Rana Kapoor’s companies used borrowed money to invest in private finance firms: Report

Yes Bank co-founder Rana Kapoor’s investment companies may come under the lens of investors and even regulators for reportedly using borrowed money from mutual funds and invested the same as equity in a finance company through a questionable transaction.

Rana Kapoor’s Yes Capital borrowed funds from the market, a part of which was invested in ART Capital, which subsequently invested a portion of that in ART Housing Finance through subsidiaries, The Economic Times reported.

The investment of debt as equity to ART Capital is reflected in Yes Capital’s balance sheet, sources told the paper, adding that the ultimate beneficial ownership of both companies is with YES Capital, which also owns shares in Yes Bank

RV Verma, non-executive director of ART Housing Finance, said Yes Capital is the ultimate owner of the finance company. “The business is done at an arm’s length from Rana Kapoor and Yes Bank,” he added.

Analysts deem the transaction irregular but not illegal, saying it does question the use of investor money and shows an attempt to disguise debt as equity. No law restricts this move but it is not considered a good practice by regulators and risk managers.

According to Yes Capital’s annual reports, nearly Rs 697 crore of the company’s Rs 712 crore investment went to ART Capital, and Rs 350 crore of that money went to ART Housing Finance.

“ART Housing Finance is funded by money raised by Mr Kapoor’s family through privately owned firms which have raised funds with Yes Bank as security,” the report said.

Yes Capital infused Rs 697.6 crore into ART Capital last fiscal as ‘non-current investments’, way more than Rs 140.4 crore a year ago. The company raised Rs 630 crore by selling non-convertible debentures to mutual funds during the year.

Raakhe Kapoor Tandon, daughter of Rana Kapoor, is a director on the board of ART Housing Finance. The company lends to customers from low and middle-income groups.
Verma said the finance company’s growth is visible in the past one year, especially due to government’s Pradhan Mantri Awas Yojana. He is expecting capital investment from promoters this fiscal.


Altico invests ₹570 crore in Bengaluru real estate projects

With these transactions, Altico has invested around ₹1,000 crore in Bengaluru’s property market. It plans to execute a couple of more deals by March 2019. Photo: Mint

Altico Capital India Ltd, a real estate-focused non-banking financial company (NBFC), has invested ₹570 crore in the Bengaluru residential market. It has backed projects of Assetz Property Group and a plotted development project of Century Real Estate Holdings Pvt. Ltd. The NBFC has sanctioned ₹450 crore in debt financing across Assetz’s five projects, underwriting a saleable area of 6.3 million sq ft.

With these transactions, Altico has invested around ₹1,000 crore in Bengaluru’s property market. It plans to execute a couple of more deals by March 2019.

Century’s managing director Ravindra Pai said since the plotted project was launched in September, it has already sold 120 of the 450 plots. “The debt will primarily be used for land acquisition payment.”

Mint could not immediately reach out to any Assetz spokesperson for comments.

The real estate projects are in the mid-income residential segment across north and north-east parts of Bengaluru, besides projects in the Whitefield neighbourhood. It also mark’s Altico’s second investment in Century Real Estate, after co-investing ₹765 crore with Piramal Capital and Housing Finance Ltd in a portfolio of projects in 2015.

The new investment is in a 30-acre plotted development, Century Greens, in north Bengaluru.

The plots are being sold at ₹25-40 lakh.

“Mid-income affordable housing is moving fast in the Bengaluru market, along with projects which are closer to completion and has acquired occupation certificates (OC). This is the segment that fits into our philosophy of investing in mid-market and affordable projects as well,” said Sanjay Grewal, chief executive officer, Altico Capital.

According to Grewal, the firm plans to broad-base its investment portfolio in the city. “We want to invest in the office and logistics sector, and are on our way to investment in the education sector in the city as well.” Bengaluru has been one of the best performing property markets despite the prolonged slowdown in the real estate sector.

Altico is backed by Fiera Capital (formerly Clearwater Capital Partners Llc), Abu Dhabi Investment Council and Varde Partners Inc.

Recently, many NBFCs have lost significant market value on growing concerns around asset-liability mismatches and tightening liquidity in the short-term money market, after a series of defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS) became public.

