Namaste! Aaj ka news roundup, Newswala style!

MARKETS

Markets: India's Sensex and Nifty 50 closed lower due to widespread selling and disappointing Q4 earnings, denting market confidence near record highs. The Sensex ended down 383 points at 73,511.85, while the Nifty 50 fell 141 points to 22,301.50, with 2,441 stocks declining.

BUSINESS

IIFL Finance grapples with liquidity crunch amid regulatory scrutiny

What happened

India's IIFL Finance is currently facing a liquidity crunch after regulatory constraints were imposed on its gold loan business by the Reserve Bank of India (RBI). This action followed concerns raised by the RBI regarding the supervision of IIFL Finance's gold loan portfolio. As a result, banks have become cautious about extending credit to the non-bank lender.

The impact of these restrictions is significant, with banks refraining from sanctioning new credit lines or disbursing funds from existing limits for IIFL Finance. This cautious approach has resulted in a liquidity squeeze for the company, affecting its ability to conduct business as usual.

Why it matters

The impact of this clampdown on IIFL Finance's operations is substantial, with an estimated impact of around 5 billion rupees ($60 million). Banks have ceased lending to IIFL Finance's gold and other businesses, further exacerbating the liquidity strain. This caution from banks has led to a halt in the sanctioning of new credit lines and disbursing from already sanctioned limits.

In response to these challenges, IIFL Finance has taken several measures to address liquidity concerns. Its major shareholder, Fairfax India, has agreed to provide up to $200 million in liquidity support. Additionally, IIFL Finance has raised 5 billion rupees through bonds and is planning a rights issue of shares to raise 12.72 billion rupees.

Zoom out

For IIFL Finance, navigating through this liquidity crunch will require strategic measures to restore confidence among lenders and stakeholders while ensuring regulatory compliance in its operations. It's notable that as of December 31, 57% of IIFL Finance's total borrowing came from banks, highlighting the significant role of co-lending arrangements in spreading credit risk, which will be crucial in the company's efforts to address its liquidity challenges.

BIG MONEY MOVES

Massive restatement reveals IL&FS's ₹9,600 crore loss

The recent restatement of accounts for IL&FS, a state-funded infrastructure development and finance company, has revealed a massive loss of ₹9,600 crore instead of the previously reported profit of ₹1,869 crore. This development has led to criminal charges against top executives and auditors, with ongoing disciplinary actions against their firms.

IL&FS Financial Services (IFIN) and IL&FS Transportation Network (ITNL) also faced substantial losses after corrections, with IFIN recording losses of nearly ₹ 5,000 crore compared to previously stated profits. The company's new leadership has responded by divesting assets to settle debts, marking a pivotal moment in this financial saga.

Jaiprakash Associates grapples with loan default of ₹4,616 crore

Jaiprakash Associates Ltd (JAL), the parent company of Jaypee Group, recently disclosed a default on loan repayments totalling ₹4,616 crore, comprising a principal of ₹1,751 crore and interest payments of ₹2,865 crore. This adds to JAL's total liabilities of ₹29,805 crore, repayable by 2037. The company is undergoing financial restructuring, planning to transfer ₹18,955 crore to a Special Purpose Vehicle (SPV) pending approval from the National Company Law Tribunal (NCLT). 

BUSINESS

Indian Airlines Set to Dominate Global Skies

What happened

Indian airlines are poised to capture a significant chunk of the country's international passenger traffic by fiscal year 2027-28 (FY28), according to a CRISIL Ratings report. The report forecasts that Indian Airlines will command around 50% of the international market, marking a notable increase from the current 43% share in FY24.

This growth is attributed to the expansion of routes, the addition of new aircraft, and the inherent advantage of superior domestic connectivity compared to foreign airlines.

