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#Linkfest – Vedanta Promoters and Zambia Copper Mine, Bharti Airtel War Chest, TN Sugarcane Crisis

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At Capitalmind Premium, we have a very active Slack channel where we discuss a lot of interesting topics. In there,  a number of interesting links come our way. Here’s the most interesting of such links shared by our members in recent days.

Yes Bank Makes a U-Turn on Selling NPAs, After RBI Raps it on the Knuckles

Yes Bank, one of India’s largest private banks, will no longer sell non-performing assets to asset reconstruction companies. Instead, it will sell them to funds. This change of heart came after an RBI inspection found that Yes Bank had sold some NPAs to ARCs at steep haircuts, which earned the bank a rap on the knuckles from the RBI. Consequently, Yes Bank sold an NPA account worth Rs. 195 crores for Rs. 120 crores in Q4FY19. Readers would remember how Yes Bank, under its new CEO Ravnit Gill, has embarked on a painful exercise of identifying NPAs and cleaning up its books. Link

Zambia Shows Vedanta Promoters the Door Over Copper Mine

Zambia is the second largest producer of copper in Africa. Anil Agarwal, the promoter of India’s Vedanta was also invested in the country (or at least until recently), through Konkola Copper Mines. But recently, the Zambian President announced that the government was terminating its agreement with Konkola Copper Mines, alleging a breach in the licensing terms. In short, Vedanta’s promoter no longer controls the mine. Meanwhile, copper workers in Chingola, the country’s copper belt, took out a demonstration in support of the government decision. Link

Tata Global Beverages’ New Avatar: Tata Consumer Products

The consumer facing businesses of Tata Chemicals will soon be demerged from the parent, only to be merged with Tata Global Beverages, to create a new company called Tata Consumer Products (confusing?). The move is seen as a consolidation of synergies, in light of Tata Global Beverages’ ambition to expand its market offerings, in an increasingly competitive business environment, dominated by the likes of Britannia, Dabur, ITC and others. The salt manufacturing business will stay with Tata Chemicals which will then share the profits with Tata Consumer Products. Link

The NBFC Crisis Has Doomed Many Realty Companies, Says Oberoi Realty Promoter

The recent financial crunch that has hit many NBFCs in India will take down many realty companies with it, said Vikas Oberoi, Chairman and MD of Oberoi Realty. Oberoi Realty has the second largest market capitalization of all listed realty companies in India. Many realty companies have borrowed heavily from NBFCs but are unable to service the debt for several reasons. With NBFCs unwilling to lend more money to the realty sector, many realty companies are facing a meltdown. Vikas also accused many realty company promoters of enriching themselves at the expense of the loans taken by their companies, from NBFCs. Link

Crude Oil Supply Constrained on the Back of Geopolitical Tensions

Global crude oil supplies may tighten in the coming days as geopolitical tensions and curbs on known crude supplies take their toll. Energy derivative traders are of the opinion that there is a currently a shortfall in oil supplies, which will act as a trigger for prices to shoot upwards, until it begins to affect demand. July crude futures are currently trading at a premium (per barrel), compared to December futures, which means traders are ready to pay more for supplies. Skirmishes in the middle east have also compounded the problem. Link

Bharti Airtel Readies War Chest Via Rights Issue to Take on Competitors

Bharti Airtel’s Rs. 25,000 crore rights issue has been oversubscribed, bolstering the telecom giant’s ability to take on competitors like Reliance Jio and Vodafone Idea. Airtel will use the money from the rights issue, and an additional Rs. 7000 crore raised from bond sales, to expand its 4G network and fund corporate expenses. The funds will help Airtel to take Reliance Jio head on, which already had a 4G  network when it began operations. Link

