Month: April 2021

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Gold demand bounces back: Here’s how much gold Indians bought in Jan-Mar

India’s gold demand recovered during the January-March period to witness a growth of 37 per cent at 140 tonne compared to the same quarter of 2020, due to ease of COVID-related restrictions, pent up demand and softening of prices of the yellow metal, according to the World Gold Council (WGC).

The overall gold demand stood at 102 tonne during the first quarter of 2020, as per WGC data. Gold demand in value terms increased by 57 per cent during the first quarter of this calendar year to Rs 58,800 crore compared to Rs 37,580 crore in the corresponding period of 2020.

Total jewellery demand was up by 39 per cent at 102.5 tonne compared to 73.9 tonnes during January-March 2020.
In terms of value, jewellery demand grew by 58 per cent to Rs 43,100 crore from Rs 27,230 crore in the same quarter of last year.

Investment demand for the quarter under review increased by 34 per cent to 37.5 tonne in comparison with 28.1 tonne in the same period of 2020, while in value terms it was up by 53 per cent at Rs 15,780 crore from Rs 10,350 crore during January-March of last year.

Total gold recycled in the country witnessed a drop of 20 per cent during the first quarter of this calendar year at 14.8 tonne compared to 18.5 tonne in the same quarter of 2020. Net bullion imports in India during January-March 2021 stood at 301 tonne compared to 83.1 tonne in the corresponding period of last year, an increase of 262 per cent.

“India’s first quarter of CY 2021 gold demand rose 37 per cent to 140 tonne on the back of COVID containment and positive sentiment following the start of the vaccination programme. “A combination of softening gold prices to around Rs 47,000 per 10 grams, buoying consumer sentiment following sharp pick-up in economic activity and return of social activities like weddings supported a 39 per cent growth year-on-year (YoY) in gold jewellery demand at 102.5 tonne,” WGC Managing Director, India, Somasundaram PR told PTI here.

The average domestic gold price of Rs 47,131 per 10 gram was 14 per cent higher YoY but 6 per cent lower quarter-on-quarter and 16 per cent lower than the August 2020 peak of Rs 56,000, he noted. “Slide in gold prices below Rs 50,000 removed a psychological barrier for the consumers and spurred bargain buying and wedding-related accumulation, releasing pent-up demand. Indian retail gold investment demand also improved for a third consecutive quarter. Bar and coin demand grew 34 per cent YoY, the strongest first quarter in India since 2015,” he pointed out.

Further, he said, a reduction in customs duty on gold, together with an appreciating rupee throughout much of the quarter, also helped lower prices and presented significant buying opportunities for retail investors. Robust consumer demand, combined with stock building among the trade ahead of key festivals, including Akshaya Tritiya in May, were the primary drivers of the strong rise in imports, Somasundaram said.

“The outlook for the coming quarter is, however, cautious. As lockdowns are re-imposed in various regions of the country in response to rising COVID-19 cases, consumer confidence has dipped. This is likely to impact wedding demand in the second quarter,” he said.

Digital and omni-channel retail strategies developed over the last year by many players may cushion the drop unlike the second quarter of 2020, but the current crisis is beyond just economics and logistics, therefore, sentiment may be affected till large scale vaccination is achieved, he opined.

“We are unable to quantify the impact on full year gold demand as we do not have sight of several critical factors currently at play,” he added.

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Zomato’s Rs 8,250-cr IPO set to hit D-street; Naukri.com parent to sell Rs 750-cr shares via OFS

Online food delivery platform Zomato is looking to raise a massive Rs 8,250 crore through its much-awaited initial public offering (IPO). In its DRHP, filed with the capital markets regulator Securities and Exchange Board of India (SEBI) today, Zomato said its IPO will be an amalgamation of fresh issue of equity shares and an Offer For Sale (OFS) by existing shareholder Info Edge Ltd — the parent firm of Naukri.com. With this, Zomato has begun the proceedings of one of the most awaited public issues on Dalal Street in recent years. Zomato’s IPO could be the largest to hit Dalal Street since SBI Cards and Payment Services in March 2020.

Issue details

Zomato will raise Rs 8,250 crore, of which Rs 7,500 crore will be a fresh issue, while another Rs 750 crore will be an OFS by Info Edge. On Tuesday evening, Info Edge, which holds over 18% stake in Zomato informed the bourses that its Board of Directors has given approval to participate in the OFS of Zomato. Zomato has also said that it might consider a private placement of Rs 1,500 crore ahead of the IPO. Such a move is likely to trim the size of the fresh issue that the company has so far proposed.

