Reliance Capital (RCap), with a debt of about £3.5 billion across the group, has been downgraded to ‘default’ rating by CARE Ratings because of a day’s delay in payment on some of its bonds. Since mutual funds have very low exposure to the papers issued by the Anil Ambani-promoted company, the fund industry is mostly insulated from the default, top industry officials said. Rcap said that the delay in payment of interest was because its bank had a technical glitch on September 9, the day interest payment was due. And the payments were completed to the satisfaction of its lenders on September 11, the next working day. It also blamed CARE for not taking that into account the technical issue the company had faced as it downgraded the group’s holding company for all financial sector activities by eight notches, from ‘BB’ to ‘D’. CARE had arbitrarily disregarded the confirmation provided by independent agencies “that established the alleged delay was on account of a technical glitch in bank servers, while funds had duly been arranged on the due date,” the intimation to the exchanges said.
FPIs withdraw £419.3 mn from capital mkts
Foreign investors have pulled out a net sum of £419.3 million from the Indian capital markets in September so far, but the trend is expected to reverse on the back of fiscal relief measures announced by the government, experts said. The Centre slashed corporate tax rates by around 10 percentage points and said the enhanced tax surcharge will not apply on capital gains arising from sale of any security, including derivatives in the hands of FPIs. “The measures will act as a catalyst for supporting the slowing investment rate, boost corporate earnings, improve aggregate demand as corporates pass on some of the benefits to consumers and attract FPI flows into India,” said Vijay Chandok, MD and CEO, ICICI Securities.
Zee stake sale may face arbitration order hurdle
The interim order in the arbitration between Essel Group main promoter Subhash Chandra and Indiabulls could potentially complicate the case for fund houses that are yet to get about £330 million from Chandra’s Essel group. Although Essel Group said that the shares they are selling are already pledged and the order relates to shares not pledged, but fund houses are still scouting for clarity on the matter. In a related development, fund houses that had in February this year entered into an agreement to not sell Zee Entertainment shares after Essel Group delayed payment to them on loans Chandra had taken by pledging the shares of Zee Entertainment, may extend the last date beyond September 30. Under the earlier agreement signed between lenders and Essel Group, it had till this month-end to pay to mutual funds and NBFCs.
Minister confident of a Gujarati setting up pharma unit in J&K
Mansukh Mandaviya, the Union Minister of state for shipping, chemicals and fertilizers, while addressing the businessmen at the Gujarat Chamber of Commerce & Industry (GCCI) said that a Gujarati will set up the first pharmaceutical unit in Kashmir. Mandaviya, who was speaking on 'Business opportunities in Jammu & kashmir' also praised the entrepreneurial skills of Gujaratis. “I am confident… I also look after the pharmaceutical department, as well as chemicals and petrochemicals… the first pharmaceutical unit (in Kashmir) will be set up by a Gujarati,” said Mandaviya. Pointing out how Gujarati firms were the first to take advantage of the relaxations offered by Himachal Pradesh to pharmaceutical industries a decade ago, the minister said, “Today half of the industries (in HP) are ours.”
