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<ul><li>Just before suffering a cardiac arrest, <keyword id="153813" type="General" weightage="50" keywordseo="tulsi-tanti" source="Orion">Tulsi Tanti</keyword> had addressed the media announcing <keyword id="46212" type="General" weightage="20" keywordseo="Suzlon-Energy" source="Orion">Suzlon Energy</keyword>’s ₹1,200 crore rights issue.</li><li><keyword id="355997" type="General" weightage="100" keywordseo="tanti" source="Orion">Tanti</keyword> said the proceeds would be used to pay debt and interest, among other things.</li><li>He was known as one of the pioneers of renewable energy in India and bagged recognition from the United Nations, apart from others.</li></ul>Tulsi Tanti, the founder chairman and managing director of <keyword id="6440105" type="General" weightage="80" keywordseo="suzlon" source="Orion">Suzlon</keyword> Energy died late on October 1 due to a cardiac arrest. The 64-year-old Gujarat-based businessman is survived by his children Nidhi and Pranav. “With profound sadness, we inform you of the untimely demise of Tulsi R. Tanti, the Founder, the chairman and managing director, and one of the promoters of Suzlon Energy Limited on 1st October 2022. Shri Tanti suffered a cardiac arrest and passed away the same day,” Suzlon Energy said in a stock exchange filing. Tanti passed away soon after flying to Pune from Ahmedabad, where he was addressing the media to announce the opening of Suzlon Energy’s ₹1,200 crore rights issue, starting October 11. During the media briefing, Tanti had underlined that the proceeds of the rights issue would be used to repay debt and reduce interest liabilities, apart from meeting working capital and corporate requirements. Tanti was amongst the first in the industry to enter the renewable energy space. He founded Suzlon Energy in 1995 and the company now has 19.4GW wind energy capacity with a 33% market share in India. The company has its presence in 17 countries around the world, including R&amp;D centres in Germany, Netherlands, Denmark, among others. At the time, the renewable energy space was dominated by international players which offered expensive and complicated technologies. With the renewable energy industry taking off now – Adani and Ambani, India’s richest men, have committed billions of dollars to it – Tanti quipped that the time is now right, and that Suzlon entered the business two decades early. Tanti was also the chairman of Indian Wind Turbine Manufacturers Association, and was awarded ‘Champion of the Earth’ by the United Nations Environment Programme in 2009. He also won recognition as ‘Hero of the Environment’ by TIME Magazine in 2007, among others. Suzlon Energy had returned to stability in FY22 after a string of major losses in the years prior – it made a small profit in FY21, but reported over ₹4,200 crore cumulative loss in FY20 and FY19. The company nearly doubled its revenue in FY22 from FY21, and its interest expenses had gradually come down, bringing a major source of expense under control. The ₹1,200 crore rights issue is aimed at further paring the debt and easing the pressure on its balance sheet. It opens on October 11. SEE ALSO: <a href="https://www.businessinsider.in/business/telecom/news/airtel-5g-services-launched-in-eight-cities-the-entire-country-to-be-covered-by-2024/articleshow/94579199.cms">Airtel 5G services launched in eight cities, the entire country to be covered by 2024</a> <a href="https://www.businessinsider.in/business/telecom/news/pm-modi-on-indias-5g-launch-here-are-the-key-points-from-the-speech/articleshow/94581721.cms">PM Modi on India’s 5G launch – here are the key points from the speech</a> <a href="https://www.businessinsider.in/tech/news/jio-will-launch-5g-for-the-entire-country-by-december-2023-mukesh-ambani/articleshow/94579338.cms">Jio will launch 5G for the entire country by December 2023: Mukesh Ambani</a>