However, Altico has maintained that it is well-capitalized with adequate cash and liquidity, and most of its debt is long term. As the residential market normalizes, it aims to reach its target of ₹9,000 crore in assets under management in FY19.

Altico recently said that it had entered the warehousing and logistics sector by investing ₹650 crore in Renaissance Group’s ongoing industrial and warehousing park in Bhiwandi near Mumbai.

The NBFC has elevated former HSBC India head Naina Lal Kidwai as chairman of the firm. She has been an independent director in it since 2016.


Podcast | Stock picks of the day: Vodafone Idea among 3 stocks that could return 10-16% in a month

Albeit Nifty50 appears to have registered a breakout, above its 8-day old consolidation zone between 10,650 and 10,440 levels, however, it is not looking that convincing.

One prominent reason was that the breakout was on the back of negative advance-decline ratio and with a 64 point narrow range which depicted a small bullish candle on the daily chart whereas on the weekly charts, Nifty formed a ‘Hanging Man’ kind of formation.

Besides, it appears to be facing selling pressure from its interim top of 10,710, which was registered on October 17, from where the initial pullback rally was sold off only to make new corrective swing lows.

Apart from this 200-day moving average is placed around 10,754 levels. Hence, the entire zone of 10,710-10,844 is looking like a massive supply zone which bulls need to absorb to sail smoothly.

On the downside, if the index slips below 10,630 then it may initially lead to the test of 10,440 in the near term.

Here is a list of top three stocks which could give 10-16% return in the next 1 month:

Indian Hotels: Buy| LTP: Rs 135.65| Target: Rs 147| Stop Loss: Rs 127| Return 15%

This counter registered a breakout above its minor consolidation zone of 9 days on relatively higher volumes in the last trading session. Besides, as it is consistently trading above its 200 Day Exponential Moving Average for the last couple of trading sessions there is a bright chance that this counter can initiate a rally and jump to higher levels.

However, 139 looks like a hurdle which it should surpass as it has just broken out of its consolidation zone. In such a scenario, the initial target of Rs 147 can be swiftly expected. Positional traders are advised to buy with a stop of 127 for a target of 147.

Vodafone Idea: Buy| LTP: Rs 42.90| Target: Rs 49| Stop Loss: Rs 35| Return 16%

This counter appears to have registered a price and volume breakout as it witnessed massive gains on huge volumes in the last session which has erased losses of preceding 6 sessions in one attempt suggesting a bottom around 36.

Hence, positional traders are advised to adopt a two-pronged strategy of buying now and on declines between 40-38 levels for an initial target of 49. A stop suggested for the trade is below 35 on a closing basis.

Bank of Baroda: Buy| LTP: Rs 115| Target: Rs 126| Stop Loss: Rs 106| Return 10%

This counter appears to be consolidating in a zone of 114 – 107 with a positive bias. As sentiment in PSU Banking space is firming up, one can expect a breakout in this counter as chart structure is looking very positive.

Hence, positional traders in anticipation of a breakout should buy now and add further on declines between Rs 110 – 107 and look for a target of Rs 126. A stop suggested for the trade is below Rs 106 on a closing basis.

Disclaimer: The author is Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

First Published on Nov 19, 2018 08:28 am

Stocks in the news: HCL Info, Oil India, Yes Bank, Quess Corp, Deepak Nitrite, Dr Reddy’s Labs

Here are the stocks that are in news today:

PNB Gilts Q2: Loss at Rs 33.18 crore versus profit at Rs 28.84 crore; revenue from operations falls to Rs 218 crore versus Rs 221 crore YoY.

Siemens Q4: Net profit at Rs 279 crore, revenue up 25.4 percent at Rs 3,939.2 crore.

Ashapura Intimates Fashion Q2: Loss at Rs 34.21 crore versus profit at Rs 3.44 crore; revenue falls to Rs 51.01 crore versus Rs 51.12 crore YoY.

HCL Infosystems: Company received orders from Central Excise & Central Goods & Services Tax to pay Rs 74 crore with interest and penalty.

Shalimar Paints – proposed rights issue of 3.37 crore equity shares at Rs 64.50 per share

Yes Bank: ICRA has affirms Long–term rating AA+ for the bank with negative implications.

