Tag: Tata Sons

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GQG Partners, Others Invest Nearly $1 Billion in Adani Group – Top Indian Market Updates

Here are some of the major updates that could move the markets on Friday:

GQG Partners, others invest nearly $1 billion in Adani Group stocks

US-based investment firm GQG Partners and other investors have bought close to $1 billion (₹8,200 crore) of additional stakes in Adani Group companies. GQG increased its holding in Adani Enterprises from 3.39% to 4.96%, valued at $1.65 billion (₹13,600 crore). The firm raised its stake in Adani Green from 3.50% to 6.32%, which is valued at $1.17 billion (₹9,600 crore).

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BPCL to raise Rs 18,000 crore via rights issue

The board of Bharat Petroleum Corporation Ltd (BPCL) has approved a proposal to raise up to Rs 18,000 crore through a rights issue. The company will raise the capital by issuing equity shares to eligible shareholders on a rights basis. The record date for the issue will be notified later. The capital infusion is for achieving energy transition, net zero, and energy security objectives.

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BEML wins orders worth Rs 385 crore

BEML has secured an order from Bharat Dynamics and Bharat Electronics Ltd for the supply of High Mobility Vehicles (HMV). The total contract value is ₹385 crore. BEML manufactures a wide range of heavy earthmoving equipment, with 50% sales from the mining and construction industry, 23% revenues from vehicles supply for defence forces, and 27% sales contributed by the rail and metro segments.

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Power Grid board approves 3 investment proposals worth Rs 389 crore

Power Grid Corporation of India Ltd’s (PGCIL) board has approved three investment proposals worth ₹389 crore. The first proposal is for a change in scope for the establishment of a dedicated telecom network for the National Transmission Asset Management Centre at a cost of ₹164.38 crore. The second proposal is for the western region expansion scheme at an estimated cost of ₹115.09 crore. The third is for the Information & Communications Technology augmentation at Navsari at an estimated cost of ₹109.47 crore.

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Adani Power’s Jharkhand plant commences supply to Bangladesh

Adani Power has started exporting power to Bangladesh from its 1,600 megawatts (MW) plant in Godda, Jharkhand. The company’s subsidiary, Adani Power Jharkhand Ltd (APJL), has achieved the commercial operations date of its second unit of 2×800 MW Godda ultra-supercritical thermal power plant. It completed the reliability run test, including commercial operation tests of the second unit of Godda power plant, on June 25.

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HDFC, Tomorrow Capital makes strategic investment in Bonito Designs

Housing Development Finance Corporation (HDFC), Tomorrow Capital, and a few high-net-worth individuals (HNIs) have invested ₹40 crore in interior design firm Bonito Designs. Bonito Designs is backed by Lodha Ventures and has a valuation of ₹650 crore. This strategic alliance with HDFC is expected to help the company deepen its presence in Mumbai and Bengaluru.

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Thermax plans entry into renewable power, electrolyser production

Thermax Ltd is planning to make a full-fledged entry into renewable power generation, electrolyzer manufacturing, and green hydrogen generation projects over the coming years. The move comes as the company seeks to meet the needs of customers transitioning to cleaner fuels. Thermax has set up open access-based renewable energy projects for commercial and industrial corporates in Gujarat, Tamil Nadu, and Maharashtra. It has around 250 MW of renewable projects at various stages of development.

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Reliance Jio acquires 30.4 lakh new subscribers in April

Reliance Jio continued its dominance over the Indian telecom space as it added 30.4 lakh subscribers in April 2023, as per data released by the Telecom Regulatory Authority of India (TRAI). Bharti Airtel saw an addition of 76,328 users in April, compared with 10.4 lakh in March. Meanwhile, Vodafone Idea lost 29.9 lakh in April 2023, compared to 12.1 lakh in March.

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Tata Sons challenge Rs 1,500cr tax claim on Docomo settlement

According to an ET report, Tata Sons has disputed a ₹1,500-crore ($183 million) tax demand on its $1.27-billion settlement in 2017 with NTT Docomo over a now-defunct telecom joint venture. The Directorate General of GST Intelligence (DGGI), which had raised the tax claim, has now moved the Bombay High Court seeking a three-month extension for the next hearing on a petition filed by Tata Sons challenging the tax demand.

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Bandhan Bank triples number of branches to 1,500 in <8 years

Bandhan Bank has tripled the number of its branches in nearly eight years of operations, totalling 1,500 at present. The lender has a network of 6,000 banking outlets across the country. The Kolkata-based bank started operations with 501 branches on August 2015. Presently, it is spread across 34 states and UTs.

Read more here.

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Market News Top 10 News

RBI Pauses Interest Rate Hike – Top Indian Market Updates

Here are some of the major updates that could move the markets tomorrow:

RBI keeps repo rate unchanged at 6.5%

The Reserve Bank of India (RBI) has kept the repo rate unchanged at 6.5%. The RBI’s Monetary Policy Committee (MPC) unanimously decided to maintain the repo rate at its current level, with a majority of five out of six members focusing on “withdrawal of accommodation” to align inflation with the target while supporting growth. RBI expects GDP to grow 6.5% in the current financial year. Retail inflation is expected to moderate to 5.2% in FY24. The repo rate has been raised by 250 basis points (bps) in the last 11 months, starting from May 2022.

