AAPI: November 2023

DELHI, November 2023

Index of this Newsletter

INDIA

INDIA & THE WORLD

21. Hello Tata, Goodbye Wistron: Anatomy of a Takeover Deal
22. No Hackney Diamonds, Value Up the Glimmer
23. Indri-yeah! A Small-town Brew has got the World Raising a Toast
24. Fresh Talent to Speed Up Air India Transformation
25. NISAR NASA ISRO: NASA-ISRO radar mission to provide dynamic view of forests, wetlands

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DELHI, NOVEMBER 2023

NEWSLETTER, NOVEMBER 2023

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1. Unemployment rate: India jobless rate rises to more than two-year high, CMIE says

ET, 4 Nov. 2023

India's unemployment rate increased to its highest level in over two years in October, primarily due to rising joblessness in rural areas, according to data from the Centre for Monitoring Indian Economy Ltd. The overall unemployment rate rose to 10.05% in October, up from 7.09% in September, marking the highest rate since May 2021.

IANS

India’s unemployment rate climbed to the highest in more than two years in October as joblessness in rural areas increased, according to a private research firm.

The overall rate rose to 10.05% last month from 7.09% in September, data from the Centre for Monitoring Indian Economy Ltd. showed, the highest since May 2021. Rural unemployment jumped to 10.82% from 6.2%, while the urban rate eased slightly to 8.44%.

The weakest monsoon rains in five years is weighing on farming output in the world’s second-biggest producer of rice, wheat and sugar. In urban areas, though, economic activity has been relatively strong, with manufacturing and consumption expanding.

The government publishes a country-wide unemployment rate only on an annual basis, and a rate for urban areas every quarter. The most recent official report, released in October, puts the unemployment rate for the country at 3.2% for 2022-2023.

Bloomberg

Economists have come to rely on the CMIE data for a better assessment of the labor market. The figures are based on monthly surveys of more than 170,000 households.

While India’s economy is expected to grow more than 6% this year and next, among the fastest in the world, that’s still not rapid enough to create jobs for the millions that need it. The CMIE data shows nearly 10 million people entered the job market in October in the hopes of finding some work.

Last month, Indian tech-services outsourcing firms, including Infosys Ltd. and Wipro Ltd., announced plan to halt hiring of college graduates, potentially leaving thousands of fresh engineering students without jobs. That could fuel discontent among the country’s youth and create problems for Prime Minister Narendra Modi as he seeks a third term in office in elections next year.

2. Small Towns See Robust Hiring

ET, 8 Nov. 2023

India’s small towns and major cities are experiencing a widening chasm in their job markets.

While the smaller towns and cities are seeing thriving demand for manpower with many companies ramping up their presence to meet rising consumer demand, job creation remains muted in the metros as companies tread cautiously amid macroeconomic and geopolitical headwinds, according to staffing companies such as Teamlease Services, Xpheno and Foundit.

Tier 2 and 3 towns such as Rajpura, Kushaiguda, Hosur, Ludhiana, Jodhpur, Jabalpur, Kalwara, Zirakpur recorded a 17% year-on-year increase in hiring for entry-level white collar and blue-collar jobs across e-commerce, manufacturing, BFSI, and telecom sectors in the September quarter, showed data from Teamlease Services. This compares with a 5% decline in similar jobs in the metros.

Data from Xpheno echoes the trend. It showed a near twofold jump in entry-level white collar jobs in small towns in October compared with a year earlier.

A mix of factors, including penetration of banks and financial services companies into new and unbanked regions, growth in ecommerce and retail sales, and demand for frontline workers in manufacturing sectors such as auto, electronics, and smartphones is driving this trend, according to executives at staffing firms.

“Many companies are looking to expand beyond the metro cities, leading to a rise in demand for talent, which is in short supply,” said Kartik Narayan, chief executive, staffing, at TeamLease Services. “There is a huge push for personal loan, home loan, credit card sales in BFSI. The market is expanding for ecommerce and retail companies too, while phone, electronics, auto and large contract manufacturers also need more people to ramp up production,” he added.

Anil Ethanur, co-founder, Xpheno concurred and said, “Companies in fintech, NBFC, MSME, ecommerce and retail are looking to increase footprint in tier 2 and 3 cities even as hiring in mega cities and especially in the technology and startup sectors – the largest employment generators – continue to be muted.”

Top roles in demand include sales and support (credit card, home loans, automobile sales), warehousing and delivery, machine operators, and other shop floor workers.

For instance, IIFL’s gold loan business has doubled its branch network to 3,000 in four years due to ballooning demand for credit from underserved smaller locations.

“To meet the business expansion, we have become a major employer in tier 2, tier 3 and tier 4 cities,” said Saurabh Kumar, head of gold loan business, IIFL Finance. So far in FY24, the company has added about 4,000 people in smaller locations and is likely to add 2,000 more by March-end.

“We see this trend continue as there is a massive business opportunity to finance the under-banked and unbanked in smaller locations," said Kumar.

Motilal Oswal Financial Services Group CHRO Niren Srivastava said: “There is a significant uptick in tier 2 and 3 hiring for housing finance and broking & distribution businesses.”

“Improved infrastructure, including transportation, connectivity, and digital access, has made tier 2 and 3 cities more conducive for businesses to operate and expand their operations,” said Sekhar Garisa, CEO, foundit, a part of Quess. Employers are looking to tap into a growing talent pool, expand their markets, and reduce operational costs in these new regions, he added.

3. Government clears Rs 20,000 crore power line to energise showpiece Ladakh solar project

Story by Sanjay Dutta, 19 Oct. 2023

LEH: The government on Wednesday approved construction of 713-km transmission line at an investment of Rs 20,773 crore for wheeling electricity from a 13 gigawatts (GW) solar power-cum-12 GW-hour battery storage project proposed to be built in Ladakh, first reported by TOI on January 13, 2019.

According to the decision taken by the Cabinet’s panel on economic matters, the Centre will provide viability gap funding of Rs 8,309 crore, or 40% of the project cost, to keep transmission tariff affordable.

The approval also includes building of an interconnect to link for feeding power from the project into the grid in Leh. The project, to be built at Pang, a vast wind-swept plateau 174 kms southeast of Ladakh’s capital Leh along the road to Manali, will also be connected to Leh-Kargil-Alusteng-Srinagar line for powering up Kargil and Jammu & Kashmir.

The high voltage direct current line has been accorded the status of a ‘national project’ and state-run transmission utility PowerGrid has been tasked to build it without bidding. The link with a capacity of 5 GW will plug into the national grid at the Kaithal, 186 km north of Delhi, in Haryana after crossing Himachal Pradesh and Punjab.

The transmission line would be a global engineering marvel as it will have to be built across stratospheric mountains and will test the limits of endurance both of men and machines due to rarefied atmosphere as well as extreme weather fluctuating between 40 degrees in summer and minus 40 degrees combined with wind chill during long winter.

Addressing the nation on abrogation of Article 370 of the Constitution, which turned Ladakh into a federal territory, prime minister Narendra Modi had on August 8, 2019 flagged projects to tap solar energy potential as a key engine of growth for the region. In his Independence Day speech next year, he announced construction of a 7.5 GW solar park in Ladakh, which has now been scaled up.

The original plan was to build a 5 GW solar project at Nyoma, close to the LAC, and another 2.5 GW plant in Kargil. But the plan for Nyoma fell foul of the wildlife department and the project was relocated to Pang with higher capacity. The Kargil project was spiked due to difficult geography.

In its current form, the Pang project will help achieve the target of 500 GW of non-fossil fuel generation capacity 2030. The project will generate large direct and indirect employment opportunities for both skilled and unskilled personnel in power and other related fields.

4. Delhi govt to launch mobile app for construction workers, Government News

ET Gov. 9 Nov. 2023

The initiative is aimed at facilitating the registration of construction workers to enable them to benefit from various welfare schemes of the government.

Delhi Labour Minister Raaj Kumar Anand on Tuesday announced the city government will launch a mobile app as a Diwali gift for construction workers to ensure that they can benefit from various welfare schemes being run for them. Anand made the announcement at a meeting of the Delhi Building and Other Construction Workers Welfare Board (DBOCWWB) at the Delhi Secretariat.

Many welfare schemes for construction workers are being run by the DBOCWWB. To ensure that these schemes reach maximum beneficiaries, various mediums of publicity are needed, an official statement said.

Advt

During the meeting, the statement said, Anand underlined the importance of mobile apps in every sector in today's digital era.

Hence, there is a need to launch a mobile app for construction workers, he said.

During the meeting, the minister also issued directions to ensure on-site registration of workers at all construction sites.

Anand also took stock of the deployment of mobile registration vans at all construction sites.

The initiative is aimed at facilitating the registration of construction workers to enable them to benefit from various welfare schemes of the government.

5. Jammu & Kashmir received investment proposal worth Rs 86000 crore, says LG Manoj Sinha

ET Gov. 31 Oct. 2023

The LG said 259 more CA stores are in the pipeline, which is expected to employ 15,000 to 16,000 people.

Jammu and Kashmir Lieutenant Governor Manoj Sinha on Sunday said the Union Territory has received investment proposals worth Rs 86,000 crore as the region has emerged as a favourite destination for investors in the country and abroad.

"Investment proposals to the tune of Rs 86,000 crore have come to the Industries and Commerce Department. People from within the country and outside are considering J&K as a favourite investment destination," Sinha said while addressing a function at the Industrial Complex at Lassipora, 35 kilometres from Srinagar.

Sinha, who inaugurated 12 controlled atmosphere stores here, said the government was working to ensure that these investment proposals are translated into tangible projects for the development and prosperity of the people of Jammu and Kashmir.

"We are working to bring these proposals to the ground level, but there can be no development without peace. While security forces will do their job, people will have to raise their voices against attempts to disrupt peace. Innocents will not be harmed or put to unease, but we will not spare the criminals," he added.

