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The domestic steel demand is expected to take a hit in the coming quarters due to "very high steel prices" and continuously rising fuel prices, according to industry consultancy SteelMint India. Steel prices in India are trading at an all-time high.

While hot-rolled coil (HRC) is quoting in the range of Rs 76,000-77,000 per tonne, cold-rolled coil (CRC) is costing between Rs 85,000-86,000 per tonne. Rebar price stands at Rs 72,000-73,000 a tonne, SteelMint India said on Thursday.

Steel prices in India are trading at an all-time high. While hot-rolled coil (HRC) is quoting in the range of Rs 76,000-77,000 per tonne, cold-rolled coil (CRC) is costing between Rs 85,000-86,000 per tonne. Rebar price stands at Rs 72,000-73,000 a tonne, SteelMint India said on Thursday.

In the domestic market, prices of HRC in the first week of March were in the range of Rs 68,000-69,000 a tonne, while CRC was at Rs 73,000-74,000 per tonne. Rebar was costing about Rs 67,500-68,500 a tonne. SteelMint said it "expects demand to be negative in coming quarters on rising steel prices and higher fuel prices, which may defer buying activities".

The government on Thursday hiked petrol, diesel prices by 80 paise a litre each, the 9th increase in 10 days, taking the total hike to Rs 6.40 a litre. Rising fuel prices will impact the logistics for the supply of steel items which may also impact the demand, the consultancy said.

According to SteelMint, domestic steel consumption is likely to be at 98 million tonnes in April 2021-March 2022.

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India’s economy is “vulnerable” because of its increasing fiscal deficit and retail inflation, and indirect exposure to the Russia-Ukraine war, according to a report by Nomura on Emerging Markets.

The report has analysed the resilience and vulnerability of 20 major EM economies, taking into account recent stressors and the countries’ fundamental financials.

Poor fiscal health

The report said that while budget deficits have ballooned in nearly all countries due to the pandemic, resulting in higher public debt ratios, some countries such as India are in a worse shape than others. It clubbed India with Brazil, Hungary, South Africa and China, while it grouped the better offs as Russia, Peru, Chile and Turkey. 

To control inflation and reduce its impact on poorer households, India may need to consider increased subsidies for fuel.

The report stated “large net importers of food and energy may need to impose price controls or increased food and fuel subsidies to limit the rise in inflation, thereby cushioning the cost-of-living impact on poorer households but at the cost of larger budget deficits”.

It stated, “The surge in commodity prices – notably food prices, which have a much larger weighting in the CPI baskets of EM countries than their DM counterparts – will result in more EM countries joining the double-digit inflation camp (Russia could soon join Turkey with over 50% inflation). Even in Asia, where inflation has been relatively low, prices are set to accelerate”.

The country’s indirect-exposure to the Russia-Ukraine war comes from its fertiliser imports. Thirty percent of India’s fertiliser imports come from Russia and Belarus.

Hanging on commodity prices

In the overall assessment, India has been placed among economies that have “relatively sound fundamentals and will benefit once commodity prices decline”. The other countries in this group are China, South Korea, Thailand and the Philippines. 

Titled ‘Beware of painting all EMs with the same brush’, the report has classified the 20 countries into three. Countries with weak economic fundamentals and high negative exposure to Russia and Ukraine via high commodity prices as vulnerable; countries with fairly healthy fundamentals, limited exposure to the two warring countries and that could benefit from high commodity prices as resilient; and countries that have relatively sound fundamentals and will benefit once commodity prices decline as ‘commodity-dependent group’

India falls in the commodity-dependent group. Hungary, Romania, Turkey, the Czech Republic and Russia fall under the ‘vulnerable’ group  and Brazil,Peru, Mexico, South Africa and Indonesia come under the ‘resilient group’.

Logistics company Delhivery aims to launch its initial public offering (IPO) in the June 2022 quarter, said investment bankers who know about the plans.

