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Rupee at 69.85, CSO Downgrades GDP estimates for UPA Era, Rana Gupta Seeks Return, et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 29, 2018 2:06 PM 3 min read

Good evening reader,


India's belligerent content battle just found itself a new front. 


Till now limited to video streaming through the likes of Netflix, Amazon Prime, and Hotstar; the entry of Spotify would ensure our homegrown music industry gets added to the mix. 


The Swedish streaming service enters India after securing deals with major domestic record labels including T-Series, owner of the most-watched YouTube Channel in the world. 


Spotify's debut is surely creating a fair bit of noise. But it is another question all together whether the company's usual strategy of attracting new users via a free tier offering, later converted into paid customers, would work in India.


Or would they prefer to bundle with telecom majors (e.g. Wynk Music via Airtel, Jio Music via Jio) thereby adopting the B2B path, all to cater to the "price-sensitive" Indian?


One thing is certain. As a country where traditional players have shown the ability to adapt to the digital realm rather ahead of the curve (e.g. Star TV with Hotstar, Times Internet, streaming music apps etc.), Spotify's hands would be full. More on this in today's Podcast.


Now to today’s Top 6 Business Stories through our End of Day Wrap Up:


CSO downgrades GDP estimates for UPA era. FM defends revision, Congress calls it a 'hatchet job'.

The What: Using 2011-12 as the base year instead of 2004-05, the Central Statistics Office (CSO) estimated that India's GDP grew by 8.5% in FY10-11 and not at 10.3% as previously estimated. This downgrading invoked a furore against the govt.


Similarly, 9.3% growth rate each in FY05-06 and FY06-07 was lowered to 7.9% and 8.1%, respectively, while 9.8% earlier estimated for FY07-08 is now 7.7%.


Rana Kapoor seeks to return as Chairman of Yes Bank, after exit as CEO and MD. 


If approved by shareholders and RBI, Mr. Kapoor will either become the non-executive chairman, or the MD and CEO, or a non-executive director.


Zoom Out: The news comes after RBI's earlier directive which did not extend the bank's MD & CEO Rana Kapoor’s tenure after January 31, 2019.


Big Picture: Existing norms, however, don’t allow reappointment of a whole-time director before two years from the date of exit. To become eligible for the post of a MD, Mr. Kapoor will have to wait till at least February 2021.


TRAI directs telcos to inform their subscribers of the new minimum recharge plans in a transparent manner.


The What: The telecom regulatory authority pulled up Airtel and Vodafone-Idea after subscribers complained of receiving messages which warned them of their SIM cards being deactivated if they do not recharge their pre-paid accounts even as they had the minimum required balance.


The Big Picture: The development comes after Airtel and Vodafone-Idea hiked minimum recharge tariff to INR35 in a move to lift their Average Recharge Per User (ARPUs) and to take on Jio.


Rupee touches 69.85 a Dollar today, Sensex rises over 450 pts.


Close Up: The Rupee is up c. 6% from its record low of 74.48 per Dollar on 11 October.


The Rupee has rebound due to:


  • Falling Oil Prices: Global crude oil prices have dropped to nearly c. $60/barrel, from a four-year high of $86 a barrel around concerns of oversupply.
  • Drop in Dollar: Fed chair Jerome Powell on Wednesday said that US policy rates were “just below” neutral. Higher US interest rates tend to boost the dollar. With another rate hike unlikely on the charts, a weaker dollar is helping boost other currencies such as Yuan and Rupee.


Adani Enterprise to self-finance Queensland coal mine and rail project in Australia. 


The What: Amidst resistance from green groups and banks backing away from funding new coal mines, the Adani Group will now self-finance the controversial Queensland coal mine and rail project in Australia.


The Plan: The company plans to start by producing around 10m tonnes a year for its own use, eventually ramping up to 27.5m tonnes for the first stage of the project.


The company’s stock rose c. 7% by close of play.


Donald Trump threatens to raise tariffs in light of GM closures, China Trade War.


Zoom Out: Trump proposes 25% duty on pick-up trucks from markets outside North America in light of GM's workforce cut. 


US Trade representatives also examining options to raise tariffs on Chinese vehicles to 40% - in line with Beijing's charges on US-made cars.


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