Referring to the controlled atmosphere stores as a fruitful business option, Sinha said the 12 stores, which have been dedicated to the public, will prove to be a boon for the farmers.

"It (the new stores) has increased the capacity by 60,000 tonnes and will give employment to 500 to 600 persons. This is just the beginning, there is room for more. The potential of horticulture is huge, and the possibilities are unlimited," he said, adding that in the past six months, investment proposals worth Rs 1,250 crore have been received in this sector.

"The CA stores are a safe investment as they remain busy throughout the year here," he noted.

The LG said 259 more CA stores are in the pipeline, which is expected to employ 15,000 to 16,000 people.

On the steps taken to promote agriculture in Jammu and Kashmir, Sinha said the country has recognised the power of agriculture and allied sectors in the Union Territory.

"Jammu and Kashmir administration has given priority welfare of farmers, not only the big farmers but even the 2.6 lakh marginal farmers," he said.

He also said that efforts were on to bring the horticulture produce under the PM Fasal Bima Yojna.

"A portal has been set up to train farmers. We are also looking at the possibility of reducing the post-harvest losses. No state is getting as much incentive as PM Modi has given to JK," he added.

- Agriculture, Fishing and Rural Development

6. Plans to cover area larger than Sikkim with palm oil plantations

Hindustan Times, Jayashree Nandi, 19 Oct. 2023

The Union government plans to cover an area larger than the entire state of Sikkim with palm oil plantations in six northeastern states as part of a national mission that could mean devastating consequences for the biodiversity of the region.

Special provisions are also being made to promote palm oil in northeast India keeping in mind the need for investment, the ministry of agriculture and farmers’ welfare said in response to an RTI application from Hindustan Times.

“Government has launched a national mission on edible oils (palm oil) (NMEO-OP) in 2021-22 with an objective to enhance edible oil production through area expansion and crude palm oil (CPO) production of oil palm and to reduce import burden on edible oils,” the ministry said. In the northeastern states, three companies, Patanjali Foods Private Limited; Godrej Agrovet Ltd and 3F Oil Palm are involved in palm oil processing, plantation and procurement, the response to the RTI added.

NMEO-OP is being implemented in 15 states in the country including six northeastern states, Arunachal Pradesh, Assam, Manipur, Mizoram, Nagaland and Tripura. HT reported on August 29 that Meghalaya plans to stay away from raising palm oil plantations in the state, citing their impact on biodiversity and opposition by farmers.

As per re-assessment of potential areas for oil palm cultivation in India by the Union government, a total area of 840,344 hectares or ha (8403.44 sqkm), larger than the total area of Sikkim, was found suitable and recommended for oil palm plantation in the northeastern states. The plantation area includes 133811 ha in Arunachal Pradesh i, 375428 ha in Assam , 66652 ha in Manipur , 51297 ha in Nagaland , 66792 ha in Mizoram , and 146364 ha in Tripura .

7. The Government intends to spend Rs. 30,000 crore (US$ 3.60 billion) to build a crop cover portal

IBEF, Oct. 23, 2023

The government intends to spend Rs. 30,000 crore (US$ 3.60 billion) to build the Pradhan Mantri Fasal Bima Yojana (PMFBY) site into a comprehensive platform that will extend insurance coverage beyond crops including assets like ponds, tractors, animals, palm trees, etc.

This campaign will be powered by the AIDE app, which was released in July to assure door-to-door enrolment, making crop insurance more accessible and convenient for farmers. Through this software, insurance brokers will not only enrol farmers in crop insurance but also cover 40 million farmers in non-subsidized plans.

An official said, " We are planning to build a platform. It’s a transition from being a portal to a platform. AIDE app is already there for farmers, through which insurance intermediaries enrol farmers for crop insurance. While they enrol the farmers for a subsidized scheme, which is PMFBY, farmers may also want some of their other rural products that are not subsidized to be covered by insurance. If the portal is converted into a platform, farmers will be able to get insurance coverage for their non-subsidized agricultural assets. Based on the subsidized platform, we will try to get schemes enrolled onto our platform where farmers of certain regions will be given choices to opt for other schemes".

PMFBY, a central government-sponsored crop insurance plan that unites all stakeholders on one platform, has been overhauled with the introduction of new technological initiatives such as YES-Tech, WINDS portal, and AIDE app, signalling a watershed moment for crop insurance in India. Following the reform of PMFBY, insured acreage increased by 12% in 2022-23, reaching more than 49.7 million hectares, and is predicted to reach an all-time high of 57.5-60 million hectares in the 2023-24 Kharif season.

The official said, “If we do it for one or two years, we will come to know what type of insurance farmers in a certain region want. We can build it into a scheme for subsidy. So, it becomes a sandbox under PMFBY to get new schemes by knowing the market demand. It will not be limited to crop insurance, but other insurance requirements and enrolments as well”.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

8. Many large buyers from Turkey land in India to buy basmati rice; prices surge

ET, 4 Nov. 2023

“The old contracts that were kept in abeyance because of sub-$1200 price per tonne are being shipped now. New orders are pouring in with large buyers from Turkey visiting India to pick up good volumes of basmati rice,” said Vijay Setia, a basmati exporter and past president of All India Rice Exporters Association (AIREA).

Getty ImagesThe surge in exports of basmati rice is likely to pinch the pockets of Indian consumers.

After India reduced the minimum export price (MEP) of basmati rice to $950 from $1200 per tonne last week, many large buyers from Turkey have landed in India to buy basmati rice resulting in prices surging to $975-$1000 per tonne in the export markets.

Farmers from Haryana, Punjab, and western UP are now getting Rs 3900 per quintal for their basmati paddy crop (1509 variety), a Rs 700 per quintal rise within a week's time fuelled by heavy demand from the global markets for basmati rice.

On August 25, the government prohibited the export of basmati rice below $1,200 per tonne to prevent potential instances of “illicit” shipment of regular white non-basmati rice disguised as high-quality basmati rice. It also kept the sub-$1,200 per tonne rice contracts in abeyance and asked the Agricultural and Processed Food Products Export Development Authority (APEDA) to set up a committee to evaluate the contracts.

After several representations by the AIREA to reduce the MEP, the Union commerce and industry minister Piyush Goyal agreed to bring down the MEP to $950 per tonne last week.

“Last week prices of basmati paddy increased by Rs 700 per quintal to Rs 3,900. It is a relief for us as we were staring at a loss since the exporters had stopped buying,” said Vijay Kapoor, a basmati farmer from Karnal. However, Kapoor pointed out, the government should keep a close watch on whether the commission agents, who buy paddy from the farmers, are giving them the right price or not.

The surge in exports of basmati rice is likely to pinch the pockets of Indian consumers. Suraj Agarwal, CEO of RiceVilla, a rice marketing and exporting firm said, “As demand is increasing in the export markets after the reduction in MEP, domestic prices of basmati rice have increased by around 9 percent in the last five days. It can increase further once export contracts start being executed. We are expecting domestic prices to increase by another 10% within a month from now.”

Of the total acreage of 1.7 million hectares under basmati rice, the 1509 variety accounts for about 40% of the area. Exports of basmati rice in 2022-23 stood at 4.5 million, valued at Rs 38,524.11 crore, with the Gulf nations being the major buyers. More than 80% of basmati rice produced in India is exported.@timesgroup.com/Kolkata

After India reduced the minimum export price (MEP) of basmati rice to $ 950 from $1200 per tonne last week, many large buyers from Turkey have landed in India to buy basmati rice resulting in prices surging to $975-$1000 per tonne in the export markets.

After several representations by the AIREA to reduce the MEP, the Union commerce and industry minister Piyush Goyal agreed to bring down the MEP to $950 per tonne last week.

9. Centre Set to Expand e-Bus Service with Focus on Smaller Cities

ET, 28 Oct. 2023

Pushing ahead its green mobility plan, the government is expanding the e-Bus network in the country, a top government official has said. “Earlier nine cities were chosen for e-bus service under FAME 1 and 2. Now, other cities will also be getting the e-Bus service,” union minister for Housing and Urban Affairs Hardeep Singh Puri said on Friday.

Addressing the 16th Urban Mobility India Conference and Exhibition being hosted here from October 27-29, Puri pointed out that inside the cities, especially smaller cities, the private players in the unorganized sector were not geared to meet the demand that will come. “We have, in the organized sector, around 40,000 buses in the cities, and it’s worrying because we need a minimum of 1.2-1.5 lakh buses,” Puri added.

Addressing the conference, Manoj Joshi, Secretary, Ministry of Housing and Urban Affairs (MoUHA) said the proposed plan would focus on smaller cities as well this time that were missing earlier.

“10,000 buses are being launched under PM-e-Bus Sewa, across 169 cities, and we have received orders for 5,000 buses from the state government, and the state government has signed up as guarantors for these orders,” said Joshi.

10. Japanese's Persimmons thriving in Kashmir, likely to boost farmers' income

ET, Ashraf Wani, 30 Oct. 2023

Japanese's Persimmons thriving in Kashmir, likely to boost farmers' income© Provided by India Today

Persimmon, the national fruit of Japan, has been showing excellent results in improving Kashmiri farmers' income. The non-native fruit crop has been introduced in South Kashmir's Kulgam district recently and is giving better results than apples in boosting the farmers' income.

The bittersweet, orange-coloured fruit, native to China, is thriving in Kashmir's Kulgam. Shabbir Ahmad Itoo planted Persimmon on his farm. Hailing from the Sonigam area of Kulgam, with a diverse educational background, Shabbir is cultivating non-native Persimmon in the region.

Talking to India Today TV, Shabbir said his father brought the fruit from Himachal Pradesh.

