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

Morning Scan

#1. Tata Sons pays back Rs 20,000 crore worth of debt to remain privately held company

Tata Sons, the holding company of the $410 billion Tata Group, is voluntarily surrendering its certificate of registration to the Reserve Bank of India after repaying more than Rs 20,000 crore in debt in a strategic move that allows it to remain an unlisted, closely held company, the Economic Times reported. The repayment excludes non-convertible debentures, and preference shares worth Rs 363 crore.

Why it’s important: If the loans were not cleared, Tata Sons would have been required to list its shares because the central bank classified it as an upper layer non-banking finance company. After the repayment, it can remain an unlisted entity.

#2. Cabinet to approve 12 industrial parks that together entail project cost of Rs 25,000 crore

The Union cabinet is expected to approve 12 industrial parks in Bihar, Andhra Pradesh and Punjab with a project cost of around Rs 25,000 crore, the Business Standard reported. These projects are expected to attract investment of around Rs 1.5 lakh crore. They will function more like industrial cities where residential and commercial setups will co-exist. The approval can come as early as this week.

Why it’s important: The pending approval is part of the government’s initiative to attract overseas investment, boost local manufacturing and help in employment generation under the National Industrial Corridor Development program.

#3. Temasek in advanced talks to lead investment of up to $150 million in Rebel Foods

Singapore’s sovereign fund Temasek is in advanced discussions to lead a $100-150 million investment in Rebel Foods, the parent of Faasos, Behrouz Biryani and other cloud kitchen brands, the Economic Times reported. The proposed deal will be a mix of primary and secondary share sales. The secondary sale is likely at a lower valuation of around $700 million. In October 2021, Rebel became a unicorn after a $175 million funding round, valuing it at $1.4 billion.

Why it’s important: Early-stage food and beverages brands are in demand from investors and multiple companies have raised funding in recent months. To be sure, cloud kitchens have been seeing moderate growth and are expanding offline through own or franchise stores.

#4. Government may make FPI and FDI interchangeable to simplify overseas investment regime

The central government is considering a plan to allow full fungibility between foreign portfolio investment and foreign direct investment in sectors where 74 percent or more FDI is allowed, the Economic Times reported. Currently, an FPI or an investor group can hold only up to 10 percent equity in a listed company. More than 10 percent is allowed through FDI.

Why it’s important: At present, overseas investments are classified under different buckets and faces different regulations. The interchangeability will allow individuals and entities the freedom to freely manage investments. Portfolio investors will be able to buy more than 10 percent stake in a company.

#5. Centre to revive plans to sell strategic stake in state-owned fertilizer firms next financial year

The federal government plans to revive the strategic sale of state-owned fertilizer firms from the next fiscal year, the Mint reported. Besides putting eight major fertilizer public sector units on the block in a phased manner, some shuttered units may be revived and prepared for sale.

Why it’s important: The plans to revive the divestment in state-run fertilizer companies comes at a time when India is successfully working to increase domestic production and reduce its dependence on imports.

#6. Ceramic manufacturers in Gujarat’s Morbi face tough times as exports slump

Last year, after a dream run of exports, Morbi’s famed ceramic cluster is facing challenges, the Hindu Businessline reported. Nearly 250 export-oriented units in Gujarat’s tile making district have downed shutters temporarily. The cluster was exporting Rs 20,000 crore of ceramic products every year, but exports have fallen by 35-40 percent in the first three months of current financial year.

Why it’s important: Morbi’s goal of overtaking tile titan China has received a setback. Exports have slumped largely to rising freight costs and non-availability of outbound containers.

#7. Rural sales of two-wheelers race past urban sale for first time since Covid-19 pandemic

For the first time since the Covid-19 pandemic, growth in two-wheeler sales in rural India has surpassed that in urban areas in between April and July, the Business Standard reported. The two-wheeler industry grew by 13.5 percent during this period, with rural sales increasing by 14.5 percent compared to 12 percent growth in urban areas.

Why it’s important: The rise in rural sales is an indication that the economic situation in the countryside is improving following the significant infrastructural push from the government. the two-wheeler market is expected to see double-digit growth during the current financial year.

#8. Reliance Jio and OneWeb start debate on allocation of satellite radio spectrum

In a new development in an ongoing spectrum battle, Reliance Jio has written to the regulator, arguing that the Telecommunications Act of 2023 does not mandate administrative allocation as the only method of assignment for satellite operators, the Business Standard reported. In contrast, Sunil Mittal’s OneWeb has made a strong case for assigning spectrum administratively to non-geostationary orbit operators on a provisional basis.

Why it’s important: The fresh development set up a direct confrontation between Jio and OneWeb. However, delaying the allocation of satellite spectrum would be tantamount is wasting both operator and public resources.

#9. Anil Ambani exploring legal options to counter five-year ban from securities market
Anil Ambani is taking legal advice on the order passed by the Securities and Exchange Board of India, which barred him from accessing the securities market for five years for alleged diversion of funds, the Hindu Businessline reported. The regulator said a fraudulent scheme was orchestrated by Ambani and administered by the key managerial persons of Reliance Home Finance to siphon off funds.

Why it’s important: Anil Ambani’s groups firms have sought to distance themselves from the ban order. It is unclear how far a legal challenge can go since a forensic audit by creditors have indicated circular transactions and evergreening of loans.

#10. Cloud kitchens dependent on delivery platforms beset by weak profit showing

In July last year, when Terra Food raised $800,000 from investors, it said the gourmet cloud kitchen platform would double its monthly recurring revenue by November, the Mint reported. Rebel Foods had in 2021 become India’s first cloud kitchen unicorn. Food-delivery platform Swiggy had its own cloud kitchen. But the situation has gone downhill since then and Terra Food has vacated most of its locations in the national capital region.

Why it’s important: It was earlier thought that India’s cloud kitchen segment will expand to $3 billion in 2024 from about $400 million in 2019. But that’s unlikely to happen. Cloud kitchens as an industry is not going to be very profitable as expected due to the complete dependency on Swiggy and Zomato.