BQuick On July 31: Top 10 Stories In 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Who Doesn't Want Deepak Parekh
Nearly a quarter of HDFC Ltd.’s shareholders voted against a resolution which sought to extend the appointment of Deepak Parekh as a non-executive director of the corporation beyond October 2019.
- Two U.S. proxy advisories had asked investors to vote against Parekh.
- ISS cited Parekh being on the board of over six public companies as the reason.
- Glass, Lewis & Co felt that the board of HDFC is not “sufficiently independent”.
- BloombergQuint reviewed the advisories shared by the firms.
24.86 percent of the HDFC shareholders voted against the resolution. And though that was not enough for the resolution to fail, it is more than median voting patterns studied by Indian proxy advisory firm IiAS.
What we find is that the median for votes ‘against’ appointment of directors was about 8 percent in 2016. This year it is about 13 percent in the first six months. It is still nowhere close to the 24 percent number we have seen in this (HDFC Ltd.) case....So, no, it is not consistent with the data we have seen in other cases.Amit Tandon, Founder & MD, IiAS
Read more on Deepak Parekh’s waning popularity!
2. Mukesh Ambani's Rs 50,000 Crore JioGigaFiber Bet
Reliance Jio Infocomm Ltd. will spend about Rs 50,000 crore in the next six to eight quarters to build its broadband network as it looks to disrupt the cable television and direct-to-home market next.
- The ‘capital work-in-progress’ in Reliance Jio’s balance sheet is dedicated to the wireline business, according to Anshuman Thakur, head of strategy and planning at the telecom operator.
- The management—in a meet with analysts after earnings—had said the amount under that head stood at $7 billion (about Rs 50,000 crore) as of June end.
- Reliance Jio plans to offer the JioGigaFiber service in at least 1,100 cities and towns, and it will come with routers and set-top boxes for television.
- Ambani set an aggressive target of 50 million subscribers without giving a deadline, and India’s newest wireless carrier plans to stitch local partnerships to meet that.
Read more on the wireless carrier's plans
3. Indian Markets Cap Second-Best Monthly Gain Of 2018; U.S. Stocks Climb
Indian equity benchmarks clocked their best monthly gains since April, as companies continue to report strong earnings.
- S&P BSE Sensex Index rose 0.3 percent or 112 points to record high of 37,606.58.
- NSE Nifty 50 Index climbed 0.33 percent or 37 points to an all-time high of 11,356.50.
- Gains were led by Reliance Industries Ltd. as it surpassed Tata Consultancy Services Ltd. to become India's most valued company.
Follow the day’s trading action here.
U.S. stocks climbed on speculation trade tensions between the U.S. and China may ease amid efforts to restart talks. Most sovereign bond yields edged lower after the Bank of Japan pledged to keep its monetary policy ultra loose.
- Major benchmarks advanced after a report that U.S. and China will discuss averting a full-blown trade war.
- Tech shares staged a modest recovery after three days of losses.
Get your fix of global markets update here.
4. Earnings Update: Tata Motors, Vedanta
Tata Motors Ltd. reported a surprise loss, the worst in nearly nine years, as its luxury car unit Jaguar Land Rover continues to face headwinds.
- Net loss stood at Rs 1,902.4 crore compared to a profit of Rs 3,199 crore last year.
- Revenue rose 14.7 percent to Rs 67,081 crore.
- Margin contracted 40 basis points to 8.1 percent.
- Loss came amid a decline in deliveries of JLR's F-Pace and Discovery Sport SUVs.
Here’s what hit the automaker in the June quarter.
Vedanta Ltd.’s profit in the June-ended quarter missed even the lowest analyst expectations as it was hurt by lower zinc and iron ore output and the shutdown of a key copper smelter in South India.
- Net profit grew 2 percent year-on-year to Rs 1,533 crore.
- Revenue grew 21 percent to Rs 22,206 crore.
- Operating profit rose 28.4 percent to Rs 6,284 crore.
- Operating margin expanded 100 basis points to 28 percent.
- Other income fell 58 percent to Rs 418 crore.
Here’s why Vedanta had a turbulent quarter.
