BQuick On Oct. 8: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Amazon Vs Future Group
Amazon.com Inc. has initiated arbitration proceedings against its Indian partner Future Group alleging that the latter violated a contract by entering into a $3.4 billion sale agreement with Reliance Industries Ltd.
“We have initiated steps to enforce our contractual rights,” a spokeswoman for the Seattle-based e-commerce giant said in an email. “As the matter is sub-judice, we can’t provide details.”
Amazon agreed to purchase 49% of one of Future’s unlisted firms last year, with the right to buy into flagship Future Retail Ltd. after a period of between three and 10 years.
But about two months ago, rival Reliance announced it would buy the retail, wholesale, logistics and warehousing units of the indebted Future Group.
The spat could derail India's biggest retail deal.
2. Laxmi Vilas Bank Gets A Non-Binding Offer
Clix Group made an “indicative non-binding offer” for investment in The Lakshmi Vilas Bank Ltd.
The offer is in continuation with Pramod Bhasin-led Clix Group’s merger proposal, the bank said in an exchange notification.
In June, Clix Capital Services Pvt., along with group companies Clix Finance Ltd. and Clix Housing Finance Pvt., submitted a non-binding letter of intent for a merger with Lakshmi Vilas Bank.
Clix’s presence in areas like housing, two-wheeler, business and unsecured personal loans could be complimentary to Lakshmi Vilas Bank's loan book.
3. An Unwanted Hattrick For Mutual Funds
Equity mutual funds in India suffered an outflow for the third straight month as investors continue to sell in a market that has erased bulk of it losses triggered by the pandemic despite a record contraction in economy.
Equity and equity-linked schemes witnessed a net outflow of Rs 734 crore in September compared with an outflow of Rs 4,000 crore in August.
Barring small caps, all segments witnessed an outflow in September.
Get more details about the state of India’s mutual fund industry here.
4. Nifty Extends Winning Streak; Crude Surges
Indian stocks rose, with information technology companies boosting the benchmark gauge after Tata Consultancy Services Ltd. said it saw a recovery in demand for its services.
The S&P BSE Sensex climbed 0.8% or 304 points to 40,182.67.
The NSE Nifty 50 Index too advanced 0.8% to rise above the 11,800 mark.
Both measures have risen for six days to less than 3% off erasing 2020 losses, while the S&P BSE Information Technology gauge’s 41% year-to-date surge has taken it to its highest ever level.
Tata Consultancy Services climbed 3.3% to a record.
Follow the day’s trading action here.
6. India’s Economy ‘Much Worse’ Than Ever Before, Says World Bank
The World Bank has cut India’s growth estimate for the ongoing financial year, cautioning that the country's economic situation is much worse than ever seen before.
The global financial institution expects India’s GDP to contract 9.6% in the fiscal ending March 2021 compared with an earlier forecast of a 3.2% contraction.
The situation is much worse in India than we have ever seen before.Hans Timmer, Chief Economist For South Asia, World Bank
The pandemic is sharply reducing wage employment in India, with informal sector workers most affected.
7. Is India Going Back To Work?
It’s been six months since work-from-home became the new normal for at least India’s privileged workforce. Sofas replaced desks. If you were lucky, a beach view replaced the whiteboard. Shorts replaced suits. And every now and then an afternoon snooze replaced the coffee break.
Now India, just like the rest of the world, is opening up with governments eager to kick-start economic activity even as Covid-19 infections persist. How quickly are Indian workers returning to their offices?
Nationwide, mobility to places of work in India, was still 27% below the pre-Covid baseline between Aug. 19 and Sept. 30, Google community mobility reports show.
The reading has improved after hovering at 33-34% below normal between mid-May and July and at 41% below normal between April and mid-May.
Mobility to workplaces across states in India shows high variation.
8. 62% Of Mid-Sized Corporates Eligible For Loan Recast
A little over 60% of companies that fall in the category of ‘mid-sized and emerging corporates’ will be eligible for loan restructuring under the Reserve Bank of India’s guidelines, according to India Ratings and Research.
India Ratings analysed 301 mid-sized and emerging corporates, 4% of whom have a credit rating of ‘A’ and 96% have a credit rating of either ‘BBB’ or ‘BB’, it said in a report dated Oct. 8.
“On an overall basis, 62% of the issuers (47% by total debt) qualify for all the ratios recommended by KV Kamath committee financial guidelines for restructuring based on the FY19 balance sheet,” India Ratings said.
Read more to find out who is likely to restructure their loans.
9. Inside TCS’ ‘Tech Transformation’
Tata Consultancy Services Ltd. surprised the street as its earnings rose in the second quarter and margin jumped to the highest in two years. That, according to chief Rajesh Gopinathan, was led by a “multi-year technology transformation cycle”.
What’s that exactly?
Gopinathan, managing director and chief executive officer at TCS, attributes it to technology leverage—using technology to deliver more value with same or less resources.
And that, he said, cuts across all industries.
“It’s not a very widely available capability, and requires not just understanding of the technology layers, which demands significant investments, which we have been doing ahead of the curve, but also the current technology estate (or infrastructure),” the TCS CEO said during an interview with BloombergQuint.
India's IT bellwether has been for many years investing in new technologies, such as cloud computing and machine learning.
10. American Wins Nobel Literature Prize
Louise Gluck, an American poet and a professor of English at Yale University, won this year’s Nobel Prize in Literature.
Gluck, who was born in 1943, was awarded the prize for “her unmistakable poetic voice that with austere beauty makes individual existence universal,” the Swedish Academy in Stockholm said in a statement on Thursday.
Gluck made her debut in 1968 with ‘Firstborn’ and was soon acclaimed as one of the most prominent poets in American contemporary literature, the academy said.
She has published 12 collections of poetry and some volumes of essays on poetry.