NEWS

23 MAY, 2021

COPPER:

COPPER IS NEW OIL. COPPER PRICES CAN TOUCH $15,000. 

 

24 APRIL, 2021

NICKEL:

IN BATTERIES COPPER AND NICKEL BOTH WILL BE USED. COPPER IS EASILY AVAILABLE DUE TO ITS MULTIPLE USE BUT NICKEL IS ONLY PRODUCED BY FEW COUNTRIES. NICKEL DOES NOT OCCUR FREELY AND IS MOST COMMONLY FOUND IN SULPHIDIC OR OXIDE FORM. SULPHIDIC ORES ARE OFTEN FOUND ALONG WITH COPPER BEARING ORES. IN SHORT NICKEL IS BY PRODUCT OF COPPER. HINDUSTAN COPPER STARTED PRODUCING NICKEL IN 2016 AND AT PRESENT IT IS THE ONLY COMPANY IN INDIA WHICH PRODUCES NICKEL. EARLIER STERLITE INDUSTRIES ALSO PRODUCED NICKEL AT ITS THOTUKODI PLANT. BUT ITS PLANT IS CLOSED. EVERYONE IS BEHIND HINDUSTAN COPPER FOR COPPER BUT ACTUALLY ONE SHOULD GO BEHIND NICKEL, SINCE IT IS THE ONLY COMPANY IN INDIA WHICH MANUFACTURES NICKEL. BUT THE PROBLEM IS COMPANY IS PSU. SINCE CURRENT GOVERNMENT OF INDIA IS FOCUSING MORE ON PRIVATIZATION, AND IF GOVERNMENT SELLS STAKE IN HINDUSTAN COPPER THEN ITS VALUE CAN BE UNLOCK.

 

9 APRIL, 2021

CEMENT:

CEMENT PRICES MAY RISE BY RS 15-30 PER BAG. 

 

19 FEBRUARY, 2021

RUBBER CHEMICAL:

NOCIL ENJOYS MONOPOLY BUSINESS. ONLY TWO COMPANIES ARE LEADERS IN WORLD FOR RUBBER CHEMICALS. NOCIL (INDIA) AND SUNSHINE (CHINA). DUE TO ENVIRONMENT ISSUES AND ANTI CHINA EFFECT, SUNSHINE HAS REDUCED ITS PRODUCTION. PLUS INDIAN GOVERNMENT PLANS TO PUT ANTI-DUMPING DUTY ON PX-13 RUBBER CHEMICAL. INDIAN GOVERNMENT HAS ALSO PUT ANTI-DUMPING DUTY ON TYRES. SO TYRE COMPANIES WILL ALSO USE TYRES MADE IN INDIA FOR WHICH THEY WILL REQUIRE PX-13 RUBBER CHEMICAL. AND NOCIL ENJOYS MONOPOLY IN IT. ALL RUBBER PRODUCTS (TYRES, FOOTWEAR SOLE, GLOVES ETC) NEED PX-13 RUBBER CHEMICAL. TO GRAB SUCH OPPORTUNITY NOCIL HAS RECENTLY COMPLETED ITS MEGA CAPEX PLAN OF RS 450 CRORE FOR ANTIOXIDANTS AND ACCELERATORS AT ITS DAHEJ PLANT. THIS INCLUDES CAPACITY ADDITION FOR ACCELERATOR – TBBS – (N-TERT-BUTYL-BENZOTHIAZOLE SULFONAMIDE; 4,500 TONNES CAPACITY) WHICH IS SO FAR IMPORTED INTO INDIA, WHOSE DOMESTIC DEMAND IS ESTIMATED TO BE 9,000 TONNES. SO A SCENARIO OF LOWER IMPORTS OF RUBBER CHEMICALS FROM CHINA IN NEAR FUTURE CAN HELP NOCIL RAMP UP ITS PRODUCTION. IT IS INCREASING ITS OVERALL PRODUCT CAPACITY FROM 73,000 MT TO 1,10,000 MT. AND EVEN AFTER INCREASING THE CAPEX AND PRODUCTION STILL NOCIL IS A DEBT FREE COMPANY. WHAT DOES AN INVESTOR WANT MORE THAN THIS ? COMBINATION OF DEBT FREE COMPANY AND MONOPOLY BUSINESS IS VERY RARELY FOUND.

 

11 JANUARY, 2020

BEER:

CONSTELLATION BRANDS REPORTED 22% INCREASE IN SALES, BOOSTED BY AT HOME CUSTOMERS BUYING MORE OF ITS CORONA AND MODELO BEER BRANDS. TOTAL SALES INCREASE TO $2.44 BILLION FROM $2 BILLION, WHILE SALES IN ITS BEER BUSINESS GREW BY 28%. THE STRONG PERFORMANCE IN SALES TO AT HOME CUSTOMERS MORE THAN OFFSET THE WEAKNESS SEEN IN SALES TO RESTAURANTS AND BARS.

 

9 JANUARY, 2020

AUTOMOBILES:

STEEL PRICES ARE AT NEW HIGH AND STILL INCREASING FURTHER. SO MOSTLY ALL AUTOMOBILE COMPANIES WILL ALSO INCREASE PRICE OF VEHICLES IN COMING DAYS.

 

9 JANUARY, 2020

OTT:

STRUMM, A STREAMING COMPANY AIMS TO GIVE CUSTOMER ALA-CARTE ACCESS TO ALL CONTENTS FROM HUNDREDS OF NICHE STREAMING SERVICES OFFERING USERS A WAY TO STREAM INDIVIDUAL SHOWS AND MOVIES FROM VARIOUS PLATFORMS WITHOUT HAVING TO SUBSCRIBE TO EACH PLAN SEPARATELY.

 

7 JANUARY , 2020

BANKRUPTCIES:

THE BUSINESS BANKRUPTCIES ROSE 29% EVEN AS PLUNGING CONSUMER BANKRUPTCIES KEPT OVER ALL U.S FILINGS AT THEIR LOWEST LEVEL SINCE 1986. MORE THAN 7,100 BUSINESSES HAVE FILED FOR BANKRUPTCIES IN U.S DUE TO COVID-19 PANDEMIC. ALTHOUGH INDIVIDUAL FILINGS WERE DOWN, BUT CONSUMER BANKRUPTCIES ARE TYPICALLY TRAILING ECONOMIC INDICATOR AND ARE EXPECTED TO RISE SIGNIFICANTLY IN SECOND HALF OF 2021. THE DECEMBER JOBS REPORT IS ESTIMATED TO SHOW THAT LABOR MARKET ENDED YEAR VERY WEAKLY. 68,000 JOBS WHERE ADDED FROM 2,45,000 JOBS ADDED IN NOVEMBER 2020 AND DECEMBER 2020 IS THE SLOWEST MONTH OF JOB CREATION SINCE THE LABOR RECOVERY BEGAN IN MAY 2020. TOURISM AND RESTAURANT SECTORS ARE EXPECTED TO FACE HARDSHIPS BECAUSE OF OWNERS PERSONAL ASSETS ARE DWINDLING. 

 

31 DECEMBER, 2020

BATTERIES:

THE RAPID GROWTH OF WIND AND SOLAR POWER COMES WITH A PROBLEM OF STORAGE. EXAMPLE IN EV, LITHIUM ION BATTERIES PROVIDE MOST OF NEW STORAGE CAPACITY. SAME WAY THERE SHOULD BE STORAGE CAPACITY FOR WIND AND SOLAR POWER. BECAUSE WHOLE WORLD IS BEHIND SOLAR AND WIND ENERGY, THE SHARE OF WIND AND SOLAR POWER PRODUCTION WILL GROW. SO IT WILL BECOME CRUCIAL TO BRIDGE THE TIME WHEN WIND DOESN’T BLOW OR THE SUN DOESN’T SHINE. SO STORAGE COULD BECOME A DOMINANT FEATURE OF GREEN ENERGY SECTOR AND AN OPPORTUNITY FOR COMPANIES WHICH CAN PROVIDE STORAGE BATTERIES FOR SOLAR AND WIND ENERGY. 

 

26 DECEMBER, 2020

EV:

JAPANESE GOVERNMENT SAID IT AIMS TO ELIMINATE PETROL POWERED VEHICLES IN THE NEXT 15 YEARS.

 

24 DECEMBER, 2020

STEEL:

RECENT LANDSLIDE IN BRAZILIAN IRON ORE MINE WILL INTENSIFY CONCERNS ABOUT SUPPLY. IRON ORE IS MAIN INGREDIENT ON STEEL. THE SHIPMENT FROM BRAZIL THE SECOND BIGGEST EXPORTER OF IRON ORE AFTER AUSTRALIA HAVE YET TO FULLY RECOVER FROM EARLIER WASTEDAM COLLAPSE AND PANDEMIC RELATED DISRUPTIONS TO PORT AND RAIL FACILITIES. PRICE OF STEEL MAY STILL RISE FURTHER.

 

12 DECEMBER, 2020

SUGAR:

COVID-19 VACCINES AWAITING REGULATORY APPROVAL WILL REQUIRED ULTRA COLD TEMPERATURES FOR SHIPPING AND STORAGE, AND MAKERS OF DRY ICE ARE BRACING FOR SURGE IN DEMAND. DRY ICE USED IN FROZEN FOOD SHIPMENTS AND FOG MACHINES, IS MADE FROM CARBON DIOXIDE, A BY PRODUCT OF INDUSTRIAL PROCESSES LIKE ETHANOL AND FERTILISER. ETHANOL PRODUCTION HAS RECOVERED. CARBON DIOXIDE SUPPLIERS ARE CONFIDENT THAT THEY CAN MEET COMING DEMAND FOR DRY ICE. AND ETHANOL IS MADE FROM SUGARCANE. BIG BENEFIT TO SUGAR INDUSTRY.

 

29 OCTOBER, 2020

BANKING:

THE EUROPEAN CENTRAL BANK QUARTERLY SURVEY OF BANKS FOUND A TIGHTENING OF CREDIT STANDARDS ON LOANS TO FIRMS IN THE THIRD QUARTER OF 2020 INDICATING CREDIT RISK CONSIDERATION DUE TO COVID PANDEMIC. SPANISH BANKS REPORTED THE MOST DRASTIC TIGHTENING OF LENDING STANDARDS AND THE BIGGEST FALLS IN DEMAND FOR LOANS AMONG THE 4 BIGGEST EUROZONE ECONOMIES IN THE THIRD QUARTER FOLLOWED BY FRENCH AND ITALIAN BANKS. THE ECB HAS ESTIMATED THAT NON PERFORMING LOANS COULD RISE BY EURO 1.4 TRILLION.

 

21 OCTOBER, 2020

COFFEE:

ARABICA COFFEE PRODUCTION IS AT 12 YEAR LOW DUE TO CLIMATIC CHANGES, PEST DAMAGES AND MANY SUCH THINGS. ARABICA COFFEE PRODUCTION WAS DOWN TO 90,300 TONNES, LOWEST SINCE 2009. PRICE OF ARABICA COFFEE INCREASED TO RS 11,000 PER 50 KG IN OCTOBER 2020 FROM RS 6,900 FOR 50 KG IN 2017. ALL THESE WILL AFFECT CAFES. MANY SMALLER AND MID SIZE CAFES WILL FIND IT DIFFICULT TO SURVIVE.

 

8 SEPTEMBER, 2020

FERTILIZER:

THE DGTR HAS RECOMMENED IMPORTS ANTI DUMPING DUTY ON IMPORTED TDI, A SPECIALITY CHEMICAL, FROM SEVERAL COUNTRIES INCLUDING CHINA. THE RECOMMENDATION IF ACCEPTED BY THE GOVERNMENT, WILL BENEFIT GNFC, WHICH IS THE LARGEST PRODUCER OF TDI IN INDIA. TDI IS USED IN THE PRODUCTION OF FLEXIBLE FOAM APPLICATIONS INCLUDING BEDDING, FURNITURE, CAR SEATS AND PACKAGING. THE PRICE OF CHEMICAL IN THE DOMESTIC MARKET HAS RISEN BY OVER 50% IN THE PAST FEW WEEKS DUE TO SEVERAL DISRUPTIONS IN THE US AND EUROPE. NEARLY 30% OF THE SUPPLY IN EUROPE IS MISSING. AS THE RESULT THE TDI PRICE TREND HAS REVERSED AFTER CONSISTENTLY FALLING FOR OVER A YEAR. IT IS CURRENTLY QUOTED AT RS 175 PER KG COMPARED WITH RS 118 PER KG IN AUGUST. A POSSIBLE ANTI DUMPING MAY OFFER GNFC MORE ROOM TO RAISE PRICES IN THE DOMESTIC MARKET. GNFC HAS TWO TDI PLANTS WITH A TOTAL CAPACITY OF 64,000 MILLION TONNES PER ANNUM. AT ONE OF THE PLANTS WITH 14,000 MTPA CAPACITY, THE CURRENTLY CAPACITY UTILIZATION IS NEAR 140% WHILE IT IS 81% AT THE OTHER PLANT WITH 50,000 MTPA CAPACITY. BASF IS THE ONLY OTHER PRODUCER OF CHEMICAL IN INDIA WITH CAPACITY OF 7,500 MTPA, BESIDES IMPORTING IT. IN FIRST SIX MONTHS OF CALENDAR YEAR 2020, GNFC REPORTED A NET LOSS OF RS 65 CRORE IN THE CHEMICAL SEGMENT ON REVENUE OF RS 882 CRORE OF WHICH TDI WAS THE LARGEST CONTRIBUTOR. IN THE PREVIOUS CYCLE BETWEEN FY16 AND FY18 WHEN TDI PRICES ROSE FROM RS 110 PER KG TO OVER RS 300 PER KG, GNFC NET PROFIT ROSE TO RS 789 CRORE FROM RS 172 CRORE. IN FY20, NET PROFIT WAS RS 498CRORE. THE BENEFIT OF THE LARGEST RISE IN TDI PRICE ALONG WITH ANY BENEFIT FROM THE ANTI DUMPING DECISION MAY BE VISIBLE FROM THE DECEMBER QUARTER.

 

26 AUGUST, 2020

FMCG:

BRITANNIA INDUSTRIES IS PLANNING TO INVEST ABOUT RS 300 CRORE IN ITS PROPOSED GREENFIELD PLANT IN UTTAR PRADESH. THE COMPANY IS READY SCOUTING FOR LAND IN CENTRAL UP FOR ITS PROPOSED FACTORY. THE PROJECT IS EXPECTED TO GENERATE DIRECT AND INDIRECT EMPLOYMENT OPPORTUNITIES FOR 1,500 PEOPLE AND ENRICH THE LOCAL SUPPLY CHAIN OF SUGAR AND FLOUR, WHICH ARE AVAILABLE IN ABUNDANCE IN THE STATE. UP ADDITIONAL CHIEF SECRETARY ALOK KUMAR SAID BRITANNIA HAD SUBMITTED A PROPOSAL TO SET UP A GREENFIELD UNIT IN EITHER HARDOI OR BARABANKI DISTRICTS OF THE STATE.

 

19 AUGUST, 2020

AIRPORTS:

UNION CABINET ON WEDNESDAY IS LIKELY TO TAKE UP THE NEXT ROUND OF AIRPORT PRIVATISATION. THE AIRPORTS AUTHORITY OF INDIA’S PROPOSAL TO SIGN A CONCESSION FOR PUBLIC PRIVATE PARTNERSHIP OF AIRPORTS IN GUWAHATI, JAIPUR AND THIRUVANANTHAPURAM IS LINED UP FOR CONSIDERATION, AN OFFICIAL SAID. THESE ARE PART OF THE SIX AIRPORTS WON BY THE ADANI GROUP UNDER A COMPETITIVE BIDDING PROCESS. IN FEBRUARY, THE GROUP SIGNED A CONCESSION AGREEMENT WITH AAI FOR MANAGING AIRPORTS IN AHMEDABAD, LUCKNOW AND MANGALORE BUT APPROVAL REGARDING THE OTHER THREE WAS DEFERRED. PRIVATISATION HAS ALSO BEEN CHALLENGED IN HIGH COURTS IN ASSAM AND KERALA BUT A GOVERNMENT OFFICIAL SAID THERE WAS NO ORDER AGAINST THE PROCESS. THERE IS NO STAY ORDER FROM COURTS. A CONCESSION AGREEMENT CAN BE SIGNED BUT THAT WOULD BE SUBJECT TO COURT ORDER. THE MINISTRY OF CIVIL AVIATION WILL PLACE OF PROPOSAL FOR FURTHER PRIVATISATION OF AIRPORTS BEFORE THE UNION CABINET. MINISTRY OF AVIATION TOLD WE HAVE GOT MANY MORE AIRPORTS LINED UP, DOZENS OF THEM, AND THE 100 NEW AIRPORTS WE WILL BUILD BETWEEN NOW AND 2030. THE AAI, WHICH WORKS UNDER THE MINISTRY OF CIVIL AVIATION, OWNS AND MANAGES MORE THAN 100 AIRPORTS ACROSS COUNTRY. PRIVATISATION OF AIRPORTS, DEVELOPMENT OF MAINTENANCE REPAIR AND OVERHAUL FACILITIES ALONG WITH FREEING UP OF DEFENCE AIRSPACE FOR PASSENGER AIRCRAFT HAVE BEEN PROPOSED AS THE GOVERNMENT’S RELIEF PLAN TO SUPPORT THE AVIATION SECTOR HIT BY THE PANDEMIC. AAI CAN EARN AROUND RS 2,000 CRORE AS UPFRONT FEE FOR TRANSFERRING OF ASSETS AT SIX AIRPORTS TO THE CONCESSIONAIRE. BUT THE HANDOVER OF AHMEDABAD, LUCKNOW, AND MANGALORE AIRPORT IS STILL PENDING AS ADANI ENTERPRISES SOUGHT TIME TO PAY AN UPFRONT FEE OF RS 1,000 CRORE FOR THE THREE AIRPORTS. INTER MINISTERIAL DISCUSSION ARE UNDERWAY REGARDING PRIVATISATION PF SIX OTHER AIRPORTS. THESE INCLUDE AMRITSAR, VARANASI, BHUBANESHWAR, INDORE, RAIPUR, AND TRICHY. ELABORATING ON THE PERFORMANCE OF AIRLINES, PURI SAID AT THE WEBINAR ORGANISED BY THE CII THAT AROUND 94,000 PASSENGERS TRAVELLED IN DOMESTIC FLIGHTS ON MONDAY, AGAINST 3,00,000 PASSENGERS A DAY BEFORE THE PANDEMIC. BY THE TIME WE REACH DIWALI, WE WOULD BE 50-55% OF OUR PRE COVID FIGURES. BY THE END OF THE YEAR, WE WILL REVIVE CIVIL AVIATION TO THE PRE COVID LEVELS, HE MENTIONED.

 

12 AUGUST, 2020

INFRA:

THE UNION FINANCE MINISTRY IS PREPARING A CABINET NOTE TO SEEK APPROVAL FOR A RS 6,000 CRORE EQUITY INFUSION INTO TWO SUBSIDIARIES OF NATIONAL INFRASTRUCTURE INVESTMENT FUND (NIIF). THE AMOUNT WILL BE PART OF THE RS 22,000 CRORE EQUITY SUPPORT PROMISED FOR NIIF IN UNION BUDGET 2020-2021. THE QUASI SOVEREIGN WEALTH FUND WILL LEVERAGE THIS EQUITY TO RAISE FUNDS FOR A RS 1 TRILLION NATIONAL INFRASTRUCTURE PIPELINE. THE MINISTRY IS GIVING THE FINAL TOUCHES TO THE CABINET NOTE, AFTER WHICH APPROVAL WILL BE SOUGHT. HOWEVER THE ENTIRE AMOUNT RS 6,000 CRORES MAY NOT BE NEEDED AS WE ARE HALFWAY THROUGH THE YEAR. GOVERNMENT MAY NEED RS 2,000 CRORE THIS FISCAL. AN INCREASE FOCUS ON INFRASTRUCTURE PROJECTS IS EXPECTED TO HELP REVIVE THE ECONOMY BATTERED BY COVID. THE RS 111 TRILLION INVESTMENT PLAN TO DEVELOP SOCIAL AND ECONOMIC INFRASTRUCTURE OVER THE NEXT FIVE YEARS IN LINE WITH PRIME MINISTER NARENDRA MODI’S VISION OF A $5 TRILLION ECONOMY. MORE REFORMS ARE EXPECTED AS FAR AS THE IMPLEMENTATION OF NIP IS CONCERNED. FOR THE FIRST TIME, THE GOVERNMENT HAS INVOLVED PRIVATE SECTOR FINANCIAL ENTITIES AND PENSION FUNDS, AND AIMS TO TAP BANKS, FINANCIAL MARKETS, GLOBAL INVESTORS, FINANCIAL ENTITIES AND PENSION FUNDS TO SUGGEST REFORMS AND WAYS TO PROCEED AS FAR AS INFRA PROJECTS ARE CONCERNED. THAT’S WHY DIFFERENT PANELS HAVE BEEN SET UP TO MONITOR THE PROGRESS OF THE PROJECTS, ELIMINATE DELAYS AND REMOVE ROADBLOCKS. THE CENTRE AND STATES WILL CONTRIBUTE 39% AND 40% RESPECTIVELY, FOR THE COST OF THESE PROJECTS, WHILE THE PRIVATE SECTOR IS EXPECTED TO CONTRIBUTE 21%. THE FINANCE MINISTER HAD EARLIER SAID THAT OVER THE NEXT FEW YEARS, PRIVATE SECTOR FUNDING IS EXPECTED TO INCREASE. ABOUT RS 22,000 CRORE HAS BEEN ALREADY BEEN PROVIDED, AS SUPPORT TO INFRASTRUCTURE PIPELINE. THIS WOULD CATER FOR EQUITY SUPPORT TO INFRASTRUCTURE FINANCE FIRMS SUCH AS IIFCL AND A UNIT OF NIIF. THIS WOULD CREATE A MAJOR SOURCE OF LONG TERM DEBT FOR INFRASTRUCTURE PROJECTS AND FULLFIL A LONG AWAITED REQUIREMENT. SECTORS SUCH AS ENERGY, ROADS, URBAN DEVELOPMENT AND RAILWAYS AMOUNT TO AROUND 71% OF THE PROJECTED INFRASTRUCTURE INVESTMENTS UNDER NIP. PROJECTS WILL ALSO BE SPREAD ACROSS SECTORS SUCH AS IRRIGATION, MOBILITY, EDUCATION, HEALTH, WATER AND THE DIGITAL SECTOR.

 

2 AUGUST, 2020

PHARMA: 

PRIVATE EQUITY PLAYER TATA CAPITAL IS SET TO PICK UP A MINORITY 0.85% FOR $30 MILLION IN THE BIOLOGICS ARM OF BIOPHARMACEUTICAL MAJOR BIOCON, THE COMPANY SAID ON FRIDAY. THE FIRM SAID THIS DEAL VALUES BIOCON BIOLOGICS AT $3.5 BILLION. BIOCON BIOLOGICS CEO CHRISTIANE HAMACHRE SAID THIS EQUITY INFUSION AND HIGH QUALITY MANUFACTURING INFRASTRUCTURE WOULD HELP THE FIRM ACHIEVE A TARGET REVENUE OF $1 BILLION IN 2021-22 FINANCIAL YEAR. POST THE COMPLETION OF THIS TRANSACTION, BIOCON WILL HOLD 95.25% IN BIOCON BIOLOGICS. THE FUND INFUSION BY TATA CAPITAL IS PART OF THE FIRM’S PLANS TO RAISE $200-300 MILLION OVER THE NEXT FEW MONTHS AS IT IS PLANNING TO FLOAT AN INITIAL PUBLIC OFFERING IN THE NEXT THREE YEARS.

 

8 JULY, 2020

AUTOMOBILE:

MAHINDRA FIRST CHOICE WHEELS (MFCW) IS EMBARKING ON AN AGGRESSIVE EXPANSION PLAN TO TAP INTO THE SURGING DEMAND FOR USED CARS. MFCW WHICH DEALS IN PRE-OWNED VEHICLES WILL ADD 30 OUTLETS IN A FEW DAYS, THUS TAKING THE TOTAL TO 1,000. EVEN AS THE MARKET FOR NEW CARS REMAINS DEPRESSED AMID THE ECONOMIC FALL OUT OF THE COVID-19 PANDEMIC, DEMAND FOR PRE OWNED VEHICLES HAS SEEN STRONG RECOVERY. CONSEQUENTLY THE MARKET IS EXPECTED TO REACH 80% OF FEBRUARY LEVEL IN VALUE TERMS. MANAGEMENT CONDUCTED A RESEARCH 4-5 WEEKS BACK, WHICH SHOWED THAT PERSONAL MOBILITY WOULD BE PREFERRED TO PUBLIC TRANSPORT. GIVEN THE CURRENT SITUATION, NEW ENTRY LEVEL AND USED CARS WILL BE IN GREAT DEMAND. IT IS AN INFLECTION POINT FOR THE USED CAR BUSINESS. MFCW IS EXPECTED TO CLOSE THE MONTH WITH 10,000 -11,000 IN SALES, COMPARED TO PRE-LOCKDOWN MONTHLY AVERAGE OF 15,000. THERE IS HUGE DEMAND, BUT SUPPLY IS AN ISSUE. DESPITE LIMITATIONS, MFCW EXPECTS TO SELL 2,00,000 VEHICLES BY THE END OF FY21, THE SAME AS FY20. OVERALL USED CAR MARKET WILL END THE YEAR WITH A DIP, AT 3.8-3.9 MILLION UNITS IN FY21, AGAINST 4.2 MILLION UNITS FY20.

 

30 JUNE, 2020

E-EDUCATION:

BYJU’S IS VENTURING INTO LIVE ONLINE TUTORING WITH A COMPREHENSIVE SUITE OF OFFERINGS. THIS FOLLOWS A TWO MONTH EXPERIMENT ON THE MODEL. IT HAS LAUNCHED BYJU’S CLASSES A PROGRAMME THAT AIMS TO PROVIDE STUDENTS ALL BENEFITS OF PERSONALISED AFTER SCHOOL TUITION CLASSES FROM THE BEST TEACHERS. BYJU’S MANAGEMENT SAID WE STRONGLY BELIEVE A PERSONALISED OFFERING SUCH AS BYJU’S CLASSES WILL TRULY STAND OUT IN AN OTHERWISE FRAGMENTED AFTER SCHOOL TUTORING MARKET. THE COMPANY ACHIEVED THE FEAT OF BECOMING INDIA’S NEWEST DECACORN, AT A VALUATION OF $10.5 BILLION FOLLOWING FUNDING FROM MARY MEEKER’S BOND CAPITAL. BESIDES GIVING FREE ACCESS TO ITS LEARNING, BYJU’S HAD ALSO INTRODUCED LIVE CLASSES TARGETING THE AFTER SCHOOL SEGMENT, AFTER THE ANNOUNCEMENT OF THE LOCKDOWN. SINCE THE CLASSES WERE BEING ATTENDED BY MILLIONS OF STUDENTS, IT OFFERED THE TWO WAY INTERACTION FEATURE. WITH THE BYJU’S CLASSES, STUDENTS WILL BE ASSIGNED A DEDICATED MENTOR FOR ONE -ON-ONE ATTENTION, COMPREHENSIVE PROGRESS REPORTS, AND PERSONALISED CLASSES TO WORK ON TOPICS THAT A PARTICULAR STUDENT NEEDS TO FOCUS ON. THIS PROGRAMME INCLUDES REGULAR SUBJECTIVE AND OBJEVTIVE TESTS. PRESENTLY, THE PROGRAMME IS AVAILABLE FOR STUDENTS FROM GRADES 4 TO 12, AND FOR THOSE PREPARING FOR COMPETITIVE EXAMS LIKE JEE AND NEET. STUDENTS MAY CHOOSE BETWEEN WEEKDAY AND WEEKEND BATCHES, AND ATTEND SCHEDULE ONLINE MATHS AND SCIENCE CLASSED BASED ON THEIR SCHOOL CURRICULUM. ACCORDING TO THE COMPANY, SPECIALLY ASSIGNED BYJU’S TEACHERS WILL HELP STUDENTS WITH LIVE DOUBT RESOLUTION. THEY MAY OPT FOR PERSONALISED EXTRA CLASSES FOR TOPICS THEY NEED EXTRA SUPPORT IN. A DEDICATED MENTOR AND COUNSELLOR WILL LOOK AFTER LEARNING REQUIREMENTS, AND BE IN TOUCH WITH PARENTS/GUARDIANS. THEY WILL INTERACT WITH STUDENTS REGULARLY TO UNDERSTAND THEIR PROGRESS AND REQUIREMENTS. WITH THIS NEW PROGRAMME, BYJU’S WILL COMPETE WITH VARIOUS EDTECH PLAYERS INCLUDING VEDANTU, A LIVE ONLINE TUTORING COMPANY. THE COUNTRY’S $180 BILLION EDUCATION SECTOR HAS GONE ONLINE TO ADAPT TO THE NEW REALITY, LEADING TO OPPORTUNITIES FOR BYJU’S AND VEDANTU. WITH THE AVERAGE TIME OF 71 MINUTES BEING SPENT BY STUDENT ON THE BYJU’S APP EVERYDAY ACROSS 1,700 CITIES, THE APP IS CREATING A NEW WAY OF LEARNING THROUGH VISUAL LESSONS AND LIVE CLASSES BY BYJU’S TEACHERS. IT IS ALSO ENCOURAGING STUDENTS TO BECOME SELF INITIATED LEARNERS. 

