BQuick On July 29: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. From Math Teacher To India’s Newest Billionaire
India’s newest billionaire is a former classroom teacher who developed an education app that’s grown to a valuation of almost $6 billion in about seven years.
- Byju Raveendran joined the rarefied club after his Think & Learn Pvt scored $150 million in funding earlier this month.
- That deal conferred a value of $5.7 billion on the company in which the founder owns more than 21 percent, people familiar with the matter said.
- Its closing coincided with the announcement that the company’s Byju’s app -- named after the founder -- will team up with Walt Disney Co. and take its service to American shores by early 2020.
Online learning is booming, perhaps nowhere more so than on Byju’s home turf.
2. SBI Slashes Deposit Rates
State Bank of India has cut interest rates on fixed deposits in response to easier liquidity conditions and policy rate cuts, the lender said in a statement on Monday.
- Interest rates on fixed deposits have been cut by 20-75 basis points across different maturities, the lender said.
- The revised interest rates are effective from Aug. 1, 2019.
- The steepest rate cuts have been seen on shorter tenor deposits.
- Retail deposits, less than Rs 2 crore, up to 179 days will earn 50 basis points less, while deposits of between 180 days and 210 days will earn 10 basis points less at 6.25 percent.
- In the category of deposits between 210 days and 1 year, rates have been cut by 15 basis points.
Easier liquidity conditions and slowdown in credit demand has allowed for deposit rates to come down.
3. Slowdown Pinches Top FMCG CEOs’ Wallets
Target-driven variable pay fell for three of the six chief executive officers of the top consumer goods makers in 2018-19 as consumption started slowing in the economy.
- That includes the head of Hindustan Unilever Ltd., India’s largest consumer goods maker, and peers from Marico Ltd. and Godrej Consumer Products Ltd., according to data collated from annual reports—promoters running FMCG companies were excluded from the comparison.
- Consumption has been slowing in India since the last festival season as consumers are buying fewer cars and scooters to shampoos and biscuits. That was captured in the earnings of the last two quarters of the previous fiscal.
- And it reflected in the GDP growth as the economy expanded at the slowest pace in 20 quarters in the three months ended March.
Here’s a look at how the variable pay changed for CEOs in the FMCG sector.
4. Cement Prices Fall Again
A slowdown in demand in a seasonally weak monsoon period and a liquidity crunch in the real estate sector pulled down cement prices for the second straight month, according a BloombergQuint survey.
- All-India average cement prices fell by Rs 10 month-on-month to Rs 352 for every 50-kilogram bag in July, according to the survey of 14 dealers across five regions.
- Except central India where prices remained unchanged, all other regions saw cement getting cheaper.
- While the price cuts were sharp in the southern and eastern regions, they were relatively lower in north and west India.
A slowdown in government projects and a ban on illegal sand mining weighed on prices in south India.
5. Sensex, Nifty At Two-Month Low
Indian equity benchmarks ended lower after a one-day breather on Friday as foreign investors continued to sell.
- The S&P BSE Sensex ended 0.52 percent lower at 37,686.37.
- The NSE Nifty 50 ended at 11,189.20, down 0.84 percent.
- The broader market represented by the NSE Nifty 500 Index ended 0.91 percent lower.
- Markets are getting "severely punished" due to continued selling from foreign portfolio investors, said Parthiv Shah, director, Tracom Stock Brokers.
- Ten out of 11 sectoral gauges compiled by NSE ended lower.
- Meanwhile, Dr. Reddy’s Laboratories beat estimates helped by higher other income and better sales in key markets.
Follow the day’s trading action here.
U.S. stocks opened mixed as investors digested earnings and benchmarks drifted near records. Treasuries gained ahead of the Federal Reserve’s meeting later this week.
- The S&P 500 Index was little changed as of 9:31 a.m. New York time.
- The Stoxx Europe 600 Index rose 0.4 percent to the highest in more than three weeks.
- The U.K.’s FTSE 100 Index increased 2 percent to the highest in almost a year.
- The British pound fell 1 percent to $1.226, the weakest in more than two years.
Get your fix of global markets action here.
6. How Vodafone-Idea Became A Value Destroyer
Vodafone Idea Ltd.’s market capitalisation plunged by close to Rs 48,000 crore in the last 11 months as the telecom operator struggles to hold ground amid an unabated tariff war in India’s telecom market.
- Shares of the wireless carrier dropped as much as 29 percent on Monday after the operator’s core operating profit turned negative in the quarter ended June as its revenue and subscriber count fell, and costs rose.
- Vodafone India and Kumar Mangalam Birla-controlled Idea Cellular had merged amid a telecom sector consolidation driven by Reliance Jio Infocomm Ltd.’s rock-bottom pricing.
- But the erosion in investor wealth continued in the last 11 months as the company’s financials worsened and debt mounted, increasing the possibility of further fund infusion.
Here’s what’s ailing India's largest telecom operator.
7. India’s Dollar Bond Made Too Many Enemies
An abrupt reshuffle at the top of India’s finance bureaucracy makes it unlikely that the country’s inaugural issue of a controversial sovereign bond overseas will happen now. It’s just as well, writes Andy Mukherjee.
- Borrowing in a foreign currency, possibly dollars, would have set back New Delhi’s attempt to drum up more global interest in rupee debt.
- India has deliberately eschewed foreign-currency sovereign borrowing and instead turned to its diaspora to tide over the occasional hard-currency shortage in the past—a prudent choice.
- The government’s sudden U-turn on that long-held consensus, driven by poor growth and depleting fiscal resources, has now backfired.
- Nationalists saw a dollar bond as subjugating India’s interests to a global order they deeply mistrust.
- Internationalist technocrats rejected the idea that sovereign borrowing in foreign currency would be a cheaper option.
Even if an opportunity to entice yield-hungry investors exists, should India take it?
India’s Animal Spirits Get Sluggish
India’s slowdown is becoming more pervasive amid a slump in services and a plunge in exports. Read more here.
8. Chicken Love Drives Corn Imports
India’s growing affluence is seeing its population turn more carnivorous, leading the country with the world’s highest number of vegetarians to import more corn for chicken feed than ever before.
- Corn purchases by Asia’s second-biggest grower are set to climb to a record 1 million tons in the year starting in November, said Jaison John, general manager for procurement at Suguna Foods Pvt., a top poultry producer in India.
- Most supplies are likely to come from Myanmar and Ukraine, he said.
- India’s growing population, rising disposable incomes and changing food habits are boosting the consumption of non-vegetarian food, according to CLFMA, an association of Indian feed manufacturers.
There’s another reason why corn imports are increasing...
9. Audit Committees Fail Auditors
When an auditor fails, indeed, before he fails, it is the audit committee that has failed, writes Nawshir Mirza.
- Why did the board approve financial statements containing material deficiencies?
- Why did the directors not challenge the use of aggressive assumptions and estimates to justify aggressive business practices?
- Did the committee create a culture where the auditor felt safe behind their protection?
Here are the ten best practices audit committees can adopt.
10. Modi Vs The Wild
The head of the world’s biggest democracy apparently has more than just jobs and a rapidly weakening Indian economy on his mind.
- Prime Minister Narendra Modi is set to appear in a documentary to raise awareness about wildlife conservation.
- The 68-year-old leader today appeared in the promotional material for Bear Grylls’ Man Vs Wild program on Discovery Channel.
- The clip shows Modi accompanying Grylls on a dinghy ride down a river.
- The tweet about the show coincides with Modi’s announcement today that India has more than doubled its tiger population to 2,967 tigers in the last 12 years.
He’s not the first politician to go into the wilderness with Grylls.