Exiting CG Power & More

Good morning, folks! It’s now been almost two months since I have consistently written Elementum Scribe 5 days a week. Along with it, have come two realisations. One, things move at a snail’s pace and generally there isn’t enough exciting news to really dig into. Two, it is a bit much for me as a one-person army. Keeping both these points in mind, I am now making this a weekly business roundup newsletter.

In case you feel strongly about it, you know what to do. Just hit reply and let’s talk it out 🙂

MAIN STORIES

Institutional Investors rush to exit CG Power

Equities are a funny temperamental game. Sometimes, the market reacts so swiftly to bad news that even the big players get caught. However, after months this week has seen a flurry of investors hurrying to take their money out of fraud-hit CG Power.

Flashback: In August last year, news hit stands that there was massive financial fraud worth thousands of Crores detected at Gautam Thapar-led CG Power. Not only were liabilities understated, but so were advances to related and unrelated parties. Stock prices promptly went down by 20%.

Current scenario: The shareholding pattern for CG Power has been a story of creaking, moving parts. The biggest to make news was when Murugappa Group company Tube Investments bought 56% stake for Rs. 700 Crores. Another entrant to the CG Power story was Blue Diamond properties buying 6.6%. But, to make up for all these supporters of the beleaguered company, enough jumped the ship – L&T Finance selling 10% in two tranches, Yes Bank with about 8% and KKR Finance with another 7.5%. One heck of a patchwork quilt, this is.

Private Public partnership for 3 airports forges ahead

It seems to be Adani all the way when it comes to Indian airports. Last year, the group won rights to upgrade and operate six airports for 50 years with AAI (Airports Authority of India) pocketing a neat Rs. 1,300 Crores annually.

Adani forges deeper into airports: Now, Adani has won the rights to redevelopment for Jaipur, Thiruvananthapuram and Guwahati in the Public Private partnership. Although these airports were part of the earlier list of six, in this contract the airport operations, management and development is leased out to Adani. In a way, it becomes like a franchisee model where the government is the overseer and earns a fee while Adani does everything else and takes the post-fees earning.

Thiru not so soon: As Shah Rukh Khan would, picture abhi baaki hai. Kerala chief minister Pinarayi Vijayan wrote to PM Modi questioning the unilateral decision taken by the Centre. He had support from the opposition party Congress, apart from Shashi Tharoor who tweeted that a world class airport worthy of the city could come only from a private entity.  And then aviation minister Hardeep Puri tweeted to clarify how Adani’s outbid the Kerala government making the rightful winners. And, we thought Bollywood movies are over dramatic!

Data, AI will play a key role

As most of us are aware, some obvious sunrise sectors in India are data and Artificial Intelligence. Now, Nasscomm has data to back up this hunch.

On the race to become economy’s Most Valued Player: As per Nasscomm, these two Karan Arjun, Data and AI have the potential to add $500 billion to the slow, bumpy crawl of our economy on the path to $5 trillion. Almost half of their value will come from providing services to three major industries – retail, agriculture and banking & insurance. So, to put these jigsaw puzzle pieces together, getting into smart data based jobs in one of these sectors could prove to be a strategic career move.

Microprocessors go swadeshi: Looks like Nasscomm and the government are working in tandem. To give a boost to startups and innovation in this sphere, Union Law Minister Ravi Shankar Prasad announced the Rs. 4.30 Crore Swadeshi microprocessor challenge. Under this challenge, participants can build products using IIT Madras and CDAC (Centre for Development of Advance Computing) microprocessors. Are you up for the challenge?

IN SNIPPETS

Franklin more funds come with conditions: As money keeps trickling in for the six Franklin debt schemes that were wound up, Franklin India has now imposed curbs on three fund of funds. Of these, two have investments in the six impacted schemes. The funny thing is that the restriction is only to allow maximum inflow of Rs. 2 Lakh per investor per day. We wonder who are these eager cookies lining up to invest in such troubled funds.

Environment given priority: Sterlite Copper’s Thoothukudi plant in Tamil Nadu has been sealed on account of faulty copper slag management and ground water pollution. Unfortunately, it was one of the main stays of livelihoods in the small town and this story from Mint shows the cost of letting environmental violations go unchecked and then closing a thriving micro economy.

EPFO adds to the recovery story: Two separate threads of data coming out from EPFO added to the India economic recovery story. Atleast 153,500 companies have resumed making payments to EPFO by July end – early August, with a remaining gap of 64,000 establishments yet to resume from February. Although this data is more dated, June saw net enrolments of 6.55 Lakh employees in EPFO. Long term average stands at 7 Lakh, so we are pretty much getting closer or were getting closer to the normal by June end.

Knowing where to draw the line: Uber’s former security chief Joseph Sullivan is facing charges for hiding a data breach in 2016 that compromised confidential data of 57 million drivers and customers. It has now come to light that he paid hacker $100,000 in bitcoin to erase the data. Although he was fired, he now faces criminal charges.

Small cities drop out of airline map: With federal aid running out, American Airlines announced a list of 15 small towns in the US to which it will cease operations for the dearth of demand. Currently, it has only struck out these towns in the schedule from 7th Oct to 3rd Nov. Some of these towns are not catered to by any other airline so aerially they are pretty much stranded.

MARKET PULSE

While markets continued their usual see-saw, Nifty saw some movement in it’s construction. Zee Entertainment and Bharti Infratel were shown the door while Divi’s Lab and SBI Life entered, putting an end to weeks of speculation.

Another interesting deal which happened was Axis Mutual Fund selling a big chunk of V-Guard shares to SBI Mutual Funds. Looks like one AMC sees red whereas the other is seeing green pastures of possibility.

WILD CARD

Call it jugaad or an interesting innovation. Indian Railways has come out with a rail inspection cycle using redundant rail equipment which is quite handy in reaching inaccessible locations. By some estimates, the cycle can be assembled for a mere Rs. 3000. For physics buff, this video tweeted by Rail Minister Piyush Goyal is quite a watch.

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