 

24 JUNE, 2020

SMARTPHONES:

TAIWAN’S FOXCONN IS PLANNING FURTHER INVESTMENT IN INDIA AND MAY ANNOUNCE DETAILS IN THE NEXT FEW MONTHS AS THE WORLD’S LARGEST CONTRACT MANUFACTURER VIEWS THE OUTLOOK THERE VERY FAVOURABLY. FOXCONN ALREADY MAKES SMARTPHONES IN INDIA FOR APPLE AND XIAOMI, THOUGH IN MARCH SAID IT SUSPENDED PRODUCTION DUE TO THE CORONAVIRUS OUTBREAK. CHAIRMAN OF FOXCONN SAID INDIA WAS A BRIGHT SPOT FOR DEVELOPMENT EVEN THOUGH THERE WAS A CERTAIN IMPACT AT PRESENT DUE TO THE VIRUS.

 

18 JUNE, 2020

COMMERCIAL PROPERTY:

REALTY MAJOR DLF HAS OFFERED RESPITE ITS BELEAGUERED MALL TENANTS BY WAVING OFF RENTS, FULLY OR PARTIALLY, UNTIL MARCH 2021. DLF HAS ALREADY OFFERED A REVISED SCHEME ON PAYABLE MODIFIED GROSS (MG) LEASE RENT TO ITS TENANTS AT ITS PROPERTIES IN THE CAPITAL. DLF PLANS TO WAIVE OF THE ENTIRE MG RENT FROM THE BEGINNING OF THE LOCKDOWN PERIOD UNTIL 15 JUNE. IT HAS OFFERED 75% WAIVER ON MG RENT FROM 15-30 JUNE. DURING THE SECOND QUARTER OF 2020-2021, IT OFFERED TO WAIVE OFF HALF OF THE RENT. DURING THE NEXT QUARTER, THE EXTENT OF WAIVER ON MG RENT HAS BEEN SET AT 25%. IN FOURTH QUARTER, 10% WAIVER HAS BEEN OFFERED. HOWEVER RETAILERS THAT ATTAIN 80% OF THEIR SALES, COMPARED TO THE SAME PERIOD LAST YEAR, DURING OCTOBER – DECEMBER WILL HAVE TO FULL RENT DURING THE THIRD QUARTER. COMPANY MANAGEMENT TOLD WE UNDERSTAND THAT BOTH, THE PANDEMIC, AND THE LOCKDOWN, HAVE BENN EMOTIONALLY AND FINANCIALLY DRAINING FOR EACH ONE OF US. WE ARE SYMPATHETIC TO THE SITUATION THE RETAILERS ARE FACING, AND WE HAVE ALSO BEEN FACED WITH A CESSATION OF REVENUE WHILST OUR FINANCIAL OBLIGATIONS TO EXTENT SHAREHOLDERS HAVE REMAINED. COMPANY HAVE WORKED ON A RENTAL PROGRAMME THAT WILL SUPPORT ITS RENTAL PARTNERS TO RESTART ITS BUSINESS. COMPANY SAID IT VALUE ITS RETAIL PARTNERS IN GOOD AND BAD TIMES AND THIS IS GENEROUS GESTURE OF BUILDING THE PARTNERSHIP. UNDER THE REVISED SCHEME, TENANTS WILL BE LOCKED IN TILL THE END OF THE CURRENT FISCAL YEAR AND ARE REQUIRED TO OPEN THEIR OUTLETS WITHIN A WEEK AFTER THE OPENING OF THE MALL. MANAGEMENT OF COMPANY SAID, OVERALL BEHAVIOUR OF THE CONSUMER HAS CHANGED TO SAVE MORE, SPEND LESS, AND INVEST SMART MODEL. REAL ESTATE HAS ALWAYS BEEN LESS VOLATILE AS COMPARED TO SHARE MARKETS MAKING IT THE SAFEST INVESTMENT AVAILABLE.

 

10 JUNE, 2020

INTERNET:

THE UNION GOVERNMENT IS READYING THE NEXT PHASE OF BHARATNET, THE PROJECT THAT AIMS TO PROVIDE BROADBAND CONNECTIVITY TO 2,50,000 GRAM PANCHAYATS IN THE COUNTRY AND WILL SOON FINALISE PUBLIC PRIVATE PARTNERSHIP MODEL WHERE EACH STATE MAY BE ALLOWED TO INVITE PRIVATE PLAYERS BASED ON DEMAND. THE PROPOSAL, WHICH IS AT AN ADVANTAGE STATE WILL EMPOWER STATES TO MAKE THEIR OWN DECISIONS AS FAR AS PRIVATE PARTICIPATION IS CONCERNED. IT IS LEARNT THAT THE DEPARTMENT OF TELECOMMUNICATIONS HAS FIRMED UP THE PROPOSAL WITH THE GOVERNMENT THINK THANK NITI AAYOG TO MONETISE BHARATNET AND WILL SOON BE SENT TO THE CABINET FOR ITS APPROVAL. THE PROPOSAL INCLUDES MODELS WHERE STATES WILL DECIDE TO TAKE UP THE FIBRE NETWORK OPTIMISATION ROLE. IT WILL BE DIVIDED INTO THREE BROAD MODELS: UTILIZATION, MAINTENANCE AND CREATION. STATES WILL BE GIVEN THE AUTONOMY TO DECIDE WHICH MODEL OR WHICH MODEL COMBINATION THEY WANT TO USE. FOR INSTANT, STATE WILL HAVE THE LIBERTY TO DECIDE WHETHER IT WOULD WANT CREATE ITS OWN BROADBAND INFRASTRUCTURE THROUGH PRIVATE PARTICIPATION OR ONLY SEEK PRIVATE HELP IN THE MAINTENANCE OF INTERNET INFRASTRUCTURE. WHILE IT IS BEING SEEN AS A PROGESSIVE STEP FOR EXPANDING INTERNET CONNECTIVITY TO THE HINTERLAND, SOME FEEL THE STATES MAY ARM TWIST THE PROPOSAL. THE BHARATNET PROJECT WAS APPROVED TO BE SET UP IN PHASES. FIRST PHASE ENTAILED A COST OF RS 18,000 CRORE AND FOR THE SECOND PHASE THE ESTIMATES WERE AROUND RS 27,000 CRORE.

 

4 JUNE, 2020

IT:

INFOSYS INVESTED RS 3,302 CRORE TO ACQUIRE IN SOME COMPANIES DURING THE PREVIOUS FINANCIAL YEAR, AS COMPANY MOVED TO EXTEND CAPABILITIES INTO EMERGING TECHNOLOGIES AND FOCUSED INDUSTRY SECTORS. EARLIER IN FEBRUARY, INFOYSIS NOVA HOLDINGS LLC, A WHOLLY OWNED SUBSIDIARY OF THE RS 90,971 CRORE SOFTWARE SERVICES EXPORTER, ACQUIRED US-BASED SALESFORCE ADVISOR SIMPLUS FOR ABOUT RS 1,892 CRORE. IN APRIL LAST YEAR, INFOSYS CONSULTING PTE ACQUIRED 81% OF VOTING INTERESTS IN HIPUS FOR ABOUT RS 206 CRORE. HIPUS IS A WHOLLY OWNED SUBSIDIARY OF JAPAN’S HITACHI LTD AND HANDLES PROCUREMENTS FOR THE HITACHI GROUP. IN MAY 2019, INFOSYS CONSULTING PTE LTD, ANOTHER WHOLLY OWNED SUBSIDIARY, COMPLETED THE ACQUISITION OF 75% STAKE IN STATER, A COMPLETELY OWNED SUBSIDIARY OF THE NETHERLANDS BASED ABN AMRO BANK, FOR NEARLY RS 1,195 CRORE. STATER BRINGS EUROPEAN MORTGAGE EXPERTISE AND A ROBUST DIGITAL PLATFORM TO THE TABLE. IN FINANCIAL YEAR 2018-19, INFOSYS SPENT A COMBINED RS 1,074 CRORE TO ACQUIRE WONGDOODY, A COMPANY FOCUSED ON DIGITAL ADVERTISING SERVICES, AND FLUIDO, A SALESFORCE ADVISOR AND CONSULTING FOCUSED FIRM. THE COMPANY PUT IN AN ADDITIONAL RS 9 CRORE IN WONGDOODY IN FINANCIAL YEAR 2019-20. THE COMPANY INVEST IN, AND BUILT STRONG PARTNERSHIPS WITH, ALL CLOUD HYPERSCALERS AND SAAS PROVIDERS. COMPANY EXPANDED ITS CAPABILITIES IN SALESFORCE ECOSYSTEM THROUGH ACQUISITIONS OF FLUIDO IN THE NORDICS AND SIMPLUS IN THE US. INFOSYS HAD ALSO LIQUIDATED SOME OF ITS SUBSIDIARIES DURING THE LAST FINANCIAL YEAR. IT LIQUIDATED PANAYA JAPAN CO LTD, A WHOLLY OWNED SUBSIDIARY OF PANAYA INC AND INFOSYS TECHNOLOGY (AUSTRALIA). PANAYA WAS RECLASSIFIED AS HELD FOR SALE BY THE COMPANY. IN MARCH 2018, THE COMPANY RECORDED A REDUCTION IN FAIR VALUE OF PANAYA TO RS 589 CRORE. A YEAR LATER SAW A FURTHER REDUCTION IN FAIR VALUE TO ABOUT RS 265 CRORE. INFOSYS SAID AT THE BEGINNING OF LAST FISCAL YEAR THAT IT HAD 25 DIRECT SUBSIDIARIES AND 34 STEP DOWN SUBSIDIARIES. AS ON MARCH 31 THIS YEAR, IT REPORTED 23 DIRECT SUBSIDIARIES AND 52 STEP DOWN SUBSIDIARIES.

 

28 MAY, 2020

AUTOMOBILE:

MARUTI SUZUKI IS EXPLORING THE POSSIBILITY OF ENTERING THE VEHICLE LEASING BUSINESS FOR ITS RETAIL CUSTOMERS. THE PLAN HAS BEEN IN THE WORKS FOR ABOUT A YEAR AND IS BEING SPEARHEADED BY A SPECIAL PROJECTS TEAM OF THE COMPANY. INDIA’S LARGEST CAR MAKER WILL FOLLOW SOME OF ITS CLOSEST RIVALS SUCH AS HYUNDAI MOTOR AND MAHINDRA AND MAHINDRA, WHO ALREADY OFFERS THEIR VEHICLE ON LEASE. MARUTI’S VEHICLE LEASING MODEL WOULD, HOWEVER FROM THE OTHERS CONSIDERING IT PLANS TO TAP ITS LARGE COUNTRYWIDE DEALERSHIP NETWORK FOR THE BUSINESS EXPANSION. THIS STRATEGY WOULD OPEN AN ADDITIONAL REVENUE STREAM FOR MARUTI DEALERS AR A TIME WHEN DOMESTIC AUTOMOBILE SALES ARE FORECAST TO SLUMP THIS YEAR DUE TO COVID-19 INDUCED ECONOMY CRISIS. CARMAKER GENERALLY TEND TO PARTNER STARTUPS SUCH AS REVV AND ZOOMCAR FOR OFFERING THEIR VEHICLES ON LEASE TO RETAIL CUSTOMERS. MERCEDES- BENZ AND BMW ALSO HAVE THEIR OWN CUSTOMIZED LEASING PLANS FOR INDIVIDUAL CUSTOMERS. SUCH VEHICLE LEASING SERVICES ARE POPULAR IN DEVELOPED MARKETS SUCH AS THE U.S AND EUROPE, WHILE IN INDIA, AUTOMAKERS HAVE STARTED THIS SERVICE FOR THE PAST TWO YEARS. MARUTI HAS PREVIOUSLY VENTURED INTO THE VEHICLE LEASING SPACE FOR CORPORATES BUT WITHOUT ANY MAJOR SUCCESS. THE SITUATION MIGHT BE CONDUCIVE FOR MARUTI TO LAUNCH SUCH SERVICES SINCE URBAN CUSTOMERS ARE LIKELY TO PREFER THE VEHICLE LEASING MODEL, GIVEN THE DECLINING AFFORDABILITY AND LESS HASSLE OF LEASED VEHICLES. IT’S STILL NOT NOT CLEAR WHEN THIS WILL BE LAUNCHED, BUT THE PROJECT TEAM HAS BEEN WORKING ON THIS. MARUTI HAS BEEN GIVING ITS CARS TO ZOOMCAR AND OTHER PLATFORMS, BUT THEY PLAN TO GO THROUGH THE DEALERS, THEN IT WILL HELP DEALERS AS WELL AS THE COMPANY. OTHERS SUCH AS HYUNDAI AND MAHINDRA ARE ALREADY PRESENT IN THIS SEGMENT THROUGH TIE UPS WITH VEHICLE LEASING STARTUPS. IN 2018, HYUNDAI ALSO MADE AN UNDISCLOSED INVESTMENT IN REVV, WHILE MAHINDRA INVESTED AROUND RS 176 CRORE IN ZOOMCAR. MARUTI’S PLAN TO FORAY INTO RETAIL VEHICLE LEASING IS A WELL THOUGHT OUT STRATEGY AS SOME CONSUMERS DON’T WANT THE HASSLE OF OWNING CARS. SO, LEASING APPEARS TO BE AN EXCELLENT ALTERNATIVE TO BUYING A CAR.

 

22 MAY, 2020

TELECOMMUNICATION:

BHARTI AIRTEL MAY BE BACK IN THE BLACK BY THE END OF DECEMBER, AFTER A YEAR OF LOSSES, DRIVEN BY STRONG OPERATIONAL ,ETRICS SUCH AS ARPU, WHICH WOULD GET A FURTHER PUSH BY EXPECTED FRESH TRAFFIC HIKES AND ADDITION OF 4G CUSTOMERS. BHARTI AIRTEL WAS CLOSE TO PROFITABILITY AT THE OPERATIONAL LEVEL IN THE JANUARY MARCH PERIOD, WHEN IT WAS DRAGGED BY THE EXCEPTIONAL CHARGES RELATED TO STATUTORY DUES AND WRITE DOWN ON 3G GEAR. ITS NET LOSS BEFORE EXCEPTIONAL ITEMS DURING THE QUARTER STOOD AT RS 471 CRORE, DOWN FROM RS 1,181 CRORE A YEAR AGO. BHARTI AIRTEL WILL BE ABLE TO GENERATE PROFITS OVER 2-3 QUARTERS AND EXIT 2020 WITH NET PAT. THE COMPANY’S STRONG STRONG INDIAN BUSINESS GROWTH WAS UNDERLINE BY THE ARPU OF RS 154 UP 14% SEQUENTIALLY AND HIGHER THAN RIVAL RELIANCE KIO INFOCOMM’S RS 130.6, WHICH INDICATES BHARTI AIRTEL HAS A FAR HIGHER PROPORTION OF TOP END PREPAID AND POST PAID USERS COMPARED WITH ITS RIVAL. EVEN IF THE CURRENT TARIFFS CONTINUE, EVEN IF THERE IS JUST AND UPGRADE AND ARPU DOES NOT INCREASE TO RS 200, IT WILL STILL TURN PROFITABLE IN FY21. RISE IN ARPU FOR BHARTI AIRTEL IS SEEN IN THE SHORT TERM OWING TO THE FULL IMPACT OF THE HIKE IN TARIFFS IN DECEMBER 2019, MORE CONVERSIONS TO 4G, POST PAIDGAINING TRACTION AND CHURN LIKELY IN LOW ARPU. EVEN IF WE KEEP ASIDE TRAI’S DECISION ON FLOOR PRICE, AIRTEL’S ARPU CAN REACH RS 165-170 ORGANICALLY OVER THE NEXT THREE QUARTERS. AS OF MARCH END AIRTELS’S 282 MILLION SUBSCRIBERS WERE 4G USERS. AIRTEL’S AVERAGE DATA USAGE PER USER AT 15GB AND VOICE MINUTES PER USE AT 989 MINUTES WERE ALSO WAY AHEAD OF RIVALS.

 

16 MAY, 2020

E-COMMERCE:

THE LOCKDOWN TRIGGERED BY COVID-19 IS SET TO GROW INDIA’S E-COMMERCE MARKET TO RS 7 TRILLION BY 2023. THE GROWTH OF INDIAN E-COMMERCE MARKET HAS BEEN REVISED UP, CONSIDERING THE POSITIVE PUSH DUE TO THE COVID-19 OUTBREAK. THE E-COMMERCE MARKET IN INDIA IS SET TO GROW AT A COMPOUND ANNUAL GROWTH OF 19.6% BETWEEN 2019 AND 2023. AS CONSUMERS MOVE FROM IN STORE TO ONLINE SPENDING TO AVOID EXPOSURE TO DISEASE VECTORS SUCH AS CASH AND POINT OF SALE TERMINALS, E-COMMERCE PAYMENTS ARE SET TO RECORD A STEEP RISE OF 25.9% IN 2020 ITSELF. WHILE THE CURRENT LOACKDOWN HAS LEAD TO AN OVERALL DECLINE IN CUSTOMER SPENDING, THIS IS BEING PARTIALLY OFFSET BY A RISE IN ONLINE SPENDING, AS WARY CONSUMER STAY AT HOME AND USE ONLINE CHANNELS TO PURCHASE GOODS. ONLINE PAYMENT SOLUTIONS FROM THE LIKES OF PAYTM, AMAZON PAY AND PAYPAL COULD POTENTIALLY BENEFIT FROM CURRENT SITUATION. THE CENTRE HAD PROHIBITED E-COMMERCE FIRMS TO SELL OR DELIVER NON ESSENTIAL PRODUCTS UNTIL THE LOCKDOWN ENDS. BUT ON 5 MAY RESTRICTION WAS PARTIALLY LIFTED. THE COVID-19 OUTBREAK WILL SAY GREATER IMPLICATIONS O INDIAN CONSUMERS BUYING BEHAVIOUR, PUSHING THEM TO EMBRACE E-COMMERCE. THE MARKET IS ANTICIPATING TO CONTINUE ITS GROWTH EXCEEDING THE PREVIOUS FORECAST LEVELS TO REACH $98.4 BILLION IN NEXT FOUR YEARS. THE INDIAN E-COMMERCE MARKET IS EXPECTED TO GROW TO $200 BILLION BY 2026 FROM $38.5 BILLION IN 2017. 

 

11 MAY, 2020

FMCG:

PURCHASE OF DAILY HOUSE HOLD ESSENTIALS AND GROCERIES IN CITIES ROSE SIGNIFICANTLY IN THE WEEKS WHEN LOCKDOWN AND ITS EXTENSION WERE ANNOUNCED, INDICATING PANIC BUYING IN SHORT SPELLS. SALES OF FMCG GREW 79% DURING FOURTH WEEK OF MARCH WHEN THE GOVERNMENT FIRST ORDERED A NATIONWIDE LOCKDOWN FOR 21 DAYS. WHILE A FOLLOWING WEEK SAW A SHARP DECLINE AT 47%, THE MARKET SAW PURCHASE SOAR AGAIN BY 239% DURING THIRD WEEK OF APRIL, WHICH COINCIDED WITH THE LOCKDOWN EXTENSION ANNOUNCEMENT. NEARLY 50% OF THE MONTH’S FMCG IS BOUGHT IN THE FIRST WEEK OF THE MONTH. MANY COMPANIES SEES INTENSIFYING GROWTH CULMINATING WITH A VERY STEEP GROWTH TOWARDS WEEKS WHEN LOCKDOWN WAS ANNOUNCED. MOST CONSUMER GOODS COMPANIES RAMPED UP PRODUCTION IN MARCH TO MEET THE STEEP RISE IN DEMAND WITH PEOPLE RUSHING TO STOCK UP ESSENTIALS AND GROCERIES IN BULK AMID FEARS OF A LOCKDOWN DUE TO CORONAVIRUS OUTBREAK. CONSUMER GOODS SALES SLOWED SHARPLY IN JANUARY AND FEBRUARY FROM THE YEAR EARLIER AND PRODUCTION WAS IN LINE WITH FALLING SALES GROWTH. AFTER THE INITIAL SUPPLY ISSUE, PARLE COMPANY SAW CONSUMER HOARDING ESSENTIALS FREQUENTLY COMPARED TO USUAL STOCK PILING, WHERE THERE IS LULL AFTER SHOPPING. PARLE COMPANY EXPECT THE MARKET GROWTH TO SLOW DOWN AFTER LOCKDOWN END BECAUSE MOST CONSUMERS HAVE STOCKED UP FOR MONTHS. COMPANIES SUCH AS MARICO AND HINDUSTAN UNILEVER POSTED DECLINING SALES DURING THE QUARTER ENDED MARCH, MANAGEMENT OF BOTH THE COMPANIES SAID CLARITY ON ACTUAL DEMAND WILL EMERGE ONLY WHEN OPERATIONS NORMALIZE. MANAGEMENT OF HUL SAID WHENEVER THERE IS A CRISIS AND WHEN YOU SENSE THERE WILL BE A SHORTAGE DUE TO SUPPLY ISSUES, THEN YOU WOULD THINK YO LAY YOUR HANDS AS MUCH AS YOU CAN.

 

5 MAY, 2020

ENTERTAINMENT:

THE INDIAN FILM INDUSTRY IS HEADED TOWARDS A MAJOR FACE OFF BETWEEN TWO OF ITS BIGGEST STAKE HOLDERS, FILM PRODUCERS AND MULTIPLEXES, AFTER FILM EXECUTIVES STARTED EXPLORING THE OPTION OF RELEASE, ON VIDEO STREAMING SERVICES. THE CINEMA EXHIBITORS HAVE INSISTED TO BE RELEASED FILMS SHOULD NOT BE MADE AVAILABLE TO OVER THE TOP PLAYERS. EXHIBITION PLAYERS MIGHT TAKE A HARD STANCE OF BOYCOTTING FUTURE RELEASE FROM PRODUCERS AND ACTORS, IF THEY ALLOW FILMS TO BE STREAMED BEFORE THE THEATRICAL RELEASE. IT’S A MATTER OF SURVIVAL, SAID A TOP EXECUTIVE OF MULTIPLEX CHAIN. ON CONDITION OF ANONYMITY. WE ARE NOT AGAINST SMALLER FILMS, WHICH ARE MEANT TO BE RELEASED DIRECTLY ON STREAMING SERVICES, OR FILMS COMMISSIONED BY NETFLIX OR OTHER SUCH SERVICES. BUT AT A TIME WHEN WE ARE FORCED TO CEASE OPERATIONS, IF PRODUCERS AND ACTORS DON’T SUPPORT US, WE WILL HAVE TO DELIBERATE IF WE WANT TO SUPPORT THEM IN FUTURE. MULTIPLEX ASSOCIATION OF INDIA (MAI) REQUESTED ALL ITS PARTNERS, STUDIOS, PRODUCERS, ETC TO SUPPORT THE CINEMA EXHIBITION SECTOR BY RELEASING THEIR FILMS IN THE THEATERS AFTER LOCKDOWN ENDS. THEY URGE ALL STUDIOS, PRODUCERS, ARTISTES AND OTHER CONTENT CREATORS, TO KINDLY RESPECT THE EXCLUSIVE THEATRICAL WINDOW, WHICH HAS BEEN A TIME TESTED INDUSTRY PRACTICE, AGREES UPON BY ALL STAKE HOLDERS, NOT JUST IN INDIA, BUT EVEN GLOBALLY, FOR SEVERAL DECADES. CURRENTLY THERE IS A EIGHT WEEK WINDOW BETWEEN A THEATRICAL AND OTHER SCREEN RELEASE IN INDIA. HOWEVER, PRODUCERS ARE WORRIED ABOUT MOUNTING CARRYING COSTS ON THEIR INVESTMENT, AND PIRACY. THERE IS NO CERTAINTY ON WHEN CINEMA SCREENS WILL BE ALLOWED TO OPERATE AGAIN. EVEN AFTER THE LOCKDOWN IS LIFTED, MOVIEGOERS MIGHT NOT WANT TO VISIT CINEMA HALLS. WE CAN’T JUST SIT WITH A READY FILM TILL THEN, IT COSTS US MONEY EVERY SINGLE DAY, SAID A PRODUCER. THE COVID-19 HAS CAUSED MAJOR DISRUPTION IN THE FILMS BUSINESS WITH BOTH MULTIPLEX OWNERS AND PRODUCERS LOSING MONEY DUE TO SHUT CINEMAS. CINEMA EXHIBITION PLAYERS HAVE BEEN RUEING NIL REVENUES SINCE MARCH RECURRING FIXED COST. FILMS SUCH AS LAXXMI BOMB, GULABO SITABO AND GUNJAN SAXENA ARE ALREADY IN TALKS WITH SERVICES INCLUDING HOTSTAR, AMAZON PRIME VIDEO AND NETFLIX TO RELEASE THE FILMS DIRECTLY ON THESE SERVICES. ANOTHER PRODUCER SAID THESE ARE UNPRECEDENTED TIMES AND NO STAKE HOLDER IS IN POSITION TO FLEX MUSCLES. A PRODUCES, SITTING ON A COMPLETED MOVIE HAS NO OTHER WAY BUT TO GO TO A VIDEO STREAMING SERVICE OR A BROADCASTER. EVERYONE HAS TO WORK TOGETHER AND I WOULD HAVE UNDERSTOOD IF IT WAS BUSINESS AS USUAL, BUT IT IS NOT. CINEMAS ARE NOT OPEN RIGHT NOW SO THERE IS NO POINT IN THEM TAKING AN ADVERSARIAL STANCE RIGHT NOW, HE ADDED.

