Innholdsfortegnelse for 9-Aug-20 i Business Today

Demand for automobiles rose sharply in June compared to May as states eased the coronavirus-induced lockdown The rise was led by rural and semi-urban areas. People bought vehicles to commute as public transport remained dysfunctional; Hero MotoCorp sales rose nearly four times Tractor demand remained strong due to partial economic recovery in rural markets; Escorts reported a rise in sales Sales, however, were substantially down yearon-year. This shows it will be months before demand returns to pre-Covid levels…

Scale has always fascinated Future Group Chairman Kishore Biyani. The bigger, the better. In 2017, when he unveiled his ambitious Retail 3.0 strategy, he articulated his dream of creating a $1 trillion business by 2047. At that time, the world’s biggest retailer Walmart generated $485 billion in revenue, a little less than half of Biyani’s ambition. But Biyani was banking on a modest year-on-year growth of 20 per cent per annum for his then ₹20,000 crore empire. His recipe for greater scale: service every possible consumer. First with 70,000-1,00,000 sq.ft. big-box retail stores, Big Bazaar. Second, in local areas through 2,000 sq.ft. small-format neighbourhood stores, EasyDay (he targeted 10,000 tech-enabled EasyDay stores by 2020). And third, create an online marketplace where these stores could access Future Group’s entire retail inventory.…

The united States recently threatened France with a 25 per cent tariff on goods imported from the country if the latter went ahead with its 3 per cent tax on digital services provided by foreign-based tech companies. It had slapped a 25 per cent tariff on import of French wine last year for the similar reason, forcing the French government to defer the implementation of its digital services tax by almost a year (from January 1 to December 31, 2020). The US, home to many tech giants at the receiving end of the digital tax planned by France and other countries, is leaving no stone unturned to ensure that its technology companies don’t end up being the worst hit. Barely a month ago, it had pulled out of talks on…

The current crisis is more like a war than a recession, normal rules of business may not apply for a while Research suggests if firms cut back less on ad budgets now, they will perform better in the long run The role of advertising is limited because the crisis is restricting both demand and supply Pay cuts and job losses have led to shortage of funds. Brands need to adapt to a less-affluent world Brands should change their mix of products and services, or find newer ways of distributing them Source: adam&eveDDB…

This year has been particularly good for 25-year-old Vignesh Sridharan. The management graduate from XLRI has joined as a trainee in the sales and marketing division of Reckitt Benckiser, a company he interned with last summer and got a job in October. The company held on to the offer even during the pandemic, and Sridharan was onboarded in June. He is currently operating out of Kolkata. In a season of layoffs and pay cuts, Sridharan is mindful of the happy confluence of three factors — luck, choice of sector and the value of sticking to commitments that recruiters make. All three played out in his case. Among his batch of 180, the majority had no issue of any sort, either in getting a job offer or in onboarding. Sridharan’s choice…

The exodus of companies from China is not new. It’s been happening since the start of the trade war between China and the US in 2018. The only difference this time is that India has a fair chance of attracting companies leaving China. This is in sharp contrast to the earlier situation where almost all companies which moved out of China went to CLMV (Cambodia, Laos, Myanmar, and Vietnam) countries as they were cost efficient and better connected to the global supply chain. The Covid-19 pandemic has changed everything. As companies look at diversifying away from China, they are looking for not just cost savings but also a captive market for their products and services. India, with its big market, is asking companies to set up base here, reportedly developing…

Acquired Nilgiris for ₹300 crore (2014); EasyDay for ₹500 crore (2015) and Heritage for ₹295 crore (2016) Set up 1,100 small format stores; most were non-performers. Consumers were not willing to pay ₹999 annual fee for 10 per cent discount Aggressive expansion of small-format stores backfired Private brand strategy failed. Aimed to scale up private brands (Future Consumer) to ₹20,000 crore by 2021. Reached ₹4,040 crore in FY20 Strategy of using stores to distribute private brands and reduce presence of established brands led to dip in footfalls Private brands constituted 35-40 per cent of inventory, but there were quality issues While rentals shouldn't exceed 2 per cent of a store’s cost, in case of Future Group, they were 10-20 per cent of the cost Liquidity crisis prior to Covid and…

MORE INBOUND DEALS High global liquidity, low interest rates to encourage acquisitions Investors from China to stay away US and European investors to look for more opportunities Covid-hit sectors such as hospitality, tourism, real estate, roads to attract interest OUTBOUND M&As SET TO LOSE STEAM Expect a few strategic deals, not for attaining scale Small-ticket transactions to dominate Technology, digital capabilities to be main interest areas Focus on acquiring R&D facilities, innovative products OTHER DETAILS Private equity to control deals Limited exits by PEs via IPOs Focus on restructuring, cost rationalisation and new markets Stress on management buyouts Committed investments worth $80 billion waiting to happen Figures in $ billion; Source: PwC report/VCC Edge/Venture Intelligence…

