9.5 times oversubscribed! GoI gets Rs 466 crores revenue by listing IRCON.

Track laying in progress. Pic for representation only.

The Initial Public Offering (IPO) of CPSE IRCON has been subscribed 9.5 times. In the IRCON IPO, the Government is selling 10.5 percent stake or about 99.05 lakh equity shares, including 5 lakh shares to employees. 

The Government is expected to raise Rs 466 crore from the issue. The issue received bids for 9.4 crore shares against the issue size of 99.05 lakh shares worth Rs 466 Crore.  The segment meant for Qualified Institutional Buyers (QIBs) was subscribed 12 times, Non-Institutional Investors 4.9 times, while the Retail Investors Segment was subscribed over 9 times. Price band for the issue has been fixed at Rs 470-475 per share, with a discount of Rs 10 for Retails Investors and Employees.

IRCON is the second CPSE to launch an IPO in the Current Fiscal besides being the second Railway CPSE to be listed on the stock markets after RITES in June this year.

IRCON International has executed crucial infra projects in India, SAARC and African nations. The company expertise in Railway projects but has been awarded Highway projects in recent times. It has executed ambitious Qazigund Baramulla railway line in Kashmir Valley. IRCON is currently constructing Western Dedicated Freight Corridor in the state of Maharashtra. It has been a pioneer in expanding Indian Railway network to Nepal and Bangladesh. IRCON has completed more than 300 infra projects in India and abroad.

- Chaitanya Kulkarni.

#TheIndianCapitalist: All You Need to Know about the LIC - IDBI Bank Deal

The much-awaited LIC - IDBI Bank deal has finally received the green light from the apex regulators and the union cabinet. India’s largest insurer, the Life Insurance Corporation (LIC) will now have a controlling stake in the IDBI Bank, one of India’s leading nationalised bank. With a rich legacy of industrial financing for more than 50 years, IDBI was converted into a banking company ie. IDBI Bank Ltd. - to undertake the entire gamut of banking activities across the length and breadth of India. IDBI Bank has serviced millions of Indians through a wide array of banking products and services from its 1900 plus branches and more than 4,000 ATMs.

In August 2018, the Union Cabinet chaired by PM Modi had approved conveying of no objection to the reduction in Government of India shareholding in IDBI Bank to below 50% by dilution. It had also approved the acquisition of controlling stake by LIC as a promoter in the bank through preferential allotment/open offer of equity, and relinquishment of management control by the Government of India in the IDBI Bank.

The approvals on LIC- IDBI Bank deal from Union Cabinet was followed after Securities Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority of India (IRDAI) go ahead on the same. The IRDAI, in June 2018, gave a one-time exemption to LIC to acquire a 40 per cent stake in the IDBI Bank, taking its total holding in the lender to over 51 per cent.

Financial experts are of an opinion that both LIC and the IDBI Bank would be benefited with this transaction. Both the entities will gain in terms of their reach through extensive customer and network base. LIC will get access to IDBI Bank’s 1.6 crore customers and 1,900 branches to sell its insurance products while IDBI Bank may further earn fees and float income from LIC customers that will boost its income and bring down the cost of funds. Also, the reach of LIC would be beneficial for IDBI Bank to target rural and semi-urban segments. The strong financial backup from the LIC brand would help IDBI Bank in its NPA resolution plan.

LIC – IDBI Bank Deal: The Way Forward

LIC is India’s insurance mammoth. Its brand value is immense; a renowned name for every Indian. One out of six people in India has an LIC policy. With a financial inclusion outlook already being saturated in the urban and semi-urban markets, IDBI Bank could reach rural segment with the reach of insurance agents. The Bank can leverage the bancassurance tie-up with LIC as also augment its ability to market its products and services. Taken together, the LIC home finance and the Bank’s home loan portfolio would be the biggest in the segment for the industry as a whole. This could act as a major growth driver for the Bank and could contribute immensely towards its revenues.

The Reserve Bank of India (RBI) and the Ministry of Finance have shown its strong commitment towards the NPA resolution. Independent media think tanks say that as much as Rs 4 lakh crores of bad loans have returned back to the system because of the new Insolvency and Bankruptcy Code (IBC). RBI is set to refer 12 big NPA accounts to National Company Law Tribunal (NCLT) under the new IBC code. IDBI Bank has received as much as Rs 329 crores as interest income from Bhushan Steel resolution. Media reports suggest that IDBI Bank has also moved to NCLT as a lead banker against Reliance Naval, Lanco Infratech, Jaypee Infratech etc. for bid-based resolution or liquidation for a quick recovery.

Amidst the NPA debate, the financial reports of IDBI Bank shed light on the bank’s lending potential in the long-term horizon. The bank reported an increase in operating profit by 71% to Rs 7907 crores during FY 2018 from Rs 4690 crores in FY2017. Recovery and up gradation improved to Rs. 6,231 crore during FY 2018 from Rs. 4,849 crore during FY 2017. IDBI Bank reported exponential growth in Current Account Savings Account (CASA) deposits and is expected to rise further after the LIC – IDBI Bank transaction.