"The fruit does not need much care or pesticides like apples. This fruit has very good medicinal value with vitamin C in it. The fruit is also useful for expecting mothers, with qualities that increase blood circulation and provide relief from joint pains," Shabbir said.

He added, "It took us about two years, and now it's bearing fruits. These plants grow significantly, much like apple trees. Furthermore, it has a promising market value. In Kashmir, this fruit is relatively new, but we successfully introduced it in Delhi, where one kg of these fruits sells for more than Rs 100."

The Diospyros kaki, more commonly referred to as Persimmon, boasts a rich history with its roots dating back over 2,000 years to China. Today, China, Japan, and South Korea have become the primary cultivators and top producers of this delectable fruit, solidifying its significance in East Asian agriculture.

- Industry and Manufacture

11. Writing instrument makers will see a 13-15% revenue increase and 150-200 bps operating margin expansion: CRISIL

IBEF, Oct. 26, 2023

According to a report by CRISIL Ratings, India's writing instrument industry is likely to witness revenue growth of 13-15% on-year this fiscal year due to increasing exports led by rising demand from the US and a continuous uptick in demand from the education sector as students return to the physical mode. It also stated that this follows a 33% growth seen in the previous fiscal year. In the long run, the sector will also benefit from India's demographic dividend and rising proportion of organised players.

Due to decreasing raw material prices, the operating margin will increase by 150-200 basis points (bps) year-over-year to around 13% in this fiscal year. The CRISIL report added that investments in new product development and capacity expansion will encourage manufacturers to borrow. However, strong cash flows and balance sheets will provide an offset against incremental debt and support credit profiles.

To report the results, CRISIL Ratings examined five manufacturers that accounted for half of the revenue in the organised market.

In this context, it is anticipated that exports are expected to increase by 15-20% this fiscal year, supported by partnerships with global brands for US sales as a de-risking tactic from China.

India's demographic dividend will continue to be a major tailwind for the writing instrument industry. With a median age of 28, there is a sizable student body and workforce available as the manufacturing and service industries grow.

Manufacturers of writing instruments in the organised segment, which make up over 80% of the market, will benefit from this. Organised manufacturers' market share increased from approximately 65% to almost 80% of the Rs. 10,000 crore (US$ 1.20 billion) industry in the last three fiscal years.

Their ability to offer superior quality writing material at a lower price point than competitors has been made possible by their growing economies of scale. After the Goods and Services Tax was implemented, unorganised producers—who had previously relied on cost arbitrage through lower import prices from China—lost their advantage and are now unable to compete with branded manufacturers in a market that is becoming more and more quality-conscious, according to the report.

Due to the drop in the price of essential raw materials (lead for pencils and polypropylene for pens) by approximately 15% over the previous fiscal year, operating profitability is predicted to increase by 150-200 basis points to approximately 13% this fiscal year. This, it was stated, is important because 60-65% of the entire cost is attributed to raw materials.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

12. With Wistron Deal, Tata to Become First Indian Co to Make iPhones

ET, 28 Oct. 2023

Tata Electronics Pvt Ltd (TEPL), the Tata Group’s manufacturing arm, is acquiring Winston's operations in India for $125 million (₹1,000 crore). That will make it the first Indian company to manufacture Apple iPhones.

Tata Electronics Pvt Ltd (TEPL), the Tata Group’s manufacturing arm, is acquiring Wistron’s operations in India for $125 million (₹1,000 crore). That will make it the first Indian company to manufacture Apple iPhones.

Taipei-based Wistron Corp’s board on Friday granted approval “to sign the share purchase agreement with TEPL for the sale of its 100% indirect stake in Wistron Info Comm Manufacturing (India) Pvt. Ltd (WMMI). The transaction price is tentatively estimated as $125 million (approximately NTD3.89 billion),” it said in a statement.

Union IT minister Ashwini Vaishnaw took to X to note the development: “Made in India iPhones… by Tata.”

The Wistron buy will spur the next cycle of investment in the Indian electronics manufacturing ecosystem and signals the maturing of the country’s contract manufacturing companies, minister of state for electronics and information technology Rajeev Chandrasekhar told ET. “I think Tata’s entry definitely signals that the Indian EMS (electronic manufacturing services) has (now) a giant Indian company which does manufacturing for global brands (in the) present and is maturing now,” he said.

Companies like Tata, which can specialise in both high-volume, low-margin and low-volume, high-margin products with the takeover of Wistron’s facilities, will help catalyse the electronics ecosystem, Chandrasekhar said.

ET had reported on November 30 last year that TEPL, already among Apple’s component suppliers in India, had started discussions with Wistron to buy its plants. Wistron is one of the three top vendors for Apple in India.

Wistron currently has four assembly lines for iPhone 14 production at its plant in the Kolar industrial area and employs 14,000-15,000 people. A facility in Peenya, Bengaluru, is out of commission, while a third is used for the repair of Apple products. The company had been about to open another manufacturing facility in Kolar by the end of November, with production beginning in January 2024.

TEPL is a wholly owned subsidiary of Tata Sons. It was set up to lead the group’s ambitions to become a scaled mobile phone and component contract manufacturer, after group chairman N Chandrasekaran sought to leverage the geopolitical backlash against China and woo smartphone companies like Apple to alternative production sites in India.

The Tata Group did not respond to ET’s queries.

In the last five years, India has made major strides in establishing an iPhone manufacturing ecosystem. The iPhone SE was the first made-in-India iPhone produced by Foxconn in 2017. In subsequent years, all the latest Apple models were made here and even exported by Apple’s three contract partners —Foxconn, Wistron and Pegatron.

13. REC extends Rs 30000 cr funding to RailTel for infra projects in telecom, IT, data centre, railway signalling,

ET Gov. 10 Nov. 2023

The MoU encompasses the possibility of financing overseas ventures related to high-speed rail, metro, IT network, and the upgradation of railway network, as part of bilateral infrastructure projects in Southeast Asia and Eastern Africa where RailTel is currently working.

REC signed an MoU with RailTel on November 9 to extend financial assistance up to Rs. 30,000 crore for infrastructure projects which will be executed in next 5 years.

These projects encompass a wide range of areas, including Data Center products and services, Telecom and IT products and services, Railways and Metro projects, and the KAVACH Train Collision Prevention System.

T.S.C Bosh, Executive Director (Infra & Logistics), REC, and Jasmeet Singh Marwah, Company Secretary, RailTel signed the MoU in the presence of Vivek Kumar Dewangan, CMD, REC, Sanjai Kumar, CMD, RailTel and other officials from REC and RailTel.

Post the MoU Signing, they also discussed opportunities for collaboration in detail and agreed upon exploring new areas such as Renewable Energy, Smart Metering and other projects where RailTel and REC (through its wholly owned subsidiary RECPDCL) can join hands.

REC Limited, a PSU under the Ministry of Power, provides long term loans and other finance products for the power infrastructure sector comprising generation, transmission, distribution, Renewable Energy and new technologies like Electric Vehicles, Battery Storage and Green Hydrogen.

Recently REC has diversified into the other infrastructure projects such as roads and expressways, metro rail, airports, IT communication, social and commercial Infrastructure (Educational Institution, Hospitals), ports and electro-mechanical (E&M) works in respect of various other sectors like steel and refinery.

The loan book of REC exceeds Rs 4,74,275 Crore.

RailTel, a PSU under the Ministry of Railways, is one of the largest neutral telecom infrastructure and ICT services providers in the country, owning a pan-India optic fiber network covering several towns and cities and rural areas of the country.

14. NCEL will boost exports, empower farmers, gain place for India in global biofuel market.

ET Gov. 24 Oct. 2023

“India is the only country where 4 crops can be grown simultaneously and if even one of these crops can be used for biofuel, then we can meet India's biofuel needs and export it as well."

Union Home Minister and Minister of Cooperation, Amit Shah, presided over the launch of the National Cooperative for Exports Limited (NCEL), a venture that marks the union of cooperative sectors in India's export efforts.

In his address, Amit Shah said that today the National Cooperative Export Limited is being formally launched on the auspicious day of Mahanavami. He said that today we are crossing a very important milestone on the way to realize the vision of Sahkarita Se Samriddhi, for which the Ministry of Cooperation was established.

He said that National Cooperative Export Limited (NCEL) was established after much deliberation with various objectives in mind. He said that our goals behind setting up NCEL include increasing exports, especially agricultural exports, making farmers prosperous, changing crop patterns and enabling two crore farmers of the country to declare their land as natural by 2027.

Shah said that a Biofuel Alliance has been announced by Prime Minister Narendra Modi. He “India is the only country where 4 crops can be grown simultaneously and if even one of these crops can be used for biofuel, then we can meet India's biofuel needs and export it as well,” he said.

“Another objective of setting up NCEL is to strengthen the cooperatives sector in the country including rural areas and population dependent on agriculture,” he added.

Shah lauded the substantial contributions made by cooperatives in various sectors, such as food production, sugar production, milk production, spindles, and grain.

"30% of food production is done in the cooperative sector, 30 %of sugar production is done by cooperatives, almost 19 per cent of milk production is done by cooperatives, if we talk about spindles, the biggest part of it is done by cooperatives and the grain is seen. If there is a question of financing the farmers who produce the goods, then 42% of the finance can be done directly/indirectly also by the cooperative," said Shah.

He noted that till now about 1500 cooperatives have become members of NCEL and it is expected that in the coming days every tehsil will join it and become the voice of the farmers. Till now NCEL has received orders worth Rs 7,000 crore and orders worth Rs 15,000 crore are being negotiated. The Minister of Cooperation expressed confidence that in the coming days, like IFFCO, KRIBHCO and Amul, National Cooperative Export Limited will also prove to be a very big and successful cooperative venture.

Amit Shah said that NCEL will become an organization representing the entire cooperative sector and in the coming days, efforts will be made to develop it into a complete export ecosystem covering all aspects like procurement, storage, processing, marketing, branding, labeling, packaging, certification and research and development.

