The Reserve Bank surprised everyone from investors to corporate leaders on Tuesday with a higher than anticipated interest rate hike. What’s more, it made it clear the hawkish monetary stance would continue until inflation eased. RBI hiked the repo, which is its short-term lending rate, by 50 basis points to 8%. And the reverse repo, the rate at which it drains excess liquidity, is now at 7%.
The Reserve Bank’s latest tightening is based on expectations of continued growth that’s accompanied by rising inflation. RBI maintained its projection for GDP growth at 8%. But raised its baseline projection for inflation to 7%.
The rules for mergers and acquisition are about to undergo a makeover. On Thursday markets regulator Sebi approved key recommendations of its takeover regulations advisory committee. Most importantly, Sebi said companies can buy up to 25% of a target firm without making an open offer. The old open offer threshold was 15%. But Sebi also increased the minimum open offer size from 20% to 26%, a move that could give more options to smaller investors.
Sebi’s other moves include ending the non- compete fees that buyers pay promoters to stop them from setting up new rival businesses. But while the scrapping of the fee will allow all shareholders to exit at the same price, critics say it will also increase the costs of takeovers because valuations could go up.
The Competition Commission of India has issued its very first order on mergers and acquisitions since it began overseeing them last year. On Tuesday it cleared RIL’s bid to buy a stake in Bharti AXA life and general insurance companies. CCI said it examined the documents involved and concluded the deal it wasn’t likely to stifle competition.
Reliance Industries has posted its highest ever rise in quarterly profits, while still lagging behind street estimates. India’s biggest company reported a 16.7% climb in first quarter profit to Rs5,661 crore and revenue went up 37.2% to Rs 83,689 crore.
Meanwhile, the numbers from RIL’s hydrocarbons businesses was mixed. While its operations at its massive oil refinery in Jamnagar produced profits, the gas business didn’t do as well. The firm’s gross refining margins rose to $10.3 per barrel from $7.3 per barrel in the year-ago period. But gas output from RIL’s flagship KG D6 field dropped during the quarter by 18% to 156.2 billion cubic feet. The KG D6 block was once among RIL’s most lucrative assets. But output there has fallen in recent times. Earlier, the government approved an RIL stake sale to energy firm BP, a deal that RIL hopes will give it the technology needed boost production at KG D6.
The Supreme Court has banned all mining in Karnatka’s Bellary district. On Friday the court’s forest bench said there should be no more excavation at the site pending further orders. The order applies to some 100 mining leases in the area. Of these 45 have already been suspended earlier.