Relaxed open offer norm for PSUs to apply to IDBI Bank Market regulator Sebi is likely to extend the relaxed open offer norm now applicable to public sector undertakings (PSUs) being privatised to IDBI Bank, sources said. If the relaxation is extended to the wining bidder of the bank, jointly owned by LIC and the government, it could acquire additional shares from the public in the open offer at the winning bid price instead of the volume-weighted average market price of last 60 days preceding the offer. The relaxation is expected to give comfort to the potential buyer that there won’t be any cost escalation for the open offer. IDBI Bank is a private sector bank by definition as the government’s direct holding in the lender is less than 51%. According to Sebi’s takeover regulations, the acquisition of an aggregate of 25% shares in a listed entity would trigger an open offer to acquire another 26% shares from the public. Only 5.28% is held by the public in IDBI Bank and the balance 94.72% is held by LIC and the Government of India. Also Read: IDBI Bank buyer to get tax relief on LIC stake On October 7, the Centre invited expression of interest (EoI) and offered to sell a total of 60.72% stake in IDBI Bank, including 30.48% held by the government directly and 30.24% by state-run LIC, along with the transfer of management control. On September 30, the Sebi amended its takeover regulations and dispensed volume weighted average market price (VWAMP) based parameter for the determination of Open Offer price in case of divestment of PSUs resulting in change in control. The government’s divestment process is long-drawn, getting culminated only when an acquirer is identified, which may take a year or more. So, by the time the share purchase agreement between the government and the buyer is executed, the traded price gets inflated and may lead to an overvalued open offer price requirement basis the prescribed 60 trading days’ VWAMP. This might reduce the bidders’ interest in the company. So, the discovered price in the strategic disinvestment process is ideal for the open offer price, the official said.
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Retail inflation in milk was reported at 8.85% in May 2023. The milk inflation has remained elevated at over 6% since August 2022. Despite India being the largest milk producer since 1998, the commodity has been the second biggest factor after cereals such as rice and wheat in driving up retail inflation in the last fiscal.
Milk has the second highest weight in the food and beverages basket of the consumer price index at 6.61%, a notch lower than cereals and products with a 9.67% weight. Organised players, including Mother Dairy and Amul, hiked prices multiple times in the last one year citing higher fodder cost, robust demand and some impact due to reports of lumpy skin disease.
Industry sources said feed cost, which has a share of more than 65% in the cost of production of milk, has increased to Rs 20/kg from Rs 8 a year ago. The finance ministry in April had attributed the elevated milk inflation to a demand supply mismatch and said it could be one of the factors apart from volatile international crude oil prices and constrained supplies of milk would influence the country’s inflation trajectory.
“Milk production has been impacted by a lumpy skin disease infecting millions of cattle in late 2022,” the ministry said in the monthly economic review, adding that the vaccination drive against the disease is expected to curb the spread and immune the cattle against the skin disease.
According to official data, currently India is the world’s largest milk producer, and has a share of 23% in global milk production. For the first time in decades, the country’s milk production is likely to have stagnated in 2022-23 due to Lumpy Skin Disease in cattle across several states and the lagged effect of Covid-19 in the form of stunting of the animals, a senior official with department of animal husbandry and dairying recently had stated. The milk production was estimated at 221 million tonne in 2021-22.