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Govt files IPO document for IRCTC with Sebi, plans to offload 12% stake

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PHOTO: Screenshot from http://irctc.payondelivery.co.in


The Indian Railway Catering and Tourism Corporation (IRCTC), the railways’ tourism and catering arm, could get listed as early as this financial year. The centre on Thursday filed IRCTC’s draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi).


Market sources say the government plans to offload around 12 per cent stake through the IPO. The share sale could fetch between Rs 500 crore and Rs 600 crore and help the government with its disinvestment target.



IDBI Capital, SBI Capital Markets and Yes Securities will handle the share sale.


According to the DRHP filed by it, IRCTC is the only entity authorised by the Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. The Central Public Sector Enterprise has also diversified into other business segments like e-catering, executive lounges and budget hotels.


IRCTC operates one of the most transacted websites, www.irctc.co.in, in the Asia-Pacific (APAC) region with transaction volume averaging at 25 million per month and 7.2 million logins a day. Over 1.4 million passengers travel on a daily basis of which 71.42 per cent book their tickets online. Between FY14-19 online bookings have grown at an annual rate of 12.5 per cent.


At a premium of only 49 paise, IRCTC offers an optional travel insurance between Rs 0.75 million – Rs 1 million to its passengers. As of June 30, 2019, over 900 million passengers have opted for this travel insurance.


Though the listing of IRCTC was planned earlier, it was postponed due to the waiver of service charge on e-ticketing by the government, after demonetisation, that wiped out Rs 500 crore in annual revenue for IRCTC. Later, the finance ministry had partially reimbursed this.


The company, however, improved its finances later through utilising the website for advertising, data monetisation, e-auctioning and retail management. It also saw an increase in revenue from its catering business and sale of Rail Neer (the bottled water brand of IRCTC) in last two years.


IRCTC’s proposed IPO will follow that of railway PSU Rail Vikas Nigam (RVNL). The centre had raised Rs 480 crore by selling 12 per cent in RVNL in April. In September 2018, the government had launched the IPO of another railway PSU IRCON International, through which the centre had raised Rs 470 crore by selling 10.5 per cent.


Shares of RVNL currently are trading 20 per cent above their issue price, while Ircon shares are 25 per cent below their IPO price.

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Market Updates

Vegetable prices decline by almost 39% on increase in new season harvests

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Vegetable, Retail inflation


Prices of green vegetables have declined by up to 39 per cent in the past three weeks because of a sharp increase in the arrival of new season harvests.


Data compiled by the National Horticultural Board (NHB) showed that the price of green peas declined 39 per cent to trade at Rs 55 per kg in the wholesale Bengaluru Agricultural Produce Market Committee (APMC) on Monday. Trading at Rs 80 per kg in retail, green peas have, so far in September, posted a decline of 33 per cent.



Following the trend, bitter gourd slumped 17 per cent to Rs 20 per kg in Delhi for the first three weeks of September. Vegetable additives such as chilli, okra and garlic also reported a decline in most mandis. The price decline comes ahead of the festive season.


Excessive rainfall in almost all major vegetable-growing regions has delayed sowing. Also, sudden water logging has damaged standing crop this kharif season. The drop in vegetable prices is being considered a temporary relief. Prices of these items are likely to increase in the coming weeks.


“There has been a sharp increase in the arrival of new season crops as farmers have started plucking matured vegetables with water receding from the fields. The arrivals are set to increase in the weeks to come,” said Santosh Sidhangouda Patil, chairman, APMC Sangli, one of the largest vegetable mandis in Maharashtra.


Vegetable prices decline by almost 39% on increase in new season harvests


In contrast, tomato prices of local variety have jumped 11 per cent (to Rs 50 per kg) in Delhi retail markets, following a 22 per cent jump (to Rs 22 per kg) in wholesale mandis. Potato prices presented a mixed picture, with rise and fall in wholesale and retail markets depending on availability.


Vegetables are drought-tolerant crops, which require an intermittent sprinkling of water for blooming. Most major vegetable growing pockets in Maharashtra reported floods and waterlogging in vegetable-sown fields. As a result, 15-20 per cent standing crop is estimated to be damaged this year.


“The arrival of vegetables to mandis is 10-15 per cent lower in September when compared to the same time last year,” said a senior official at APMC, Nagpur.


Sriram Gadhave, president of the Pune-based Vegetables Grower Association said: “We cannot expect vegetable prices to decline as steeply as the past years because of estimates of lower production.”


The actual long-period average rainfall turned surplus after six years in 2019.


“The uneven distribution of rainfall has impacted standing vegetable crops. The shelf life of vegetables may also reduce due to high moisture in crops that were harvested early,” said Gadhave.