 

1 MAY, 2020

E-COMMERCE:

FACEBOOK CEO MARKKZUCKERBERG HAS SAID THAT COMPANY’S $5.7 BILLION INVESTMENT INTO JIO PLATFORMS WILL HELP THE US COMPANY BUILD PRODUCT AND TECHNOLOGY THAT CAN BE EXTENDED TO OTHER PARTS OF THE WORLD. FACEBOOK MANAGEMENT SAID ALL THE PRODUCTS THAT WE ARE BUILDING TO ENABLE THAT PARTNERSHIP ARE GOING TO BE THE THINGS THAT WE WANT TO DO AROUND THE WORLD. SO WE ARE EXCITED ABOUT WORKING WITH JIO TO DRIVE THE VISION FORWARD, AND THEN EXTENDING IT WHERE OVER THE COMING MONTHS AND YEARS. FACEBOOK’S AIM WAS TO CREATE A MUCH BETTER SHOPPING AND COMMERCE EXPERIENCE IN INDIA, WORKING WITH JIOMART, BY LEVERAGING WHATSAPP’S COMMUNICATION AND PAYMENTS PLATFORMS. INDIA IS WHATSAPP’S LARGEST MARKET, WITH OVER 400 MILLION USERS. JIO WANT TO TRY GET SMES AND SHOPS ONTO A SINGLE NETWORK THAT WE WILL BE ABLE TO COMMUNICATE WITH THROUGH WHATSAPP AND DO PAYMENTS ONLINE THROUGH WHATAPP. THIS IS HOW JIO AND FACEBOOK CAN WIRE UP AND HELP SMALL BUSINESSES IN THE COUNTRY THEY HAVE LARGEST WHATSAPP COMMUNICATION. FACEBOOK LAST WEEK SAID IT WILL INVEST $5.7 BILLION INTO JIO PLATFORMS, A UNIT OF RELIANCE INDUSTRIES FOR 9.99% STAKE. IT IS SAID TO BE THE LARGEST INVESTMENT FOR A MINORITY STAKE BY A TECHNOLOGY COMPANY ANYWHERE IN THE WORLD AND THE LARGEST FDI IN THE TECHNOLOGY SECTOR IN INDIA. ZUKERBERG SAID THAT FACEBOOK’S STRONG BALANCE SHEET PROVED TO BE AN IMPORTANT ASSET, THIS QUARTER, ENABLING IT TO COMMIT TO A LONG TERM GROWTH PRIORITY IN INDIA EVEN IN THE MIDST OF A TROUBLED GLOBAL ECONOMY. FACEBOOK HAS ALSO JOINED HANDS WITH RELIANCE’S RETAIL AND JIO PLATFORMS TO BRING JIOMART, ORIGINALLY LAUNCHED IN DECEMBER 2019, TO ITS MESSAGING APP, WHATSAPP. BOTH COMPANIES RECENTLY PILOTED WHATSAPP BASED JIOMART PROJECT IN AREAS OF NAVI MUMBAI, THANE AND KALYAN. ZUCKERBERG SAID THE LARGEST FACEBOOK AND WHATSAPP COMMUNITIES IN THE WORLD ARE IN INDIA, AND THERE’S AN ESPECIALLY IMPORTANT OPPORTUNITY TO SERVE SMALL BUSINESSES AND ENABLE COMMERCE OVER LONG TERM. BY BRINGING TOGETHER JIOMART, WHICH IS JIO’S SMALL BUSINESS INITIATIVE TO CONNECT MILLIONS OF SHOPS ACROSS INDIA, WITH WHATSAPP, THEY THINK THEY THAT THEY ARE GOING TO ABLE TO CREATE A MUCH BETTER SHOPPING EXPERIENCE.  

 

28 APRIL, 2020

TELECOM:

BHARTI AIRTEL HAS AWARDED A MULTI CRORE RUPEE CONTRACT TO NOKIA TO EXPAND AND MODERNIZE ITS 4G NETWORK IN NINE CIRCLES, WHERE THE FINNISH COMPANY HAS ALREADY PROVIDED EQUIPMENT TO THE TELECOM OPERATOR. AIRTEL IS EXPEDITING ITS NETWORK EXPANSION AND RAMPING UP CAPACITIES, ESPECIALLY IN RURAL AREAS. RENEGOTIATIONS WERE ON FOR SOME TIME WHERE AIRTEL WAS SEEKING REDUCED PRICE UNDER NEWLY CONSTRUCTED AGREEMENT. SUCH TALKS ARE ALREADY ON WITH OTHER VENDORS LIKE ERICSSON, HUAWEI, AND ZTE IN THEIR RESPECTIVE CIRCLES WHERE AIRTEL IS SEEKING NEW PRICES. AIRTEL HAS AWARDED THE ORIGINAL 4G CONTRACT TO NOKIA FOR GUJARAT, MADHYA PRADESH, BIHAR, WEST BENGAL EXCLUDING KOLKATA, ODHISHA, MUMBAI, MAHARASHTRA, KERALA AND UP EAST CIRCLES IN 2006. THE DEAL SIZE WAS PEGGED AT $500 MILLION. THE CURRENT NEWLY AGREED DEAL SIZE COULD NOT BE ASCERTAINED. RURAL AREAS AND SUBURBAN AREAS ARE SEEING MORE TRAFFIC ON AIRTEL’S NETWORK THAN URBAN AREAS AFTER THE NATIONWIDE LOCK DOWN CANE INTO EFFECT A MONTH AGO. 

 

25 APRIL, 2020

IT:

CASH RICH IT SERVICES PROVIDERS TATA CONSULTANCY SERVICES, INFOSYS AND WIPRO ARE LIKELY TO GO ON AN ACQUISITION SPREE, AS COMPANIES WILL BE AVAILABLE AT DISCOUNTED VALUATION DUE TO THE COVID-19 CRISIS. THE THREE COMPANIES COLLECTIVELY HAVE CASH RESERVES OF MORE THAN $13 BILLION, A SUBSTANTIAL FIREPOWER IN A DOWNTURN WHICH COULD HELP THEM BUY SMALLER RIVALS IN NICHE SEGMENTS. ACQUISITIONS MAY HELP THEM GAIN STRATEGIC CAPABILITIES AND MARKET ACCESS, AND BOOST GROWTH ONCE BUSINESS IS BACK TO NORMAL. THEY COULD LOOK FOR OPPORTUNITIES IN COGNITIVE AND SELF HEATING IT PLATFORMS AND CLOUD BASED CYBER SECURITY PRODUCTS WHICH ARE IN DEMAND BY THEIR CLIENTS. TCS’S LARGEST M&A TO DATE WAS ACTUALLY EXECUTED AT HE PEAK OF THE GLOBAL FINANCIAL CRISIS. MANAGEMENT OF TCS IS NOT SHY OF M&A AND THEY BELIEVE THAT THE BEST TIME TO EXECUTE IT IS WHEN NOBODY ELSE IS BUYING. DURING THE HEIGHT OF THE 2008-2009 US RECESSION STIRRED BY THE FINANCIAL CRISIS, TCS BOUGHT CITI GROUP’S CAPTIVE BUSINESS PROCESS CENTRE IN INDIA FOR $505 MILLION, WHICH HELPED IT SIGN A DECADE LOG $2.5 BILLION CONTRACT WITH THE GLOBAL BANK TO PROVIDE SERVICES. TCS MANAGEMENT SAYS THEIR STANCE IS THAT FOR THE RIGHT ASSET AT THE RIGHT PRICE, THEY ARE ALWAYS GAME FOR IT. AND IF THIS CURRENT MARKET THROWS UP THOSE OPPORTUNITIES, THEY WOULD DEFINITELY SNAP THEM UP. TCS, INFOSYS AND WIPRO’S NET CASH HOLDINGS WERE $5.9 BILLION, $3.6 BILLION AND $3.53 BILLION, RESPECTIVELY AT THE END OF MARCH. TCS, INDIA’S LARGEST IT SERVICE FIRM HAS IN THE PAST ACQUIRED FIRMS SUCH AS CONSULTANCY BRIDGEPOINT GROUP AND DESIGN FIRM W12, BESIDES PURCHASING CERTAIN ASSETS OF THE INDIAN TECHNICAL CENTRE OF GENERAL MOTORS. AMONG INDIA’S IT SERVICES COMPANIES, WIPRO HAS BEEN THE MOST ACQUISITIVE. INDIA’S FOURTH LARGEST SOFTWARE EXPORTER REMAINS KEEN ON DEPLOYING CASH FOR MORE MERGERS AND ACQUISITIONS DESPITE COVID-19 RELATED SLOWDOWNS. WIPRO MANAGEMENT SAID THIS COULD BE THE TIME THEY COULD EVEN LOOK AT A POSSIBLE WELL PRICED, M&A OPPORTUNITY WITHOUT HAVING TO WORRY ABOUT WHETHER THEY HAVE SUFFICIENT CASH OR NOT. SINCE 2016, WIPRO HAS SPENT OVER A BILLION TO ACQUIRE ASSET SUCH AS HEALTH PLAN SERVICES CLOUD ENABLEMENT FIRM APPIRIO DESIGN CONSULTANCIES SUCH AS DESIGNIT AND COOPER, BESIDES SMALL FIRM SUCH AS INFOSERVER AND INTERNATIONAL TECHNEGROUP. AN ECONOMIC DOWNTURN IS ALSO THE RIGHT TIME TO PICK COMPANIES DUE TO LOWER VALUATIONS. AS THE CURRENT COVID CRISIS COULD LEAD TO EROSION IN VALUATION, BOTH TCS AND WIPRO COULD SCOUT CAPTIVES OF SELECT GLOBAL CLIENTS. IN MARCH, INFOSYS CLOSED IT $250 MILLION ACQUISITION OF SIMPLUS, A SALESFORCE IMPLEMENTATION PARTNER. PREVIOUSLY, IT ACQUIRED A MAJORITY STAKE IN STARTER N.V, WHICH OFFERS MORTGAGE ADMINISTRATION, FROM ABN AMRO FOR AROUND RS 1,000 CRORE. IT ALSO BOUGHT FLUIDO, A FINNISH SALESFORCE CONSULTING FIRM. INFOSYS MANAGEMENT SAID THEY HAVE ENOUGH OF HEADROOM AND THEY WILL HAVE TO SEE IF ANY ASSETS COME UP WITH INTERESTS THEM DURING THIS PERIOD, BUT THEY ARE OPEN TO EVERYTHING AT THIS STAGE.  

 

22 APRIL, 2020

BANKING:

THE INDIAN BANK’S ASSOCIATION (IBA) IS FINALIZING A SPECIAL RESTRUCTURING PROPOSAL TO BE OFFERED TO COMPANIES IMPACTED BY COVID-19 INDUCED DISRUPTION. THE PROPOSAL WILL ALLOW BANKS TO EXTEND LOAN TENURE WITHOUT CLASSIFYING THEM AS NON PERFORMING ASSETS. BANKERS FEEL COMPANIES HIT BY THE LOCKDOWN WILL NEED AT LEAST A YEAR TO RECOVER, AND THAT THE MARCH TO MAY MORATORIUM ANNOUNCED BY THE RBI IS NOT ADEQUATE. THE DRAFT RESTRUCTURING PROPOSAL COULD BE SENT TO THE RBI FOR APPROVAL. BANKS ARE TRYING TO WORK OUT RESTRUCTURING PACKAGE WITHOUT CALLING FOR A CHANGE IN OWNERSHIP WHILE ALLOWING THE LOANS TO REMAIN STANDARD. BOTH PRESENT AS WELL AS FUTURE CASH FLOWS OF MANY COMPANIES HAVE BEEN HIT DUE TO THIS CRISIS. THE SITUATION IS SUCH THAT EVEN IF BANKS TAKE THEM TO BANKRUPTCY COURTS, THERE WON’T BE ANY BUYERS. CURRENT RBI NORMS SPECIFY THAT A LOAN ACCOUNT UNDERGOING RESTRUCTURING WITHOUT CHANGE IN OWNERSHIP CANNOT BE CLASSIFIED AS STANDARD. KEEPING THESE ACCOUNTS STANDARD WOULD ALSO ALLOW BANKS TO SAVE ON COST BY WAY OF EXTRA PROVISIONS. THE IBA PLAN IS TO GIVE THE COMPANIES MORE TIME TO PLAY BACK LOANS BY EXTENDING THE MORATORIUM AND IN SOME CASE EXTENDING THE TENURE OF TERM LOANS. FOR WORKING CAPITAL LOANS THAT ARE SHORT TERM, THE INTEREST PAYMENT PERIOD COULD BE EXTENDED TO THREE YEARS. MISUSE OF PREVIOUS RESTRUCTURING FRAMEWORKS BY PROMOTERS HAS MADE THE RBI WARY OF APPROVING ANY SUCH REJIG WITH EXISTING PROMOTERS AS THE HELM. BANKERS ARE MINDFUL THAT ANY PROPOSAL HAS TO HAVE STRONG CHECKS AND BALANCES TO ENSURE IT IS NOT MISUSED. BANKS MAY ALSO ROPE IN RATING AGENCIES AND AUDITORS TO ENSURE ONLY COMPANIES THAT NEED IT BENEFIT FROM IT. BANKERS ARGUE THAT AN EXTENDED LOAN MORATORIUM AND KEEPING LOANS AS STANDARD WILL HELP BANKS SAVE ON CAPITAL, AND THUS LEND MORE. THIS IS AN UNPRECEDENTED SITUATION.GROWTH HAS FALLEN OFF THE CLIFF AND A RECOVERY WILL BE HARD TO COME BY IF WE DO NOT ACT NOW. WHILE PROVISIONS ARE NECESSARY AND IS THE RIGHT BANKING PRACTICE, IT IS NOT WHAT IS NEEDED NOW. A PROVISIONING HOLIDAY WILL HELP BANKS CONCENTRATE ON WHAT IS NECESSARY, PUSHING CREDIT AND SAVING JOBS. BANKERS ARE ALSO NOT SURE OF THE IMPACT OF THE CURRENT CRISIS ON THEIR OWN BALANCE SHEETS. LOAN GROWTH IS ALREADY AT A 58 YEAR LOW, AND COULD SLIP FURTHER DUE TO DEMAND DESTRUCTION CAUSED BY THE CRISIS. A RESTRUCTURING PLAN WILL NOT HELP NOT ONLY THE CORPORATES, BUT ALSO BANKS, BECAUSE LENDERS WILL ALSO STRUGGLE TO FORECAST RECEIVABLES FOR COMPANIES HIT BY THE COVID CRISIS. 

 

20 APRIL, 2020

FUTURE GROUP:

KISHORE BIYANI, FOUNDER OF FUTURE GROUP, WHO IS IN THE MIDST OF A COURTROOM BATTLE OVER PLEDGED SHARES OF THE COMPANY, MAY GET A BREATHER AFTER SEVERAL LENDERS GAVE A CONDITIONAL NOD TO RESTRUCTURING LOANS WORTH $600 MILLION OF PROMOTER DEBT. THE LOAN RESTRUCTURING COMES WITH AN EXIT ROUTE CHARTERED FOR BIYANI FROM FUTURE GROUP, WHICH HE FOUNDED IN 1987. THIS MAKES IT BINDING FOR HIM TO SELL CONTROLLING STAKES IN GROUP COMPANIES TO RAISE FUNDS FOR REPAYMENTS. THE LENDERS HAVE ALSO BEGUN REACHING OUT TO POTENTIAL BUYERS BUT AS THERE IS A CAP ON FOREIGN INVESTMENT IN MULTI RETAIL SEGMENT. POTENTIAL BUYER OF FUTURE RETAIL INCLUDE RELIANCE INDUSTRIES, WHICH IS RAMPING UP ITS RETAIL PORTFOLIO, AND A POTENTIAL JOINT VENTURE OF FOREIGN RETAILERS SUCH AS AMAZON AND WALMART WITH AN INDIAN PARTNER. LENDERS TO BIYANI’S HOLDING COMPANIES INCLUDE PRIVATE EQUITY FUNDS BLACKSTONE AND AION CAPITAL. BIYANI’S DEBT RELATED TROUBLE CAME TO THE FORE IN MARCH, WHEN SHARES OF FUTURE GROUP’S LISTED COMPANIES LOST SIGNIFICANT VALUE LEADING TO RATINGS DOWN GRADE OF HIS PROMOTER HOLDING COMPANY AND INVOCATION OF PLEDGED SHARES BY LENDERS. THE GROUP HAS MOVED TO FIND BUYERS FOR PROMOTERS SHARES IN TWO GROUP ENTITIES. FUTURE GROUP HAS APPOINTED INVESTMENT BANK ARPWOOD CAPITAL TO FIND A BUYER FOR THE APPAREL BUSINESS FUTURE LIFESTYLE FASHION LTD, WHICH RUNS THE CENTRAL BRAND OF APPAREL RETAIL STORES. GROUP AIMS TO RAISE AS MUCH AS RS 2,500 CRORE BY SELLING ITS STAKE IN AN INSURANCE JOINT VENTURE. 

 

18 APRIL, 2020

FUTURE GROUP:

FUTURE GROUP IS NEGOTIATING RENT FOR ALL ITS 1,700 STORES TO CUT COSTS AMID THE CORONAVIRUS OUTBREAK AS IT LOOKS TO SAVE ON THE ANNUAL RENTAL OUTGO OF NEARLY RS 1,500 CRORE. THE RETAILER IS TALKING TO INDIVIDUAL LANDLORDS AND HAS CARVED OUT MULTIPLE NEGOTIATION STRATEGIES. ITS BIG BAZAAR OUTLETS ARE OFFERING A REVENUE SHARE MODEL TO LANDLORDS. FOR THE LANDLORDS NOT AGREEABLE TO THE REVENUE SHARE FORMULA, FUTURE GROUP IS SEEKING EITHER A RENT DEFERAL OR REDUCED PAYMENT OPTION AND STORES THAT ARE COMPLETELY SHUT, THE RETAILER HAS SOUGHT A TOTAL PAYMENT HOLIDAY. THE IDEA IS TO SIGNIFICANTLY CUT DOWN RENT COSTS, SO THE NEGOTIATIONS ARE ONGOING WITH EACH AND EVERY LANDLORD MAKE THEM UNDERSTAND THE EXTRANEOUS SITUATION. AS PER RETAILER’S ANNUAL REPORT AT THE END OF MARCH 2019, IT HAD RENTAL EXPENSES OF RS 1,487 CRORE AGAINST RS 1,405 CRORE AT THE END OF MARCH 2018. THESE 1,700 STORES OPERATE THROUGH BRANDS LIKE BIG BAZAAR, FOOD BAZAAR, FBB, HOMETOWN, CENTRAL AND EZONE AMONG OTHERS. THE RETAIL COMPANY HAS 293 BIG BAZAAR STORES, 95 FBB  OUTLETS AND 1,147 SMALL STORES. RETAILERS ASSOCIATION OF INDIA, WHICH REPRESENT SOME OF THE TOP RETAILERS IN THE COUNTRY, HAS MADE REPRESENTATIONS TO THE GOVERNMENT TO ALLOW A BLANKET INVOCATION OF THE FORCE MAJOR CLAUSE TO TIDE OVER THIS CRISIS. IN MAJOR RELIEF FOR PROMOTERS OF FUTURE GROUP, THE SUPREME COURT HAS DISMISSED A SPECIAL LEAVE PETITION FILED BY UBS LONDON BRANCH CHALLENGING THE BOMBAY HIGH COURT RULING, THAT RESTRAINED IDBI TRUSTEESHIP AND OTHER FROM SELLING PLEDGED SHARES IN FUTURE RETAIL. DIVISION BENCH OF THE SUPREME COURT OBSERVED THAT THE MATTER IS ALREADY LISTED BEFORE THE HIGH COURT AND HENCE NEED NOT BE HEARD.

 

10 APRIL, 2020

FMCG:

FLIPKART IS GOING TOGETHER INTO SERIES OF PARTNERSHIPS WITH BRICK AND MORTAR RETAILERS AND LEADING FMCG COMPANIES TO SPRUCE UP ITS OFFERINGS IN ITS WEAKEST BUSINESS AREA OF ESSENTIALS. IT FORMED SUCH AN ARRANGEMENT WITH SPENCER RETAIL. FLIPKART IS IN ADVANCED TALKS ALSO WITH HUL AND ITC TO SELL THEIR ESSENTIAL PRODUCTS THROUGH ITS MARKETPLACE, AND HAS APPROACHED OTHER RETAILERS LIKE D’MART. 

 

9 APRIL, 2020

FUTURE GROUP:

FUTURE GROUP HAS PICKED UBS GROUP AG TO LEAD THE SALE OF ITS STAKE IN INSURANCE JOINT VENTURE WITH ITALY’S ASSICURAZIONI GENERALI SPA. FUTURE GROUP IS WORKING WITH THE SWISS BANK ON THE PLANS TO DISPOSE ITS SHARE OF THE FUTURE GENERALI LIFE AND GENERAL INSURANCE BUSINESSES. THE GROUP WHICH CONTROLS COMPANIES INCLUDING AMAZON.COM INC’S LOCAL RETAIL PARTNER HAS HELD INITIAL DISCUSSIONS WITH POTENTIAL BUYER. THE COMPANY WHICH IS BACKED BY BIYANI FAMILY, IS SEEKING TO RAISE ABOUT 25 BILLION RUPEES FOR ITS STAKE IN THE GENERAL INSURANCE JOINT VENTURE. THE FIRM WILL ONLY START SELLING ITS HOLDINGS IN THE LIFE INSURANCE JOINT VENTURE AFTER IT COMPLETES THE GENERAL INSURANCE AND UNIT DIVESTMENT. THE SALE PROCESS IS AT EARLY STAGE, AND THE OWNER COULD DECIDE NOT TO PROCEED WITH ANY TRANSACTION. A DEAL COULD COME AS FUTURE’S FOUNDING BIYANI FAMILY FINDS ITSELF IN BREACH OF TERMS INCLUDING COLLATERAL COVER REQUIREMENTS FOR LOANS BACKED BY SHARES IN FUTURE GROUP’S LISTED UNITS. THE CORONA OUTBREAK HAS DRIVEN ASSET PRICES AROUND THE WORLD SHARPLY LOWER, LEAVING MANY BORROWERS WHO HAVE PLEDGED SHARES FACING CALLS TO SHORE UP THEIR COLLATERAL. GENERALI IN 2018 INCREASED ITS STAKE IN THE LIFE AND GENERAL FUTURE GENERALI PARTNERSHIP FROM 25.5% TO 49%, INVESTING 120 MILLION EUROS. THE LIFE INSURANCE JOINT VENTURE HAS WRITTEN OVER 1.38 MILLION POLICIES. THE GENERAL INSURANCE JV HAS MORE THAN 36.3 BILLION RUPEES OF ASSETS UNDER MANAGEMENT.

 

INFRA:

BLACKSTONE GROUP AND BENGALURU BASED SALARPURIA SATTVA HAVE JOINTLY ACQUIRED A 3.3 MILLION SQAURE FEET OFFICE PARK, GLOBAL VILLAGE TECH PARK, IN THE CITY OWNED BY COFFEE DAY ENTERPRISES FOR RS 2,500 CRORE. THE DEAL HAS BEEN COMPLETED AND THE MONEY WILL PE PAID IN THE THREE TRANCHES TO COFFEE DAY ENTERPRISES. SALARPURIA IS LIKELY TO HOLD AROUND 25% STAKE IN NEW ASSET. EARLIER THIS MONTH, BLACK STONE PAID THE FIRST TRANCHE OF AROUND RS 300 CRORE. THE SECOND TRANCHE OF RS 1,700 CRORE WILL BE PAID WITHIN THIS WEEK. THE REMAINING MONEY WILL BE TRANSFERRED BY THE END OF THE YEAR. IN SEPTEMBER LAST YEAR, THE BOARD OF DIRECTORS OF THE COFFEE DAY ENTERPRISES APPROVED THE SALE OF GLOBAL VILLAGE TECH PARK TO BLACKSTONE. THE TECH PARK IS SPREAD OVER 90 ACRES AND FALLS UNDER THE SPECIAL ECONOMIC ZONE OWNED BY TANGLIN DEVELOPMENTS, A WHOLLY OWNED SUBSIDIARY OF COFFEE DAY ENTERPRISES. THE FIRM IS INTO DEVELOPMENT OF TECHNOLOGY PARKS IN BENGALURU AND MANGALURU. PRIVATE LENDER YES BANK HAS ALSO ISSUED A NO-OBJECTION CERTIFICATE . TANGLIN DEVELOPMENTS OWES THE BANK RS 100 CRORE. GLOBAL VILLAGE TECH PARK HAS MINDTREE, MPHASIS AND ACCENTURE AMONGST ITS CLIENTS. 

 

11 MARCH, 2020

FMCG:

ITC WILL ACCELERATE THE ROLL OUT OF NEW FMCG PRODUCTS, BUCKING THE INDUSTRY TREND AMID CONSUMPTION SLOWDOWN, AIMING TO DRIVE SALES AND MARKET SHARE. ITC WILL LAUNCH 50 PLUS PRODUCTS IN THE NEXT FINANCIAL YEAR AND IS ON COURSE TO INTRODUCING 17 PRODUCTS DURING THE CURRENT QUARTER. EVEN DURING SLOWDOWN CONSUMER LOOK FOR VARIETY AND VALUE ADDED ATTRIBUTES IN PRODUCTS. COMPANY’S PRIMARY FOCUS IS TO DRIVE DEMAND AND GROW CONSUMER FRANCHISE WITH THE LAUNCH OF INNOVATIVE AND DIFFERENTIATED PRODUCTS. COMPANY FOCUS IS ON PURSUING ACCELERATED GROWTH WITH PROFITABILITY. THE MAKER OF AASHIRVAAD ATTA, BINGO SNACKS AND SUNFEAST BISCUITS DOES NOT WANT TO CHANGE ITS STRATEGIES DURING SHORT TERM DISRUPTIONS. THIS IS IN CONTRAST TO MOST LEADING FMCG COMPANIES, WHICH SLOW DOWN THEIR LAUNCHES OF NEW PRODUCTS DUE TO POOR CONSUMPTION. ITC IS BRINGING OUT LOW PRICED UNITS, SUCH AS RS 5 PACKS, IN ALMOST EVERY CATEGORY TO BOTH RETAIN CUSTOMERS AND GET NEWER CONSUMER WHO HAVE CUT DOWN ON THEIR DAILY NECESSITY SPENDING. THE COMPANY WILL DEBUT ITS FMCG E-STORE IN THE NEXT FINANCIAL YEAR AND IS SCOUTING FOR INVESTMENT IN FMCG STARTUPS AFTER PICKING UP STAKE IN A VENDING MACHINE COMPANY RECENTLY. FOR ITC’S NON-CIGRETTE FMCG BUSINESS, EBITDA INCREASED 43% TO RS 658 CRORE IN NINE MONTHS ENDED DECEMBER. EBITDA MARGINS IMPROVED TO 7.7% IN OCTOBER-DECEMBER QUARTER FROM 5.4% A YEAR YEARLY EVEN AFTER THE COST IMPACT OF NEW LAUNCHES. THE COMPANY IS TARGETING TO BECOME INDIA’S LARGEST FMCG COMPANY WITH SALES OF RS 1 LAKH CRORE BY 2030, AN EIGHTFOLD INCREASE FROM RS 12,506 CRORE GROSSED IN 2018-19. AMONG ITS RECENT LAUNCHES, ITC INTRODUCED LENTIL BASED BAKED CHIPS, 2 IN 1 POCKET PERFUMES AND PRESERVATIVE FREE FROZEN SNACKS. IT IS LOOKING TO REINVIGORATE THE STAGNANT CREAM BISCUIT CATEGORY WITH NEWER PRODUCTS SUCH AS JAM TARTS. ONCE THE HARVEST HAPPENS, RURAL SENTIMENTS SHOULD RECOVER. THE GOVERNMENT HAS TAKEN A NUMBER OF STEPS IN RECENT UNION BUDGET, ESPECIALLY IN THE AGRICULTURE SECTOR. 

