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Transfin. Podcast S2 E18: Brextinct, Breaking Bad, Hotflix

Professor S

LongShorts Jan 17, 2019

  We like to talk Business and Finance. Figured we should do it for a living.   Jet troubles, India eases, Germany slows down. But we rather talk of:   With Theresa May's Brexit Plan Out...What Next?    Theresa May on Tuesday tabled her Brexit Deal which was turned down by the British Parliament by an overwhelming 432-202 votes against her. Following the historic defeat, a no-confidence motion was tabled against May by the leader of the opposition Labour Party, Jeremy Corbyn. As she survives the motion, we discuss what awaits May's rather ambitious and much delayed Brexit deal.    Did Huawei's Woes Push China to Seek Retribution?    The present narrative in China is nothing less than the plot for a Spielberg movie. The Chinese court recently sentenced a Canadian man who appealed his 15-year prison sentence for drug smuggling to death. The sentencing was rather quick and could be considered a hit back from the Chinese government after Canada last month arrested Huawei’s CFO Meng Wanzhou in Vancouver. We do a deep dive into the ongoing geo-political turbulence.    Hotstar Digs in Original Programming. But to What Extent?     Hotstar is unleashing a INR120cr war-chest to generate ‘original content’. We talk about how a foray into original content could be an attempt by Hotstar to hedge itself against any potential business risk profile due to the dearth of original programming and limited access to distribution rights.    Also: The Fabulously Useless Share Price Chart of Jet Airways here.   (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

Transfin. Podcast S2 E17: Bad Apple, WeNotWork, Reserve(d)

Professor S

LongShorts Jan 11, 2019

  We like to talk Business and Finance. Figured we should do it for a living.   Welcome to Season Two! There is already too much ground to cover; but let's dig straight into:    Apple's China Problem, China's America Problem et al   Apple last week slashed its quarterly revenue forecast for the first time in more than 15 years on back of lower than anticipated iPhone revenue, primarily from Greater China. Tim Cook, Apple's CEO however was rather calm, focussing on Apple's premier proposition and loyal customer base. We take this as a cue for a deep dive into the Apple, China, US narrative - what does the future have in store for Apple, US economy and the world economy in general.   WeWork is a Real Estate Co Afterall. Duhh!     Softbank recently reduced it proposed injection into America-based shared workspace provider WeWork from $16bn to $2bn. We discuss how this might be correlated to the overall macro and if Softbank is bracing for an upcoming recessionary mood?   The Central Bank is likely to pay $4bn interim dividend to the government. We turn inwards to discuss a perennial bone of contention - RBI's surplus reserves. This time we use an article by Colin Lloyd to understand how much reserves Central Banks of emerging markets must hold to hedge themselves from increasing US interest rates and where does India stand vis-a-vis this estimate.   Also: View the funky Reserve Benchmark Chart we spoke of here.     (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

What Does the New FDI Policy For E-Commerce Actually Mean?