Suzlon Energy’s founder chairman Tulsi Tanti passes away due to cardiac arrest

<ul><li><keyword id="46212" type="General" weightage="50" keywordseo="suzlon-energy" source="Orion">Suzlon Energy</keyword> is the fifth largest wind turbine maker in the world, and the company has come up with a ₹1,200 crore rights issue. </li><li>The company intends to use the proceeds of the rights issue to pare its debt and interest, apart from meeting other corporate requirements. </li><li><keyword id="153813" type="General" weightage="20" keywordseo="Tulsi-Tanti" source="Orion">Tulsi Tanti</keyword> was the pioneer of renewable energy in India – and with him now gone, <keyword id="6440105" type="General" weightage="100" keywordseo="suzlon" source="Orion">Suzlon</keyword> Energy’s rights issue could be at risk. </li></ul>Suzlon Energy, the fifth largest wind turbine maker in the world, has come up with a ₹1,200 crore rights issue that kicks off on October 11. But now with the <a href="https://www.businessinsider.in/business/corporates/news/suzlon-energys-founder-chairman-tulsi-tanti-passes-away-due-to-cardiac-arrest/articleshow/94596261.cms">company’s face and founder Tulsi Tanti gone</a>, investors may have some concerns. The rights issue is the latest in Suzlon Energy’s attempts to trim its debt – its total borrowings stood at ₹6,800 crore in FY21. Earlier this year, its lenders agreed to convert a part of their loans to equity, increasing their stake in the company to 35%. <div type="image" title="Suzlon Energy shareholding pattern ." msid="94617027" hostid="261" sizebytes="17524" caption="&amp;lt;p&amp;gt;Suzlon Energy shareholding pattern&amp;lt;/p&amp;gt;"></div> However, just as <keyword id="355997" type="General" weightage="80" keywordseo="tanti" source="Orion">Tanti</keyword> was trying to partly repay lenders, <a href="https://www.businessinsider.in/business/corporates/news/suzlon-energys-founder-chairman-tulsi-tanti-passes-away-due-to-cardiac-arrest/articleshow/94596261.cms">he suffered a cardiac arrest and passed away</a>, and the retail investors who Tanti had confidence in might end up thinking twice before subscribing to the rights issue. In an exchange filing earlier today, the company confirmed that it is going ahead with the rights issue, with the promoters announcing they will fully subscribe to their rights entitlement. <cmsannotation type="cmsannotation" annotationid="Suzlon could be a ‘good candidate’ for other green energy players" comment="subhead" text="Suzlon could be a ‘good candidate’ for other green energy players">Suzlon could be a ‘good candidate’ for other green energy players</cmsannotation> Shrikant Chouhan, head of equity research (retail) at Kotak Securities, remains optimistic about the company’s fortunes despite the demise of Tanti, who was the keyman of Suzlon Energy and its face, too. “Rights issues may turn out to be good for the company because right now the investors are ready to infuse money and the confidence building is also there. If they get proper response from investors then I think the company will start doing well,” he told Business Insider India. Suzlon Energy could also be on the radar of other green energy companies. “Since there is a focus of the government on clean or green energy, Suzlon Energy will be a good candidate in the future for anyone to take over or to buy or consolidate,” Chouhan added. What might be of concern to investors, though, is that the company’s financials don’t inspire a lot of confidence. From its peak of ₹21,000 crore in revenue in 2012, Suzlon’s topline fell 7 times to ₹3,000 crore in 2020. In this period, the company reported a cumulative loss of over ₹19,800 crore. However, it has slowly started clawing back after hitting the bottom in 2020. 2021 saw its topline grow by 12%, but the most important improvement was in the bottomline – Suzlon reported a profit of ₹105 crore after reporting a loss of ₹2,700 crore in 2020. In 2022, Suzlon’s topline nearly doubled, while it remained in the black in terms of profits. Its shares, however, entered the death spiral over a decade ago, falling by over 200 times from the peak of ₹425 to ₹1.95 in 2019. Whether the rights issue will help the company bounce back or will it just bail out the lenders, only time will tell. <cmsannotation type="cmsannotation" annotationid="India’s ‘wind man’" comment="subhead" text="India’s ‘wind man’">India’s ‘wind man’</cmsannotation> Tulsi Tanti is often called the pioneer of renewable energy and the ‘wind man’ of India. He founded Suzlon Energy in 1995 and the company now has 19.4GW wind energy capacity with a 33% market share in India. It’s present in 31 countries around the world, including R&amp;D centres in Germany, Netherlands, Denmark, among others. At the time, the renewable energy space was dominated by international players which offered expensive and complicated technologies. With the renewable energy industry taking off now – Adani and Ambani, India’s richest men, have committed billions of dollars to it – Tanti <a href="https://www.businessinsider.in/business/corporates/news/suzlon-energys-founder-chairman-tulsi-tanti-passes-away-due-to-cardiac-arrest/articleshow/94596261.cms">quipped</a> that the time is now right, and that Suzlon entered the business two decades early. While the future seems hazy right now, Tanti’s journey from a textile businessman to a renewable energy pioneer is one of ingenuity and intrigue. <cmsannotation type="cmsannotation" annotationid="Textiles to renewable energy – and the makings of Adani" comment="subhead" text="Textiles to renewable energy – and the makings of Adani">Textiles to renewable energy – and the makings of Adani</cmsannotation> Tanti’s first tryst with entrepreneurship was in the textiles industry. He set up Sulzer Synthetics in 1987 along with his siblings, in typical baniya spirit. Soon, to support textile manufacturing, Tanti set up a captive wind energy unit that allowed him to reduce his energy costs, but like his fellow Gujarati Adani, he expanded his wind energy unit from being a captive source to an actual business of its own. He set up Suzlon Energy in 1995, and the next 10 years created a billionaire out of a textile businessman. Suzlon hit the capital markets with an IPO in 2005 to raise ₹1,500 crore, but the renewable energy business had enough excitement around it that the issue was oversubscribed 15 times. Suzlon’s success even helped Citigroup Venture Capital – a private equity firm and part of Citigroup at the time – reap handsome rewards. The firm invested $22 million and cashed out $400 million, with $300 million worth of stake still in its kitty. Suzlon used these funds to make some quick acquisitions – it scooped up Belgium-based Hansen Transmissions which made gearboxes, aiming for backward integration. Later, it acquired Germany-based REpower Systems, surprising global bankers and wind energy players. On the other hand, Suzlon’s debt kept piling up even as the company’s market cap soared to ₹68,000 crore in 2009. If this sounds familiar, it is because it’s true – while<a href="https://www.businessinsider.in/thelife/personalities/news/gautam-adani-a-story-on-how-to-generate-wealth-via-hope-fomo-and-of-course-debt/articleshow/91829090.cms"> Tanti had the makings of Gautam Adani</a>, he never quite managed to tide over the debt concerns despite multiple restructurings. The REpower acquisition sent Suzlon’s debt soaring from ₹5,100 crore to ₹17,000 crore, forcing Tanti to hit reset on debt restructuring multiple times. He did eventually manage to sell REpower for a €500 million loss in 2015, but that was after eight years of servicing debt. SEE ALSO: <a href="https://www.businessinsider.in/retail/news/jewellery-chains-are-growing-at-the-cost-of-standalone-jewellers-and-its-only-going-to-get-worse-says-world-gold-council-report/articleshow/94510142.cms">Jewellery chains are growing at the cost of standalone jewellers – and it’s only going to get worse, says World Gold Council report</a> <a href="https://www.businessinsider.in/business/corporates/news/the-adani-effect-ambuja-cements-rallies-40-in-one-month-analysts-suggest-good-days-ahead-for-the-cement-industry/articleshow/94366341.cms">The Adani effect: Ambuja Cements rallies 40% in one month – analysts suggest good days ahead for the cement industry</a> <a href="https://www.businessinsider.in/stock-market/news/how-indian-equity-gold-and-debt-investments-have-performed-over-the-past-two-decades/articleshow/94304653.cms">Story in charts: How Indian equity, gold and debt investments have performed over the past two decades</a>

Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death

Key stock indices <keyword id="6484188" type="General" weightage="20" keywordseo="sensex" source="Orion">Sensex</keyword> and Nifty declined over 1 per cent at close on Monday amid weak global market trends and continued foreign fund outflows. Benchmark BSE Sensex tumbled 638.11 points or 1.11 per cent to settle at 56,788.81. During the day, it tanked 743.52 points or 1.29 per cent to 56,683.40. The broader NSE Nifty fell by 207 points or 1.21 per cent to end at 16,887.35. Among the Sensex stocks, Maruti, Hindustan Unilever, IndusInd Bank, ITC, Bajaj Finance, State Bank of India and Kotak Mahindra Bank were the major laggards.Dr Reddy's, NTPC, Bharti Airtel and Wipro were the winners. Elsewhere in Asia, markets in Hong Kong settled lower, while Tokyo ended higher.Stock exchanges in Europe were trading lower in mid-session deals after oil prices rose by more than USD 3 per barrel amid dire warnings over energy shortages in Europe. The <keyword id="123399" type="General" weightage="20" keywordseo="us-markets" source="Orion">US markets</keyword> ended in negative territory on Friday.Sensex had jumped 1,016.96 points or 1.80 per cent to settle at 57,426.92 on Friday. The Nifty climbed 276.25 points or 1.64 per cent to end at 17,094.35. Meanwhile, the international oil benchmark Brent crude futures jumped 3.90 per cent to USD 88.46 per barrel. Foreign institutional investors offloaded shares worth Rs 1,565.31 crore on Friday, according to data available with BSE.Foreign investors turned sellers in September, pulling out Rs 7,600 crore from Indian equity markets. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/science/space/news/mangalyaan-all-you-need-to-know-about-indias-first-historic-mission-to-mars/slidelist/94617244.cms">India’s first mission to Mars – Mangalyaan</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/heres-all-you-need-to-know-about-suzlon-energys-1200-crore-rights-issue-after-founder-tulsi-tantis-death/articleshow/94617068.cms">Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death</a>

Sensex, Nifty fall over 1% on weak global trends

<ul><li>The IPO consists of a fresh issue of ₹350 crore and an offer for sale of upto 7.5 million shares by shareholders and promoters.</li><li>The proceeds from the <keyword id="15151031" type="General" weightage="20" keywordseo="IKIO-Lighting-IPO" source="Orion">IKIO Lighting IPO</keyword> will be used to repay debt worth ₹50 crore. As of August 2022, the company’s total outstanding borrowings amounted to ₹70 crore.</li><li>It is looking to open a new facility at Noida, Uttar Pradesh.</li></ul>IKIO Lighting, which is a provider of light-emitting diode (LED) lighting solutions, has filed draft papers with the Securities Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). The company intends to raise as much as ₹350 crore, via a fresh issue and an offer for sale. The proceeds from the IPO will be used to repay debt worth ₹50 crore. As of August 2022, the company’s total outstanding borrowings amounted to ₹70 crore. Further, it is looking to open a new facility at Noida, Uttar Pradesh by investing IPO proceeds worth ₹236 crore via its subsidiary IKIO Solutions. IKIO Lighting has four facilities with one in the SIDCUL Haridwar industrial park in Uttarakhand and three in Noida. As of March 2022, it had an annual installed capacity to manufacture 20.31 million LED light pieces. The company had witnessed a partial shutdown of its units during lockdown. “Due to the nationwide lockdown, we were required to shut down our manufacturing operations from March 25, 2020 to May 3, 2020. Any future restrictions on our workforce’s access to any of our manufacturing facilities and the health and availability of our workforce could limit our ability to meet customer orders and have a material adverse effect on our business, results of operations and financial condition,” said the company in DRHP. In the past three fiscal years, it provided products to over 900 domestic and six international customers. Philips Electronics is one of its largest customers. The company is in negotiations with some of its existing customers to supply their LED home lighting products to their international supply chain. Along with its improving profitability in the last three years, the company’s EBITDA margin has also improved over time. It was at 23.3% in FY22; 22.4% in FY21 and 16.94% in FY20. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fiscal year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Revenue </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Profit </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹333 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹50 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹214 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹28 crore </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY20 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹221 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹21 crore </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/electronics-mart-india-ipo-set-to-open-on-oct-4-commands-grey-market-premium-of-30/share/articleshow/94620046.cms">Electronics Mart India IPO set to open on Oct 4; commands grey market premium of ₹30/share</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/heres-all-you-need-to-know-about-suzlon-energys-1200-crore-rights-issue-after-founder-tulsi-tantis-death/articleshow/94617068.cms">Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death</a>

