Ford, M&M Call Off Deal for JV

Ford and Mahindra and Mahindra have called off a deal to form a joint venture company that involved the acquisition of the former’s India business, citing greater-than-expected capital needs and the changed business landscape in the aftermath of the pandemic.

The companies separately said that they amicably reached the decision to not pursue the joint venture, seeking instead the option to re-deploy elsewhere the earmarked capital. December 31 was the hard stop date for the companies to reach a definitive transfer agreement.

Ford said it will continue to have independent operations in India.

“All the assumptions and scenarios that we had while signing the agreement are very different today,” said Pawan Goenka, managing director of Mahindra and Mahindra.

The deal did not make economic sense after the capital that both companies had to put in was enhanced due to Covid-19 related issues and other global developments, according to Anish Shah, the deputy managing director and CFO of the Mahindra Group.

“The objectives were not being met and the capital required for the business was much higher; hence we are looking at different ways of collaborating,” Shah said. M&M had talked about investing ₹1,400 crore of equity into the proposed JV and an equivalent amount as the debt.

India one step away from COVID vax

India is one step away from its first coronavirus vaccine, with the nod of the Drug Controller General of India awaited on the Subject Expert Committee's recommendation for emergency use of Oxford-AstraZeneca's Covishield vaccine.

According to official sources, the panel's recommendation, which came at its meeting here on Friday, has been sent to DCGI VG Somani for approval. The approval will pave the way for the vaccine's rollout in India, which also has the highest number of infections in the world, after the US. The rollout will begin from January 6, according to ministry sources.

The UK and Argentina have already approved Covishield. More than five crore doses of the vaccine have already been stockpiled by its manufacturer, the Pune-based Serum Institute of India.

The expert panel had convened a meeting on Friday afternoon to take a call on the emergency use authorisation sought by the Serum Institute and Bharat Biotech for their coronavirus vaccine candidates. Recommendations on latter's application is still awaited.

The Serum Institute had partnered with Oxford-AstraZeneca for conducting clinical trials and manufacturing 'Covishield' while Bharat Biotech has collaborated with the Indian Council of Medical Research to make 'Covaxin'.

America's Pfizer was the first one to apply for the accelerated approval on December 4, followed by Serum and Bharat Biotech on December 6 and 7, respectively. Pfizer has, however, sought more time to present the data.

As India await a silver bullet against coronavirus with bated breath, the DCGI, on Thursday, hinted at the approval of vaccine and said that the country will have a "Happy New Year with something in hand".

The meeting of the expert panel came a day before dry run of the vaccine is slated to commence in all the states and Union Territories to equip the administration in management of vaccine supply, storage and logistics, including cold chain management. The Central government plans to vaccinate nearly 30 crore people in the first phase of drive. It will be offered to one crore healthcare workers, along with 2 crore frontline and essential workers and 27 crore elderly, mostly above the age of 50 years with co-morbidities. 

December 2020: GST mop-up rises 11.6%

Goods and services tax collections rose 11.6% in December to reach a record Rs.1.15 lakh crore on the back of higher demand, partly due to Diwali, improved compliance and higher prices of some goods.

Latest data released showed collections in December, which were for sales and transactions in November, were higher than the previous high of Rs.1.13 lakh crore, recorded in April, 2019. It also marks three straight months of over Rs.1 lakh crore collections. “This is the highest growth in monthly revenues in the last 21 months. This has been due to a combined effect of the rapid economic recovery post-pandemic and the nationwide drive against GST evaders,” the finance ministry said.

The ministry added that the drive against fake bills, along with many systemic changes introduced recently, has also led to improved compliance and hence growth in GST collections.

What seems to have helped was record monthly filing of returns, estimated at 87 lakh, which was 7% higher than December 2019. The government’s decision to closely monitor tax credits and a crackdown on fraudulent transactions has helped, even as the economy hasn’t fully returned to pre-Covid levels.

While sectors such as automobiles, white goods, electronics and consumer goods have seen a strong comeback in demand, there are several sectors such as hospitality and tourism that are yet to see a return of normalcy. Besides, the collections in December were driven by a 27% increase in collections from imports, whose volume was estimated to have declined by over 13% in November, according to data released by the commerce department earlier.

“Robust growth in GST collections, even after the festive season is over, is a clear signal that businesses are leaving the ghost of COVID behind now... Significant jump in GST on imports could indicate revival in demand on high end products like cell phones and electronic items. Apart from economic revival, the reason for this growth could be tightening of compliances with measures such as e-invoicing and increased investigations to catch tax evaders even though GST audits for 2017-18 and 2018-19 are yet to start in a big way,” said Pratik Jain, who leads the indirect tax practice at consulting firm PwC India.

Delhi shivers

Delhi entered the New Year with dense fog and freezing cold that saw the mercury dip to 1.1 degrees Celsius, the lowest minimum temperature in January in the last 15 years, the Indian Meteorological Department (IMD) said. It was the coldest New Year day in recent memory across north India as the temperature dropped below freezing point in three cities.

It was a double whammy for Delhiites setting out in the early hours, as air quality was also classified as “severe” according to CPCB’s daily index.

Delhi had last recorded a lower minimum temperature on January 8, 2006, when the mercury fell to 0.2 degrees Celsius. The temperature is set to increase in the coming days.

