Business & Finance - Current Affairs for October, 2016

Pharmaceutical giant Dr. Reddy’s Laboratories Ltd on 26th Oct 2016 announced a strategic partnership with Gland Pharma.

• Companies seek to distribute a diverse portfolio of eight injectable Abbreviated New Drug Applications.
• The portfolio is a mix of filed ANDAs pending approval by the US FDA and ANDAs that will be filed imminently.
• The portfolio comprised genetic injectables administered in hospitals and clinics in the US.
• Dr Reddy’s Laboratories is an Indian MNC pharma company based in Hyderabad, Telangana.
• The company was founded by Anji Reddy who previously worked in the mentor institute- Indian Drugs and Pharmaceutical Limited.
• Dr. Reddy’s manufactures and markets a wide range of pharma in India and overseas.
• The company has over 190 medications, 60 active pharmaceutical ingredients for drug manufacture, diagnostic kits, critical care and biotechnology products.

AT&T, a telecom major has decided on 22nd Oct 2016 to purchase Time Warner Inc for USD 85.4 billion in a deal that will transform the phone company into a media giant

• The telecom company has agreed to pay USD 107.50 dollars per share, evenly split between stock and cash
• This deal is expected to close by 2017
• The new company will be headed by the telecom company’s CEO Randall Stephenson
• AT&T will tap USD 40 billion in bridge loans with USD 25 billion from JP Morgan and USD 15 billion from BoA
• AT&T will rely on its entertainment business for 40 percent of the revenue after this
• The decision will pair the wireless and pay television subscribers of the telecom major with Time Warner’s media lineup including networks like CNN, TNT and HBO channels

On Oct 24, 2016, the TATA Sons board fired Cyrus Mistry less than 4 years into his term at the chief of the software-to-steel conglomerate

• The board did not give a reason for the removal of the 48-year-old Irish citizen
• Predecessor Ratan Tata was appointed as interim chairman
• Mistry had earlier headed the Shapoorji Pallonji Group’s construction business has been considered by many to be struggling to lift the conglomerate’s financial performance
• The divestment of its struggling UK assets and corporate divorce with NTT DoCoMo were seen as reasons for this abrupt dismissal
• While TCS and TATA Motors performed well, during Mistry’s period, the four other flagship companies underperformed
• TATA Trusts, the principal shareholder of TATA Sons with a 66 percent stake was not impressed with Mistry’s performance
• TATA Sons has set up a selection committee comprising Ratan Tata, industrialist Venu Srinivasan, Ronen Sen, Amit Chandra and Lord Kumar Bhattacharyya
• The Shapoorji Pallonji group which has 18.4 percent in TATA Sons is said to be working on a legal challenge to Mistry’s removal as chairman
• Mistry was the sixth chairman of the group
• He was only the second chairman who did not carry the TATA name after Nowroji Saklatwala

IT major Wipro has acquired USD 500 million worth Appirio, a US based services firm with a large offshore presence that enables corporates to implement cloud applications such as SalesForce

• This is the second biggest acquisition after Infocrossing by Wipro for USD 600 million in 2007
• Appirio was founded by Chris Barbin, Mike O’Brien, Glen Weinstein and Narinder Singh in 2006
• The 10 year old firm has revenue worth USD 200 million in 2015
• It has an Indian offshore base in Jaipur and customers include eBay, IBM, Sony and Facebook
• In the digital world, as consumer behaviours and expectations are reshaped by experiences, Cloud has acquired importance leading to this acquisition by Wipro.

India’s two largest travel booking portals Ibibo and MakeMyTrip have agreed to merge together in an impending consolidation in the consumer internal sector

• The transaction is estimated at USD 1.8-2 billion
• Another indication of the valuation came from a statement by Makemytrip which pegged the stake owned by Ctrip at 10 percent
• This is a step forward for the rapidly growing travel industry in India
• The acquisition comes after Yatra was acquired by SPV acquisition firm Terrapin Acquisition Corp in a reverse merger deal
• NAspers invested USD 250 million in Ibibo Group recently
• The focus is on moving people from offline to online booking as travel penetration for online websites remains low at 15 percent for the accommodation industry and 18 percent for the organised bus industry

Russia’s Rosneft Oil Company along with its partners on 15th Oct 2016 acquired India’s second biggest private oil firm Essar Oil in an all cash deal valued at USD 13 billion