Noida-based LED IKIO Lighting files DRHP with SEBI to raise ₹350 crore

<keyword id="10627165" type="General" weightage="20" keywordseo="Appointment-on-compassionate-ground" source="Orion">Appointment on compassionate ground</keyword> is a concession not a right and the object of granting such employment is to enable the affected family to tide over a sudden crisis, the <keyword id="6354977" type="General" weightage="20" keywordseo="supreme-court" source="Orion">Supreme Court</keyword> has said. The apex court last week set aside the judgement of a division bench of the Kerala High Court, which confirmed the verdict of a single judge directing the Fertilisers and Chemicals Travancore Ltd and others to consider the case of a woman for appointment on compassionate ground. A bench of <keyword id="12024223" type="General" weightage="20" keywordseo="Justices-M-R-Shah" source="Orion">Justices M R Shah</keyword> and <keyword id="333383" type="General" weightage="20" keywordseo="Krishna-Murari" source="Orion">Krishna Murari</keyword> noted that the father of the woman was employed with Fertilisers and Chemicals Travancore Ltd and died while on duty in April 1995. At the time of his death, it noted, his wife was serving and therefore not eligible for appointment on compassionate ground. "After a period of 24 years from the death of the deceased employee, the respondent shall not be entitled to the appointment on compassionate ground," the bench said. According to the law laid down by the apex court on appointment on compassionate ground, equal opportunity for all government vacancies should be provided to all aspirants as mandated under Articles 14 and 16 of the Constitution. Article 14 of the Constitution deals with equality before law and Article 16 with equality of opportunity in matters of public employment. "However, appointment on compassionate ground offered to a dependent of a deceased employee is an exception to the said norms. The compassionate ground is a concession and not a right," the bench said in its judgement delivered on September 30. The apex court noted that when the employee had died in 1995, his daughter was a minor. On attaining the age of majority, she made an application for appointment on compassionate ground, the court said. It also noted that after a period of around 14 years after his death, his daughter had submitted an application for appointment on compassionate ground. Referring to previous judgements of the top court, the bench said as per the law laid down, compassionate appointment is an exception to the general rule of appointment in the public services and is in favour of dependants of a person dying in harness and leaving his family in penury and without any means of livelihood. In such cases, out of pure humanitarian consideration, a provision is made in the rules to provide gainful employment to one of the dependants of the deceased who may be eligible for such employment, the court said. "The whole object of granting compassionate employment is, thus, to enable the family to tide over the sudden crisis. The object is not to give such family a post much less a post held by the deceased," the bench said. Allowing the appeal filed by Fertilizers and Chemicals Travancore Ltd and others against the March this year verdict of the high court, the court said that if such an appointment is made now it shall be against the object and purpose for which the appointment on compassionate ground is provided. Setting aside the high court judgement, it said both the single judge as well as the division bench had committed an error in directing the appellants to reconsider her case for appointment on compassionate ground. The bench noted that her application for compassionate appointment was rejected in February 2018 on the grounds that her name was not in the list of dependants submitted by the deceased employee and that the policy was to give employment to widow or son or unmarried daughter of the employee. It also noted that in December 2019, the appellants had again rejected her application for appointment on compassionate ground on the grounds that 24 years had lapsed since the death of the employee. It also did not meet the primary test of scheme that the deceased employee should be the "sole bread winner of his family" since his wife was gainfully employed with the Kerala State Health Services Department at the time of his death, the bench said. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/infosys-to-lead-it-sectors-q2-show-with-4-revenue-growth-says-jefferies/articleshow/94606976.cms">Infosys to lead IT sector’s Q2 show with 4% revenue growth, says Jefferies</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/business/corporates/news/suzlon-energys-founder-chairman-tulsi-tanti-passes-away-due-to-cardiac-arrest/articleshow/94596261.cms">Suzlon Energy’s founder chairman Tulsi Tanti passes away due to cardiac arrest</a>

