Several Indian state-owned companies, including REC, IIFCL, HUDCO, and SIDBI, are preparing to raise nearly $2 billion through bond sales early next week. This initiative follows the Reserve Bank of India’s recent interest rate cut, the first in nearly five years, aimed at stimulating the economy. Despite the rate reduction, bond yields have risen as the central bank did not introduce additional liquidity measures. The RBI has injected close to 2 trillion rupees into the banking system since last month, leading mutual funds to favor short-term, high-rated corporate bonds. RBI Governor Sanjay Malhotra has pledged to monitor the situation and take proactive steps to maintain orderly liquidity conditions.
Honeywell Automation India Sees Modest Profit Growth Amid Slowing Demand
Honeywell Automation India reported a 3.3% year-on-year increase in profit for the October-December quarter, totaling 1.32 billion rupees ($15.1 million). This growth is a decline from the 20.5% rise seen in the same period the previous year. Revenue grew by 1.8% to 10.91 billion rupees, as domestic capital goods companies faced reduced demand due to weak manufacturing activity. The parent company, Honeywell International, posted a 1.7% rise in net income and announced plans to separate its aerospace and automation businesses. Shares of Honeywell Automation India remained nearly flat at 38,338.3 rupees before the earnings announcement.
Shein Re-Enters Indian Market Through Partnership with Reliance Retail
Chinese fast-fashion retailer Shein has returned to the Indian market nearly five years after being banned due to border tensions between China and India. Reliance Retail has quietly launched Shein as a standalone app following a technology agreement. The app and user data will be hosted in India to address previous concerns about Chinese data access. Shein’s products will be manufactured in India, targeting both domestic and international markets. It’s unclear why Reliance didn’t launch its own low-cost fashion brand instead of retaining the Shein name.
Kia Challenges $14 Million Tax Demand Over Trade Treaty Exemptions
Kia is contesting a $14 million tax demand from Indian authorities for allegedly misusing free trade agreements to claim lower tariffs on imported electronic car parts. The dispute involves claims of incorrect tax declarations for imports between 2019 and 2022, amounting to a duty evasion of 1.22 billion rupees ($14 million). Kia has preemptively paid 322 million rupees ($4 million) under protest. This case is separate from another $155 million tax evasion notice regarding Kia’s import practices for their Carnival minivan. Kia denies these accusations and is appealing the demands. Volkswagen is also involved in a large-scale tax dispute with New Delhi. The outcome of these reviews could depend on higher-level interpretations of the rules. Kia reported its highest annual sales in India at $4.45 billion in fiscal 2022/23, with a net profit of $243 million.
India Anticipates Significant IPO Activity Despite Economic Slowdown
India is preparing for a notable year in initial public offerings (IPOs), with at least seven companies, including Groww and Pine Labs, expected to raise at least $1 billion each. The total equity fundraising could exceed $23 billion, following last year’s $19.6 billion from 336 IPOs. Despite a slowing economy and currency pressures, domestic investor interest remains strong, drawn by India’s high equity valuations and a robust domestic market.
