BQuick On July 10: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Mukesh Ambani Now Richer Than Warren Buffett
Mukesh Ambani has had a rollercoaster 2020, cutting a string of deals for his digital business, undergoing wild swings in his wealth and having his brother’s finances laid bare for the world to see.
Now he can add another chapter—eclipsing the fortune of Warren Buffett.
- The chairman of Reliance Industries Ltd. is now worth $68.3 billion, surpassing Buffett’s $67.9 billion as of Thursday, according to the Bloomberg Billionaires Index.
- Shares of Ambani’s Indian conglomerate have more than doubled since a low in March as its digital unit got more than $15 billion in investments.
While Ambani’s wealth has jumped, Buffett’s fortune dropped. Find out why.
2. Uday Kotak Takes A Pay Cut
The top two executives at Kotak Mahindra Bank Ltd. took a pay cut in the financial year ended March 2020, according to the lender’s annual report.
- Uday Kotak, managing director, saw his annual remuneration decline to Rs 2.65 crore during the fiscal from Rs 3.24 crore reported a year ago.
- Including stock options, Kotak’s annual remuneration was at Rs 2.97 crore in FY20 compared with Rs 3.54 crore a year ago, the bank’s annual report released on Friday showed. That works out to an 18% cut.
- Kotak, however, is also promoter of the bank. As such, his compensation is not comparable with other private banks’ chief executives.
Read more to see what Kotak said in his annual letter to shareholders.
3. How The Lockdown Hit Industrial Activity
India’s industrial output continued to contract sharply in May over a year ago, even though it showed a marginal pick up over April, when the nation went into a near complete lockdown.
- The Index of Industrial Production contracted by 34.7% in May over last year, compared to a revised contraction of 57.6% in April.
- Like in April, the government refrained from providing the year-on-year change and only released index numbers.
- A majority of the industrial sector establishments were not operating from the end of March, 2020 onwards, in view of the pandemic, said the government release.
- This has had an impact on the items being produced by the establishments during the period of lockdown and the subsequent periods of conditional relaxations in restrictions.
However, a “graded pickup” in industrial activity in the economy was noted.
4. Franklin Templeton Recovers Rs 1,252 Crore
Franklin Templeton Mutual Fund has recovered Rs 1,252.44 crore as it recieved payment from Vodafone Idea Ltd. on non-convertible debentures that matured today.
- The asset manager had, in January, side pocketed its exposure to Vodafone Idea after doubts were cast on the telecom major’s ability to honour its obligations.
- The funds from Vodafone Idea have been received by the six fixed-income funds that were subsequently wound up by Franklin Templeton in April.
This money is expected to go to investors who had held units in the six schemes that were shut.
5. Nifty Ends Lower, But Posts Another Weekly Gain
Indian equity markets ended off the lowest point of the day to post modest losses. However, today’s decline wasn’t enough to prevent a fourth straight weekly advance for the benchmark indices.
- The S&P BSE Sensex ended 0.4% lower at 36,594 while the NSE Nifty 50 index also fell 0.4% to end at 10,768.
- Banks were the top laggards in today’s session. The Nifty Bank and PSU Bank indexes ended 2.2 and 2.7% lower, respectively.
- Broader markets remained subdued. The midcap index ended 0.7% lower while the smallcap index was little changed.
- For the week, both benchmark indices ended with gains of 1.6%.
Follow the day’s trading action here.
Yes Bank’s Public Offer
Yes Bank Ltd. said its board approved the price band for the Rs 15,000-crore fundraising through the follow-on public offer.
- The floor price has been fixed at Rs 12 apiece, while the cap is at Rs 13 per equity share, a discount of Re 1 for eligible employees of the private bank, according to an exchange filing.
- The fresh issue of shares will take place next week between July 15 and 17.
More details on the fundraising here.
