The Metro
Charging up the EV Infra, The Great Meat-Hack, Indian economy's reckoning and more....
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NEWS OF THE WEEK
Global investors believe the worst is over for India. The Indian stock markets have displayed extraordinary resilience as the second wave of COVID-19 pandemic wreaked havoc throughout the nation. As the stock indices hit a record high this week, investors around the world seem to suggest the second wave has peaked. The rupee also showed significant gains. This highlights the fact that big businesses and large corporations have managed the pandemic well while small and medium sized business continue to struggle. The big has become bigger while the small has become smaller, the overall market has shrunk but the large business now have a bigger share of the pie.
Cairn Energy, the Scottish energy company has been in a long tussle with the Indian Government over the past few years. In 2015, India levied a retrospective tax of $1.6 Billion on Cairn Energy. Indian government also seized its assets - a 10% stake in Cairn India roughly worth $1 Billion. Cairn Energy opposed these measures and legally challenged the decision. An International Tribunal in Netherlands ruled in company’s favor and asked the India to cough up $1.2 Billion plus interest as a payout. Now the tables have turned and Cairn Energy is looking to seize India's assets in foreign countries, if the government refuses to comply with the order. Financial Times reported, last month Cairn began legal proceedings against Air India in New York in an attempt to seize its assets to enforce the ruling.
A devastating shipwreck near the coast of Sri Lanka has turned out to be a threat to the surrounding environment. A cargo ship carrying tons of chemicals has sunk near the western coast of Sri Lanka due to an explosion. The vessel was carrying chemicals such as nitric acid and other cosmetic chemicals. The sinking of this container vessel has resulted in spread of harmful contaminants which could affect the fishing waters and beaches lined on the coastline. This can lead to a catastrophic environmental disaster possibly causing significant damage to marine life and the natural ecosystem. The government has banned fishing in surrounding waters for now and authorities also said they are preparing for an oil leak. This disaster has also affected the livelihood of the local fishermen.
AUTO
Charged Up: Building the EV charging infrastructure
Electric vehicles are here to stay this time! Bloomberg reported the total number of EVs on road are set to hit 12 million. Now, this is a magic number because 12 million is 1% of all the cars on the road. Whoa! However, the report also cautioned that counting cars on the road is not as easy as it sounds so 1% is an approximate estimate. But electric vehicles have largely penetrated the automobile markets mostly in the western countries and China - Europe, China and North America account for 96% of the total EVs on the the road.
Charging the Infra : One of the major obstacles in the shift from combustions engine cars to EV is the supplementary infrastructure, that is, the battery manufacturing and charging infrastructure. In the last issue, we reported that the lack of charging infrastructure is one of the major challenges to this transition in India. Many traditional energy companies and power companies are venturing into the charging stations business. The British energy giant BP (British Petroleum Company Plc.) recently acquired Chargemaster - UK’s largest charging company. In India, Tata Power has established charging stations network in several major cities and also signed deals with auto manufacturers to provide charging solutions. Other companies like Ola Electric have started building charging station in various cities. Recently, the world's largest chain of convenience stores 7-Eleven announced it is going to install 500 EV charging stations for consumers in the US. Hmm….an unexpected outsider trying to cash in on the lucrative EV market.
Battery-swap: There are other energy solutions too. The Metro last week reported the consistent decline in the battery prices. This has given a rise to a new model called battery swapping. The process of battery swapping is as simple as it sounds, a discharged battery is exchanged for a charged one at a battery swapping stations which is the place where these discharged batteries are charged in a safe and controlled environment. This requires modular or detachable batteries. This process is faster, safer and economically more viable. However, this is not a new concept. Tesla had started battery swapping stations as early as 2013 but stopped it a year later. But now the demand is picking up again. Ample is battery swapping company which has been fairly successful in the US. The Chinese EV maker Nio is expanding its network of battery swapping stations.
Though everything looks promising the fundamental process of generating electricity should also shift from coal to cleaner renewable energy sources. There are some startups and companies working on that too!
