Since the beginning of February, FPIs have been on a selling spree with net sales of over $1 billion. This is a stark contrast to the $2 billion of FPI money that flowed into India in the month of January 2018. With US unemployment getting closer to 4.1%, the chances of a rate hike as early as March is a distinct possibility. This has revived the possibility of funds shifting risk-off and out of the emerging markets. Some of the profit booking is also an outcome of FPIs booking out on their long term capital gains to make the best of the grandfathering clause which is valid till March 31st this year.
A total of 349 infrastructure projects have shown a total cost overrun of Rs.200,000 crore owing to delays in execution. The MOSPI currently directly coordinates infrastructure projects worth Rs.150 crore and above. This reflects a total cost overrun of around 12%. Another 302 projects had time escalations due to a variety of restrictive factors. The delays are a function of a variety of factors including delays in land acquisition, forest clearance, supply of equipment, funds constraints, and Maoist incursions in specific areas, legal cases as well as law and order situations in specific areas.
In the financial year 2018-19 a total of 8 PSU companies are expected to hit the capital markets which include marquee names like Hindustan Aeronautics and RITES Ltd. The government plans to sell 10% stake in HAL while the other divestments are yet to be finalized. The divestment program also includes Bharat Dynamics and IREDA. The government has set an aggressive target of Rs.80,000 crore which includes a mix of minority stake sale and strategic sales. Interestingly, Air India is one of the key strategic divestments during the year. Current year divestments are likely to exceed targets by 30%.
Even as the PNB fraud perpetrated by Nirav Modi and Mehul Choksi gets murkier, the ED has attached properties worth Rs.5674 crore of these defaulting promoters. Nirav Modi and Mehul Choksi have defrauded Indian banks to the tune of Rs.11,400 crore and they have also managed to skip town and fly out of India. It is all the more surprising as the investigations had been going on for quite some time now and there was no action taken on the erring companies. Even in the past, cases like NSEL saw attachment of properties but little progress by way of recovery of the defrauded money.
It now appears like Tata Steel may bag both Bhushan Steel and Bhushan Power and Steel under the Insolvency and Bankruptcy Code (IBC). Tata Steel had bid Rs.45,000 crore for Bhushan Steel and Rs.17,000 crore for Bhushan Power. This is substantially higher than the bid made by the other bidder, JSW Steel. While Bhushan Steel owes banks nearly Rs.56,000 crore, Bhushan Power owes another Rs.48,000 crore to the banks. Bhushan was a high priority case and was part of the first list put out by the RBI for urgent resolution. The Indian Banks Association (IBA) has already asked the banks to only negotiate with the highest bidder; Tata Steel in this case. How Tata Steel integrates this buy into their overall business model and manages the cultural differences remains to be seen.
The good news is that Indian digital spends could cross the $100 billion mark by the year 2020, largely driven by a combination of better bandwidth and cheaper smart phones. That means; the next round of digital demand explosion is likely to be largely driven by mobile transactions only. In absolutely levels, Indian spending levels are 1/3rd that of China and 1/4th that of the US. Only 20% of Indian shoppers spend a significant portion of their time online and that is going to increase in the coming years. The big growth in online is likely to come from semi-urban and rural areas