Professor S

LongShorts Jan 01, 2019

The government recently released new changes to the FDI policy governing the e-commerce sector. These guidelines which strike down at predatory pricing and deep discounts aim to provide a level-playing field for all can prove to be a game changer for the sector.     I. High Level: The Ministry of Commerce and Industry recently released new changes to the FDI policy for the e-commerce sector which aim to cut predatory pricing and deep discounting by retail giants, thereby bringing about a "level-playing field" for the smaller and multi-channel players, as well as the brick and mortar retailers.   II. Differentiation: The guidelines differentiate between a Marketplace based model of e-commerce and an Inventory based model of e-commerce, allowing 100% foreign direct investment through automatic route in the former, but no such capital injection in the latter.   Marketplace based model of e-commerce: In this model, the role of the e-commerce entity is restricted to being a facilitator between the buyers and the sellers with no ownership or control over the inventory or the good and services to be sold.   Inventory based model of e-commerce: Within this model, an e-commerce entity owns the inventory of goods and services and sells them directly to the customers.   III. Why?: Experts opine that it was the heavy discounts, primarily funded by FDI which made it difficult for smaller players and offline retailers to compete against the big players. The new guidelines would ensure fair play for all.   IV. Current Scenario: Till now big the retail giants such as Amazon and Flipkart were bypassing the Marketplace model by creating legal entities which first buy from vendors (i.e in a way keep inventory).   V. Changes:   Concentration: As per the new regulations, an e-commerce marketplace entity will be deemed to control the inventory of a vendor if the marketplace entity or its group companies purchases more than 25% of such a vendor’s inventory.   Equity: An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.   No more discounts: E-commerce marketplace entity are prohibited from directly or indirectly influence the sale price of goods or services.    No more exclusivity: The regulations dictate that platforms cannot enter into exclusive deals with sellers. This would mean that online exclusive brands would now have to tap multiple companies to sell their products     VI. Cause & Effect:   For brands: Brands like BPL, Sanyo, Thomson, Xiaomi, OnePlus, etc, operate as online-exclusive brands on online marketplaces such as Amazon India and Flipkart. In light of the new guidelines, these are likely to enter into partnerships with multiple platforms, become sellers by themselves or venture offline, focusing on retail expansion.   For retail giants: Flipkart and Amazon have launched their private labels such as Smartbuy (Flipkart’s native label for chargers and cables) and MarQ (Flipkart’s homegrown brand for air conditioners and smart televisions) and Amazon Basics (the giant’s native arm which sells electronics, kitchen and dining, travel and more.) which offer goods and services at lower costs and higher margins. Flipkart and Amazon may have to enter into re-seller agreements with multiple Indian companies to be able to sell their products as per the new FDI guidelines.   VII. Loopholes: The new FDI rules state that an online marketplace cannot sell products from a vendor in which they have a stake. However, they do not say anything about selling goods from a subsidiary firm of a vendor. For example, Cloudtail is a joint venture between Amazon.com and Narayan Murthy’s family office Catamaran Ventures, which forms a majority of Amazon's sales.   VIII. The Watchdog: The government is also considering the appointment of a dedicated e-commerce regulator.   If implemented with due diligence, the new rules can provide the much-needed fillip to small players and brick-and-mortar retailers who have suffered massive losses on back of the colossal discounts and cashbacks offered by the retail giants over the years.   IX. Next steps: The FDI rules are expected to come into force by February 1st, 2019. A new comprehensive draft policy for e-commerce sector as a whole is expected to be released in a few weeks.   (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

Our Pick: Biggest Business Stories of 2018

Professor S

LongShorts Dec 27, 2018

As 2018 comes to a close, here are some stories that we liked primarily due to their significant impact in defining Indian businesses and economy.   Unicorn Rising: Eight Indian firms storm into the Unicorn club in 2018. Swiggy, Zomato, Oyo Rooms, Udaan, Paytm Mall, Byju’s, Policybazaar and Freshworks all generated a $1bn+ valuation, consequently finding their way into the prestigious Unicorn Club.     A Big Deal This: Walmart’s purchase of 77% stake in India’s largest online retailer, Flipkart for $16bn was the world’s largest e-commerce deal and India’s biggest acquisition. Not only did it endorse potential “exits’ in the Indian private equity space, but also served as a nod of approval for the entire start-up ecosystem.     Deadly Cocktail: The economy came under intense scrutiny thanks to a sliding Rupee, exacerbated by volatility in crude oil prices and generally rising US interest rates. India's dependency on oil imports and a fickle foreign investor base which leapt to the US markets in a classic case of "flight to quality", further weakened the Rupee, hitting the domestic financial markets.     Autonomy Spat: Starting from discussions around adequate "Surplus" to opening up an entire philosophical ‘autonomy’ debate, the RBI and Government's disagreement ultimately led to the resignation of Urjit Patel and subsequently making way for Shaktikanta Das, ex bureaucrat as the new RBI Governor. Stressed loans and a depressed credit cycle (read PCA norms) played their own roles in the saga. Watch out for more debates around this in 2019 as general elections loom large.       Stressed Assets and Scams: It was ironic that even with average NPAs keeping consistently above 10%, bad loans were just one of the issues faced by Indian banks in 2018. The year kicked-off with the Nirav Modi-PNB scandal bringing flak to the humble "Letter of Intent", virtually killing export finance overnight. Biggest shocker however was the IL&FS fiasco, where a systemically important quasi-sovereign financial institution got bailed-out by the exchequer.     Too late still to avoid a liquidity crunch for other NBFCs, thereby serving a double whammy to lending, already suppressed thanks to the NPA unwind. No wonder the government got so worked up that a change in the RBI leadership got forced, leading to a potential relaxation in PCA norms.   Telecom Consolidation: Reliance Jio and its aggressive go-to-market strategy had an unmissable role in lowering mobile data prices across the country. However, what is somewhat missable is that Jio's rise also brought about industry restructuring none of which is as eye-catching as the merger of Vodafone and Idea. The Vodafone-Idea merger as such turned India from a four-player telecom market into a three-player market. Airtel, Jio and Vodafone-Idea, between them, account for an estimated c. 90% of industry revenues and hold over c. 80% of spectrum.      (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

