IMF cuts India's GDP growth forecast for FY19-20. Jet Airways lenders invite bids for c. 75% stake in the debt-laden carrier. Etihad seeks to increase stake in Jet, submits expression of interest (EoI). Founder Naresh Goyal also files EoI; Fleet drops to 11 aircraft. Disney to launch video streaming service Disney+ on November 12. US announces initiatives to accelerate rollout of 5G. EU extends Brexit deadline until Oct 31.
Moving on to the top Business stories of the week.
IMF cuts India's GDP growth forecast for FY19-20; cuts global growth forecast for FY19-20 by 20 basis points to 3.3%. India industrial output growth slumps to 20-month low in February. RBI should not cut its policy interest rate any further, says IMF.
Slashed: The International Monetary Fund (IMF) on Tuesday cut India’s GDP growth forecast for FY19-20 and FY20-21 by 20 basis points each.
In India, growth is projected to pick up to 7.3% in FY19-20 and 7.5% in FY20-21, supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy, noted IMF in its World Economic Outlook Report.
The news comes shortly after both Asian Development Bank and RBI last week cut their FY2019-20 growth projection for India to 7.2% from 7.4% earlier, on back of rising risks to global economic growth as well as weakening domestic investment activity.
And This: IMF also cut its global growth forecast for FY19-20 by 20 basis points to 3.3% from estimates of 3.5% in January and 3.7% in October - the lowest since the financial crisis in 2008. The downgrade is on account of trade tensions between the US and China, loss of momentum in Europe and uncertainty surrounding Brexit.
Exception Count: IMF however, raised China’s GDP growth outlook by 10 basis points to 6.3% for 2019.
Massive Slump: Industrial output growth slowed to a 20-month low of 0.1% in February vs 6.9% last year, primarily on back of contraction in the manufacturing sector.
The Breakdown: The manufacturing segment, which constitutes a majority of the index of industrial production (IIP) at 77.6%, contracted by 0.3% in February vs a marginal rise of 0.93% in January.
Capital goods output declined by 8.8% in February vs 16.6% growth last year. Power sector growth also slowed to 1.2% as compared to 4.5% a year ago.
Mining sector output grew 2% in the month compared to contraction of 0.4% earlier.
No More Cuts: The RBI should not cut its policy interest rate any further, noted the IMF. It should, instead, keep the powder dry to fight an unexpected financial market turmoil that may hit after June this year if the US and China don’t reach a long-term trade agreement, it warned.
Previously: RBI had cut rates by 25 basis points each in February and April to support economic growth.
Jet Airways lenders invite bids for c. 75% stake in the debt-laden carrier. Etihad seeks to increase stake in Jet, submits expression of interest (EoI). Founder Naresh Goyal also files EoI; Fleet drops to 11 aircraft.
Good Riddance?: 26 lenders of Jet Airways led by SBI have invited initial bids to buy as much as 75% of the beleaguered carrier.
Min-Max: According to the Expression of Interest (EoI) document issued on Monday, an acquirer of Jet Airways will have to take at least 35.4 million shares equalling 31.2% stake in the airline. These represent shares pledged by the airline's promoter and former chairman Naresh Goyal. The acquirer can take a maximum of 85.1 million shares equal to 75% control.
Conditions Apply: As per a document by the lead creditor SBI, potential buyers must submit their interest by April 10. A strategic bidder should have a net worth of at least $10bn in the preceding financial year, or at least three years of experience in the airline business.
Reclaiming the Throne: Jet Airways Founder Naresh Goyal has filed an expression of interest (EoI) for a stake in the beleaguered carrier as the deadline for submission of EoI ended on Friday.
The move has reportedly come as a surprise for lenders who have put the equity on sale as part of a rescue plan for the airline. They have asked for legal advice on how to respond to the move by Goyal, who recently quit as Chairman and Director and had previously said he was ready to sacrifice control of the carrier to ensure its survival.
Etihad, which currently owns 24% in Jet had submitted its EoI on Thursday, joining a host of private equity firms including TPG Capital and Indigo Partners in the bid for stake in Jet.
Down to 11: The Prime Minister’s Office yesterday held an urgent meeting, promoted by Jet’s fleet dropping to a mere 11 and its decision to extend its cancellation of international operations till Monday.
Flipkart gears up to provide instant credit to customers. Ola plans to launch operations in Dubai. Airtel plans to buy stake in Dish TV to take on Jio.
Shop Now, Pay Later: Flipkart is working on a video Know Your Customer (KYC) solution to offer instant credit to customers who buy through its platform.
Backstory: The move comes after the Supreme Court struck down Aadhaar-based eKYC for private entities last year.
Pilot: Flipkart has started a pilot project for digital KYC with almost 10,000 customers. The service will be made available to a wider customer base in the coming weeks, pending approvals from the RBI.
At present, Flipkart's fintech partners are Kissht, which offers cardless EMIs, and ZestMoney, which offers EMI purchases during online transactions.
Next Stop: After Australia, New Zealand, and the UK, ride-hailing platform, Ola is planning to launch operations in Dubai.
Interestingly, the news comes shortly after rival Uber struck a $3.1bn deal to acquire Dubai-based rival Careem.
Step 1: Singapore Telecommunications, Bharti Airtel and Warburg Pincus are in talks to buy c. 61% stake of Zee founder Subhash Chandra’s family in Dish TV.