Syndicate Bank: The issue price for preferential issue to government fixed at Rs 39.63 per share, bank can allot up to 18.4 crore shares to government against capital infusion of Rs 728 crore.

Sical Logistics: 29,18,570 equity shares at Rs 195 per share allotted to Giri Vidhyuth [India] on preferential basis.

AU Small Finance board meeting on November 22, to consider and decide on raising Basel II compliant Tier II Non-Convertible, Redeemable Bonds in INR on private placement basis

GHCL: Cyclone Gaja has impacted one of the spinning units of the company located at Manapparai and also salt Works located at Vedaranium in Tamil Nadu which caters to consumer products division.

Jiya Eco-Products: Stock will trade ex-bonus from Monday (Bonus issue 1:1).

Emerald Leasing Finance: Board meeting is scheduled on Monday to fix the record date for right issue, the ratio and the price for the equity shares of the right issue.

Oil India: Board on Monday to consider the proposal for buyback of the fully paid-up equity shares of the company, and issuance of debt securities in domestic/overseas markets.

Deepak Nitrite: Company confirmed that there has been search operations being carried on by the Income Tax Department at the company.

Mahindra & Mahindra: EPC Industrie Limited, a listed subsidiary of the company, has incorporated a subsidiary company namely Mahindra Top Greenhouses Private Limited in India.

Jet Airways: Tata Sons said any discussion with the airline company has been preliminary and no proposal has been made.

Dr Reddy’s Labs: Audit of formulations Srikakulum Plant (SEZ) Unit II, Andhra Pradesh by the US FDA, has been completed with zero observations.

Infosys: Infosys completed the formation of a joint venture with Temasek, the global investment company headquartered in Singapore.

Oriental Bank of Commerce: Board approved the proposal for raising of capital for an amount upto Rs 250 crore by offering upto 5 crore new equity shares of face value of Rs 10.00 each to the employees of the Bank through Employee Stock Purchase Scheme (ESPS) in one or more tranches.

Quess Corp: Company completed acquisition of 70 percent equity in Quess East Bengal FC Private Limited.

Tata Investment Corporation: Board approved a proposal to buyback upto 45 lakh equity shares of the company for an aggregate amount not exceeding Rs 450 crore being 8.17 percent of the total paid-up equity share capital, at Rs 1,000 per share.

IDFC Bank: ICRA downgraded its rating for non-convertible debentures of the bank from AAA (Stable) to AA+ (Stable).

Alankit: CARE reaffirmed the rating BBB+ (Outlook: Stable) assigned to long term bank facilities and A3+ assigned to short term bank facilities.

SRF: The unit in Viralimalai, Tamil Nadu of the technical textiles business (engaged in manufacture of belting fabrics) of the company has been damaged by Cyclone GAJA today. It has adequate insurance cover for the said unit.

Bulk Deals

GSS Infotech: Sarvottam Securities Private Limited bought 1,62,000 shares of the company at Rs 123.34 per share on the NSE.

Indiabulls Housing Finance: Principal Global Investors LLC sold 27 lakh shares of the company at Rs 767.26 per share on the NSE.

Info Edge (India): Aranda Invest(Mauri) PTE LTD sold 11,72,000 shares of the company at Rs 1,370.39 per share on the NSE.


FIIs, MFs bet on 138 stocks in last 1 year; should you buy?

When it comes to hunting for stocks, investors depend on their financial advisors or do their own research. To that end, analysing the portfolio of foreign investors as well as mutual funds can certainly help retail investors shortlist a few stocks.

We analysed portfolios of foreign investors (FIIs) and mutual funds (MFs) not just for one quarter but for the last four quarters and found that there are as many as 138 stocks that are common in both the portfolios.

Also, it was noticed that FIIs and MFs increased their stake in these stocks in the last one year on a year-on-year basis.

Out of the 138, as many as 14 stocks saw a correction of 20-80 percent in the past one year. The list includes 8K Miles, CL Educate, Bharti Infratel, Bhansali Engineering, Balaji Telefilms, BHEL, Ambuja Cements, Dixon Technologies and Amrutanjan Health, according to data collated by AceEquity.


Market timers are on the sidelines, which means you might want to jump in

Bear-market calls are rampant these days. Paul Tudor Jones says “really scary moments” are on the way. Jim Cramer warns there’s nowhere to hide in this “very serious correction.” Steve Cohen predicts that the bull is about to die a painful death.