In Conversation with a Doctor: Nutrition, Exercise, Health Tips

Professor S

LongShorts Dec 21, 2018

    Welcome to the Season Finale! To make this one really special - today we have a guest to speak on:   The Bare-Bones (slurrp!) of Good Nutrition   Why do we crave fats? Why do we regain the lost weight? Is veganism the way to go? How healthy is red meat?   Today we talk about the basics of nutrition, discussing how the moderate consumption of any nutrient is the most optimum and how to engineer a 'balanced diet'.   Fitness 101   We move on to discuss exercise and fitness. What have we gotten wrong about fitness and exercise? Where do we begin from? What are some cost-effective alternatives to the gym? How do we think of diet and exercise in parallel?    What's Wrong with India's Healthcare?   Lancet, an acclaimed medical journal recently spoke of the rising risk of physical violence on doctors. We talk about how and why a reputed profession has come under attack in the recent past.   In Conversation with Dr Arun K Chopra, Director Cardiology, Fortis Amritsar.      Dr Chopra is a DM Cardiology from AIIMS where he also served as an Associate Professor. He's a Fellow of many respected International Medical Bodies as well as a regular contributor to reputed Medical Journals.     He's a passionate student and practitioner of nutrition and fitness, having lost over 100kg of weight in his lifetime, while developing an almost encyclopediac knowledge on the subject on the way. He also writes a weekly column by the name of Ship Shape on Transfin.      While you're at it, do check out:     Dr Chopra's author profile on Transfin. (with a repository of all his writings):      His 5 Most Popular Articles:      Combining Exercise with Healthy Diet for Weight Loss, Bodybuilding, Endurance and More     Why HIIT is the Ultimate Resistance Training Routine     Intermittent Fasting vs. Frequent Small Meals     Your Guide To An Effective Keto Diet     Fixing The Healthcare Industry in India     (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

Govt Re-Energizes Its Push for Electric Vehicles in India, Time to Get Real?

Professor S

LongShorts Dec 20, 2018

While there has lately been tremendous development in the Electric Vehicle (EV) sector, lack of a structured framework around charging infrastructure and policy remains a hiccup. Towards this effect, the Ministry of Power last week released guidelines around charging infrastructure for EVs.   Top-line:   An eight page document carrying much awaited guidelines around Charging Infrastructure for EVs released over the weekend.  A proposal to impose fees on purchase of new petrol / diesel cars to cross-subsidize EVs and battery tech is apparently in the works, as per reports.    Related Event: Tata Power concurrently announced plans to invest c. INR700m to set up 1,000 charging stations for EVs in NCR, serving both personal and commercial vehicles. That's a far cry from the 21 charging points it operates for EVs in Mumbai, Delhi, and Hyderabad. The company plans to join hands with Hindustan Petroleum, Bharat Petroleum and Indian Oil to set up the stations. It would also partner with other entities, such as metro rail stations, hospitals, malls, hotels, etc, besides own franchisees.         Ok, let's zoom out: Charging points are a massive EV enabler. They, along with better battery tech minimize the so-called "range anxiety" faced by EV drivers i.e. a fear that your vehicle would run out of charge before you reach your destination or the next suitable charging point. Moreover, the advent of "Fast" charging has now ensured EVs don't really need to wait for long before they're juiced up.   It is hence only natural that the industry (not just the big boys but nimble start-ups which typically innovate much faster) have been waiting with bated breath.   What do the rules say?: Well, you can charge your EV at home now. You will get priority access to electricity from power utilities at the same power tariff. You also don't need to be a licensed power distribution company to setup a public charging station (PCS). If you satisfy the laid out specs, you're good to go. Moreover, if you're a commercial EV owner-operator (e.g. EV trucking and bus companies), you can setup "captive" charging infrastructure for your vehicles.     Unanswered: Are the specs required to setup PCS too cumbersome for smaller players? Can small EV manufacturers (and not only owners like in the case of trucks and buses) also setup captive charging infrastructure? What about parts of the country which are off-grid?   The Big Picture:    The present rules appear to favour big "wannabe" EV manufacturers (like Mahindra)/power companies (like Tata Power), who can afford/care to setup a PCS OR commercial EV owner-operators who are allowed to setup captive charging infrastructure.  Are the "wannabe" EV manufacturers really incentivized to setup public charging infrastructure? They're already selling petrol vehicles and would prefer a status quo unless the demand side for EVs is disrupted (hence the subsidy structure would become very important).  What about the small players? As per industry experts, they would struggle to satisfy the onerous technical specs as laid out in their current form.    In US and China, EV charging infrastructure started through the captive approach, before demand picked up and an ecosystem developed around it. In India, the approach seems to be the other way round.     (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