TheIndianCapitalist.com is of an opinion that the LIC – IDBI Bank deal is a win-win for both the entities. The brand value of LIC and strong lending portfolio of IDBI Bank will create synergy and endless opportunities for millions of MSME lenders and policyholders.

- Chaitanya Kulkarni.

Lockheed Martin ties with Tata to manufacture F-16 wings in India.

F-16 on the streets of Turkey during a failed coup.

Tata Advanced Systems Limited (TASL) and Lockheed Martin have entered into an agreement to commence production of F-16 wings in India for export. This strategic initiative positions TASL to become the provider of wings for all future customers and strengthens its role in the F-16 global supply chain.

Production of F-16 wings in India will further strengthen TASL’s capability to address the global aerospace requirement of fighter aircrafts and support ‘Make in India.’ The planned F-16 wing production move to India is not contingent on the Government of India selecting the F-16 for the Indian Air Force.

“We are delighted with the decision made by Lockheed Martin to select Tata Advanced Systems Limited (TASL) for the production of F-16 wings in India. This positions TASL as a global provider of F-16 wings in future. TASL and Lockheed Martin, through a long-standing joint-venture, have been manufacturing airframe components of the C-130J aircraft and S-92 Sikorsky helicopter at the Hyderabad facility. This development now again gives us an excellent opportunity to showcase our technological expertise and advance our capability development, as we reinforce our commitment to both the Indian and global aerospace industry. The production of the F-16 wings in India, for global application, is set to place the country at the centre of the world's largest fighter aircraft ecosystem and make it a preferred destination for aerospace manufacturing.” - Mr Sukaran Singh, CEO & MD, Tata Advanced Systems Limited.

Tata Advanced Systems Limited is a wholly owned subsidiary of Tata Sons, focused on providing integrated solutions for Aerospace, Defence and Homeland Security. TASL has partnered with global OEMs, including Boeing, Airbus Group, Sikorsky Aircraft Corporation, Lockheed Martin Aeronautics, Pilatus Aircraft Ltd, Cobham Mission Equipment, as well as the Government of India’s DRDO. It has capabilities throughout the entire aerospace value chain from design to full aircraft assembly and is well positioned in areas that include missiles, radars, unmanned aerial systems, command and control systems, optronics and homeland security.

Source - Press Release.

Financial Inclusion 2.0: All 1.55 lakh post offices will offer banking services through India Post Payments Bank.

From the Red Fort, PM Modi announced the plans about postal banks across all villages of 715 districts of India in 2014. The much delayed India Post Payments Bank was launched on 1st September in Talkotara Stadium, Delhi in the august presence of PM Modi and Mr Suresh Sethi, MD and CEO, India Post Payments Bank. The function was witnessed at over 3000 locations across the country, which were connected to the main event in Delhi. "Jo Khata Nahi uska bhi toh Khata Hota Hain" said jokingly as PM Modi also become the first bank account holder of India Post Payment Bank.

IPPB has been envisioned as an accessible, affordable and trusted bank for the common man, to help speedily achieve the financial inclusion objectives of the Union Government. It will leverage the vast network of the Department of Posts, which covers every corner of the country with more than 300,000 Postmen and Grameen Dak Sewaks. IPPB will hence significantly augment the reach of the banking sector in India.

The launch of IPPB marks another significant milestone in the Union Government’s endeavour to take the benefits of a rapidly developing India to the remotest corners of our country. On the day of the launch, IPPB will have 650 Branches and 3250 Access Points spread across the country. Simultaneous launch events will be held at these branches and access points. All the 1.55 lakh Post Offices in the country will be linked to the IPPB system by December 2018.

IPPB will offer a range of products such as savings and current accounts, money transfer, direct benefit transfers, bill and utility payments, and enterprise and merchant payments. These products, and related services will be offered across multiple channels (counter services, micro-ATM, mobile banking app, SMS and IVR), using the bank’s state-of-the-art technology platform.

Postmen across India has long been a respected and accepted person in the villages. He said the trust on the postman remains, despite the advent of modern technology. The Government’s approach is to reform existing frameworks and structures, and hence, transform them in accordance with the changing times. There are over 1.5 lakh post offices and over three lakh postmen or “grameen dak sevaks” who are connected to the people of the country. Now they shall be empowered with smartphones and digital devices to provide financial services. - PM Modi.

The Jan Dhan Yojana has opened 32 crores accounts across the country. But in rural areas, people have to travel more than 20km to reach the bank. Since Postal Departments have a wider reach, financial experts are of an opinion that India Post Payment Bank is indeed Financial Inclusion 2.0.