Appointment on compassionate ground concession not a right: SC

<ul><li><keyword id="8087626" type="General" weightage="100" keywordseo="prosus" source="Orion">Prosus</keyword>, the company behind PayU has terminated a $4.7 billion deal to acquire <keyword id="225041" type="General" weightage="80" keywordseo="billdesk" source="Orion">BillDesk</keyword>.</li><li>The company has said that certain conditions precedent were not met by the deadline at the end of September.</li><li>Prosus had announced the deal in August last year.</li></ul> Prosus NV, which owns PayU, has terminated a $4.7 billion (about Rs 38,400 crore) deal to acquire Indian payments firm BillDesk after conditions on the deal weren't met. In a statement, Prosus said certain conditions precedent weren't met by the deadline at the end of September. Approval of the Competition Commission of India (CCI), which was one of the conditions precedent, was received on September 5 but Prosus did not specify which other conditions were not met. A condition precedent is a stipulation that defines certain conditions that must either occur or be met by either party to ensure progress or execution of a contract. The amalgamation of BillDesk with PayU of Prosus would have created a digital payments giant with an annual total payment volume (TPV) of $147 billion. Its closest rivals in India such as Razorpay and CCAvenue, which is owned by Infibeam, are estimated to have an annual TPV of over $50 billion and $18-20 billion, respectively. This would have been the largest acquisition of Prosus, a Dutch e-commerce company. Prosus had on August 31 last year announced the acquisition of BillDesk in an all-cash deal to expand its footprint in India's booming fintech sector under the umbrella of its payment gateway PayU. There is no break-free associated with the deal. Prosus, majority owned by Naspers, serves more than 4,50,000 merchants with over 100 payment methods. Prosus has been a long term investor and operator in India investing close to $6 billion in technology companies like Swiggy, and Pharmeasy since 2005, it said. BillDesk, founded by three consultants from Arthur Andersen LLP - MN Srinivasu, Ajay Kaushal and Karthik Ganapathy - in 2000, benefited from a surge in growth in digital payments as smartphones adoption grew and Internet access became ubiquitous. The founders would have collected $500 million each from the deal. "Closing of the transaction was subject to the fulfilment of various conditions precedent, including approval of the CCI," Prosus said in a statement. While CCI approval was secured on September 5, 2022, "certain conditions precedent were not fulfilled by September 30, 2022 long stop date and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented," it said. It remains committed to the Indian market and growing its existing business within the region, Prosus statement added. Launched when the term fintech didn't even exist, BillDesk - which counts private equity firm General Atlantic as its single-largest shareholder with a holding of about 14.2 per cent - is said to have the largest roster of business clients among payment gateways in India. It provides solutions ranging from settlements, collections, reconciliations, and auto settlements. It also partners with companies in categories such as billing, utility payments, direct-to-consumer procurement, government payments, financial services, and telecom. TA Associates held a 13.1 per cent stake while Visa had 12.6 per cent in the firm. The three founders had close to 30 per cent shareholding. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/heres-all-you-need-to-know-about-suzlon-energys-1200-crore-rights-issue-after-founder-tulsi-tantis-death/articleshow/94617068.cms">Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death</a> <a href="https://www.businessinsider.in/business/corporates/news/infosys-to-lead-it-sectors-q2-show-with-4-revenue-growth-says-jefferies/articleshow/94606976.cms">Infosys to lead IT sector’s Q2 show with 4% revenue growth, says Jefferies</a> <a href="https://www.businessinsider.in/business/news/mumbai-tops-real-estate-sales-and-new-launches-in-september-quarter/articleshow/94613731.cms">Mumbai tops real estate sales and new launches in September quarter</a>