[The repo rate is the key lending rate through which the RBI lends money to commercial banks against government securities.]

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SP Group looks to raise $1.75 billion against Tata stake

Shapoorji Pallonji (SP) Group is reportedly in talks with lenders to raise $1.75 billion by pledging half of its stake in Tata Sons. The funds raised would be used to repay part of SP Group’s debt obligations and inject cash into its operating companies. The group has already pledged close to 9% of its 18.37% stake in Tata Sons. If the latest transaction goes through, its entire stake (valued at around Rs 94,000 crore) would be pledged to lenders, including foreign banks and overseas hedge and credit funds. 

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HPCL may soon launch ethanol cooking stoves

Hindustan Petroleum Corporation (HPCL), in collaboration with the Indian Institute of Technology (IIT) Guwahati, has developed a cooking stove that runs on bio-ethanol, a green fuel produced by the fermentation of sugar or food grains. HPCL is planning a pilot launch of the ethanol-fueled stove soon and the introduction of ethanol ATMs where users can procure ethanol in canisters for the stove. These ATMs may be positioned at HPCL’s retail outlets, as per industry executives familiar with the development.

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Tata Steel saw record operational performance in FY23

Tata Steel achieved a record operational performance in the last financial year, producing 19.87 million tonnes (MT) of steel compared to 19.06 MT in the previous year. Sales also increased to 18.87 MT from 18.27 MT. Despite facing challenges, the company’s CEO & MD, T V Narendran, attributed the success to a strong marketing network and agile business model. In the January-March period, Tata Steel India’s production rose to 5.15 million tonnes from 4.90 million tonnes in the same period the previous year.

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General insurance industry premium grows 16% in FY23

The general insurance industry in India grew at a healthy pace of 16% in FY23, with total premiums reaching Rs 2,56,920 crore. The standalone health insurance sector also showed robust growth with premium growth of 26% to reach Rs 26,242 crore. ICICI Lombard’s premium grew by 17% for FY23, while New India Assurance’s growth was 6% due to sluggish performance in the first half of the year. Star Health Insurance reported premium growth of 11% in March and 13% for the year.

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Promoter group companies fully repaid loan against shares: Jindal Steel & Power

Jindal Steel and Power Ltd’s (JSPL) promoter group companies have fully repaid all outstanding loans against shares of the company. The promoter group companies, namely OPJ Trading Pvt Ltd, Opelina Sustainable Services Pvt Ltd, and Gagan Infraenergy Ltd, have paid off the loan liabilities, resulting in the loan against share (LAS) for the Naveen Jindal group now standing at Nil. This repayment is part of JSPL’s deleveraging strategy.

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Rail Vikas Nigam Ltd emerges as lowest bidder for Mumbai Metro project worth Rs 380 crore

Rail Vikas Nigam Limited (RVNL) has emerged as the lowest bidder (L1) for a Mumbai Metro project worth Rs 378.2 crore. RVNL has been selected for the design, manufacture, supply, installation, testing, and commissioning of various systems including substations, cabling, and overhead catenary system for Mumbai Metro line 2B of MMRDA (Mumbai Metropolitan Region Development Authority).

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Mazagon Dock Shipbuilders’ turnover jumps 32% in 2022-23

Mazagon Dock Shipbuilders has reported a 32% increase in revenue from operations in the financial year 2022-23, reaching Rs 7,547 crore. It is one of the few shipyards in India capable of building Destroyers and Conventional Submarines. The company’s primary customers are the Indian Navy and the Indian Coast Guard, and it has delivered several major warships in the past.

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Religare Enterprises to acquire MyInsuranceClub to expand offerings

Religare Enterprises Limited (REL) has signed a Share Purchase Agreement to acquire MyInsuranceClub (MIC), an insurance web aggregator, from iGear Holdings Private Ltd. This acquisition is part of REL’s strategy to democratize the insurance business in India and expand its offerings in the insurance distribution space. MyInsuranceClub is the first IRDAI-approved web insurance distribution and comparison platform.

Read more here.

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Market News Top 10 News

Retail Inflation Eases to 3-Month Low of 6.77% in Oct – Top Indian Market Updates

Consumer Price Index

Here are some of the major updates that could move the markets tomorrow:

Retail inflation eases to 3-month low of 6.77% in Oct

India’s retail inflation, measured by the Consumer Price Index (CPI), fell to a three-month low of 6.77% in the month of October. The retail inflation in September stood at 7.41%. Inflation in the food basket showed a fall from 8.6% in Sept to 7.01% in October. Inflation in the fuel & light segment rose 9.93%, while the clothing & footwear segment gained 10.16% last month. Meanwhile, wholesale price-based inflation (WPI) fell to a 19-month low of 8.39% in October. 

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Grasim Q2 Results: Net profit falls 17% YoY to ₹1,097 crore

Grasim Industries Ltd reported a 17% year-on-year (YoY) decline in consolidated net profit to ₹1,097 crore for the quarter ended Sept (Q2 FY23). Its revenue from operations rose 22% YoY to ₹27,486 crore during the same period. EBITDA stood at ₹3,783 crore in Q2, down 12% YoY. The company received a dividend of ₹628 crore from its subsidiary UltraTech Cement during Q2.

