Even as Emmanuel Macron committed $700 million for solar energy, he admitted that the world would require nearly $1 trillion worth of investments to achieve 1 terawatt (TW) of solar capacity by the year 2020. Macron also took a dig at the US for trying to exit the Paris Climate Accord which was the key to getting massive global investments into solar energy. The Paris Accord has been signed by 200 countries to limit the impact of greenhouse gases to 2 degrees Celsius. Macron was in India and addressed the conference jointly with Mr. Modi, where he emphasised on the regulatory and capacity hurdles.
The Nifty level of 10,200 will be crucial if the market strength has to be revived. The forthcoming week is likely to be a data heavy week with the inflation data and the IIP data likely to be announced during the week. The global overhang of the likely trade war triggered by the US is still a big issue and is not yet clear how the EU and China are going to react to the same. Canada and Mexico may be happy for being exempted from the import tariffs on steel and aluminium but it will also mean that they will have to eventually accept the American version of a revised NAFTA agreement.
A consortium consisting of Jet Airways, Air France – KLM and Delta Airlines are likely to make a bid for Air India. The government is expected to shortly invite Expressions of Interest (EOI) for the stake sale in Air India after classifying its debt into sustainable and unsustainable portions. While the current debt burden of Air India stands at Rs.50,000 crore, the acquisition is likely to expand the footprint of other airlines in India and abroad. The government will split Air India into 4 different units and then put up the company for sale. Air India will be the first and prestigious strategic sale for the government.
The RBI has initiated a special audit of state-run banks with specific focus on trade finance. This was necessitated after PNB was caught in the $2 billion scams where its own employees had issued fraudulent LOUs to Nirav Modi firms. According to the RBI, many of the wilful default cases are related to trade finance where the money is becoming hard to trace as it has moved abroad. Vijay Mallya, Nirav Modi and Mehul Choksi are all cases in point. Earlier, OBC and Bank of Baroda had also become victims of similar frauds using the trade finance route. Now loans above Rs.50 crore will require passports.
RBI deputy governor, S S Mundra, has propounded the idea of holding company model for state-owned lenders in India. However, Mundra ruled out privatization of state-owned banks at this point of time. One of the pre-conditions for the holding company concept will be to consolidate the PSU banks and reduce the number of PSBs from 21 to around 8. Currently, there is a lot of duplication among banking services in India especially among the large PSBs. This can be avoided and managed through consolidation. The idea of a holding company is to let the holding company be the vehicle for gradual reduction of government stake in these PSBs at a time when the business growth and the valuations are a lot more appropriate. The big challenge today is to get good valuations for state run banks.
Ultratech Cements of the Birla group has revised its bid for debt-laden Binani Cements after a consortium led by Dalmia Bharat emerged as the highest bidder. Ultratech has raised its bid for Binani Cements to Rs.7200 crore since the Dalmia-Piramal consortium was yet to get approval for its bid. Dalmia consortium had bid Rs.6350 crore for Binani Cements. Analysts are of the view that while the bid made by Ultratech is more aggressive than the bid they made for Jaypee Cements, one also needs to factor in that Binani has huge limestone reserves which can feed into the Brownfield expansion.