Step 2: This is to be followed by an open offer for 26% more.
Step 3: Following this, Bharti Airtel’s digital TV business, housed under Bharti Telemedia, is likely to be hived off and combined with Dish TV through a reverse merger.
The development comes as Airtel tries to boost its digital TV and home broadband play to take on Jio as it plans to buy Hathway Cable & Datacom and DEN Networks.
If the Airtel-Dish TV deal goes through, the combined entity will be the world’s largest TV distribution company with over 38 million subscribers and 61% share of India’s DTH market. In comparison, Jio, after acquiring majority stakes in Hathway and DEN, would have over 24 million subscribers across 750 cities. This is around 35% of India’s estimated cable industry base of 70 million.
TCS reports c. 18% growth in consolidated net profit in Q4 FY2019. Infosys Q4 profit grows 11% YoY to INR4,078cr. J.P. Morgan Chase reports record high profit and revenue; signals growth in US economy amidst global geopolitical uncertainty.
TCS: Tata Consultancy Services reported a c. 18% growth in consolidated net profit, beating expectations at INR8,126cr for Q4 FY19 vs a net profit of INR6,904cr previous year.
For the entire fiscal, net profit was higher by c. 22% at INR31,472cr, while revenue increased 19% to INR1,46,463cr.
"This is the strongest revenue growth that we have had in the last fifteen quarters. Our order book is bigger than in the prior three quarters, and the deal pipeline is also robust. Despite macro uncertainties ahead, our strong exit positions us very well for the new fiscal," said Rajesh Gopinathan, CEO and MD of TCS.
Infosys: Infosys reported 10.5% growth in consolidated net profit at INR4,078cr for Q4 FY19 vs INR3,690cr previous year. Revenue grew 19% to INR21,539cr in the quarter under review from INR18,083cr previous fiscal.
Breaking Records: J.P. Morgan Chase on Friday reported record Q1 profit and revenue, beating analysts’ expectations.
The company reported 5% rise in profit to $9.18bn, well ahead of expectations. Revenue also rose 5% to $29.9bn, exceeding estimates by about $1.5bn as net interest income grew 8% on back of higher interest rates.
Bellweather: The record performance by J.P. Morgan perhaps suggests that the US is still motoring along, even as the global markets are deeply impacted by the ongoing Brexit discussions and as the boost from last year’s tax cuts fades.
“Even amid some global geopolitical uncertainty, the US economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong”, noted JPMorgan CEO Jamie Dimon.
Disney to launch video streaming service Disney+ on November 12. US announces initiatives to accelerate rollout of 5G.
Walt Disney is set to launch its new streaming service, Disney+ on November 12.
Netflix-Slayer?: The service will be available at a price of $6.99 a month - nearly half the cost of Netflix.
Disney+ will be an ad-free subscription service anchored by programming based on Disney’s biggest franchises, including “Star Wars” and Marvel Studios, as well as original programming.
The Spread: In addition to Disney films and TV shows, it will feature programming from the Marvel superhero universe, the "Star Wars" galaxy, "Toy Story" creator Pixar animation and the National Geographic channel.
Omnipresent: The company said it has struck deals with Roku and Sony to distribute Disney+ on streaming devices and console gaming systems and expects it to be widely available on smart televisions, tablets, and other outlets by launch.
A Race America Must Win: President Donald Trump and the Federal Communications Commission on Friday announced several initiatives to spur 5G network growth in the US.
Trump announced that 92 5G markets will be ready by the end of 2019, outpacing South Korea, which is on pace to have 48 markets live by the end of the year.
To facilitate the development of these 5G markets, the Trump administration will free up as much wireless spectrum as needed, removing regularity barriers to the buildout of networks.
Along Similar Lines...: The FCC, which regulates the spectrum space has said that starting Dec 10, it will offer the largest spectrum auction in the US history.
Wait...There's More: Additionally, the FCC proposed new rules that allow Fixed Satellite Service operators to provide faster, more advanced services to their customers using 50 GHz spectrum. It also noted that current rules impair the ability of users to deploy small, next-generation networking devices on their own property, and therefore proposed changes that would allow people to install hub and relay antennas on their property to help spur 5G networks. It would also create a new $20bn funding program to assist in deployment of broadband in hard-to-serve rural areas.
EU extends Brexit deadline until Oct 31.
More Room: The European Union has agreed to extend the Brexit deadline by six-months to October 31.
In an emergency European Council meeting that began Wednesday evening, British Prime Minister Theresa May formally requested a second short extension of the Article 50 procedures, which has already been extended once past the original date of March 29, 2019, until the end of June. May requested more time to seek approval in the British House of Commons for the Withdrawal Agreement.
European Council President Donald Tusk said that the "flexible extension" will put "the course of action entirely in the UK's hands." The UK "can still ratify the Withdrawal Agreement, in which case the extension will be terminated. It can also reconsider the whole Brexit strategy," he said.
Sincere Apologies: PM Theresa May reacted to the extension by pledging to ensure that the UK could “leave as soon as possible.” She said she “sincerely regretted” the fact that she had not been able to persuade parliament yet to reach a deal.
EU Commission president Jean-Claude Juncker also confirmed that the UK would participate in EU parliamentary elections in May.
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