Patanjali, Adani Wilmar and Godrej Agrovet may be in the race to buy Ruchi Soya. The company has been under financial debt for some time but buyers find it attractive due to its exposure to the production and distribution of edible oils, specialty fats and bio-diesel. Ruchi Soya has debt to the tune of Rs.10,000 crore and owns some leading brands like Nutrela, Mahakosh, Sunrich, Ruchi Start and Ruchi Gold. Larger food companies like Adani Wilmar and Godrej Agrovet have been looking at strategic buys from the NCLT process to spruce up their production and distribution networks.
The all-important 27th meeting of the GST Council is scheduled on 04th May and one of the key items in the agenda will be the idea of simplified GST returns. For the month of April, the GST collections crossed the targeted number of Rs.1 trillion and the government seriously believes that simplifying the returns filing process may give a further boost to collections. One of the additional changes will be that nil return filers will be allowed to file returns once in a quarter rather than each month. One of the items on the agenda is also to convert GSTN into a fully government owned company.
In what may be good news for the liquidity situation in the Indian markets, the cash/GDP ratio may be approaching the pre-demonetization levels. The demonetization exercise had led to nearly 86% of the active currency in circulation being withdrawn and demonetized. Currently, the cash/GDP ratio stands at 11.3%, which is very close to the pre-demonetization levels in the range of 11.5-12%. The only concern for the government could be that despite the big thrust to digital money, the reliance of the Indian economy on hard cash continues. Increased cash may also be attributed to Karnataka elections.
The stock of Interglobe Aviation went 20% down on Thursday before bouncing back and settling just 10% lower. While the profits of the company did fall due to the frequent engine shutdowns and a below capacity operation, the big worry for Interglobe is that the spread between the RASK and the CASK has also shrunk. With crude oil at $74/bbl, aviation stocks including Jet Airways and Interglobe have come under tremendous pressure. Analysts believe that aviation stocks may come under further pressure with the largest OPEC member, Saudi Arabia, projecting Brent Crude at $100/bbl.
At first glance, the SEBI stipulation on reclassification of mutual funds does not appear to have worked. It may be recollected that SEBI had stipulated 34 classifications in all; including 10 for equity funds, 16 for debt funds, 8 for hybrid funds and 2 for solution funds. Funds were asked to avoid duplication and if required modify the features of the schemes so that they can be merged into a single scheme. However, in terms of sheer numbers, this announcement has not been really instrumental in reducing the complexity of the number of mutual fund schemes. The number of schemes has actually gone up to 579 schemes in March 2018 compared to 571 in the month of September 2017. Interestingly, the top 5 funds by AUM still have well above 34 schemes with Reliance Fund leading at 54 schemes.
Net profits of Vedanta shot up by 81% for the March quarter on the back of an exceptional gain. This pertains to an earlier reversal of impairment in the oil and gas business. Revenues for the quarter were up by 23% at Rs.27,630 crore. This was largely helped by higher volumes in the aluminium, oil and copper business in India. EBIT margin actually narrowed by over 400 basis points from 32.7% to 28.4%. Vedanta is also planning a massive capital infusion of $1.5 billion during the year. Vedanta has been one of the big beneficiaries in the stock market due to the global rally in industrial commodities.