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Voltas enters technology license agreement with Denmark’s Vestfrost Solution

Voltas Ltd has entered into a technology license agreement with Denmark-based Vestfrost Solutions to develop, manufacture, sell, and service medical refrigeration and vaccine storage equipment in India. This includes advanced products like ice-lined refrigerators, vaccine freezers, and ultra-low temperature freezers. This partnership will leverage the strong brand presence and wide sales and distribution network of Voltas.

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Godrej Industries Q2 Results: Net profit rises 9% YoY to ₹156 crore

Godrej Industries Ltd reported a 9% YoY increase in consolidated net profit to ₹156 crore for the quarter ended Sept (Q2 FY23). Its revenue from operations rose 22.59% YoY to ₹4,021 crore during the same period. The company’s total expenses stood at ₹4,099 crore in Q2, up 23.2% YoY. Its board has approved a proposal to raise up to ₹2,000 crore by issuing non-convertible debentures (NCDs).

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Tata Sons initiates process to bring all airlines under Air India wings

Tata Sons has initiated the consolidation of its airline entities Vistara, AirAsia India, and Air India Express under Air India. This move will make Air India the second-largest airline in the country in terms of fleet and market share. The Tata group will have a low-cost carrier and a full-service airline under Air India, which will be the only airline brand in the group following the merger

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IRCTC Q2 Results: Net profit rises 43% YoY to ₹226 crore

Indian Railway Catering & Tourism Corp. (IRCTC) reported a 43% YoY increase in net profit to ₹226.03 crore for the quarter ended Sept (Q2 FY23). Its revenue from operations rose 99% YoY to ₹805.8 crore during the same period. Total expenses jumped 152% YoY to ₹524.33 crore in Q2. Revenue from internet ticketing stood at ₹300.25 crore, up 13.17% YoY.

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L&T Infotech, Mindtree merge to make India’s fifth-largest IT company

The L&T Group announced the merger of L&T Infotech (LTI) and Mindtree into ‘LTI-Mindtree’ with immediate effect. With this, the combined entity will become the sixth-largest IT services firm by revenue and the fifth-largest in terms of market value. Shareholders of Mindtree Ltd will get 73 LTI shares for every 100 shares they hold after the merger.

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Bharat Forge Q2 Results: Net profit falls 48% YoY to ₹141 crore

Bharat Forge Ltd reported a 48% YoY decline in consolidated net profit to ₹141.6 crore for the quarter ended Sept (Q2 FY23). Its revenue from operations rose 29% YoY to ₹3,076.4 crore during the same period. The company’s margins contracted sharply due to elevated raw material, finance, and employee costs. Its board has declared an interim dividend of ₹1.5 per share.

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Centre ready to bring petrol under GST but states unlikely to agree: Petroleum Minister

The Central govt. is ready to bring fuel under GST but the states (for whom fuel and liquor are major revenue generators) are unlikely to agree to such a proposal, said Union Minister Hardeep Singh Puri. With regard to fuel prices, the minister said India has seen one of the lowest rises in prices in the past year. US fuel prices rose by 43% in one year but India only saw a 2% rise.

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Tata Motors, Cummins Inc to offer solutions in hydrogen-powered commercial vehicle space

Tata Motors has partnered with US-based Cummins Inc to offer solutions in the hydrogen-powered commercial vehicle space. Under the pact, both entities will collaborate on the design & development of low and zero-emission propulsion technology solutions for commercial vehicles in India. This includes hydrogen-powered internal combustion engines, fuel cells, and battery electric vehicle systems.

Read more here.

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Editorial

Q2 Result Analysis: Tata Steel Net Profit Soars 660% YoY

TATA STEEL q2 results

Tata Steel, the steel giant, saw incredible growth this quarter in terms of profits, Q2FY22. In the second quarter, the steelmaker saw its revenue grow by ~62% YoY and ~13% QoQ. The revenue growth eventually resulted in a whopping ~660% growth over a year. In the current quarter, Q2FY22, the company scored a net profit of Rs 11,918.1 crore against Rs 1,565.4 crores last year, the same quarter. The company’s profits grew by ~33% over the previous quarter.

Source: Company Website

What Drove The Quarterly Results?

In the previous marketfeed articles, we have discussed the steel market in COVID-19 times. We have addressed the industry’s stress globally, China’s involvement, and how the sector recovered post-pandemic. To know more, you can read: 

Global Steel Prices Volatility, China-Australia Trade War and Indian Metal Market: Analysis

Reasons Behind the Rise in Steel Prices in India

Steel Prices Surge in India; is China Hoarding Global Steel?

To sum it up, steel plants were operating below capacity, China, the largest steel supplier, had disrupted global supply citing environmental concerns. Post-pandemic, the supply picked up, at least in India, yet, the prices remained high globally. Indian steelmakers took advantage and gained higher margins on exports. 

The current quarter saw high vaccination rates, normalised trade, and healthy steel prices in the international steel market. Like other steel companies, Tata Steel managed to gain higher realisations in the domestic market. In the global market, Tata Steel managed to play on better price realisations and increased volumes. However, lesser ‘deliveries’ in Europe impacted the profit numbers

For Tata Steel, production increased by 2% on QoQ and 4% on a YoY basis despite planned maintenance shutdowns. Steel sales volume increased by 4% QoQ base with best-ever quarterly sales of Rolled Products.