Get the idea? Yeah, pretty sure you do.

So perhaps it is time to consider Baron Rothschild’s famous market take: “The time to buy is when there’s blood in the streets.” That’s gospel for contrarian investors, and despite the occasional market blip to the upside, there’s very little doubt that there’s blood flowing in the streets these days.

Which brings us to our chart of the day.

Amid all the reasons for doom and gloom, there’s one indicator that is pointing to a rally, at least for the short term: Market timers are sitting this one out.

According to this chart from Erin Swenlin of the DecisionPoint blog, the National Association of Active Investment Managers (NAAIM) exposure reading hasn’t been this low since 2016, and that is typically taken as a contrarian indicator.

“They will sometimes be ‘right’ in their exposure in the very short term,” Swenlin wrote. “But in the intermediate term, price reversals nearly always occur.”

Swenlin did warn, however, that if a trend of lower and lower readings unfolds, a bear market could be coming, as was signaled before “the dam broke” in 2007.

“I would expect a small rally or bounce,” she wrote. “But we need to be cautious if these extremely low exposure readings continue lower.”

Not much of a rally or bounce taking shape yet.

The market

Futures for the Dow Jones Industrial Average YMZ8, -0.35%  and the S&P 500 ESZ8, -0.38%  are looking rather sluggish this morning, as is the Nasdaq Composite NQZ8, -0.39% Gold GCZ8, -0.18%  is also in the red, as is silver SIZ8, -0.26% Crude oil CLZ8, +0.04% was providing a glimmer of green this morning before turning mostly flat to lower.

Overseas, Asia markets ADOW, +0.30%  and Europe markets SXXP, +0.17%  are doing just fine, with most major markets in the green.

The buzz

Last week was a chart-lover’s paradise, especially if said chart-lover was looking for warning signs in this unsteady stock market. Apple AAPL, -1.80% bitcoin BTCUSD, -5.75%  and oil CLZ8, +0.04%  were all ringing alarm bells in recent sessions, and they’ll surely be closely eyed by traders in the coming sessions.

Facebook FB, -0.5[“source=cnbc”]9%  is back in the news and looks set to stay there this week. In the latest development, CEO Mark Zuckerberg reportedly has adopted a more aggressive management style in recent months, driving away many top execs amid sinking employee morale. He apparently also blamed COO Sheryl Sandberg for the fallout of the Cambridge Analytica scandal, making her wonder if her job was secure, according to The Wall Street Journal. About a dozen high-profile execs have left Facebook this year.


3-day bank holiday this week in many cities. Check the dates

Banks in several cities like Mumbai, New Delhi, Chandigarh and Hyderabad will be closed on account of Guru Nanak Jayanti on Friday. Saturday is a holiday for all banks as it is the fourth Saturday of the month. Photo: Mint

Banks in several cities like Mumbai, New Delhi, Chandigarh and Hyderabad will be closed on account of Guru Nanak Jayanti on Friday. Saturday is a holiday for all banks as it is the fourth Saturday of the month. Photo: Mint

New Delhi: In most states of India, commercial banks will be closed for business for 3 days this week. The bank holidays are on account of two festivals — Eid-e-Milad-ul-Nabi and Guru Nanak Jayanti — and fourth Saturday, making it an extended weekend for bank employees. In cities like New Delhi, Mumbai, Hyderabad and Bengaluru this Wednesday, November 21, is a bank holiday due to Eid-e-Milad (Prophet Muhammad’s birthday) under the Negotiable Instruments Act. And on Friday, November 23, banks in several cities like Mumbai, New Delhi, Chandigarh and Hyderabad will be closed on account of Guru Nanak Jayanti.

Cities where banks will be closed for 3 days:

Banks in Mumbai, rest of Maharashtra, New Delhi, Hyderabad, Raipur, Ranchi, Srinagar, Dehradun, Jammu, Srinagar, Kanpur and Lucknow (Uttar Pradesh) will be closed for three days — Wednesday, Friday and Saturday.

