Midnight News Update –Jun 30th2017
Even as the government put forth its plan to sell off Air India, one of the first expressions of interest came from Indigo Airlines, which is the largest airline in India with a domestic market share of nearly 40%. However, Indigo has only expressed interest in the international operations of Air India and has not spoken about its domestic operations. Air India is laden with debt of nearly Rs.50,000 crore and has been consistently making losses over the past many years. Ironically, airline companies have been outperformers in the equity market on the back of rapid growth and cheap oil prices.
The official launch of the GST is likely to be an elaborate and grand affair on the night of the 30th of June. GST is likely to be one of the biggest and most far-reaching tax reforms in India as it will subsume over 17 different central and state-level taxes into a national level GST. Parties like the Congress, DMK, CPI-M and TMC have chosen to boycott the function whereas Nitish Kumar of the JD(U) is likely to attend the function. Some key businessmen, Bollywood personalities and senior bureaucrats and politicians have also been invited for the launch of GST. The GST goes officially live from July 01st 2017.
Azim Premji Investments, the family office of the Wipro Chairman, will be acquiring a 2.2% stake in Aditya Birla Capital after its internal restructuring is completed. Aditya Birla Capital will issue a total of 4.8 crore preference shares at the price of Rs.145.8/share and will entail an investment of Rs.700 crore by Premji Investments. This deal values the financial services business of Aditya Birla Group at Rs.32,000 crore (a little under $5 billion). Premji Invest manages a corpus of nearly $1 billion and has been an active investor in a variety of such strategic investments from a long-term perspective.
Vedanta plans to spend nearly $3 billion over the next 3 years to energize its oil reserves and double its oil output on an annual basis. According to a spokesperson of Vedanta, the Barmer block acquired by Cairn India has huge potential and is likely to be viable even when Brent Crude is priced as low as $40/bbl. Vedanta will account for 50% of India’s oil production by 2020 and it is paradoxically the only large oil company that is adding investments in oil. The entire $3 billion is likely to be funded internally and the company does not have any plan to raise additional debt from the markets or from banks.
ICICI Bank led consortium pulled off a coup of sorts as it managed to push through the sale of Jaypee Cements to Ultratech. In fact, the deal had been in the limbo for a long time and the consortium push surely helped close the deal. The deal is worth Rs.16,189 crore and is likely to largely diffuse the debt crisis at Jaypee group. In fact, this is the largest resolution transaction in Indian banking and the RBI must be hoping for more such cases to quickly resolve the NPA problem of banks. The deal will make a lot of sense for Ultratech as it will help the company increase its cement capacity by 21 million tonnes to 91 million tonnes per annum (tpa). Of course, this deal will pare debt by Rs.14,000 crore in case of Japyee, but the group still has outstanding debt to the tune of Rs.60,000 crore on its books.
The latest trend in the IT market, artificial intelligence, is likely to be generate $15 trillion worth of output by the year 2030. This will be more than the combined GDP of India and China, which is how big the opportunity in AI is. This benefit will come in the form of increased producer efficiency as well as enhanced consumption. Global GDP which currently stands at $75 trillion is likely to get closer to $86 trillion by 2030 and is likely to be largely driven by AI. Being an economy driven by manufacturing, the Chinese economy is expected to benefit substantially from the focus on artificial intelligence.