Meanwhile, the minimum temperature in Agra dropped to 2 degrees Celsius as compared to 7 degrees Celsius in Mussoorie. Besides Agra, cold waves swept across Firozabad, Mathura, Etah, Aligarh, Kasganj and Mainpuri on Friday.

As icy winds continued to lash Lucknow, it recorded the lowest minimum temperature of the season with mercury plummeting to 0.5 degrees Celsius, colder than most hill stations in the country. 

Nifty scales 14k, sensex nears 48k

The last trading day of one of the most volatile and eventful years in Dalal Street’s recent history saw the sensex ending on a flat note, but at least in the green. On the NSE, the Nifty scaled the 14k mark for the first time, but settled marginally down on the day at 13,982 points.

On the BSE, the sensex rose for the sixth consecutive session and settled just 5 points higher at 47,751 points — a closing record. In the process, the sensex closed 2020 with a 16% gain, while for the Nifty it was 15%. However, the rise to record closings has come in a year when the indices fell to multiyear lows in late March, thanks to pandemic-induced fears among investors globally.

From its March-end close of 29,468 points, the sensex has more than recovered its early losses to give a 62% gain. The rally since the March trough also made investors richer by Rs 88 lakh crore, with the BSE’s market capitalisation now at Rs 188 lakh crore. And on an annual basis, the rise in market cap was nearly Rs 33 lakh crore, BSE data showed.

The year also recorded the biggest foreign fund inflows into the Indian stock market with total net buying now at nearly Rs 1.8 lakh crore. Over two-thirds of this came in the last two months alone, CDSL data showed. On a monthly basis, December recorded the best ever figure. At a net inflow of Rs.62,016 crore, this surpassed the Rs.60,358 crore recorded in November. The nearly 6,500-point gain in the sensex since the year’s beginning came mainly on the back of just five stocks — Infosys, Reliance, TCS, Kotak Bank and HUL. These five — out of the 30 that form the sensex — together accounted for 72% of the gains.

In forex market, after the rupee weakened to an all-time low below Rs.75-per-dollar as foreign funds took money out, a deluge of inflows led to the Indian currency’s appreciation. All through the year, the RBI played a stellar role — it sold dollars during the early part of the pandemic-led weakness in the rupee, and followed it with a purchase of nearly $100 billion in the later half of the year as the rupee strengthened. According to Kotak Securities VP Ravindra Rao, 2021 could be challenging for crude as markets would see normalisation of both demand and supply. While demand recovery will depend on how quickly the virus is controlled, supply side would mainly be dictated by OPEC and allies.

November 2020: Core Sector Contracts

The eight key core sectors contracted for the ninth consecutive month in November, posing some concerns for policy makers in the new year. The key infrastructure sectors contracted 2.6% in November, sharper than the 0.9% decline in the previous month. The core sectors had witnessed 0.7% growth in the same month last year.

The crucial sector accounts for nearly 41% of the index of industrial production and the November numbers may impact the factory output, which will be released later. Between April and November, the core sector contracted 11.4%.

Separate data showed the Centre’s fiscal deficit touched 135.1% of the 2020-21 Budget estimates. The deficit at the end of November 2019 was at114% of the Budget target for 2019-20. Sluggish revenues and higher spending commitment has widened the deficit and most economists expect it to be way above the Budget target of 3.5% of GDP set for the current fiscal year.

With four months still left in the fiscal year, the government’s fiscal deficit had already climbed to Rs 10.8 lakh crore in April-November 2020, 33% higher than the year-ago level, and 35% higher than the full year Budget estimate.

Punjab jeweller who got J&K domicile shot dead

A 70-year-old jeweller from Punjab settled in Srinagar for four decades was shot dead by motorcycle-borne terrorists in the city’s congested Sarai Bala locality on Thursday, months after he got a domicile certificate and purchased a shop and a house.

Claiming responsibility for the killing of Satpal Nischal, whose roots are in Amritsar, the fledgling Pakistan-backed terror outfit TRF said the new domicile law was “unacceptable” and everyone other than indigenous Kashmiris would be treated as “occupiers” if they acquired property in J&K. “More to come,” TRF said in a statement circulated through Facebook.

Nischal, the first domicile certificate holder to be targeted by terrorists since the new law took effect, was the owner of Nischal Jewellers in Srinagar. Police said he took three gunshots on his chest and was declared dead on arrival at SMHS Hospital. Nischal is survived by two sons and a daughter.

A little-known outfit that calls itself the United Liberation Front of J&K praised TRF, an amalgam of the banned Jaish-e-Mohammad, Lashkar-e-Taiba and Hizbul Mujahideen, for going hard at “occupiers and stooges”.

As soon as he got his domicile certificate earlier this year, Nischal purchased a shop at Hanuman Mandir in the heart of Srinagar and a house at Indira Nagar, near the Army headquarters in Badami Bagh. “His shop in Saria Bala is a popular one among to-be brides because of its reasonable rates,” a family friend said. Meanwhile, a CRPF sub-inspector was injured when suspected terrorists lobbed a grenade, followed by firing, on a patrol party in the Sangam area of south Kashmir’s Anantnag district