News in numbers, Mar 4, 2016: Drought impact on Maharashtra, Indian firms’ dividend rush…

 

4.6%

What is it? Median return on assets for Indian firms in 2014-15, according to a country report by the International Monetary Fund (IMF).

Why is it important? It has gradually decreased since 2005 (except for an increase in 2010) and was the lowest over the last decade. The report attributes this to “supply side bottlenecks”, especially in the sectors of infrastructure, iron and steel sectors. This shows a divergence between corporate profitability and economic growth, which was recorded as 7.3% in 2013-14, the year in which India surpassed China to become the fastest growing economy in the world.

Tell me more: Two other factors show Indian corporates are likely to take time to get onto the growth path: companies’ heavy dependence on debt to finance growth (their leverage is one of the highest among emerging economies) and their ability to repay debts has fallen.

3

What is it? Number of major industrial regions in Maharashtra that are facing water shortage due to reallocation of the resource by the state government.

Why is it important? The regions – Thane-Belapur, Raigad-Taloja and Aurangabad – have 13,400 industrial units, of which most are small and medium firms. The Maharashtra Industrial Development Corporation, which operates these industrial estates, has cut down water supply as water levels in dams fell to less than 6.5%-50% of their capacity.

Tell me more: Maharashtra’s minister for water resources Girish Mahajan said that due to the drought, the industrial units have to face water shortage as “people and cattle in the affected regions are more important”. Over a third of the state (around 15,000 villages) are facing a severe drought situation.

50

What is it? Number of companies listed on the Bombay Stock Exchange (BSE) that have announced they are considering paying an interim dividend before the end of this month.

Why is it important? This comes within a few days from Finance Minister Arun Jaitley’s announcement of a 10% tax on an individual, Hindu Undivided Family or firm if their dividend income exceed Rs 10 lakh per annum, in his Budget Speech for 2016-17. The tax is effective from April 1. This is almost double of the number of companies (27) that declared dividends in all of March 2015. A Business Standard report says at least 70 companies have called for board meetings to declare dividends by the end of this month.

Tell me more: Companies are already charged with dividend distribution tax, which effectively comes up to 20.36% including surcharge and cess but the dividend income received by shareholders was exempt from taxes.

Rs 49

What is it? The royalty fee recommended by a government panel for a 450 gm packet of genetically modified cotton seeds, termed Bollgard II by technology provider Mahyco Monsanto Biotech (India) Pvt. Ltd (MMBL).

Why is it important? If this recommendation is accepted, then it would be a 70% reduction from the current royalty fee of Rs 163 per packet. This would benefit around 80 lakh cotton farmers in India but would hit MMBL’s finances, which earned Rs 4,479 crore in royalty fees between 2005-06 and 2014-15. The Indian government is working on a national draft policy on intellectual property rights, which should shed more clarity on price regulations.

Tell me more: Over 90% of cotton grown in India is based on MMBL’s technology, which has been licensed to 49 seed companies in exchange for a royalty fee. The committee has also recommended a maximum sale price of Rs 800 for a 450 gm packet of Bolgard II Bt Cotton seeds, lower than the prices they are being sold in states such as Maharashtra (Rs 830/packet), Telengana and Andhra Pradesh (Rs 930/packet) and Punjab and Haryana (Rs 1,100/packet).

Rs 5,000-Rs 8,000

What is it? Cost of a chopper ride from Bengaluru airport to one’s home or office in the city, to be offered by private travel operator, JetSetGo, which is backed by Puneet Dalmia (managing director of cement major Dalmia Bharat Group).

Why is it important? The city was ranked the sixth worst in IBM’s Commuter Pain Index in 2011 and this meant $6 billion worth of man-hours spent in traffic. The service might find takers among high-flying executives who can cut down the travel time by a fourth to 23 minutes the airport to the city. Bengaluru is home to IT majors Wipro and Infosys and unicorns such as Flipkart and Ola. The city has 6,700 high net worth individuals, according to the Asia Pacific 2016 Wealth Report.

Tell me more: JetSetGo plans to start its test flights in April and launch its services by the end of monsoon season this year. The company has already been running private shuttle services between Mumbai and Delhi thrice a week.

