Reliance Jio turned around to profit during the third quarter ended December 2017 even as operating profits grew by 82%. The big boost to the Reliance Jio numbers came from its ARPU of Rs.154, which was sharply higher than the Rs.123 ARPU reported by Bharti Airtel. The big advantage to Reliance Jio came from the cut in interconnect fee, which was proving to be the big drag on the profits of Jio. Jio is already the fourth largest player in the telecom industry and in a span of just 15 months it has emerged as a formidable player which has redrawn the competitive contours of telecom in India.
After the decision to buy the government’s 51.11% stake in HPCL for Rs.37,000 crore, ONGC has decided to increase its debt raising plan by nearly 40%. This takes the total debt raising plan of ONGC from Rs.25,000 crore to Rs.35,000 crore. This will create the first fully integrated oil company which interest stretching from oil drilling, gas, crude oil refining and distribution and marketing. Globally, that is the accepted model in the hydrocarbons especially if you see giants like Exxon, Chevron, BP and Total; they are vertically integrated. This move will give ONGC the global size and scale.
There is an interesting shift happening in the recruitment profile of the IT biggies. In the last 1 year, TCS has added nearly 60,000 people to its rolls of which over 20% were recruited outside India. The decision is obviously in response to concerns in the US and other countries that Indian software engineers were taking away jobs from locals. To pre-empt harsh measures by these governments, something like the H1-B fiasco, the IT companies have taken the lead in recruiting local talent in other countries wherever possible. Once the domestic jobs scene is taken care of, criticism automatically dies down!
London based oil experts are now betting on Brent crude crossing the $100 mark soon. That looked years away a few months ago, but a mix of weaker US shale output and sustained supply cuts by the OPEC have managed to bring crude oil prices closer to the $70/bbl mark. One of the reasons for the buoyant demand for oil is the economic growth in countries like Japan and the EU. The US tax cuts are also expected to add a lot to oil demand. Crude oil prices have already rallied by over 50% in the last 6 months and there is always that fear that demand should start faltering at higher levels.
Even as the government is exploring ways and means to deal with stressed assets, RBI deputy governor Viral Acharya has put forward the idea of an online platform to sell the stressed assets and bad loans of the banking system. Such a system already exists in the US and Dr. Acharya believes that it can be replicated in India too. According to Dr. Acharya, it can not only create a vibrant secondary market for stressed assets but also do so in a transparent manner. In Asia, Korea too tried the experiment with adequate success when it was faced with a banking crisis in the late 1990s. Currently, gross NPAs are 10.2% of the total loan book of banks and the purpose of the IBC is to ensure that there is speedy resolution of the stressed accounts and bank lending activity can get back to normal.
If one really wants to look at the success of the equity cult in India then the best indicator is the number of folios added in mutual funds. During the year 2017, mutual fund folios grew by 1.37 crore to touch a level of 6.65 crore. This is largely representative of the spread of the equity cult in India. While folios are not unique individuals, they are broadly representative of the surge in retail interest in markets. Mutual funds saw an infusion of Rs.2 trillion in the last 1 year of which nearly Rs.1.5 trillion came into equity funds and ELSS funds, indicating sharply higher retail appetite for indirect equity.
