The budget could further the agenda of building a new India and is expected to open the doors of opportunities to investors in financial markets across asset classes.

Union Budget 2019 is expected to set the tone for the Narendra Modi government 2.0 on July 5. Market participants will listen keenly to the announcements of the Finance Minister Nirmala Sitharaman as she presents the Union Budget for 2019. The interim budget presented on February 1 by the then Finance Minister Piyush Goyal hinted at continuation of the reforms agenda. The re-election of National Democratic Alliance in the Loksabha election with clear majority gives a clear path to the Narendra Modi-led government to act on the opportunity by accelerating the reforms process.

The budget should further the agenda of building a new India and is expected to open the doors of opportunity to investors in financial markets across asset classes. There is a wide belief that government must take some firm action to accelerate the economic growth and the fruits of economic development should be enjoyed by all strata of the society. No wonder, many are waiting for the Union Budget to see if their wishes would be fulfilled. Here are some of the wish lists from Union Budget2019.

Neil Parag Parikh, Chairman and CEO, PPFAS Mutual Fund.

Though the upcoming Union Budget may seem like a needless diversion from the ongoing Cricket World Cup for some, to many others it is still an event to be tracked closely and debated vigorously.

The current one, to be announced by a new Finance Minister holds out the hope that the dovish stance on monetary policy will be supplemented by a fiscal tailwind. The recent admittance of an economic slowdown and lack of job creation, in certain quarters have further bolstered this hope.

But are such expectations realistic? To me, it appears to be a stretch.

For one, large-scale deviations from the Budget announced last February are unlikely, given that we are midway through the year. Second, given that the new Finance Minister is still learning the ropes, she may prefer to open her innings with a staid Budget.

Given the current milieu, I expect that there may just be some tinkering around the edges. These could manifest as:
Some reclassification/re-ordering of GST categories for consumer-facing industries, which are facing softening demand (Such as automobiles and some FMCG firms).

The aim would be spurring demand on the back of price-cuts. The recent tirade against anti-profiteering could be viewed as a nudge to manufacturers that they must pass on all ensuing benefits.

A small increase in the income tax-exemption limit or minor changes in the slabs.

Measures to encourage spending on infrastructure (more than measures, we need better accountability regarding timely project completion).

Measures to provide some respite to the rural sector (Perhaps on the agricultural front or by announcing easier credit terms)

On the whole, tepid tax collection figures in the recent fiscal year will reduce the latitude for large-scale tax cuts.

Also, given that this Budget immediately follows the Elections, there may not be any political angle to it. Consequently, I feel the announcements may be more tactical, aiming to cause as little disruption as is feasible.

In a nutshell, my expectations are decidedly more conservative than those of many others. However, I would not mind being proven pleasantly wrong on Budget Day.

https://www.moneycontrol.com/news/business/personal-finance/budget-2019-here-are-the-financial-services-industry-bigwigs-expectations-4155071.html

The consortium of 30 lenders led by state-run Union Bank of India, which includes banks and other financial institutions, may also consider conversion of debt into equity

Lenders of troubled NBFC DHFL are scheduled to meet on Monday, seeking a solution for the Rs 90,000 crore debt that is owed to them.

The consortium of 30 lenders led by state-run Union Bank of India, which includes banks and other financial institutions, may also consider conversion of debt into equity that can make them the largest shareholder in the mortgage lender, sources said over the weekend.

The debt recast plan will be arrived at as per the RBI’s revised circular on resolving asset quality stress, they said.

The circular gives lenders a 30-day period since default to arrive at a debt recast plan.

DHFL’s promoter group, the Wadhawan family which owns over 39 per cent of the firm, has been looking at various ways of coming out of the stress which first came to light late last year following the IL&FS crisis.

These include selling stakes in group companies, while they are also reportedly fine with giving up half of their stake in the listed company.

According to earlier media reports, an alternative investing firm has evinced interest in the company’s wholesale book, at least two private equity funds are interested in buying stake in DHFL.