He said that NCEL will also work on connecting with the Ministry of Commerce and Industry, Ministry of External Affairs and our embassies abroad with the Whole of Government Approach for market linkages. Apart from this, a design will be prepared by keeping Farmers Producers Organizations (FPOs) and Primary Agriculture Cooperative Credit Societies (PACS) together so that the production is as per the market demand.

15. JLR: From Tata’s ‘biggest mistake’ to a money-spinner, how focus on high-profit cars did the trick

ET, 7 Nov. 2023

JLR now accounts for two-thirds of Tata Motors’ consolidated revenues and profits. The most dramatic change is happening in free cash flow generation, which used to be the weakest link at JLR. The company also accounts for over a third of Tata Motors’ share price valuation. What drove this transformation, and is it sustainable?

The day was June 2, 2008. Ratan Tata was looking sharp in a grey suit-white shirt combination as he sported a confident smile after clinching a USD2.3 billion all-cash deal to acquire UK-based marquee luxury car brands Jaguar and Land Rover (JLR). As congratulatory messages and loud applause filled the air at JLR’s Gaydon office in the UK, outside, the criticism from industry experts was even sharper: “Why on earth?”.

They had a point. The world was slipping into a recession. The demand for luxury cars and SUVs was crashing. JLR was heading towards a major loss. The company was critiqued for being Tata’s “biggest mistake”.

But Tata Motors looked at JLR as an opportunity to enter the global big league. The initial signs were not good though. While the JLR acquisition put an INR21,900 crore debt on Tata Motors, in FY09, the company reported an INR2,500 crore loss, a first in seven years. For years to come, both Tata Motors and JLR struggled to keep their head above the water.

Fifteen years on, the narrative has changed. Tata Motors is now India’s number 3 carmaker, hot on the heels of number 2 Hyundai, with a market share of 13.4% in the passenger vehicle segment. And JLR has proved why Ratan Tata was not wrong in his pursuit.

In the second quarter of FY24, JLR accounted for two-thirds of Tata Motors’ consolidated revenues and profits. JLR now makes up over a third of Tata Motors share-price valuation. JLR was always a big contributor to Tata Motors’ revenue. What has changed now is JLR’s sharp recovery in profitability. More crucially, free cash flows. In the first half of the financial year itself, the company has generated almost as much free cash flow as it did in its best years on a whole.

The Street today attributes a valuation of around GBP10 billion to JLR, in its sum-of-the-parts or SOTP valuation of Tata Motors which is low if the company can sustain the GBP2 billion or over INR20,000 crore of free cash flows the management is projecting for FY24. While the management believes in further upside in profitability to 10% by FY26 versus 8% in FY24, the Street is divided on profit margins sustaining at 8%. That makes JLR a catalyst for Tata Motors share price in the future.

So, how did JLR achieve this? Well, that is a remarkable story of transformation driven by a smartly stitched strategy and wise utilisation of resources. Before we tell you more about this, here’s what numbers tell us about the company.

The transformation

The astonishing part is JLR’s performance this fiscal is coming on the back of volumes that are likely to be 36% lower than the peak levels in FY18. But the revenue per vehicle will beat the volume decline resulting in the highest revenue ever.

The most dramatic change is happening in free cash flow generation. This used to be the weakest link at JLR so far, with only a small amount of profits converting to cash in the bank. JLR’s net debt was GBP3 billion in FY23. This is set to go down to just GBP1 billion and the company is likely to have a net cash by the end of FY25. This is also playing a vital role in Tata Motors’ efforts to slash its net debt.

In our February 2023 story, we ended with this thought: “…after a long struggle, JLR can prove to be a positive catalyst for Tata Motors.” That seems to be coming true with the FY24 performance coming in better than anyone was expecting.

The turnaround drivers

What made JLR’s transformation playbook interesting was a narrow focus on its most-profitable products. So much so that products like Range Rover, Range Rover Sports, and the Defender accounted for 64% of the vehicle sales this year and 77% of the orderbook. Gone are the days when a Range Rover Evoque, which starts at GBP40,000, was a bestseller. Even the Range Rover Velar, which starts at GBP54,000, has seen a de-emphasis.

The intent to continue on this path is evident from JLR’s bracketing of the Range Rover Velar as a medium profitability car. The aim is to maintain and take its 5.5% market share in the segment to 5.8% in FY26.

The focus will be squarely on high-profitability cars where the company wants to take its global market share from 12% in the second half of FY23 to 17% in FY26.

The company plans to fully exit — yes you heard it right, exit — low-profitability cars like the Jaguar sedan. The Jaguar will be reborn in 2025 as three fully electric sports cars with pricing starting from GBP100,000 and a range of 700km.

Speaking of high-margin cars, the company is selling the largest number of Range Rover models ever. Here, the base model starts at GBP110,000. The personalised Range Rover Special Vehicle variant, which starts at GBP162,000, is no longer a niche offering.

Even the Defender, which has emerged as a key model contributing a third to JLR’s wholesale volumes (excluding the China JV) in the quarter gone by is priced between GBP60,000 and GBP80,000, or sits in a segment higher than the Velar and is massively more profitable than the Evoque was. JLR spent almost GBP60 million to make the Defender brand the official sponsor of the 2023 Rugby World Cup and in advertisement in the September quarter. The brand differentiation between various JLR models is very sharp. In fact, when you visit the Land Rover website anywhere in the world, you have to choose between Range Rover, Defender and Discovery brands to enter. In other words, one can’t browse all JLR models on the same website as we see on most car websites.

The next big trigger for JLR will be the launch of battery electric Range Rover in late 2024 and Range Rover Sports soon after. It is likely that these vehicles have higher price points. Going by JLR’s R&D expenditure (50% higher than last year), it seems the company is spending an enormous amount of money building these electric vehicles. In fact, JLR’s total investment, which sunk to just GBP2.3 billion in FY23 could climb to USD3 billion in FY24 and further to GBP3.5 billion in FY25.

Manufacturing and distribution redefined

JLR has a plan to reduce its production capacity by 20% over FY24-FY27, according to a presentation on its investor day. This essentially means that its manufacturing footprint is structurally reduced to make fewer luxury cars.

The company has already cut its total workforce by 8% over FY18-FY23. However, employee costs have risen by 18% year-on-year this year indicating higher wage inflation and fresh hiring related to its battery electric vehicle (BEV) investments. For instance, a new BEV testing facility will just cost GBP250 million and create 350 jobs. For instance, a new BEV testing facility will just cost GBP250 million and create 350 jobs.

JLR is in the news for 10,000 of its customers not getting spare parts. The real reason behind this problem is that JLR is consolidating its aftersales operations and is moving to a massive single warehouse (from the 18 warehouses it used to have) operated by a specialised logistics provider. Unipart won a five-year contract last year to operate the global parts centre owned by JLR. Similarly, TCS is taking over the responsibility of digital infrastructure and contract management. This kind of outsourcing to specialised players helps iron out the creases.

The overall car industry in major economies has stagnated although the luxury SUV segment continues to grow, something we have seen in India as well. However, the macroeconomic situation is tougher and with the reduction in the waiting period for customers (JLR will reduce its orderbook to 110,000 over the next six months from 168,000 at the end of Q2 FY24), it is likely that discounts, which rose slightly to 1.5% in the quarter gone by, will move up in FY25. The JLR management is optimistic that any additional discounts will be offset by further normalisation of raw material and power costs from elevated levels.

But how sustainable is this turnaround? And what are the catalysts for investors or the stock price?

A lot of focus is being put both at Tata Motors and JLR to make battery electric vehicles (BEVs) mainstream. But that may put a dent on margins.

The EV challenge

A ICICI Securities report by Basudeb Banerjee talks about downside risks in JLR’s Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin coming under pressure from FY25, as new EVs start entering the portfolio. “We believe replicating portfolio-level margin for its EV models might be tough in the initial years of EV launches,” the report says.

Tata Motors EV business is currently making a -5% Ebidta margin as compared to +9% for the ICE (internal combustion engine) business. While this will get better, the fear is electric Range Rovers will negatively impact profitability.

Mercedes recently highlighted that the pricing is brutal in electric cars, and this is putting a huge pressure on margins. JLR also admitted that given the spate of product launches, supply is more than demand putting pressure on pricing. How long this scenario will continue is hard to tell, it said.

Also, the new BEV-only competitors in key regions are taking market share away from traditional players. However, the big disruptors like Tesla, BYD or Nio are more in the premium end. They are not the major players in the ultra-luxury end of the market. So, this can be a deciding factor for companies such as JLR that are planning to make electrification a part of their core strategy.

The launch of an all-electric Range Rover and Range Rover Sport, to be launched a year from now, will be a big trigger for the stock market. The huge investments, despite multiple partnerships, mean the efforts being put in are humongous. These two models, in their ICE avatar, are massively profitable. But no one really expects them to be able to have similar profitability in their EV versions. Remember, other traditional manufacturers like Mercedes and Ford are struggling with profitability of their BEVs.

So, the market may get more apprehensive in the run up to the product launches mentioned above. The management may try to explain why JLR can have a different and more profitable path. In fact, Tata Motors has already given indications that its EVs are likely to be profitable. In fact, with PLI (Production Linked Incentive), Tata Motors EV business could indeed be profitable in the coming year.

If JLR can pull off profitability from its electric cars, that will be a remarkable feat vis-à-vis all traditional carmakers around the world. And that will be another astonishing story to narrate.

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16. The Indian hotel sector would have double-digit revenue growth and 25–28% operating margin growth in FY24: ICRA

IBEF, Oct. 26, 2023

According to an Investment Information and Credit Rating Agency (ICRA) report, the Indian hotel industry is predicted to see double-digit revenue growth in FY24, driven by the continuation of domestic leisure travel, demand from Meetings, Incentives, Conferences, and Exhibitions (MICE), business travel, and an increase in Foreign Tourist Arrivals (FTAs). The ongoing ICC World Cup 2023 and the G20 conference have also helped the business, it continued.

