Sterlite Power plans to invest close to Rs.66,000 crore ($10 billion) to expand its power business in the domestic and the international markets. Sterlite Power sees immense potential in the transmission business especially after the government opened it up to private players. The company had earlier acquired a 28.4% stake that Standard Chartered Private Equity held in its transmission business. Traditionally, only power generation was opened up to private players but with the transmission business also being opened up, there is likely to be a beeline of big players.
In a fairly ambitious estimate, the government hopes to net Rs.40,000 crore as revenues from the 10% LTCG. That is obviously an extrapolation based on the LTCG of Rs.367,000 crore in the previous financial year. However, the imposition of the 10% tax will not only change the behaviour of investors but also the net impact will be much smaller when the set-off of losses and the carry forwards are also considered. The tax on LTCG was reintroduced in the Union Budget 2018 if the long term gains on equities and equity funds for the year exceeded Rs.1 lakh.
As the deadline for submitting final bids for Bhushan Steel approached there were apparently only 2 investors left in the fray. The first was Tata Steel and the other was a joint venture of JSW Steel and a fund of the Piramal Group. The final bids will be opened by the resolution professional on Tuesday. JSW Steel was originally supposed to bid along with JFE Steel of Japan but had to replace them with the Piramal sponsored fund after JFE walked out of the deal. Bhushan Steel has total debt of Rs.56,000 crore and is one of the largest and most prominent cases admitted for resolution under IBC.
In what could be great news for the Mumbai property market, Godrej Properties just concluded an Rs.700 crore worth of property deals and sold 2 lakh square feet of property in its iconic tower in Bandra Kurla Complex in Central Mumbai. Prime rent yield assets have been in great demand and commercial property demand has been buoyant even as residential demand has remained slack. This refers to the 9 month period till December 2017. Incidentally, Godrej has been able to sell even residential properties much more successfully compared to other realty firms in and around Mumbai.
A day after the Union Budget announced its ambitious National Health Plan to cover 10 crore marginal families with a health insurance cover of Rs.5 lakhs, questions are being raised about the allocation of a mere Rs.12,000 crore. The assumption is a floater premium of Rs.1200 per family which apparently is grossly inadequate when the concomitant risks are considered in implementing a program of such magnitude. The centre will put in 60% of the funds and the respective states shall chip in with the balance 40%. However, experts in the insurance industry believe that a premium assumption of Rs.4000-5000 per annum would be a more realistic assumption. That still leaves a huge gap to be filled which will have to be done through public-private partnerships with the insurance companies.
There is good news on the credit off take front once again. For the fortnight ended 19th January 2018, the RBI reported a 10.5% growth in credit off take at Rs.81.71 trillion. Even in the previous fortnight, the RBI had reported credit growth of 11.11%, although this could be partially due to the credit crunch in late 2016 due to the aftermath of demonetization. The credit growth is sharply higher than the 5.1% growth in deposits indicating a positive trend for the C/D ratio. In addition, the Rs.88,139 crore bank recap program will also open the floodgates for credit to the tune of Rs.500,000 crore.