The DHFL debt has been downgraded by multiple rating agencies as the stress kept building up, while the company has also deferred announcement of quarterly results last week.

The RBI blames the crisis on asset liability mismatches at firms like DHFL, which typically borrowed short for creating long term assets.

The banking regulator has vowed multiple times to do everything possible to ensure systemic financial stability.

In last week’s financial stability report, it said the impact of a big housing finance company going down will be the same as a large commercial bank going down.

https://www.business-standard.com/article/pti-stories/lenders-of-troubled-dhfl-to-meet-on-mon-119063000444_1.html

Tata Group will focus on assets it can use to scale up & tap the gap created by the exit of Jet.

The Tata Group plans to bid for some assets of Jet as it undergoes bankruptcy resolution, said people with knowledge of the matter. It had told bankers as much when they sought to interest the group in a rescue plan before the carrier was sent to bankruptcy court. The focus for the Tata Group will be assets it can use to scale up and tap the gap created by the exit of Jet, officials said.
“We were reluctant when it was on the books of the company. Now that it’s with NCLT (National Company Law Tribunal), one can look at the bilateral rights and whatever is available in terms of fleet to quickly grow our business,” said one of the persons. “There is no value in buying the company anyway.”

The Tata Group had withdrawn from talks for a possible acquisition in November 2018. The board of group holding company Tata Sons advised caution due to worries over the Naresh Goyal promoted airline’s liabilities and ownership. The Tata Group has a presence in aviation through budget airline AirAsia India Pvt Ltd and full-service carrier Vistara, a joint venture with Singapore Airlines Ltd.
“With demand evidently remaining unfulfilled, we like other airlines have sought to get more aircraft into our fleet, including those grounded at present,” said Tata SIA Airlines chairman Bhaskar Bhat. “Acquiring (Jet’s) Boeings makes our otherwise A320 Airbus fleet asymmetric but it will at least service the gap even if temporarily.” On June 20, the NCLT admitted an insolvency appeal from State Bank of India (SBI) against Jet after the airline repeatedly defaulted on loan repayments.

Slots Allocated on Temporary Basis

Grant Thornton partner Ashish Chhawchharia was appointed insolvency resolution professional for Jet. A person in the know said that while executives from Etihad Airways, the Hinduja Group and the newly formed consortium of UK-based Adi Partners and the airline’s employees have met Chhawchharia, no executive from the Tata Group has approached him yet.

The government has farmed out Jet’s slots to its rivals as its grounding in April has created a shortfall in capacity and fares have soared. The ministry of civil aviation has allowed Jet’s rivals to use its slots till the end of December, around when the NCLT wants the insolvency procedure completed. A new investor will get back the slots if it can get Jet flying again. Jet also has a fleet of 14 planes — mostly wide-bodied Boeing 777s and Airbus 330s. The start of the bankruptcy process has stalled efforts by financers and lessors to repossess Jet’s planes.

“Long before NCLT, the employees and the planes were steadily being depleted from the company,” said an executive. “The government also started reallocating the slots to various airlines. Now very little is left in Jet Airways to buy. Even the international bilateral rights will slip away from an airline that has no aircraft to use them.”

The Tata Group sees demand rising in such a situation, said people with knowledge of the matter.

“We have been requesting our suppliers to hurry up with deliveries,” said one of them. “We are clearly expanding our network aggressively and have also got international rights.”
Tata Sons and Singapore Airlines have infused a combined Rs 900 crore into Vistara in the past few months, bolstering efforts by the carrier to improve its financial health and take delivery of new planes from Airbus SE and Boeing Co. Tata Sons pumped in Rs 459 crore fresh equity by subscribing to two rights issues, one in December and the other in March.
Vistara recently obtained government approval to launch international flights. It currently operates 730 flights a week to 24 cities in the country using a fleet of 23 single-aisle Airbus A320 and six Boeing 737s earlier flown by Jet. The airline has been slow to expand and currently accounts for just 5% of the domestic market. It has approvals to start international operations to Singapore, Bangkok and Dubai. It has stalled plans to start maiden international flights to Colombo after the Easter Sunday blasts in the island-nation.

