Real estate major, DLF, plans to launch a QIP in the June to raise nearly Rs.4500 crore. The company has a target to become debt-free by March 2019 and this funding will help them defray part of their debt. The net debt of the company has come down substantially to around Rs.5513 crore and this should be substantially covering their debt burden. The debt level used to be around Rs.27,000 after DLF monetized its holdings in the commercial real estate business by selling a stake to GIC of Singapore. This QIP is also intended to bring the promoter stake to below the 75% mark.
According to data put out by CAMS, new SIP registrations were up by 92% in the financial year 2017-18. SIPs predominantly represent retail appetite for equity funds. There were a total of 1.15 crore fresh SIP registrations during the financial year. In fact, the monthly SIP inflows during the year were averaging at around Rs.7,000 crore compared to just Rs.3,000 crore in the previous financial year. Interestingly, equity mutual funds are no longer a cosmopolitan phenomenon with Tier-2 and Tier-3 cities contributing nearly 45% of all inflows into systematic investment plans (SIPs).
Foreign portfolio investors withdrew nearly $2.5 billion from Indian markets during the month of April 2018. Interestingly, the debt outflows were nearly twice the equity outflows. This clearly indicates that the worry is less on the valuation front and more on the crude oil, currency and the trade deficit front. In addition, the risk of a China-US trade war has also forced FPIs to adopt a more cautious stance towards investing in Indian paper. During the month of March, while equities saw inflows, debt continued to see consistent outflows. This could also be attributed to risk-off trades by FPIs.
In a rapid follow up to the Fugitive Economic Offenders Law, the government has notified rules to actually operationalise it on top priority. This is intended as a deterrent for economic offenders. The laws will expedite the recovery of dues through the immediate attachment and confiscation of properties of the defaulter. This is largely on the back of alleged fraudsters like Nirav Modi and Mehul Choksi who defrauded Indian banks and absconded to the US. This Ordinance gives powers to a Special Court under the PMLA, in case the fugitive offender refuses to return to India.
Reliance Industries proposes to shut down oil and gas fields in the KG-D6 Block in the Krishna Godavari Basin. This is in line with government guidelines for decommissioning facilities in the Bay of Bengal block where the output has reached its lowest level. Till date, Reliance has made 19 oil discoveries in the KG-D6 basin of which only 3 are fully operational as of now. The output on these fields has also dropped to 1/4th of the peak production. The timeline for the decommissioning has not been laid out but that is expected to be disclosed soon by the company. BP of UK holds 30% stake in the KG-D6 basin in tandem with the Reliance group.RIL is now developing 3 sets of discoveries viz. R-Cluster, Satellite Cluster and MJ Fields in that region. Initial gas is expected to flow from these discoveries by 2020.
In the aftermath of the sharp fall in the INR, the RBI has moved in to remedy the situation. RBI has now permitted foreign investors to invest in shorter tenure bonds which are likely to bring down the yields at the short end of the curve. This will also bring some relief for the INR, which is getting perilously close to the 67/$ mark. It may be recollected that Reliance Industries had recently raised short term paper at around 100 basis points higher than last year. The sharp rise in bond yields has been a global phenomenon. Maturity limits are removed for government bonds for FPI investment.
