BQuick On August 1: Top 10 Stories In Under 10 Minutes
Here is a roundup of the day’s top stories in brief.
1. Bharti Airtel’s Loss Masks Recovery
Bharti Airtel Ltd. reported its biggest loss since going public in 2002. But that masks the underlying recovery the telecom operator has made since it changed strategy to focus on fewer, better-paying users.
- Net loss stood at Rs 2,866 crore compared to a profit of Rs 107 crore in the March quarter.
- Higher loss was due to an exceptional cost of Rs 1,469 crore for network refarming and other provisions.
- Margin expanded more than 7 percentage points to 39.97 percent.
- Average revenue per user rose for a third quarter to Rs 129.
Here’s how Airtel’s India business improved.
2. No End To Auto Sales Slowdown
Car and two-wheeler sales declined again in seasonally weak July with all automakers reporting a fall in monthly sales.
- Bajaj Auto Ltd.’s sales declined 5 percent year-on-year, the first decline in two years.
- Maruti Suzuki India Ltd.’s sales slumped 33.5 percent, the steepest fall in seven years.
- Ashok Leyland’s sales fell 28 percent year-on-year.
Follow the monthly auto sales here.
3. $200 Billion Wiped Out...In Less Than A Month
Indian equities have wiped off $200 billion after the Modi government’s July 5 budget increased taxes and offered little stimulus to revive sagging growth.
- The negative sentiment eroded investor wealth—represented by BSE market capitalisation—worth Rs 14 lakh crore.
- The benchmark S&P BSE Sensex tumbled more than 8 percent during the period.
- The depth of the selloff has been much higher than anticipated, Deven Choksey of broking firm KRChoksey, told BloombergQuint over the phone. “The markets are currently heading towards capitulation stage.”
- Today, the S&P BSE Sensex closed 1.23 percent or 463 points lower at 37,018 and the NSE Nifty 50 ended at 10,980, down 1.24 percent.
Foreign investors pulled out more than $2 billion in July.
U.S. Stocks Rise, Dollar Erases Gain
U.S. stocks rebounded from a post-Fed sell-off amid strong earnings and a slump in manufacturing that rekindled speculation for more rate cuts.
- The S&P 500 reclaimed 3,000, spurred higher by factory data that confirmed a key sector of the economy continues to show signs of weakness.
- The dollar slid from near an eight-month high, with traders now focused on a jobs report on Friday that could weigh heavily in the Federal Reserve’s next policy decision.
- West Texas Intermediate crude fell 2.7 percent to $57.02 a barrel.
Get your daily global markets fix here.
4. The Jedi Guide To Valuations
How do investors gauge difficult-to-value businesses? Currency exchange rates, risk-free rate of return and sovereign ratings are among the tools in what Aswath Damodaran calls the ‘Jedi guide to ‘investing’.
- And while luck does play a part, the valuation guru, in a two-hour session on The Dark Side of Valuation, explained the key aspects of looking at difficult-to-value businesses: young companies, mature businesses in transition, and declining and distressed firms.
- The professor of finance at the Stern School of Business at New York University, speaking at the session organised by RBSA Advisors in Mumbai, covered everything from how to value customer-centric technology businesses like Spotify Inc. and Uber Technologies Inc. to how geographic concentration matters for the likes of Coca Cola Co. and Infosys Ltd.
Want to know more about how the finance guru values companies? Watch this video.
5. Slower GDP Growth But Still An Outperformer? S&P Thinks So.
Countries that are more reliant on trade have been hit due to the ongoing trade war. India, on the other hand, is safer because of its domestic demand focused economy, according to S&P Global Ratings Inc. Chief Economist Paul Gruenwald.
- “India is a relatively closed economy and is less reliant on manufacturing for growth which explains why it continues to perform well. It is currently on a soft path but we would expect to see India outperform in relative terms,” he said.
- Gaining from the U.S.-China trade war, however, is going to be a challenge, Gruenwald clarified. “In an abstract sense, India has an opportunity but it would require intensive investment in logistics and some liberalisation.”