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News in numbers, Jan 20, 2016: VC-backed startups’ funding falls, ad spending in 2016…

 

Rs 4.34 per unit

What is it? The price at which Finland-based Fortum Finnsurya Energy has bid to build a 70-MW solar plant in Rajasthan under NTPC’s Bhadla Solar Park tender.

Why is it important? This is the lowest solar tariff in India, beating the recent bids by SBG Cleantech and Sun Edison at Rs 4.63 per unit. Though such low tariffs raise concerns about the viability of these projects, the government says this has been possible “through transparent auctions with a ready provision of land, transmission and the like”. Lower crude prices tend to be bad for solar energy firms, but India’s energy push is opening up opportunities for some of them.

Tell me more: State-owned NTPC conducted the reverse bidding for 420 MW solar projects to be set up at Bhadla’s Solar Park – Phase II on Monday.

 

35 seconds

What is it? The minimum time it will take to book a train ticket on IRCTC website.

Why is it important? The railway ticket booking website has deliberately kept the booking time to 35 seconds to prevent automated software from exploiting the system. The 35 second wait time was arrived at after considering that it takes at least 35 seconds to fill in the needed information. This is expected to reduce complaints from individual users who end up not being able to book tickets online.

Tell me more: In 2014-15, 18.3 crore tickets were booked on the IRCTC website and 14.9 crore between April-December 2015.

 

6%

What is it? The rate at which print advertising is estimated to grow in 2016 in India, according to a report by media agency GroupM.

Why is it important? However, print’s share in ad spending is estimated to decrease from 32.4% to 29.7% in 2016. Share of digital and television advertising are expected to increase to 12.7% and 47.1% this year. The growth in print sector is to be driven by auto, banking and finance and the government, besides regional advertising of telecom and consumer product brands in vernacular papers.

Tell me more: Total ad spending is estimated to grow 15.5% in 2016 to Rs 57,486 crore. Digital spending is likely to grow the fastest at 47.5% while growth rates of television and radio advertising are likely to slow down from 2015.

 

$1.5 billion

What is it? Amount venture capital-backed startups raised on 114 deals in the October-December quarter of 2015, according to a report by CB Insights and KPMG.

Why is it important? This is a decline of 46% in funding and 18% in number of deals in the last quarter of 2015 compared to the previous quarter. In Q3 of 2015, VC-backed startups raised $2.8 billion on 139 deals. An indicator that startups may not enjoy the same steady flow of VC money as in the previous quarters. India recently announced setting up a fund of funds with a $1.5 billion corpus to spent over four years.

Tell me more: At a global level too, there was a 30% drop in funding to $27.2 billion invested across 1,742 deals, marking the “lowest quarterly deal activity since Q1 2013”.

 

6.9%

What is it? China’s economic growth rate in 2015.

Why is it important? It is the slowest in 25 years. A slowdown in China, which is the second largest economy and the second largest importer of goods and services, is bound to affect the global economy. Concerns over China’s slowdown and a slump in commodity prices have prompted the International Monetary Fund (IMF) to cut its global economic growth forecast to 3.4% in 2016 from its October projection of 3.6%. It has kept China’s growth projection unchanged at 6.3% this year. China’s release of its weak economic growth prompted speculation that the government might announce some stimulus package, causing global stocks to rise.

Tell me more: China’s economic slowdown in the last two years comes as its government is trying to transition to an economy that is led by consumption and services rather than exports and investments.

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News in numbers, Dec 18, 2015: Doubling of US visa charges, global warming…

$400 million

What is it? The amount Indian IT industry will lose every year if US proposal to impose special fee on temporary work visas goes through, according to estimates by industry body Nasscom.

Why is it important? It will hit profit margins of Indian IT players dependent on H1-B and L-1 visas. In 2014, 86% of H1-B visas and 47% for computer occupations and engineering jobs (respectively) went to Indians, the largest share in both the categories, according to an analysis by Computerworld. Recently, when a couple of US senators wanted to curb the number of temporary work visas given to foreigners, Indian IT stocks took a hit.