The Gurugram-based company filed in November its draft red herring prospectus with market regulator Securities and Exchange Board of India (Sebi). It got Sebi’s approval for the IPO in January.

Challenging market conditions due to the US Federal Reserve’s hawkish pivot and Russia’s attack on Ukraine have roiled the IPO market after a record-breaking 2021.

"The market has seen an improvement in the past one week amid talks of ceasefire between Russia and Ukraine. If market conditions continue to improve, we can see large issuances such as Delhivery launch their share sale," said a banker. Four IPOs have got launched in the past one week compared to just three between January and February.

Delhivery IPO is pegged to be around Rs 7,000 crore. It is India’s largest multimodal, fully-integrated logistics and supply-chain firm by revenues (FY21 basis).

Brokerage Motilal Oswal said in in a recent note the domestic logistics sector offers a large addressable opportunity as it is pegged to grow at an annualized rate of 9 per cent to $365 billion between FY20 and FY26. It expects the growth to be higher for the organised players due to their “relentless focus on technology and automation.”

At present, the logistics market is highly fragmented with organized players accounting for less than 4 per cent of market share. Motilal Oswal said the shift to unorganised to organized sector is already underway.

“This shift has gathered pace with the rollout of GST, which increased demand for national, integrated supply chain service providers with integrated warehousing and Transportation models, that allow customers to scale operations at lower fixed costs, while creating opportunities for optimizing footprints and capacity utilization, lesser inventory, and faster and cheaper fulfillment,” said Alok Deora and Dhirendra Patro, who are analysts at Motilal Oswal, in a note.

As per the brokerage, some of the key positives of Delhivery are an asset-light business model, diverse customer base, and sophisticated network infrastructure.

Motilal Oswal said Delhivery has proprietary technology systems that enable it to offer integrated logistics services to a wide variety of customers. Its technology stack consists of over 80 applications that encompass all supply chain processes.

Private sector lender Axis Bank is close to acquiring Citigroup's retail banking business in India and a deal is likely to be announced soon, sources said on Wednesday.

According to the sources, the deal, to be valued at USD 2.5 billion (about Rs 18,000 crore), will be subject to regulatory approvals.

In April 2021, American banking major Citigroup announced its plan to exit from the consumer banking business in India as part of its global strategy.

The business comprises credit cards, retail banking, home loans and wealth management. The bank has 35 branches in the country and employs about 4,000 people in the consumer banking business.

Once the deal gets the approvals, the sources said the balance sheet size of Axis Bank will expand and the retail segment will witness a significant jump.

An e-mail sent to Axis Bank seeking comments on the proposed deal did not elicit any response immediately.

Earlier this month, Axis Bank said it was yet to take a decision on the purchase of Citigroup's India retail business.

Citigroup had entered India in 1902 and started the consumer banking business in 1985.

Apart from the institutional banking business, Citigroup in India will continue to focus on offshoring or global business support rendered from centres in Mumbai, Pune, Bengaluru, Chennai and Gurugram.

Also Read:- As sustainability reporting kicks in, ESG investing faces global credibility risk

In two days’ time, from April 1, new corporate governance rules as mandated by the Securities and Exchange Board of India (Sebi) will become operational. The top 1,000 companies ranked by market capitalisation will be required to include Business Responsibility and Sustainability Report (BRSR) in their annual reports. This, many experts see, as the precursor to formalisation of Environmental, Social and Governance (ESG) disclosures in India through a set of standard metrics.

The actions that corporations take for sustainability, and to protect the planet, is important for investors to understand corporate purpose, strategy, and management quality of companies.

From an investors’ point of view, ESG rankings can be a useful way to hold companies accountable, and measure them on their sustainability actions and efforts. That said, it may well be worthwhile to flag a caveat. How does one measure outcomes, and impact on a quantifiable scale that are not nationally, if not globally, standardised?