• Rosneft’s partners include Rosneft Oil Company, United Capital Partners and Trafigura
• The acquisition was announced during the 8th BRICS Summit in Goa
• Rosneft will have a 49 percent stake in the refinery, port and petrol pumps of Essar Oil
• The remaining partners will split the 49 percent equity equally
• Remaining 2 percent will be held by minority shareholders after the delisting of Essar Oil
• Deal includes USD 10.9 billion for Essar’s Vadinar refinery and USD 2 billion for the port terminal that feeds the refinery
• It also includes Essar Oil’s debt of USD 4.5 billion and USD 2 billion debt with the port company and power plant
• Rosneft now becomes the third international player after after Royal Dutch and Shell and British Petroleum to enter the Indian fuel retailing market
• Essar Oil a subsidiary of Essar Group is a fully integrated oil & gas company and is among the largest single site refineries in Vainer, Gujarat with the capacity of 20 MT
• Essar Oil has a portfolio of offshore and onshore oil and gas blocks with around 1.7 billion barrels of oil equivalent in reserves and resources
• The company was established in 1969
• Essar Group is led by Shashi Ruia and Ravi Ruia

As part of the initiative of the Ministry of Commerce & Industry, to provide easy access to the public with regard to Indian export, import and balance of trade data in an analytical format over time and space, Commerce and Industry Minister Nirmala Sitharaman launched a new enhanced Dashboard on Foreign Trade Data.

• The technology will be used for transparent decision making and reaching out to people using real time data
• This dashboard is an improved version of the earlier EXIM Analytics Dashboard developed with many added feature
• It is user friendly, intuitive and provides an accurate picture of the dynamics of foreign trade performance of India
• The new dashboard gives a graphical collection of imports, exports and balance of trade of India
• The new dashboard has an interface providing the user to study Exports, Imports and BOT views
• Import view gives a sharp perspective of how Indian imports have changed compared to the previous year
• Countries can be sorted by Import value and the corresponding value of export trade
• Digitisation of government records and tactic analytics is crucial for fast and effective evidence based planning and policy evaluation
• This plays an important role in effective and transparent governance
• Dashboard also provides an enabling environment to importers and exporters to identify and access international trade opportunities based on reliable and updated information accessible to the public through the government.

Airline industry on Oct 5, 2016 agreed to a framework for reducing the carbon footprint at the UN meeting in Montreal

• It became the first industry and commercial sector to tackle climate change
• International Civil Aviation Organisation president A Rahman called the deal “historic” at the plenary session to cap GHG emissions by 2035 to 2020 levels
• Agreement was reached despite reservations by India, Russia and China
• ICAO announced that after six years of negotiations, a voluntary phase from 2021-2026 will become mandatory in 2027 for states with larger aviation industries
• 64 countries with 85 percent of international aviation activity are participating in the world’s first airline pollution agreement, including US and EU. Only the poorest nations, small island states and countries with global passenger travel of lower than 05 percent will be exempted from the agreement
• Framework agreement is a compromise between the developing and developed world
• Civil aviation produces 2 percent of the world’s carbon emissions
• Agreement is called CORSIA or Carbon Offset and Reduction Scheme for International Aviation
• It will slow the growth of emissions from an industry where passengers will double to 7 billion by 2034
• Deal will cost airlines less than 2 percent of their annual revenues
• CORSIA will apply to global passenger and cargo flights and business jets to generate more than 10,000 tonnes of emissions annually
• Airlines operating such planes will have to buy carbon credits to offset growth productions

TATA Sons Chairman Emeritus Ratan Tata has invested in GOQii a virtual fitness coaching platform.

• According to the IDC, GOQii has been ranked number one with a market share of 16.1 percent in Q2, 2016
• Its CEO and founder is Vishal Gondal
• The company is headquartered in CA with offices in Mumbai and China
• It is a leader in health and lifestyle coaching platforms
• It offers wearable application, guidance from international experts and counselling
• The company raised USD 13.4 million in Series A Funding in November 2015
• TATA group and Ratan Tata have invested in numerous Indian and global startups as well as through RNT Associates.

The philanthropic arm of Infosys, the Infosys Foundation has signed an MoU with IIT_Kharagpur for funding socially relevant projects.