5. Modi’s Toilet Building Spree Is A Windfall For Some Companies
India is on the greatest toilet-building spree in human history, and it’s a windfall for companies. Prime Minister Narendra Modi’s $20 billion “Clean India” mission aims to construct 111 million latrines in five years.
- The national hygiene drive has spurred an 81 percent jump in sales of concrete building materials and 48 percent increase in bathroom and sanitaryware sales, according to Euromonitor International.
- Almost 80 million household toilets are estimated to have been built since Modi’s 2014 pledge.
- That means the market for toilet-related products and services is predicted to double to $62 billion by 2021.
Here's everything you need to know about Modi's mission, and the stakeholders it is benefiting.
6. Fiscal Deficit Widens, But Remains Lower Than Last Year
India’s fiscal deficit rose further in June inching closer to the government's budgetary estimate for financial year 2018-19. But it remained lower than what it was during the same period last year.
- Fiscal deficit rose to Rs 4.29 lakh crore at the end of June. That’s 68.7 percent of the targeted Rs 6.24 lakh crore in 2018-19.
- The gap is lower than what it was in June last year, at 80.8 percent of the FY18 target, as the government had front loaded expenditure to kickstart the investment cycle.
- The government’s total expenditure for April-June rose to Rs 7.07 lakh crore, or 29 percent of the full-year target.
- Revenue receipts stood at 15.5 percent of the target at Rs 2.67 lakh crore.
- Tax revenue stood at Rs 2.37 lakh crore, or 16 percent of the full-year target.
- Non-tax revenue hit 12.5 percent of the target at Rs 30,601 crore.
Get a detailed look at the government’s finances in June.
7. A Rate Hike Now, To Avoid More Later
Emerging market history is replete with the same lesson: the earlier central banks act, the less they eventually need to do, writes Sajjid Chinoy.
- If the MPC waits for food prices to go up before moving on rates, it may end up playing catch-up.
- Only if the RBI believes it has much work to do in this cycle, will a stance change be warranted.
- Strong growth, oil and food prices are likely to boost the MPC’s Jan-Mar 2019 inflation forecast above 5 percent.
Here’s why JPMorgan’s Chinoy is arguing for a rate hike tomorrow.
8. India Gets Its Third Unicorn In Two Months
Freshworks, a cloud-based business software firm, has become the third Indian unicorn in two months, according to people privy to its latest fundraise.
- It raised $100 million in the fresh round led by existing investors and venture capital firms Accel Partners and Sequoia Capital.
- The startup was formerly known as Freshdesk
- The new round values it at $1.5 billion
Read more on what Freshwork will use the capital for.
9. The Most Successful Venture Investment Ever
One IPO and three stock splits later, Jeff Bezos' parents’ stake in Amazon could be worth almost $30 billion today. That would make them wealthier than Microsoft Corp. co-founder Paul Allen, the 30th-richest person on the Bloomberg Billionaires Index.
The parents’ holdings haven’t been publicly disclosed since the end of 1999. While it’s unclear how much they still own, continuing donations of Amazon stock to their charitable foundation suggest they still control a healthy chunk of the world’s second-most valuable company.
- In 1995, Jackie and Mike Bezos plowed $245,573 into their son’s fledgling e-commerce website, according to a prospectus two years later.
- They’ve donated 595,027 shares to the Bezos Family Foundation from 2001 through 2016, according to filings available on GuideStar. The 25,000 shares they gifted in 2016 were worth about $20 million at the time.
Read more on the wealth estimate of Jeff Bezos’ family
10. A Global Guide To State-Sponsored Trolling
All over the world, governments are fashioning digital hate mobs to squelch dissent.
The Indian version of the trolling toolkit included strategies meant to inflame sectarian differences, malign the Muslim minority and portray Modi as savior of the Hindus, according to Mahaveer Prasad Khileri, who used to work in Bharatiya Janata Party’s IT Cell.
Supervisors would set themes for the day and specify targets to attack. Khileri and 300 other paid trolls would create memes or cut-and-paste Twitter posts that were sent to WhatsApp groups of tens of thousands of party loyalists. Their reposts sent hashtags viral in minutes.
Here’s a special feature on how regimes around the world have created increasingly aggressive online playbook.