Cities where banks will be closed for 2 days:

Banks in Ahmedabad (Gujarat), Bengaluru or Bangalore (Karnataka), Bhopal (Madhya Pradesh) and Chennai (Tamil Nadu) will observe holidays on Wednesday and Saturday only as there is no holiday for Guru Nanak Jayanti in these states.

On the other hand, banks in Chandigarh, Guwahati, Jaipur, Kolkata, Shillong and Shimla are the ones to be closed on both Friday and Saturday (November 23 and 24).

Since Kerala is observing Eid-e-Milad on Tuesday, banks will be closed on that day besides Saturday.

Places where banks will be closed for 1 day:

Banks in cities like Agartala, Aizawl, Bhubaneswar, Gangtok, Imphal, Goa, Patna (and rest of Bihar) will be closed only on Saturday as there are no holidays for the two festivals.

All banks will be closed on Saturday as this is the fourth Saturday of the month. According to the Reserve Bank of India (RBI) rules, banks are closed on second and fourth Saturday of every month.


Bitcoin Mining (In A Mine) Without Breaking The Bank Or The Planet?

Bitcoin mining, using sophisticated computers to create new bitcoins through the peer-to-peer blockchain network, is a costly endeavor that takes its toll on the environment and resources. That’s the widely accepted perception but is it possible to mine bitcoin more cheaply and in a less environmentally damaging way?

Northern Bitcoin, a German listed company, has begun mining bitcoin and other cryptocurrencies deep within a Norwegian former metal mine and claims it has slashed the price and energy costs of bitcoin mining.

Bitcoin miners around the world have unearthed more than $4.7 billion in revenue so far this year, according to Diar, a bitcoin and blockchain research firm, but due to sky-high electricity prices and this year’s fall in the value of bitcoin and other cryptocurrencies, profits are increasingly hard to come by.

Bitcoin mining price image

The Lefdal mine near Norway’s Sandane now acts as a data center for some of the world’s biggest tech companies.Northern Bitcoin / Lefdal mine

The largest mining pool operator in the world, Bitmain, will soon be forced to average out electricity costs across all of its facilities in order to remain profitable, according to Diar.

Northern Bitcoin claims it can mine one bitcoin for as little as $2,700 in Norway’s Lefdal Mine, against a current market price of around $6,500 and giving it a profit per bitcoin in the region of $4,000.

The Lefdal Mine, which last year opened as a data center hosting the likes of computing giant IBM, uses the cold water of the fjord to cheaply cool computers and the hydroelectric and wind power generated in the region to provide cheap, renewable, electricity.

The mine, which was previously used to harvest the mineral olivine, had been closed for almost 10 years before being transformed to a sprawling underground data center, that includes a self-sustaining water cycle.

Northern Bitcoin has found the Norway average cost for bitcoin mining is $7,700 per coin. It claims China has the lowest average of $3,100, along with Saudi Arabia. In Canada, the average cost of bitcoin mining is almost $4,000. At the other end of the scale, bitcoin mining can cost almost $10,000 per bitcoin in Australia.

bitcoin mine image

Racks of computers are brought into the mine on trucks.Northern Bitcoin / Lefdal Mine

Northern Bitcoin, which in October ditched bitcoin mining for bitcoin cash in order to have a say in the up-coming bitcoin cash fork (but plans to revert to bitcoin mining after that), hopes to eventually be mining 100 bitcoins per day—up from what the company described as “several bitcoins per day” before the bitcoin cash switch.

Meanwhile, bitcoin mining continues to attract attention for its huge energy consumption. The amount of energy required to mine one dollar worth of bitcoin is more than twice that required to mine the same value of copper, gold or platinum, according to a paper published in the science journal Nature this week.

One dollar’s worth of bitcoin takes about 17 megajoules of energy to mine, according to researchers from the Oak Ridge Institute in Cincinnati, Ohio, compared with four, five and seven megajoules for copper, gold, and platinum.

Last year it was estimated the power consumption of the bitcoin network was equivalent to that of the whole of Ireland, while another suggested it was producing the same annual carbon emissions as one million transatlantic flights.


3 dangerous fires are burning across California, and 6 people died in their cars as they tried to escape

Woolsey Fire

Three dangerous wildfires are raging in California.