 

3 MARCH, 2020

SUGAR:

THE GOVERNMENT IS PLANNING TO MORE THAN DOUBLE ETHANOL PRODUCTION AND INCREASE BLENDING OF ETHANOL WITH PETROL TO REDUCE OIL IMPORTS. IT PLANS TO ENHANCE ETHANOL PRODUCTION CAPACITY TO 9 BILLION LITRES FROM 3,55 BILLION LITRES IN TWO YEARS. FOR THIS IT HAS GIVEN PRINCIPLE APPROVAL TO 362 NEW PLANTS IN SUGAR MILLS FOR ADDING CAPACITY OF 5.5 BILLION LITRES. THIS WILL REQUIRE AN INVESTMENT OF RS 18,000 CRORE. THE ENHANCE CAPACITY WILL HELP MEET THE GOVERNMENT’S TARGET OF 10% ETHANOL BLENDING BY 2022. THIS IS LIKELY TO REDUCE THE COUNTRY’S OIL IMPORTS BY 2 MILLION TONNES ANNUALLY AND REDUCE THE OIL IMPORT BILL BY RS 7,000 CRORE. ETHANOL CAN BE PRODUCED DIRECTLY FROM CANE JUICE AS WELL AS FROM B-GRADE AND C-GRADE MOLASSES. THE PRICE OF ETHANOL FROM SUGARCANE JUICE HAS BEEN FIXED AT RS 59.48 PER LITRE WHILE ETHANOL EXTRACTED FROM C-GRADE MOLASSES FETCHES RS 43.75 A LITRE AND THAT FROM B-GRADE MOLASSES GETS RS 54.27 A LITRE. INDIA NEEDS AT LEAST 4.25 BILLION LITRES OF ETHANOL TO MEET THE 10% BLENDING TARGET. LAST YEAR 1.91 BILLION LITRES OF ETHANOL WAS BLENDED WITH PETROL, ACHIEVING JUST 5.5% BLENDING. THIS YEAR, SO FAR OIL COMPANIES HAVE SIGNED UP CONTRACTS FOR 1.4 BILLION LITRES AND CONTRACTS OF ADDITIONAL 310 MILLION LITRES ARE IN PIPELINE. THERE IS DEMAND OF 5.11 BILLION LITRES FROM OIL COMPANIES. SINCE THERE IS AROUND 21% DIP IN PRODUCTION, THE TARGET OF ETHANOL BLENDING COULD REACH 4.5% ONLY. THE GOVERNMENT IS TARGETING TO CONVERT 7,00,000 -8,00,000 TONNES OF SURPLUS SUGAR IN EACH OF THE NEXT TWO YEARS FOR ETHANOL PRODUCTION TO MAXIMISE PROFITABILITY OF SUGAR COMPANIES. THIS YEAR SUGAR PRODUCTION IS DOWN DUE TO BAD WEATHER IN MAHARASHTRA AND KARNATAKA. IF PRODUCTION SURGES IN THE NEXT SEASON, THEY MAY DIVERT DOUBLE THE QUANTITY FOR ETHANOL PRODUCTION. HOWEVER, EXPANSION OF NEW PRODUCTION CAPACITY DOESN’T TOOK EASY GIVEN THE TIGHT FINANCIAL CONDITION OF SUGAR MILLS. OUT OF 362 PROPOSALS, SO FAR BANKS HAVE AGREED TO FINANCE ONLY 56 PROJECTS.

 

25 FEBRUARY, 2020

IT:

TECH MAHINDRA HAS ACQUIRED ZEN3 INFOSOLUTIONS FOR $44 MILLION. A FURTHER $22 MILLION WILL BE PAID OUT AFTER THREE YEARS, BASED ON PERFORMANCE. THE ALL CASH DEAL IS EXPECTED TO CLOSE BY APRIL. ZEN3 IS A SOFTWARE SOLUTION GROUP WITH EXPERTISE IN SOFTWARE PRODUCT ENGINEERING, DEVOPS TESTING, MACHINE LEARNING, AI AND ANALYTICS. THE ACQUISITION WOULD BRING STRONG CAPABILITIES IN AI ENABLEMENT SERVICES OF MAHINDRA. THIS WILL ALSO HELP IT TO BOLSTER ITS ENTERPRISE APPLICATION PRACTICE. TECH MAHINDRA WILL ACQUIRE INDIAN SUBSIDIARY OF ZEN GROUP, ZEN3 INFOSOLUTIONS, WHILE TECH MAHINDRA (AMERICAS) WILL ACQUIRE ZEN3 INFOSOLUTIONS (AMERICA). ZEN3 INFOSOLUTIONS HAS OVER 1,300 EMPLOYEES GLOBALLY. IT HAS OFFICES IN SEATTLE, DUBLIN, BENGALURU, HYDERABAD AND VISHAKHAPATNAM. 

 

18 FEBRUARY, 2020

APPAREL:

ADITYA BIRLA FASHION AND RETAIL, THE COUNTRY’S LARGEST CLOTHING FIRM, PLANS TO OPEN MORE THAN 500 OUTLETS THIS YEAR, NEARLY THREE TIMES ITS AVERAGE ANNUAL EXPANSION, AT A TIME WHEN THE OVERALL ECONOMIC SLOWDOWN HAS MADE MOST RETAILERS GO SLOW ON INCREASING BRICK AND MORTAR NETWORK AND SHIFT FOCUS ON ONLINE. THE FIRM THAT RUNS BRANDS SUCH AS LOUIS PHILIPPE AND PANTALOONS IS BETTING ON CONSUMERS SHIFTING FROM THE UNORGANIZED MARKET TO BRANDED APPAREL. THE GENERAL CONSUMPTION HABITS ARE CHANGING, ESPECIALLY IN A DIGITALLY CONNECTED NETWORK, WHEN YOU ARE SEEING DESIRE FOR BRANDS AND ASPIRATION FOR BETTER QUALITY PRODUCTS. ADITYA BIRLA RUNS MORE THAN 3,000 OUTLETS. WITH LIQUIDITY STRESS PERSISTING IN WHOLESALE CHANNELS, MOST RETAILERS ACROSS CONSUMER PRODUCTS, LIQUOR AND APPAREL HAVE BEEN FACING PRESSURE TO PUSH INVENTORY IN SMALLER TOWNS AND HINTERLAND. UNDERLYING SITUATION HASN’T DRAMATICALLY IMPROVED DUE TO LIQUIDITY ISSUES AND THERE IS STILL NERVOUSNESS IN TERMS OF STOCKING UP. THE WHOLESALE BUSINESS APPEARS TO BE UNDERGOING SOME STRUCTURAL SHIFT TRIGGERED BY LIQUIDITY ISSUES IN THE ECONOMY AND MANAGEMENT OF ABFRL IS STRATEGISING TO INVIGORATE THE SAME WHILST SIMULTANEOUSLY SPEEDING UP EXCLUSIVE BRAND OUTLETS EXPANSION, INCLUDING CONVERSION OF SOME LARGE WHOLESALES INTO EXCLUSIVE BRAND OUTLETS. THE COMPANY SAID ITS GROWTH HAS SO FAR REMAINED UNAFFECTED BY NEWER RIVALS AS EACH OF ITS TOP BRANDS  LOUIS PHILIPPE, VAN HEUSEN, ALLEN SOLLY AND PETER ENGLAND GENERATE RS 1,000 – 1,500 CRORE IN ANNUAL SALES, EACH BIGGER THAN FAST FASHION RIVALS. IT NOW PLANS TO LAUNCH A NEW MASS MARKET ETHNIC WEAR BRAND. LAST YEAR, IT ACQUIRED ARTISANAL ONLINE RETAILER JAYPORE.COM AND 51% STAKE IN FINESSE INTERNATIONAL DESIGN, WHICH RUNS BESPOKE APPAREL RETAIL BRAND SHANTANU & NIKHIL, TO ENTER THE PREMIUM ETHNIC WEAR SEGMENT.

 

13 FEBRUARY, 2020

IT:

INDIA’S INFORMATION TECHNOLOGY AND BACK OFFICE SECTOR IS EXPECTED TO GROW 7.7% IN FISCAL 2020 TO $191 BILLION, WITH EXPORTS TOUCHING $147 BILLION. THE SECTOR ADDED 2,05,000 JOBS IN THE ONGOING FISCAL, UP FROM 1,85,000 JOBS IT ADDED IN FY19. THE SECTOR IS STILL CAUTIOUSLY OPTIMISTIC ABOUT THE NEXT FINANCIAL YEAR STARTING APRIL. IT WAS GOOD PERFORMANCE BY THE SECTOR. ANY INDUSTRY THAT DELIVERS MORE THAN 7% GROWTH IS STRONG INDUSTRY WHEN THE WORLD ECONOMY IS GROWING IS GROWING ABOUT 3%. INDUSTRY ADDED $14 BILLION IN NEW REVENUE, A SIGNIFICANTLY HIGHER AMOUNT THAN IN THE PAST. 

 

11 FEBRUARY, 2020

STEEL:

IRON ORE AUCTIONS ARE SET TO RAISE COST OF MINING IN EASTERN INDIA, WITH PREMIUMS RANGING BETWEEN 90% TO 135% FOR THE SEVEN MINES BID FOR ODISHA TILL DATE. THIS IS LIKELY TO ERODE MARGINS OF NON INTEGRATED STEEL PLAYERS WHO DO NOT HAVE CAPTIVE ORE. JSW STEEL WHICH HAS BEEN MORE AGGRESSIVE IN THE AUCTION THAN THE LIKES OF TATA STEEL AND ARCELOR MITTAL AND HAS BAGGED FOUR MINES, IS EXPECTED TO BE BETTER OFF AFTER THE UPCOMING AUCTION. THE DIFFERENCE BETWEEN DOMESTIC AND IMPORTED ORE PRICES WILL COME DOWN AFTER THE AUCTION. JSW STEEL HAS DECIDED TO SECURE MAJOR PART OF THEIR EXISTING STEEL PORTFOLIO WITH ODISHA ORE AND THEREBY INADVERTENTLY ADD THE EXISTING COST STRUCTURE, BUT STILL GIVEN THE SCENARIO, JSW STEEL WILL BE BETTER OFF COMPARED TO AN UNINTEGRATED STEEL PLAYER IN INDIA. JSW STEEL HAS PARTICIPATED IN THE ODISHA  IRON ORE AUCTIONS TO ENSURE RAW MATERIAL SUPPLIES. TATA STEEL, STEEL AUTHORITY OF INDIA AND JSPL HAVE NOT BEEN BIDDING AGGRESSIVELY. EVEN ARCELOR MITTAL HAS BEEN RELATIVELY MEASURED, WHILE BOTH THE CENTRE AND STATE HAVE BEEN PROACTIVE IN CHANGING NORMS OF THE AUCTIONS WHEN NECESSARY, THE LAST ROAD BLOCK NEED TO BE CLEARED.

 

5 FEBRUARY, 2020

BATTERY:

INDIAN OIL CORPORATION (IOC ) HAS PICKED UP A MINORITY EQUITY STAKE IN ISRAEL’S BATTERY DEVELOPER PHINERGY. THE TWO COMPANIES PLAN TO JOINTLY SET UP A FACILITY IN INDIA TO MANUFACTURE ALUMINIUM AIR (AL-AIR) BATTERIES FOR ELECTRIC VEHICLES. IOC AND PHINERGY ARE SETTING UP JOINT VENTURE IN INDIA FOR COLLABORATION IN THE FIELD OF AL-AIR BATTERY SYSTEM, INCLUDING RESEARCH AND DEVELOPMENT , CUSTOMISATION, MANUFACTURING, ASSEMBLY, AND SALE AND SERVICE OF AL-AIR ENERGY SYSTEMS TECHNOLOGY. THE JV AIMS TO SET UP A FACTORY IN INDIA TO MANUFACTURE AL-AIR BATTERIES. 

 

4 FEBRUARY, 2020

GAMING:

INDIA IS BECOMING A DEVELOPMENT HUB FOR GAMES, OPENING UP JOB OPPORTUNITIES IN THE SECTOR. CURRENTLY, CLOSE TO 23,000 GAMING BASED JOB OPENINGS ARE AVAILABLE, WITH SALARY PACKAGES RANGING FROM RS 3 LAKH TO LITTLE OVER RS 40 LAKH. UBISOFT, 99GAMES, GSN, MOONFROG LABS, EA, NAZARA TECHNOLOGIES, OCTRO AND DREAM 11 ARE SOME OF THE BIG NAMES THAT ARE HIRING. IN INDIA, AROUND 200 STARTUPS SERVE VARIOUS GAME RELATED PRODUCTION MARKETS. SKILLS ARE REQUIRED IN THE ENTRY, MID AND MID TO SENIOR LEVEL POSITIONS. FANTASY, SPORTS, REAL MONEY BETTING AND CASUAL GAMES ARE IN DEMAND. FINTECH AND ECOMMERCE COMPANIES TOO ARE ADDING GAMING ELEMENTS TO ENHANCE USER ENGAGEMENT. INDIA IS AMONG THE LARGEST MARKET FOR GAME DOWNLOADS AMONG EMERGING ECONOMIES AND IS SET TO GROW THE GAME DEVELOPING MARKET SHARPLY. AS GAMES OF THE FUTURE ARE SET TO GET BIGGER, DEEPER, REALISTIC AND IMMERSIVE, ONE CAN EXPECT THEM TO BE POWERED BY ARTIFICIAL INTELLIGENCE, AUGMENTED REALITY (AR) AND VIRTUAL REALITY (VR) AMONG OTHER EMERGING TECHNOLOGIES. INVESTMENTS FROM BIG FIRMS INCLUDING ALIBABA, TENCENT, NAZARA AND YOUZU HAVE LED TO RAPID GROWTH OF SECTOR . MOST SMART PHONE USER SPEND AN AVERAGE ONE HOUR ON GAMING CONTENT. THIS IN TURN HAS LED TO THE CREATION OF A LARGE GAMING ECOSYSTEM WITH GLOBAL GAMING PRODUCTS NOW BEING MADE IN INDIA. PROFESSIONALS WITH AR OR VR APP DEVELOPMENT AND UNITY GAME DEVELOPMENT SKILLS WILL BE IN GREAT DEMAND THIS YEAR.

 

29 JANUARY, 2020

AUTOMOBILE:

THE $113 BILLION SALT TO SOFTWARE TAT GROUP IS SEEKING TO BUILD AN ECOSYSTEM TO UNDERPIN ITS LEADERSHIP AMBITION IN ELECTRIC CARS, HARNESSING TO MAKE BATTERIES, CHARGING STATIONS AND A DISTRIBUTION NETWORK TO OUTDO RIVALS IN AN INDUSTRY WITNESSING UNPRECEDENTED VALUE MIGRATION. CHAIRMAN EMERITUS RATAN TATA, CURRENT CHAIRMAN N. CHANDRASEKARAN AND THE LEADERSHIP AT 6 GROUP COMPANIES ATTENDED AN EVENT ON WHERE THE GROUP ANNOUNCED THAT IN NEXT 2 YEARS , TAT MOTORS WILL HAVE 6 DIFFERENT EVs FOR PERSONAL BUYERS NOT JUST FLEET OPERATORS. THE GROUP COMPANIES WILL HELP BUILD THE ECOSYSTEM AROUND THESE VEHICLES. GLOBALLY THE SHIFT TOWARD ELECTRIC VEHICLES IS MEGA TREND THAT IS IRREVERSIBLE. GIVEN THE ACCELERATING CLIMATE CHANGE, AND THAT 14 OUT OF THE WORLD’S MOST POLLUTED CITIES ARE IN INDIA. THE SHIFT TO EVs IS NOT JUST TREND BUT AN IMPORTANT STEP FOR THE COUNTRY. THE ECOSYSTEM APPROPRIATELY NAMED TATA UNIEVERSE COMPRISES PARTICIPATION FROM MULTIPLE TATA GROUP COMPANIES, INCLUDING TATA POWER, TATA CHEMICALS, TATA AUTOCOMP, TATA MOTORS FINANCE, TCS AND CROMA. WHILE MOTORS LAUNCHED ITS FIRST ELECTRIC SUV NEXON EV, TATA POWER MANAGING DIRECTOR SAID THAT HIS COMPANY WILL BE INSTALLING 300 PUBLIC FAST CHARGER ACROSS THE COUNTRY BY MARCH 2020 AND THEN TAKE THAT NUMBER UP TO 650 BY MARCH THE FOLLOWING YEAR. THE NEXON EV COMES WITH A CLAIMED RANGE OF 312 KM PER CHARGE, SIGNIFICANTLY HIGHER THAN THE 213 KN ON TATA TIGOR EV. THE TATA ELECTRIC CARS WILL BE POWERED BY A BATTERY PACK MANUFACTURED BY TATA AUTOCOMP SYSTEMS.

 

23 JANUARY, 2020

ELECTRIC BUSES:

PMI ELECTRO AND BYD-OLECTRA HAVE WON LARGE CONTRACTS FLOATED BY STATE TRANSPORT AGENCIES FOR SUPPLY OF ELECTRIC BUSES UNDER A GOVERNMENT SCHEME TO PROMOTE GREEN MOBILITY FOLLOWED BY JBM AUTO, TATA MOTORS AND MYTRAH. HARYANA BASED PMI ELECTRO MOBILITY SOLUTIONS, WHICH HAS COMMERCIAL TIE UP WITH CHINESE COMMERCIAL VEHICLE MAKER BEIQI FOTON MOTORS, HAS BAGGED CONTRACTS FOR ABOUT 750 ELECTRIC BUSES IN THE TENDERS THAT HAVE BEEN FINALIZED SO FAR. PHASE OF THE RS 10,000 CRORE GOVERNMENT SCHEME FAME PROPOSES DEMAND INCENTIVE OF UP TO RS 55 LAKH FOR LONG ELECTRIC BUSES, RS 45 LAKH FOR MIDI BUSES AND RS 35 LAKH FOR MINI BUSES. OLECTRA-BYD, ON THE OTHER HAND, HAS WON CONTRACTS FOR ABOUT 600 ELECTRIC BUSES FROM CITY TRANSPORT CORPORATION, INCLUDING THOSE OF SURAT, BHOPAL AND INDORE. TATA MOTORS SAID IT CONTINUES TO PLAY A PROACTIVE AND CONSTRUCTIVE ROLE IN E-MOBILITY SPACE WITH A LONG TERM PERSPECTIVE OF THE CAUSE. IN FAME-II AS WELL, THE COMPANY HAS PARTICIPATED IN ALL TENDERS SO FAR, AND HAS WON ORDERS FOR 220 BUSES IN TWO OF THEM, IN ADDITION TO THE PRIVATE TENDER OF AJL FOR 300 BUSES. GURGAON BASED JBM AUTO HAS WON CONTRACT OF SUPPLY OF 100 ELECTRIC BUSES IN NAVI MUMBAI, AND SOURCES BELIEVE THE COMPANY IS THE LOWEST BIDDER IN TENDERS FOR 480 ELECTRIC BUSES IN AHMEDABAD, NAVI MUMBAI AND DELHI.

 

22 JANUARY, 2020

ELECTRIC BUSES:

THE CENTRE WILL INVITE PROPOSALS FROM THE STATE TRANSPORT DEPARTMENTS FOR REALLOCATION OF CENTRAL SUBSIDY FOR 2,000 ELECTRIC BUSES UNDER ITS FAME-II SCHEME TO PROMOTE ELECTRIC MOBILITY, BUT WILL NOT ALLOW PARTICIPATION OF CITIES THAT DEFAULTED IN THE FIRST ROUND. THE GOVERNMENT IS EXPECTED TO ISSUE AN EXPRESSION OF INTEREST NEXT MONTH UNDER THE ONGOING SECOND PHASE OF FAME, BUT IT IS LIKELY TO BE OPEN TO ONLY STATE UTILITIES THAT HAVE AWARDED TENDERS OR ARE CLOSE TO AWARD TENDERS AS PER THE SCHEME. THIS MEANS ABOUT 18 CITIES THAT HAVE NOT BEEN ABLE TO INITIATE TENDERING TO AWARD CONTRACTS TO BUS COMPANIES TO AVAIL SUBSIDY UNDER FAME-II WILL NOT BE ALLOWED TO BID. THE SUBSIDIES ALLOCATED TO THESE CITIES TO PROCURE ELECTRIC BUSES UNDER THE SCHEME INITIATED IN AUGUST LAST YEAR WILL NOW BE REALLOCATED. THIS IS ENSURE ONLY SERIOUS PLAYERS ARE ALLOCATED SUBSIDIES FOR BUYING ELECTRIC BUSES. THE ELECTRIC BUS INDUSTRY HAS BEEN DEMANDING TO BAR CITIES THAT SQUAT ON ALLOCATED SUBSIDIES. ABOUT 30 CITIES HAVE AWARDED CONTRACTS FOR 2,000 ELECTRIC BUSES UNDER THE SCHEME AS THE DEADLINE EXPIRED ON JANUARY 15, WHILE OTHER 20 CITIES ARE AT VARIOUS STAGES OF FINALISATION OF CONTRACTS FOR ABOUT 1,900 E-BUSES. THE CITIES THAT HAVE NOT INITIATED THE TENDERING PROCESS UNDER FAME-II INCLUDE HYDERABAD, AGARTALA, SHIMLA, SRINAGAR, JAMMU AND RAIPUR. AS MANY AS 6 CITIES CITIES IN THIS LIST ARE FROM ANDHRA PRADESH. WITH PROPOSED FUND ALLOCATION OF RS 10,000 CRORE, FAME-II AIMS TO GIVES PUSH TO THE GOVERNMENT’S E-VEHICLE DRIVE. PUBLIC TRANSPORT FLEETS, REGISTERED COMMERCIAL BUSES, FOUR- WHEELERS AND THREE-WHEELERS, AND PRIVATELY OWNED TWO WHEELERS ARE ELIGIBLE FOR SUBSIDY UNDER THE SCHEME.

 

20 JANUARY, 2020

NATURAL GAS:

INDIA IS PLANNING A NETWORK OF LNG FUELLING STATIONS ALONG ITS 6,000 KM LONG GOLDEN QUADRILATERAL HIGHWAYS, A MOVE THAT COULD ENCOURAGE THOUSANDS OF TRUCKERS TO SWITCH TO THE CLEANER FUEL FROM POLLUTION DIESEL. STATE RUN GAIL IS PUTTING TOGETHER A PLAN AND PERSUADING ALL POSSIBLE PARTICIPANTS, CITY GAS DISTRIBUTORS, GAS SUPPLIERS, FINANCIERS, FLEET OWNERS AND TRUCK MANUFACTURERS TO GET THEM ON BOARD AND HELP BUILD AN EFFECTIVE ECOSYSTEM FOR LNG FUELLED VEHICLES IN THE COUNTRY. A SHIFT TO LNG POWERED TRUCKS FROM DIESEL WILL CUT POLLUTION AND TURN INDIA HIGHWAYS QUIETER WHILE BOOSTING GAS IMPORTS. ABOUT 350 LNG FUELLING STATIONS, AT A COST OF RS 3,000-3,500 CRORE, WILL BE NEEDED TO COVER THE FULL LENGTH OF GOLDEN QUADRILATERAL, AS PER THE INITIAL PLAN. REGULATIONS PERMITS ONLY THOSE WITH CITY GAS DISTRIBUTION LICENCES TO SET UP LNG STATIONS, AND THEREFORE VARIOUS LICENCE HOLDERS WILL BUILD FUELLING STATIONS IN SPECIFIC STRETCHES OF THE EXPRESS WAY THAT FALL IN THEIR RESPECTIVE LICENSE AREAS. ABOUT A FIFTH OF THE GOLDEN QUADRILATERAL’S LENGTH FALLS IN AREAS FOR WHICH GAIL AND ITS JOINT VENTURE UNITS HAVE LICENCES. GAIL IS PLANNING TO BUILD ABOUT 90 LNG STATIONS. INDIAN OIL WHICH HAS OBTAINED SEVERAL LICENCES IN RECENT YEARS, TOO PLANS TO BUILD LNG STATIONS IN ITS AREA. GAIL IS ALSO IN TALKS WITH EXXON MOBIL AND MITSUI, WHICH CAN POTENTIALLY PARTNER AS LNG SUPPLIERS AS WELL AS FINANCIERS FOR THE INITIAL LOT OF LNG TRUCKS PLANNED TO HIT INDIAN ROADS. THE PLAN IS TO GET AT LEAST 10,000 LNG TRUCKS, MOST OF WHICH WOULD BE INITIALLY IMPORTED. AT PRESENT, INDIAN CITIES HAVE ABOUT 3.5 MILLION VEHICLES USING CNG, BUT BARELY ANY THAT USE LNG, WHICH IS NATURAL GAS SUPER COOLED TO -162 DEGREE CENTIGRADE. BECAUSE OF ITS LOWER ENERGY DENSITY AND SLOW REFUELING TIME, CNG  IS SEEN AS SUITABLE FOR CITY TRANSPORT, BUT NOT FOR LONG HUAL DRIVES. LNG CONTAINS 2.5 TIMES MORE ENERGY PER UNIT VOLUME COMPARED WITH CNG AND CAN FILL FAST, BECOMING APPROPRIATE FOR LONG DISTANCE TRAVEL.

 

16 JANUARY, 2020

BANKING:

IN A SCRAMBLE TO MEET ITS FINANCIAL INCLUSION AGENDA, THE FEDERAL GOVERNMENT HANDED LENDERS A LIST OF LOCATION WISE BRANCHES TO BE OPENED BY BOTH STATE-RUN AND PRIVATE BANKS. LENDERS INCLUDING STATE BANK OF INDIA, BANK OF BARODA, HDFC BANK AND ICICI BANK WILL OPEN 14,000-15,000 BRANCHES IN THE COMING YEAR TO REACH THE UN-BANKED AREAS AS PER GOVERNMENT DIRECTIVE. THE MANDATE FROM THE FINANCE MINISTRY IS TO OPEN A BRANCH WITHIN 15 KM RADIUS OF A VILLAGE WHERE THERE ARE NO BANKING FACILITIES AVAILABLE. THE BRANCH OPENING HAS TO BE PER THE LOCATIONS PROVIDED BY THE MINISTRY. LARGE STATE RUN BANKS LIKE SBI HAVE TO OPEN NEARLY 1,500 BRANCHES, THEIR PRIVATE PEERS HAVE BEEN ASKED TO OPEN 600-700 BRANCHES EACH. THE LIST INCLUDES VILLAGES AND PANCHAYAT REGIONS WHERE THERE ARE NO BANK BRANCHES SO IT CAN PUSH CHEAP CREDIT TO THE UN-BANKED. AS OF MARCH 2019, INDIA HAD MORE THAN 1,20,000 BRANCHES AND A LITTLE OVER 2 LAKH ATMs. OF THESE, ONLY 35,649 BRANCHES ARE IN THE RURAL AREAS. RBI DATA ON FINANCIAL INCLUSION SUGGESTS THAT INCLUDING REGIONAL BANKS OUTLETS IN RURAL LOCATIONS REACHED OVER 52,000 AT THE END OF MARCH 2019, A GROWTH OF MERE 3% OVER 2018. FOR BANKS, A BRANCH IN METRO CITIES BECOMES PROFITABLE IN TWO YEARS, WHILE A RURAL BRANCH BREAKS EVEN IN FOUR YEARS. BUT, WITH THE RBI ALLOWING EASIER BRANCH OPENING AND FUNCTIONING RULES, BRANCLESS OUTLETS IN RURAL AREAS HAVE CLOCKED NEARLY 5.5 LAKH. THE SHARE OF BUSINESS CORRESPONDENTS IN TOTAL BANKING OUTLETS IN RURAL AREAS REMAIN AROUND 41%. GOVERNMENT WANTS BANKS TO REACH UNBANKED AREAS AND REPLACE INFORMAL CREDIT WITH FORMAL CREDIT, BRINGING DOWN BORROWING RATES FOR THE RURAL FOLK WHO STILL RELY ON MONEY LENDERS. PRIVATE SECTORS BANKER SAID WE CAN HAVE BRANCHES THAT CAN LEFT OPEN FOR AT LEAST 4 HOURS PER DAY FOR 5 DAYS IN A WEEK MANNED EITHER BY BUSINESS CORRESPONDENTS OR BY BANK OFFICIALS. IN A BID TO TAKE BANKING SERVICES TO THE REMOTE LOCATIONS OF THE COUNTRY, THE RBI IN 2017 PERMITTED THE OPENING OF MINI BRANCHES OR BANKING OUTLETS ACROSS THE COUNTRY WITHOUT HAVING TO TAKE PERMISSION FROM THE REGULATOR ON A CASE BY CASE BASIS.