Currently, Tata Steel is working on offsetting its debt. The company’s debt stood at Rs 88,501 crore in the quarter ended March 2021. The debt was reduced by 11.2% to Rs 78,163 crore in the current quarter. The company plans to reduce gross debt by nearly Rs 14,000 crores in FY22 while prioritising off-shore debt repayment.

The company saw its operating expenses increase by 41% YoY and 17% QoQ. The expenses increased primarily due to an increase in the purchase of  Iron ore and coal consumption cost across its key entities and also higher purchase of Finished & Semi-finished goods.

In other news, the shortage of semiconductors in the automobile has hit the demand. The problem is likely to persist in the short term. Once the problem is mitigated, one can expect a healthy steel sales volume in the automobile sector.  

The company’s investor presentation states its future goals. The company plans to offset a huge amount of debt and aim for strong earnings and improved cash flow performance. It intends to focus on capital allocation, cashflow, and working capital management. Moreover, the company plans to spend Rs 10,000- Rs 12,000 crore as capital expenditure. 

Recovering markets have paved the way for greater demand for steel and lowered material costs. India steel demand is expected to improve, supported by govt’s push for infrastructure spending and consumer demand with the onset of the festive season. One can expect demand improvement across segments and high coking coal prices. Coking coal is a very critical raw material in manufacturing steel. 

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Editorial

TATA Takes Back Air India. What’s Next?

On October 8, Puhin Kent Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM) announced that Tata Sons had won the bid for debt-laden Air India. The news has taken the aviation industry by storm. The airline has returned to the Tata Group after 68 years! In this editorial, we dive into the details of the acquisition and what lies ahead for the airline. 

Air India – A Brief Profile

India’s first civil aviation pilot, Jahangir Ratanji Dadabhoy (JRD) Tata, set up the first domestic airline— Tata Airlines in April 1930. In the pre-independence era, princes of different states enjoyed the new mode of transport and the hospitality it offered. Thus, the group redesigned the airline with the iconic ‘Maharaja’ style. 

After India’s independence, the Tata Group proposed the launch of ‘Air India International’, a new overseas air service. This new entity became the first Asian airline that connected the east with the west. In 1953, with the heat of nationalisation spreading across the nation, Tata Airlines and nine other domestic carriers were merged and rebranded as Indian Airlines. Air India International was also taken over and merged with Air India. This move was opposed by JRD Tata and other players in the airline industry, but as a consolation, JRD was appointed as the Chairman of Air India and one of the directors of Indian Airlines. With his leadership, the new entity found its pace for the next 25 years.

With liberalization and the entry of private low-cost carriers, Air India started to lose its feet in the industry. Various governments tried versatile steps to make the airline profitable, including measures to privatize it. Due to various political circumstances, none of these measures was successful. In 2007-08, a decision was taken by the government for the merger of the domestic carrier Indian Airlines with Air India. The merged entity had a very stressed balance sheet, and the management was in deep trouble.

In March 2018, the government invited bids for acquiring a 76% stake in Air India. At that time, not even a single bid was received. Finally, the state again revised its invitation for a 100% stake in the airline. The Tata Group was declared the winning bidder for the national carrier on October 8th 2021.

Details of the Deal

Talace Pvt Ltd, a subsidiary of the Tata Sons, will be paying Rs 18,000 crore for a 100% stake in Air India and its low-cost arm Air India Express. They will also acquire a 50% stake in the ground handling company of Air India (AISATS).

Currently, Air India has an aggregated debt of Rs 61,562 crore. Out of this, Rs 46,262 crore will be handled by Air India Asset Holding Ltd (AIAHL), a special purpose vehicle (SPV) created to manage its debt. An amount of Rs 15,000 crore will be paid off by Talace. The government will be left with Rs 2,700 crore as cash equivalent after the deal.

It is interesting to note that Air India has generated a total debt of Rs 20,000 crore in the last two years. Additionally, the Centre has infused more than Rs 1 lakh crore into the airline since 2009 to make it operational. 

Origin of Vistara & Air Asia India

The Tata Group always had the intention to get into the airline business. In 2013, the Government of India allowed Foreign Direct Investment (FDI) of up to 49% in the civil aviation sector. A joint venture (JV) by Tata Group and Singapore Airlines (which was rejected in the early 1990s) came into the limelight again, giving life to TATA-SIA Ltd or Vistara Airlines. Tata Sons have a 51% shareholding in the entity, and the remaining stake is held by Singapore Airlines.

Currently, Vistara has a fleet of 47 aircraft and a market share of 8.1% in the Indian civil aviation industry. However, the airline is not profitable. From a loss of Rs 400 crore in FY16, it has ended up in a loss of Rs 1,612 crore in FY21. The company has raised fresh capital of Rs 1,835 crore in FY21 as a result of the high capital requirements of the industry.