Ad volumes fell over 35 per cent of their pre-Covid numbers during the early days of the lockdown. They later recovereds to 23 per cent The number of brands advertising on television declined from 2,045 to 1,370 Average time spent on smartphones went up by 11 per cent; data usage per day at 1.1 GB This has led to brands increasing their digital connect with audiences Digital ad spends set to be 30-35 per cent of the overall ad industry in 2020, against 20 per cent in 2019 Companies such as Nestle, Godrej Consumer or Marico have increased their digital ad spends by up to 30 per cent, from low single-digits…

On July 13, in a rare expression of solidarity, representatives of half-a-dozen Indian private healthcare industry associations, at least a dozen heads of leading private hospitals and the Health Services Committee of industry body Ficci announced a virtual press conference. It got postponed at the last minute to July 15, only to get cancelled again, as the central topic of discussion was “sub judice.” The topic, which representatives of top ranking private hospitals such as Apollo, Fortis, Hinduja, DM Healthcare and Columbia Asia wanted to discuss, was challenges due to the Covid-19 pandemic. The issue most central to this — price caps on Covid tests and treatments by central agencies, state governments and the General Insurance Council — is also being considered by courts. Though the event got postponed, there…

In between his busy schedule of managing 750 employees and strategising, Ankit Mehrotra, Founder and CEO of Dineout, finds time to de-stress. He cooks two-three times a week, and considers it the best way to take breaks in these times of work from home. While studying in London and then working as an investment banker overseas, Mehrotra, 35, learned six cuisines, including Italian, Spanish, French, Indian and Mexican. “I was learning almost one cuisine every year from my friends at the university. I can cook five-six dishes in each of those cuisines,” he says. Mehrotra’s personal favourites are pasta and grilled chicken, his go-to dishes because they are the quickest to prepare. “I go to buy groceries, and do elaborate cooking, especially on weekends, for my family of seven,” he…

Central government finances came under heavy strain during April and May. Revenue receipts during these two months, at ₹44,667 crore, were merely 2.2 per cent of budget estimate for FY21 Net tax collections shrank 70 per cent year-on-year to ₹33,850 crore, 2.1 per cent of budget estimate, compared to 7 per cent in April-May 2019 Fiscal deficit touched ₹4,66,343 crore, 58.6 per cent of annual budget estimate UNION GOVERNMENT ACCOUNT April-May 2020…

Economic Prospects As many as 63% respondents expect improvement Order Book Just 4% expect things to worsen Financial Situation 37% say they see a ray of hope Sales Pickup 65% see higher sales in current quarter Hiring Pickup More than half see no change Profit Pickup Half expect profits to rise from here on Has India Done Enough to Revive Economy? What Kind of Intervention Could Help Revive Economic Growth for FY21 and Beyond?…

According to ICRA, Future Group’s six listed firms had ₹12,778 crore debt in September 2019 The issue surfaced in mid-February when shares of listed firms started crumbling. This led to rating downgrades. Lenders sought more promoter shares as collateral for loans against shares Pandemic disrupted operations. Cash flow was not enough to pay off debts; what came to the rescue was government’s exemption of Covid-related debt from default and suspension of fresh insolvency cases UBS and IDBI Trusteeship tried to invoke pledged shares but Biyani got interim relief from the Bombay High Court. The Supreme Court dismissed the Special Leave Petition filed by UBS AG London Branch challenging the high court ruling…

The Sensex posted its best quarterly return of 19 per cent in the first three months of the current fiscal. Keeping in step, other broader indices, such as large-cap, mid-cap and small-cap, posted similar returns. But are all constituents of these indices delivering identical returns or are some of them bucking the trend? The trigger for the rally came from retail investors and domestic institutional investors (DIIs) even as foreign portfolio investors (FPIs) pressed the panic button. DIIs pumped in ₹88,132 crore in Indian stock markets in the first half of 2020, almost double of what they had invested in the entire 2019. Mutual funds invested ₹39,359 crore. On the contrary, FPIs turned net sellers, pulling out over ₹18,000 crore during the period. They had pumped in a little over…

The stock market is on a roll again after falling steeply in March due to spread of coronavirus and the resulting lockdown. The benchmark Nifty has risen 43 per cent since March 24, when it had hit 7,511 (it closed at 10,768 on July 10). Equity mutual fund investors, whose portfolio had crashed 30-40 per cent, have a reason to rejoice. Not just largecaps, even midcap and smallcap funds have risen up to 35 per cent since March 24, a signal that the recovery is broad-based. Most sectoral indices are also up significantly. Even the worst-performing theme – PSU – is up 27 per cent. Is the worst behind us? Not necessarily. Coronavirus cases are still rising. While slowdown in the June quarter is a given, there may be negative…