 

11 JANUARY, 2020

TELECOM:

RELIANCE JIO IS PLANNING TO DEPLOY TWO SUBMARINE CABLE SYSTEMS TO CONNECT INDIA WITH SINGAPORE AND EUROPE, PROVIDING HIGHER DATA SPEED TO THE INTERNET USERS. THE CABLES ARE EXPECTED TO BE OPERATIONAL IN TWO YEARS. THE TWO SUBMARINE SYSTEMS WILL PROVIDE DIRECT CONNECTIVITY TO THE TOP CONTENT HUBS WORLDWIDE AND THE DEPLOYMENT IS SET TO BOOST INDIA’S DATA AVAILABILITY. THE INDIA-ASIA -XPRESS (IAX) WILL CONNECT MUMBAI AND CHENNAI TO SINGAPORE AND INTERCONNECT THEM WITH OTHER FAR EAST COUNTRIES TOWARDS THE WEST COAST OF THE US, AND THE INDIA-EUROPE-XPRESS (IEX) WILL CONNECT MUMBAI TO EUROPE AND INTERCONNECT IT WITH THE EAST COST OF THE US. INTERNET DATA ACROSS COUNTRIES AND CONTINENTS ARE TRANSMITTED THROUGH LARGE SUBMARINE CABLE SYSTEMS. GREATER ACCESS TO VARIOUS SUBMARINE CABLE SYSTEMS ENHANCES DATA TRANSMISSION CAPACITY OF A TELECOM OPERATOR’S NETWORK. MULTINATIONALS SUCH AS GOOGLE, MICROSOFT, FACEBOOK AND AMAZON HAVE ALSO BEEN SPENDING HUGELY ON SUCH SYSTEMS. THE UNDERSEA SYSTEMS WOULD OFFER DIRECT ACCESS TO GLOBAL INNOVATION CENTRES AND CONTENT HUBS TO DELIVER LOW LATENCY AND HIGH RELIABILITY, NECESSARY FOR COULD AND PLATFORM-DRIVEN DIGITAL APPLICATIONS AND SERVICES. THE PROPOSED SUBMARINE SYSTEM THROUGH MULTIPLE BRANCHING LINKS, ACCORDING TO ONE PERSON PRIVY TO THE MATTER, WILL PROVIDE OPTIONS TO EXTEND THE CONNECTIVITY WITH OTHER SOUTH EAST ASIAN DESTINATIONS. THE IAX AND IEX SYSTEMS WILL PROVIDE MORE THAN 100 TERABIT PER SECOND (TBPS) CAPACITY AT TRANSMISSION SPEEDS OF OVER 100 GIGABIT PER SECOND (GBPS).

 

9 JANUARY, 2020

MINING:

INDIA HAS OPENED UP THE COAL SECTOR COMPLETELY FOR COMMERCIAL MINING FOR ALL LOCAL AND GLOBAL FIRMS AFTER EASING RESTRICTIONS ON END-USE AND PRIOR EXPERIENCE IN AUCTIONS VIA AN ORDINANCE, BUT THE MINING MINISTER SAID THE MOVE WILL NOT HURT STATE MONOPOLY COAL INDIA. THE UNION CABINET APPROVED PROMULGATION OF MINERAL LAWS ORDINANCE 2020 TO AMEND THE COAL MINES ACT 2015, AS WELL AS MINES AND MINERALS ACT 1957. THE AMENDMENT TO THE LATTER WAS REQUIRED TO BEGIN AUCTIONS OF IRON ORE MINING LEASES BEFORE THEY EXPIRE IN MARCH THIS YEAR. THE ORDINANCE PUTS AN END TO CAPTIVE COAL BLOCKS AUCTIONS IN FUTURE AND WILL HAVE TO BE ADOPTED IN THE UPCOMING BUDGET SESSION ONCE IT IS CLEARED BY THE PRESIDENT. THE GOVERNMENT PROPOSES TO KICK START STATE COMMERCIAL COAL MINING AUCTION PROCESS THIS MONTH WITH RELEASE OF BID RULES AND CONSULTATIONS WITH STAKEHOLDERS. THE AMENDMENTS WILL OPEN UP NEW AREAS OF GROWTH IN THE SECTOR. INDIA IMPORTED 235 MILLION TONNES COAL WORTH RS 1.75 LAKH CRORE LAST YEAR. OF THIS, 100 MILLION TONNES WAS NON-SUBSTITUTABLE COKING COAL BUT GOVERNMENT HOPES TO STOP COAL IMPORTS BY POWER PLANTS IN DUE COURSE. THE ORDINANCE ALLOWS ANY INDIAN REGISTERED COMPANY TO BID AND DEVELOP COAL BLOCKS. SECTION 11A OF MINES AND MINERALS ACT PROVIDES THAT THE CENTRAL GOVERNMENT CAN AUCTION COAL AND LIGNITE MINING LICENCES ONLY TO COMPANIES ENGAGED ON IRON AND STEEL, POWER AND COAL WASHING SECTORS. THE COMPANIES ALSO NEEDED PRIOR EXPERIENCE OF MINING IN INDIA TO BID FOR THE BLOCKS. COAL INDIA HAS BEEN TASKED TO PRODUCE 1 BILLION TONNES BY 2023-24 BUT PRODUCTION WILL STILL FALL SHORT OF DEMAND AND THERE IS NEED TO INTRODUCE PRIVATE PLAYERS IN COAL MINING. AMENDMENT WILL HELP ATTRACT MORE PARTICIPATION IN COAL BLOCK AUCTIONS. THE GOVERNMENT EXPECTS TO ATTRACT INVESTMENTS FROM INDIAN AND GLOBAL CORPORATES, BESIDES MINING MAJORS SUCH AS PEABODY, BHP BILLITON AND RIO TINTO. THIS STEP WILL GO A LONG WAY IN REDUCING COAL IMPORTS WHICH IS OVER $15 BILLION A YEAR. IN TODAY’S TIME WHEN OIL PRICES ARE VERY UNCERTAIN, THIS DECISION IS PATH BREAKING IN MAKING INDIA SELF RELIANT. AMENDMENT TO MINES AND MINERALS ACT WILL ALLOW FOR SEAMLESS TRANSFER OF ENVIRONMENT AND FOREST CLEARANCE IN OPERATIONAL MINES. AMENDMENT TO ACT WAS REQUIRED TO BUILD CONFIDENCE AMONG BIDDERS PARTICIPATION IN THE AUCTION OF 46 OPERATIONAL IRON ORE MINES WHOSE LEASE EXPIRE IN MARCH 2020.  

 

7 JANUARY, 2020

PHARMA:

HOME GROWN PE FUND TRUE NORTH WILL INVEST ABOUT RS 536 CRORE TO ACQUIRE 2.4% STAKE IN BIOCON BIOLOGICS INDIA, SUBSIDIARY OF THE BENGALURU BASED BIOPHARMACEUTICALS COMPANY BIOCON. BIOCON APPROVED A PRIMARY EQUITY INVESTMENTS BY TRUE NORTH. AS PER THE TERMS OF PROPOSED AGREEMENT, TRUE NORTH WILL ACQUIRE A MINORITY STAKE IN THE BIOSIMILARS BUSINESS AFTER ALL RESTRUCTURING, INCLUDING THE FILED MERGER OF BIOCON RESEARCH WITH BIOCON BIOLOGICS, VALUING BIOCON BIOLOGICS AT RS 21,450 CRORE ON PRE-MONEY EQUITY BASIS. THIS IS THE FIRST STEP A LARGER $200-300 MILLION FUNDRAISING ROUND THAT IS EXPECTED TO CLOSE BEFORE MID 2020. BIOCON IS ALSO IN TALKS WITH OTHER GLOBAL INVESTORS SUCH AS THE SINGAPORE GOVERNMENT OWNED TEMASEK HOLDINGS AND THE UK GOVERNMENT’S INVESTMENT ARM CDC FOR SUBSEQUENT ROUNDS IN WHICH TRUE NORTH MAY ALSO PARTICIPATE. AFTER COMPLETION OF THE TRANSACTION WITH TRUE NORTH, BIOCON WILL HOLD 96.07% STAKE IN BIOCON BIOLOGICS. BIOCON BIOLOGICS WAS LAUNCHED IN DECEMBER 2017 TO HOUSE ALL ITS BIOLOGICS BUSINESS, BIOSIMILARS WHICH INCLUDE MONOCLONAL ANTI BODIES, RECOMBINANT INSULINS AND NOVEL BIOLOGICS, KEEPING FUTURE VALUE UNLOCKING IN MIND. THE TRUE NORTH HAS BEEN COMMITTED INVESTOR IN BOTH BIOCON AND SYNGENE PRIOR LISTING. THIS INVESTMENT IS AN ENDORSEMENT OF THE VALUE THAT BIOCON BIOLOGICS HAS DEMONSTRATED AS A GLOBAL BIOSIMILARS PLAYER, HAVING COMMERCIALISED THREE OF ITS MOLECULES IN DEVELOPED MARKETS LIKE EU, US, JAPAN AND AUSTRALIA. COMPANY IS CONFIDENT OF ACHIEVING ITS GOAL OF SERVING 5 MILLION PATIENTS THROUGH ITS BIOSIMILARS PORTFOLIO AND REACHING ITS ASPIRATIONAL REVENUE TARGET OF $1 BILLION IN FY22.  IT’S THE THIRD TIME THAT TRUE NORTH, FORMERLY INDIA VALUE FUND ADVISORS OF IVFA, IS INVESTING IN THE MAZUMDAR SHAW LED BIOPHARMACEUTICAL BUSINESS. IN 2014, IVFA PICKED UP ABOUT 10% OF CONTRACT RESEARCH ARM SYNGENE FOR RS 380 CRORE BEFORE THE COMPANY WENT PUBLIC IN 2015. IVFA ALSO INVESTED IN BIOCON IN 2003 IN A PRE-IPO ROUND AND EXITED IN 2004 SOON AFTER IT WENT PUBLIC. HEALTHCARE AND LIFE SCIENCES HAS BEEN A FOCUS SECTOR FOR TRUE NORTH WITH INVESTMENT OF $600 MILLION ACROSS 10 COMPANIES TILL DATE. TRUE NORTH HAS HAD A LONG SUCCESSFUL ASSOCIATION WITH BIOCON TEAM. BIOCON BIOLOGICS HAS A PRODUCT PIPELINE OF 28 MOLECULES, INCLUDING 11 WITH MYLAN, SEVERAL WITH SANDOZ, AND IS DEVELOPING MANY INDEPENDENTLY. THE COMPANY’S THERAPEUTIC BASKET INCLUDES MOLECULES FOR DIABETES, ONCOLOGY, IMMUNOLOGY, DERMATOLOGY, OPHTHALMOLOGY, NEUROLOGY, RHEUMATOLOGY AND INFLAMMATORY DISEASES. SO FAR, THE COMPANY HAS COMMERCIALIZED FIVE BIOSIMILARS, TRASTUZUMAB, PEGFILGRASTIM, BEVACIZUMAB, RH INSULIN AND INSULIN GLARGINE, IN SEVERAL MARKETS WORLDWIDE. 

 

4 JANUARY, 2020

E-VEHICLE CHARGING STATION:

THE GOVERNMENT GAVE NOD FOR INSTALLATION OF AROUND 2,600 ELECTRIC VEHICLE CHARGING STATIONS IN 62 CITIES, UNDER ITS FLAGSHIP SCHEME FOR PROMOTION OF ELECTRIC VEHICLES. THE DEPARTMENT OF HEAVY INDUSTRIES APPROVED 2,636 CHARGING STATIONS FOR 24 STATES AND UNION TERRITORIES UNDER THE SECOND PHASE OF FAME INDIA. THE DEPARTMENT HAD INVITED EXPRESSION OF INTEREST FROM MILLION PLUS CITIES, SMART CITIES, STATE OR UT CAPITALS AND CITIES FROM SPECIAL CATEGORY STATES FOR SUBMISSION OF PROPOSAL FOR AVAILING INCENTIVES UNDER THE SCHEME FOR DEPLOYMENT OF CHARGING INFRASTRUCTURE FOR EVs WITHIN CITIES. ABOUT 106 PROPOSALS FROM PUBLIC AND PRIVATE ENTITIES FOR DEPLOYMENT OF 7,000 CHARGING STATIONS WERE RECEIVED IN RESPONSE. AFTER EVALUATION, THE GOVERNMENT SANCTIONED PROPOSALS SUBMITTED BY 19 PUBLIC ENTITIES FOR 24 STATES. OVER 300 CHARGING STATIONS HAVE BEEN ALLOTTED IN MAHARASHTRA, 266 IN ANDHRA PRADESH, 256 IN TAMIL NADU, 228 IN GUJARAT, 205 IN RAJASTHAN, 207 IN UP, 172 IN KARNATAKA, 159 IN MADHYA PRADESH, 141 IN WEST BENGAL, AMONG OTHERS. UTTARAKHAND, PUDUCHERRY AND HIMACHAL PRADESH HAVE ALSO BEEN ALLOTTED 10 STATIONS EACH. BY INSTALLING ALL THESE CHARGING STATIONS, IT IS EXPECTED THAT AT LEAST ONE CHARGING STATION WILL BE AVAILABLE IN MOST OF THESE SELECTED CITIES IN GRID OF 4KM*4 KM, WHICH WILL BOOST THE CONFIDENCE IF USERS OF ELECTRIC VEHICLES IN TERMS OF RANGE ANXIETY. THE MOVE WILL ENCOURAGE ORIGINAL EQUIPMENT MAKERS, TO LAUNCH NEW EV VARIANTS, WHO HAVE OTHERWISE BEEN HESITANT BECAUSE OF LACK OF CHARGING INFRASTRUCTURE.

 

3 JANUARY, 2020

TELECOM:

TELECOM EQUIPMENT COMPANY STERLITE TECHNOLOGIES (STL) HAS WON A RS 1,800 CRORE PROJECT FROM THE TELANGANA GOVERNMENT TO BUILD A RURAL BROADBAND NETWORK CONNECTING 3,000 GRAM PANCHAYATS. THE PROJECT WILL SERVE SIX MILLION RURAL CITIZENS ACROSS 11 DSTRICTS AND STL WILL MANAGE THE NETWORK FOR 7 YEARS. THE PROJECT’S OPERATION AND MANAGEMENT REVENUE STREAMS ARE ESTIMATED AT 30% OF PROJECT VALUE. THE ORDER CALLS FOR ROLLING OUT AN END TO END NETWORK BY DEPLOYING 64,000 KM OF OPTICAL FIBRE, STL WILL DEPLOY ITS LATEST NEYWORK SOLUTIONS FOR PROJECT. THE UNIQUENESS OF THIS PROJECT IS THAT IT WILL CONNECT EVERY HOUSEHOLD ACROSS THE RURAL PART OF THE STATE THROUGH OPTICAL FIBRE AND PROVIDE THEM HIGH SPEED INTERNET CONNECTIVITY. 

 

1 JANUARY, 2020

REAL ESTATE:

INDIA’S PROPERTY INDUSTRY CONTINUED ITS CHOPPY RIDE THROUGH 2019 WITH COMMERCIAL ASSETS FINDING MORE TAKERS AND AFFORDABLE HOMES, UNDERPINNED BY FEDERAL SOPS AND LOWER INTEREST RATES, BUCKING THE TEPID DEMAND TREND IN RESIDENTIAL REAL ESTATE MARKET. LIQUIDITY PRESSURE ON BUILDERS ON THE BACK OF THE NBFC CRISIS LED TO SIGNIFICANT RISE IN CONSOLIDATION ACROSS GEOGRAPHIES, PAVING THE WAY FOR JOINT VENTURES, DEVELOPMENT AGREEMENTS AND EVEN OUTRIGHT SALE OF PROJECTS. THE GOVERNMENT’S ANNOUNCEMENT OF A RS 25,000 CRORE LAST MILE FINANCING SUPPORT FOR STUCK PROJECTS HAS REKINDLED HOPES AMONG HOME BUYERS WHO ARE YET TO GET DELIVERY OF THE HOMES THEY PAID FOR. THE HOUSING MARKET HAS MANAGED TO SHOW SOME GROWTH THIS YEAR AND THIS COULD HAVE BEEN A RECOVERY YEAR HAD IT NOT BEEN FOR THE SLOWDOWN IN CREDIT AND LIQUIDITY. HOUSING DEMAND GROWTH SHOULD PICK UP IN 2020 AS BUILDERS ARE OFFERING DISCOUNTS, AND THE TIME CORRECTION ALSO WOULD ATTRACT HOME BUYERS. RECENTLY STATE BANK OF INDIA REDUCED ITS EXTERNAL BENCHMARK RATE BY 25 BASIS POINTS. THE REVISED EFFECTIVE BENCHMARK LENDING RATE OF 7.8% WILL COME INTO EFFECT FROM JANUARY 1, AND NEW HOME BUYERS WILL GET LOANS STARTING 7.9%. COMMERCIAL REAL ESTATE IN KEY OFFICE MARKETS HAS SET A NEW BENCHMARK IN NET ABSORPTION AND COMPLETIONS. WHILE 46.5 MILLION SQ.FT OFFICES WERE ABSORBED, NEARLY 52 MILLION SQ.FT GRADE A OFFICES WERE COMPLETED IN THE YEAR. A SIGNIFICANT GROWTH WAS RECORDED IN THE SECOND HALF WITH NET ABSORPTION INCREASING 63% TO 24.7 MILLION SQ.FT. THE LAST SUCH SPIKE IN NET ABSORPTION WAS REPORTED IN 2011, WHEN THE MARKET REPORTED NET ABSORPTION OF 37 MILLION SQ.FT. DEMAND GROWTH IN 2019 WAS DRIVEN BY STRONG EXPANSION OF IT/ITeS, WHICH ACCOUNTED FOR 42% OF TOTAL LEASING, AND CO-WORKING OPERATORS THAT FORMED 14% OF OVERALL LEASING. IN 2019, ANNUAL HOUSING SALES EXCEEDED LAUNCHES FOR THE FIRST TIME SINCE 2016, INDICATING FURTHER STABILITY IN THE RESIDENTIAL MARKET. THE INDIAN REAL ESTATE SYSTEM WILL REAP THE BENEFITS OF STRUCTURAL ECONOMIC POLICY REFORMS INTRODUCED WITH THE INTENTION OF BRINGING FINANCIAL DISCIPLINE, ACCOUNTABILITY AND TRANSPARENCY. MOST HOME BUYERS NOW PREFER READY APARTMENTS OR UNDER- CONSTRUCTION PROPERTIES THAT ARE CLOSER TO COMPLETION. THE SURGE IN SALES WILL PRIMARILY HINGE ON ENHANCED CONSUMER CONFIDENCE, WHICH IN TURN DEPENDS UPON THE EFFECTIVE IMPLEMENTATION OF GOVERNMENT POLICIES AND ECONOMIC GROWTH REGISTERING A COMEBACK. THE RISE IN RESIDENTIAL SALES IN 2019 WAS LED BY AFFORDABLE AND READY APARTMENTS AND THESE SEGMENTS ARE EXPECTED TO LEAD DEMAND REVIVAL IN 2020 AS WELL. NET ABSORPTION OF COMMERCIAL REAL ESTATE IS EXPECTED TO CONTINUE EXPANDING IN 2020, WITH OVER 40 MILLION SQ.FT OF ESTIMATED LEASING. GIVEN THE DEMAND FOR COMMERCIAL PROPERTIES, OFFICE ASSETS ARE OFFERING HIGH GROWTH AND STABLE RETURNS, WHICH IS PROMPTING  GLOBAL INSTITUTIONAL INVESTORS, PENSION AND SOVEREIGN FUNDS TO KEEP INFUSING FUNDS INTO THESE PROPERTIES. CAPITAL INFLOWS INCREASED BY MORE THAN 30% FROM A YEAR AGO TO NEARLY $4.6 BILLION IN THE FIRST 9 MONTHS OF 2019. OF THIS NEARLY 60% OF CAPITAL FLOWS WERE LED BY FOREIGN INSTITUTIONAL INVESTORS. IN LARGEST SINGLE COMMERCIAL PROPERTY TRANSACTION THIS YEAR, THE ALLIANZ-SHAPOORJI PALLONJI GROUP JOINT ENTITY ACQUIRED A 2.3 MILLION SQ.FT IT SPECIAL ECONOMIC ZONE PROPERTY FOR RS 1,800 CRORE. 

 

27 DECEMBER, 2019

BANK, INSURANCE:

BANKS MAY HAVE TO CUT THEIR STAKE IN INSURANCE COMPANIES AS THE RBI HAS EXPRESSED CONCERNS ABOUT VOLATILITY IN THESE TWO FINANCIAL SECTORS. IN A BID TO SHIELD BANKS FROM RISK ARISING OUT OF THEIR NON-BANKING BUSINESSES AND BOOST LIQUIDITY IN THE SLOWING ECONOMY, THE CENTRAL BANK HAS DIRECTED BANKS TO CAP THEIR STAKES IN INSURERS AT 30% . THE RBI, IN A MEETING, INFORMED THE BANKERS THAT IT WILL SOON NOTIFY RULES TO CAP THEIR HOLDINGS IN AN INSURANCE COMPANY TO 30%. THE STATE WILL BE CAPPED AT 50% FOR NON-BANKING FINANCIAL COMPANIES SUCH AS HOUSING DEVELOPMENT FINANCE CORPORATION. HOWEVER RBI HAS NOT ISSUED ANY OFFICIAL COMMUNICATION REGARDING THIS. AS PER THE INFORMATION, THE RULE WOULD BE IMPLEMENTED IN A PHASED MANNER. THE PROPOSED RBI RULE WILL HAVE SEVERE IMPACT ON BANKS SUCH AS STATE BANK OF INDIA, ICICI BANK AND KOTAK MAHINDRA BANK, AS THEY DERIVE A HUGE CHUNK OF INCOME FROM THEIR INSURANCE UNITS. THE MOVE WILL ALSO IMPACT INSURANCE COMPANIES AS MAJORITY OF THEM HAVE BANKS AS PROMOTERS. INSURER MAJORS LIKE SBI LIFE INSURANCE, ICICI PRUDENTIAL LIFE INSURANCE , UNIVERSAL SOMPO GENERAL INSURANCE AND CANARA HSBC OBC LIFE INSURANCE HAVE BANKS AS PROMOTERS. STATE BANK OF INDIA HOLDS 57.6% STAKE IN SBI LIFE INSURANCE COMPANY, ICICI BANK HOLDS 52.87% SHARE IN ICICI PREDENTIAL LIFE INSURANCE CO AND KOTAK MAHINDRA BANKS OWNS 77% IN KOTAK MAHINDRA LIFE INSURANCE CO.LTD . IN A SEPARATE DEVELOPMENT, THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA PROPOSED AN INCREASE IN FOREIGN DIRECT INVESTMENTS IN INSURANCE FROM 49% TO 74%, WHICH WILL ENSURE THAT INSURANCE COMPANIES DO NOT FACE CAPITAL CONSTRAIN.

 

26 DECEMBER, 2019

SUGAR:

A RECENT PICK UP IN SUGAR EXPORTS IS EXPECTED TO HELP MILLERS SETTLE THE CANE ARREARS OF FARMERS. THE GOVERNMENT GIVES MILLERS AN EXPORT SUBSIDY OF RS 10,448 PER TONNE, WHICH SHOULD BE TRANSFERRED DIRECTLY TO BANK ACCOUNTS OF FARMERS TO SETTLE ARREARS. THE MORE THE EXPORTS, THE FASTER FARMERS GET THEIR ARREARS. MILLS HAVE SO FAR CONTRACTED EXPORT OF 2 MILLION TONNES. THIS HAS RAISED HOPES OF ACHIEVING THE TARGETED EXPORTS OF 6 MILLION THIS YEAR. GLOBAL SUGAR PRICES IN THE RANGE OF $300-$350 PER TONNE WILL HELP INDIAN EXPORTS. IN THE NEW SUGAR SEASON THAT STARTED IN OCTOBER, INDUSTRY ESTIMATES CANE ARREARS TO BE AROUND RS 4,500 CRORE, WITH MORE THAN RS 3,000 CRORE PENDING TOWARDS FARMERS IN UTTAR PRADESH, THE LARGEST SUGARCANE PRODUCING STATE. AS CRUSHING HAS BEGUN IN THE NEW SEASON, DUES HAVE MOUNTED. THERE IS A FIRM DEMAND IN GLOBAL MARKET. THE INTERNATIONAL MARKET MAY REQUIRED 3-3.5 MILLION TONNES OF SUGAR FROM INDIA. THERE IS ALSO FRESH DEMAND OF 7-8 LAKH TONNES FROM IRAN. SO IN CURRENT MARKET CONDITIONS, EXPORTING 4.5 MILLION TONNES OF SUGAR LOOKS QUITE POSSIBLE. LAST YEAR GOVERNMENT HAS MILLERS TO EXPORT 5 MILLION TONNES, BUT THEY MANAGED TO ACHIEVE 3.7 MILLION TONNES. THIS YEAR, MILLERS ARE EXPECTING DEMAND FROM INDONESIA, WHICH HAS SHOWN INTEREST IN BUYING INDIAN SUGAR IN LIEU OF PROMOTING ITS PALM OIL EXPORTS TO INDIA. INDONESIA BUYS SUGAR FROM THAILAND AND AUSTRALIA. IF THE BUSINESS SHIFTS TO INDIA, THEN THE TARGET OF 6 MILLION TONNES COULD BE ACHIEVED. THIS YEAR SUGAR OUTPUT IS LIKELY TO TOUCH 26 MILLION TONNES, DOWN 21.5% FROM LAST YEAR. THE OUTPUT IS JUST ENOUGH TO MEET THE ANNUAL DOMESTIC DEMAND. HOWEVER, A RECORD CARRYOVER STOCK OF 14.5 MILLION TONNES ALLOWS MILLERS TO EXPORT AGGRESSIVELY SO THAT THE CURRENT YEAR ENDS WITH SURPLUS OF ABOUT 9 MILLION TONNES.

 

23 DECEMBER, 2019

METHANOL:

THE GOVERNMENT IS LOOKING AT INTRODUCING METHANOL BLENDED  FUEL PAN INDIA MOVE THAT CAN POTENTIALLY REDUCE ONE’S FUEL BILL BY AT LEAST 10%, LOWER VEHICULAR POLLUTION LEVELS BY OVER 30%, AND SAVE THE EXCHEQUER RS 5,000 CRORE IN ANNUAL IMPORT BILL. ROAD TRANSPORT AND HIGHWAYS MINISTER NITIN GADKARI HAS WRITTEN TO PETROLEUM MINISTER DHARMENDRA PRADHAN, ASKING HIM TO MAKE ALL EFFORTS TO MAKE METHANOL WIDELY AVAILABLE FOR COMMERCIAL USE AT FUEL STATIONS. CURRENTLY, VEHICLES IN INDIA USED UP TO 10% ETHANOL BLENDED FUEL. BUT THE COST OF ETHANOL PRODUCTION IS COMPARATIVELY HIGH AT RS 42 A LITRE. METHANOL OR METHYL ALCOHOL, IS ESTIMATED TO COST LESS THAN RS 20 A LITRE. INDIAN OIL CORPORATION IS ALREADY MAKING M15 FUEL WITH 15% METHANOL AND 85% PETROL AVAILABLE FOR COMMERCIAL USE. THE MINISTRY OF ROAD TRANSPORTS AND HIGHWAYS HAVE PUT THE REGULATORY FRAMEWORK IN PLACE, AND ITS NOW THE PETROLEUM MINISTRY JOB TO MAKE THE FUEL AVAILABLE. THE MINISTRY HAS NOTIFIED REGULATORY STANDARDS FOR METHANOL BLENDS M15, M85 AND M100, OR NEAT METHANOL. THE INDUSTRY IS BACKING THE MOVE. MULTI FUEL OPTION IS DEFINITELY WORTH EXPLORING FROM ENERGY SECURITY POINT OF VIEW. NITI AAYOG MEMBER VK SARAWAT, WHO HAS BEEN HELMING THE METHANOL ECONOMY PROJECT SINCE ITS INCEPTION TWO YEARS AGO, CONFIRMED THAT 65,000 KM OF TRIAL RUN ON M15 BLENDED FUEL HAS BEEN SUCCESSFULLY COMPLETED AND THERE IS NO TWEAKING REQUIRED IN VEHICLES TO RUN ON METHANOL BLENDED FUEL. THE THINK TANK HAD PROJECTED ANNUAL REDUCTION OF $100 BILLION IN CRUDE IMPORTS BY 2030 IF HE COUNTRY MOVES TO 15% BLENDED FUEL BOTH FOR TRANSPORTATION AND COOKING. INDIA IS THIRD BIGGEST OIL IMPORTER GLOBALLY. OUR CRUDE OIL IMPORTS STANDS AT CLOSE TO RS 5 LAKH CRORE ANNUALLY WITH 2,900 CRORE LITRE PETROL AND 9,000 CRORE LITRE DIESEL CONSUMED. METHANOL IS CURRENTLY BEING MANUFACTURED AT ASSAM PETROCHEMICALS WHERE THE CURRENT PRODUCTION CAPACITY IS 100 TONNES PER DAY AND COMPANY HOPES TO RAMP UP ITS PRODUCTION SIX FOLD TO 600 TONNES PER DAY BY APRIL 2020. COMMERCIAL PRODUCTION OF METHANOL FROM COAL WILL SOON BE STARTED IN WEST BENGAL AND JHARKHAND WITH STATE GOVERNMENTS HAVE ALLOTTED A DEDICATED COAL MINE EACH FOR THIS. THE PLAN IS TO HAVE AN INSTALLED CAPACITY OF 3-4 MILLION TONNES IN THE NEXT FIVE TO EIGHT YEARS TO HELP REPLACE 50% OF FOSSIL FUEL REQUIREMENT.

