RBI in India Lowers Rate, Shree Renuka Brazil Units File Bankruptcy

Mukesh Buch
29 Sep, 2015
New York City

The Reserve Bank of India lowered its reference rate as anticipated but consumer price inflation in India remains elevated despite the deepening wholesale price deflation. Shree Renuka said its Brazilian unit acquired five years ago in debt-financed deals filed for bankruptcy protection.

[R]6:00 PM Mumbai – The Reserve Bank of India lowered its reference rate as anticipated but consumer price inflation in India remains elevated despite the deepening wholesale price deflation. Shree Renuka said its Brazilian unit acquired five years ago in debt-financed deals filed for bankruptcy protection.[/R]

Market indexes in Mumbai traded higher after the Reserve Bank of India lowered its reference rate as expected today.

The central bank’s action was widely anticipated by market and economy watchers with the deepening deflation in wholesale prices and struggling exports.

However, consumer price inflation in India still remain elevated at 5% to 7%, nearly three times higher than the inflation rate in the developed economies and China.

Reserve Bank of India lowered its repo rate by 50 basis points to 6.75% and left its cash reserve ratio requirement unchanged at 4%.

The housing finance companies stocks rallied after the central bank move.

LIC Housing Finance Ltd advanced 2.2%, GIC Housing Finance Ltd soared 3.2%, Gruh Finance Ltd increased 1.3% and Can Fin Homes Ltd jumped 3%.

Housing Development Finance Corp. Ltd gained 2.7%.

Rupee strengthen 8 paisa to 65.96 against one U.S. dollar.

The Sensex Index increased 161.82 or 0.6% to close at 25,778.66. The CNX Nifty gained 47.60 or 0.6% to 7,843.30.

Gainers & Losers

Goa Carbon Limited rose 0.8% to ₹65.50 after the Calcined Petroleum Coke maker launched its operations at Bilaspur unit in Chattisgarh on September 26.

Infosys Limited increased 1.2% to ₹1,121.10 after the software services provider tied up with U.S.-based venture capital firm Vertex Ventures US Fund I LP to boost its access to new tech companies.

Larsen & Toubro Limited gained 1.3% to ₹1,448.25 after the infrastructure developer’s subsidiary received an order in Water & Waste-Water Infrastructure Business for ₹1,509 crore.

Nestle India Limited edged up 0.1% to ₹6,210 and the consumer products maker cancelled its 12-year old contract for manufacturing its Maggi instant noodles with SAJ Food Products. The news was first reported by several domestic news stations.

Safari Industries (India) Limited edged up 0.1% to ₹910 after the luggage travel goods maker agreed to acquire trademark & goodwill of brands from Genius Leathercraft Pvt. Ltd.

Shree Renuka Sugars Ltd declined 3.1% to ₹7.49 after the sugar refiner in a regulatory filing that its Brazilian subsidiary filed for bankruptcy protection in Sao Paolo.

Shree Renuka in a debt fuelled acquisition spree acquired two Brazilian units for ₹10,000 crores in 2010, funded with 90% debt.

The drought in Brazil and the glut in world supply added to the companies woes in Brazil. In addition, the company failed to improve operations in Brazil, the central pillar of its acquisition strategy.