| | | Question of the Week This week’s newsmaker was Maruti chairman Ravindra Chandra Bhargava. Which equally well-known public sector undertaking’s loss was Maruti’s gain when he was brought in to steer the fortunes of the Indian car maker? | | |  | Here's a great value proposition A digital subscription to Mint premium can be yours at just ₹213 per month. Check out the convenient and affordable plans we have for you here. | | Good Morning | | The News in Summary The Hinduja and Torrent group are engaged in a bidding war as part of the auction to buy the assets of the bankrupt Reliance Capital, with the former’s much higher upfront cash offer seeming to weigh the bid in its favour. Meanwhile, Maruti chairman R.C. Bhargava repeated his warning that high tariffs are holding back car penetration in the country, while Yes Bank, in its battle with Subhash Chandra’s Dish TV, sprang a surprise by transferring its 24.19% stake in the company to JC Flowers Asset Reconstruction Co. Elsewhere, Reliance Retail sewed up its deal to buy German retail giant Metro AG’s India business. Finally, the National Company Law Appellate Tribunal (NCLAT) upheld the order of penalty imposed by the Competition Commission of India (CCI) on United Breweries and other liquor companies. | | | | Auction of Reliance Capital Triggers Fierce Bidding War Just days after the Torrent Group emerged as the highest bidder in the first phase of the auction for acquiring the assets of debt-laden Reliance Capital, it was trumped by a higher offer from the Hinduja group. While Torrent bid Rs 8,640 crore for the bankrupt Anil Ambani Group company, Hinduja, which had initially offered Rs 8,110 crore, upped its bid to Rs 9,000 crore, including upfront cash of Rs 8,800 crore, significantly higher than the Rs 4,000 crore cash offered by the Torrent. Another contestant, the Oaktree and Cosmea-Piramal consortium, eventually withdrew from the race at the last minute. The bids are well below the liquidation value of around Rs 13,000 crore that independent valuers Duff & Phelps and RBSA had estimated for the company. The committee of creditors overseeing the resolution process will now examine the final details of the plans submitted by the two bidders before deciding on the winning bidder. Last December, the Reserve Bank of India (RBI) referred Reliance Capital to the Mumbai bench of the National Company Law Tribunal (NCLT) after it superseded its board and seized control of the company. This came after bondholders, citing challenges faced in the asset monetization process and non-cooperation, urged the central bank to do so. | | | | It is sad to see Reliance Capital go under the hammer. How different was the mood when its chairman Anil Ambani spoke at the company’s AGM just seven years ago: | | | | Maruti Chairman Says High Taxes Holding Back Car Industry Growth R.C. Bhargava, chairman of Maruti Suzuki India Ltd, lent his voice to the chorus of criticism about India’s tax regime from carmakers when he blamed government policies for slowing industry growth. Speaking at an event, the influential boss of the country’s biggest carmaker said, “government policies are such that they treat cars as luxury products that need to be heavily taxed.” The 28% GST on all cars, including Maruti’s lowest-priced models, has restricted car ownership in India to just 7.5% of the households, way below that in China. Other car makers, including Toyota and, more recently, Tesla, have flagged India’s high tariffs as a deterrent. With demand coming back after the pandemic-period slump, there is a waiting period of up to nine months for some of Maruti’s models though cost pressures are forcing car makers to hike prices. Maruti posted a fourfold increase in net profit for the second quarter of FY23 on the back of healthy double-digit growth in sales. | | |  | | | | | | | | Yes Bank Passes on its Dish Headache to JC Flowers ARC In a fresh turn to the 16-month-long Yes Bank-Dish TV battle, the private sector bank transferred its entire 24.19% stake in the satellite TV company to JC Flowers Asset Reconstruction Co, along with the underlying loan given to Subhash Chandra’s Essel group companies. With Essel failing to service the Rs 5,000 crore of loans given by Yes Bank, the private lender had invoked the 24.19% of Dish TV’s shares pledged with it. Yes Bank’s logic for transferring the shares to JC Flowers is that while it has several constraints when it comes to recovering the loans, an ARC has the flexibility to look at different options, including taking over the company. As part of its own restructuring, the bank is working on transferring bad loans worth Rs 48,000 crore from its books to the asset reconstruction company, and the transfer of Dish’s shares will give it more flexibility to proceed with the recovery process. | | | | Reliance Retail Closes Deal to Buy Metro AG As expected, Reliance Retail Ventures Limited sealed a deal to acquire German firm Metro AG’s wholesale operations in India for Rs 2,850 crore. The acquisition of the wholesaler, which currently operates 31 large format stores across 21 cities, is expected to strengthen the position of Reliance Industries’ subsidiary in India’s rapidly growing retail sector. Reliance emerged as the winner in the race to buy Metro, which initially included contestants like the Thai-conglomerate Charoen Pokphand Group and Amazon. Eventually, the Indian conglomerate was chosen based on its ability to get quick regulatory approvals and safeguard the interests of employees. Metro generated sales of Rs 7,700 crore for the financial year 2021-22, its best sales performance since it launched its India operations in 2003. | | |  | | | | Appellate Court Upholds CCI Penalty for UB In the midst of good times, United Breweries, which reported a 67% growth in its consolidated net profit second quarter ended September 30 on the back of strong volume growth, suffered a setback with NCLAT upholding the order of penalty of Rs 751.83 crore imposed by Competition Commission of India (CCI). In September 2021, the competition watchdog found UBL, Carlsberg India and SABMiller India Ltd guilty of alleged cartelization for having engaged in price coordination, supply restrictions and market sharing in different states. UB said it would evaluate filing an appeal against the NCLAT judgment before the Supreme Court. | | | | Last Word Paytm boss, Vijay Shekhar Sharma, is finding out that investor confidence, once lost, can be very difficult to regain. Nothing, it seems, can arrest the continuous fall in the share price of One 97 Communications Ltd. Even Sharma’s statement at a banking event that there would be no more cash burn in the business couldn’t stop its stock price from dropping another 10%. At the event, Sharma asserted that his company was far ahead in re-setting its ambition on controlling spending and its cash burn. That echoes what CLSA said last month when it upgraded Paytm on the grounds its cash burn could end in another four to six quarters. Last month, Paytm, which posted higher Q2 losses of Rs 571.5 crore even as its revenue was up 76%, said it would become free cash flow positive in the next 12-18 months. However, despite such positive vibes, investors aren’t yet willing to forgive the company’s disastrous post-listing performance. | | |  | | | | Answer to the Question An IAS officer from the 1956 batch, R.C. Bhargava, was drafted from Bharat Heavy Electricals Ltd to join Maruti as its marketing director in 1981. | | | Do you have any questions? Send in your queries to sundeepkkhanna@gmail.com Were you forwarded this email? Did you stumble upon it online? Sign up here. | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Nirmalya Dutta. Send in your feedback to newsletters@livemint.com. | | | | | Download the Mint app and read premium stories | | | | | | View in Browser | Privacy Policy | Contact us You received this email because you signed up for Mint Top of the Morning or because it is included in your subscription. Copyright © HT Digital Streams. All Rights Reserved | | | | |