Transfin. Podcast E15: RBI Shake-out, Silicon Wars, Brexit 2.0

Professor S

LongShorts Dec 13, 2018

  We like to talk Business and Finance. Figured we should do it for a living.   What a week! News flow reached its zenith with drama unfolding through RBI, Elections, Mallya et al. But we focus on:   What's Next for India's Central Bank?   Monday evening we saw the resignation of RBI Governor Urjit Patel. Without much delay, Shaktikanta Das dubbed an "economic bureaucrat" took charge. We discuss how the appointment of a bureaucrat, and not a technocract at the helm of the Central Bank may play itself out, especially with the much-awaited RBI Board meeting scheduled for tomorrow.     Is the Huawei Arrest Only About US Sanctions?   Canada last week arrested Meng Wanzhou, CFO of the Chinese telecom company Huawei. Meng is accused of helping the telecom company circumvent US sanctions on Iran by positioning a Huawei subsidiary as a separate company. However, it is widely believed that the arrest was made on directions from the United States. We try to understand the noise around the company as the narrative unfolds.    Is Referendum Number 2 the Answer to Brexit?   Sensing a growing dissent on the Brexit Agreement, Theresa May pulled off the voting by the British Parliament due last Tuesday. Consequently, there was a lot of mayhem in the Parliament, resulting in a no confidence motion being raised against May. Now while May has crossed the no-confidence hurdle, there is a chance that Britain may seek another Referendum to bring a conclusion to the Brexit deal.   Bonus: Don't forget to tune in next week for our Season Finale where we bring a Special Guest!     Wow Factor: Yes we do "Season(s)"...how classy is that!?     (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

The Noise Around Huawei’s Top Exec Arrest: Why is the Chinese Technology Company Under Duress

Professor S

LongShorts Dec 13, 2018

Meng Wanzhou, top executive at Chinese tech company Huawei, and daughter of the founder and CEO was arrested last week in Vancouver, Canada.   It is widely believed that the arrest was made on directions from the United States. While Meng is accused of helping Huawei circumvent US sanctions on Iran by positioning a Huawei subsidiary as a separate company,  the arrest still has a political undertone which makes it somewhat murky and fairly layered.   [Listen in from 12:09 onwards to understand what the noise is all about.]   It is believed that Meng was on the board of a Hong Kong-based company called Skycom, which allegedly did business with Iran between 2009 and 2014. US banks worked with Huawei at this time, so Iran sanctions were violated indirectly, and in that context, it is alleged that Meng committed fraud against these banks. It is further believed that Skycom was an unofficial subsidiary of Huawei which perhaps strengthen the allegation.   The key central political nuance to the controversy is that US intelligence alleges that Huawei has questionable ties with the Chinese government and that its equipment could contain “backdoors" for use by government spies.    Despite being largely unproven, it has prompted the US in taking a series of steps banning the equipment from US markets including government officials and even private companies. US concerns are further exacerbated by a new Chinese law which requires domestic firms to assist the government when asked to do so.    Huawei is the world's largest supplier of telecom network equipment and second-biggest maker of smartphones with reported revenues of c.$92 billion last year.    The company was founded in 1987 by former Chinese military officer Ren Zhengfei. Unlike other big Chinese technology firms, Huawei has meaningful overseas presences and is somewhat of a market leader in several countries across Europe, Asia and Africa. There have been ‘price-cutting’ and ‘copy-cat’ type strategic narratives associated with Huawei and lawsuits by companies such as Cisco and Motorola further substantiate this viewpoint. However, heightened R&D spend in recent times has somewhat improved their overall originality profile. Huawei is at the cutting-edge of 5G technology and the use of this technology in international markets is being viewed quite cautiously. For perspective, Australia and New Zealand have banned Huawei from building 5G networks.   US-Sino relationships could see heightened complication at the back of this arrest, especially with ongoing trade tensions. This is further exacerbated by the fact that semiconductor technology is increasingly finding itself in the spotlight.    While largely unsubstantiated, there is a narrative that the arrest is part of a larger plan by the United States to put trade pressure on China and use the arrest as some sort of leverage. In recent times, semiconductor industry has seen a sharp uptick in the attention it generates and as such has firmly found itself in the spotlight. With Chinese chip makers gaining substantial ground in terms of research and innovation, there are political considerations at play here. Perhaps, US and China, both see chipmaking as a key strategic levers in a world wherein semiconductor technology is increasingly becoming central to defence and military systems and in the evolving artificial intelligence ecosystem.      In the latest update, Meng was released on $10m bail; She will remain in Vancouver while extradition proceedings unfold.   The $10m bail consists of  $7 million in cash and a $3-million surety made up of property from four associates. She will remain in Vancouver, where she owns two homes, while she awaits extradition proceedings.   (We are now on your favourite messaging app – WhatsApp. We strongly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

