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Reliance Industries Ltd Announces Massive INR53,125cr Rights Issue, Pilots JioMart on WhatsApp

Professor of Financial Economics and Part-time Value Investor, Transfin.
May 3, 2020 3:50 PM 5 min read
Editorial

Reliance Industries Ltd announces massive ₹53,125cr ($7bn) rights issue. Reliance and Facebook pilot JioMart on WhatsApp. CAIT to launch bharatemarket.in to take on JioMart, Amazon and Flipkart. US economy suffers contraction of 4.8%, worst since Great Recession. Tesla reports $16m profit. 

 

 

INDIA

India could play major role in COVID-19 vaccine development.

The Race of Our Lives

The entire world is enveloped in a race to develop a COVID-19 vaccine, and India is bound to play a major role in the entire process as one of the largest producers of generic drugs and vaccines. It is home to several vaccine makers, including the world’s largest by number of doses produced and sold globally, Serum Institute of India. And half a dozen Indian firms are researching vaccines against the COVID-19 coronavirus. [BBC]

 

One for All, All for One

Once we have a vaccine in our hands, distributing it will be a challenge, given how there will be astronomical demand for it from all corners of the world. It will also be of utmost importance to see that the vaccines go to the most needy and not just those with the deepest pockets. Here’s a piece on the push to distribute vaccines fairly. [Guardian]

 

47% of startups and small businesses in India have less than one month of cash left with them.

Extra Crunch

According to a survey by community platform LocalCircles, which received around 13,970 responses from start-ups and small businesses located in over 90 districts across the country, about 47% of startups and small businesses in India have less than one month of cash left with them while many are out of funds already.

 

Nearly 74% of the startups are expecting to shut down or scale down their businesses over the next six months, according to the survey.

 

Click here for the full scoop. [BS]

 

CAIT to launch bharatemarket.in to take on JioMart, Amazon and Flipkart.

Of the People, By the People, For the People

The Confederation of All India Traders (CAIT) has announced that it will soon launch an e-commerce platform - bharatemarket.in  - for retail traders across the country.

 

CAIT has tied up with the Department for Promotion of Industry and Internal Trade (DPIIT) to come up with an e-commerce platform for local retailers and grocery stores and plug millions of mom-and-pop or Kirana shops in the country to digital commerce. [Inc42

 

RELIANCE

Reliance Industries announces massive ₹53,125cr ($7bn) rights issue. 

The Mother of All Issues

Reliance Industries has announced its first rights issue in three decades (read press release here). And it’s going to be a mammoth one. The conglomerate plans to raise ₹53,125cr ($7bn) through this process of offering equity shares to existing shareholders at ₹1,257 ($16.68) per share.

 

The announcement comes after RIL’s Q4 results (read press release here) were released yesterday. The results, for the quarter ended March 31st, showed the company’s consolidated revenue declining 2.5% to ₹1.51Lcr ($20bn) and consolidated net profit falling 38.73% to ₹6,348cr ($842m).

 

Dreaming Debt-Free

With the rights issue, Jio-Facebook deal and BP’s investment in the previous fiscal, RIL expects to raise ₹1.04Lcr in the current quarter, en route to its goal of becoming a debt-free company before March 2021. [ET Markets]

 

BTW

For context, ₹53,125cr ($7bn) is more than what Indian markets managed to gather collectively in rights issues in all of 2019. Last year, 12 rights issues took place, including those of Bharti Airtel, Vodafone Idea, Tata Steel Long Products, Piramal Enterprises and Bajaj Electricals. [Financial Express]

 

Reliance and Facebook pilot JioMart on WhatsApp.

Shortly after Reliance announced the signing of binding agreements with Facebook for an investment of ₹43,574cr ($5.7bn) into Jio Platforms, JioMart is testing an “ordering system” on WhatsApp.

 

Users in Navi Mumbai, Thane and Kalyan can now use JioMart’s WhatsApp  business account for grocery shopping. 

 

Here's how you can place an order with JioMart. [Yourstory]

 

TECH

WhatsApp eyeing digital money lending in India. 

We'll Do It All...Everything

WhatsApp is reportedly eyeing digital money lending in India. 

 

Facebook-owned WhatsApp has listed to offer “advance money or give credit on such terms as may seem expedient, and with or without security, to customers and others” as one of the areas that it is looking to explore, in a Ministry of Corporate Affairs filing earlier this month.

 

The news comes shortly after Facebook invested $5.9bn in Reliance Jio. As part of the partnership, JioMart has started selling groceries through WhatsApp.

 

FYI

WhatsApp has been testing its UPI-based payments service in India since 2018 but is still awaiting regulatory approval from authorities for a full-fledged commercial launch. [Financial Express]

 

Airtel signs deal worth $1bn with Nokia to enhance network capacity.

Telecom giant Airtel has signed a $1bn multi-year deal with Nokia in a bid to strengthen its 4G network, improve customer experience and enhance 5G capabilities in India.

 

Nokia, which is the largest 4G vendor in Airtel network, will help lay the foundation for providing 5G connectivity in the future by deploying 300,000 radio units across several spectrum bands in nine circles, expected to be completed by 2022. [The Hindu]

 

EARNINGS

Alphabet reports Q1 revenue growth of 13% YoY. 

Happy-Sad

One of the world’s largest companies expects a difficult quarter ahead.

 

Alphabet reported quarterly revenue on Tuesday, and the numbers beat analysts’ estimates on the positive side despite the economic slowdown from the novel coronavirus. Alphabet’s overall revenue in the first quarter was $41.2bn, up 13% YoY.

 

Tesla reports $16m profit. 

Good News, Bad News

Tesla has revealed its Q1 results and reported a $16m profit. But the electric car maker also recorded negative free cash flow of $895m and walked back previous guidance. It also said near-term profit guidance is “currently on hold”. [CNBC]

 

While We’re On Tesla...

CEO Elon Musk recently used some colourful words to describe the coronavirus lockdowns in the US. He called them unconstitutional, outrageous, fascist and a couple of other expletive-laden phrases. [NPR]

 

Microsoft reports growth in sales and profits.

On a High

Q1 results were largely positive for Microsoft, which is benefiting from more people using the internet and cloud computing services. The tech giant said sales rose 15% in January-March to $35bn and it generated net profit of $10.75bn. [WSJ]

 

US

US economy suffers contraction of 4.8%, worst since Great Recession.

Nobody Said It Was Easy

The world’s largest economy has gone negative. US GDP shrank by 4.8% in the first quarter of this year amidst the coronavirus pandemic, the first contraction since 2014 and the severest contraction since the Great Recession.

 

And this may just be the beginning of a long-drawn crisis – the lockdowns that stifled economic activity only began sometime in March, towards the end of the quarter. [BBC News]

 

Manufacturing activity plunges to 11-year low. 

No Respite

US manufacturing activity contracted at the sharpest rate in 11 years in April as companies pulled back following lockdowns.

 

Manufacturing index fell to 41.5% from 49.1% in March - the lowest level since April 2009. [Reuters]

FIN.

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