• Funding of travel to international conferences for women and the celebrated research carried out by the IIT in association with ASI for studying the antiquity of the Indus Valley is being carried out as per the MoU
• Corporate houses have a long term relation with this IIT in sponsoring research and consultant projects
• The institute receives INR 100 crore each year for industrially relevant research from various industrial houses
• Murthy also holds a position on the board of governors at the IIT-Kharagpur
• The project 'Tracking the Antiquity and Climate during Bronze Age Harappan /Indus Valley Civilisation (IVC) in India Using Isotope & Latest Chronological Techniques (CVO) aims at studying climate change and its historic importance in cultures

The Reserve Bank of India on 4th October 2016 cut the repo rate by 25 basis points and also said the key takeaways from the RBI policy were as follows:

• The RBI indicated international growth has slowed more than anticipated through 2016 so far
• Brexit, banking stress in Europe, Chinese debt, rising protectionism and lowered confidence in monetary policy were key risks.
• World trade volume contraction was sharper than anticipated in the first half of 2016, and the outlook was bleak
• As global markets have shrugged off the Brexit vote, an uneasy calm remains regarding uncertainty about the stance of monetary policy of systematic central banks
• Outlook for agricultural activity in India is bright
• First advance estimated of Kharif foodgrain production for 2016-2017 was at a record high
• Industrial sector was impacted by manufacturing-driven contraction in Q2 of the fiscal following the addition of a sequential deceleration in the gross value added in Q1.
• Steel and cement production are strong but the output of the core industries as a whole was weighted down by decline in the production of coal, natural gas and crude oil
• Business expectations as per RBI’s industrial outlook survey remained expansionary in Q2 and Q3.
• Strong public investment in roads, railways and inland waterways and increased spending from the 7th Pay Commission award will strive to improve industrial outlook
• Acceleration in the pace of activity in services sector in Q1 appears to have sustained
• Inflation excluding fuel and food have been around 5 percent mainly with respect to education, medical and personal care services.
• Household inflation expectations in the Sept 2016 round of RBI survey have risen
• Input costs in the manufacturing sector including staff costs have risen but corporates lack pricing power to pass costs onto customers
• Liquidity conditions remained comfortable in Q3, while exports were down but sharp fall in imports have helped contain trade deficit
• Deficit in remittances and flattening of software earnings may have to be watched
• Forex reserves stood at record high of USD 372 billion by Sept 30, 2016
• RBI also cut the key lending repo rate to 6.25 percent as the panel felt inflation levels were low enough to reduce loan rates
• Six member Monetary Policy Committee headed by governor Urjit Patel has agreed that inflation was unlikely to overshoot the threshold level of 6 percent.
• A lower repo rate at which banks borrow from the RBI would mean households may expect cheaper bank loans to buy houses and goods such as cars
• GoI has also announced measures to control food inflation pressures, especially with regard to pulses- measures will control the momentum of food inflation in coming months
• While Indian economy grew by 7.1% in April to June period (the slowest in 6 quarters) RBI and MPC have expected a revival in coming months boosted by rain and government bonanza for its employees

The largest offset contract to be executed by any company in India till date was the partnership between Dassault Aviation of France and Reliance Group to execute offsets for the recently concluded Rafale deal.

• The joint venture called Dassault Reliance Aerospace was jointly announced by Dassault Aviation and Reliance Group
• The contract value is estimated at INR 30,000 crore
• “The proposed strategic partnership between Dassault and Reliance will also focus on promoting research and development projects under the IDDM program (Indigenously Designed, Developed and Manufactured)…,” the statement from Reliance added, referring to the new provision introduced in the Defence Procurement Procedure (DPP) 2016.
• India and France signed an Inter-Governmental Agreement (IGA) for 36 Rafale multi-role jets in fly-away condition worth €7.87 billion or about Rs. 59,000 crore.
• The deal has a 50 per cent offset clause to be executed by Dassault and its partners in India
• JV will focus on aero structures, electronics and engines and intends to infrastructure and supply chain in India for the aerospace sector.

Google will set up its first India data centre in Mumbai by 2017.

• It aims to take on global competitors such as Amazon and Microsoft who have a presence in the nation
• The search engine also plans for local customers to host their applications on their internet via this data centre
• Google controls majority market share in India in search, email and smartphones through its Android operating system
• It has significant offerings in enterprise applications such as mail and other services, but lags behind in cloud business
• Amazon currently has three data centres in Mumbai, Chennai and Delhi with over 750,000 customers including Ola, TATA Motors and NDTV on its cloud
• Microsoft in 2015, set up three data centres in India offering Azure cloud to local clients
• Google, which already hosts applications of its Indian customers such as Wipro, Ashok Leyland, Smartshift by Mahindra & Mahindra, Dainik Bhaskar Group and INshorts.com on its global cloud platform, expects a India presence to service local customers faster.
• Google calls it data centre Cloud Region.
• The Google Cloud Platform has taken infrastructure, machine learning and networking services use to power Google services and make them available to businesses and developers with high performance app and data analysis at a low cost
• India’s startup community continues to grow and cloud platform provides a base for deploying and testing apps