It plans to add about 60 planes, including 10 Boeing 787 Dreamliners in the next five years through a mix of direct orders, leases and options. The rest will be Airbus A320neos and A321neos.
AirAsia India aims to start international operations by October this year and is looking to fly to Sri Lanka, Thailand and Kuala Lumpur. The airline recently received its 21st plane and aims to take the fleet size to 40 aircraft in a year. It operates 164 daily flights.

https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/with-jet-in-nclt-hangar-assets-on-tata-radar/articleshow/70017183.cms

Firm plans to raise Rs 7,000-8,000 cr of fresh equity capital

The promoters of Dewan Housing Finance Corporation (DHFL) are willing to give up their controlling stake to global private equity (PE) funds, according to people in the know. They said the firm is looking to raise Rs 7,000-8,000 crore of fresh equity capital, at a substantial premium to the market price.

The Wadhawan group controls 39.21 per cent and was earlier looking to reduce its stake by half and retain joint control of the firm with PE investors. The market capitalisation of the company, at the close of trade on Wednesday, was Rs 2,366 crore. The promoters are in talks with three PE funds, which include AION Capital (a JV between ICICI Venture and Apollo Global Management), True North, and KKR. However, a deal is expected to fructify only in a couple of months.

DHFL is also in talks with banks and other funds to sell close to Rs 6,000 crore of its wholesale loan portfolio, on which it will get a fee and margin from the buyer. This provides the firm a cushion for paying off about Rs 6,500 crore — due as principal amount of the non-convertible debentures — in July, August, and September. The outgo, said the people cited above, stands at slightly over Rs 2,000 crore a month.

People close to the negotiations said: “The promoters say they will do whatever they can to ensure fresh infusion of equity capital, and if that means giving away controlling stake, so be it. Only PE funds have the cash and can raise ECBs (external commercial borrowings), without depending on banks to get more funds.”

DHFL has sold as much as Rs 41,000 crore of its Rs 78,000-crore retail loan portfolio to banks and others, bringing the same down to Rs 37,000 crore. The proceeds have been utilised in making repayments. Similarly, its total wholesale loan portfolio of Rs 30,000 crore will also reduce by over Rs 9,000-10,000 crore after the proposed sale. It had already sold its wholesale loan portfolio of around Rs 4,000 crore earlier.

DHFL and its promoters have been selling assets to raise cash for a while. The promoters, as well as the firm (which held the entire stake in Avanse Financial), received a nod to sell the stake to Warburg Pincus for Rs 1,200 crore. It has also sold its stake in Aadhar Housing Finance Corporation to Blackstone for Rs 800 crore. The firm on Tuesday paid 40 per cent of its Rs 375 crore to pay on its commercial papers. However, people in the know said it is expected to complete the entire repayment over the next few days.

https://www.business-standard.com/article/companies/dhfl-promoters-ready-to-sell-controlling-stake-to-global-pe-funds-119062601337_1.html

Pune saw 10-fold increase in PE inflow to $237 million in January-June period of this year

Private equity investment in real estate rose 26 per cent in the first half of this year to $3.9 billion (nearly Rs 28,000 crore) driven by higher inflow in commercial and warehousing projects, according to property consultant Colliers.

PE inflows from foreign investors increased 28 per cent during the first six months of the 2019 calendar year.

“During the first six months of 2019, the real estate sector witnessed private-equity (PE) inflows of $3.9 billion (Rs 27,767 crore), eclipsing the first halves of previous years,” Colliers International said in a report.

The increase in PE inflow signals rising confidence of institutional investors in India’s premium office spaces, retail properties and warehousing sector, it said.

“Foreign funds remain active in the real estate market, with inflows from such investors rising 28 per cent in H1 2019. While foreign funds continue to be active in the commercial office space, they are also investing into the logistics sector,” the report said.

