Tata Group to Consolidate Airlines Under a Single Entity
Almost 73 years after Air India (formerly Tata Airlines) was taken away from the Tatas, the Tatas may be again chasing their dream of a consolidated national airline. The bidding for Air India is not over and Tata Group, Ajay Singh of SpiceJet and few PE funds are in the fray.
The verdict is not yet out, but the market is excited about the likely impact of a consolidated Tata airline. After the demise of Kingfisher and Jet Airways, there has been no competitive airline market in India.
If the Tatas win the bid for Air India, they could look at consolidation of airline interests under one head. Tata Sons currently holds 83.67% in Air Asia with the balance 16.33% held by Air Asia Malaysia Bhd, which plans to exit India fully by May 2022.
This stake in Air Asia India will be sold to the Tatas for $18 million. Of course, in the case of Vistara, Singapore Airlines owns 49% with Tata Sons holding the balance. Here the buy-in of Singapore Airlines will be required.
Why does the consolidation make business sense? If you look at the market share of airlines in India, the 3-month rolling average is 56% for Indigo, 12.5% each for Air India & Spice Jet, 9% for Vistara, 5.8% for Air Asia and 3.2% for Go Air.
Apart from Indigo, which leads the Indian market with its LCC model, other market shares are too dispersed. If the Tatas combine Vistara, Air Asia and Air India (subject to winning the bid), then the Tatas get a combined 27-28% of the Indian aviation traffic.
This puts them in a sweet spot to take on the leader, Indigo Airlines. Also, Tata Airlines will be the only airline to offer the complete bouquet of LCC and full service airlines under a consolidated banner. As part of its plan, the Tatas would like to get the buy-in of Singapore Airlines and also get them to partner the combined venture.
When Cathay Pacific, Thai Airways and Singapore Airline wanted to benchmark themselves on airline service standards 50 years ago, it was Air India, under JRD Tata, that they turned to. It is perhaps time to revive some of the glory.
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Paradeep Phosphates gets SEBI approval for IPO
The Rs.1,255 crore fresh issue plus OFS, for which Paradeep Phosphates had filed the DRHP with SEBI in August 2021, has got SEBI approval for the IPO. The next step would be to factor in any comments of SEBI and then file the Red Herring Prospectus (RHP) with the Registrar Of Companies (ROC). The issue date is normally finalized after the RHP filing.
Paradeep Phosphates is currently 80.45% owned by Zuari Maroc Phosphates Private Limited and 19.55% owned by the Government of India. The overall issue will consist of Rs.1,255 crore fresh issue by the company to raise capital as well as an offer for sale of 12 crore shares by the existing shareholders viz. Zuari Maroc and Government of India.
As per the DRHP filed with SEBI, the government of India will offer 11.25 crore shares while Zuari Maroc Phosphates will offer 75 lakh shares as part of the offer for sale portion. The government stake will substantially reduce in this OFS and will add to its disinvestment receipts for fiscal year 2021-22. India has a divestment target of Rs.175,000 crore for FY22.
While the OFS portion will not alter the equity capital of the company, the fresh issue portion of Rs.1,255 crore will lead to expansion of the equity base and the dilution of earnings per share. The fresh issue proceeds will be used by the company for acquiring a fertilizer facility in Goa and repaying some of its debt to deleverage the balance sheet.
Paradeep Phosphates manufactures complex fertilizers like di-ammonium phosphate (DAP) and three grades of Nitrogen, Phosphorus, Potassium (NPK) fertilizers. The fertilizers manufactured by Paradeep Phosphates are currently marketed under the brands of “Navratna” and the Jai Kisaan Navratna”.
The current year has been a solid year for the IPOs and looks all set to better the tally of 2017. Also, there are mega issues like Policybazaar, Nykaa, Paytm and LIC that are slated to hit the IPO market during the current fiscal.
How to Check Allotment Status of Paras Defence & Space Technologies IPO
The Rs.170.78 crore of Paras Defence & Space Technologies IPO, consisting of a fresh issue of Rs.140.60 crore and an offer for sale (OFS) of Rs.30.18 crore, was subscribed 304.26X overall at the close of bidding on 23rd September. The basis of allotment will be finalized by the end of Tuesday, 28th September. If you have applied for the IPO, you can check your allotment status online.
Check:- Paras Defence & Space Technologies IPO Subscription Day 3
You can either check your allotment status on the BSE website or the website of the IPO registrar, Link Intime.
Here are the steps:
Checking the allotment status of Paras Defence & Space Technologies on BSE website
Visit the BSE link for the IPO allotment by clicking on the link below
Once you reach the page, here are the steps to follow:
I) Under Issue Type – Select Equity Option.
