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Sebi’s refund to Sahara investors inches up to Rs 129 crore; Balance in repayment accounts swells to Rs 23,000 crore

Capital markets regulator Sebi has managed to refund Rs 129 crore to investors of two Sahara companies in nearly nine years after being assigned the task by the Supreme Court, while the amount deposited in specially-opened bank accounts for the repayment purpose has swelled to over Rs 23,000 crore, according to the latest disclosure made by the regulator.

In the absence of claims from a large majority of the bondholders of the two Sahara companies, which were asked to return the money to nearly 3 crore investors along with interest in August 2012 through a Supreme Court order, the total amount refunded by Sebi rose by just about Rs 14 crore during the last fiscal, 2020-21, while the balance in Sebi-Sahara refund accounts rose by over Rs 1,400 crore during the year.

In its latest annual report, the Securities and Exchange Board of India (Sebi) said that it received 19,616 applications as of March 31, 2021, involving total refund claims of nearly Rs 81.6 crore. Of this, it has issued refunds in 16,909 cases (Rs 129 crore, including Rs 66.35 crore principal and Rs 62.34 crore interest), while 483 applications (involving over Rs 2.3 crore) have been referred back to investors for addressing discrepancies.

While seven applications have been put in the disputed category, 332 applications are pending with Sahara, 122 are pending with Sebi and 2,487 cases have been closed for reasons including no response from investors and absence of records), the regulator said.

In its previous update, Sebi had put the total amount refunded by it as of March 31, 2020 at Rs 115.2 crore (concerning 15,140 applications). The number of disputed cases at that time was much higher at 229, while the count of closed cases was lower at 1,688.

Sebi further said pursuant to various orders passed by the Supreme Court and the attachment orders passed by the regulator, an aggregate amount of Rs 15,473 crore has been recovered by it as of March 31, 2021.

“These amounts along with interest earned on them after providing for making refunds to the bondholders have been deposited in various Nationalized Banks in terms of the judgment dated August 31, 2012 of the Supreme Court. As of March 31, 2021, the total amount deposited in these banks is Rs 23,191 crore,” Sebi said.

This amount stood at Rs 21,770.70 crore as of March 31, 2020.

Reacting to the latest update from Sebi, the Sahara group said as per its own estimate the money deposited in the Sahara-Sebi account including interest should be around Rs 25,000 crore and alleged that Sebi is “unreasonably holding Rs 25,000 crore money of Sahara and its investors”.

Referring to various rounds of newspaper advertisements given by Sebi over the years to invite refund claims, Sahara said the regulator had made it clear in the last advertisement that it would not entertain any further claim received after July 2018.

“It means that for Sebi there is no more claimants to be paid and Sahara’s entire Rs 25,000 crore deposited by it is unreasonably held by Sebi and should be returned to Sahara. Sahara has given all original documents pertaining to its 3 crore investors to Sebi nine years back for verification and as per the directives of the Supreme Court, this amount of Rs 25,000 Crore will eventually come back to Sahara,” it said in a statement.

The group further said it was “unfortunate and unacceptable” for Sebi to hold on to the funds deposited by Sahara.

“This huge amount of money is lying unutilised, idle in the banks which is not only hurting the interest of Sahara as a business organisation but also impeding the economic growth of our country especially in these testing times of economic slowdown,” it added.

Sebi had ordered Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) in 2011 to refund the money raised from investors through certain bonds known as Optionally Fully Convertible Bonds (OFCDs) after the regulator ruled that the funds were raised by the two firms in violation of its rules and regulations.

After a long process of appeals and cross-appeals, the Supreme Court on August 31, 2012 upheld Sebi’s directions asking the two firms to refund the money collected from investors with 15 per cent interest.

Sahara was eventually asked to deposit an estimated Rs 24,000 crore with Sebi for further refund to investors, though the group always maintained it amounted to “double payment” as it had already refunded more than 95 per cent of investors directly.

In its annual report for 2020-21, Sebi said its actions in the case are overseen by Justice (Retd) B N Agarwal, appointed by the Supreme Court in this matter and details are provided in the status report filed before the apex court from time to time.

As of March 31, 2021, Sebi had filed 22 status reports before the Supreme Court in this matter.

Sahara group, in its statement, said it has always built its businesses by productively channelizing human capital spread across India and giving employment and work at people’s doorstep.

“In this way, Sahara is providing bread and butter to more than 14 lakh people in their own villages and towns. It is the country’s second-largest human capital after Indian Railways. This amount could have been used by the organisation to generate more employment and work and helped the country and therefore its economy,” it added.