“The sector is at an inflection given the 3Rs – Reforms, REITs, and Results of the recently concluded elections. The year 2019 will see the bulls at play, with phenomenal capital influx in the office and logistics space,” said Suresh Castellino, Executive National Director, Capital Markets & Investment Services at Colliers International India.

Mumbai attracted maximum (27 per cent) of the total PE inflows, garnering around $1.05 billion of investments.

Pune saw 10-fold increase in PE inflow to $237 million in January-June period of this year.

During the first six months of the year, investments in commercial office assets accounted for 42 per cent share of total investments. Investors pumped in $1.2 billion into the retail sector, accounting for 31 per cent share.

“We foresee the current year to create a new record for investments in real estate, with investors viewing retail and logistics assets favourably in addition to commercial office assets,” said Megha Maan, Senior Associate Director, Research at Colliers International India.

https://www.business-standard.com/article/pti-stories/pe-investment-in-real-estate-up-26-pc-at-rs-28-000-cr-during-jan-jun-2019-report-119062600367_1.html

Reliance Infrastructure has won a Rs 7,000-crore contract to develop the Versova-Bandra Sea Link project from the Maharashtra State Road Development Corporation (MSRDC), the infrastructure development company said in a press release.

The project will be developed in partnership with Italy-based construction company, Astaldi.

Versova-Bandra Sea Link is a marquee project stretching across 17.17 km, which is three times the length of the Bandra-Worli Sea Link, which stretches 5.6 km. Reliance Infrastructure has 60 months to deliver the project, as per the contract.

Also read: Versova-Bandra Sea Link to reduce travel time from 90 minutes to 10 minutes! Reliance Infra bags project

Reliance Infrastructure has already completed the work related to soil investigation, in partnership with Fugro, and engineering design in partnership with Lebanese company Dar Al Handasah, the release said.

https://www.financialexpress.com/infrastructure/reliance-infra-bags-rs-7000-crore-versov-bandra-sea-link-project/1620349/

Coca-Cola Atlanta office is leading the talks to acquire a substantial stake in the coffee chain

The world’s largest beverage company, Coca-Cola, has begun preliminary talks for a substantial stake buy in Cafe Coffee Day 10 months after it acquired UK-based Costa Coffee for $5.1 billion. The discussion with the Bengaluru-based company, promoted by VG Siddhartha, who exited information technology firm Mindtree earlier this year, is being led by the Atlanta office of the beverage major, persons in the know said.

T Krishnakumar, president and chief executive officer, Coca-Cola India and South West Asia, is currently in Atlanta and is involved in the negotiation, it is learnt. A Coca-Cola India spokesperson said the news about a possible acquisition was speculative in nature and that the company had no comment to offer at this stage. Cafe Coffee Day too declined to comment.

Coca-Cola has been looking to make inroads into the Rs 2,500-crore domestic coffee retail market in line with its global strategy of diversifying into non-carbonated drinks. While the Costa Coffee acquisition last year was intended to help the company do just that, an impediment has been the franchise agreement that Costa’s previous owner Whitbread had with billionaire-bottler Ravi Jaipuria in India.

Jaipuria’s Devyani International continues to run around 50 stores of Costa Coffee in the country, unable to work out a deal with Coca-Cola for his exit out of the franchise agreement. Jaipuria was not immediately available for comments on the matter.

For Cafe Coffee Day, an acquisition by Coca-Cola will mean much-needed funds to reduce the debt on the books of parent Coffee Day Enterprises. Cafe Coffee Day is owned by Coffee Day Global, a subsidiary of Coffee Day Enterprises.

As on March 31, 2019, Coffee Day Enterprises’ total debt stood at Rs 6,547 crore, two-and-a-half times its networth of Rs 2,529 crore. Its market capitalisation after Wednesday’s closing price stood at Rs 4,732 crore.

https://www.business-standard.com/article/companies/coca-cola-in-talks-to-pick-stake-in-cafe-coffee-day-after-pocketing-costa-119062700063_1.html