II) Under Issue Name – Select Paras Defence & Space Technologies from the drop down box.
III) Enter the Application Number exactly as in the acknowledge slip.
IV) Enter the PAN (10-digit alphanumeric) number.
V) Once this is done, you need to click on the Captcha to verity that you are not a robot.
VI) Finally click on the Search Button.
The allotment status will be displayed on the screen in front of you informing about the number of shares of Paras Defence & Space Technologies allotted to you.
Checking the allotment status of Paras Defence & Space Technologies on Link Intime (Registrar to IPO)
Visit the Link Intime registrar website for IPO status by clicking on the link below:
This dropdown will only show the active IPOs, so once the allotment status is finalized, you can select Paras Defence & Space Technologies from the drop down box.
I) There are 3 options:
a) You can either access the allotment status based on PAN
b) Application Number
c) DPID-Client ID combination.
II) Select the appropriate option you want to use and enter the details (PAN / Application Number / DPID-Client ID)
III) Finally, click on the Search button
The IPO status with number of shares of Paras Defence & Space Technologies allotted will be displayed on the screen.
CMR Green Tech Files DRHP with SEBI for Proposed IPO
CMR Green Technologies, a metal recycling company, has filed the DRHP with SEBI for its proposed IPO. According to the draft red herring prospectus (DRHP), the IPO will consist of Rs.300 crore worth of fresh issue and an offer for sale (OFS) of 3.34 crore shares held by promoters and early investors. The IPO is subject to SEBI approval.
The OFS shares will be offered by four members from the promoter group and one early investors. The OFS break-up would be approximately as under.
Name of Shareholder
Number of Shares offered
Gauri Shankar Agarwal
34.33 lakh shares
33.45 lakh shares
30.09 lakh shares
30.09 lakh shares
Global Scrap Processors
199.00 lakh shares
Data Source: DRHP
The fresh issue portion of Rs.300 crore will be largely utilized to repay the debt of the company as well as for general corporate purposes. The company is planning a Pre-IPO placement of shares worth Rs.60 crore to select institutional and HNI investors. If the placement is successful, the fresh issue size will be reduced proportionately.
With the focus on green technologies, there is a greater focus on the effective utilization of scrap. CMR Green Technologies is primarily focused on recycling aluminium. This process entails processing of aluminium based scrap metal to make aluminium alloys. The output is normally supplied, either in liquid form or in the form of solid ingots.
Its aluminium recycling business and the zinc alloys business is currently spread across 12 manufacturing facilities in India. The thirteenth such facility is being set up in the state of Gujarat, which will be a state of the art cold refining plant. This will not only create operational efficiencies but also reduce the logistics costs in the process.
The book running lead managers or BRLMs for the issue will be ICICI Securities, Axis Capital and JM Financial. The dates will be finalized post the approval received from SEBI.
SEBI Plans to Tighten Broker Net Worth Requirements
In the last couple of years there have been more than 25 cases of major broker defaults. There have been some high profile names like Karvy, Anugrah Broking, Arcadia Stocks, Bezel etc. In a number of these cases, the trading license was cancelled by the stock exchanges after the brokers were found to be illegitimately pledging client shares to raise funds.
To address the issue of broker defaults and to protect the interests of the small investors, SEBI now plans to hike the broker net worth requirements. While, this may not address all the challenges, it will at least ensure that well capitalized serious players will remain in the interest. That way, the customers will not have to worry about the safety of their shares.
Currently a Professional Clearing Member (PCM) or a Trading cum Clearing Member (TCM) requires a net worth of Rs.3 crore for clearing transactions in cash market. If they also clear transactions in the F&O market, then the net worth requirement doubles to Rs.6 crore. Going ahead, this number is likely to be increased manifold.
SEBI has now proposed that the base net worth requirements for PCM and TCM be raised in tranches. For example, the base net worth requirements will be raised to Rs.25 crore by Oct-22 and increased further to Rs.50 crore by Oct-23. Brokers may have to show higher variable net worth if 10% of average client balance retained exceeds Rs.50 crore.
One of the justifications given by SEBI for this move is that the current limits were set about 20 years ago. In the last 20 years, the capital markets have changed drastically in terms of size, breadth, institutional participation and complexity. Also, in the light of the proliferation of the number of trading accounts in the last one year, SEBI has called for this move.
While the larger brokers are already well capitalized, this move will actually impact the small and mid-sized brokers. The smaller brokers have remonstrated that this would push most of them out of business. However, SEBI is right that they cannot afford another big default in the stock markets, and prevention is always better than cure.