Sri Lanka’s CEAT Kelani radial tyre capacity raised amid money printing, import controls

Sri Lanka’s CEAT Kelani radial tyre capacity raised amid money printing, import controls

ECONOMYNEXT – Radial tyre capacity has been raised by 16 per cent to 600,000 a year to cater to strong demand, Sri Lanka-based CEAT Kelani Holdings said as import controls slapped as money printing created forex shortages.

The addition of two tyre presses and a tyre building machine will add the capacity to produce 84,000 more tyres from the current 516,000 units.

The capacity will “ease pressure on supply attributed to government-imposed restrictions on the import of certain sizes to conserve foreign exchange,” the firm said.

Sri Lanka’s central bank has printed large volumes of money defending various interest rates including a 12-month bill yield, creating forex shortages when the newly created liquidity comes up for redemption in forex markets.

Instead of stopping liquidity injections, authorities have imposed controls, sometimes backed by so-called import substation crony firms who are not competitive enough to export but are exploiting domestic consumers with ‘black market’ prices under cover of import duties.

CEAT however is export competitive.

With new machinery commissioned earlier this year, radial capacity is already up 30 percent this year, CEAT Kelani said.

“The CEAT brand supplied nearly half of Sri Lanka’s pneumatic tyre requirements for several years before the pandemic,” CEAT Kelani Managing Director Ravi Dadlani said in a statement.

“The disruption of transport logistics worldwide due to the pandemic combined with the temporary import restrictions on certain categories and sizes of tyres required us to accelerate production to help meet the domestic shortfall”.

Now monthly production was about 50,000 tyres.

The expansion will help meet the demand for Suzuki Alto, Maruti Suzuki Alto, Maruti Suzuki Omni, Tata Ace Ex2, Hyundai- Eon, Mitsubishi Minicab, Toyota HiAce, Nissan Vanette, Lanka Ashok Leyland Dost, Tata Winger, Nissan Urvan, Kia K2500, Suzuki- Super Carry, Maruti Suzuki, Super Carry, Piaggio Porter, Toyota Town Ace, Toyota Lite Ace, SuzukiWagon R, Daihatsu Mira ES, Nissan Dayz, Nissan Note, Honda Freed and Toyota Avanza models, the firm said.

CEAT Kelani increased two-wheeler tyres by 85 per cent between June and September 2020. Production of motorcycle and scooter tyres had been raised from 27,000 to 41,000 units between July and August 2020 and 50,000 from September.

Repeating Mercantilism peddled by authorities, CEAT said it had potentially saved “Sri Lanka 11 billion rupees a year in foreign exchange.”

However, Sri Lanka’s forex problems had become worse amid liquidity injections. Credit financed by liquidity injections flowed into areas pushing imports back to 1.7 billion rupees in March.

Meanwhile, a parallel market for foreign exchange had also developed at around 230 to US dollar from around June as extra tyre production was commissioned.

In Sri Lanka, there is a strong Mercantilist belief that monetary instability is linked to trade and not the monetary anchor or credit.

Sri Lanka has been suffering forex shortages and import controls ever since a Latin America style central bank was set up in 1950 and economic policy is usually directed to ‘save foreign exchange’ at the expense of basic economic freedoms of the citizenry.

Tyre imports are controlled under an import control law enacted in 1969, when foreign reserves fell to 40 million US dollars from 190 million dollars when a currency board (fixed exchange rate or hard peg) was abolished to create an unstable soft-peg. (Colombo/July12/2021)

Ola Funding Of $500 Mn Ahead Of Ola IPO Date; IPO Price To Be Between Rs. 72 To Rs. 76

On July 8, Ola announced that Temasek and Plum Wood Investment Ltd, an affiliate of Warburg Pincus along with Bhavish Aggarwal are investing 500 million dollars in Ola ahead of its IPO of 93.75 billion rupee. Warburg Pincus is a global private equity fund. The funding will be causing a rise in the valuation of Ola.