The report further mentioned that the premium hotel occupancy across India is expected to reach approximately 70-72% in FY24, following a recovery to 68-70% in FY23. Average Room Rates (ARRs) for premium hotels across India are projected to be between Rs. 6,000 (US$ 72.14) and Rs. 6,200 (US$ 74.55) in FY24. Although occupancy is anticipated to reach decadal highs, RevPAR is anticipated to stay at a 20–25% discount to the peak of FY08. The improvement of air connectivity and infrastructure, favourable demographics, and the projected growth in large-scale MICE events with the opening of several new convention centres in recent years, among other factors, all contribute to the medium-term demand outlook's continued health.

The healthy demand amid relatively lower supply would lead to higher ARRs. Further, larger players would also benefit from revenues or shares of profits generated from hotel expansions through management contracts and operating leases.

According to Ms. Vinutaa S, Vice President and Sector Head, Corporate Ratings, ICRA Limited, with stable corporate performance and positive consumer attitudes, demand is predicted to stay high across markets in FY24. However, demand for a particular hotel would rely on factors like location, competition, and other dynamics specific to the facility. Additionally, domestic travel would be the main factor, even though FTA activity is probably going to increase in the second half of FY24.

She further added that Mumbai and Delhi, being gateway cities, are likely to report occupancy north of 75% in FY24, benefitting from transient passengers, business travellers, and MICE events. Even though Pune and Bengaluru may trail behind other markets, they should see notable improvements in FY24 over FY23, notwithstanding this. In FY24, the ARRs would see a healthy year-on-year (Y-o-Y) increase, although it would still lag below the FY08 peak. Demand for mid-scale hotels was also impacted by the steep increase in the ARRs of premium hotels.

The report also mentioned that the continuation of many of the cost-rationalization initiatives implemented during the COVID era, along with the advantages of operating leverage, has led to a notable increase in margins when compared to pre-COVID levels. The ratio of workers to rooms is still about 15–20% lower than it was before COVID-19.

It further stated that while pass-through of cost inflation and stringent management over fixed cost increases have sustained profits, the companies have boosted their use of renewable energy. Larger hotel businesses have found that asset-light expansions increase their margins. Even if those are still far larger than pre-COVID levels, there may be some decrease in margins from the FY23 levels as a result of hotels renovating and maintaining their facilities.

A sample of ICRA comprising 12 large hotel companies is expected to report operating margins of 25-28% for FY24, as against 28-30% for FY23 and 20-22% pre-Covid. De-leveraging of balance sheets has led to lower interest costs and would support net margins.

Ms. Vinutaa S. stated that the anticipation of ICRA stated that ICRA anticipates that the improvement in cash flows and earnings will sustain the capital structure in the future. If there are any asset monetisations, they will mostly concern non-revenue-producing assets. In FY24, hotels' debt indicators should be better than they were before the COVID-19 pandemic. However, the degree of improvement in Return on Capital Employed (RoCE) would rely on the expansion strategy and, in the event of an asset-heavy expansion, could be limited by the high capital cost of additional properties due to rising land and construction costs. Numerous organisations have seen improvements in their credit profiles as a result of the robust business accruals. As a result, in FY23 and Year to Date (YTD) FY24, upgrades have outpaced downgrades. Currently, 94% of ICRA's ratings have a stable outlook.

According to the report, the recent 12 to 15 months have seen an increase in supply announcements and the start of delayed projects as a result of the solid demand rise. On the other hand, supply would fall short of demand, growing at a CAGR of 3.5–4% over the medium term. Issues with land availability presently prevent supply expansion in upscale metropolises and larger cities' micro markets.

Rebranding and property upgrades are the main reasons for the increase in the supply of premium hotels in these areas, and greenfield developments are mostly located in the suburbs.

Religious, corporate, and tier-II leisure locations witness large supply announcements. In addition, compared to pre-Covid levels, the cost of building a room has increased by 20–25% due to cost inflation.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

17. Partners Lens on India

ET, 29 Oct. 2023

The tech giant is currently in a prolonged battle with New Delhi on various issues. Dia Rekhi finds out if an array of recent announcements, such as manufacturing in India and offering credit access, can pull it out of the crisis.

Earlier this month, Google made a slew of India-centric announcements, li ke expanding its flagship Google Pay app to include business loans, manufacturing their Pixel smartphones in India, partnering with government-backed ONDC and Bhashini among others. These are all steps Google is taking to cement its position in India — one of its most critical markets and the largest data market in the world.

And it comes at a critical time for the California headquartered giant. Never in its entire time in the country has the company faced such a challenging set of crises. The directive by the Competition Commission of India (CCI) was a big blow to the company financially, as this changed how the company operated in India.

Then came the controversy over the commissions it charges over Play Store apps. And there’s also a fear of YouTube being banned over child sexual abuse material (CSAM) on it, along with a sword hanging over its intermediary status in the country in the wake of the Digital India Act (DIA). Viewed through this lens, t he announcements at t his year’s Google4India take on a deeper meaning.

Google’s country head Sanjay Gupta told ET that Google is working with regulators to address their concerns — including the company’s alleged monopolistic practices on Android, the dispute over Play Store commissions, misinformation and fake news on YouTube, etc. “We are a large, growing market with very different needs. There is a lot of effort we make in engaging with people. We will continue to make these efforts,” he said. “To be sure, not everybody will be convinced that what we’re saying is right.”

Gupta reiterated that there’s no “anti-Google sentiment” in the country, pointing to how Indians love its apps, be it Search, Maps, Payments, YouTube, or others.

MOMENTOUS OCCASION

As Google celebrates its 25th anniversary, Google is excited about the prospects that the Indian market provides — driven by the large number of developers and sheer volume of users in the country.

To this end, its decision to move parts of its Chromebook and Pixel manufacturing units to India is likely to bolster India’s aspirations of becoming a global electronics manufacturing hub. Analysts said this decision could also be good news for users, as prices are expected to come down. This, in turn, may widen the scope for Google in an already Android-heavy market.

“It’s a step in the right direction to start with the Pixel 8 base version, as Google would look to save on import duties and pass it on to consumers, making it more price competitive,” said Neil Shah, vice-president of Counterpoint Research. India is the world’s largest Android market with a 600-million smartphone user base. And as per Counterpoint’s Research, India’s premium smartphone segment grew 112 per cent YoY in Q2 to contribute a record 17 per cent to the overall shipments.

“So, it is a significant opportunity for Google if it aims to expand in a big way, which has never been the case before,” Shah explained.

GAINED IN TRANSLATION

Google is also supporting India’s languages AI programme, Bhashini, which uses Google’s natural language processing and ML capabilities. “Google has been a pioneer in natural language processing with state-of-the-art machine learning.

Bhashini aims at leveraging this dataset with the help of AI to enable millions of Indians to access government services in their vernacular language,” said Mohit Rana, partner at Red seer Strategy Consultants. This push for language inclusivity is especially significant in a multilingual country like India, analysts said. “Google has been quick to realise that English will only take them to a particular point in India,” the analyst added.

“In order to be dominant in the Indian market, one needs to cater to India’s diverse language spectrum as well. They are taking significant strides with Bhashini and it will be key to the next leg of growth. Its partner -ship with Axis My India will also cement this further.” India’s digital public infrastructure — including Aadhar-based eKYC, UPI, etc — offer a great platform for Google to experiment and build in India.

With this backdrop, it is important to note that last week, Google announced its foray into being a facilitator for formal credit in India. GPay, the company’s peer-to-peer payment app, now enables an option for users and small businesses to seek formal credit from lenders.

These plans also include the option of availing sachet loans for merchants for amounts as low as `15,000 per month. “Google Pay has about 35 per cent of the UPI market share and is now looking at expanding its footprint in lending,” Rana said. “While UPI apps are allowed to capture only limited customer data, Google has access to multiple customer data sources and can position its own finance products accordingly.”

However, Rana warned that Google will need to remain cognizant of concerns around data privacy. “Google already has access to massive amounts of user data — about 90 per cent of total web pages viewed are through its Chrome browser, while it has 98.5 per cent of web traffic through search engines,” he said. Rana added that the company already leverages this data extensively for advertising — it dominates India digital advertising market with 40-42 per cent market share.

“So, if it leverages its market position and customer data for too many products and services, questions around its monopoly market power will get more insistent,” Rana said.

COST CUTTING

Experts pointed to tough calls taken by Google to let people go in order to focus on operational efficiency.

In January this year, Google announced that it would shed nearly six per cent of its workforce or cut 12,000 jobs. “The company is asking hard questions on which core areas it wants to focus on,” Kalyan Kumar, co-founder of B2B tech platform Klugklug, said. “There is a shift towards understanding the role of products being more salient towards revenues rather than being dependant on people. It explains their further entrenchment into finance.”

Kumar said Google has “quietly” used its digital real estate to expand GPay and could be poised for massive growth. Tech and cyber policy expert Prasanto Roy also felt Google Pay’s credit play would give lots of small business users and blue collar urban workers access to a bit of formal credit for “working capital”.

However, he added that the finer details will still need to be checked, especially if these people don’t use a credit card. Roy said the most visible and high impact move by Google was to use generative AI on Search, which suddenly brought the technology into the lives of hundreds of thousands of mobile users.

“This would also bring back users who may have started shifting to Bing because of its Gen AI (ChatGPT) integration. Google’s Generative AI support is working well in the local context, even in its early days,” Roy said. Even on the creator economy front, India provides Google with massive fodder.