Prosus terminates $4.7 bn deal to acquire BillDesk

<ul><li>Indians are taking more personal and <keyword id="1897540" type="General" weightage="20" keywordseo="consumer-durable-loans" source="Orion">consumer durable loans</keyword>, boosting the overall growth of retail credit in the country.</li><li>Personal and consumer durable loans almost doubled between FY19 and FY22, despite a lull for two years due to Covid-19.</li><li>Tier 2 and lower cities and districts have joined the party, with home loans seeing a surge in these areas due to WFH.</li></ul>Indians are taking more <keyword id="35520" type="General" weightage="100" keywordseo="personal-loans" source="Orion">personal loans</keyword> and buying consumer products on credit than ever before, according to a new report by credit bureau <keyword id="2509365" type="General" weightage="80" keywordseo="crif-high-mark" source="Orion">CRIF High Mark</keyword>. Personal loans, consumer durable loans and business loans carry relatively higher risk for lenders, when compared to home and auto loans. Despite this, personal and consumer durable loans grew at a high CAGR of 25% between FY19 to FY22 – almost doubling in this period, according to a report by Kotak Institutional Equities. Overall, the total lending market in India stood at ₹174.3 lakh crore in FY22, with the retail segment accounting for 48.9% of it. While the overall lending market grew 11.1% in FY22, it has capped off the sluggish growth in FY20 and FY21 – two years highly impacted by Covid-19 and the lockdowns. “FY22 witnessed tremendous growth in new loan originations across retail, microfinance and commercial loans. This resurgence in the credit landscape signals economic recovery and is extremely encouraging,” said Sanjeet Dawar, Managing Director, <keyword id="2302542" type="General" weightage="20" keywordseo="CRIF" source="Orion">CRIF</keyword> High Mark. <cmsannotation type="cmsannotation" annotationid="Economic recovery sounds good, so why are personal loans surging?" comment="subhead" text="Economic recovery sounds good, so why are personal loans surging?">Economic recovery sounds good, so why are personal loans surging?</cmsannotation> An economic recovery sounds like a positive development, but the surge in personal and consumer durable loans might also be hinting at another problem. A surge in these two loan segments suggests people are conserving cash, so they are taking loans and buying products on EMIs to ensure they have enough liquidity. On a positive note however this also suggests two other things – there is a revival in consumer demand, and that people are optimistic about their cash flows, giving them the confidence that they can repay loans on time. “Early warning indicators are at a comfortable level today across all loan segments. Delinquency levels in high-risk segments like consumer durables, personal loans and credit cards are also at a comfortable level today, indicating no reason to be concerned today,” the Kotak report added. This means that both lenders and borrowers are placed securely, and overdue loans are within a comfortable range. <cmsannotation type="cmsannotation" annotationid="Revenge shopping is adding to the surge – and Tier 2+ cities are joining the party" comment="subhead" text="Revenge shopping is adding to the surge – and Tier 2+ cities are joining the party">Revenge shopping is adding to the surge – and Tier 2+ cities are joining the party</cmsannotation> Another factor at play is revenge shopping – lockdowns and Covid-19 restrictions resulted in muted festivities for two years, but everything has opened up in 2022.<a href="https://www.businessinsider.in/business/ecommerce/news/online-festival-sales-likely-to-be-28-higher-than-pre-covid-levels-at-11-8-billion-report/articleshow/94076810.cms"> Experts believe online festival sales could be 28% higher</a> than pre-Covid levels, which suggests that people are itching to shop. Joining the party are people from Tier 2, 3 and 4 cities. “We are forecasting 4x growth in the number of online shoppers from 2018. This growth has been driven by accelerated digital adoption and increasing penetration in Tier 2+ cities,” said Sanjay Kothari, associate partner, Redseer Strategy Consultants. Better yet, this surge is not limited to personal or consumer durable loans – home loans, which have much higher ticket sizes and are relatively less risky than personal loans, have also seen an increase in T3 and T4 districts. According to a<a href="https://www.businessinsider.in/finance/news/home-loans-growing-at-a-faster-rate-in-tier-3-and-4-districts-thanks-to-wfh-sbi-report/articleshow/94393267.cms"> report by SBI</a>, T3 and T4 districts account for 36% of fresh disbursals in FY22, up from 32% in FY19 – thanks to a boom in Work from Home, freelance jobs, and a renewed focus on work-life balance. SEE ALSO: <a href="https://www.businessinsider.in/finance/banks/news/credit-suisse-is-in-trouble-but-this-is-not-2008-investors-remain-wary-of-the-all-is-well-soundbites/articleshow/94641570.cms">Credit Suisse is in trouble, but this is not 2008 – investors remain wary of the ‘all is well’ soundbites</a> <a href="https://www.businessinsider.in/business/auto/news/auto-sales-remain-buoyant-in-september-with-reports-of-a-good-festive-season-ahead/articleshow/94622721.cms">Auto sales remain buoyant in September with reports of a good festive season ahead</a> <a href="https://www.businessinsider.in/stock-market/news/heres-all-you-need-to-know-about-suzlon-energys-1200-crore-rights-issue-after-founder-tulsi-tantis-death/articleshow/94617068.cms">Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death</a>

Indians are taking more personal loans, buying consumer goods on credit, says report

Auto sales remain buoyant in September with reports of a good festive season ahead

