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NCLT Approves ArcelorMittal’s Bid for Essar Steel, Elon Musk May Get Sued Over His Tweets, Bulk Deposits to Now Earn Higher Returns et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 9, 2019 2:21 PM 4 min read
Editorial

NCLT approves Arcelor Mittal’s bid for Essar Steel. SBI to link savings deposit, loan pricing to repo rate from May 1. Elon Musk may get sued over “repeated misstatements” on Twitter. WhatsApp ties up with third-party companies to resell WhatsApp for Business.
 

Now to Today's Top Business News Stories in Our End Of Day Wrap Up:

 

ESSAR


NCLT approves ArcelorMittal’s bid for Essar Steel.
 

Green Signal: Ahmedabad bench of NCLT approved ArcelorMittal’s bid for debt-laden Essar Steel.
 

ArcelorMittal, in a joint venture with Japan’s Nippon Steel & Sumitomo Metal, has offered an upfront cash settlement of INR42,000cr to lenders and an INR8,000cr capital infusion. It is also planning an INR18,697cr capital expenditure program for Essar till 2024
 

Conditions Apply: However, the case may not be over yet, with the promoter Ruia family and British bank Standard Chartered seeking permission to appeal against the order. 
 

From the Horse’s Mouth: Read ArcelorMittal’s take on its bid for Essar here.

 

MONEY

Real returns from FD at 7-year high. Bulk deposits to now earn higher returns. SBI to link savings deposit, loan pricing to repo rate from May 1. 
 

Reap More Than What You Sow: Real returns from FDs recently hit a 7-year high with a one-year deposit with SBI earning interest at 6.8% - which works out to a 4.76% yield (assuming a tax rate of 30%).
 

The More the Merrier: RBI recently raised the criteria for 'bulk deposits' for banks to INR2cr from INR1cr in an attempt to provide more operational freedom to lenders to raise funds. 
 

These deposits usually earn a marginally higher interest rate than on smaller-amount fixed deposits for similar maturity periods. Moreover, banks can now offer differential rate of interest on bulk deposits as per their requirements and asset-liability management projections.
 

View what returns some top banks are offering on bulk deposits here
 

Linked: In a first, SBI is set to use RBI’s policy repo rate as a benchmark to set the savings deposit rates and those for short-term loans. Beginning May 1, SBI will link savings bank deposits with balances over INR1L and all cash credit accounts and overdrafts with limits above INR1L to the repo rate. 
 

The move will help SBI address rigidities in the balance sheet and ensure a quick transmission of changes in the RBI’s policy rates.
 

Backstory: The announcement comes in the backdrop of the RBI directing banks to link all new floating rate personal or retail loans (housing, auto) and floating rate loans to MSMEs to one of the four external benchmarks – policy repo rate / 91 days treasury bill / 182 days treasury bill / a benchmark market rate produced by Financial Benchmarks India – from April 1.

 

MACRO

MSMEs created 3,32,394 jobs at 14% growth in the last 4 years, as per a CII survey.
 

What’s the News?: The number of net jobs created in the MSME sector in the last four years stood at 3,32,394. This is 13.9% higher than the base four years ago and a 3.3% increase per annum. 

 
The number however seems rather pale considering that over 11,54,293 MSME jobs were created in the three years ended 2014-15, an year before the four-year base.
 

Maharashtra, Gujarat, and Telangana accounted for over 50% of the jobs created and the top employment generating sectors included hospitality and tourism, textiles and apparels, metal products, machinery parts and transport & logistics.

Two Sides of a Coin: Read two very different takes on the matter here and here.

Racing Against Time: The Modi government inaugurated over 50 projects worth at least INR2tr (excluding the INR75,000cr per annum PM Kisan Scheme) and cleared 94 proposals within 16 days ahead of the announcement of the model code of conduct. Once deployed, the code will deter the government from announcing any program or welfare measures.

 

TECH

Elon Musk may get sued over “repeated misstatements” on Twitter.
 

Time to Log Out?: A group of institutional investors in Tesla are suing to bar Musk from tweeting over “repeated misstatements” that they claim hurt the company and its shareholders.
 

The lawsuit seeks to permanently block Musk’s “unchecked use of Twitter to make inaccurate statements about the company."
 

The move comes after Musk recently tweeted that Tesla would produce roughly 500,000 cars this year, despite figures presented weeks earlier in a letter to shareholders reflecting a significantly lower production output
 

On Repeat: The SEC had last year sued Tesla and Musk over a tweet in which Musk claimed that he had the funding secured to take the company private at $420 a share.

The Trinity: With CEO Mark Zuckerberg’s recent announcement of Facebook’s “pivot to privacy”, the social media giant hopes to contain its users within the ecosystem – Facebook, WhatsApp and Instagram – akin to the WeChat model. However, to be able to accomplish that, Facebook will have to do something no one else has yet been able to do - pull iPhone users off of iMessage. Read this to know how the rivalry could turn ugly.

 

NEW

Management schools across India witness steep increase in placement offers from e-commerce companies as well as startups. WhatsApp ties up with third-party companies to resell WhatsApp for Business.
 

India’s Got Talent: Top business schools in India including IIMs in Bengaluru, Kolkata and Kozhikode, and the Faculty of Management Studies reported to have witnessed a steep increase in offers this placement season from e-commerce companies as well as newly funded startups who are on a look out for managerial talent with a technical background to drive the next phase of growth. Read more on this here
 

Passing On: WhatsApp has been partnering with third-party companies to resell WhatsApp for Business in a bid to generate more revenue from its over 1 billion users. 

What’s the Plan: Instead of selling the solution directly to enterprise companies as it has done in the past, the idea now is to create an ecosystem of companies to do the selling so that WhatsApp can remain as a “lean tech company”.
 
WhatsApp for Business is being sold as a replacement for text message based notifications and conversations between an enterprise and its customer. Notifications could cost about 30 paise each in India and conversations are priced on a tiered basis depending on the number of users a company has. The messaging app currently offers its services to companies like BookMyShow and Netflix.

 

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