In 2013, Malaysian global low-cost airline, AirAsia, was also interested in starting its Indian subsidiary. They created a JV with Tata Sons in India. AirAsia India currently has a market share of 6.7%, with a fleet size of 33 aircraft. The Tata Group has an 83.6% stake in this airline. Similar to Vistara, Air Asia India is also a loss-making company. The company reported a loss of Rs 1,533 crore in FY21, almost double compared to the previous year.

The Airline Industry – An Analysis

Before the Covid-19 pandemic hit the airline industry, nearly 16 crore Indians utilized air travel as a major mode of transport. The United States tops the chart by carrying 92 crore travellers, followed by China with 65 crores. This report indicates the scope of penetration of airlines in India. 

IndiGo Airlines tops the chart with a share of more than 58%. The combined market share of the 3 companies led by the Tata Group will be only 25%. 

We can see the magnitude of the fleet size of IndiGo compared to Vistara and AirAsia. Even though Air India has witnessed a lot of selling pressure on its fleet to manage debt, the company still manages to have a fleet strength of 172.

Conclusion

The arrival of well-experienced management is positive news for the stressed airline. The expertise of the Tata Group in managing and collaborating with international air carriers will help the new entity find its path. In 2019, N Chandrasekaran (Chairman of Tata Sons) said that they are not interested in running a third airline unless all are merged. Thus, there are a lot of rumours surrounding the merger of the three entities. However, such a merger can be a double-edged sword. If not managed properly, we may see a similar situation of the Air India-Indian Airlines merger or a similar case of the recent unification of Vodafone-Idea.

It is important to note that none of the existing airlines is profitable. Increasing competition, high capital requirements, debt, and the Covid-19 pandemic are some of the major concerns for this business. In this scenario, it is an advantage for new airline players to start from scratch and keep their balance sheet strong. One such move has been made in the industry by the Stock Market Big Bull Rakesh Jhunjhunwala. He has announced a new airline venture, Akasa. The lack of penetration of air travel in India, as well as being a comparatively cheaper mode of transport for long distances, is the fuel that drives these airlines in the long term.

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Editorial

TCS Q3 Results Analysis

India’s largest IT company, Tata Consultancy Services (TCS), reported better-than-expected results for the quarter ended December 2020 (Q3). In fact, it was the firms’ strongest third-quarter result in nine years. Despite the negative effects of the Covid-19 pandemic, TCS has been able to comfortably secure its market share in the IT industry. Let us dive into specific details regarding its performance for the October-December quarter. 

Important Q3 Figures

  • TCS reported a 7.18% year-on-year (YoY) increase in consolidated net profit to Rs 8,701 crore. The IT major had posted a profit of Rs 8,118 crore in Q3 of the previous financial year.
  • The company’s consolidated revenue increased by 5.42% YoY to Rs 42,015 crore in Q3 FY21. Its revenue stood at Rs 39,854 crore in the corresponding period in FY20.
Quarterly FinancialsQ3 FY21Q2 FY21Q3 FY20QoQ change(%)YoY change(%)
Revenue (Rs crore)42,01540,13539,8544.75.4
Net Profit (Rs crore)8,7017,4758,11816.47.18
Source: TCS’ Q3 Financial Report
  • Constant currency revenue growth stood at 4.1% QoQ (or 0.4% YoY). [Constant currency refers to a fixed exchange rate that eliminates fluctuations when calculating financial performance figures. Companies with significant operations in other countries often represent their earnings in constant currency terms, since floating exchange rates can often mask true performance]
  • In dollar terms, revenue increased 5.1% to $5,700.6 million during the same period. 
  • The operating margin (or EBIT margin) stood at 26.6%. This is the highest EBIT margin in the last 5 years, even after rolling out salary hikes. [Earnings Before Interest & Tax (EBIT) margin is the ratio of operating income to net sales]
  • TCS has also been able to secure the lowest-ever employee attrition rate in IT Services at (Last Twelve Months) 7.6%. [Attrition rate is measured as a percentage of employees that left a firm over a specific period]
Source: TCS’ Q3 Financial Report

Historically, it is seen that Q3 tends to be a seasonally weak quarter for IT companies. This is due to year-end holidays in the United States and Europe, which are key markets for these companies. However, TCS has completely beaten street estimates and has posted great results during the quarter. The company has also announced an interim dividend of Rs 6 per share. It has fixed January 16 as the record date to determine the eligible shareholders. The payment date of the dividend will be February 3.

Robust Growth and Expansion

Now, let us look at the segment-wise growth of the company in Q3. The revenue growth of TCS was led by the Manufacturing vertical, which grew 7.1%. The Banking, Financial Services, and Insurance (BFSI) vertical showed a sequential growth of 2%. This segment contributes 30% to the IT major’s revenue. Other verticals of TCS that showed improved growth include Life Sciences and Healthcare (+5.2%) and Communications & Media (+5.5%). The North American market, which contributes to half the company revenue, saw 3.3% QoQ growth. 

TCS continued to receive significant orders from prominent companies during the October-December period. Many of its clients embraced digital transformation because of disruptions caused by the Covid-19 pandemic. There was a greater demand for TCS’ cloud-based services as well. 