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Nirma Group cement company Nuvoco Vistas IPO opens Aug 9; check price band, IPO size, bid details

Nirma group cement company Nuvoco Vistas Corporation Ltd IPO will open for subscription on Monday, 9 August, at a price band of Rs 560-570 per share of face value of Rs 10 each. The issue will close on Wednesday, 11 August. Nine years ago Nirma shares were delisted from exchanges. The Rs 5,000 crore public issue comprises a fresh issue of shares worth Rs 1,500 crore and an offer for sale (OFS) of Rs 3,500 crore by its promoter entity Niyogi Enterprise Pvt. Ltd. Niyogi Enterprises holds an 86.56 per cent stake in the company.

Investors can make bids for a minimum of 26 equity shares and in multiples thereafter, implying a minimum investment of Rs 14,820 per lot. Half of the net offer has been reserved for qualified institutional buyers (QIBs), 35 per cent for retail investors and the remaining 15 per cent for non-institutional investors. Upon successful completion of its IPO, it will join the industry-listed peers such as Ultratech Cement, Shree Cement, Ambuja Cements and ACC. ICICI Securities Ltd, Axis Capital, HSBC Securities and Capital Markets India, JP Morgan India and SBI Capital Markets are the lead managers to the issue. Link Intime India Private Ltd is the registrar to the issue.

The average industry P/E ratio stands at 35.90x, while the weighted average return on net worth for the last three fiscals is 1.31 per cent. The company has planned to utilise the net proceeds from the issue for the repayment/prepayment/redemption, in full or part, of certain borrowings availed of by the company which is about Rs 1,350 crore and for general corporate purposes. Nuvoco Vistas is the fifth-largest player in India and the largest cement company in East India, in terms of capacity, with a consolidated capacity of 22.32 MMTPA. It has 11 cement plants, comprising five integrated units, five grinding units and one blending unit.

Nuvoco Vistas’ competitors from domestic cement companies which operate in the Indian market, include UltraTech Cement Limited, Shree Cement Limited, Birla Corporation Limited, Dalmia Bharat Cement Limited, Ambuja Cement Limited and other regional players like Wonder.

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Nykaa files IPO papers with SEBI; this new-age internet company to raise Rs 525 cr via fresh equity

Cosmetics retailer Nykaa has filed its draft red herring prospectus (DRHP) with capital market regulator SEBI to launch an IPO. The public issue comprises fresh issue of shares worth Rs 525 crore, while the promoters and investors will sell up to 4.31 crore equity shares via offer for sale (OFS). Selling shareholders include promoters Sanjay Nayar Family Trust, and investors such as TPG Growth IV, Lighthouse India Fund III, Lighthouse India III Employee Trust, Yogesh Agencies & Investments Private Limited, JM Financial and Investment Consultancy Services, Sunil Kant Munjal, Harindarpal Singh Banga jointly with Indra Banga and others.

There are no listed companies in India that engage in a business similar to that of Nykaa. Kotak Mahindra Capital Company, Morgan Stanley India Company Private Ltd, BofA Securities India, Citigroup Global Markets India Private Ltd, ICICI Securities, and JM Financial. Link Intime India Private Ltd will be the registrar to the issue. The company has planned to utilise the net proceeds towards funding the investment in certain of its subsidiaries, namely, FSN Brands and/or Nykaa Fashion for funding the set-up of new retail stores worth Rs 35 crore; capital expenditure to be incurred by the company and investment in certain of its subsidiaries, namely, Nykaa E-Retail, FSN Brands and Nykaa Fashion for funding the set-up of new warehouses worth Rs 35 crore; repayment or prepayment of outstanding borrowings availed by the company and one of its subsidiaries, namely, Nykaa E-Retail worth Rs 130 crore; Rs 200 crore expenditure to enhance the visibility and awareness of its brands; and for general corporate purposes.

The promoters of the company are Falguni Nayar, Sanjay Nayar, Falguni Nayar Family Trust and Sanjay Nayar Family Trust. The weighted average return on net worth for the last three fiscals stood at 0.68 per cent. India has the second-largest urban population in the world. India will continue to grow across the digital use-case funnel, as there is significant headroom for growth at each level. This growth is expected to be driven by the affordability of the internet, continuous improvement in telecommunications infrastructure, increased adoption from Tier 2+ cities, the rising popularity of social media, competitively priced online offerings and growing trust and adoption of online payment platforms.