With 467 million users, India is the largest user base for YouTube, way ahead of the US in second place with 247 million. “The creator economy in India is split into two — Meta’s Instagram and Google’s YouTube,” Kumar explained. “At present, we peg the creator economy at around `1,500 to 1,800 crore, so it is a vast market that these companies are looking at.

And while it was initially all Instagram, we are increasingly seeing brands and creators moving to YouTube now because the format provides for longer and more lasting conversation. And now with Shorts, there is the option of providing shorter form content too.”

REVENUE GROWTH

This point could be illustrated with ad sales too. On YouTube, ad sales went up 12 per cent to $7.95 billion, and the company reiterated that Shorts would be a key growth driver.

“The fundamental strength of our business was apparent again in Q3, with $77 billion in revenue, up 11 per cent year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud,” said Ruth Porat, CFO at Google’s parent company Alphabet. “We’ll continue to focus on judicious capital allocation to deliver sustainable financial value.” The double-digit increase in revenue comes after four quarters of single-digit expansion.

Google faced a slowdown in ad revenue owing to tough macroeconomic conditions and increased competition from TikTok. Apart from this, Google has also planned an immersive news section for YouTube in India, which will be rolled out in Q4 of 2023 across 11 languages. This page will bring together a diverse and credible range of news sources on YouTube, across video on demand, live streams podcasts and shorts.

Apart from these services, what stood out for startup and angel investor Lloyd Mathias was the company’s partnership with ONDC. “The deepening of their partnership not only gives ONDC gravitas to stand up to the might of Amazon and Flipkart, but also gives Google a play in the booming e-commerce space,” Mathias said. The move gains significance as ONDC is expected to trigger a price war in the Indian e-commerce market, which is set to cross the $100-billion milestone by 2024, as per a report by data and analytics company GlobalData.

CHALLENGES AHEAD

But it isn’t all a bed of roses. Increased scrutiny by CCI into its offerings relating to Android OS, Play Store, search services, news, etc, can potentially play spoilsport. “The cases in India are consistent with and have often followed similar investigations against Google in other jurisdictions, including Europe, US and several Asian countries, most recently Japan,” said Yaman Verma and Ritwik Bhattacharya, partners at Shardul Amarchand Mangaldas.

“Globally, too, there seems to be a spotlight on Google’s business practices which are generally being viewed as unfair and anti-competitive.” However, they added, “even where violations were found, Google’s implementation of the remedies directed by the CCI have raised further questions. Therefore, while we can expect more sanctions, the CCI will also have to direct watertight remedies and monitor their implementation closely”.

Big Tech giants, including Google, have been under fire the world over for their alleged monopolistic practices. On October 20, the antimonopolies watchdog imposed a Rs1,337.76 crore fine on the search giant for abusing its dominant position in multiple markets through Android. Less than a week later, on October 25, the CCI imposed a penalty of Rs936.44 crore on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a cease-anddesist order.

After a fractured win at the National Company Law Appellate Tribunal (NCLAT), CCI and Google both approached the Supreme Court. While the NCLAT had upheld the imposition of the penalty, it did strike down some of the clauses CCI had mandated. Earlier this month, the Supreme Court deferred the hearing to the last week of January.

18. Indian Hospitality Sector in a Strong Upcycle: IHCL

ET, 30 Oct. 2023

The Indian hospitality sector’s ongoing upcycle is not a short term 3-4-year trend but one that will continue for long, said Puneet Chhatwal, MD of Indian Hotels Co (IHCL) in an interview with ET. There is no indication to signal any slowdown in the short to medium term, he said.

“There are four factors that have a big impact on the short to midterm and the long-term outlook for the hospitality sector. The factors impacting the sector include demand outpacing supply. Currently, the rate of growth of demand is higher than the rate of supply,” Chhatwal told ET.

“Secondly, the investment in infrastructure is helping the sector to be the direct beneficiary, whether it's roads, trains, or airports. The third factor impacting the sector is the GDP growth in India. India was, is, and will remain a savings economy for some time, but, post pandemic, discretionary spends have gone up,” he said.

“With India’s strategic positioning as the fastest growing and the fifth largest economy, the world wants to invest in India or have India as a partner, which is fuelling the GDP (gross domestic product) growth further. Fourthly, the hospitality sector is the biggest catalyst for jobs with a multiplier effect,” he added.

Speaking of the chain, Chhatwal said while IHCL was always 'iconic,' it has just added the words ‘most profitable’ to its vision. “IHCL continues to set new benchmarks for the industry every day. We have demonstrated a strong financial turnaround underpinned by margin expansion (nearly doubled in five years) and enhancing the balance sheet strength,” he said.

“Our profit after tax has grown 10x in the last five years from ₹101 crore in FY18 to ₹1,003 crore in FY23. IHCL’s reported cash and cash equivalents as of September 2023 of ₹1,395 crore with nil net debt puts us in a good state of preparedness for the future,” he added. IHCL reported a profit of ₹179 crore for the quarter ended September 30, up 38% from the corresponding period of the previous fiscal.

The chain reported revenue from operations of ₹1,433 crore for the quarter ended September 30 this year, up from ₹1,233 crore in the corresponding period of the previous fiscal. On a half yearly basis, the chain reported a profit of ₹415 crore and revenues of ₹2,900 crore for this fiscal, up 34% and 16%, respectively.

Indian Hotels Company has transformed simultaneously into being a ‘temple of excellence’ and a ‘playground for innovation’, Chhatwal said.

“To enable growth, we have created two organisations. We are focussed on our traditional business, which includes Taj, Vivanta, SeleQtions, at the same time we are providing a very big push to our new business which includes Ginger, Qmin and Ama,” he said.

“For example, 29 of the Ginger hotels have Qmin branded all day dining and by the year end we will be close to 50 Qmin branded restaurants. We should get close to 100 operational Ama properties by the end of this year. The opening of the Ginger hotel in Santacruz is imminent and will redefine the budget mid-market positioning in the sector. The new businesses are getting the tailwinds and the traditional business is maintaining the competitive advantage for IHCL,” he added.

He said Taj remains the company's 'backbone' and the chain is focussed on its ‘crown jewels’ which drive operating leverage for the portfolio.

'Effective’ asset management and ‘smart renovations’ are pushing the absolute returns and the new initiatives are driving the percentage returns, he said.

19. India can steer 6G standardization, become global exporter of such tech: Abhay Karandikar

ET Gov., 30 )ct. 2023

“As you know that the 5G itself was a paradigm shift from 2G and 3G mobile networks, while 6G would be really a game changer and India presents a fertile use case scenario for influencing the 6G research and the standardization in a vastly different way.”

"This diversity in India will be a useful test scenario for cellular mobile communications, and also devices connected through Wi -Fi, drones, satellite, terrestrial networks, sensors as well as IoT.”

With its indigenous 5G technology in place, a committed and dedicated team of researchers in academia, industry players and startups India has an ecosystem to bring the country to a position of strength in terms of mobile network technologies. This was stated by Professor Abhay Karandikar, Secretary Department of Science and Technology (DST), at the Indian Mobile Congress (IMC) on October 29.

“We have an opportunity to steer the 6G standardization in a way which we have not really thought of before, as well as become a global exporter of such technologies in the years to come,” Professor Karandikar said at his session during Second International Workshop on 6G Standardization that took place as part of the IMC, which was inaugurated by the Prime Minister on October 27.

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He said that with the advent of mobile communication, India is contributing hugely to the massive escalation of global data volume and by 2030 India’s share may increase to one third or even more of the total data generated from the standard mobile communication.

“We will have a variety of use cases from very high to a very low data rate, from very stringent latency environments to latency tolerant applications, heterogeneous radio access technologies and a range of access devices. This diversity in India will be a useful test scenario for cellular mobile communications, and also devices connected through Wi -Fi, drones, satellite, terrestrial networks, sensors as well as IoT,” Professor Karandikar pointed out.

“However, we still have a long way to go as far as research on standardization and filing patents is concerned. Also, a significant amount of work needs to be done in the core network itself. Core networks will present huge scalability challenges and to overcome this, an efficient heterogeneous radio access technology which can help pumping in large volumes of data to the core networks would be very useful,” he explained.

“The research challenges that these areas throw up, can be supported by the Department of Science and Technology through its initiatives like the National Mission for Cyber Physical Systems (NMICPS). Besides primary telephone connectivity, it can span communication in sectors of agriculture, health, transportation, logistics and so on. Besides, with the ANRF soon to be operational, some of these advanced areas can have new mechanisms of funding in place,” Professor Karandikar said.

20. Sun Pharma’s Focus on Specialty Drugs Pays Off

ET, 2 Nov. 2023

India’s largest pharma company’s pivot to global specialty drugs is paying off now. Its September quarter performance was enhanced by the growing traction of its specialty product portfolio. With an 11% surge in revenues and 5% rise in profits, the Street cheered the performance leading to the stock closing 2.5% higher on Wednesday.

ETMarkets.comSun Pharmaceutical Industries' shares ended with gains of Rs 28.40 or 2.61% on Wednesday at Rs 1,117 after the company reported a 6% YoY growth in consolidated net profit for the September quarter to Rs 2,385 crore. Revenue from operations increased 11.3% YoY to Rs 12,192 crore.

The company’s revenues grew 11% driven by strong growth posted by the India business and the global specialty sales in the US. A third of the company’s revenues is earned each from India and the US. Sun’s market share in India increased from 8.3% to 8.4% for the year ended September 2023. The company expanded its sales force strength in India to improve its geographical and doctor penetration. Sun has over 12,500 medical representatives with the highest field force productivity amongst key players in India.

Its US formulations business grew 8% with the company being the 11th largest player in the US generics market with presence in specialty, generics and OTC segments. The company has a robust pipeline of 93 ANDAs and 13 NDAs pending for approval with USFDA.

