Morning Scan: All the big stories to get you started for the day

The central government has decided to hold off introducing the production-linked incentive scheme for any additional sectors until it verifies the efficacy of existing initiatives. There has been mixed feedback on the scheme, including insights from the Economic Advisory Council to the Prime Minister. Launched three years ago with an allocation of Rs 1.97 lakh crore, the scheme aimed to boost domestic manufacturing and attract investments. The government is currently exploring whether there is a need for any course correction in any of these schemes.

Why it’s important: Despite the fanfare, only a handful of the schemes are working well of the 14 introduced. Sectors like solar modules, steel, textiles, and automobiles haven’t shown promising results.

#3. Manipal chairman Ranjan Pai may invest $250-300 million in Akash Institute

Ranjan Pai, chairman of the Manipal Education and Medical Group, may invest $250-300 million in Aakash Institute, a unit of troubled edtech start-up Byju’s. Although his initial plan was to invest around $70 million, Pai is now close to infusing $170 million, with more to come later.

Why it’s important: The funds would provide some relief to Byju’s, which would use the money to part retire debt to US-based Davidson Kempner, from which it had borrowed against cash flows from Akash.

#4. Jindal Power submits expression of interest to buy insolvent Go First airline

Naveen Jindal, promoter of Jindal Steel and Power, has put in an expression of interest to buy insolvent airline Go First, which is undergoing insolvency proceedings. The expression has been submitted by unlisted Jindal Power, which is owned by Worldone, a closely held company of Naveen Jindal.

Why it’s important: It is unclear whether Jindal is looking to acquire the bankrupt carrier outright or come in as a strategic investor. This could be a breakthrough solution for the airline because securing funding from lenders has proven to be challenging due to litigation by aircraft lessors.

#5. People’s Bank of China continues to own Indian shares worth Rs 25,000 crore

The People’s Bank of China continues to own shares worth at least Rs 25,000 crore across 20 major Indian companies, including TCS, Infosys, Hindustan Unilever, and Vedanta. Infosys and ICICI Bank are the Chinese bank’s biggest portfolio holdings in India, according to regulatory filings.

Why it’s important: The holdings in Indian firms by the Chinese bank is despite escalating geopolitical tensions between the two nations over a border standoff. It has kept its holdings below the 1 percent threshold in companies that require public disclosure to prevent any kind of backlash.

#6. Union cabinet approves royalty rates for strategic minerals like lithium and rare earths

The Union cabinet has approved an amendment to the Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957, specifying royalty rates for strategic minerals that include lithium, niobium, and rare earth elements. The approval clears the way for the government to auction mining blocks containing these critical minerals for the first time.

Why it’s important: These minerals that have applications in batteries, electronics and aerospace are increasingly playing a crucial role in economic development and energy security. Their importance has surged as India undergoes rapid energy transition to achieve net-zero emissions by 2070.

#7. ArcelorMittal and JSW Steel lead race to acquire mines and steel assets of Vedanta

JSW Steel and ArcelorMittal, along with several private equity funds, have expressed interest in buying the iron ore mines and steel plant owned by ESL Steel, a part of Vedanta. While the Vedanta group has indicated an enterprise valuation of Rs 10,000 crore for these assets, potential buyers are seeking a reduced valuation.

Why it’s important: The Vedanta Group is in dire need to raise funds so that flagship Vedanta Resources can repay debt worth $1 billion due by January. India Ratings has already downgraded Vedanta on increased liquidity risk.

#8. India’s market regulator investing between Adani Group and Gulf Asia fund

The Securities and Exchange Board of India is investigating the relationship between the Adani Group and Gulf Asia Trade & Investment incorporated in the tax haven of British Virgin Islands and owned by Dubai businessman Nasser Ali Shaban Ahli to see if there has been a violation of share ownership rules.

Why it’s important: The fund has invested in several listed Adani firms, according to the Organized Crime and Corruption Reporting Project. The Adani Group has denied all wrongdoing.

#9. Canadian investment fund and others seek to buy stake in Aditya Birla Renewables

Canadian investment firm Alberta Investment Management Corporation and a few others have expressed interest to pick up a significant minority stake in Aditya Birla Group’s renewable energy business. The business house is looking to sell up to 49 percent stake in Aditya Birla Renewables to raise about $400 million. Standard Chartered Bank is advising on the fundraise.

Why it’s important: The conglomerate will use the money to build renewable capacities to meet its decarbonisation plans. Fundraising shouldn’t be difficult as there’s keen investor interest in renewables.

#10. Corporate India unlocks value of subsidiaries through mergers and splits

Corporate India is restructuring through mergers, demergers, and splits to create assets and unlock value. The pitch rose significantly during the second quarter of 2023-24, translating into $32.9 billion worth of deals, the highest quarterly amount since the HDFC Bank-HDFC merger announced in the September quarter of 2021-22.

Why it’s important: Rightly done, mergers and splits create shareholder value and provide synergy benefits. It is a natural corollary as Indian conglomerate expand their business activities.