The company’s total deal wins for the quarter ended December were reported at an impressive $6.8 billion (~Rs 49,915 crore)! In November, TCS agreed to acquire the employees and select assets of Pramerica Systems from insurance giant Prudential Financial Inc. It had also announced the acquisition of Postbank Systems, the IT unit of Deutsche Bank AG- a deal that is estimated to be around $500-$1,000 million (~Rs 3,670 crore-Rs 7,341 crore). These massive deals would help the firm to expand in key European markets.

“Growing demand for core transformation services and strong revenue conversion from earlier deals have driven a powerful momentum that helped us overcome seasonal headwinds and post one of our best performances in a December quarter” – TCS CEO Rajesh Gopinathan.

Conclusion

The Covid-19 pandemic had a substantial effect on almost all IT companies during the first quarter of FY 2019-20. Some companies lost several clients, whereas many others faced a slowdown in sales revenues. Employees were forced to work from home, which initially led to an increase in costs. Despite all odds, the IT sector showed a very strong rebound over the next two quarters. This was primarily due to massive deal wins and clients spending more on cloud computing and artificial intelligence (AI). Technology companies have also been able to cut costs.

The Q3 results posted by Tata Consultancy Services has become a picture-perfect definition of a strong recovery. It has been able to show promising revenue growth across all segments and continues to receive significant orders. They have worked extensively to create better products to meet the demands of all types of clients. At a time when most firms are struggling to cope amidst the Covid-19 pandemic, TCS had even declared salary hikes for its employees in October! The company’s management is confident that TCS will post double-digit growth in the financial year ending March 2022. Interestingly, the stock price is now trading above Rs 3,200, while the recently concluded buyback’s price was around Rs 3,000. Let us look forward to seeing how the IT major plans to further establish its dominance across the globe.

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Market News Top 10 News

Covid-19 Expert Panel Recommends SII’s Covishield for Emergency Use – Top Indian Market News

Covid-19 expert panel recommends SII’s Covishield for emergency use

The Subject Expert Committee (SEC) on Covid-19 of the Central Drugs Standard Control Organisation (CDSCO) has recommended granting emergency use authorisation (EUA) for ‘Covishield’, a Covid-19 vaccine developed by Oxford University and AstraZeneca. The Pune-based Serum Institute of India (SII) has tied up with AstraZeneca to manufacture Covishield in India. The Drugs Controller General of India (DCGI) will now take the final decision on emergency approval of the vaccine based on the expert panel’s recommendations.

After SII’s application, the SEC has started reviewing the EUA application by Bharat Biotech for its Covid-19 vaccine, Covaxin, and is yet to take a final decision on the matter.

Read more here.

Tata Sons overtakes GoI as largest promoter of listed companies

As per a report from Business Standard, Tata Sons has overtaken the Government of India (GoI) as the largest promoter of listed companies. This is the first time in nearly two decades that the government has not held the position. This has been due to the decline in the market capitalisation of state-run companies. The report states that Tata Sons’ stake in the conglomerate’s listed companies is now worth Rs 9.28 lakh crore, up 34.4% on a year-on-year (YoY) basis.

Read more here. 

Automobile companies register improved sales growth in December

Major automobile companies registered healthy sales growth during December 2020. Maruti Suzuki posted a 20.2% YoY increase in total sales at 1.60 lakh units in December, which was led by compact vehicles, LCVs, and vans. Mahindra & Mahindra announced that its overall passenger vehicle sales were up 3% YoY at 16,182 units, with a 3% growth in exports at 2,210 units. Escorts Ltd’s domestic tractor sales grew 90% YoY at 7,230 units, while exports were up 63.3% at 503 units.

Read more here.

WHO approves Pfizer-BioNTech vaccine for emergency use

The World Health Organization (WHO) announced that it has cleared the Pfizer-BioNTech coronavirus vaccine for emergency use. This means that poorer countries may soon get access to the shot, which is already available in Europe and North America. Every country that has a drug regulatory agency will have to issue its own approval for any COVID-19 vaccine. However, countries with weak systems usually rely on the WHO to vet the shots.

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TCS completes acquisition of Postbank Systems from Deutsche Bank AG

Tata Consultancy Services (TCS), on Friday, said it has completed the acquisition of 100% shares of Postbank Systems AG (PBS) from Deutsche Bank AG. PBS has been the internal IT provider for Postbank AG, a subsidiary of Deutsche Bank. It caters to the German retail banking market. In November 2020, TCS had announced its plans to acquire Postbank Systems through its subsidiary, Tata Consultancy Services Netherlands B.V.

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Praj Industries bags Rs 226 crore order from Indian Oil Corporation

Praj Industries Ltd, on Friday, said it has bagged a Rs 226.90 crore order from Indian Oil Corporation Ltd (IOCL). The company stated that the order is for the execution of a zero liquid discharge system – water treatment package and wastewater treatment package of Acrylic/Oxo-Alcohol Project, at IOCL Dumad in Gujarat. Praj Industries is a Pune-based industrial biotechnology company.