- If correct structural changes are made, then it could have some potential of being a bigger part of the global supply chain, in the long term, he said.
Find out what Gruenwald thinks about easier monetary policy by central banks across the world.
6. Is India Ready For The Big Shipping Change?
Maritime trade will become expensive in about five months as merchant shipping firms need to comply with stricter fuel emission standards.
- Starting Jan. 1, ships will have to slash sulphur content in fuel oil by 85 percent by using fuel oil containing 0.5 percent of the chemical, according to the International Maritime Organization’s changed rules.
- That means they either use costlier low-sulphur grade fuel or install scrubbers or equipment to contain toxic fumes.
- Prices of the low-sulphur shipping fuel have already have jumped on anticipation of higher demand, Bloomberg reported.
- That’s likely to affect India’s trade as around 95 percent of the nation’s trading by volume and 70 percent by value is done through maritime transport, according to the Ministry of Shipping.
Shipping firms may have to pass a major chunk of their costs to customers.
7. India Plans To Cut Coal Imports
India’s coal ministry is preparing a plan to cut imports of the fuel by at least a third over the next five years, counting on an increase in domestic production and a jump in renewable output, people familiar with the plan told Bloomberg News.
- Imports are seen falling to below 150 million tons by the year ending March 2024, down from 235.2 million tons India got from overseas in the last fiscal year, the people said, asking not to be named as the five-year plan is still being finalised.
- To meet the import reduction goal, state miner Coal India Ltd. will aim to raise its annual output to 880 million tons by fiscal year 2024, a compounded annual growth of 7.7 percent through the period.
- Imports will be dominated by coking coal purchases by steelmakers because domestic supplies are limited, the people said.
Captive coal miners will also need to produce more to substitute imports.
8. New CSR Rules: The Risks Of Greater Rigidity
Corporate Social Responsibility in India faces the prospect of attaining the full mandatory status that is akin to taxation, writes Umakanth Varottil
- The amendments to the Companies Act introduce a mandatory requirement for CSR spending through the back-door.
- By eliminating the possibility that companies can spend less than the prescribed amount, CSR in the Indian context equates with taxation.
This will substantially alter the original philosophy behind CSR and encourage mechanical compliance.
9. Kejriwal's Free Electricity Offer
Delhi Chief Minister Arvind Kejriwal said people in the national capital won’t have to pay for electricity if their monthly power usage is within 200 units.
- Kejriwal said at a conference that households consuming between 201 and 401 units of electricity will get 50 percent subsidy from the government.
- The decision—which comes ahead of the assembly elections—is effective from Thursday.
- “People used to pay Rs 622 for 200 units of electricity till yesterday, now it’s free,” the Delhi chief minister said. “For 250 units they used to pay Rs 800, now they’ll pay Rs 252. For 300 units, they used to pay Rs 971, now they’ll pay Rs 526. For 400 units, they used to pay Rs 1,320, now they’ll pay Rs 1,075.”
The Delhi government would reimburse the balance amount to electricity distribution companies.
10. How To Build A Startup From A Failed Restaurant
When Indian diners order biryani online from Rebel Foods they’re greeted with a culinary history of the fragrant, slow-cooked rice dish. “The recipe was lost forever when King Cyrus laid siege to Behrouz until it was discovered amongst the ruins,” the story reads in part. “With this Biryani, we have brought back to life this lost recipe.” Diners are invited to read the entire account, which extends to 14 chapters and describes a protracted war between two ancient Persian kingdoms.
- The whole thing is made up—a canny exercise in myth-making that has helped turn the meal into a top-seller and the first branded version of India’s unofficial national dish.
- Rebel Foods calls itself the World’s Largest Internet Restaurant Company, a boast that’s hard to disprove because there aren’t many chains quite like it.
- Founded by a McKinsey & Co. alumnus named Jaydeep Barman, the company serves a dozen different menus with everything from cheese-loaded Italian pizzas to 99 variations of the dosa, a popular south Indian lentil-and-rice crepe.
Find out about Barman, the man behind food brands like Faasos, Mandarin Oak, and Behrouz Biryani.