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Electric Vehicles Charging Infrastructure, Oil Prices Steady, RBI Push for Data Localisation et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Dec 17, 2018 2:17 PM 4 min read
Editorial

Good evening reader,

 

Last week we spoke of Huawei, discussing how the Chinese smartphone giant may have opened yet another front, i.e., in the battle for global semiconductor domination. 

 

Or is it something even more sinister? 

 

Whilst it is difficult to gain clarity at this stage, one thing is certain: following shuns by US, Japan, Australia and New Zealand, and the high-profile arrest of CFO Meng Wanzhou, the Chinese behemoth is skating on thin ice.

 

If today's press reports are to be believed, India has just joined the above list. Our telecom export council apparently expressed “national security concerns" associated with Huawei's equipment in their approach to the NSA. 

 

With PSUs and govt agencies having granted equipment contracts to the Chinese firm (including in sensitive areas such as the North East), and its pre-existing domination in India's 4G and 5G space...any oversight and perspective would be welcome! 

 

On the other hand it may also merely be a case of rivals taking advantage of an ongoing, albeit unverified narrative to ease the competition out. 

 

Well, conjectures shouldn't exclude us from imagining a theory, right? Without that, there's no fun :) 

 

Moving on to Today’s Top 6 Business Stories through our End Of Day Wrap Up:

 

Ministry of Power releases guidelines which enable electric vehicle owners to charge their cars and scooters at their homes. Tata Power plans to invest c. INR700m to set up 1,000 charging stations for EVs in NCR.

 

Go Green: The latest guidelines for charging infrastructure of electric vehicles(EVs) states that owners of EVs can charge them at their homes, with priority access to electricity from power utilities at the same power tariff. 

 

Also, this: A public charging station (PCS) can now be set up without the requirement of a licence if individuals or entities meet the standards drawn up by Ministry and the Central Electricity Authority.

The Big Picture: The move is in line with the govt’s push to provide an enabling framework to EV owners. Recently the govt announced that it might provide a INR1,000cr subsidy to build a nationwide charging infrastructure.
 

Zoom Out: Tata Power currently has a total of 21 charging points for EVs in Mumbai, Delhi, and Hyderabad and is planning to invest c. INR700m to set up 1,000 more charging points in NCR, catering to both personal and commercial vehicles
 

What’s the plan?: Tata plans to join hands with Hindustan Petroleum, Bharat Petroleum and Indian Oil to set up the charging stations. It would also partner with other entities, such as metro rail stations, hospitals, malls, hotels, etc, besides own franchisees.

 

ABB closing in to sell power grids to Hitachi in a $11bn deal. Brookfield in talks to buy Leela hotels for INR4,500cr.

The What: Swiss-Swedish engineering giant ABB may sell 80% of its power-grid units to Japanese co Hitachi in a $11bn deal.

Zoom Out: The acquisition would strengthen Hitachi’s position in the growing power transmission and distribution sector, helping it to diversify away from its nuclear plant business and making it the world's second-largest heavy electrical equipment maker by revenue, after General Electric.

Also, this: As per a Livemint report, Canada’s Brookfield Asset Management is closing in to buy at least four luxury hotels and a land parcel in Agra owned by debt-ridden Hotel Leelaventure for c. INR4,500cr.

Perspective: The deal, which is expected to close early next year, will provide a much-needed boost to Leelaventure, which had a debt of INR3,799cr as of March 2018. It will also mark Brookfield’s entry into India’s hospitality sector. 

 

Oil prices steady, but remain under pressure on back of oversupply.

 
The What: Oil prices steadied on Monday after slipping by c. 2% last week. Brent crude oil was unchanged at $61.09 per barrel. US light crude was unchanged at $52.09.
 

The Bigger Picture: Both benchmarks have fallen more than 25% through the last two months on back of increased output.
 

Zoom Out: OPEC and its allies have agreed to reduce output by 1.2 million barrels per day from January to curb the falling crude oil prices.

 

Govt pushes for data localization to ensure safety of citizens’ data and easy debit of taxes.
 

Up Close: As per a report by the Economic Times, the govt has been pushing tech giants such as Google, Facebook to store their data locally on Indian servers. Apart from their motive to keep citizens’ data safe, this move will also allow the govt to tax the tech giants for all income attributable to the country.

Perspective: Currently, tech companies deliver services mostly from overseas, outside India’s tax jurisdiction.

 

Car and bike rental platform Drivezy to raise $60m in Series C funding round as it seeks to expand its two-wheeler segment.

 
The What: As per an Economic Times report, the new injection will value the Bengaluru-based company at c. $400m, a four-fold jump from its November valuation.
 

Zoom Out: Last month Drivezy raised $20m in a Series B round, led by Yamaha Motor Co. Ltd and Axan Partners and existing investor Das Capita among others.

 

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