India Inc raises Rs 8.84 trillion via rupee bonds By Rajesh Kurup & Kishor Kadam In a year when the global markets took a knock due to the Russia-Ukraine war and fears of recession, Indian corporates were able to raise Rs 8.84 trillion through rupee bonds – marginally down from Rs 8.86 trillion raised in FY22. A total of 365 companies mopped up funds through bonds in FY23, some of them repeatedly tapping the capital markets during the year. HDFC topped the chart with Rs 78,415-crore fundraise through issuance of bonds during the year under review, followed by Power Finance Corporation (Rs 45,097 crore), Nabard (Rs 49,510 crore), State Bank of India (Rs 38,851 crore), REC (Rs 37,705 crore), SIDBI (Rs 35,405 crore), Indian Railway Finance Corp (Rs 29,559 crore) and HDFC Bank (Rs 23,000 crore), according to data sourced from Bloomberg. “The lacklustre interest by corporates in raising funds through bonds was mainly due to the rise in interest rates during the financial year, while a rise in global inflation rates also played its part. Due to these factors, raising funds through fresh issuance of bonds would have been comparatively costlier, which also made corporates adopt a wait-and-watch approach. During the fiscal, corporates stayed away from making real investments, while funds were raised only for refinancing,” Mahesh Singhi, founder & MD at investment banking firm Singhi Advisors, said. “With these issues still hovering, we don’t expect much fundraising through bonds to happen in FY24. The traditional way of borrowing from banks would be the preferred mode,” Singhi added. In FY23, the RBI raised benchmark lending rates by 250 bps. “In FY23, despite the rate hikes, banking channels were offering loans at rates much below the corporate bond rates. The credit growth of banks has been hovering at 15-16%. Drying up of market liquidity, coupled with slower pace of deposit mobilisation growth, has resulted in transmission of rates by banks, the impact of which will be seen in FY24. The reduction in corporate tax rates during the last couple of years has helped companies to accrue more cash and de-leverage significantly — it has resulted in strengthening of their balance sheets, thereby enhancing their credit rating, making them more attractive for bond market issuance for their next phase of inevitable growth,” Vinay Pai, head (fixed income) at Equirus, said. December 2022 witnessed the highest fundraise in FY23 at Rs 1.43 trillion, followed by March 2023 (Rs 1.11 trillion), November (Rs 92,565 crore), September (Rs 92,533 crore) and February 2023 (Rs 86,087 crore).
The Japanese pharma major is also filing a plea before the Delhi HC seeking appointment of forensic auditors to analyse transactions involving IHH, Fortis Healthcare and RHT, Singapore, as directed by the HC on October 18.
The development is likely to create legal hurdles and delay the proposed open offer as IHH had recently told FE that it could only go ahead if Sebi agreed with its legal interpretation that the SC’s September 22 order has lifted all such restraints.
IHH managing director and CEO Kelvin Loh told FE on November 9 that the company would like to go ahead with the open offer “as soon as possible” as there has already been a delay of four years. Ravi Rajagopal, chairman of Fortis Healthcare, had added that their legal counsel has advised that the company can go ahead with the open offer as the SC order has disposed of various appeals, including the suo motu contempt. “We have represented to the Sebi and the matter is with them,” Rajagopal had said.
However, legal observers told FE that the matter is not that straightforward and simple as the Delhi HC has to take the final call on the matter of open offer as well as whether a forensic audit has to be done in the share sale which was executed in 2018.
Also Read: IHH to float open offer for Fortis if Sebi concurs with our legal view: MD & CEO
Loh and Rajagopal had said the possibility that the matter may take a different turn when it comes up in Delhi HC cannot be ruled out.
IHH had in July 2018 acquired a 31% stake in Fortis Healthcare for Rs 4,000 crore through the bidding route. It had also earmarked Rs 3,000 crore to make an open offer for an additional 26% to the public shareholders as required under the law.
Daiichi has written to Sebi that the SC in its September 22 order had asked the HC to consider ordering a forensic audit into the dilution of FHL shareholding, repeated violation of undertakings and assurance by former FHL promoters — Malvinder and Shivinder Singh — and the transaction between FHL, IHH and the clandestine transfer of Rs 4,666 crore to RHT Singapore.
Daiichi is “severely prejudiced” with IHH’s clandestine attempt to subvert the status quo order directed by the SC on December 14, 2018, and September 22 with respect to the conduct of forensic audit and the pending proceedings before the HC by purportedly consulting regulatory authorities, including Sebi, on the proposed FHL-IHH transaction. It has reiterated that the FHL-IHH transaction was currently sub-judice before the HC where FHL is also a party, its solicitors, P&A Law Offices, have said in the letter.
“We further state that any such attempt by FHL and/or IHH to proceed with the FHH-IHH transaction would be in direct contravention of the HC and SC orders,” the letter sent by the law firm has stated. Daiichi Sankyo is pursuing the enforcement of Rs 3,500-crore arbitration award against the Singh brothers pronounced by a Singapore tribunal for concealing information when they sold Ranbaxy Laboratories to it for $4.6 billion in 2008. The apex court had in 2018 put on hold the sale of Fortis Healthcare to IHH on a contempt plea filed by the Japanese drugmaker against the Singh brothers.