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Coal India output rises 6% to 157 million tonnes in Q3

Coal India Ltd’s output grew 6.3% YoY at 156.8 million tonnes (MT) during the October-December quarter (Q3). The company had reported an output of 147.5 MT during the same period in the previous financial year (FY20). The state-owned mining company also posted over 9% YoY growth in offtake at 154.6 MT during Q3 FY21. [Coal offtake is the amount of coal supplied from the coal mine]

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Gayatri Projects declared lowest bidder for road project worth Rs 1,323 crore

Gayatri Projects Ltd said it has been declared as the lowest bidder for a road project worth Rs 1,323.52 crore. The company has been declared as an L-1 bidder for the development of a six-lane access-controlled highway in the Uttar Pradesh portion of the Delhi-Saharanpur Highway. Gayatri Projects is a Hyderabad-based construction engineering company.

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Dabur launches ‘Dabur Red Pulling Oil’, an Ayurvedic mouthwash

Dabur India Ltd has announced its entry into the mouthwash category with the launch of Dabur Red Pulling Oil, an Ayurvedic mouthwash. The launch of this Ayurvedic detox for teeth and gums marks another first for Dabur and the Ayurvedic products industry in India. Priced at Rs 275 for a 195ml pack, Dabur Red Pulling Oil is initially available across all leading e-commerce platforms and will soon be rolled out through regular retail channels.

Adani Green secures 600 MW wind-solar hybrid power project

Adani Green Energy announced that its subsidiary, Adani Renewable Energy Holding Eight Ltd, has received the contract to build a 600 megawatts (MW) wind-solar hybrid power project. This will take the company’s total project portfolio to 14,795 MW. The fixed tariff for this project is Rs 2.41 per unit for a period of 25 years. The project is scheduled to be commissioned in 18 months from the effective date of the power purchase agreement.

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Market News Top 10 News

DBS Completes Takeover of Lakshmi Vilas Bank – Top Indian Market News

DBS completes takeover of Lakshmi Vilas Bank

Singapore-based DBS Group, on Monday, stated that its Indian subsidiary- DBS Bank India- has completed the takeover of distressed Lakshmi Vilas Bank (LVB). LVB’s banking services have been restored, with all branches, digital channels, and ATMs functioning as usual. The interest rates on savings bank accounts and fixed deposits will remain unchanged until further notice. All employees of LVB will continue in service and are now part of DBS Bank’s workforce. 

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Govt likely to spend Rs 18,000 crore on priority vaccination for Covid-19

The Indian Government is likely to spend Rs 18,000 crore for the first phase of priority vaccination for Covid-19. This is according to a report from CNBC-TV18. The projected cost has been estimated by an expert panel comprising of Niti Ayog and Health Ministry officials. Currently, the panel is in the process of identifying 30 crore priority beneficiaries such as health care workers, police, sanitation workers, and the elderly. However, the report also states that these are approximations and the actual cost is yet to be finalised.

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Banks in India to see capital decline over two years without fresh infusion: Moody’s

A report from Moody’s Investors Service stated that Indian banks will see a larger capital decline without further infusion, over the next two years. Moody’s says that the uncertain trajectory of asset quality is one of the biggest threats for emerging market banks. The report also states that the 2021 outlook for banks in emerging markets (such as India) is negative.

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Hindustan Construction, Vensar JV wins Rs 236 crore railway order

Hindustan Construction Company Ltd, in a joint venture with Vensar Constructions Company Ltd, has bagged two contracts worth Rs 236 crore, from the Northeast Frontier Railway. The companies will construct a portion of the Bairabi-Sairang broad gauge rail line. This is part of the Indian Railways’ plans to improve its network across North-East India. Hindustan Construction’s share in the order is placed at Rs 130 crore.

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Shapoorji’s $1.2 billion deal with ADIA on hold over debt issues: Report

The Shapoorji Pallonji Group has kept its logistics venture with Abu Dhabi Investment Authority (ADIA) on hold. According to a report from Business Standard, the reason for keeping the deal on hold is due to debt issues and the ongoing Covid-19 pandemic. The group had planned to launch a $1.2 billion (~Rs 8,874 crore) venture with ADIA to invest in logistic centres in India.

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Serum Institute rejects volunteer’s claims of suffering side effects; seeks damages worth Rs 100 crore

The Serum Institute of India (SII) filed a Rs 100 crore defamation case against a Chennai-based volunteer who took part in its ‘Covidshield’ vaccine trials. The volunteer had alleged that the vaccine triggered an adverse reaction, which included neurological impairment. On November 21, the volunteer sent a legal notice and sued SII for Rs 5 crore. SII has denied the allegations and has stated that there was no correlation between the vaccine trial and the medical condition of the volunteer.

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Tata Sons may raise stake to over 76% in AirAsia India by end of FY21: Report

As per a report from Business Standard, Tata Sons is planning to gradually raise its stake in AirAsia India to more than 76% by the end of 2020-21. This may allow Malaysia-based AirAsia Group (which holds a 49% stake in the company) to exit its operations from India. The AirAsia Group earlier stated that it was struggling to recover from the Covid-19 impact, and had hinted at exiting its operations in India.

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Paytm Money launches IPO investments for retail investors

Paytm’s wholly-owned subsidiary, Paytm Money, will now facilitate investments in Initial Public Offerings (IPOs). It will enable investors to instantly apply for the latest IPOs from their UPI-linked bank accounts and complete the application process in 3-4 days. The company is aiming to capture 8-10% of applications market share in the first year of launch.