 

23 DECEMBER, 2019

STEEL:

INDIA’S CRUDE STEEL OUTPUT FELL FOR THE SECOND STRAIGHT MONTH IN NOVEMBER, DECLINING 2.8% TO 8.934 MILLION TONNE (MT). IN NOVEMBER 2018, THE COUNTRY’S CRUDE STEEL OUTPUT STOOD AT 9.19 MT. GLOBAL STEEL PRODUCTION ALSO REGISTERED A 1% FALL AT A 147.791 MT IN NOVEMBER 2019 WITH 149.356 MT IN NOVEMBER 2018. IN OCTOBER 2019, INDIA HAD REPORTED A 3.4% FALL IN CRUDE STEEL OUTPUT AT 9.089 MT AS AGAINST 9.408 MT IN THE YEAR AGO MONTH. 

 

16 DECEMBER, 2019

SOLAR:

INDIA HAS SET UP A TEAM TO CERTIFY ALL SOLAR POWER GENERATION EQUIPMENT MAKERS WHO WANT TO DO BUSINESS IN THE WORLD’S LARGEST GREEN ENERGY MARKET. THE MOVE AIMS TO BOOST DOMESTIC MANUFACTURING AND PROTECT ITS DOMESTIC COMPANIES FROM CHEAP AND SUB-STANDARD IMPORTS. MANUFACTURERS ARE LINING UP FOR CERTIFICATIONS AS THE IMPLEMENTATION OF THE NEW SOLAR POWER GENERATION EQUIPMENT SOURCING GUIDELINES WILL START ON 1 APRIL. AT PLAY IS INDIA’S RENEWABLE ENERGY PROGRAMME, WHICH WOULD REQUIRE $80 BILLION IN INVESTMENTS TILL 2022. THIS FIGURE WILL GROW MORE THAN THREE FOLD TO $300 BILLION DURING 2022-2030. INDIA IMPORTED $2.16 BILLION WORTH OF SOLAR PHOTOVOLTAIC (PV) CELLS, PANELS AND MODULES IN 2018-2019. ONLY MANUFACTURERS AND SOLAR MODULES WHO ARE APPROVED BY THE BUREAU OF INDIAN STANDARDS (BIS) AND THE MINISTRY OF NEW AND RENEWABLE ENERGY (MNRE) AND ARE ON THE APPROVED LIST OF MODULES AND MANUFACTURERS ( ALMM) WILL BE ELIGIBLE FOR GOVERNMENT SUPPORTED SCHEMES, INCLUDING PROJECTS WHERE ELECTRICITY DISTRIBUTION COMPANIES PROCURE SOLAR POWER OF SUPPLY TO THEIR CONSUMERS, ACCORDING TO THE CENTRE’S DIRECTIVE. THE MOVE, WHICH IS BEING SEEN AS A NON- TARIFF BARRIER, WILL ENSURE COMPLIANCE BY A MAJORITY OF DOMESTIC AND GLOBAL MANUFACTURERS, INCLUDING CHINESE MAJORS, AND THUS HELP MAINTAIN QUALITY BY AVOIDING THE USE OF LOW QUALITY IMPORTED EQUIPMENT. THE FAST GROWING DOMESTIC MARKET FOR SOLAR COMPONENTS IS DOMINATED BY CHINESE COMPANIES BECAUSE OF THEIR COMPETITIVE PRICING. THE SURGE IN IMPORTS LED THE GOVERNMENT IN ITS PREVIOUS TERM IMPOSE A SAFEGAURD DUTY FROM 30 JULY 2018 ON SOLAR CELLS AND MODULES IMPORTED FROM CHINA AND MALAYSIA. POOR QUALITY CHINESE SOLAR MODULES, REJECTED BY DEVELOPERS BEING SOLD IN THE DOMESTIC MARKET AT A DISCOUNT. MODULES ACCOUNT FOR NEARLY 60% OF A SOLAR POWER PROJECT’S TOTAL COST. THE INDIAN GOVERNMENT WILL INSPECT WHETHER THE MANUFACTURERS IS MAKING ON ITS OWN. WE WILL PROTECT OUR INDUSTRY. AFTER THEY MEET OUR STANDARDS, WE WILL PUT THEM ON THE ALMM LIST. THIS WILL APPLICABLE TO ALL MANUFACTURERS SITUATED IN INDIA OR OVESEAS. THERE ARE BIS STANDARDS AND A TEAM HAS BEEN CONSTITUTED BY THE MINISTRY TO INSPECT SUCH FACILITIES. APPLICATIONS HAVE STARTED COMING, SAID MNRE SECRETARY ANAND KUMAR. CLEAN ENERGY PROJECTS NOW ACCOUNT FOR MORE THAN A FIFTH OF INDIA’S INSTALLED POWER GENERATION CAPACITY, WITH THE COUNTRY BECOMING ONE OF THE TOP RENEWABLE ENERGY PRODUCERS GLOBALLY WITH AMBITIOUS CAPACITY EXPANSION PLANS. HOWEVER, GLOBAL INVESTOR ARE CONCERNED ABOUT THE ANDHRA PRADESH GOVERNMENT’S DECISION TO HAVE A RELOOK AT RENEWABLE ENERGY CONTRACTS. THE MOVE BY CENTRE WILL ASLO CHECK THE PRACTICE OF SOME MANUFACTURERS CLAIMING PRODUCTION OF CELLS AND MODULES THAT HAVE BEEN PRODUCED ELSEWHERE. THE MNRE TEAM WILL INSPECT THE MANUFACTURING FACILITY AND CONDUCT THE PRODUCTION AND SALE AUDIT BEFORE IT INCLUDES MODULES AND MANUFACTURERS IN THE ALMM LIST FOR TWO YEARS, ACCORDING TO GOVERNMENT DOCUMENTS. A SIMILAR SCHEME, THE REGISTERED LIST OF MODELS AND MANUFACTURERS, EXISTS FOR THE INDIAN WIND ENERGY SECTOR. INDIA HAS A DOMESTIC MANUFACTURING CAPACITY OF 3 GIGAWATTS (GW) FOR SOLAR CELLS AND 10GW FOR WIND POWER EQUIPMENT. 

 

13 DECEMBER, 2019

AVIATION:

DOMESTIC AIR PASSENGER TRAFFIC FOR NOVEMBER GREW AT THE FASTEST PACE IN 2019, A YEAR IN WHICH AIR TRAVEL HAS BEEN HIT BY THE TWIN BLOWS OF THE CLOSURE OF JET AIRWAYS INDIA LTS AND AN ECONOMIC SLOWDOWN. INDIAN AIRLINES CARRIED 12.95 MILLION PEOPLE IN NOVEMBER, UP 11.2% Y-O-Y. THIS WAS THE FASTEST GROWTH RECORDED SINCE DECEMBER LAST YEAR. DOMESTIC PASSENGER TRAFFIC GROWTH IN NOVEMBER WAS LED BY SPICEJET, WHICH CARRIED 2 MILLION PASSENGERS IN THE MONTH, A JUMP OF 43% Y-O-Y, WHILE INDIA’S LARGEST AIRLINE INDIGO CARRIED 6 MILLION PASSENGERS, UP 21%. GOAIR’S PASSENGER TRAFFIC INCREASED 39.5% TO 1.4 MILLION, WHILE THAT OF AIR INDIA INCREASED BY 10% TO 1.5 MILLION. THE GROWTH HAS LIKELY COME AT THE COST OF PRICING WEAKNESS THAT CONTINUE INTO NOVEMBER. LOW FARES WERE OFFERED BY MOST CARRIERS TO ENCOURAGE MORE PEOPLE TO FLY AMID THE ECONOMIC DOWNTURN. THOSE FARES HELPED FILL MORE AIR CRAFT SEATS, SPECIALLY WITH THE ONSET OF THE TOURIST SEASON. TICKET PRICES HAVE BEEN DOWN FOR A FEW MONTHS, INCLUDING OCTOBER, WHEN THERE WAS BOTH DUSSEHRA AND DIWALI. THE WEAKNESS IN TICKET PRICES REFLECTS THE SLOWDOWN IN THE ECONOMY, SIMILAR TO WHAT HAS BEEN SEEN IN VARIOUS OTHER SECTORS. AN IMPROVEMENT IN ECONOMY WILL HOLD THE KEY PRICING AND THEREBY PROFITABILITY. LOW TICKET PRICES AND THE ONSET OF THE FESTIVAL SEASON LED TO PASSENGER LOAD FACTOR, THE PORTION OF SEATS FILLED IN PLANE FOR INTERGLOBE AVIATION LTD’S INDIGO IMPROVING BY 6% POINT MONTH ON MONTH TO 91.4%. GOAIR AND SPICEJET’S PASSENGER LOAD FACTOR ROSE BY 10% POINTS AND 3% POINTS, RESPECTIVELY, TO 93%. VISTARA, AIR ASIA AND AIR INDIA ALSO RECORDED HIGHER PASSENGER LOAD FACTOR IN NOVEMBER AT 84%, 87% AND 83% RESPECTIVELY. THE JUMP IN AIR PASSENGER VOLUMES HAVE ALSO COME AS THE COMBINED CAPACITY OF AIRLINES REBOUNDED RECENTLY AFTER AFTER DROPPING IN THE WAKE OF THE CLOSURE OF JET AIRWAYS IN APRIL. ALL MAJOR AIRLINES EXCEPT AIR INDIA HAVE SEEN AN INCREASE IN MARKET SHARE THIS YEAR FOLLOWING JET AIRWAY’S EXIT. THE MARKET SHARE OF NO FRILLS AIRLINES INDIGO AND SPICEJET INCREASED TO 47.5% AND 16.1% RESPECTIVELY IN NOVEMBER. GOAIR HAD A MARKET SHARE OF 11%, WHILE AIR ASIA AND VISTARA HAD MARKET SHARES OF 6.8% AND 5.9% RESPECTIVELY. AIR INDIA’S MARKET SHARE HAS REMAINED AT 12% SINCE THE START OF THE YEAR. IN TERMS OF ON TIME PERFORMANCE, GOAIR TOPPED THE CHARTS AT THE FOUR MAJOR AIRPORTS OF BENGALURU, DELHI, HYDERABAD AND MUMBAI, WITH VISTARA, AIR ASIA AND INDIGO FOLLOWING CLOSELY, AND AIR INDIA BEING THE LEAST PUNCTUAL.

KEY PLAYER: SPICEJET

 

10 DECEMBER, 2019

INSURANCE:

GOVERNMENT MAY RAISE THE OVERSEAS INVESTMENT LIMIT IN INSURANCE TO 74% IN FEBRUARY BUDGET, UP FROM 49% NOW, POSSIBLY PAVING THE WAY FOR FOREIGN CONTROL OF COMPANIES. THE INDIAN REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (IRDAI) SOUGHT THE VIEWS OF VARIOUS STAKEHOLDERS ON THE MATTER IN A DECEMBER 2 LETTER AT THE DIRECTION OF GOVERNMENT. THE LETTER TO INSURANCE COMPANIES AND OTHERS HAS CALLED FOR SUGGESTIONS ON RAISING THE FDI LIMIT. THE GOVERNMENT IS SERIOUSLY CONTEMPLATING OPENING UP THE SECTOR AS IT WANTS LONG TERM STABLE MONEY TO BE INVESTED IN THE COUNTRY. IRDAI IS SEEKING INPUTS FROM INDUSTRY PEOPLE ON GOVERNMENT INSTRUCTIONS AND A REPORT IS EXPECTED TO BE SUBMITTED SOON. IF ALL GOES WELL GOVERNMENT IS PLANNING TO INTRODUCE THIS A PART OF BUDGET ANNOUNCEMENT AND TAKE A SHORTCUT SO THAT IT GETS PARLIAMENT’S NOD AS PART OF THE FINANCE BILL. THE FINANCE MINISTRY AND IRDAI DID NOT REPLY TO QUERIES. IT’S BEEN PROPOSED THAT THE STAKE LIMIT COULD BE RAISED TO 74% OVER TIME. HOWEVER; FOREIGN INSURERS WANT IT TO BE SET AT 74% WITHOUT DELAY. THE GOVERNMENT INCREASED THE LIMIT ON FDI IN INSURANCE INTERMEDIARIES TO 100% ON SEPTEMBER 2. THE INITIAL INPUTS GATHER BY THE REGULATOR CENTRE AROUND UNWINDING PROVISIONS RELATED TO INDIAN OWNERSHIP IN INSURANCE FIRMS, SOLVENCY FIRM OWNED BY FOREIGN PROMOTERS, EXERCISING LONG TERM LIABILITY CONTRACTS ON OVERSEAS OWNERS AND SECURING POLICY HOLDERS RIGHTS IN CASE THE INSURER IS FOREIGN OWNED. THE GOVERNMENT RAISED FDI IN INSURANCE UNDER THE AUTOMATIC ROUTE TO 49% FROM 26% IN 2015. PRIOR TO THIS RELAXATION, APPROVAL FOR INVESTMENT UP TO 49% REQUIRED APPROVAL BY FOREIGN INVESTMENT PROMOTION BOARD, WHICH WAS DISBANDED 2 YEARS BACK. OWNERSHIP AND CONTROL HAD TO REMAIN WITH INDIAN RESIDENTS AS PER THE 2015 INSURANCE ACT AMENDMENT THAT RAISES THE OVERSEAS LIMIT TO 49%. UNTIL THEN, THE INSURANCE ACT DID NOT PROVIDE FOR THIS, SO IT WAS POSSIBLE FOR OFFSHORE STRATEGIC PARTNERS TO HAVE SUBSTANTIAL CONTROL RIGHTS, INCLUDING RESERVED MATTERS OR VETO RIGHTS ON OPERATIONAL AND FINANCIAL POLICY DECISIONS OF THE JOINT VENTURE. SEVERAL OVERSEAS INVESTORS INCREASED THEIR STAKES IN INDIAN INSURANCE JOINT VENTURE AFTER THE LIMIT WAS RAISED IN 2015. HIGHER FDI ENABLED COMPANIES TO GO IN FOR INITIAL PUBLIC OFFERINGS. LISTED LIFE INSURANCE COMPANIES INCLUDE HDFC LIFE, SBI LIFE AND ICICI PRUDENTIAL. LISTED GENERAL INSURANCE FIRMS ARE ICICI LOMBARD, GIC RE AND NEW INDIA ASSURANCE. IN JULY BUDGET, FINANCE MINISTER NIRMALA SITHARAMAN HAD ANNOUNCED THAT GOVERNMENT WILL HAVE TO EXAMINE SUGGESTIONS FROM VARIOUS STAKEHOLDERS TO FURTHER OPEN UP FDI IN INSURANCE SECTOR. IN ORDER TO FACILITATE THE HIGHER INVESTMENT LIMIT, THE GOVERNMENT WILL HAVE TO AMEND THE INSURANCE ACT, ALTER PROVISIONS PERTAINING TO INDIAN OWNERSHIP, MONITOR THE SOLVENCY OF FOREIGN FIRMS SO THAT THE LOCAL BUSINESS IS UNAFFECTED BY ANY CHALLENGES FACED BY THE PARENT AND THAT THEY STICK AROUND TO HONOUR LONG TERM CONTRACTS. THE GOVERNMENT IS KEEN ON INDIAN PROMOTERS RUNNING THE SHOW EVEN WITH ONLY 26% STAKE IN JOINT VENTURE. INDIA HAS 24 LIFE INSURANCE COMPANIES AND 34 GENERAL INSURANCE FIRMS. ONLY ABOUT 4 IN 100 INDIANS HAVE LIFE COVER, OFFERING COMPANIES A POTENTIALLY MASSIVE MARKET IN THE WORLD’S SECOND MOST POPULOUS COUNTRY.  

 

5 DECEMBER, 2019

PHARMA:

BIOCON IS PLANNING TO TAKE ITS RECOMBINANT HUMAN (rh) INSULIN INTO THE US MARKET SOON AND HAS TABLED AN AFFORDABLE PRICE RANGE FOR THE DIABETES DRUG TO THE US ADMINISTRATION. IF YOU LOOK AT rh- INSULIN, I THINK ITS VERY INTERESTING CURRENTLY TO LOOK AT THE UNITED STATES. WE ARE HEAVILY FOCUSING ON POLICY WORK, HOW CAN WE WORK WITH KEY STAKEHOLDERS IN AN ADMINISTRATION, OR WITH THE FDA AND HAVING DIALOGUE TO SHOW OPTIONS, CHRISTAINE HAMACHER SAID. THE BENGALURU HEADQUARTERED BIOTECH FIRM IS PLANNING TO PROVIDE rh-INSULIN TO MIDDLE AND LOW INCOME COUNTRIES AT LEASS THAN 10 CENTS A DAY. IT HAS ALSO STARTED AN AFFORDABLE PRICE POINT FOR THE US, THE THIRD LARGEST COUNTRY WITH A DIABETIC POPULATION, WHICH ANALYSTS HAVE FLAGGED AS A CRISIS. BIOCON BIOLOGICS IS CHASING A REVENUE TARGET OF $1 BILLION IN FINANCIAL YEAR 2021-2022. IN THE PREVIOUS FISCAL YEAR, ITS REVENUE HAD TOPPED $200 MILLION BIOCON HAS LAUNCHED TWO BIOSIMILARS IN THE US MARKET- PEGFILGRASTIM AND TRASTUZUMAB FOR CANCER TREATMENT WITH PARTNER MYLAN. CURRENTLY, rh-INSULIN PRICES ARE SIGNIFICANTLY HIGHER AND NOT COVERED UNDER HEALTH INSURANCE. THE rh-INSULIN MARKET IS CONTROLLED BY PHARMA MAJORS SUCH AS ELILILLY AND NOVO NORDISK. IN THE US, rh-INSULIN RETAILS AT MORE THAN $5 A DAY AND PRICES COULD INCREASE FURTHER, HAMACHER SAID. IN RECENT DRAFT GUIDANCE ON BIOSIMILAR DRUGS, THE US FDA HAS SOUGHT TO WAIVE OFF CERTAIN ADVANCED IMMUNOGENICITY STUDIES FOR A BIOSIMILAR OR INTER CHANGEABLE INSULIN, IF ANALYTICAL ASSESSMENTS SHOW IT TO BE HIGHLY SIMILAR. HAMACHER SAID THIS WOULD SIGNIFICANTLY HELP IN BOOSTING ACCEPTANCE OF rh-INSULIN. WE NOW HAVE AN OPPORTUNITY TO ACCELERATE THE ENTRY INTO THE MARKET AND THE US, THAT HAS A DIABETES CRISIS, SHE SAID. BIOCON SAID IT IS STRONGLY DRIVEN BY ECONOMIES OF SCALE AND WELL POSITIONED TO PLAY THE VOLUMES IN THE US, UNLIKE PEERS.

 

4 DECEMBER, 2019

HOTEL :

REDUCTION IN DEBT AND OPERATING COSTS, RISING OCCUPANCY RATES AND RELATIVELY BETTER FINANCIAL PERFORMANCE MAKES INDIAN HOTELS AND ATTRACTIVE BET FOR INVESTORS. AT THE TIME WHEN INDIA INC IS REELING UNDER THE DEBT PILE, INDIAN HOTELS, A CHAIN OF LUXURY HOTELS AND RESORTS, HAS REDUCED ITS DEBT-EQUITY RATIO TO 0.5 IN FY19 FROM 2.1 IN FY15. TOTAL DEBT FELL TO RS 1,722 CRORE FROM RS 4,632 CRORE DURING THE PERIOD. TOTAL EXPENDITURE AS A PERCENTAGE OF REVENUE FELL TO 81% IN FY19 FROM 96% IN FY15 FOLLOWING THE COMPANY’S STRATEGY TO RUN AN LIGHT ASSET LIGHT OPERATIONS. ITS PERFORMANCE IN SEPTEMBER QUARTER ALSO REFLECTS THE IMPROVED OPERATING EFFICIENCY. IN A SEASONALLY LEAN QUARTER, ITS REVENUE GREW BY 4% UNLIKE PEERS WHO REPORTED A DROP IN SALES. REVENUE PER AVAILABLE ROOM (REVPAR) GREW BY 3.9% Y-O-Y TO RS 4,833. THE OCCUPANCY RATE OF ITS HOTELS GREW TO 68.2% FROM 63.9% IN THE YEAR AGO QUARTER. THE SECTOR’S REV PAR GREW BY 3.1% TO RS 3,254. THE COMPANY APPEARS TO BE ON A STRONG FOOTING AND IS SET TO BENEFIT FROM SECOND HALF OF THE PRESENT FISCAL, WHICH IS A SEASONALLY STRONG QUARTER. BESIDES THIS, THE COMPANY’S SIGNIFICANT PRESENCE IN LUXURY SEGMENT INSULATES IT FROM STIFF COMPETITION HOTEL AGGREGATORS WHO ARE EATING INTO THE BUSINESS OF MID-SIZE HOTELS. THE COMPANY’S ROOM PORTFOLIO IS WELL BALANCED IN TERMS OF COST STRUCTURE. CLOSE TO 40% OF THE 18,020 ROOMS ARE ON MANAGEMENT CONTRACT, WHICH MEANS IT DOES NOT OWN THE ROOMS BUT LENDS ITS NAME. IN THE NEXT THREE YEARS, THE COMPANY PLANS TO INCREASE THE SHARE OF SUCH ROOMS TO 50% OF THE PORTFOLIO. THIS WILL RESULT IN COST SAVING ONCE THE DEMAND PICKS UP IN THE COMING QUARTER. HE COMPANY EXPECTS TO IMPROVE THE EBIDTA MARGIN TO 25% BY 2022 FROM CLOSE TO 20% IN FY19. THIS IS ACHIEVABLE GIVEN ITS COST STRUCTURE AND STABLE DEMAND FROM DOMESTIC TRAVELLERS AND MEETINGS, INCENTIVE, CONFERENCES AND EXHIBITION SEGMENTS.

 

4 DECEMBER, 2019

PHARMA :

AFTER BELOW EXPECTATIONS SEPTEMBER QUARTER, BIOCON LTD HAS REASON TO REJOICE. THE PHARMA COMPANY HAS RECEIVED APPROVALS FOR SOME CRITICAL DRUG LAUNCHES IN US, BREATHING LIFE INTO STOCK. INVESTORS ARE BANKING ON BIOLOGICS BUSINESS, WHICH IS BEING SEEN AS A CATALYST. MUCH OF THE ENTHUSIASM SURROUNDS THE EXPECTED RAMP-UP OF BIOCON’S BIOLOGICS BUSINESS. ALONG WITH MYLAN NV WITH WHOM IT HAS A TIE UP, COMPANY IS EXPECTED TO LAUNCH SOME CRITICAL BIOSIMILARS IN THE US. IT IS ALSO EXPECTED TO RAM-UP SOME EXISTING PRODUCTS. BIOCON HAS BEEN INVESTING IN BIOSIMILARS, WHICH ARE CLOSE VARIANTS, BANKING ON KEY INGREDIENTS FOR THE SAME THERAPEUTIC EFFECT. IN FACT OVER THE PAST SEVERAL YEARS, BIOCON HAS BEEN EXPANDING CAPACITY TO ADDRESS THE INCREASING DEMAND FOR BIOLOGICS. IT IS ESTIMATED THAT BIOLOGIC SALES WOULD MAKE UP FOR ABOUT 35% OF THE COMPANY’S SALES IN FY21, MARKEDLY HIGHER FROM 26% IN FY19. RECENTLY, BIOCON LAUNCHED A BIOSIMILAR OF HERCEPTIN, CALLED OGIVRI, IN THE US MARKET. HERCEPTIN HAS SALES OF ABOUT $2.9 BILLION IN THE US, HENCE THE BIOCON- MYLAN LAUNCH IS ONE OF THE FIRST TO TAP THIS POTENTIAL. HOWEVER, B-HERCEPTIN IS LIKELY TO SEE ONLY A GRADUAL RAMP-UP IN THE US AND SALES WOULD LARGELY COME FROM NEW PATIENTS. WITH THIS LAUNCH, BIOCON AND MYLAN WILL HAVE TWO IMPORTANT BIOSIMILARS IN THE US MARKET. BIOCON COULD ALSO LAUNCH ANOTHER HIGH POTENTIAL BIOSIMILAR, INSULIN GLARGINE, IN MARCH 2020 IN US. AS HAS BEEN THE CASE, PRICE EROSION POST-LAUNCHES HAS BEEN A KEY ISSUE IN THE US. NEVERTHELESS IT IS STILL EXPECTED AN INCREASE IN PROFITS. WITH A 40% PRICE EROSION AND A 10% MARKET SHARE, IT IS  ESTIMATED THAT OGIVRI WILL PROVIDE FUTHER  SALES OF $165 MILLION – $190 MILLION FOR THE BIOCON- MYLAN ALLIANCE IN FY21 AND FY22. THIS IMPLIES INCREMENTAL SALES NET PROFIT FOR BIOS FROM THE OPPORTUNITY ARE $50 MN/$10 MN IN FY21, IMPLYING 5% ADDITIONAL EARNINGS. BIOCON HAS RECEIVED US FOOD AND DRUG ADMINISTRATION’S APPROVAL FOR ITS EXTENDED MANUFACTURING FACILITY IN BENGALURU RECENTLY. AS A RESULT, IT CAN NOW CATER TO THE DEMAND FOR BIOSIMILARS IN THE US AND OTHER GLOBAL MARKETS. EARLIER, CAPACITY CONSTRAINTS HAD KEPT BIOCON AND MYLAN FROM CAPITALIZING ON THE NEULASTA LAUNCH IN THE US IN 2018. 