<ul><li>The price band for the initial public offering of the Hyderabad-based consumer durables retail chain is ₹56-₹59/share.</li><li>The company plans to raise ₹500 crore through fresh issue of shares.</li><li>The company’s net profit in FY22 grew 78% from the previous financial year while its EBITDA margin rose marginally to 6.7%, from 6.4% in FY21.</li></ul>The initial public offering (IPO) of Hyderabad-based Electronics Mart India, a consumer durables retail chain, is set to open on October 4 and close October 7. It plans to raise ₹500 crore through fresh issue of shares through the IPO, the price band for which is set at ₹56 to ₹59 a share. Money raised through the IPO will be utilised for capital expenditure plans like opening of new stores and warehouses, working capital, debt payment and for general corporate purposes. The shares of the company are currently commanding a grey market premium, or GMP, of ₹30 per share. GMP is the premium at which IPO shares are traded in an unofficial market before they are listed on the stock exchanges Analysts at Angel One broking firm have recommended subscribing to the IPO because of factors including better revenue growth in two years. “EMIL has better revenue growth (CAGR of 17%) over 2 years, better return on equity and expansion plan on the cards. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a SUBSCRIBE rating on the issue,” Angel One said in a report. The company’s net profit in FY22 grew 78% from the previous financial year while its EBITDA margin rose marginally to 6.7%. Covid restrictions hurt its EBITDA margin in FY21, which slipped to 6.4%, from 7.2% a year earlier. “Our operations at all of our stores were impacted during the lockdown period due to the Covid-19 restrictive guidelines issued by the respective state governments,” the company said in its regulatory filing. Electronics Mart India offers a range of products including air conditioners, televisions, washing machines, refrigerators, mobiles, small appliances and IT products. The company offers product categories from more than 70 consumer durable and electronic brands. It operates across three channels – retail, wholesale and e-commerce. In the filing, Electronics Mart India said a risk factor attached to its business was that the company may not return to the pre-Covid growth levels due to a possible change in consumer trends post the Covid lockdowns. People may choose to opt for only essential items and do away with discretionary products like the ones they offered, the company said. “In addition, since most of our product offerings being discretionary in nature to an extent, we may not achieve pre-Covid-19 level of footfalls in our stores and consequently, the pre-Covid-19 level of sales. The consumers may not choose to shop discretionary products as compared to essentials, immediately after lifting of lockdown owing to inter alia, the economic slowdown and job cuts leading to less disposable income for discretionary spends,” said the company in its regulatory filing. <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Fiscal year </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Revenue </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Net Profit </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">EBITDA margin </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY22 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹4,353 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹103 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.71% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY21 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3,207 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹58 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">6.37% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">FY20 </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹3,179 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">₹81 crore </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">7.18% </td></tr></tbody></table>It has 112 stores across 36 cities, of which 100 stores are multi-brand outlets (MBOs) and 12 stores are exclusive brand outlets. It operates MBOs under the name Bajaj Electronics, Electronics Mart and Kitchen Stories, which caters to the kitchen-specific demands of customers, and Audio &amp; Beyond, which focuses on home audio and home automation solutions. Currently, Electronics Mart India has a leadership position in South India and aims to deepen its store network in its existing clusters and increase its market share in Telangana and Andhra Pradesh. It also intends to build its store network in the NCR by opening 26 MBOS with the proceeds of the IPO. Here are some of the important details of the IPO: <table style="border-width: initial; border-style: none;"></colgroup><tbody><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Issue details </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;"> </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Price band </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">₹56-₹59 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">IPO open date </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">October 4 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">IPO close date </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">October 7 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Allotment date </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">October 12 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Initiation of refunds </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">October 13 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Credit of shares to demat account </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">October 14 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">IPO listing date </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">October 17 </td></tr><tr><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">Minimum lot </td><td style="border-left:solid #000000 0.8333325pt;border-right:solid #000000 0.8333325pt;border-bottom:solid #000000 0.8333325pt;border-top:solid #000000 0.8333325pt;vertical-align:bottom;padding:2pt 2pt 2pt 2pt;overflow:hidden;overflow-wrap:break-word;">254 </td></tr></tbody></table> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-nifty-fall-over-1-on-weak-global-trends/articleshow/94619815.cms">Sensex, Nifty fall over 1% on weak global trends</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/heres-all-you-need-to-know-about-suzlon-energys-1200-crore-rights-issue-after-founder-tulsi-tantis-death/articleshow/94617068.cms">Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death</a>

Electronics Mart India IPO set to open on Oct 4; commands grey market premium of ₹30/share