Ola funding statements

Bhavish Aggarwal, Chairman and Group CEO of Ola reportedly said, that over the last 12 months they have made Ola more robust, resilient and efficient. With a strong recovery post lockdown and a shift in consumer preference away from public transportation, they are well-positioned to capitalise on the mobility needs of their customers. He welcomed Warburg Pincus and Temasek to Ola and said he looks forward to collaborating with them in the next phase of growth for Ola. Vishal Mahadevia, Managing Director and Head of India at Warburg Pincus, also said that Warburg is excited to partner with Aggarwal and Ola. He said that Ola is the leading mobility platform in India with a robust and fast-growing business. He said they look forward to collaborating with Aggarwal and the team in the next phase of Ola’s growth.

Ola IPO date, Ola IPO price and Bhavish Aggarwal net worth

The Ola IPO date has not been announced yet but there are plans for the launch this year. As per reports, the Ola IPO price is set to be between 72 to 76 rupees. Bhavish Aggarwal net worth is around 500 Million dollars. He is the 11th self-made billionaire under the age of 40. Bhav

Ola funding history

Last year, due to the pandemic, as per reports, Ola had to halt about 95% of its business. They also had to lay off around 35% of their workforce. With this new investment news, there are speculations of further investment of this to be made in ANI Technologies, the parent company of Ola. In 2019, Ola had raised 300 million dollars from Hyundai Motor Company and Kia Motors, and the OLA valuation was 6 billion dollars, which was its peak. The Vanguard Group had then cut the value of their investment in Ola. While Ola did not reveal details on the IPO plans they reportedly said that Ola continues to scale up its business sectors across various categories and geographies.

(IMAGE: @WIEF2021/@AIMTOINNOVATE/TWITTER)

First India Unicorn IPO 35 Times Subscribed by Anchor Funds

(Bloomberg) – Zomato Ltd., the Indian food delivery startup backed by Jack Ma’s Ant Group Co., got about 35 times more bids from anchor investors than it intended to sell in its blockbuster initial public offering, according to people with knowledge of the matter.

The Gurgaon-based firm received bids worth 1.5 trillion rupees ($20 billion) from large funds compared with the 42 billion rupees offered, the people said, asking not to be identified as the information is private. The subscription marks one of the most popular Indian IPOs among institutional investors in recent years as Zomato starts taking public orders for the $1.3 billion share sale on Wednesday.

Zomato allocated about 552 million shares to 186 anchor investors including funds managed by BlackRock Inc. and Fidelity International Ltd. as well as New World Fund and Tiger Global, according to a Tuesday filing, which didn’t provide any subscription figures. The shares were sold at 76 rupees each to the anchor investors, the top of a marketed range with a minimum price of 72 rupees. Indian funds got about a third of the anchor allotment.

The interest follows a blistering rally in Indian stocks this year, and signals confidence in the market debut of the country’s first real consumer internet offering. Zomato recently raised its IPO target by 14% as demand grew in a fast-growing Indian food-services market that Sanford C. Bernstein & Co. estimates will balloon to $97 billion by 2025.

Zomato is selling about 90 billion rupees worth of new shares in the IPO, while its shareholder Info Edge (India) Ltd. is offering as much as 3.75 billion rupees worth of stocks, according to terms of the deal obtained by Bloomberg News.

Shares of Info Edge rose 0.6% as of 1:40 p.m. in Mumbai on Wednesday, compared with a 0.2% gain in the benchmark index.

At about $1.3 billion, the startup’s IPO is set to be India’s biggest since SBI Cards & Payment Services Ltd.’s $1.4 billion share sale in March 2020, according to data compiled by Bloomberg. That said, Zomato’s record could soon be overtaken by digital payments services provider Paytm, which is preparing for its more than $2 billion IPO.

Story continues

Kotak Mahindra Capital, Morgan Stanley India, Credit Suisse Group AG, BofA Securities and Citigroup Inc. are managing Zomato’s IPO.

(Updates with detail on Indian funds in third paragraph)

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