 

29 NOVEMBER, 2019

INFRA:

PROPERTY MARKETS IN TOP METROS MAY BE CAUGHT IN A GRINDING SLOWDOWN, BUT THERE IS CHEER IN SMALLER CITIES. DRIVEN BY THE GOVERNMENT’S PUSH FOR AFFORDABLE HOUSING, HOME SALES IN SMALLER TOWNS AND CITIES HAVE STEADILY GROWN IN THE LAST 5 YEARS, SHOWS DATA FROM REAL ESTATE ADVISOR LIASES FORAS. SALES IN 20 TIER-II CITIES INCLUDING JAIPUR, VADODARA, NASHIK AND NAGPUR MADE UP 25% OF NATIONWIDE SALES AT THE END OF 2018-19, UP FROM 16% 5 YEARS AGO. BY THE END OF THE SEPTEMBER QUARTER OF 2019-20, THE SHARES OF TIER-II CITIES HAD RISEN FURTHER TO 26%. IN THE SAME QUARTER, OVER ALL HOUSING SALES ACROSS THE COUNTRY INCLUDING MAJOR CITIES LIKE MUMBAI METROPOLITAN REGION, NCR, BENGALURU, CHENNAI, HYDERABAD AND PUNE FELL BY 2% TO 91,115 UNITS AS PER LIASES FORAS. IF YOU LOOK FROM 2014, SALES OF TIER-II CITIES HAVE JUMPED BY 112% WHILE TIER-1 CITIES HAVE GROWN BY 28%. CONTRIBUTION OF THESE SMALLER CITIES TO THE OVER ALL HOUSING MARKET IS INCREASING. THE PUSH FOR AFFORDABLE HOUSING IS DRIVING THIS GROWTH, SAID PANKAJ KAPOOR, MANAGING DIRECTOR, LIASES FORAS. APART FROM GOVERNMENT INITIATIVES LIKE PRADHAN MANTRI AWAS YOJANA WHICH HAS HELPED PUSH DEMAND IN THE AFFORDABLE HOUSING SEGMENT, SMALLER TOWNS AND CITIES OFFER MORE CONDUCTIVE LAND TO DEVELOP LOW COST HOMES, KAPOOR SAID. WHILE MOST CITIES SAW A DECLINE IN SEPTEMBER QUARTER, SOME SUCH AS JAIPUR, NASHIK AND AHMEDABAD SAW JUMPS OF 22%, 25% AND 4%. WHILE BIG CITIES CREAK UNDER A HUGE SUPPLY OVERHANG, SMALLER TOWNS AND CITIES WHERE THERE IS LITTLE SPECULATIVE BUYING HAS SEEN NO DOWNTURN, REAL ESTATE DEVELOPERS AND CONSULTANTS SAID. WHILE THE GROWTH IN SMALLER CITIES IS NOTHING PROMINENT AS OF NOW, THESE PLACES WERE LESS AFFECTED BY THE BUBBLE WHICH WAS THERE IN THE MARKET. SOME OF THESE CITIES HAVE REMAINED VERY STABLE AND HAVE NOT BEEN AFFECTED BY THE DOWNTURN. THAT’S WHY THESE CITIES ARE SHOWING A RELATIVELY HEALTHIER POSITION, SAID SAURABH MEHROTRA, NATIONAL DIRECTOR, KNIGHT FRANK, A PROPERTY CONSULTANT FIRM. CHEAPER LANDS HELPS DEVELOPERS IN SMALLER CITIES EXECUTE LOW COST PROJECTS AS THEY CAN REDUCE CAPITAL COST BY 25-30%. MEGA AFFORDABLE PROJECTS (LIKE THOSE COSTING BELOW RS 10 LAKH) HAVE COME UP IN SMALLER TOWNS. REASONABLE LAND PRICE ALONG WITH GOVERNMENTS SUBSIDIES HAVE HELPED LOCAL DEVELOPERS TO BUILD LOW COST HOUSING PROJECTS AT SUCH PLACES. HOWEVER DEVELOPERS SAYS GROWTH IN LAST 5 YEARS IN TIER-II CITIES IS ONLY A GREEN SHOT AS JOB MARKETS EXPAND BEYOND THE METROS BUT WOULD TAKE FEW MORE YEARS TO REACH SIMILAR DEMAND IN THE MAJOR CITIES LIKE MUMBAI AND NCR. MANY SMALLER CITIES IN INDIA ARE LIKELY TO SEE INCREMENTAL DEVELOPMENT BECAUSE OF THE KIND OF THRUST THAT THE GOVERNMENT IS GIVING ON CREATING SMART CITIES. BUT IT IS A LONG TERM STORY. HOWEVER, SOME OF THE SMALLER CITIES IN HE SOUTH LIKE MANGALORE AND KOCHI HAVE SEEN SIGNIFICANT CHANGES IN THE LAST FEW YEARS. MORE JOBS AND DEVELOPMENT WILL LEAD TO OFFTAKE OF RESIDENTIAL HOUSING IN THESE CITIES, SAID A SPOKESPERSON WITH PROPERTY DEVELOPER PURAVANKARA LTD. THE BENGALURU BASED DEVELOPER HAS ONGOING AFFORDABLE HOUSING PROJECTS UNDER BRAND PROVIDENT IN CITIES LIKE KOCHI, COIMBATORE AND MANGALORE.  

 

27 NOVEMBER, 2019

PHARMA:

THE DOMESTIC DRUG INDUSTRY AND TRADE HAVE AGREED TO THE GOVERNMENT’S PROPOSAL TO CAP TRADE MARGINS FOR ALL MEDICINES OUTSIDE PRICE CONTROL AT 30%, MOVE THAT WILL REDUCE THE PRICES OF NEARLY 80% OF FORMULATIONS. A CONSENSUS TO THIS EFFECT WAS REACHED AT A MEETING HELD ON FRIDAY BETWEEN THE DRUG PRICING REGULATORY, PHARMA LOBBY GROUPS AND INDUSTRY ASSOCIATIONS, SAID PEOPLE PRESENT AT THE MEETING. THE 30% CAP ON TRADE MARGINS WAS PREFERRED OVER OTHER PROPOSAL SUCH AS IMPOSING A FLAT 100% TRADE MARGINS ON ALL MEDICINES, INCLUDING THOSE WITHIN PRICE CONTROL.WE ARE OK WITH RATIONALIZATION OF TRADE MARGINS. WHATEVER HAS BEEN TRIED OUT WITH CANCER DRUGS, FIXING TRADE MARGIN GAINS AT 30%, WE ARE FINE WITH IT. IF IT HAS TO BE EXTENDED TO OTHER PRODUCTS, IT SHOULD BE DONE IN PHASED MANNER, SAID DEEPNATH ROY CHOWDHURY, PRESIDENT, INDIAM DRUG MANUFACTURERS ASSOCIATION (IDMA). TWO PEOPLE AWARE OF THE MATTER SAID ALL INDIAN AND MULTINATIONAL PHARMA LOBBY GROUPS HAD AGREED TO THE 30% CAP. THE MARGIN IS EQUIVALENT TO 43% MARK UP FOR THE PRICE TO STOCKIST. THE MOVE IS LIKELY TO HIT BIG PHARMA COMPANIES WITH GENERIC DIVISIONS, SUCH AS SUN PHARMA, CIPLA AND LUPIN, AS THEY WILL HAVE TO REDUCE THE MAXIMUM RETAIL PRICE . SINCE THE MARGINS OF THE STOCKIST AND THE RETAILERS WILL BE SIGNIFICANTLY SQUEEZED, THE LOBBY GROUPS FOR THESE SEGMENTS MAY ASK MANUFACTURERS TO COMPENSATE THEM FOR THE LOSS. IN 2013, WHEN MANY NON-SCHEDULED DRUGS WERE BROUGHT UNDER PRICE CONTROL, STOCKIST AND RETAILERS HAD FORCED MANUFACTURERS TO CONTINUE TO PAY THEM A MINIMUM 30% MARGIN AGAINST 24% FOR PRICE CONTROLLED DRUGS. THE PROPOSAL MARGIN CAP WILL HAVE IMPACT ON A WIDE RANGE OF PHARMACEUTICALS, RANGING FROM VITAMIN D SUPPLEMENTS TO ANTIBIOTICS. NON SCHEDULED DRUGS, OR FORMULATIONS OUTSIDE PRICE CONTROL, ACCOUNT FOR RS 10,000 CRORE OF SALES IN THE RS 1 LAKH CRORE INDIAN DRUG MARKET. MANKIND PHARMA CHAIRMAN RC JUNEJA DESCRIBED THE PROPOSAL TO RESTRICT TRADE MARGINS AT 30% AS PRO CONSUMER, AND SAID THE MOVE HAD THE BACKING OF THE INDUSTRY. THE INDIAN PHARMACEUTICAL ALLIANCE, IDMA AND THE ORGANIZATION OF PHARMACEUTICAL PRODUCERS OF INDIA WERE SUPPORTIVE AND WILLING TO FOLLOW THE CANCER DRUG MODEL. THERE WERE COUPLE OF RESERVATIONS. THE ALL INDIA CHEMISTS AND DRUGGISTS ASSOCIATION SOUGHT HIGHER MARGINS OF 12.5% FOR STOCKIST AND 25% FOR RETAILERS. SOME ANALYSTS ARE NOT IMPRESSED. PHILLIPS CAPITAL ANALYST SURYA PATRA SAID MEDICINES NOT UNDER PRICE CONTROL ALREADY HAVE 30% CAP ON TRADE MARGIN (20% FOR RETAILERS 10% FOR WHOLESALERS) AND THEREFORE THERE WILL NOT BE ANY SIGNIFICANT REDUCTION IN PRICES. TRADE MARGIN IS THE DIFFERENCE BETWEEN THE PRICE AT WHICH MANUFACTURERS/ IMPORTERS SELL TO STOCKIST AND THE PRICE CHARGED TO CONSUMER CURRENTLY, THE NATIONAL PHARMACEUTICAL PRICING AUTHORITY FIXES PRICES OF SCHEDULED DRUGS. THE PRICE OF NON SCHEDULED DRUGS CAN BE RAISED BY UP TO 10% A YEAR. THE NON SCHEDULED DRUGS, THE INDUSTRY NORMS HAS BEEN TO GIVE 10% MARGIN TO STOCKISTS AND 20% TO RETAILERS. HOWEVER, THERE HAVE BEEN ALLEGATIONS THAT ACTUAL MARGINS ARE FAR HIGHER. BY MAKING TRADE MARGINS EXPLICIT, THERE WILL BE LESS SCOPE FOR EXPLOITATION BY LARGE INSTITUTIONS, SAID ONE OF THE PERSONS CITED ABOVE. MARGINS WILL GO DOWN FOR TRADE MAKING DRUGS CHEAPER. ACCORDING TO DATA AVAILABLE WITH THE HEALTH MINISTER, 70% OF INDIA’S TOTAL HEALTHCARE SPENDING GOES TOWARDS MEDICINES. DATA AVAILABLE WITH THE DEPARTMENT OF PHARMACEUTICAL SHOWS THERE ARE 10,600 NON SCHEDULED DRUGS. SOME INDUSTRY EXPERTS PRESENT AT THE FRIDAY MEETING ALSO EXPRESSED CONCERN OVER DISTRIBUTION AND AVAILABILITY OF GENERIC DRUGS AND TRADED BUSINESS. THEY SAID THESE DRUGS SUPPLIED TO VILLAGES AND SMALL TOWNS, WHERE TRADE CANNOT RETURN EXPIRED OR DAMAGED PRODUCTS TO STOCKISTS OR MANUFACTURERS. A PROPOSAL TO EXEMPT LOWER PRICED MEDICINES THAT COST RS 2-5 PER UNIT FROM THE MARGIN CAP WAS ALSO DISCUSSED. BUT THIS WAS OPPOSED BY CONSUMER ACTIVISTS. WE SUPPORT THE CAPPING OF TRADE MARGINS ACROSS ALL NON SCHEDULED LESS THAN RS 5 PER UNIT SHOULD NOT BE EXCLUDED FROM THIS CAP. A LARGE POPULATION SUFFERS FROM CHRONIC DISEASES. MANY OF MEDICINES FOR MANAGING THESE CONDITIONS COULD FALL IN THIS CATEGORY. ENSURING AFFORDABLE ACCESS IS CRUCIAL WHERE PATIENT NEED MEDICINES CONTINUOUSLY, SAID MALINI AISOLA, CO-CONVENOR OF ALL INDIA DRUG ACTION NETWORK, A GROUPING OF SEVERAL NON GOVERNMENT ORGANIZATIONS. THE PROPOSAL FOR CAPPING TRADE MARGIN HAS ALREADY BEEN DISCUSSED WITH THE PRIME MINISTER’S OFFICE, NITI AAYOG AND THE DEPARTMENT OF PHARMACEUTICALS. 

 

27 NOVEMBER, 2019

AUTOMOBILE:

THE GOVERNMENT IS LOOKING TO TIGHTEN THE CORPORATE AVERAGE FUEL ECONOMY (CAFE) NORMS, IN A BID TO PUSH AUTOMAKERS TO INCREMENTALLY INCREASE PRODUCTION OF ELECTRIC VEHICLES BY 2-3% EVERY YEAR. THIS IS MORE GRADUAL EFFORT AFTER ITS EFFORT TO MAKE VEHICLE MANUFACTURERS REDUCE THE NUMBER OF VEHICLES POWERED BY INTERNAL COMBUSTION ENGINES THROUGH LIMITS ON THEIR PRODUCTION FACED STIFF RESISTANCE FROM THE INDUSTRY. ELECTRIC MOBILITY WILL ONLY BE ADOPTED IF IT MAKES COMMERCIAL SENSE, BUT WE CAN DO OUR BIT TO STEER IT IN THAT DIRECTION, SAID A SENIOR GOVERNMENT OFFICIAL. CAFE IS THE AVERAGE FUEL EFFICIENCY OF ALL VEHICLES PRODUCED BY A MANUFACTURER IN A GIVEN PERIOD, TAKING INTO CONSIDERATION THE SALES VOLUME OF EACH MODEL. THE GOVERNMENT EXPECTS THAT A STRICT CAFE TARGET WILL PROVIDE INCENTIVES TO AUTO MAKERS TO PRODUCE AND SELL MORE EVs, TO IMPROVE THEIR AVERAGE FUEL EFFICIENCY. FROM THE MANUFACTURERS SIDE, IF WE TIGHTENED THE CAFE NORMS, THEY WILL BE FORCED TO PRODUCE 2-3% ELECTRIC, THE OFFICIAL , WHO IS IN THE KNOW OF THE MATTER SAID. SINCE SEVERAL AUTOMAKERS HAVE ALREADY ACHIEVED THEIR AVERAGE FUEL CONSUMPTION TARGET, THE OFFICIAL SAID THAT BY TIGHTENING THE NORMS, AUTO MAKERS WILL HAVE TO INDIRECTLY INVEST IN EVs RATHER THAN MAKE PRODUCTION OF EVs MANDATORY. THE GOVERNMENT HAS REDUCED ITS AGGRESSIVE INITIAL TARGET OF GETTING AGGREGATORS TO MAKE 40% OF THEIR FLEET ELECTRIC BY 2026, THE OFFICIAL SAID AGGREGATORS WILL BE ASKED TO PROCURE EVs AS PART OF THEIR NEW FLEET ADDITIONS, AND THIS COULD BE IN 2% INCREMENTS ANNUALLY. THIS IS THE VISION BUT WE UNDERSTAND THAT THE REALITY IS INDIA NEEDS MORE BUSES, BUT NOT NECESSARY ELECTRIC BUSES. STRINGENT CAFE NORMS HAVE BEEN ONE OF THE MOST EFFECTIVE WAYS TO PUSH ELECTRIFICATION GLOBALLY, WITH GREAT SUCCESS IN PLACES SUCH AS CALIFORNIA, WHICH HAS AMONG THE HIGHEST DENSITY OF ELECTRIC VEHICLES GLOBALLY. EXPERTS SAID INDIA HAD A REAL CHANCE TO LEARN FROM THE REST OF THE WORLD ABOUT WHAT WORKS AND WHAT DOES NOT IN PROMOTING EVs. INDIA SEEMS TO BE TAKING LESSONS FROM THE REST OF THE WORLD. WE ARE BEGINNING TO SEE THAT ELECTRIFICATION HAPPENED THE MOST WHERE CAFE HAS BEEN THE MOST RIGOROUS. THE ONLY REASON WHY AUTOMAKERS WILL MAKE THE URGENT ELECTRIC PUSH IS IF THERE’S A PENALTY OR A PUNITIVE COST, OTHERWISE THEY WOULD MUCH PREFER TO MAINTAIN STATUS QUO. THE GOVERNMENT HAD EARLIER MOOTED THE IDEA OF BANNING ALL THREE WHEELERS WITH COMBUSTION ENGINES BY 2023 AND TWO WHEELERS WITH ENGINE CAPACITY LESS THAN 150 CC BY 2025. IT LATER CANCELLED THE PLAN AFTER LOBBYING FROM THE AUTOMOBILE INDUSTRY.

 

20 NOVEMBER, 2019

STEEL:

TOP STEEL PRODUCERS, INCLUDING TATA STEEL LTD, JSW STEEL LTD AND JINDA STEEL AND POWER LTD, HAVE CUT CAPITAL EXPENDITURE PLANS, ANTICIPATING WEAK DEMAND FOLLOWING A DEPRESSING SECOND QUARTER, CONSERVING CASH FOR THE LONG HAUL. TATA STEEL, INDIA’S LARGEST PRIVATE STEEL MAKER, REPORTED CONSOLIDATED NET PROFIT OF Rs 3,302 CRORE IN THE SECOND QUARTER, THANKS SOLELY TO A ONE TIME FAVOURABLE TAX IMPACT OF Rs 4,233 CRORE. JSW STEEL, SECOND LARGEST, ALSO BENEFITED FROM ONE TIME DEFERRED TAX PROVISION WRITE BACK OF Rs 1,976 CRORE IN THE QUARTER. PROFIT BEFORE TAX, FOR ITS PART, WAS Rs 688 CRORE FOR THE QUARTER, FALLING 77.2% FROM A YEAR EARLIER. TATA STEEL, ON THE OTHER HAND, REPORTED A PRE-TAX LOSS. JSPL POSTED A CONSOLIDATED LOSS OF Rs 399.31 CRORE FOR THE QUARTER, AGAINST A CONSOLIDATED NET PROFIT OF Rs 279.17 CRORE A YEAR AGO. ANY OPTIMISM AROUND MARGIN EXPANSION IN INDIAN OPERATION APPEARS OVERDONE, WHILE EUROPEAN MARGINS WILL STILL STAY UNDER PRESSURE. SO THE NET DEBT LEVELS OF TATA STEEL WILL STAY ELEVATED. PROFITABILITY PLUNGED AS STEEL PRICES FELL. FOR TATA STEEL INDIA, EBITDA/ TONNE OF STEEL FELL TO Rs 9,238 CRORE FROM Rs 16,368 CRORE IN THE YEAR AGO QUARTER, WHILE ON CONSOLIDATED BASIS, IT CRASHED FROM Rs 12,713 CRORE TO Rs 6,156 CRORE. FOR JSPL, STEEL SALES WERE DOWN 7% FROM THE PRECEDING QUARTER, WHILE OPERATING PROFIT PER TONNE FELL BY Rs 1,800 TO Rs 9,437 PER TONNE. FOR JSW, THE CORRESPONDING FIGURE WAS Rs7,768 DOWN FROM Rs 12,118 PER TONNE FROM THE LAST QUARTER. OVER LAST FOUR QUARTERS, OPERATING MARGIN OF THE DOMESTIC STEEL INDUSTRY HAVE BEEN SLIPPING, NARROWING STEADILY FROM 22.6% IN Q1FY19 TO 18.2% IN Q1FY20, AND PRODUCTION DROPPED STEADILY TO MATCH THIS. SLUGGISH DOMESTIC DEMAND FROM END USER SEGMENTS, INCLUDING AUTO, CONSUMER DURABLE, CAPITAL GOODS, CONSTRUCTION AND REALTY SECTOR HAS LED TO SLOWDOWN IN CONSUMPTION GROWTH. SMALLER STEEL MILLS HAVE UNDERTAKEN MAINTENANCE SHUT DOWN RANGING FROM ONE WEEK TO A FEW WEEKS THROUGH THE SECOND QUARTER. R.K GOYAL, MANAGING DIRECTOR OF KALYANI STEEL, WHICH MAKES AUTO GRADE STEEL, SAID, “THERE ARE NO BUYERS IN THE MARKET TODAY. IT IS NOT IRON ORE PROBLEMS FOR US, BUT SALES ARE NOT HAPPENING. WE HAVE CUT PRODUCTION BY 25-40% IN THE LAST 15 DAYS. JSW HAS CUT CAPEX FOR 2019-20 FROM Rs 15,708 CRORE TO Rs 11,000 CRORE WHILE ALSO TRIMING ITS SALES FORECAST FROM 16.95 MILLION TONNES FOR THE YEAR TO 16 MT. “WE FEEL THAT WILL BE ABLE TO MEET 97% OF THE GUIDANCE” SAID M.V.S SESHAGIRI RAO, JOINT MANAGING DIRECTOR OF JSW STEEL. JSW STEEL SAID ” EVEN IF WE PERFORM IN THE SECOND HALF OF THIS FISCAL AS WELL AS WE DID LAST YEAR, WE WILL NOT BE ABLE TO MAKE UP FOR THE LOSSES INCURRED IN THE FIRST HALF”. TATA STEEL HAS SET ITS FY20 CAPEX AT Rs 8,300 CRORE. IN THE SECOND QUARTER, THE FIRM SPENT Rs 2,325 CRORE AND Rs 4,895 CRORE SO FAR THIS FISCAL. HOWEVER, IT MIGHT CONSIDER SCALING BACK IF SENTIMENT DOES NOT IMPROVE . ” WE ARE FOCUSING ON UNLOCKING VALUE FROM OUR CAPITAL EXPENDITURE PLANS AND ON INCREASING VOLUMES.” KOUSHIK CHATTERJEE CFO OF TATA STEEL SAID. THIS IS THE SECOND TIME THIS FISCAL THAT TATA STEEL HAS CUT ITS CAPEX GUIDANCE, WHICH HAD STOOD AT Rs 11,000 CRORE AT THE START OF THE YEAR. 

 

18 NOVEMBER, 2019

INFRASTRUCTURE:

LEADING COMMERCIAL PROPERTY DEVELOPERS SUCH AS DLF LTD, PRESTIGE GROUP, EMBASSY GROUP, RMZ CORP, K.RAHEJA CORP. ARE LOOKING TO RAISE FUNDS TO EXPAND THEIR PORTFOLIO, PARE DEBT AND MONETIZE THEIR ASSETS AT TIME OF HIGH INSTITUTIONAL INVESTOR INTEREST IN OFFICE PROJECT. THE COMPANIES ARE LOOKING TO RAISE EQUITY AS WELL AS DEBT, EITHER THROUGH PRIVATE EQUITY FIRMS AND GLOBAL INVESTORS, OR THROUGH A REAL ESTATE INVESTMENT TRUST.  DLF, INDIA’S LARGEST REAL ESTATE FIRM, IS LOOKING TO RAISE CAPITAL FROM PE FUNDS FOR A FEW PLANNED COMMERCIAL PROJECTS. HAVING SIGNIFICANTLY REDUCED ITS DEBT BY SELLING PROMOTER’S STAKE IN RENTAL ARM TO GIC PTE LTD, DLF HAS LAND PARCELS WHERE IT INTENDS TO DEVELOP OFFICE PROJECTS. BENGALURU BASED PRESTIGE GROUP HAS A THREE PRONGED STRATEGY TO MONETIZE ITS COMMERCIAL REAL PORTFOLIO, WHICH INCLUDES STRATA SALES IN SELECTIVE UNDER CONSTRUCTION OFFICE PROJECTS TO RETAIL INVESTORS, BRINGING IN A STRATEGIC INVESTOR FOR A PORTFOLIO OF ITS UNDER CONSTRUCTION PROJECTS AND FINALLY, DECIDING IF REIT IS THE IDEAL ROUTE FOR ITS MATURE, YIELDING ASSETS. ITS OFFICE PORTFOLIO IS EXPANDING AND HAVE AROUND 12 MILLION SQ FT OF OFFICE SPACE UNDER CONSTRUCTION AND A SIMILAR AMOUNT IN PLANNING STAGE. THESE ARE SPREAD ACROSS NOT JUST THE SOUTH BUT ALSO PUNE AND NCR. THIS YEAR HAS BEEN CRUCIAL FOR THE COMMERCIAL REAL ESTATE SECTOR, PARTICULARLY OFFICE, WITH LARGE INVESTMENTS, INCREASE IN RENTALS, ROBUST DEMAND FOR SPACE AND THE LAUNCH OF THE COUNTRY’S FIRST REIT BY EMBASSY OFFICE PARKS. OFFICE SPACE DEALS IN THE FIRST NINE MONTHS TOUCHES 47 MILLION SQ FT, UP 30% FROM A YEAR AGO, AND MAY TOUCH WITH AN ALL TIME HIGH OF 60 MILLION SQ FT BY 31 DECEMBER. MOST OFFICE DEVELOPERS ARE INVESTING TO BOLSTER THEIR PORTFOLIOS AND ARE ALSO LOOKING TO MONETIZE THEIR HOLDINGS TO EXTRACT THE MAXIMUM VALUE. EMBASSY GROUP, WHICH ALONG WITH BLACKSTONE GROUP, LAUNCHED A REIT EARLIER THIS YEAR, IS NOW LOOKING TO DIVEST SOME OF ITS OWN ASSETS TO REDUCE DEBT AND CREATE CASH REVENUES. EMBASSY LAST WEEK EXTENDED A RIGHT OF FIRST OFFER INVITATION TO THE REIT TO BUY ABOUT 8.7 MILLION SQ FT OF SPACE IN EMBASSY TECH VILLAGE IN BENGALURU, THAT COULD BE VALUED AT AROUND RS 6,000 CRORE. BLACKSTONE HAS INVESTED $1.6 BILLION IN COMMERCIAL REALTY IN INDIA FROM JANUARY TO SEPTEMBER. ON THE REIT FRONT, MUMBAI BASED K RAHEJA CORP, WHICH HAS OFFICE PARKS IN WEST AND SOUTH INDIA, IS GEARING UP TO LAUNCH ITS REIT EARLY NEXT YEAR. THERE IS STRONG INVESTOR INTEREST TO DEPLOY EQUITY IN NOT JUST OFFICE ASSETS BUT ALSO RENT GENERATING ASSETS IN RETAIL AND WAREHOUSING. THIS, EVEN THOUGH THERE IS A DEARTH OF EQUITY PROVIDERS FOR RESIDENTIAL PROJECTS. RENTAL AND OCCUPANCY RATES ARE GOING UP, THE REIT WAS SUCCESSFUL, THERE ARE NO DEFAULTS AND ALL THE BIG OFFICE DEVELOPERS ARE DOING WELL, LEADING TO INVESTMENTS HAPPENING AT MARGINALLY SHARPER RATES. DEAL SIZE ARE GETTING BIGGER. WITH EVERY TRANSACTION, A NEW RECORD IS BEING CREATED. BENGALURU BASED DEVELOPER RMZ CORP IS LOOKING TO RAISE INSTITUTIONAL CAPITAL, BOTH EQUITY AND DEBT, FOR ITS CHENNAI, BENGALURU AND MUMBAI PROJECTS. HIRANJAN HIRANANDANI, CO-FOUNDER AND MANAGING DIRECTOR OF HIRANANDANI GROUP BELIEVES THAT IT’S A GOOD TIME TO HOLD ON TO MATURE RENTAL ASSETS, IF THERE IS NO URGENCY. VALUES (OF OFFICE ASSETS) CAN ONLY GO UP.  WE ARE NOT LOOKING TO MONETIZE RIGHT NOW, BUT WE WILL LOOK AT IT WHEN WE CAN USE THE LIQUIDITY TO GO THE NEXT LEVEL, HE SAID. 

