A round-up of the biggest articles from newspapers
1. Economic growth likely a median 6.45 % in fiscal second quarter
India’s economy likely grew 6.2-7.2 percent in the September quarter from a year earlier, according to a survey of economists, buoyed by an increase in services and government capital spending, as well as high pre-festive season production. The median of predictions by ten economists for the September quarter was 6.45 percent. Gross domestic product grew 13.5 percent in the first quarter of 2022-23, boosted by the low base a year ago. The official national income data for the second quarter will be released on November 30.
Why it’s important: Although exports lost momentum in the second quarter, increased domestic demand may have played a significant role in boosting growth despite the waning base effect.
2. Australia clears parliamentary hurdle for free trade pact with India
The Australian Parliament has ratified the Economic Cooperation and Trade Agreement (ECTA) with India, paving the way for implementing the deal by January. The deal will now need approval from the Australian Cabinet and the President of India. The ECTA will enter into force 30 days after an exchange of written notifications on the completion of domestic processes. The Australian Parliament also amended the double tax avoidance agreement with India to stop taxing the offshore income of Indian IT firms operating in Australia. This will resolve a long pending issue and lead to savings of more than $200 million.
Why it’s important: It will be India’s first free trade deal with a developed country in more than a decade, after the Comprehensive Economic Partnership Agreement (CEPA) was signed with Japan in 2011.
3. Budget may introduce Rs 10,000 crore incentive for chemical manufacturing
The central government is working on a production-linked incentive (PLI) scheme worth Rs 10,000 crore for chemicals and petrochemicals industries, as the country aims to triple capacity to manufacture these key ingredients by 2040. The Union Budget 2023 is likely to announce the scheme, under which selected companies may get an incentive of 10-20 percent on their incremental sales. The department of chemicals has identified 50 specialty chemicals that will be utilized by key industries.
Why it’s important: Since the chemical and petrochemical industry provides building blocks for several other industries like textiles, papers, paints, soaps, and pharmaceuticals, a government incentive would be welcome news.
4. Adani Enterprises to raise up to Rs 2,500 crore through follow-up offer
Gautam Adani’s flagship company Adani Enterprises has begun its follow-on public offer to raise as much as Rs 20,000 crore from retail and institutional investors, riding on the sharp 26-fold jump of its stock prices. The company has asked Jefferies and ICICI Securities to manage the offer. It has also informed the stock exchanges that it will hold a board meeting in Ahmedabad on November 25. The market capitalisation of Adani Enterprises is around Rs 4.6 lakh crore.
Why it’s important: A follow-on offer will increase the public float in the blue-chip, which is less compared to similar-sized listed firms like Reliance Industries (RIL) and Tata Consultancy Services (TCS). There is likely to be heavy investor interest in the offer.
5. High Court rejects Future Group’s plea to terminate Singapore arbitration
The Delhi High Court (HC) has rejected the Future Group’s plea seeking termination of proceedings at a Singapore arbitral court, paving the way for Amazon to press ahead with the arbitration on November 28. On November 17, the Supreme Court had observed that it would not allow stalling of arbitration pending before the Singapore International Arbitration Centre between the US e-commerce giant and Future Group, saying the sanctity of such proceedings needed to be maintained.
Why it’s important: Amazon wants damages from the Future Group related to its 2019 investment of Rs 1,400 crore in Future Coupons. The US firm has argued that Future violated the terms of the deal by deciding to sell assets to RIL. The Singapore arbitrator has supported Amazon’s position.
6. Alternative investment funds not allowed to extend life to avoid fire sale
Private equity firms, venture capitalists, real estate and debt fund managers can no longer indefinitely stretch the lives of their funds to avoid a fire sale of assets and securities. The capital markets regulator has made it clear that funds have to close and liquidate within the specified period even if a predominant number of investors who have contributed to a pool give their consent to extend the tenure of the fund.
Why it’s important: Fund managers often postponed exits and closure due to a slew of factors. Industry observers fear that many funds could now be driven to undertake a distress sale of assets to fall in line with the market regulator. This could shake up the industry.
7. RIL and Adani Power set to compete for Lanco Amarkantak auction
RIL and Adani Power are set to compete at an auction scheduled on November 25 for distressed thermal power firm Lanco Amarkantak Power, which is undergoing corporate insolvency. This is the first time two of the country’s largest conglomerates will be vying directly against each other for an asset. A consortium of state-owned Power Finance Corporation and REC, will also be participating in the bidding.
Why it’s important: If the bid by Reliance is successful, it will mark the company’s entry into the thermal power sector in India. It has been the highest bidder in the first round of submissions of a resolution plan, while Adani took pole position in the second round.
8. Goldman and TVS Capital may lead $150 million funding round in InsuranceDekho
Goldman Sachs and TVS Capital are in advanced discussions to lead a $150 million investment in used cars unicorn CarDekho’s insurance unit InsuranceDekho in what is expected to be the biggest Series A funding round in India. The company is likely to be valued at $450-500 million in the funding round. InsuranceDekho, operated by Girnar Insurance Brokers, was founded in 2017. The company may record annualized premium collection of around Rs 3,600 crore in 2022-23.
Why it’s important: This will be the first institutional investment in InsuranceDekho, which comes at a time when a funding winter has arrived for local start-ups.
9. Amazon Web Services to invest Rs 36,000 crore by 2030 in India
Amazon Web Services (AWS) will invest nearly $4.4 billion (Rs 36,000 crore) in India by 2030 and support more than 48,000 jobs externally through a new regional service launched on Tuesday, the on-demand cloud computing company has said. AWS Asia Pacific (Hyderabad) is the company’s second infrastructure region in India, six years after it opened its first cloud region in Mumbai in 2016. The new investment will include capital expenditure on the construction of data centres, operational expenses, facility costs, and the purchase of goods and services from regional businesses.
Why it’s important: The market for cloud computing in India seems poised to take a significant jump, indicated by the investment plans of firms that offer such services.
10. Key indicator suggests Reserve Bank may raise policy rate once again before pause
A fortnight ahead of the Reserve Bank of India’s (RBI) next monetary policy review, a key market indicator of interest rates, called the overnight indexed swap, suggests that the central bank may tighten policy by 35 basis points (bps) and then pause further rate hikes. One basis point is a hundredth of a percentage point. At present, the OIS pricing is showing a 35 bps rate hike by the RBI in December, experts have said.
Why it’s important: Although retail inflation is still above the central bank’s comfort zone, it has shown signs of slight easing. A pause in the tightening monetary cycle will provide some relief in borrowings.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries (RIL) is the sole beneficiary.
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