Money Morning….


FMC approves Kotak Mahindra Bank deal to buy 15% stake in MCX, Also FTIL sells entire stake in MCX- Positive from medium term perspective
The Forward Markets Commission (FMC) had banned MCX from launching new contracts for 2015 in a bid to exert pressure on the exchange to comply with an order directing promoter FTIL to divest its equity completely. Last month, Kotak Bank signed a memorandum of understanding with FTIL to acquire 15 per cent of its MCX stake for 459 crore. Yesterday, FMC approved Kotak Mahindra Bank’s move to buy a stake in MCX. The development comes as a major relief for MCX. Yesterday, Financial technologies has also offloaded a 5 per cent stake in MCX, thus completing the divestment of all its equity in the country’s largest commodity exchange. SBI Life Insurance was the buyer of 343400 shares at Rs. 830. We believe MCX is now placed in a sweet spot from the long term perspective wherein promoter overhang is removed and also the business opportunity opens up as the restriction placed by FMC is removed.

Cairn India gets nod to sell gas to Gujarat based firms at $8.4. Positive in short to medium term for Cairn India
Cairn India has been allowed to sell gas from its Rajasthan block at about $8.40 per unit to Gujarat based firms, including a fertilizer plant, since March 2013. Oil ministry officials said Cairn’s production sharing contract (PSC), which was signed before the launch of the New Exploration Licensing Policy (NELP) in the late 1990s, allows pricing and marketing freedom to the company. In contrast, the PSCs of Reliance Industries and Gujarat State Petronet(GSPL) applicable to blocks awarded under NELP — stipulated a higher level of government involvement, these officials said. Notably, the pricing formula for gas found in the NELP blocks has to be approved by the government. Hence, companies like RIL and GSPL may have to wait till September-end to learn if they can charge more than $4.20 perunit of gas.

RBI eases procedure of ECB refinancing
The Reserve Bank has eased the refinancing procedure of ECBss where borrowers can repay any existing debt by raising fresh ECB at lower all-in-cost but subject to the condition that the outstanding maturity of the original loan is maintained. Banks need to undertake the refinancing before the maturity of the existing ECB while consent of the exiting lender should be available. Both the existing and fresh ECBs should be in compliance with the applicable guidelines; All-in-cost of fresh ECB should be less than that of the all-in-cost of existing ECB, RBI said.

ADB to provide up to $9 bn loan to India over 3 years
Committing to support infrastructure development in India, Asian Development Bank to provide up to 7-9 billion loan to the country over the next three years. Besides, the multilateral funding agency will provide around $30 million for technical assistance grants, especially for building institutions and capacity at the state as well as the local levels.

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