Month: August 2024

The National Company Law Tribunal (NCLT) at Mumbai has given the green light to the merger between Reliance Industries owned Viacom18 and Disney’s Star India, setting the stage for a transformative shift in India’s media sector. [Viacom 18 Media Private Limited and Star India Private Limited]

The approval granted on Friday by judicial member Kishore Vemulapalli and technical member Anu Jagmohan Singh paves the way for what will become India’s leading media conglomerate, reportedly valued at over ₹70,000 crore.

The NCLT’s decision follows the approval to the merger granted by the Competition Commission of India (CCI) earlier this week.

Reliance, through its holding firm Network 18, owns the TV18 news channels and a range of entertainment and sports channels under the ‘Colors’ brand as well as the OTT platform Jio Cinema. The newly merged entity will combine these with Star India’s assets, creating a formidable player in the media landscape.

The NCLT’s order stipulates several conditions for the merger. Key among these is the requirement of approval from the Ministry of Information and Broadcasting for the transfer of TV channels from Viacom18 to Star India.

Additionally, the petitioner companies are directed to file the NCLT order and the approved scheme with the Registrar of Companies within 30 days. They must also present the order to the Superintendent of Stamps for stamp duty adjudication, if applicable, within 60 days.

The joint entity will feature two leading OTT streaming platforms: Disney Hotstar and Jio Cinema.

The deal, which was initially announced six months ago, had initially faced scrutiny from the CCI. However, later approval was granted after both parties agreed to modify the original transaction structure to address regulatory concerns.The merger is expected to be completed by the end of 2024 or early 2025.

Senior Advocate Gaurav Joshi, briefed by Advocates Mehul Shah, Aman Yagnik, Haabil Vahanvaty, Rushabh Gala and Ishrita Bagchi of Khaitan & Co represented the two companies.

Advocate Disha Shah with Senior Standing Counsel Subir Kumar appeared for the CGST deaprtment.

Advocate Abhishek R Mishra represented the Income Tax department.

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India’s gross domestic product slowed to a quarter low of 6.7 per cent in April-June this fiscal against 8.2 per cent in the year-ago period, mainly due to poor showing by the farm sector, shows government data.

Growth in Asia’s third-largest economy had been well above 7 per cent during previous quarters.

The previous GDP low was 6.2 per cent in January-March 2023.

India remains the fastest-growing major economy, as China’s GDP growth in the April-June quarter was 4.7 per cent.

The agriculture sector recorded a 2 per cent growth, down from 3.7 per cent in the April-June quarter of 2023-24, as per the National Statistical Office (NSO) data released on Friday.

However, the growth in the manufacturing sector accelerated to 7 per cent in the first quarter of the current fiscal compared to 5 per cent in the year-ago period.

“While the Q1 FY25 GDP growth has come in softer than expectations, the GVA (Gross Value Added) has remained firm, with non-farm growth holding up well,” Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank in Mumbai, told Reuters.

“We retain our GDP growth expectations of 6.9% in FY 2025, aided largely by rural demand and government spending, while closely watching the likely fatigue in urban demand, private capex and the pace of global slowdown,” Ms Bhardwaj added.  

The expansion in ‘financial, real estate and professional services’ GVA has slowed to 7.1 per cent from 12.6 per cent in the year-ago quarter.

“Real GDP or GDP at Constant Prices in Q1 of 2024-25 is estimated at ₹ 43.64 lakh crore against ₹ 40.91 lakh crore in Q1 of 2023-24, showing a growth rate of 6.7 per cent,” the National Statistical Office (NSO) said in a statement.

Electricity, gas, water supply and other utility services grew by 10.4 per cent from 3.2 per cent.

The construction segment also grew by 10.5 per cent from 8.6 per cent a year ago.

Trade, hotels, transport, communication and services related to broadcasting slowed to 5.7 per cent from 9.7 per cent a year ago.

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In an order issued on August 29, the Union government has lifted the cap on producing ethanol from sugarcane-related products. All sugar mills and distilleries have been granted permission to produce ethanol from sugarcane juice or sugar syrup and B-heavy and C-heavy molasses for the ethanol supply year (ESY) 2024-25.

Additionally, another order stated that ethanol distilleries can participate in the Food Corporation of India’s (FCI) rice auctions. Under this order, these distilleries will be allowed to purchase rice at the final fixed price through e-auction from August to October 2024 for ethanol production.

Distilleries will be able to procure a maximum of 2.3 million tonnes of rice from FCI stocks for ethanol production. Ethanol producers can use this rice as feedstock, which is a crucial raw material for ethanol production.

The Union government has set a target to increase the ethanol blending rate in petrol to 20 per cent by 2025, up from the current 13 per cent. Consequently, ethanol production is being continuously encouraged.

The order issued on August 29 also mentioned about a periodic review of the diversion of sugar for ethanol production in collaboration with the Union Ministry of Petroleum and Natural Gas to ensure that sugar availability remains consistent throughout the year. 

Last year, a cap was imposed on the diversion of sugar for ethanol production due to concerns about a potential decrease in sugar production and a possible rise in sugar prices. Additionally, considering the rising rice prices, the government had also imposed a cap on using rice from FCI stocks for ethanol production. 