Transfin. Podcast E14: Jio Saavn, GDP Redux, OPEC Plus

Professor S

LongShorts Dec 07, 2018

  We like to talk Business and Finance. Figured we should do it for a living.     One week in and Spotify faces its first Contender. Macro themes otherwise dominate:     How JioSaavn Makes Music Streaming an Open Game   Earlier this year, Reliance Jio acquired Saavan. The two are now integrating to launch JioSaavn app - a music streaming platform. We talk about how this integration could change the dynamics of the India music streaming landscape, which awaits the advent of Spotify.     The GDP Back-series Conundrum, Q1 Numbers and More   With the announcement of the GDP data for Q2 and the Central Statistics Office (CSO) recently recalibrating, and in a way downgrading the GDP growth figures for the 2006-2012 UPA era, the economic metric has witnessed a lot of backlash. We attempt to understand the re-calculation of the back series and the following redux in growth.      Qatar Exiting OPEC and Does it Really Matter?   News of Qatar leaving the OPEC has been a moving piece of narrative through the week. We discuss what impact this move could have on  global geopolitics.    Cherry on Top: How WhatsApp Payments Makes the Likes of Paytm etc. Nervous?   We speak about how entry of WhatsApp payments will impact the payments space in India.   On a related note, do check out:   Spotify's entry into India (listen in from 0.55-5.23): https://audioboom.com/posts/7102074-high-end-let-go-thin-ice     India's New GDP Series: Understanding The Reduced Growth Rate Under the UPA Govt: https://transfin.in/india-gdp-back-series-reduced-growth-rate-upa-nda     Qatar Exiting OPEC & Understanding the Causes and Plausible Implications to Global Crude Oil: https://transfin.in/qatar-opec-exit-impact-on-global-crude-oil-focus-on-natural-gas    (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)

Qatar Exiting OPEC: Understanding the Causes and Plausible Implications to Global Crude Oil