Why the Bangladeshis Won’t Eat as Much Indian Grown Rice Now

Bangladesh has increased the duty on non-basmati rice imports from India to 28%, up from 2% levied earlier. The import duty has caused a massive fall in rice exports to Bangladesh, which in monetary terms is estimated to be in the range of Rs. 3278 crores. The move has brought the rice milling industry in West Bengal to its knees, and 90% of them are not currently financially viable. Close to a 100 rice mills have shut shop in West Bengal in the past few years. Link

Shortage of Sugarcane Forces Tamil Nadu Sugar Mills to Cease Operations

Tamil Nadu is in the grip of a rain shortage, which has caused a dip in sugarcane production, a water intensive crop, in the state. The problem is so acute, half of the 25-odd private mills in Tamil Nadu have been forced to cease operations because they don’t enough sugarcane to crush. The state’s sugar industry has already written to the state and the Union government to provide relief to the sugar mill owners, so that they can tide over the crisis. Tamil Nadu is currently the 4th largest sugar producing state in the country, a slip from the 3rd position it used to enjoy earlier. Link

Fear of Job Losses Looms Large as Amazon Deploys Machines to Take Over Manual Labor

Amazon Inc. has deployed two machines at a warehouse, to box up customer orders. After the machines were installed, at least 24 people have lost their jobs. The company currently runs 55 fulfillment centers across the U.S and if the machine is deployed at each of them, 1300 people stand to lose their jobs. Amazon hopes to recover the money from each machine in under two years, estimating an expense of Rs. 1 million on each machine, including operational expenses. Link

Second Hand Car Sales Overtake New Car Sales in India

According to a recent report by Mahindra First Choice Report, the market for second hand cars in India is bigger than the market for new cars. The report says that more than 4 million second hand cars were sold in India in 2018-19, compared to 3.4 million new cars sold during the same time. One of the reasons why the market for used cars is growing so fast is because consumers are increasingly seeing value in owning used cars. Link

How to Perform Financial Jugglery and Survive, feat The Adani Group

Adani Group has interests spread across coal mining, coal importing, power transmission, ports, city gas distribution and many more. Analysts have often wondered how the company manages to stay afloat, even as it continues to buy existing projects from other companies, invest in new businesses and even acquire other companies. Moreover, the group doesn’t have a cash engine like Reliance Petrochemicals of the Reliance Group or Tata Communication Services of the Tata Group. The answer is in this post. Link

PayTM Won’t Be Profitable in the Near Future, Vijay Shekhar Sharma

Expanding into new businesses is a good idea, because it reduces your risks. That is why PayTM, which originally started off as a mobile money transfer service, consequently expanded into other services like payment bank, forex, mutual funds, credit score, insurance sales, and more. The problem is, none of these associate services are turning a profit for PayTM. In fact, PayTM has hemorrhaged Rs. 1600 crores, just in FY18. But PayTM’s founder, Vijay Shekhar Sharma is candid about it. He actually said, he doesn’t expect the company to turn a profit for the next three years, at least. Link

NSE Appeals to Securities Appellate Tribunal to Set Aside SEBI’s Adverse Order

Recently, SEBI had passed adverse orders against NSE, charging the latter with abetment of fraud, in the algorithmic trading and co-location case. Now NSE has appealed to the Securities Appellate Tribunal to set aside SEBI’s order on the grounds that it is improper. In its defense, NSE also said that if the order is imposed, it would cause irreparable harm to NSE’s financials and reputation. Readers would note that NSE’s investors had earlier asked NSE not to fight SEBI’s penalty and instead focus on its upcoming IPO. Link

Competition Commission of India Dings Monsanto in GM Cotton Seed Case

The Competition Commission of India’s investigative unit has found that Mahyco Monsanto Biotech (India) took advantage of its near monopoly in the Indian GM-cotton seed market, to charge higher fees from its farmer-customers. The order will now be reviewed by the CCI’s senior members and if it is sustained, Monsanto may have to cough up, up to 10% of its turnover in the past three years in India, as penalty. Monsanto controls up to 90% of the market for GM cotton seeds in India. Link