According to a press release dated December 20, 2023, the ethanol production capacity in the country was approximately 13.80 billion litres as of November 30, 2023, with about 8.75 billion litres being molasses-based and approximately 5.05 billion litres being grain-based.

The Indian government is implementing an Ethanol Blending Program (EBP) across the country, under which oil marketing companies (OMCs) sell petrol blended with ethanol. Under the EBP program, the government has set a target to achieve a 20 per cent ethanol blending in petrol by 2025.

According to the press release, to meet the 20 per cent blending target by 2025, approximately 10.16 billion litres of ethanol will be required, with a total ethanol demand of 13.50 billion litres including other uses. To meet this, an ethanol production capacity of around 17.00 billion litres will be needed by 2025, assuming plants operate at 80 per cent efficiency.

The government has estimated the demand for ethanol required for a 20 per cent blending target by 2025, taking into account the growth of petrol-based vehicles in the two-wheeler and passenger vehicle segments and the projected sales of motor spirit (MS).

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The Sun will set on Vistara on November 12 when the airline will move under the Air India brand with its flights carrying the “AI” flight code instead of its “UK” designator and flight bookings too moving to the latter’s web portal thereby completing the merger between the two airlines.

Starting September 3, passengers will no longer be able to book tickets with Vistara for travel on or after November 12. Vistara will continue to take bookings and operate flights as usual till 11 November 2024.

The important merger milestone was announced by Vistara and Air India soon after Singapore International Airlines said that the Indian government has approved its proposed foreign direct investment (FDI) into Air India. Singapore Airlines, which held a 49% stake in 70-aircraft strong Vistara along with Tata Sons, will now hold a 25.1% stake in the combined entity with a total fleet size of 285 aircraft in return for a ₹2,058.5 crore investment. The combined entity includes Air India, Air India Express and Vistara.

“This approval, along with other governmental and regulatory approvals received to-date, marks a significant development towards the completion of the merger,” the SIA said in a statement.

All customers already booked on Vistara flights after 12th November will automatically have their reservations converted to Air India flight numbers. This will take place in phases during September and customers will be individually informed about the transfer.

“We want to emphasize that this merger is about offering customers more choice with a larger fleet and a wider network, while elevating the overall travel experience. Vistara and Air India are committed to ensuring that this transition is smooth and hassle-free,” said Mr Kannan in a press statement.

The merger is an outcome of Air India’s privatisation, which was sold and transferred to the Tata Group in January 2022. The privatisation included both Air India as well as Air India Express, which was then a low-cost international airline. Since Tatas also co-owned AirAsia India with Air Asia Investment Ltd, and Vistara it decided to consolidate all four airlines and carve out two airlines — a full service carrier in Air India and a low-cost arm in Air India Express to rival IndiGo. So, it bought the remaining 16.33% stake from Air Asia and merged AirAsia India with Air India Express to create a low-cost airline for domestic and international flights, and a full service carrier by merging Air India and Vistara by offering SIA a stake of 25.1% in the full-service entity.

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Shares of Bajaj Twins – Bajaj Finance, Bajaj Finserv surged up to 3 percent on August 29 as reports suggested that Bajaj Housing Finance may launch its initial public offering (IPO) as soon as first half of September 2024. The company will mop up Rs 7,000 crore from this issue.

The IPO will have a special quota for shareholders of Bajaj Finserv and Bajaj Finance, both of whom are classified as ‘promoters.’ Bajaj Finance has a 100 percent stake in Bajaj Housing, while Bajaj Finserv holds 51.34 percent in Bajaj Finance. The public issue will have Rs 4,000 crore fresh issue and Rs 3,000 crore offer-for-sale. Following this, the IPO would be listed on both BSE and NSE.

Despite the company not announcing the price band yet, Bajaj Housing Finance is already commanding a grey market premium of Rs 41 in unlisted markets.

Earlier in June, Bajaj Housing Finance filed its draft red herring prospectus (DRHP) for Rs 7,000-crore IPO with Sebi. It had to comply with rules of the Reserve Bank of India that entailed listing of upper-layer non-banking finance companies on stock markets by September 2025.

Kotak Mahindra Capital, BofA Securities India, Axis Capital, Goldman Sachs (India) Securities, SBI Capital Markets, JM Financial, and IIFL Securities are the book-running lead managers. KFin Technologies was the registrar to the issue. Bajaj Housing will utilise the net proceeds from the fresh issue to augment its capital base to meet future business requirements. A portion of the proceeds from the fresh issue will be used towards meeting offer expenses.

Bajaj Housing Finance is a diversified NBFC catering to more than 76.5 million customers across the country, according to its website. Based in Pune, it offers finance to individuals as well as corporate entities for the purchase and renovation of homes or commercial spaces.

As of March 2024, the company’s assets under management (AUM) stood at Rs 9.14 lakh crore, growing at an annualised rate of 30.9 percent between FY22 and FY24. Its average ticket size for home loans is Rs 46 lakh, with an average loan-to-value ratio of 70.5 percent, as of March 31.

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