Professor S

LongShorts Dec 06, 2018

Qatar is leaving the Organization of the Petroleum Exporting Countries (OPEC) beginning Jan, 2019. It has been an OPEC member since 1961 and its exit from the bloc paints an eye-catching narrative especially since it is the first Gulf nation to do so.   OPEC is an in intergovernmental organization of 15 nations which was formed in 1960 by the five founding nations - Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. In 1961, Qatar became the first country to join OPEC after the aforementioned founding members and is now the first Gulf country to leave the bloc.   [Listen in from 20:10 onwards to learn more on the implications of Qatar's exit from the OPEC]    As such, OPEC consists of the oil-exporting developing nations that “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry”. OPEC member countries accounted for c. 45% of global oil production and c. 82% of world’s proven oil reserves. Consequently, OPEC has meaningful influence on global oil prices largely driven by controlling the supply side of the equation.   Given the political noise emanating in the Oil markets ranging from US President Donald Trump’s onslaughts on OPEC coupled with Qatar’s somewhat choppy relationship with Saudi Arabia (considered as the de-facto leader of OPEC) among several other geopolitical nuances, Qatar’s departure from OPEC certainly paints an eye-catching narrative, notwithstanding fairly modest economic ramifications for the world. At the very least, from a philosophical standpoint, it sets a precedent which somewhat questions issues around shared economic interest vs political motivations vs individual national interests.   Qatar is the 11th largest producer of the 15 OPEC members and accounts for less than 2% of its overall oil output. Regional politics aside, the economic ramifications on global oil market due to Qatar exit is expected to be somewhat modest.   Qatar produces around 600,000 barrels of crude oil per day. For perspective, this compares to nearly 10 million barrels of crude oil produced per day by Saudi Arabia alone. In that context, overall impact from Qatar’s OPEC exit on the global energy market might be fairly muted. Recall that the oil-centric global energy market is largely influenced by OPEC’s regulation of oil supply which in turn leads to swings in its price. For a deeper-dive into the oil markets, click here.   Despite modest positioning on the crude oil front, Qatar is a natural gas giant and was world’s largest exporter of Liquefied Natural Gas (LNG) in 2017. Exiting OPEC is somewhat tied to a heightened focus on natural gas as it aims to lift its LNG exports from 77 million tons of gas per year to 110 million tons.   Liquefied Natural Gas or LNG constitutes the largest export item for Qatar and as such constitutes nearly 60% of overall exports. Over the years, Qatari government has deployed more resources and heightened its efforts towards the development of natural gas which as an energy source is not central to OPEC's mandate. In that context,  in 2017, with 81 million tonnes in exports, Qatar was the world’s largest exporter of LNG. With the role of natural gas in meeting global energy requirements widely expected to see somewhat of an uptick, managing LNG output is a key economic and national interest subject for Qatar. The decision of leaving OPEC is perhaps tied to it from an economic standpoint as it plans to lift its LNG exports from 77 million tons of gas per year to 110 million tons. Using natural gas (and crude oil to an extent) as key economic levers, Qatar perhaps aims for heightened level of control towards its own economy and this somewhat makes intuitive sense from a national interest standpoint.   Qatar’s departure from OPEC should not have any meaningful impact on Indian energy requirements and buying patterns, largely driven by Qatar's modest impact on the overall global oil market.   Given Qatar’s somewhat modest positioning within OPEC in terms of oil supply, as alluded to earlier, the impact on Indian oil needs appear to be fairly limited. What is more important from an Indian standpoint is Qatar’s LNG production and strategy considering its dominant positioning in the space. Furthermore, Qatar is a longstanding LNG partner for India and if there are any meaningful strategic changes around LNG policies, that might have a more telling effect. However, Qatar's OPEC exit in isolation appears to not have any meaningful impact on Indian oil buying patterns.    OPEC’s oil production narrative is riddled with complex layers of geopolitical nuances. Consequently, assessing the impact of Qatar’s exit from a political standpoint is somewhat of a strenuous task.   Getting into the nuances of middle-eastern politics is a complex endeavor. Dynamic relationships with Saudi Arabia, Turkey, Iran among others coupled with the general sway that United States and Russia tend to have in the region, combine together with several intricacies which could have consequences in terms of the overall stability of OPEC. In that context,  Qatar’s exit has a signalling effect, the ramifications of which will perhaps only get clearer with time.   OPEC’s 10 petro allies, led by Russia, appear to be heading towards a much more collaborative set-up giving rise to more potent “OPEC+” or “Vienna Group” which would consist of 24 members and such boast of c. 55% of global oil production and 90% of global proven reserves.   With the addition of 10 non-OPEC members into the mix, OPEC+ is expected to have a much more astounding control over the oil market. With Russia, Mexico and Kazakhstan as notable additions, OPEC+ can boast of c. 55% of global oil production and 90% of global proven reserves, up meaningfully from OPEC’s c. 45% of global oil production and c.82% of world’s proven oil reserves. With Russian President Vladimir Putin suggesting over the weekend’s G20 summit that Russia has agreed to go along with production cut in Vienna, there are already signs of heightened collaborative decision making. Consequently, Qatar’s exit from OPEC is perhaps overshadowed by the heightened collaborative environment being created by the 10 new additions, most significant of which appears to be the Saudi Arabia - Russia relationship which has far-reaching political repercussions. As such this OPEC could pave way fora  much more robust and potent OPEC+. How OPEC+ evolves and manages the several political moving pieces at play is probably going to be the biggest oil price driver in the near to me dium term future.      (We are now on your favourite messaging app – WhatsApp. We highly recommend you SUBSCRIBE to start receiving your Fresh, Homegrown and Handpicked News Feed.)