Zomato said it will utilise funds raised through the issue for organic as well as inorganic growth, along with general corporate purposes. In the financial year ending March 2020, Zomato’s total income stood at Rs 2,742 crore. Meanwhile in the pandemic struck 2020, the company’s income was at Rs 1,367 crore. Zomato continues to remain a loss-making entity as of now.

Valued at $5.4 billion

Zomato, an online food delivery company, counts Ant Financials, Info Edge, Sequoia, and Uber as some of its investors. The company has strengthened its position in the two-player food delivery market with the latest round of funding coming in February this year. Zomato received $250 million in its latest investment round at a post-money valuation of $5.4 billion, Info Edge had said in an exchange filing. In the latest rounds of fundraising, Tiger Global, Fidelity, and Kora Management were among those writing cheques for the company.

“Food services is a large market in India with ~$80 Bn (~50% organized). Online food delivery is expected to grow strongly to reach $22 billion by 2025 growing at 40% CAGR. Online penetration to increase from 7% today to ~10% in 2022 and ~ 20% by 2025,” Bernstein had said in a report last year. Zomato controls a 50% market share.

In a recent report, CLSA said that Swiggy and Zomato are fighting for India’s $11 billion online food delivery pie. Profitability is now taking the center stage in the industry as both Zomato and Swiggy try to improve their unit economics. CLSA believes profits will expand as volumes increase.

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JSPL board okays divestment in Jindal Power to World one for Rs 3,015 cr

Jindal Power and Steel (JSPL) on Tuesday said its board has approved divesting its entire equity interest in Jindal Power to Worldone, a promoter group company, for Rs 3,015 crore. The board of directors of JSPL has approved the divestment of its entire equity interest (representing 96.42 per cent of the issued and paid up capital) in Jindal Power by way of sale of shares, to Worldone Pvt Ltd, a promoter group company and a related party to the company, JSPL said in a regulatory filing.

The equity value is an all-cash offer of Rs 3,015 crore, the company added. JSPL said Worldone was selected by way of an elaborate bidding process run by an independent third-party merchant banker, Grant Thornton Advisory, wherein the acquirer submitted the highest binding bid on acceptable terms and conditions.

The proposed sale is subject to necessary approvals of shareholders of the company, regulatory clearances, go-ahead from lenders of the company and Jindal Power, contractual approvals and such other consents, permissions and sanctions as may be necessary in line with extant relevant guidelines.

JSPL said the long stop date for completion of the proposed sale is 12 months which maybe mutually extended by the parties thereto, failing which the proposed sale shall terminate. The company’s board also approved the execution of a binding share purchase agreement, a loan agreement and other ancillary agreements, in relation to the proposed sale and accordingly, the company has executed a share purchase agreement.

The share purchase agreement with the Worldone and Jindal Power captures the entire understanding between the parties in relation to the sale of shares held by the company.

The company’s board also approved entering into a loan agreement with Jindal Power to convert the existing capital advances and inter corporate deposits availed by JSPL from Jindal Power aggregating to Rs 4,386.28 crore into an unsecured loan.

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Blackstone commits up to $2.8 billion to acquire a controlling stake in Mphasis

Blackstone on Monday announced that private equity funds managed by Blackstone have entered into definitive agreements to acquire a majority stake in Bengaluru-headquartered IT services company Mphasis Limited. A wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA), UC Investments and other long-term investors will co-invest along with Blackstone, a joint statement said.

This transaction will trigger a mandatory open offer for the purchase of up to 26 per cent additional shares of the company from the public shareholders and the acquiring entity has released a public announcement to the stock exchanges, it said. Based on the open offer subscription, the blended purchase price will vary between Rs 1,452 to Rs 1,497 per share (12-16 per cent premium to 12-month average price and 3 -6 per cent discount to six-month average price) and the purchase consideration will vary between Rs 152 billion to Rs 210 billion (or, approximately USD 2.0 billion to USD 2.8 billion).

A different fund managed by Blackstone had acquired a controlling stake in Mphasis from Hewlett Packard Enterprise in September 2016. The sale is expected to complete in the coming months, subject to customary closing conditions and regulatory approvals, the statement added.

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