 

12 NOVEMBER, 2019

IT:

IT SPENDING IN INDIA IS PEGGED TO GROW AT 6.6% TO REACH US$ 94 BILLION IN 2020 FROM US$ 88.5 BILLION IN 2019, WITH PURCHASE OF CONSUMER DEVICES PLAYING A BIG ROLE. SOFTWARE AND IT SERVICES ARE EXPECTED TO LEAD THE SPEND, GROWING AT 15.2% AND 13.4% RESPECTIVELY, IN 2020, FOLLOWED BY DEVICES (6.3%), DATA CENTRE SYSTEM (2.5%) AND COMMUNICATIONS SERVICES (2%). THE UPTICK IN IT SPENDING IS EXPECTED TO AID LARGE COMPANIES LIKE ACCENTURE, IBM AND HPE. INDIAN IT SERVICES COMPANIES LIKE TCS LTD, WIPRO LTD AND TECH MAHINDRA LTD, WHICH HAVE A RELATIVELY STRONG DOMESTIC FOCUS, ARE ALSO EXPECTED TO BENEFIT. FOR TCS, INDIA ACCOUNTED FOR 5.7% OF REVENUE FOR THE SECOND QUARTER ENDED SEPTEMBER. WHILE WIPRO AND TECH MAHINDRA DON’T SHARE REVENUE SPECIFICALLY FROM INDIA, THE REST OF THE WORLD ( EXCLUDING NORTH AMERICA AND EUROPE) CONTRIBUTED 16.9% AND 24.9% TO THEIR TOP LINE IN SEPTEMBER QUARTER. 2020 WILL BE REBOUND YEAR FOR INDIA’S IT SPENDING AS CONSUMERS RETURN TO PURCHASING MOBILE PHONES AFTER SITTING ON THE SIDELINES IN 2019. ADDITIONAL BUSINESS SPENDING ON IT GREW 6% IN 2019 AND IS EXPECTED TO INCREASE 9% IN 2020, HELPING TO DRIVE GROWTH ACROSS ALL SEGMENTS. STRONG GROWTH IN TOTAL SOFTWARE SPENDING WILL BE DRIVEN BY ENTERPRISE APPLICATION SOFTWARE, WHICH IS FORECAST TO GROW 17% IN 2020. THE EXPECTED INCREASE IN OVERALL BUSINESS SPENDING WILL HELP DRIVE 16% GROWTH IN ENTERPRISE MOBILE PHONE SPENDING IN 2020, PUSHING GROWTH IN THE DEVICE SEGMENT TO 6.3%. CORPORATE SPENDING IN SOFTWARE AND SERVICES SAW AN UPTICK AFTER THE GOVERNMENT INTRODUCED CORPORATE TAX CUTS, ALONG WITH POLICES AIMED AT REVIVING THE ECONOMY AND BOOSTING CONSUMER SPENDING IN MID 2019. IN THE NEXT 2-3 YEARS, IT SPENDING WILL INCREASE AS THE ECONOMY BENEFITS FROM THE GST IMPLEMENTED BY THE INDIAN GOVERNMENT IN 2017, AND AS POLICIES SUPPORTING CONSUMER SPENDING COME INTO PRACTICE.  

 

4 NOVEMBER, 2019

HOTEL INDUSTRIES:

IN SPITE ON RECENT RALLY IN INDIAN EQUITY INDICES, SHARES OF HOTEL COMPANIES HAVE HARDLY SHOWN PROMISE. IN OCTOBER, SHARES OF LEADING HOTEL CHAINS, SUCH AS INDIAN HOTELS CO LTD, EIH LTD, TAJ GVK HOTELS LTD AND HOTEL LEELA VENTURES LTD, HAVE FALLEN BY 8-10% WITH A FEW EXCEPTIONS LIKE CHALET HOTELS LTD AND LEMON TREES HOTELS LTD. HOWEVER, THE FUNDAMENTALS ARE TURNING FAVOURABLE NOW. GOVERNMENT REFORMS AND STRUCTURAL CHANGES ARE SET TO IMPROVE THE DEMAND-SUPPLY EQUATION FOR HOTELS. THIS IS SURE TO TRANSLATE INTO A SUSTAINED RAMP UP IN ROOM REVENUE, WHICH HAS BEEN LANGUISHING SINCE 2008. WITH LOW SUPPLY OF ROOMS AND IMPROVEMENT IN DEMAND, ANALYSTS SAID THE OCCUPANCY RATE (ORs) WILL ONLY NUDGE HIGHER FROM THE CURRENT LEVELS. IN ITS DETAILED REPORT ON THE HOTEL SECTOR, ICICI DIRECT RESEARCH PROJECTED AVERAGE OR’s TO INCREASE FROM 67.5% IN FY19 TO 73% BY FY 23. THIS IS GOOD NEWS GIVEN THAT HOTEL OR’s HAVE BEEN STICKY AT 65-67% OVER THE LAST THREE TO FOUR YEARS, BARRING A FEW SPURTS DURING THE HOLIDAY SEASONS. THE TURNING POINT, AFTER NEARLY A DECADE OF SLOWDOWN, WHAT WITH POOR OCCUPANCY, WEAK REVENUE AND HIGH INDEBTEDNESS, IS THE DIP IN SUPPLY OF NEW ROOMS. ANALYST’S CONSENSUS IS THAT SUPPLY WILL GROW 5% OVER THE NEXT 3 TO 5 YEARS, COMPARED TO A DEMAND EXPANSIONS OF 6-7%. RECALL THAT THE SECTOR HAD TRIPPED ON ITS OWN OVERESTIMATION WHEN IT HAD ADDED ROOMS AT A COMPOUNDED ANNUAL GROWTH RATE OF 9% BETWEEN FY10 AND FY19. THE DEMAND OUTLOOK FOR HOTELS HAS BRIGHTENED DUE TO SEVERAL GOVERNMENT INITIATIVES. ANALYSTS RECKONED THAT THE DRASTIC CUT IN E-VISA FEES AND GOODS AND SERVICE TAXES (FROM 28% TO 18% FOR TARIFF ABOVE RS7500/ROOM, AND FROM 18% TO 12% FOR TARIFF BELOW RS7500/ROOM) ARE LIKELY TO MAKE INDIA MORE COMPARED TO ITS SOUTH-EAST ASIAN PEERS. THIS SHOULD SPUR TOURIST ARRIVALS, WHICH GREW AT A MEAGRE 2.1% FROM THE YEAR AGO PERIOD COMPARED TO 5.7% Y-O-Y GROWTH IN 2018. INDUSTRY EXPERTS AND ANALYSTS WERE HOPEFUL THAT THE FORTHCOMING TOURIST SEASON (DECEMBER-FEBRUARY) WILL SEE REVIVAL IN HOTEL REVENUE. A CARE RATINGS REPORTS ESTIMATES 3.5-4.5% PER ANNUM GROWTH IN AVERAGE ROOM RATES. ACCORDINGLY, THE HOTEL INDUSTRY IS EXPECTED TO SEE AN INCREASE IN ROOM REVENUE AT THE RATE OF 10-12% CAGR OVER THE NEXT THREE YEARS.

 

1 NOVEMBER, 2019

SUGAR:

INDIA’S 2019-2020 SUGAR PRODUCTION SHOULD FALL TO 26.9 MILLION TONNES, 1.3 MILLION TONES BELOW AN AUGUST PROJECTION, DUE TO UNFAVOURABLE WEATHER CONDITIONS. IN MAHARASHTRA AND KARNATAKA , THE CANE AREA HAS DECLINED DUE TO EXTREME WHETHER, THUS ADVERSELY IMPACTING THE SUGAR PRODUCTION. THE EXPECTED DECLINE IN THE SUGAR PRODUCTION FOR FY 2020 ALONG WITH THE ANNOUNCEMENT ON CREATION OF 4MT OF SUGAR BUFFER STOCK AND SUBSIDY ON 6MT SUGAR EXPORTS HAS RESULTED IN A RECENT INCREASE IN SUGAR PRICES TO RS 34-34.5/KG (EX-MILL UP). OTHER RECENT GOVERNMENT SUPPORT MEASURES ARE LIKELY TO RESULT IN THE IMPROVEMENT IN LIQUIDITY OF THE SUGAR MILLS, THUS SUPPORTING THE CANE PAYMENTS TO FARMERS TO AN EXTENT. THE FINANCIAL PERFORMANCE OF MOST SUGAR MILLS IN Q1FY2020 SAW AN IMPROVEMENT IN THE REVENUES AND PROFITABILITY DUE TO RELATIVELY BETTER PERFORMANCE OF THE SUGAR AND DISTILLERY DIVISION ON A YoY BASIS.

KEY PLAYERS:  BALRAMPUR CHINI, DHAMPUR, AVADH SUGAR & ENERGY , ETC.

 

25 OCTOBER, 2019

PHARMA:

BIOCON LTD PLANS TO SELL INSULIN IN LOW AND MIDDLENCOME COUNTRIES AT A FRACTION OF THE CURRENT PRICES TO ACHIEVE THE $1 BILLION ANNUAL SALES TARGET FOR ITS BIOLOGICS BUSINESS BY 2021-2022. TO ACHIEVE THE SALES TARGET, THE BIOLOGICS SUBSIDIARY OF BIOCON IS ALSO COUNTING ON THE UPCOMING LAUNCH OF ANTI-BREAST CANCEL BIOSIMILAR TRASTUZUMAB IN THE US BY DECEMBER, AS WELL AS INSULIN GLARGINE NEXT YEAR. THE BENGALURU BASED COMPANY HAS 28 PRODUCTS IN THE PIPELINE, INCLUDING INSULIN ASPART AND ONCOLOGY BIOSIMILAR BEVACIZUMAB. BIOCON PLANS TO SUPPLY RECOMBINANT HUMAN INSULIN TO DIABETES PATIENTS IN THESE COUNTRIES AT LESS THAN 10 CENTS PER DAY, ROUGHLY ONE-THIRD OF THE CURRENT PRICES. WHILE BIOCON IS NOT BREAKING DOWN ITS TARGET BY MOLECULE, IT IS A SIGNIFICANT OPPORTUNITY FOR BIOCON BECAUSE OF THE HUGE VOLUMES COMPANY IS HAVING. BIOCON IS LOOKING AT AFRICAN COUNTRIES LIKE ETHIOPIA, IN  SOUTH-EAST ASIA LIKE VIETNAM AS WELL AS LATIN AMERICA, AND IT WILL BE VIA GOVERNMENT PROCUREMENT. THE COMPANY IS ALSO LOOKING AT INDIA AS AN OPPORTUNITY TO PROVIDE CHEAPER RECOMBINANT HUMAN INSULIN, ESPECIALLY CONSIDERING THAT THE COUNTRY HAS BEEN DUBBED THE DIABETES CAPITAL OF THE WORLD. AT 10 CENTS PER DAY, OR ROUGHLY RS 7, THE PRICE WOULD BE LESS THAN ONE-THIRD OF THE 36 CENTS, WHICH IS THE MEDIAN COST FOR DAILY DOSAGE IN LOW AND MIDDLE INCOME COUNTRIES. IT IS AN OFFER THAT IS DIRECTED TOWARDS COMPANY GOVERNMENT PURCHASES, WHICH ALSO CIRCUMVENTS ALL THE MIDDLEMEN AND ALL THE SUPPLY CHAINS IN BETWEEN. AS COMPANY MAKING THIS OFFER TO GOVERNMENTS, THIS IS ALSO ABOUT VOLUMES AND ECONOMIES OF SCALE, WHICH IN THE END MAKE IT PROFITABLE.

 

23 OCTOBER, 2019

BATTERY, AUTOMOBILE:

BATTERY MAKERS FACE A DOUBLE WHAMMY FALLING SALES AND A 30% RISE IN LEAD PRICES IN THE PAST THREE MONTHS. THIS POSE RISKS TO THE COMPANIES PROFITABILITY. THE CONCERN IS EVIDENT FROM THE 7% FALL IN SHARES OF EXIDE INDUSTRIES LTD AND AMARA RAJA BATTERIES LTD SINCE OCTOBER 1. THOUGH THE SALES HAVE DECLINED STEADILY OVER THE PAST 12 MONTHS, STABLE DEMAND FROM THE REPLACEMENT MARKET AND LOWER Y-O-Y LEAD PRICES, TILL RECENTLY, MANAGED TO OFFSET THE IMPACT OF FALLING DEMAND. DEMAND FROM REPLACEMENT MARKET WAS LARGELY STABLE ON THE BACK OF ROBUST AUTO SALES BETWEEN FY16 AND FY18. AUTO BATTERIES, WHICH ACCOUNT FOR OVER HALF THE SALES OF BOTH THE LISTED COMPANIES, ARE TYPICALLY REPLACED IN THREE- FOUR YEARS.  AND LEAD PRICES HAVE BEEN CASCADING SINCE THE MIDDLE OF 2018, GIVING A LEG UP TO BATTERY MAKERS PROFIT. LEAD PRICES COMPRISE 50-60% OF THE COST OF MAKING A LEAD-ACID BATTERY. THAT’S HOW BOTH EXIDE INDUSTRIES AND AMARA RAJA BATTERIES CLOCKED AN INCREASE IN EBITDA. BUT THINGS HAVE NOW TAKEN A TURN FOR THE WORSE, AND SUDDENLY. THE 30% SPURT IN LEAD PRICES SINCE END MAY HAS SUPRISED ANALYSTS. ALSO, THE SURGE COMES AS A TIME WHEN AUTO ORIGINAL EQUIPMENT SALES ARE YET TO PICK UP AND, HENCE, BUSINESS FOR BATTERY MAKERS IS YET TO IMPROVE . WHILE MAXIMUM IMPACT OF THE RISE IN LEAD PRICES WILL BE FELT IN Q3, IT WOULD DAMPEN PROFITABILITY EVEN IN Q2. EBITDA MARGIN FOR THE QUARTER IS LIKELY TO BE FLAT ON AN ANNUAL BASIS. THE 50-60 DAY INVENTORY ACROSS AUTO SEGMENTS- PASSENGER VECHILES, TWO WHEELERS AND COMMERCIAL VEHICLES HAS DIMMED HOPE OF BETTER OFFTAKE EVEN IN THE SECOND HALF. FURTHER IF VEHICLES SALES CONTINUE TO FALL, IT WOULD HAVE AN ADVERSE IMPACT ON REPLACEMENT MARKET SALES AS WELL. BATTERY FIRMS HAVE HAD IT THOUGH SO FAR THIS FISCAL YEAR, WITH NOTHING TO WRITE HOME ABOUT EVEN IN HOME INVERTER AND TELECOM BATTERY SALES. AND, IF ALL THIS IS NOT ENOUGH FOR INVESTORS TO TREAD WITH CAUTION, BOTH EXIDE INDUSTRIES AND AMARA RAJA BATTERIES ALSO FACE THE CHALLENGE OF TRANSITIONING TO LITHIUM-ION BATTERIES OVER THE NEXT FEW YEARS. THE PARADIGM SHIFT IN TECHNOLOGY COULD KEEP VALUATIONS SUPPRESSED, WITH THE 16-18 TIMES PRICE TO EARNINGS RATIO FOR THE ESTIMATED FY21 EARNINGS LOOKING STEEP, GIVEN THE RISK TO GROWTH AND PROFITABILITY IN THE NEAR TERM.

 

23 OCTOBER, 2019

SUGARCANE, ETHANOL:

TO ENHANCE THE SUGARCANE VALUE CHAIN IN UTTAR PRADESH, GOVERNMENT CONTROLLED DISTILLERIES IN THE STATE HAVE LINED UP INVESTMENT OF ABOUT RS 160 CRORE TO CREATE FRESH ETHANOL PRODUCTION CAPACITY OF 53 MILLION LITRES. THE ETHANOL WOULD BE SUPPLIED TO THE PUBLIC SECTOR OF OIL MARKETING COMPANIES (OMC) UNDER THE ETHANOL BLENDING PROGRAMME FOR DOPING PETROLEUM PRODUCTS. THE SCHEME WAS MANDATED BY THE CENTRAL GOVERNMENT IN ORDER TO GRADUALLY ADOPT GREENER FUELS AND TO PARE THE MASSIVE OIL IMPORT BILL. UP COOPERATIVE SUGAR MILL FEDERATION LIMITED IS INVESTING TO SET UP ZERO LIQUID DISCHARGE TECHNOLOGY AT ITS SIX EXISTING DISTILLERIES. THE CIVIL WORK IS NEARING COMPLETION EVEN AS THE 2019-20 CANE CRUSHING SEASON IS JUST 7-10 DAYS AWAY IN THE COUNTRY’S TOP SUGARCANE AND SUGAR PRODUCING STATE. BESIDES, TWO MODERN DISTILLERIES OWNED BY THE FEDERATION AT AZAMGARH AND BIJNORE DISTRICTS ARE EQUIPPED WITH ETHANOL AND RECTIFIED SPIRIT CAPACITY OF 18 MILLION LITRES AND 3 MILLION LITRES RESPECTIVELY. THUS, THE EIGHT DISTILLERIES OPERATED BY THE FEDERATION WILL HAVE AN OVERALL CAPACITY TO PRODUCE 53 MILLION LITRES AND 16.5 MILLION LITRES OF ETHANOL AND RECTIFIED SPIRIT, RESPECTIVELY, IN THE FORTHCOMING CRUSHING SEASON. IN THE ETHANOL PROCUREMENT PECKING ORDER, INDIAN OIL CORPORATION IS THE TOP BUYER WITH NEARLY 45% SHARE, FOLLOWED BY HINDUSTAN PETROLEUM AND BHARAT PETROLEUM. MAJOR STATES SUCH AS MAHARASHTRA, UP, UTTARAKHAND, PUNJAB, HARYANA AND KARNATAKA HAVE CLOCKED MORE THAN 8.5% ETHANOL BLENDING WITH MAHARASHTRA AND UP HAVING ACHIEVED 9% OR EVEN HIGHER RATIO OWING TO HIGH AVAILABILITY OF SUGARCANE. IN 2018, THE OMC’S REQUIREMENT OF ETHANOL FOR BLENDING WITH PETROL STOOD AT 3,136 MILLION LITRES AND FOR THE 2019 SEASON, THE SAME IS ESTIMATED AT 3,300 MILLION LITRES. THE OMC’S HAVE ALREADY FLOATED TENDERS EARLIER THIS YEAR, FOR THE PROCUREMENT OF 910 MILLION LITRES OF ETHANOL. MEANWHILE, THE FEDERATION HAS LIKELY TO EARN RS 250 CRORE A YEAR FROM THE SALE OF ETHANOL AND RECTIFIED SPIRIT, WHICH WOULD PROVIDE A CUSHION TO ITS CHAIN OF 24 SUGAR MILLS SETTLE FARMERS ARREARS PROMPTLY. AT THE SAME TIME, THE BIO-COMPOST WOULD BE SUPPLIED TO LOCAL FARMERS FOR ENRICHING SOIL WITHOUT USING CHEMICAL FERTILISERS AND CONTRIBUTING TOWARDS HIGHER RURAL INCOME GOAL. EARLIER, CHIEF MINISTER YOGI ADITYANATH HAD ALSO ASSURED THE CENTRE THAT THE STATE WOULD COOPERATE WITH THE CENTRE TO PROMOTE ETHANOL BLENDING TO SAVE FOREIGN EXCHANGE AND CUT OIL IMPORT BILL. ACCORDING TO, UP PRIVATE SUGAR MILLERS SUCH AS TRIVENI, DHAMPUR, BALRAMPUR AND DWARIKESH GROUPS HAVE PLANNED CAPITAL INVESTMENT WORTH RS 1,500 CRORE TO AUGMENT THEIR COMBINED ETHANOL PRODUCTION CAPACITY TO 1,200 KLPD (KILO LITRES PER DAY).

 

17 OCTOBER, 2019

AUTOMOBILE:

AUTOMOTIVE BATTERY MAKER EXIDE INDUSTRIES SAID IT IS FORAYING INTO MANUFACTURING OF E-RIKSHAWS. THE NEW VERTICAL IS LIKELY TO ADD NEARLY RS 120 CRORE TO THE COMPANY’S TOPLINE IN THE FIRST FULL YEAR OF OPERATION. THE COMPANY’S E-RIKSHAWS, BRANDED “EXIDE NEO” AND PRICED AT RS 1.2 LAKH EACH, WILL INITIALLY BE SOLD IN THE SELECT MARKETS INCLUDING WEST BENGAL, UTTAR PRADESH, THE NORTHEASTERN REGION AND THE NATIONAL CAPITAL REGION. IT WILL SUBSEQUENTLY BE INTRODUCE ACROSS THE COUNTRY IN A PHASED MANNER. EXIDE INDUSTRIES MANAGING DIRECTOR GAUTAM CHATTERJEE TOLD THAT THIS IS THE FIRST FORWARD INTEGRATION PROJECT THAT THE COMPANY HAS UNDERTAKEN IN THE RECENT TIMES. AN ASSEMBLY LINE WITH AN ANNUAL CAPACITY OF 15,000 UNITS HAS COME UP AT DANKUNI, WEST BENGAL. THE E-RIKSHAW SECTOR HAS SEEN PHENOMENAL GROWTH IN THE COUNTRY OVER THE PAST FEW YEARS. EXIDE INDUSTRIES HAVE BEEN AN INTEGRAL PART OF IT SINCE ITS INCEPTION THROUGH OUR OFFERINGS OF LEAD-ACID BATTERIES. EXIDE INDUSTRIES SEE A BIG OPPORTUNITY IN SECTOR.

 

26 SEPTEMBER, 2019

CHEMICAL:

RECENTLY, THE CHEMICAL INDUSTRY SAFETY AND ENVIRONMENT PROTECTION WORKING GROUP OF JIANGSU PROVINCE OF CHINA ISSUED A NOTICE ON THE GOAL OF IMPROVING THE SAFETY AND ENVIRONMENTAL PROTECTION OF THE CHEMICAL INDUSTRY IN THE PROVINCE IN  2019. IT IS MENTIONED THAT THERE ARE TOTAL OF 4022 CHEMICAL PRODUCTION ENTERPRISES INCLUDING IN THE RECTIFYING LIST. AND IT IS PLANNED TO CLOSE 1431 ENTERPRISES, SHUT DOWN AND RECTIFY 267, RECTIFY 1,302 IN LIMITED TIMELINE, RELOCATE 77 IN DIFFERENT PLACES AND UPGRADE 945. IN 2019, THE PROVINCE PLANS TO CLOSE AND CANCEL CHEMICAL POSITIONING OF 9 CHEMICAL PARKS. THIS WILL GIVE DIRECT BENEFITS TO INDIAN CHEMICAL INDUSTRY.            KEY PLAYERS:  AARTI INDUSTRIES LTD, ATUL LTD

 

26 SEPTEMBER, 2019

PHARMA:

THE GOVERNMENT OF INDIA IS CONSIDERING A PROPOSAL TO KEEP MEDICINES MADE FROM LOCALLY PRODUCED INGREDIENTS OUT OF PRICE CONTROL TO PROMOTE DOMESTIC MANUFACTURING AND REDUCE THE DEPENDENCE OF INDIAN COMPANIES ON IMPORTS. TWO SENIOR GOVERNMENT OFFICIAL SAID, WHAT THE GOVERNMENT IS CONSIDERING IS THAT IF AN INDIAN COMPANY MANUFACTURED API (ACTIVE PHARMACEUTICAL INGREDIENT), THEN THE DRUG WILL BE EXEMPTED FROM DPCO(DRUG PRICE CONTROL ORDER). HOWEVER DRUGS MADE FROM API’s THAT ARE IMPORTED WILL BE UNDER DPCO. API’s OR BULK DRUGS, ARE KEY RAW MATERIAL FROM WHICH MEDICINES ARE MADE. CURRENTLY INDIA IMPORTS A MAJORITY OF ITS API’s ESPECIALLY FROM CHINA. THE CENTRE IS EXAMINING WAYS TO TACKLE THE CHALLENGES LIKELY TO COME UP, INCLUDING HOW TO VERIFY CLAIMS ABOUT THE USE OF LOCALLY SOURCED API’s. IN 2018-2019, INDIAN PHARMACEUTICAL COMPANIES IMPORTED BULK DRUGS AND INTERMEDIATES WORTH $2.4 BILLION FROM CHINA, WHICH WAS ABOUT 68% OF TOTAL IMPORTS OF RAW MATERIAL. WHILE IMPLEMENTATION OF THE MOVE COULD BE CHALLENGE, IF SUCCESSFULLY IMPLEMENTED, IT WOULD BOOST DOMESTIC MANUFACTURING OF API. EXEMPTING FORMULATIONS MADE OF LOCAL BULK DRUGS FROM PRICE CONTROL, IF IMPLEMENTED, WILL INCENTIVIZE PHARMACEUTICAL COMPANIES TO INCREASE DOMESTIC PRODUCTION OF API’s AND WOULD REDUCE OUR DEPENDENCE ON CHINA. IT WOULD HELP ENHANCE DOMESTIC PRODUCTION AND INCREASE CAPACITY UTILIZATION, WHICH WOULD REDUCE COST.                                                                                                                                                            KEY PLAYERS: DIVIS LABORATORIES LTD, CIPLA  LTD, ETC…

 

CHEMICAL

11 JUNE, 2019

WHILE MOST INDIAN INDUSTRIES ARE FACING A SLOWDOWN, THE CHEMICAL INDUSTRY IS BUCKING THE TREND, POSTING STRONG GROWTH EVERY QUARTER. THE TOP 10 CHEMICAL COMPANIES HAVE REPORTED AN AVERAGE 48% GROWTH IN EARNINGS FOR MARCH QUARTER AND THIS TREND IS LIKELY TO CONTINUE. THEIR TOTAL REVENUES CROSSED OVER RS 35,000 CRORE IN FY19, A 28% JUMP. THE OVERALL INDUSTRY TO CONTINUE TO GROW IN DOUBLE DIGIT. REFLECTING THE TREND, SHARES OF INDIAN CHEMICAL COMPANIES INCLUDING AARTI INDUSTRIES, SRF, DEEPAK NITRITE, VINATI ORGANICS, ATUL HAVE HIT RECORD HIGH. RISING INDIAN CONSUMPTION, IMPORT SUBSTITUTION, AND RISING SHARE IN GLOBAL EXPORTS ARE THE THREE MAIN REASONS FOR SUCH GROWTH. INDIAN CONSUMPTION IS 20% OF GLOBAL AVERAGE, YET 45% OF THE DEMAND IS MET THROUGH IMPORTS WHICH STANDS AT $55 BILLION. WITH CHINA IMPLEMENTING STRING ENVIRONMENT NORMS, MANY CHINESE CAPACITIES ARE SHUTTING DOWN, WHICH IS BENEFITING LARGE ORGANISED INDIAN PLAYERS. LARGE GLOBAL CHEMICAL SOURCING CHAINS ARE FORCED TO LOOK AT INDIA AS AN ALTERNATIVE MARKET. VOLUMES HAVE RISEN, AND ALSO HAVE PRICES GLOBALLY. $430 BILLION OF CHEMICALS ARE EXPORTED, WITH EUROPE AND CHINA BEING MAJOR EXPORTERS, EACH HAVING NEARLY A 20% SHARE. INDIA’S SHARE IS STILL SMALL, HAVING RISEN TO 4.5% OVER PAST FIVE YEARS FROM 3.3%.

 

3 JUNE, 2019

FURNITURE AND NBFC’s

CUSTOMER ARE INCREASINGLY OPTING FOR EQUATED MONTHLY INSTALLMENT (EMI) OPTIONS WHILE SHOPPING FOR FURNITURE ONLINE, RESULTING RISE IN 5.8% RISE IN EMI PAYMENTS IN THE YEAR ENDED 31 MARCH 2019 FROM A YEAR EARLIER. AROUND 12-15% OF OVERALL TRANSACTION ACROSS ONLINE FURNITURE BRANDS SUCH AS PEPPER FRY, URBAN LADDER, AND REFURBISHED MARKET PLACE ZEFO ARE NOW PAID IN EMI’s . FURNITURE BRAND TIE UP DIRECTLY WITH NBFC’s, BANKS AND LENDERS FOR CREDIT SCORING, WHILE COLLECTION OF LOANS IS PROCESSED DIRECTLY BY THE LENDING PARTNER. EMI PURCHASES IN FISCAL YEAR 2019 ACCOUNTED FOR 19% OF SALES UP 3% COMPARED TO FY18 AND UP BY 8% OVER A TWO YEAR PERIOD. SUCH TYPES OF  EMI IN FURNITURE WILL HELP FURNITURE, NBFC’s AND BANK TO INCREASE THEIR SALE.

KEY  PLAYERS: SUNDARAM FINANCE, BAJAJ FINANCE, PRAXIS HOME RETAIL.