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IHCL announces expansion in eastern India with Ambuja Neotia Group

Indian Hotels Company Ltd (IHCL) has announced the signing of three hotels in eastern India (two in Kolkata and one in Patna), with the Ambuja Neotia Group. The company’s CEO Puneet Chhatwal stated that 60% of revenue in FY21 is expected to come from its leisure segment. He further stated that IHCL will be present in 9 out of 10 states in the east. IHCL, which runs the Taj group of luxury hotels, is owned by the Tata Group.

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Indian Railways record 371% increase in electrification during 2014-2020

Piyush Goyal, the Union Minister of Railways, stated that the electrification of 18,065 km of railway lines has been completed during 2014-2020. There constitutes a 371% increase in electrification, as compared to the period between 2009-2014. The minister also stated that the electrification process will help eliminate pollution, cut down imports of fuel, and save costs.

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Categories
Editorial

Mistrys Cut Business Vows with the Tatas After 70 Years of Legacy

Shapoorji Pallonji tata

A few days back, Shapoorji Pallonji Group decided to sell off its 18.4% stake in Tata Sons. The Shapoorji Pallonji Group(SP Group) is headed by Pallonji Mistry and his son, ex-Tata Chairman Cyrus Mistry. The Mistrys and Tatas have been associated with each other for the past 70 years. Their relationship has turned sour in the past few years.

The reason why SP Group and the Tatas were in news was since SP Group which has been hit by a liquidity crunch intended to raise capital by putting their 18.4% stake as collateral. This did not go down well with Ratan Tata. He did not want their stake to go in the wrong hands. A battle followed in the courts. How did Ratan Tata’s relationship with Cyrus Mistry turn sour? Why is SP Group selling its complete stake in Tata Sons? Let us find out what lead the long-time friends turning into foes.

Cyrus Mistry Ratan Tata’s Blue Eyed Boy

Ratan Tata had immense faith in Cyrus Mistry. In fact, it was him who declared Mistry as his successor as Chairman of Tata Sons in 2013. Shortly after he was appointed as chairman, many of his business decisions did not go down well with Ratan Tata. Tata felt that many of Mistry’s decisions were against the ethics and morals of the company and that some of his decisions didn’t do justice to the Tata name. After all, Tatas are admired for their ethics.

Ratan Tata earlier offered Mistry to resign voluntarily, he even asked his close confidante Nitin Nohria, also the Dean of Havard Business School and Director at Tata Sons, to convince Mistry to resign voluntarily. Mistry failed to comply. He was voted out as chairman by the Tata Sons Board on 24 October 2016. Thereafter he was voted out of every possible board, making the bitterness between Ratan Tata and Cyrus evident.

Why does SP Group want to Sell Off Their Stake?

SP Group hasn’t done very well in the past few years. The company has accumulated a lot of debt. The company works mostly in the real estate and infrastructure sector which hasn’t performed well over the past year. When COVID struck, the situation worsened. SP Group currently owes debt worth Rs 28,000 crores.

In the past, SP Group has already pledged a few its shares in Tata Sons to raise a capital close to Rs 1,437 crores. However, SP Group missed the deadline for payment.
This was worth worrying for many at Tata Sons.

Tata’s Worry

While SP Group still owed the debt, it decided to raise capital by pledging shares it has in Tata Sons. They wanted to raise money to finance themselves by keeping Tata Sons shares as collateral. In case SP Group fails to pay, the shares might be transferred to the creditor. This did not go down well with Ratan Tata since he did not want Tata Sons’ shares to go into the hands of an unfriendly investor.

Tata Sons Board approached the Supreme Court. The plea was to restrict the SP Group promoters from raising capital by pledging their shares in Tata Sons. Their plea was that under the company’s articles of association (AoA), the board of Tata Sons has the first right to buy the shares at fair market value. The move shattered SP Group’s hope of raising the capital of Rs 3,750 crores from Canadian Investor Brookefield as well.

Coming To A Common Ground

Recently, SP Group confirmed their intentions of selling their complete 18.4% stake in Tata Sons. SP Group said in an official statement: “a separation from the Tata Group is necessary due to the potential impact this continuing litigation could have on livelihoods and the economy”.

The best-case scenario for SP Group would be to get a fair value for its stake in the Tata’s in order to get their company out of a liquidity crisis. The value of the 18.4% stake which SP Group has in Tata Sons is 1.78 lakh crores or $24 Billion. Such a big amount may not be covered at one-go but in parts, a proposed by Tata Sons.

Apart from a few companies like TCS, none of the Tata Companies have faired well this quarter owing to the COVID-19 pandemic. For Tata Sons, the problem of arranging funds and deciding on the fair value of the purchase still remains. Tata has set up a team for contingency fund planning, which shall decide on how to arrange funds to buy out the stake owned by the Mistrys.

TCS’s buyback has given Tata Sons some relief. Tata Consultancy Services’ buyback of shares has infused close to Rs.11,000 crores in Tata Sons. This gives Tata some liquidity to begin the acquisition in parts if it decides to do so.

Also recently, there were unconfirmed reports about Walmart investing around $25 Million into Tata Group’s proposed ‘super app’, which will bring all of Tata’s Retail channels under a single app. The amount to be invested by Walmart and the amount which Tata shall give to SP Group is a close figure… What do you think is cooking up?