TECHNOLOGY
The Great Meat Hack: Explained
What Happened: JBS, the world’s largest meatpacker a vicious and lethal cyber attack - yes, again - by a Russian ransomware group called REvil. This forced JBS to stop operations in all its cattle slaughter plants in US and Australia which ultimately disrupted production and supply which could result in higher prices. This comes after the Colonial Pipeline cyber attack last month, also by a Russian group, which caused disruption in gas supply and the prices shot up.
Why: These ransomware hacking groups create softwares which encodes the data and makes it inaccessible to the owners. Then they demand for a ransom in the form of cryptocurrency in exchange for clues of codes that allow owners to decipher the data files and use them.
What’s Next: Cybersecurity has become an issue of national security for the United States and it looks like the current administration is serious about it. In India too there have been many data breaches and cyber attacks, the digital payments firm Mobikwik being the most recent one where sensitive financial data of users was exposed. Hence, it has become imperative for governments and companies to invest in a robust cyber security infrastructure to protect sensitive data and maintain data ethics.
POLICY
China's Digital Yuan Experiment
There's a new kid on the block in crypto town! China will distribute 40 million renminbi ($6.2 million) to citizens of Beijing as a part of an experimental trial to test their new digital currency. Renminbi is a CBDC (Central Bank Digital Currency) issued by the People's Bank of China. In short it's a cryptocurrency issued by a central bank. This will be distributed in the form of 200,000 "red packets" with each packet containing 200 yuan as a part of a lottery for which citizens of Beijing can apply. This crypto currency is fundamentally different from other cryptocurrencies like bitcoin as this can only be issued by the central bank so in principle it is not decentralized unlike bitcoin. China, the world's second largest economy has been developing a central digital currency since 2014 but it has been only tested in limited quantities and only in certain cities like the tech-capital of Shenzhen and now in Beijing. Hmm...wonder what's behind the recent Chinese crackdown on bitcoin and bitcoin mining....?
TECHNOLOGY
Twitter Blue! Your opinion, now with a charge
Ever wondered why a platform like Twitter is free to use? Do not worry, Twitter’s got a subscription service for y'all. ‘Twitter Blue’ will be launching in Canada and Australia for prices $3.49 and $4.49 per month in local currencies. ‘Undo tweets’, ‘organize bookmarks into folders’, ‘Reader mode to make it easier to read long threads’, ‘customizable icons’ are some of the elite features going to available for the users who pay for the subscription. According to this report by CNBC, competition in ads and investor interference has pushed Twitter to roll out a plan for its future and they plan to reach 315 million daily active users who can be monetized by the end of 2023 and double its annual revenue to $7.5 billion by the end of 2023. If this is a success, we could also see the subscription services global release sooner or later. Looks like Jack has finally caved in to pressure from investors to monetize the hugely popular and widely used platform. But we still won't get a permanent edit button, even after paying 4 dollars!
Tech Bytes
📹 Zoom, the video-calling software which dominated the enterprise video communications market last year reported blockbuster set of earnings in the first quarter this year with a sales growth of 191% and is expecting a 50% growth in revenue for the full fiscal year. However, the company warned of a slowdown in growth fueled by the rise of WFH model comes to a halt as workplaces open up.
🌿 Amazon supports legalization of marijuana and is updating its workplace policies to stop testing workers for cannabis. Dave Clark, Amazon's chief of consumer operation announced in a blog post that Amazon supports the federal bill to legalize marijuana. Amazon is also changing the system by which the company measures worker productivity which has a subject of wide criticism in the past. This is a progressive step by the e-commerce giant and we can only hope that more big employers follow Amazon.
📲 PhonePe, the Walmart-owned digital payments network touched 300 million registered users with 125 million monthly active users and a total payment value (TPV) run rate of $388 billion. It is the largest digital payments service in India with 44% market share in Unified Payments Interface (UPI) transactions followed by Google Pay at 35% as of April 2021. Last year, it achieved the milestone of becoming the first payments service to process over 1 billion UPI transactions. With fierce competition from rivals like Google Pay, Amazon Pay and Paytm, the resilience shown by PhonePe to successfully sustain its market dominance is commendable.