The global specialty business now contributes 16% to the company’s overall business comprising a portfolio of promising brands such as Ilumya, Cequa, Odomzo, Winlevi and Absorica. There is also a pipeline of six molecules, which the company is investing in such as deuruxolitinib and Nidlegy, which are undergoing clinical trials. The company is growing its specialty portfolio through a fair mix of acquisitions with Concert Pharma being the latest.

Even as the raw material cost climbed down from 25% of revenues a year ago to 23% in the September quarter, the other expenses increased from 28% of revenues to nearly 32% in the quarter.

The increase in expenses was due to increased selling & distribution expenses as well as higher R&D expenses. As a result, the company posted an 80 bps decline in operating margin at 26.5% compared to a year-ago level of 27.3%.

There has been a 35% y-o-y jump in R&D expenses during the quarter to ₹773 crore. The company spent 6.4% of revenues towards R&D — encouraging for a company aggressively investing in specialty, therapy-focussed portfolio.

The company managed to repay ₹5,000 crore of its debt this fiscal

The concerns related to the pending resolution of USFDA compliance issues at its Halol and Mohali sites remain even as the company continues to update the agencies and awaits re-inspection.

The Sun Pharma stock has gained 12% since the beginning of 2023 on the back of improving performance. The company is fairly valued given its strategic placement to take advantage of growth opportunities in India, US and emerging markets.

India and the World

21. Hello Tata, Goodbye Wistron: Anatomy of a Takeover Deal

ET, 9 Nov. 2023

Manufacturing facility, which will make it the first Indian firm to assemble iPhones, is worth a total $750 million inclusive of debt, said people with knowledge of the matter. Both sides signed the takeover deal on Wednesday, they said.

The Tata Group’s acquisition of Wistron’s manufacturing facility, which will make it the first Indian firm to assemble iPhones, is worth a total $750 million inclusive of debt, said people with knowledge of the matter. Both sides signed the takeover deal on Wednesday, they said.

The plan that was unveiled on October 27 had said Tata would pay $125 million but that’s only the equity cheque, said the people cited above. There is another $75-80 million term debt in the target company that will now get loaded on to the acquirer, they said. Additionally, there is a $550 million inter-corporate loan given by the parent to Wistron India. ET spoke to multiple people on both sides and others with knowledge of the matter to gather the granular details, hitherto unreported.

The $550 million inter-corporate loan was infused by the Taiwanese parent as an unsecured working capital loan in its Indian arm against receivables from Apple, the company whose products were being manufactured by the vendor at the Kolar plant that employs 14,000-15,000 people. The local Wistron unit is being taken over by Tata Electronics Pvt Ltd (TEPL), which has a manufacturing plant in Hosur, Tamil Nadu.

TEPL is a wholly owned subsidiary of Tata Sons.

Given Apple’s impeccable credentials, banks will refinance the facility on behalf of Tata in what is called receivable financing or ‘factoring’. Citi, the adviser to the transaction along with AZB, is believed to be leading this initiative as well. Banks typically syndicate or sell down such loans to other financial institutions and peers.

Tata and Wistron did not respond to ET’s queries.

ET was the first to report on November 30 last year that TEPL, already among Apple’s component suppliers in India, had started discussions with Wistron to buy its plants. Wistron is one of the three top vendors for Apple in India, along with Foxconn and Pegatron.

The Wistron purchase is expected to spur the next cycle of investments in the Indian electronics manufacturing ecosystem and signals the maturing of the country’s contract manufacturing companies, minister of state for electronics and information technology Rajeev Chandrasekhar told ET last week.

“I think Tata’s entry definitely signals that the Indian EMS (electronic manufacturing service) has (now) a giant Indian company which does manufacturing for global brands (in the) present and is maturing now,” he said.

Wistron currently has four assembly lines for iPhone production. A facility in Peenya, Bengaluru, is out of commission, while a third is used for the repair of Apple products. The company had been about to open another manufacturing facility in Kolar by the end of November, with production beginning in January 2024.

“The Wistron acquisition will help Tata move up the Apple value chain,” said a telecom hardware industry executive on condition of anonymity. “With Wistron’s existing knowhow, Tata will now be the first homegrown vendor to make iPhones. At the Hosur plant, the Tatas were primarily focussing on iPhone casings with only 15-20% of consumables locally sourced. This will be a serious leg-up.”

According to a report by JPMorgan, Apple plans to shift 25% of its iPhone production to India by 2025 in a bid to diversify its manufacturing base, which is currently concentrated in China.

On October 27, Taiwan’s Wistron Corp announced that its board had approved the signing of a share purchase agreement by subsidiaries SMS Infocomm Singapore Pte Ltd and Wistron Hong Kong Ltd with TEPL. The transaction would involve the sale of its 100% indirect stake in Winstron Infocomm Manufacturing (India) Pvt Ltd (WMMI) for an estimated $125 million (Rs 1,000 crore). Simultaneously, SMS InfoComm (Singapore) Pte Ltd announced a proposal to convert debt of $130.26 million, including accrued interest, extended by WMMI in the form of external commercial borrowing (ECBs) into equity.

Chandrasekhar had tweeted the breaking news, lauding India’s largest business group and the flagship production-linked incentive (PLI) scheme introduced by the Narendra Modi government to bolster domestic manufacturing.

Tata Sons chairman N Chandrasekaran has been pushing the group’s ambitions to become a scaled mobile phone and component contract manufacturer to leverage geopolitical headwinds against China and persuade companies such as Apple to shift to alternative production sites in India.

22. No Hackney Diamonds, Value Up the Glimmer

ET, 28 Oct. 2023

India’s diamond industry is losing its lustre — first on account of Covid disruptions, followed by sanctions against Russian diamonds, flagging demand in the US, Europe and China, and finally the prospect of unsettled trade with Israel. Alongside, synthetic diamonds are eroding value in the business globally. Steadily shrinking exports of polished diamonds requires India’s largely unorganised industry to seek out newer Asian markets and move up the jewellery value chain. Stagnant prices are making this possible by increasing affordability of diamond jewellery in India and the Asean market. Growing corporate interest is also transforming India’s jewellery business through quality assurance and design capability.

Stuck in the middle of the value chain, the Indian industry has to fight fires at both ends — depressed prices on oversupply and weak demand. Prices of polished diamonds, of which India processes the bulk, have collapsed further than retail prices, where the country’s share is not substantial. The direction for diamond exports is clearly towards building brands and developing newer markets. This involves breaking silos between the gold and diamond jewellery segments while adding design capacity to both. The industry also needs to improve inventory management to avoid flooding the global market with diamonds during a business downturn, such as now.

India’s position in the sector, and its emergence as a destination for diamond jewellery, make it a key stakeholder in sustainable mining, establishing provenance, creating a secure supply chain, ensuring secular demand growth and innovative retailing. It must also contribute to bringing down the cost of producing lab diamonds, increasing their consumer acceptance and keeping the trade in synthetic stones separate from natural diamonds. India’s cost advantage in processing derives from the underlying value of the diamond industry, which it needs to nurture. A prolonged crisis is an opportunity to reinforce processes that protect the diamond industry from its own excesses.

23. Indri-yeah! A Small-town Brew has got the World Raising a Toast

ET, 30 Oct. 2023

Talk about the vagaries of provenance. A little-known sugar mill located in Indri, Haryana, with some extra malt on its hands, decides it might be a good idea to turn some of that into whiskey. That was two years ago, when the world was still in the grip of the pandemic. By now, this should have been a morality fable about businesses that try to diversify into related areas in which they have little experience. Instead, it’s a fairy tale. The Indri Diwali collector’s edition, a new peated whiskey made by the sugar mill, won the Best in Show Double Gold award at the Whiskies of the World Awards, it was announced last month. Indri was the sole winner in that category.

That’s not all. The stock of Piccadily Agro Industries—the company that runs the sugar mill—has soared. It was ₹25 in December 2021 and has since shot up to ₹241. The Haryana-based sugar mill with a market capitalisation of ₹250 crore before the whiskey launch less than two years ago is now a liquor firm worth ₹2,275 crore.

Piccadily Agro CEO Praveen Malviya is gratified by the market response. “While awards surely create a buzz and keep conversations around the product going, the true indicator for our success will be measured in terms of initial sales as well as repeat purchases,” he said. “We have been supplying bulk malt to global distillers and were confident of the product quality. But the market response has gone beyond that and is overwhelming.”

In 2021, the three-decade-old company had about 28,000 barrels of malt that had been stored in its warehouse for over seven years. In India's extreme weather, the casks matured twice as fast as they would take in Scotland, arguably the home of whiskies.

Piccadily’s whiskey was created by master blender Surrinder Kumar, a former distiller at Amrut Distilleries.

For validation, Picadilly hosted tasting sessions initially for Indians, followed by Scottish and Japanese connoisseurs. Encouraged by the response, it launched the single malt under the brand Old Bombay. However, for a company with no distillation legacy, the brand didn’t resonate. It was quickly renamed Indri, the name of its home base that fortuitously is also the Sanskrit word for the senses. Provenance thus became the primary consideration for the malt, which originates from indigenous six-row barley grown in neighbouring Rajasthan.

The company was set up 30 years ago by ex-Congressman and former lawmaker Venod Kumar Sharma. Promoters and their companies control 71% of Piccadily Agro. Soon N Sure Holdings, owned by Sharma, holds a 33.46% share while son Siddhartha Sharma owns 22.7%. Promoter group firm Piccadilly Hotels owns a 14.5% share.

Since the launch of Indri Trini, matured in three different wooden barrels—former bourbon, wine and sherry casks--the company's share price has surged nearly 10 times. It has more than doubled in the past month, hitting the upper circuit consecutively for several days, triggered by Indri Diwali’s global award but has since fallen from its 52-high of ₹328.