Why it matters

The rise of Indian airlines in the international market signifies a strategic shift in the aviation industry. With increased routes and fleet size, Indian carriers can offer more options to passengers, reducing travel time and eliminating layovers. This growth also translates into higher profitability, as international routes often yield better returns than domestic ones due to less competition and higher fares.

• In recent months, Indian airlines have witnessed a remarkable 22% increase in overseas traffic from October to December.
  
  

• To tap into this expanding market, Indian carriers have strategically added 55 new international routes in the past 15 months, bringing their total to over 3004 routes.
  
  

•  These additions primarily focus on popular long-haul destinations like the United States, Europe, and Australia.

The notable increase in Indians travelling abroad can be attributed to factors such as rising disposable incomes, eased visa regulations, and improved air connectivity.

Zoom out

The latest data reveals a significant uptick in international passenger numbers, reaching around 70 million in fiscal 2024. This marks a substantial rebound from the pandemic-hit fiscal 2021 when numbers plummeted to a low of 10 million. What's more, the FY24 figures have not only bounced back but have surpassed pre-pandemic levels, exceeding the 67 million passengers recorded in FY20.

BIG PICTURE

🍪 Britannia prioritizes volume growth over margins amid price challenges

Britannia, India's top biscuit maker, aims for double-digit volume growth despite potential price hikes for wheat and sugar after elections. Varun Berry, the company's vice-chairman, mentioned a possible 3-4% inflation post-elections. Despite this, Britannia plans to focus on expanding retail reach, implementing AI-driven ordering, and upgrading sales automation to boost sales.

Berry noted a willingness to temporarily sacrifice margins for long-term readiness and compensate for it with a gain in volume of sales.

💰️ Blackstone nears ₹2,000 cr deal for Adani Realty’s BKC office tower

Blackstone Group is in advanced talks to acquire Adani Realty's Inspire BKC, a prime commercial property in Mumbai's Bandra-Kurla Complex. The deal, valued between ₹ 1,800-2,000 crore, covers an expansive 800,000 sq ft tower housing top-tier companies. Adani Realty, seeking to monetize this asset for years, had engaged with various investors including Blackstone previously.

The deal signals a resurgence in real estate investment post-pandemic, highlighting confidence in India's commercial property market despite past uncertainties.

BUSINESS

Adani Green Energy's Landmark Partnership with Sri Lanka

What happened

Adani Green Energy has inked a monumental 20-year deal with the Sri Lankan government. The agreement entails the establishment of wind power stations in Mannar and Poonerin, representing a significant leap towards sustainable energy in Sri Lanka. This partnership is a pivotal move in Sri Lanka's renewable energy journey. Amid economic challenges and power deficits, the country is prioritizing renewable solutions. 

Why it matters

The future 20-year power purchase agreement at 8.26 cents per kilowatt-hour will provide stability and foster a greener energy landscape. Adani Green's involvement will not only bolster Sri Lanka's energy sector but also strengthen bilateral ties.

Furthermore, Adani Green's stock saw a spike to ₹ 1,790 per share post-announcement, reflecting investor confidence in the venture. The US government-backed International Development Finance Corp's loan of $553 million to Adani Ports for a container terminal in Sri Lanka adds to the strategic partnership between India and Sri Lanka in the renewable energy and infrastructure sectors.

Zoom out

The collaboration between Adani Green Energy and the Sri Lankan government ushers in a transformative era of sustainable energy practices. With substantial investments and international support, Sri Lanka is poised to reduce fuel expenses and bolster energy security. This follows Adani Green Energy's approval in February 2023 to invest $442 million in developing 484 megawatts wind power plants in Northern Sri Lanka.

MIRCH MASALA

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👫 Chris Hemsworth and Elsa Pataky make grand debut as a couple at Met Gala 2024 
🤣 Laugh out loud with Rajasthan's class 5 student's viral exam answer
🇷🇺 Putin takes oath for fifth presidential term, says leading Russia a sacred duty
🍕 Man eating pizza every day for 6 years declares he is happy and healthy