ECONOMY
In Focus: India’s Economic reckoning
(Image: OECD)
India’s economy is technically in a recession. Once the fastest growing economy in the world has now been battered by the pandemic, like all other developing economies around the world but in India’s case the decline started much before the pandemic. There are some silver linings in this dark cloud but the next few quarters will be crucial. Here’s a snapshot of the Indian economy as it is right now -
The Union Government on Monday released the estimates for GDP growth rate which suggest India’s GDP declined by 7.3 in 2020-21. Which is not good but better than what was expected.
The GDP per capita which is the GDP divided by the total population gives a better picture of the economic situation individual citizen has fallen significantly and now even lower than Bangladesh
Inflation which is the new hot topic in the economics chat rooms can be a big concern for India. The Consumer Price Index (CPI) or retail inflation eased to 4.29% in April 2021. However, RBI estimates the inflation rate to be at 5.1% in 2021-22. All this is happening while the petrol prices are surging through the roof!
The RBI which has been the savior of the Indian economy during the pandemic has kept repo rates unchanged at 4% and stance also unchanged, accommodative. This essentially means that that RBI will lend money to banks at 4% interest rates (which is relatively very low) and in turn the banks will lend to their consumers at low rates (the famous “trickle-down” effect) thus maintaining adequate liquidity in the system
Although, the RBI projected India’s GDP will grow at 9.5% in FY21-22 it said the consumer survey showed that consumer confidence is at record lows. Ouch!
STARTUPS
The Crunch: India’s tech startup boom
India is the world's second largest internet market with more than 700 million internet users in the country. In an era where almost every business is an app this huge market has extraordinary potential. This has fueled India's startup boom - silicon valley venture capital funds and large foreign institutional investors are scrambling to invest in Indian startups even when the economy is in a recession. The COVID-19 pandemic has accelerated digitization and encouraged use of technology by both business and individuals.
The Money: According to Credit Suisse report, India has about 100 unicorns with a combined market value of $240 billion operating in sectors like retail, software services, food delivery, logistics and fintech. Mint, a leading financial newspaper reported last month, six new unicorns created in just 4 days! This insane tech boom has been backed by an aggressive funding boom by the likes of Tiger Global and Softbank Group. UrbanCompany, a gig marketplace which offers home services raised $255 million in a new funding round. An tech-based supply chain logistics startup, Delhivery which will soon go public via an IPO raised $277 million in its latest funding round led by Fidelity Investments.
Outlook: With the Silicon Valley pumping money into Indian tech and signing deals left, right and center the big boys of Indian Corporate elite also have upped their game. Reliance Industries, energy giant owned by India's richest man who is all set to for a war with Jeff Bezos to dominate India's e-commerce sector, has acquired home decor and furniture e-commerce company, Urban Ladder and Netmeds which is online pharmacy. The Tatas went shopping and bought online grocery BigBasket and 1mg, another online pharmacy. It is now being reported that they are looking to add Curefit, a digital fitness and health service to their shopping cart. The shining stars of Indian tech startup scene, Paytm and Zomato are set to go public. All of this also raises question about the underlying fundamentals of these startup businesses and their profitability. Some believe this year might be a turning point where both investment firms and startup businesses themselves will adjust their approach and focus on profitability rather than valuation or growth.
ENTERTAINMENT
What To Watch: This Week
Rome
Streaming on: Disney+Hotstar (India), HBO (US)
This historical documentary drama which depicts the fall of the Roman Republic and the rise of the empire can be a great binge watch even if you are not a history buff. The down-to-earth account of the life during the Roman Republic and brilliant acting performances, especially by James Purefoy who portrays Mark Antony enhance the viewing experience. The historical accuracy of events can be challenged but with a beautifully crafted plot and exceptional production this saga of war and politics is a must watch.
Movie Of The Week: Host
Streaming on: Prime Video
A group of friends hanging out on a social video calling app which somehow leads to inexplicable and often horrifying events. Yes, we know this premise is overused and is the plot of dozen other horror movies but this time it’s different. This indie British horror film by Shudder is too good to be miss. Although, it has all the horror movie cliches and the starting few minutes are very predictable there is a point in time where things escalate pretty quickly and nothing is predictable. Warning: Not for the weak-hearted
That’s all for now. See you soon!
Writers: Durgesh Kinnerkar and Anirudh Bhat
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