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Here’s why cut in corporate taxes failed to cheer the mining sector

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Merchant mining leases lapsing by March 2020 may get three-year extension


The government’s latest move to pare corporation taxes has failed to perk up the mining sector already burdened with a slew of levies like royalty, the goods and services tax (GST), and mandatory contributions to the District Mineral Foundation (DMF) and the National Mineral Exploration Trust (NMET). The Federation of Indian Mineral Industries (FIMI) feels that even after the government slashed corportion tax rates, the taxation rate is still steep for the mining sector.


“The effective rate is 58 per cent for existing mines and 54 per cent for new mines granted through auctions. Globally, the rates are as low as 31 per cent with the highest being 45 per cent,” said R K Sharma, secretary general, FIMI.



Apart from royalties on respective minerals, miners have to pay to the DMF pegged at 30 per cent of the royalty for older mines and 10 per cent for mines won through auctions.


They also have to pay two per cent of royalty to NMET, dividend distribution tax and corporate tax.


The sector has been clamouring for ‘one tax regime’ in mineral production along the lines of GST with the effective taxation rate (ETR) capped at 40 per cent.


Over and above the ETR, the mining sector is burdened with a plethora of other taxes and levies such as net present value (NPV) for surveys and mining in forest land.


The levies also include auction premium, performance security, GST on royalty, stamp duty, compensation afforestation charges and 10 per cent tax as levied by the Supreme Court in Goa and Karnataka besides Forest Development Tax (FDT).


All these levies and payments to the government make the domestic raw materials costly, resulting in costlier finished products in the economy and leading to imports and reduced gross domestic product (GDP) from mining.


The mining sector’s contribution to GDP is only 1.53 per cent, compared to 7-7.5 per cent in resource-rich countries like Australia and South Africa.


It is obvious that the mining sector in India is heavily taxed, not only in comparison to international levels but also against other domestic sectors.


The government needs to realise that the taxation regime for mining in India affects all downstream industries and employment opportunities in the economy while fuelling the already skewed balance of payments through additional import of minerals.


There is need to rationalise tax structure in the mining sector for sustainable development and deriving long-term benefits in terms of sustained raw material security for industries,” Sharma said.


He felt that despite its immense employment potential, the country’s mining sector is growing at a very sluggish pace. The sector has the potential to create 50 million jobs by 2025 but with the imminent lapsing of merchant mines by March 2020, 264,000 jobs are at stake.

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Debenture trustee sells Rs 200 crore of Zee Entertainment shares

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ZEE appoints Animesh Kumar as chief people officer


Catalyst Trusteeship, acting on behalf of one or few debenture holders, sold Rs 204 crore worth of Zee Entertainment’s shares in a bulk deal on Monday. Zee shares were placed as collateral with various mutual funds (MFs) and lenders, which had taken loan-against-share (LAS) exposures to Essel group firms.


On Monday, shares of Zee Entertainment corrected 9.6 per cent amid talks of one of the lenders invoking the pledged shares and selling these in the market. However, it couldn’t be ascertained which lender initiated this share sale or if there were more than one lender involved.



Responding to an e-mailed query, a company spokesperson said, “Essel Group confirms that the lenders who had not agreed to grant the extension, have exited by selling the pledged shares of Zee Entertainment. The other lenders who value the assets, have in-principally agreed to grant more time to the Group.”


The share sale comes at a time when Essel group is trying to get an extension from mutual funds (MFs) and other lenders to clear its dues. In February, promoters of Essel group firms had reached a ‘standstill’ agreement with MFs and other lenders to clear its dues by September 30.


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Earlier in the month, proceeds from promoters’ stake sale in Zee Entertainment were transferred to MFs and lenders. This transaction settled half of the dues of most of the creditors.


Over the last one-month period, the stock of Zee Entertainment has corrected 17.4 per cent. This sharp correction in shares would have also weighed on the equity cover that was offered against these loans.


Essel group has been seeking extension from MFs and other lenders for its debt repayment beyond the September 30 deadline. Earlier, MFs and other lenders had entered into a ‘standstill’ agreement with Essel group where the former wouldn’t sell the pledged shares of promoters to recover dues. The promoters were given time till September 30 to clear the outstanding dues.


It was expected that most lenders would give an extension to Essel group beyond the September 30 deadline as first tranche of payment had demonstrated the group’s intention to repay the debt.


According to people in the know, Subhash Chandra, chairman of Essel group, was also going to make a representation to Finance Minister Nirmala Sitharaman to assure of the group‘s debt repayment plans.


Overall, the MF industry had Rs 5,000 crore – Rs 6,000 crore of debt exposure to Essel group firms.


Exchange disclosures showed that as of the June quarter, 64 per cent of the promoter holdings in Zee Entertainment were pledged. The other listed companies of Essel Group where promoter pledging is on the higher side include Dish TV (94.47 per cent of promoter stake pledged), Siti Networks (90 per cent), Zee Learn (82.74 per cent), and Zee Media (93.54 per cent).


In second week of September, the group had cleared about half of the LAS dues after concluding the 8.7 per cent stake sale in Zee to Invesco Oppenheimer.

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