Piccadily has sold nearly 18,000 cases of Indri Trini since the 2021 launch until the end of FY23. In the first six months of the current year, considered to be a lean period for spirits sales, it’s already overtaken that number. It also started selling the whiskey at duty free shops in half a dozen Indian? airports last month. To avoid a supply-demand mismatch, the Haryana-based company has been ramping up capacity, with plans to take it from 12,000 litres a day of malt now to 20,000 litres by April next year.

Similarly priced scotch rival Glenlivet, about Rs 6,000 a bottle depending on the shop’s location, sold 95,000 cases while Jack Daniel's sold 128,000 cases last year. Both have been present in the country for over a decade.

The share surge is due to the shift in Piccaddily’s prospects. The low-margin sugar business now accounts for just a third of its total revenues while bulk spirits contributes to the rest. The company expects sugar's share to come down to a fourth by next year and, over a five-year period, for the branded spirits business to outpace both bulk malt and sugar.

“While the company was earlier valued as a low-margin sugar mill firm, we have consistently posted profit. Investors, however, now realise the potential from us having a high-margin category too,” said Malviya.

Premiumisation has hit a new high since the pandemic. Last year alone, Indians consumed more than 7.5 millon cases of Scotch whisky, almost double that of 2020, when it was 3.9 million cases. And it’s not just Scotch. Between 2020 and 2022, Irish whiskey grew five times, Japanese whiskey sixfold and American whiskey three times, with all three reaching 500,000 cases combined, up from 150,000.

“Indri has done well in terms of creating visibility and has a good prospect in their category,” said Amar Sinha, chief operating officer at Radico Khaitan, which sells Rampur Whiskey and Magic Moments vodka.

Experts said Indri's story mimics other Indian single malts especially that made by Amrut and Paul John, which entered the market over the past two decades and are now global labels. Apart from Fusion, Amrut’s other highly regarded single malt is Amalgam. Paul John’s Brilliance, Bold and Nirvana have also earned a similar level of global respect.

The only difference is that unlike Indri, those brands were launched in the UK initially and then in India.

24. Fresh Talent to Speed Up Air India Transformation

ET, 30 Oct. 2023

Mumbai | Delhi: Tata group-owned Air India is accelerating its ongoing transformation programme to ensure consumer visibility for improvements made on ground as the once state-owned airline strives to overcome its legacy issues of outdated aircraft, inefficient service and flight delays.

The latest hiring of Klaus Goersch as chief operations officer is expected to give it a significant boost to the plan, Campbell Wilson, MD, Air India, told ET.

Goersch, who will oversee flight operations, engineering, and cabin crew, has significant global experience with stints in airlines such as British Airways and Air Canada.

“Air India has witnessed significant transformation in the first year of our multi-year transformation initiative, Vihaan.AI and in this context, induction of senior talent from India and beyond brings a wealth of knowledge and experience that is valuable to the ongoing transformation at Air India. We are also progressing well towards building a new organisational culture,” Wilson said.

The airline continues to face criticism over its aircraft quality, service issues and system delays, which are being overhauled gradually, officials close to the development said.

“Our employees on ground are working hard on ground to improve operations, systems and processes. Culture will change gradually and get efficient and the new aircraft coming in will make a visible difference to consumers,” an Air India official said.

Air India is also inducting new planes and the new COO Goersch, who will take charge on Monday, has been mandated to quickly transform operations and inject efficiency on ground before the airline moves on to its next challenge of integrating Vistara.

Simultaneously, JuLi Ng, a former head of inflight services at Scoot — the low-cost arm of Singapore Airlines — has replaced Sandeep Verma as divisional vice-president of cabin crew. Rod Butchers, an independent consultant, is working with the operations control centre at Delhi Airport to improve the airline’s on-time performance.

The flight operations department is the last department to undergo the group's HR revamp, following commercial and finance. The structural changes have been made with a view to manage succession, streamlining the organisation as also optimising talent from within the Tata airline group. The contemporary organisation structure has been designed to provide clarity on lines of accountability, promote efficiency, cross-functional collaboration and ample growth and advancement of our employees, said Wilson.

“Comparatively it was tougher to bring in new people in flight operations as it is a critical part and people with experience in domestic and international airline functioning can only handle these. So, it took some time to make the changes,” another senior official said.

Air India 's organisational culture change will take time since it still carries some legacy mindset, which is being changed with the hiring of new employees, said officials. The Tata group is also tapping the expertise and experience of many of its top talent who have retired from either Air Asia or Air India to help set up its airline training academy and proposed integration with Vistara.

Meanwhile, Air India has deployed its latest Boeing 777 jetliners to all three of its US destinations: New York JFK, Newark Liberty, and San Francisco. The airline has six new Boeing 777-300ER aircraft in its fleet, which are being used to upgrade its existing flights to the US.

25. NISAR NASA ISRO: NASA-ISRO radar mission to provide dynamic view of forests, wetlands

ET Gov., 30 Oct. 2023

Once it launches in early 2024, the NISAR radar satellite mission will offer detailed insights into two types of ecosystems - forests and wetlands - vital to naturally regulating the greenhouses gases in the atmosphere that are driving global climate change.

NASA-ISRO radar mission to provide dynamic view of forests, wetlands

NISAR, a joint Earth-observing mission between NASA and the Indian Space Research Organisation (ISRO), will help researchers explore how changes in Earth's forest and wetland ecosystems are affecting the global carbon cycle and influencing climate change, said a news release.

NISAR is a joint mission by NASA and ISRO (Indian Space Research Organisation), and when in orbit, its sophisticated radar systems will scan nearly all of Earth's land and ice surfaces twice every 12 days. The data it collects will help researchers understand two key functions of both ecosystem types: the capture and the release of carbon, informed NASA in a release.

Forests hold carbon in the wood of their trees; wetlands store it in their layers of organic soil. Disruption of either system, whether gradual or sudden, can accelerate the release of carbon dioxide and methane into the atmosphere. Tracking these land-cover changes on a global scale will help researchers study the impacts on the carbon cycle - the processes by which carbon moves between the atmosphere, land, ocean, and living things.

"The radar technology on NISAR will allow us to get a sweeping perspective of the planet in space and time," said Paul Rosen, the NISAR project scientist at NASA's Jet Propulsion Laboratory in Southern California. "It can give us a really reliable view of exactly how Earth's land and ice are changing."

Forestry and other land-use changes account for about 11 per cent of net human-caused greenhouse gas emissions. NISAR's data will improve our understanding of how the loss of forests around the world influences the carbon cycle and contributes to global warming.

"Globally, we do not understand well the carbon sources and sinks from terrestrial ecosystems, particularly from forests," said Anup Das, an ecosystems scientist and co-lead of the ISRO NISAR science team. "So we expect that NISAR will greatly help address that, especially in less dense forests, which are more vulnerable to deforestation and degradation."

The signal from NISAR's L-band radar will penetrate the leaves and branches of forest canopies, bouncing off the tree trunks and the ground below. By analysing the signal that reflects back, researchers will be able to estimate the density of forest cover in an area as small as a soccer field. With successive orbital passes, it will be able to track whether a section of forest has been thinned or cleared over time. The data - which will be collected in early morning and evening and in any weather - could also offer clues as to what caused the change, such as disease, human activity, or fire.

It's an important set of capabilities for studying vast, often cloud-covered rainforests such as those in the Congo and Amazon basins, which lose millions of wooded acres every year. Fire releases carbon into the air directly, while the deterioration of forests reduces the absorption of atmospheric carbon dioxide.

The data could also help improve accounting of deforestation and forest degradation - as well as forest growth - as countries that rely on logging try to shift toward more sustainable practices, said Josef Kellndorfer, a member of the NISAR science team and founder of Earth Big Data LLC, a provider of large data sets and analytic tools for research and decisions support. "Reducing deforestation and degradation is low-hanging fruit to address a substantial part of the global carbon emission problem," he added.

Wetlands present another carbon puzzle: Swamps, bogs, peatlands, inundated forests, marshes, and other wetlands hold 20 to 30 per cent of the carbon in Earth's soil, despite constituting only 5 to 8 per cent of the land surface.

When wetlands flood, bacteria go to work digesting organic matter (mostly dead plants) in the soil. Through this natural process, wetlands are the planet's largest natural source of the potent greenhouse gas methane, which bubbles to the water's surface and travels into the atmosphere. Meanwhile, when wetlands dry out, the carbon they store is exposed to oxygen, releasing carbon dioxide.

"These are huge reservoirs of carbon that can be released in a relatively short time frame," said Erika Podest, a NISAR science team member and a carbon cycle and ecosystems researcher at JPL.

Less well understood is how changing temperature and precipitation patterns due to climate change - along with human activities such as development and agriculture - are affecting the extent, frequency, and duration of flooding in wetlands. NISAR will be able to monitor flooding, and with repeated passes, researchers will be able to track seasonal and annual variations in wetlands inundation, as well as long-term trends, a NASA release said.

By coupling NISAR's wetlands observations with separate data on the release of greenhouse gases, researchers should gain insights that inform the management of wetland ecosystems, said Bruce Chapman, a NISAR science team member and JPL wetlands researcher. "We have to be careful to reduce our impact on wetland areas so that we don't worsen the situation with the climate," he added.

NISAR is set to launch in early 2024 from southern India. In addition to tracking ecosystem changes, it will collect information on the motion of the land, helping researchers understand the dynamics of earthquakes, volcanic eruptions, landslides, and subsidence and uplift (when the surface sinks and rises). It will also track the movements and melting of both glaciers and sea ice, the release said.

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Saturday 11 November 2023

Newsletter, 20-XI-2023

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

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NEWSLETTER, NOVEMBER 2023

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

- Agriculture, Fishing and Rural Development

- Industry and Manufacture

- Services (Education, Healthcare, IT, R&D, Tourism, etc.)

India and the World