6. Default Risk For India Inc. Dropping Rapidly
Default risks for Indian firms are declining at the fastest pace in more than a decade as the nation’s government deploys huge stimulus to support local companies hit by the impact of the pandemic.
- The cost to insure against non-payment by a basket of Indian companies including Reliance Industries Ltd. and State Bank of India, dropped by 252 basis points in May and June combined, the most for any two-month period dating back to 2009, according to CMA prices.
- Prime Minister Narendra Modi’s government unveiled $277 billion of stimulus in May and the central bank cut benchmark borrowing rates to the lowest since at least 2000 to help an economy that’s facing a contraction after the world’s largest lockdown.
The economic package is giving confidence to global investors and helping boost asset prices.
7. Motherson Sumi’s Resilience
Motherson Sumi Systems Ltd., one of the world’s largest makers of automotive wiring harnesses and mirrors for passenger cars, has started to see business normalise in most of the 41 countries it operates in, according to Chairman Vivek Chaand Sehgal.
- That’s because the auto parts maker—which counts Audi AG, Daimler AG and Volkswagen AG as its top customers—has always followed the ‘Vocal for Local’ ideology, popularised after Prime Minister Narendra Modi’s speech on ‘Atmanirbhar Bharat’ to tide over the Covid-19 crisis.
- “We are kind of vindicated,” Sehgal said, as he explained that the company has been producing locally in all countries it is established in.
- That spared the company some pain when the coronavirus outbreak came to the forefront, disrupting global supply chains, he said.
Motherson Sumi’s global presence also helped it prepare for the different stages of disruption. Watch the full interview here.
8. Virus Is Making Indians Buy Protection Policies
While insurers, like other sectors, witnessed a contraction in premium during the lockdown, one segment of their business grew: protection policies.
- Demand for term plans and guaranteed savings policies rose as worried Indians looked to cover risk during the pandemic that has already infected more than 7.5 lakh Indians and left more than 20,000 dead.
- “Demand for pure protection plans has gone up dramatically in the last three months,” Rushabh Gandhi, deputy chief executive officer of IndiaFirst Life Insurance, told BloombergQuint over the phone.
- “Compared to only 2% of the pure term policies sold in April and May last year, over 40% of our policy sales are from pure term plans this year,” he said.
Find out what’s driving the recovery for private insurers amid the pandemic.
9. Covid-19: Cases Rise, And So Do Containment Zones
Coronavirus infections in India inched closer to the 8-lakh mark after the country reported the largest single-day spike on Friday.
- India added over 26,500 Covid-19 cases in just 24 taking the total tally at close to 7.94 lakh, according to the Health Ministry’s 8 a.m.
- Nearly 5 lakh of these cases have been declared as cured or discharged.
Track news and developments around the Covid-19 outbreak in India here.
Since India allowed economic activity to resume after more than two months of strict curbs to contain the pandemic, the pace at which the nation is adding areas with severe outbreak has spiked.
- The number of containment zones in India rose 1.5 times to 8,655 in June, according to data provided to BloombergQuint by Legistify, a startup mapping areas with high incidence of infections.
- All kinds of economic activity, except essential services, remains barred in these localities.
- The virus, which initially swamped New Delhi and Mumbai, is now spreading at a faster pace outside metropolitan hotspots.
- Maharashtra leads with maximum containment zones, followed by West Bengal, Tamil Nadu and Delhi as on June 30.
An analysis of numbers from Tier-II cities showed that the virus has making inroads there as well.
10. The High Cost Of A Loose China Policy
The Indian army and government have, in effect, accepted a reshaped map of Ladakh favouring China, writes Bharat Karnad.
- Maybe it’s too much to expect the country’s political leaders to learn from India’s own historical experience of dealing with China.
- It is inexcusable, however, for the Indian armed services to act innocent of the methods that fetched them success against the PLA in the past.
- By obliterating the concept of the ‘no man’s land, this border safety belt is exposed to surreptitious PLA takeover.
Now, there is only one way to recover lost ground.