Paul Clements-Hunt, who coined the acronym ESG, said that the ESG fund industry is headed for a “shakeout” over the next five years. He is of the view that the finance sector has “sprinkled ESG fairy dust” on products that do little to account for environmental, social and governance risks.

“Anybody who uses ESG, sustainability or green purely as a marketing device is really heading for trouble. You’ll see a developing queasiness from marketing departments where, perhaps, ESG funds aren’t all what they’re cracked up to be,” he said in an interview to Bloomberg.

Experts have been cautioning about the risks associated with opaqueness in ESG measurement. In an essay in the Harvard Business Review last year, Jennifer Howard-Grenville, Diageo Professor of Organization Studies, at the Cambridge Judge Business School, said that the “current focus on ESG measurement is dangerously narrow. It fails to capture the complex, systemic nature of social and environmental systems, and indeed that of business organizations themselves”.

ESG funds and their managers from across the world are gradually, but increasingly, showing signs of acknowledging that a more restrained approach may be required in ESG investing, which may also be partly drawn by disproportionately greater commissions that incentivises them to skew their portfolios towards such investments.

The key question for asset managers is: What are classified as ESG investment, and what are not?

A recent Schroders Institutional Investor Study, ‘Gearing up against greenwashers: investors seek clarity on sustainability terminology,’ has revealed that investors want a better understanding of sustainability terminology so as to avoid ‘greenwashers’. ‘Greenwashing’ happens when companies falsely communicate and make unsubstantiated claims about environmentally-friendly products, and processes.

“A dearth of clear, agreed sustainability definitions present a challenge to investors looking to invest sustainably”, it said. The study surveyed 650 institutional investors across 26 countries during April 2020.

Tariq Fancy, who was BlackRock’s first global chief investment officer for sustainable investing between 2018 and 2019, has also cautioned about the errors that are beginning to creep into these investments, guided by incomplete information, and interpretation.

“Green bonds, where companies raise debt for environmentally friendly uses, is one of the largest and fastest-growing categories in sustainable investing, with a market size that has now passed $1 trillion. In practice, it’s not totally clear if they create much positive environmental impact that would not have occurred otherwise,” Fancy said in a recent online essay.

This is because “most companies have a few qualifying green initiatives that they can raise green bonds to specifically fund while not increasing or altering their overall plans. And nothing stops them from pursuing decidedly non-green activities with their other sources of funding,” he added.

Financial institutions may have an extra motivation to push for ESG products, driven by higher fees that they earn.

According to data from FactSet and published by the Wall Street Journal, ESG funds had an average fee of 0.2 percent at the end of 2020, whereas other more standard baskets of stocks had fees of 0.14 percent. The Wall Street Journal said that “socially focused exchange-traded funds give asset managers higher fees in a low-fee industry.”

The lack of reliable and standardised data and metrics has opened up the precarious possibility of pitting one investors’ views against another, meaning one portfolio manager could classify a firm as ESG-friendly, while another might view the same firm as not doing much on sustainability efforts.

Sheila Patel, chair of Goldman Sachs Asset Management, underlined this with caution. “When you think about the composition of ESG funds it’s first of all important to remember they are still meant to be a fund invested to get a return for the portfolio. And so they can tilt based on industry groups, based on sector views and that may or may not relate to an ESG view,” Patel told CNBC.

There is no gainsaying that ESG investing today is big business. Trillions of dollars are at stake, based on the individual fund managers’ interpretation about companies. This can be fraught with risks as the absence of a standardised, transparent system of gauging sustainability efforts may allow fund managers’ biases to influence ESG investment decisions, rather than informed choices guided by prudent, globally accepted norms, and audit.

Addressing the programme via video conferencing, Modi said his government has given topmost priority to providing houses to the poor people.

So far, 2.5 crore houses have been constructed under the PMAY scheme in the country, including two crore in rural areas, he said.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan participated in the programme from Chattarpur in the state.

On the occasion, PM Modi also said that under the Nal-Jal scheme in the country, six crore families were provided pure water tap connections in their houses.