<ul><li><keyword id="48085" type="General" weightage="100" keywordseo="credit-suisse" source="Orion">Credit Suisse</keyword>, one of the largest and oldest banks of the world, is in trouble after the sharp rise in its credit default swaps. </li><li>Loss of talent, bad risk management and loss of investor confidence have sent the bank’s stock into a spiral. </li><li>Market experts believe a 2008-like situation is possible if the bank sinks like Lehman Brothers did. </li><li>Citibank says it would be wary of drawing parallels with 2008 and that CS has multiple options. </li></ul>On 23 September Nassim Nicholas Taleb tweeted about his former employer Credit Suisse, and ever since social media platforms have not stopped buzzing. So much so that analysts have started coming out with reports explaining why the sharp fall in its stock and rise in credit default swaps is not similar to what happened in 2008. What’s happening at Credit Suisse is uncannily similar to what happened prior to the Global Financial Crisis in 2008, when financial markets saw a complete meltdown once Lehman Brothers went under. Taleb’s Tweet needs to be seen in the context of the GFC, which saw central banks unleashing large scale bond buying programmes and interest rates went to zero. In his Tweet, Taleb said: “15 years of near zero interest rates wiped out the brains at CS &amp; all those with risk &amp; market knowledge were forcibly retired; risk-blind profitable turkeys were promoted. It's the #FooledbyRandomness effect: evolution in reverse. Sadly, I worked there &amp; loved it.” Credit Suisse, one of the oldest and largest banks, has been in trouble for a while now. While the change of the CEO made some waves in July this year, it has become all the buzz in social media after its credit default swaps – which is nothing but the protection that credit instruments have against default – jumped sharply to levels seen last in 2008. This brought its stock down by 95% from its all-time highs. The buzz soon translated into a flurry of media reports, and statements from Credit Suisse that are eerily similar to what Lehman Brothers was saying prior to its collapse in 2008. Joining the Credit Suisse discussion in India was Sandeep Parekh, an independent director on HDFC Bank’s board, who said on Twitter that a “real shit show” was ahead, regardless of Credit Suisse going bust or being rescued by the Swiss government. The Global Financial Crisis that plunged the world into a recession was triggered by the burst of the housing bubble in the US, with Lehman Brothers at the center of it. This caused a spillover effect throughout the world given how interconnected economies are – for instance, the benchmark Nifty50 index fell 40% and took over nine months to recover since the fall of Lehman Brothers in September 2008. Given how large and systemically important Credit Suisse is – together with Deutsche Bank, Credit Suisse – has $2,800 billion worth assets under management. In comparison, Lehman Brothers’ AUM stood at $600 billion – the current crisis threatens to be another Lehman moment. While Deutsche Bank has lost 31% of its market cap this year, Credit Suisse’ stock has lost over 54% of its value in the same time. “I know it's not easy to remain focused amid the many stories you read in the media – in particular, given the many factually inaccurate statements being made. That said, I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank,” Credit Suisse CEO Ulrich Koerner <a href="https://www.reuters.com/business/finance/credit-suisse-has-strong-capital-base-liquidity-ceo-memo-2022-09-30/">said</a> in a memo, assuaging investor concerns. However, people were quick to<a href="https://twitter.com/Spencerjakab/status/1576228237092749312"> point out</a> the similarities with statements from Lehman Brothers. While the 2008 recession was triggered by the housing bubble collapse, CDS could end up being the trigger for a collapse now. <div type="Article" hostid="261" msid="94393267" title="Home loans growing at a faster rate in Tier 3 and 4 districts, thanks to WFH: SBI report" mstype="2" mssubtype="0"></div> <cmsannotation type="cmsannotation" annotationid="Here’s why Credit Suisse is in trouble" comment="subhead" text="Here’s why Credit Suisse is in trouble">Here’s why Credit Suisse is in trouble</cmsannotation> The answer lies in credit default swaps, also known as CDS. Simply put, CDS is an insurance policy that lenders take against the loans they have given to someone. In this case, Credit Suisse borrows money to do business. Its lenders take insurance against Credit Suisse defaulting on its obligations. For this, they have to pay a premium to the issuer, just like you would pay a premium on your insurance policies. The problem is, the price of these <keyword id="15162793" type="General" weightage="20" keywordseo="credit-suisse-cds" source="Orion">Credit Suisse CDS</keyword>’ are off the charts now – higher than they were in 2008 when the banking industry collapse was imminent. This, combined with Credit Suisse’ inefficient risk management policies – it was involved in two massive debacles, Greensill and Archegos Capital, where its investors lost billions of dollars – has limited the bank’s avenues for obtaining finance, further increasing its borrowing costs. <div type="Article" hostid="261" msid="94510142" title="Jewellery chains are growing at the cost of standalone jewellers – and it’s only going to get worse, says World Gold Council report" mstype="2" mssubtype="0"></div> Essentially, Credit Suisse’ situation right now is of a person with multiple defaults in the past eroding their capital, causing their credit rating to go junk. As a result, that person’s borrowing costs increase since lenders are wary of defaults. This essentially increases the risk of the said person going bankrupt and investors losing their money. Apart from this, the bank has reported three consecutive quarterly losses, leading to the appointment of a new CEO in August. It also <a href="https://www.bloomberg.com/news/articles/2022-08-01/credit-suisse-hands-out-300-million-in-a-month-to-retain-talent">lost</a> over 60 executives in the past 18 months, with the <a href="https://www.businessinsider.in/business/corporates/news/swiss-banking-giant-credit-suisse-fighting-for-its-survival-says-report/articleshow/94610616.cms">latest high-profile departure being Jens Welter</a>, who defected to Citigroup after a 27-year stint at Credit Suisse. But analysts suggest this is not 2008 and Credit Suisse has multiple options in front of it to escape the current crisis. “We would be wary of drawing parallels with banks in 2008 or Deutsche Bank in 2016. Credit Suisse has a CET1 (Tier 1 capital) ratio of 13.5%, high vs peers, and would imply Swiss Franc 2.5 billion of excess capital vs a 12.5% ratio,” said a report by Citi Research. What does this mean? Essentially, Credit Suisse is placed comfortably when it comes to capital adequacy, and a run on the bank is not a certainty as of now. “The liquidity credit ratio at 191% is among best in class, with a Swiss Franc 235 billion high-quality liquid assets portfolio, so the liquidity position is very healthy. Rather than liquidity concerns, we see the current move in spreads as an inconvenience for funding costs,” the report added further, explaining where Credit Suisse stands currently, and what the impact of the flurry of negative media reports could be on the bank. The short of it is, Credit Suisse might experience higher financing costs in the interim until the bank’s management plans and executes a restructuring strategy. Everything hinges on whether Credit Suisse is able to navigate these choppy waters and execute its restructuring strategy efficiently or not. After all, the ‘all is well’ play will only work for so long before the fundamentals trigger a response. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/auto-sales-remain-buoyant-in-september-with-reports-of-a-good-festive-season-ahead/articleshow/94622721.cms">Auto sales remain buoyant in September with reports of a good festive season ahead</a> <a href="https://www.businessinsider.in/stock-market/news/heres-all-you-need-to-know-about-suzlon-energys-1200-crore-rights-issue-after-founder-tulsi-tantis-death/articleshow/94617068.cms">Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death</a> <a href="https://www.businessinsider.in/finance/news/rbis-interest-rate-hikes-not-over-yet-but-intensity-might-come-down/articleshow/94558336.cms">RBI’s interest rate hikes not over yet, but intensity might come down</a>

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