| | | Question of the Week In February 2001, the Vajpayee government approved the sale of a 51% stake in Balco to Sterlite Industries for Rs 551.5 crore. Which were the two other bidders in the fray? | | |  | Here's a great value proposition A digital subscription to Mint premium can be yours at just ₹213 per month. Check out the convenient and affordable plans we have for you here. | | Good Morning | | The News in Summary The Adani group faced fresh challenges with Sebi investigating if it had violated disclosure norms on related party transactions, while Fitch Ratings warned that Adani Transmission Ltd and Adani Ports and Special Economic Zone are exposed to heightened contagion risks. Meanwhile, the government moved to sell off its remaining 41% shareholding in aluminium producer Balco 22 years after it had first sold a majority to the Sterlite group. Elsewhere, bankrupt Reliance Capital’s struggles with its lenders continued despite a court nod to proceed with its second auction, while Kotak Equities cast a shadow of doubt over Vodafone Idea’s ability to survive without substantial capital infusion. Finally, a settlement with lender IndusInd Bank took Zee Entertainment a step closer to its proposed merger with Sony. | | | | Adani Faces Sebi Probe Even as Fitch Flags Contagion Risk The Securities and Exchange Board of India (Sebi) is investigating a possible violation of ‘related party’ transaction rules in the Adani Group’s dealings with at least three offshore entities with links to Vinod Adani, the brother of the conglomerate’s founder Gautam Adani. The three entities allegedly entered into several investment transactions with unlisted units of the group, and Sebi is probing if the lack of that disclosure violated its ‘related party transaction’ rules. The news came just when the group had rebutted a report by The Ken alleging that regulatory filings revealed that banks have not yet released a large portion of the Adani group’s promoters’ shares. The story, which initially sent stocks of all the group’s various companies crashing the most by value in the last 23 sessions, was denied by Adani Group chief financial officer, Jugeshinder Robbie Singh, who on Twitter called it “deliberate misrepresentation” by Ken in ignoring the fact that the “relevant exchanges will update end of the quarter.” Adani stocks subsequently recovered most of the losses. Adding to its troubles, rating agency Fitch said that two Adani Group subsidiaries, Adani Transmission Limited and Adani Ports and Special Economic Zone, are exposed to heightened contagion risks as a result of governance weakness at the conglomerate’s sponsor level. | | | | Balco Disinvestment Back on Table After Years on Back Burner The Union government is preparing to sell its 41% stake in Bharat Aluminium Co. (Balco), among the largest aluminium producers in the country, accounting for about 20% of the country’s total capacity. If it goes through, the share sale will come 22 years after the Vajpayee government sold a 51% stake in the company to Sterlite Industries Ltd, a unit of Vedanta Ltd, as part of its privatization drive. The department of investment and public asset management (Dipam) has been asked for a road map for the divestment, which has been talked about for decades but never took off due to a lack of clarity over the valuation of shares and the rights of the majority shareholder. Ten years ago, the government also considered an initial public offering of Balco to determine its market price, a move that was subsequently dropped. Now, however, following various court verdicts, it has a free hand to decide the mode, valuation and quantum of the share sale. | | |  | | | | | | | | RCap Sale Faces an Impasse  The sale of Reliance Capital (RCap), already embroiled in a series of controversies, turned messier with lenders to the bankrupt company deciding to proceed with a second auction despite the Hinduja group’s decision to retract its revised bid. This is in accordance with a Supreme Court ruling disallowing Torrent group’s objections to a second auction after it had emerged as the highest bidder in the initial exercise. The matter went to court after the Hinduja group submitted a revised bid topping that of Torrent, but a day after the first round of auction had closed. With the top court eventually dismissing Torrent’s objection to the lenders’ call for revised bidding, the stage appeared set for a fresh exercise. However, in a strange twist, the Hinduja group told lenders at an informal meeting ahead of the auction that it wants to revert to its old offer of Rs 8110 crore, which was lower than Torrent’s Rs 8,640 crore offer. As a result, both companies will now have to submit fresh bids though no reserve price has been set. | | | | Kotak Equities Casts Shadow Over Vodafone Idea Survival In an ominous report, brokerage Kotak Institutional Equities warned of “Vi shutting shop” if there is a delay in tariff hike/fund-raise as it “stares at a cash shortfall of ~Rs55 billion over the next 12 months.” The cash-strapped telecom company’s share price nosedived to a 52-week low after the report said there could be a delay in 5G monetization and tariff hikes till the 2024 general elections, which could hurt the country’s third-largest telco the most. What’s more, unless the company can quickly raise funds, its capex won’t be able to bridge the gap on 4G coverage or roll out 5G, which would result in further market share erosion. This came on a day when the company allotted optionally convertible debentures (OCDs) worth Rs 1200 crore to ATC Telecom Infrastructure Pvt. Ltd as part of a preferential issuance of up to Rs 1,600 crore of OCDs for the telecom towers company. The funds are to be used by Vi to clear some of the pending dues to the tower operator for renting its assets. | | | | Decks Clearing for Zee-Sony Merger Following a settlement agreement with IndusInd Bank, Zee Entertainment Enterprises Ltd is now closer to inking its planned merger with Sony Pictures (Culver Max Entertainment). With Zee paying the first tranche of its dues, the bank informed the National Company Law Appellate Tribunal (NCLAT) that it would withdraw its insolvency petition, which essentially opposed the former’s deal with Sony. This is the second major hurdle in the way of the deal that’s been crossed. Last month National Company Law Tribunal (NCLT) allowed the Indian Performing Right Society Ltd (IPRS), an operational creditor of Zee, to withdraw its insolvency petition. However, with separate insolvency applications filed by Axis Finance and IDBI against Zee still pending before the bankruptcy court, the mega-merger of the two entertainment giants remains in the balance. | | | | Last Word Indian Chinese has been part of our local cuisine for years, but with Swiss multinational Nestle now joining other bidders to acquire India’s Capital Foods Pvt, the makers of Ching’s Secret sauces, it is going completely legit. In a deal that could value the Mumbai-based company at more than a billion dollars, Nestle is looking to buy the 61-year-old company, which boasts of investors like General Atlantic and is well known for its brand of spicy noodles and fusion chutneys. Buoyed by its strong performance in 2022, when it delivered its highest double-digit growth in a decade, Nestle India has been expanding its reach in small towns and villages, a strategy it terms “rurban”, to secure a better reach into newer markets. Ching’s Secret sauces, infused with so-called “desi Chinese” flavours, certainly seem like the way to the hearts of Indians. | | | | A part of the billion-dollar price tag for India’s Capital Foods will have to be for some of its most memorable ads, including this Sridevi special series for Ching’s Chowmein Hakka Noodles Masala. | | | | Answer to the Question Sterlite emerged the winner in the bidding for Balco in 2001, beating the Aditya Birla group’s Hindalco and the US-based Alcoa. Hindalco had bid Rs. 265 crore against the reserve price of Rs. 514 crore, while Alcoa eventually opted out of the race. | | | Do you have any questions? Send in your queries to sundeepkkhanna@gmail.com Were you forwarded this email? Did you stumble upon it online? Sign up here. | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Sukoon Wadhawan. 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