The Camp Fire, in northern California, started Thursday morning and quickly charred the entire town of Paradise, which is home to 27,000. The flames grew so fast — a pace of 80 football fields per minute— that four people were burned to death in their cars, the Butte County sheriff Korey Honea told the Associated Press. One deceased person was found near a vehicle.

According to the sheriff, the department has received 35 missing persons reports. So far, at least nine people have died as a result of the Camp Fire. In addition to those found in or near a vehicle, one person was found inside a home.

As of 6:00 p.m. PT, fire officials said the blaze had burned 90,000 acres in just over 24 hours, and was 5% contained.

More than 6,700 structures were destroyed. It is now considered the most destructive wildfire in California history in terms of the number of structures destroyed.

To the south, on the outskirts of Los Angeles, two smaller fires also started Thursday and are now creating havoc for drivers and forcing homeowners to flee. The Woolsey and Hill Fires are burning through parts of Ventura and LA counties. The flames have threatened the homes of celebrities such as Kim Kardashian and shut down stretches of the 101 freeway.

Inside the city limits of LA, another smaller fire broke out Friday morning in Griffith Park near the zoo. Firefighters there are scrambling to reach the area by helicopter, since it’s not accessible by truck.

Southern California fire officials say the flames have burned at least 150 homes. They say that number is likely to increase.

Already this year, 7,578 fires have burned across California, fueled by hot, dry conditions and aggressive winds.

Camp Fire claims at least 9 lives

The Camp Fire started about 6:30 a.m. on Thursday. So far, more than 6,700 structures have burned and thousands more are threatened.

According to the Butte County sheriff’s office, five of the people whose deaths have been confirmed were found near Edgewood Lane in Paradise, California, in or near “vehicles that were overcome by the Camp Fire.” The sheriff’s office was not yet able to identify those victims because of their burn injuries. Other residents ran from the fire, the Sacramento Bee reported.

camp fire burns down paradise, CA nov 8 18
A sign is posted on the Paradise Skilled Nursing center as it is consumed by flames from the Camp Fire on Thursday in Paradise.
Justin Sullivan/Getty Images

California Acting Gov. Gavin Newsom declared a state of emergency in Butte County because of the Camp Fire Thursday, and sent a letter to President Donald Trump and the Federal Emergency Management Agency (FEMA) asking for federal assistance.


US trade deficit increases more than expected in October and is now up 10% for 2018

A container ship at the Port of Oakland in Oakland, California.

Getty Images
A container ship at the Port of Oakland in Oakland, California.

The U.S. goods and services deficit increased more than expected in September amid escalating tensions with its global trading partners.

The shortfall rose to $54 billion for the month, a 1.3 percent increase, or $700 million, from August and reflective of a 10.1 percent increase year to date, according to government numbers released Friday. Economists surveyed by Refinitiv had been looking for a gain of $53.6 billion.

The goods deficit stood at $76.3 billion, the highest on record on a seasonally adjusted basis.

Exports increased to $212.6 billion, a $3.1 billion gain from August, while imports rose $3.8 billion to $266.6 billion.

Those numbers come as the Trump administration moved forward with a plan to tax $200 billion worth of Chinese imports and as China countered. In recent days, President Donald Trump has expressed hope that upcoming talks with Chinese President Xi Jinping can yield fruits on the impasse between the two nations.

Trump has expressed disdain for trade imbalances and has vowed to use tariffs as a way to reduce deficits and get agreements that are fairer to the U.S.

For all of 2018, the global trade deficit has increased $40.7 billion, a result of a $143.8 billion increase in imports and a $184.5 gain in imports.

On a three-month average, the goods and services shortfall rose 5.6 percent from the same period a year ago.

In China’s case, the goods and services deficit increased to $40.2 billion, the highest on record on a non-seasonally adjusted basis Year to date, the U.S. is running a $301.4 billion deficit with China. The closely watched soybean trade was reflective of the trade tensions, with the decline in September exports at $744 million from the previous month.

The goods and services deficit with Russia rose to $1.7 billion, the highest since May 2013.

The goods deficit with Mexico showed a sharp decline, falling $1.1 billion to $7.6 billion, a 12.6 percent slide. The move came almost entirely due to exports, which rose $1.1 billion to $22.5 billion. Imports were little changed, falling less than $100 million to $30.1 billion.