“We have the policy to ensure that even the last man in the queue gets the benefit of government schemes,” he said.

Ruchi Soya Industries has said that the SMSes pertaining to investments in its follow-on public offering (FPO) have not been issued by the company or its promoters. The company has filed a first information report to investigate the origin of the messages doing the rounds on social media.

“We understand that there is a SMS/message in circulation in social media, speculating about investment opportunity in our company’s issue and about equity shares of our company being available at discount to the market price. We wish to bring to attention of the investors that this message has not been issued by our company or any of our directors, promoters, promoter group or group companies. A first information report bearing number 0188 dated March 27, 2022 has been logged by our company with a police station at Haridwar to take up investigation in respect of the message, under section 67A of the Information Technology Act, 2000 and section 420 of the Indian Penal Code, 1860,” Ruchi Soya said in a newspaper advertisement.

The Securities and Exchange Board of India (Sebi) has directed Ruchi Soya Industries to give the investors who participated in its Rs 4,300-crore follow-on public offering (FPO) the option to withdraw their bids due to “circulation of unsolicited SMSes advertising the issue”.

Ruchi Soya, in the advertisement, has stated that the last day for withdrawal of bids will be Wednesday. The company has also issued an indicative timeline for listing of the new shares that are being issued in the FPO. As per the timeline, the new share will list “on or about” April 8.

Sebi’s diktat to the company follows a message circulated on social media which said that the FPO was a “good investment opportunity” and that the shares were available at 30 per cent discount.

“Great news for all beloved members of Patanjali parivar. A good investment opportunity in Patanjali Group. Patanjali Group company - Ruchi Soya Industries has opened the Follow-On Public offer(FPO) for retail investors. The issue closes on 28 March 2022. This is available in the price band- Rs 615-650 rupees per share , i.e discount of about 30 per cent to market price. You can apply for shares through your bank/ broker/ ASBA/UPI in your Demat account,” read the message.

In a letter to the three investment bankers handling Ruchi Soya’s share sale, Sebi has said prima facie the contents of the SMSs appear to be “misleading/fraudulent” and not in consonance with the ICDR (Issue of Capital and Disclosure Requirements) Regulations.

Ruchi Soya’s FPO, which closed on Monday, has garnered 3.6 times subscription. The issue was undersubscribed in the retail category at 90 per cent but saw strong demand in all the other categories.

Shares of Ruchi Soya dropped 6 per cent on Monday to close at Rs 815. The company priced its FPO in the range of Rs 615 and Rs 650 per share – 20 to 25 per cent lower than the last close.

Baba Ramdev-led Patanjali Ayurved owns 98.9 per cent in Ruchi Soya, while only 1.1 per cent is with the public. With a miniscule free-float, there are doubts over whether trading in Ruchi Soya’s shares is leading to fair price discovery.

Following the FPO, Patanjali’s shareholding is expected to reduce to 81 per cent, while public shareholding will rise to 19 per cent. The move would help the stock discover its fair price, experts say.

Also Read:-Goa cabinet decides to provide 3 cooking gas cylinders free to households

The Goa government has said it will provide three cooking gas cylinders free of cost to households in the coastal state, as promised by the BJP in its election manifesto. Chief Minister Pramod Sawant made the announcement on Monday after chairing the first meeting of the new cabinet, comprising him and eight other ministers.

In a tweet on Monday evening, Sawant said, Chaired the first meeting after taking oath as CM. The Cabinet has decided to formulate the 3 free cylinder scheme as promised in the BJP manifesto from the new financial year. Before the Goa Assembly elections held last month, the BJP had in its poll manifesto promised three LPG cylinders free of cost per year, if voted to power.

Sawant also told reporters on Monday that resumption of iron ore mining and creating employment were his priorities during the current tenure. On his opponents referring to him as an accidental CM, Sawant said this time he is elected and not selected as the state's chief minister.