The number of online shoppers in India reached 150-180 million in 2020 (up from 120-150 million in 2019) with approximately 70% of these shoppers belonging to the non- Metro cities. These shoppers buy a variety of products online ranging from mobiles, electronics, fashion, beauty and personal care and groceries. The Beauty and Personal Care Market in India was sized at Rs 1,267 billion in 2019, growing at a CAGR of 13 pet cent in the last 3 years. Though the market fell down to Rs 1,120 billion in 2020 as a result of reduced spending during the first COVID-19 wave, it is projected to grow at a CAGR of 12 per cent to reach Rs 1,981 billion in 2025 implying a CAGR of 7.7 per cent from the pre-COVID-19 market in 2019.

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Record-breaking IPOs expected in 2021; fundraising through public issue may cross Rs 1 lakh crore

With the IPO momentum holding strong, calendar year 2021 is set to witness record fund raising through initial public offerings.

As on date, India Inc has raised over Rs 42,000 crore though 28 IPOs in seven months till date. If the number of companies which have filed their issues with SEBI or have shown intent to list is any indication, this could easily cross Rs 1 lakh crore by December should the secondary market maintain its tempo.

Besides companies in traditional businesses, the bumper listing of Zomato is set to trigger a host of IPOs from other new-age companies including Paytm, PhonePe, MobiKwik, Grofers, PolicyBazaar, Flipkart Internet, Delhivery among others that have shown their intention to list this year.

Such hectic fund raising through IPOs was last witnessed in 2017 when companies raised Rs 67,147 crore through 36 IPOs. This year, India Inc has already raised over Rs 42,000 crore though 28 IPOs. Data compiled by Prime Database shows that 34 more companies have already filed offer documents with Sebi, and are estimated to raise over Rs 71,000 crore through IPOs.

Further, 54 companies have announced their intention to tap the primary market this year, and just 21 of them are estimated to raise over Rs 70,000 crore. These do not include state-owned Life Insurance Corporation, which could raise around Rs 50,000 crore or more depending on its estimated valuation of anywhere between Rs 10 lakh crore and Rs 15 lakh crore.

Pranav Haldea, Managing Director, Prime Database, said it is critical for markets to remain bullish for deals to close. “Even if the companies have Sebi approval, they will launch the issue only if the market is in bullish territory. In 2013, we did a study which showed that companies holding Sebi approval for IPOs worth Rs 75,000 crore allowed these to lapse when the markets turned bearish. So, while the pipeline is strong, bullishness in the market will be key for their conclusion,” said Haldea.

Despite concerns of a third Covid-19 wave, stretched valuations and inflation, the market has shown appetite for IPOs. ‘Seize the opportunity’ seems to be the axiom guiding retail participants. “What is significant is banks and financial institutions have, of late, shown equal if not more interest than retail participants in primary issues. They have nearly doubled their investments in IPOs reaching four-year highs and we are only over half way through the year,” said Nirai Shah, Head of Equity Research, Samco Securities.

The excitement does not end here; pension regulator PFRDA is considering permitting pension funds to broaden their investment spectrum to invest in eligible IPOs and similar primary issues with certain predefined criteria. “This unequivocally shows the IPO party is far from being over, given our economy is flushed with liquidity,” Shah said.

While the Zomato IPO showed signs of investor maturity and appetite for new age companies, Sebi chairman Ajay Tyagi recently said the filings and public offerings reflect the maturity of the market to accept the business model of new age tech companies, which aren’t amenable to valuation through conventional metrics of profitability.

“Along with the robust growth, it is heartening to note that our markets are entering a new era with several new age tech companies preferring to list domestically. Our markets offer as attractive a fund-raising proposition as any overseas market,” Tyagi said at the NISM capital market conference last week.

Successful IPOs of such companies are likely to attract more funds in domestic markets, thus creating a new ecosystem of entrepreneurs and investors, Tyagi said.

After Zomato, the next mega unicorn listing is likely to be One97 Communications, the parent firm of Paytm, a leading digital ecosystem for consumers and merchants, which recently filed the draft red herring prospectus with the regulator SEBI for a Rs 16,600 crore IPO. This could be one of the largest IPOs in recent years.

The company’s revenue has been growing strongly, while losses have been coming down. It announced a loss of Rs 1,701 crore in FY’21, lower than Rs 2,942 crore in FY’20 and Rs 4,230 crore in FY’19.

LIC, which is preparing the groundwork for the IPO, is set to hit the capital market in the fourth quarter of FY’22 and could raise between Rs 55,000 and 80,000 crore.

As for the overall resource mobilisation through capital markets, companies raised Rs 10.12 lakh crore in FY21 despite this being a pandemic-affected year, surpassing previous year’s figures of Rs 9.96 lakh crore.

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