Tell me more: US lawmakers have proposed to impose a special fee of $4,000 on certain categories of H1-B visas and $4,500 on L-1 visas. In effect, it doubles the visa charges. They expect it to generate $1 billion annually, which it would use to fund a biometric entry and exit tracking system and funding health screenings and treatments for the first responders after the 9/11 terror attacks on the US. The Indian IT industry has a significant presence in the US where it contributed nearly 411,000 jobs in 2015 and $20 billion in taxes between 2011-15. It gets about 47% of its $98 billion export revenues from the US.

 

0.97 degree celsius

What is it? The degree by which the average temperature in November across global land and ocean surfaces was higher than the 20th century average, according to National Oceanic and Atmospheric Administration (NOAA).

Why is it important? This makes last month the hottest November (on record) ever . It is also the seventh consecutive month when a monthly global temperature record has been broken. If December 2015 beats the coldest December (on record) in 2016, it has to be “unusually cold” and that is not likely to happen, according to Jake Crouch, climate scientist at NOAA’s National Centers for Environmental Information. And, if this doesn’t happen, then 2015 would be the warmest year ever – underlining the need to tackle climate change whose effects include more droughts, heat waves and increase in sea levels.

Tell me more: The globally-averaged sea surface temperature was the highest for November in the 1880-2015 record and the globally-average land surface temperature was the fifth highest for November in the same period.

 

$434 million

What is it? The payout to businessman Bernard Tapie by the French government in 2008.

Why is it important? It has come back to haunt Christine Lagarde, then France’s finance minister and now managing director of International Monetary Fund (IMF). A French court has ordered Lagarde to face trial over her role (which was, negligence) in this payout. This is likely to end her prospects of seeking a second term as IMF chief. Appointed in 2011, Lagarde is the first woman to head the organisation of 188 countries and her term ends in May 2016. Her predecessor Dominique Strauss-Kahn also faced tough time during his tenure – for a different reason.

Tell me more: In this 20-year old case, Tapie sold his majority stake in the then ailing Adidas to a group of investors and a year later, the company was bought by a businessman who was part of that investment group. Tapie alleged that the company was deliberately undervalued and sued the Crédit Lyonnais bank (was part of the investment group). After going through a series of courts, the case was referred to Lagarde (then France’s finance minister) who referred it to an arbitration panel and Tapie was awarded $434 million compensation. This was paid out of public funds in an out-of-court settlement, which caused a public furore.

 

5

What is it? Number of S-400 air defence systems India has proposed to buy from Russia at an expected cost of Rs 30,000 crore.

Why is it important? It’s a sign of strengthening ties between India and Russia. Prime Minister Narendra Modi is visiting Russia next week, and is expected to create a joint innovation fund, among others. The defence deal is also aimed to counterbalance Russia’s relationship with China and Pakistan. China signed a deal with Russia to procure S-400 systems earlier this year, and Pakistan is seen as getting close to Russia. China’s military strength is far superior to India’s by several metrics, with its defence budget nearly four times more than India’s. India has been strengthening its defence shield against both through domestic research and development and imports.  

Tell me more: S-400 is designed to protect key installations such as nuclear reactors and big cities. A surface-to-air missile, which can attack unmanned aerial vehicles, drones, cruise missiles, is completely automated from target acquisition to final engagement and is considered as a fourth-generation system in combat capabilities.

 

65 basis points

What is it? The difference between the cut in benchmark rate by the Reserve Bank of India (RBI) and the drop in banks’ lending rates in 2015. One basis point is one-hundredth of a percentage point.

Why is it important? The mismatch has led RBI to introduce a new formula (with effect from April 1) to calculate lending rates, and make them more responsive to policy rate changes. For new borrowers, loan rates are likely to be cheaper and for the existing customers, it is likely to take a year to experience the effects of implementing the new formula. Besides transmission in rates, the RBI expects the new measures to bring in increased transparency in calculating loan rates and which are “fair” to both the bankers and the borrowers.

Tell me more: Currently, banks decide their lending rates based on the average cost of funds on deposits outstanding and under the new method, the lending rates would be based on marginal cost of funds based lending rate. An October report by India Ratings said that while the RBI has cut rates by 125 basis points, banks have cut one-year deposits by an average of 130 basis points, thus paying lower to customers and making more money. A study of the last 10 years by India Ratings shows that in most cases when policy rates have been reduced, deposit rates have come down quicker than lending rates and the decrease of the former also has been higher.

 

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