Donald Trump Threatens to Ramp Up US Tariffs on Chinese Imports, Ratan Tata Invests in Ola Electric Mobility, India's Services Sector Activity Fell to 7-Month Low in April et al.

India’s services sector activity fell to a seven-month low in April. RBI may consider incentivizing lenders to take defaulters to bankruptcy court. Ratan Tata invests c. INR268cr in Ola Electric Mobility. Medlife acquires medicine-delivery startup Myra. Airtel to announce Q4 earnings today, expected to report an improvement in its Average Revenue Per User. ICICI Bank reports 5% drop in profit at INR969cr in Q4. Donald Trump Threatens to Ramp Up US Tariffs on Chinese Imports. 

 

Moving on to the top Business stories of the day.

 

 ECONOMY 
 
India’s services sector activity fell to a seven-month low in April. RBI may consider incentivizing lenders to take defaulters to bankruptcy court. 
 

Slowdown Blues: India’s services sector activity fell to a seven-month low of 51 in April vs 52 in March, on back of sluggish rise in output and new businesses, along with disruptions arising from the elections.

 
Chart: India Services PMI trend here.
 

Click Bait: The RBI is considering incentivizing lenders to take errant borrowers to bankruptcy court
 

The Central Bank is considering a proposal to assign a ‘lower risk weight’ on loans to companies against which action has been initiated under the Insolvency & Bankruptcy Code (IBC).
 

A lower risk weight would act as an incentive to banks as it would help them in conserving capital. 
 

The move comes a month after the SC struck down RBI’s February 12, 2018 directive, which gave defaulting companies 180 days to agree on a resolution plan with lenders or be taken to bankruptcy court to recover debt of INR2,000cr and above.

 

 EV 

Ratan Tata invests c. INR268cr in Ola Electric Mobility.


Extentions: Ola Electric Mobility has raised c. INR268cr from Ratan Tata as part of its Series A round of funding.
 
Behind the scenes: The investment was made in a personal capacity. Tata was also one of the early investors in Ola’s parent company, ANI Technologies Pvt. Ltd.           
 
 
Ola Electric has been running several pilots involving charging solutions, battery swapping stations, and deploying vehicles across two, three and four-wheeler segments.
 
 
Hubris: India is home to over 2 million electric two-wheelers and rickshaws, but with a lack of proper charging infrastructure.
 
 
The government earlier this year laid out a three-year subsidy program for electric vehicles valued at about $1.4bn - about 10 times larger than a previous plan. There’s just one flaw in this impressive-looking commitment to putting more clean-energy vehicles on the roads: It’s likely to exacerbate rampant theft of electricity. 
 
 
The power sector loses more than $16bn a year to theft — more than any other country in the world. Power stolen to charge three-wheeler rickshaws cost more than $20m a year in Delhi alone. Read more on this here
 
 
 HEALTHCARE 
 
Medlife acquires medicine-delivery startup Myra. 
 

A Consolidation En Route?: Online pharmacy Medlife has acquired Bengaluru-based medicine-delivery startup Myra in an all-stock deal.
 
 
The deal is indicative of signs of consolidation in India's rather crowded e-pharmacy sector. 
 
 
Following the acquisition, Medlife will gain access to Myra's express delivery segment and expand the service to 22 cities in the coming months.
 
 
Big Expectations: China has rolled-out an ambitious multi-city bulk procurement program that’s driving down prices and providing an opening for Indian manufacturers like Sun Pharma to compete. More on this here.
 
 
 EARNINGS 

Airtel to announce Q4 earnings today, expected to report an improvement in its Average Revenue Per User. ICICI Bank reports 5% drop in profit at INR969cr in Q4. 
 
 
Eagerly Awaiting: Bharti Airtel is set to announce it Q4 earnings today. 
 
 
The telecom giant is expected to report an improvement in its Average Revenue Per User (ARPU) for the second consecutive quarter after the company rolled out minimum recharge plans for users to stay on its network in a bid to take on rival Reliance Jio which has been riding on its cheap tariffs.
 
 
Putting Things into Perspective: In Q3, Airtel’s profit had plunged 72% to INR86cr vs INR306cr in the previous year. Reliance Jio posted a profit of INR840cr in Q4. 
 
 
Among Other Things: Airtel’s topline has continued to remain under pressure after Jio’s entry in September 2016 brought down tariffs to rock-bottom. However, analysts believe that a large part of tariff downtrading is now complete, therefore stability in revenue is likely, unless Jio initiates a new round of tariff war to accelerate its subscriber growth. As of February end, Airtel had 340.3 million users while Jio had 297.2 million users.
 
 
Target Missed: ICICI Bank posted a 5% drop in profit at INR969cr in Q4 vs INR1,020cr last year, missing estimates on back of higher expenses which jumped 18.1% to INR14,680cr. 
 
 
Gross NPA came in at 7.38% vs 7.75 per cent QoQ.
 
 
 US 

Donald Trump threatens to ramp up US tariffs on Chinese imports. 

 
High Stakes: In a thread of Twitter messages, US President Donald Trump wrote that he plans to raise levies on $200bn in Chinese imports to 25% starting Friday, up from the current 10%. 
 
 
He also wrote he would impose 25% tariffs “shortly” on $325bn in Chinese goods that haven’t yet been taxed.
 
 
The news comes as trade discussions are underway between both the countries. 
 
 
Global stocks dropped following the announcement, intensifying the US-China trade tensions, which could perhaps dent economic growth.
 
 
US futures and stock markets in Asia and Europe were lower, oil prices fell and the Chinese yuan weakened.
 
 
Calm Before the Storm: Surprisingly however, mainstream news outlets in China have been rather quiet on the news. State media outlets such as Xinhua and newspapers including People’s Daily and China Daily did not report on Trump’s tweet after it was sent out.
 
 
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