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Black Gold, Tata May Fly Jet et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 18, 2018 1:56 PM 3 min read
Editorial

Good evening reader,

 

Without a doubt the biggest moving piece in the Indian Economy's recent narrative has been Crude Oil, well evidenced by Prime Minister's recent meeting with Heads of major Oil corporations.

 

Bringing a "Buyer's Perspective" to the global Oil table seemed to be on Agenda.

 

The PM's message being: "Look, higher Crude Oil prices are hurting India's growth. Oil majors' need to provide "support" to put that in check."

 

How, you may ask?

 

He asks OPEC countries to allow Oil payments from India to be in Rupees, rather than Dollars or Euros.

 

Unrealistic? Maybe. Innovative? Most definitely yes!

 

International Crude Oil trade works on some assumptions. Most transactions are conducted in Dollars. Prices, being inelastic are seller driven. Set benchmarks (e.g. WTI, Brent, Fateh etc.) are applied.

 

PM's assertions, if they ever come to fruition, would challenge this status quo. As the leader of world's third largest buyer, he says Buyers considerations are also important.

 

This has been said earlier, but not worked. However, with Iran (who sold Oil to us for Rupees) now on the verge of facing US sanctions, will this time be any different? Diplomacy and geopolitics are such spoilsports.

 

On a much cheerier note...today we've turned One. A big Thank you for all your support to date. You inspire us to create and source the most concise and enjoyable Business News content we possibly can, each day.

 

Many more milestones to go! Moving on now to Today Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

Tata Group reportedly holds preliminary talks to discuss stake acquisition of Jet Airways.

Tata Group has reportedly held preliminary talks with Blackstone, TPG, and 24% shareholder Etihad Airways to acquire a stake in Jet Airways. Discussions understood to have made little headway on reports regarding reluctance of 51% shareholder and Founder Chairman Naresh Goyal.

 

Adani and Total SA announce JV to enter India's retail fuel industry.

Adani Group and French Oil Major Total SA setup a joint venture to roll out 1,500 retail outlets across highways in the next 10 years. JV also said to develop terminals for importing gas in ships. Adani would be the third private Indian company to enter retail fuel, after Reliance Industries and Essar. Total would be the third foreign company to do the same, after BP and Shell.

 

Reliance Industries Limited (RIL) report 17.4% rise in net profit for Sep quarter.

Increased profits largely driven by good performance in its petrochemicals business. Refining margins reduce to single digits. Revenues increase by 54.5% yoy for the quarter, driven by higher price realisation courtesy 44.5% rise in Brent crude oil prices, and higher volumes. Jio beats estimates and reports a net profit of INR680cr, vs. loss of -INR270cr during the same period last year. Reports 252m subscribers to date.

 

Government says it has discontinued Aadhaar based verification of mobile phone users.

Clarified SIM cards already issued using Aadhaar eKYC would continue to function normally. Users are free to request for de-linking of Aadhaar or replace Aadhaar eKYC by fresh KYC. Asserts there is no need for telecom operators to delete authentication logs to-date.

 

US/International

 

US may remove India from its currency monitoring list.

US Treasury acknowledge certain interventions of the Government of India in addressing its concerns (which compelled it to move India to its currency monitoring list for the first time, along with China, Germany, Japan, South Korean and Switzerland). The Treasury cites India's reduced purchase and increased sale of Dollars as a driver, and mentions it may remove India from the list soon.

 

Several public funds back proposal to remove Zuckerberg as Facebook Chairman. Uber raises $2bn in junk bond sale ahead of potential 2019 IPO.

Proposal requesting separation of Chairman and CEO filed, led by hedge fund Trillium Asset Management. Highly unlikely to go through as Mark Zuckerberg has 60% vote share on Board and can veto it. Uber raised $1.5bn through sale of 8 year notes yielding 8% and additional $500m via 5 year notes yielding 7.5% in a private placement led by Morgan Stanley.

 

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