Consumer Goods Companies Battling Slowdown On Grounds Of Weak Demand

Not only car and bike manufacturers are seeing a sales slowdown, the  consumer goods companies are also going through complains of declining demands. This may lead to job losses. To be precise, biscuit manufacturers are likely to suffer the most which means that the consumers are wary of buying even low-priced items.

On Wednesday, Parle Products, a leading domestic biscuit maker, said that it might lay off up to 10,000 workers as slowing economic growth and falling demand in the rural heartland could lead it to resort to production cuts.

A sharp drop in Parle’s biscuit sales means the company may have to slash production, which may result in layoffs of 8,000-10,000 people, Mayank Shah, category head at Parle, told Reuters.

“The situation is so bad, that if the government doesn’t intervene immediately… we may be forced to eliminate these positions,” he said.

Commenting on the turmoil in the consumer space, Britannia’s managing director Varun Berry recently said, “We have grown only 6% and the market is growing slower than that. And that’s a little bit of a worry, because even for a `5 product if the consumer is thinking twice before buying it, then there is some serious issue in the economy.” Berry was speaking in the company’s latest earnings call.

Britannia like some other corporates has also cut back on capex plans due to the current environment. The company has not employed any capital in its dairy business, Berry said in the analyst call. “In the dairy business for the milkshakes, we’ve employed no capital at all. It’s all third-party. Our manufacturing is done by a third-party. Similarly for wafers, we have started the business with a third-party — with, in fact, two third parties, who are making our products. But yes, even if we were to employ the capital today, which we are not doing, we will get a payback in four years. So we have done the numbers, but we have still said that the times are tough, so in certain categories, we should make sure that the capital is employed at the right time”.

Similarly, during the April-June quarter, FMCG major Hindustan Unilever reported a rise in revenues of just 6.61% year-on-year, owing to weak volumes which grew at only 5% y-o-y, the slowest in seven quarters. HUL’s chief financial officer Srinivas Phatak said the firm expects demand to remain subdued in the near term. “We expect the near-term demand to remain a bit subdued given the macroeconomic environment. Commodities and currency will continue to remain volatile,” he said.

Coming back to Parle, the company employs about 100,000 people, including direct and contract workers across 10 company-owned facilities and 125 contract manufacturing plants.

Shah said demand for popular Parle biscuit brands such as Parle-G had been worsening since the roll out of goods and services tax (GST) in 2017, which imposed a higher levy on biscuits costing as low as Rs 5.

The higher taxes have forced Parle to offer fewer biscuits in each pack, hitting demand from lower-income consumers in rural India which contributes more than half of Parle’s revenues.

“Consumers here are extremely price-sensitive. They’re extremely conscious of how many biscuits they are getting for a particular price,” Shah said.

In the auto space, poor retail sales due to weak consumer demand has left dealers saddled with high inventory, which saw sales across segments witnessing its sharpest decline in nearly 19 years in July, dropping 18.71% on a year-on-year basis.

The previous biggest decline across overall domestic automobile sales was recorded in December 2000 when it fell 21.81%. “The data shows how urgent the need is for revival package from the government. There is urgent need for some kind of action. The industry is doing all it can to promote sales. I think this is the time when the industry really needs the support of government coming out with a revival package,” Vishnu Mathur, director-general, Society of Indian Automobile manufacturers (Siam), said commenting on the sales data.

The auto industry has sought reduction in GST rate, introduction of vehicle scrappage policy, revival of NBFC sector as sales are mostly dependent on availability of finance and delay in implementation of the proposed increase in vehicle registration fees.

Amazon Opens Largest Global Campus In Hyderabad, Can Accommodate Over 15,000

E-commerce giant Amazon opened its largest campus in Hyderabad outside of the US facility on Wednesday. It is spread across 9.5 acres and can accommodate over 15,000 employees. This new campus is the company’s first own office building and is the single-largest building globally. It contains over 2.5 times more steel than Eiffel Tower, measured by weight. Amazon first started operations in India from Hyderabad in 2004.

The company plans to strengthen its focus on talent in India. It has 62,000-odd full-time employees, the largest tech base outside Seattle and approximately 1.55 lakh contract employees. Besides, it is also first Amazon facility to create an Alexa Pod and experiment the Inside Day 1 Alexa Skill (Beta) and the campus is built to offer Agile-based environment to maintain well-being of employees and foster inclusion.

“Over the last 15 years, we have invested significantly in India across 30 office spaces, the AWS APAC Region in Mumbai, 50 Fulfilment Centers in 13 states as well as hundreds of delivery stations and sort centres, creating nearly 200,000 jobs in India. This new Amazon campus building is a tangible commitment to that long-term thinking and our plans for India,” Amazon’s India country manager Amit Agarwal said. “The largest buildings in Seattle houses about 5,000 employees,” said John Schoettler, vice-president of Amazon’s Global Real Estate and Facilities. He said the campus was Amazon’s largest in the world but has plenty more room to grow.

Amazon started its retail operations in India in 2013 and has added several services to boost sales, including an expansion into producing Bollywood originals to boost its Prime Video loyalty programme in the movie-loving country. Prime membership in India has doubled over the past 18 months, Agarwal said.

Amazon already has three fulfilment centres in Telangana offering more than 3.2 million cubic feet of storage space to sellers, two sort centres with one lakh sq ft of processing capacity and 90 delivery stations.

On the company’s commitment to the Indian market, Agarwal said it has already announced $5 billion investment in India and another $500 million in food and retail. “We continue to invest across all over businesses,” he said without giving details on investments for Hyderabad facility.

On a query on slowdown, he said the company has not seen a slowdown in its business in India. “As far as our services go, we don’t see any slowdown. There could be multiple reasons. I think one thing to keep in mind is that e-commerce is very small and probably just 3% of total retail. When you are that small, there is so much room to grow,” he said.

Agarwal said the company had launched its Global Selling programme in India a few years ago that allows small and medium businesses in the country to sell to customers in other countries.

“What we have seen is while we have 500,000 sellers in the marketplace selling nationally, for exports 50,000 have already signed up. We have 140 million items that are available on Amazon.com in the global marketplaces. The cumulative exports so far since the launch has crossed $1 billion and in the next three years, it is expected to go to $5 billion,” he added.

 

HPCL Likely To Invest Rs 74,000 Crore In Five Years

ONGC- owned Hindustan Petroleum Corporation (HPCL) is looking to invest around Rs 74,000 crore over the next five years to elaborately expand its capacity.

The Navaratna company plans to invest around Rs 14,900 crore in the current fiscal, chairman Mukesh Kumar Surana told shareholders after the annual general meeting here Wednesday evening.

“We are focused on strengthening refining and marketing through expansion of our refining capacity, supply chain capabilities and customer reach.

“In addition, the thrust is on creating new levers of growth by establishing a strong presence in petrochemicals, scaling up footprints in natural gas and expanding marketing overseas,” he said.

The company, which owns and operates three refineries, has undertaken capacity expansion at refineries atVisakhapatnam and Mumbai.

The modernisation of the Visakhapatnam refinery will enhance capacity from 8.33 million tonnes to 15 mt.

The capacity of the Mumbai refinery is also being enhanced from 7.5 mt to 9.5 mt.

“On completion, these projects will enhance our profitability. We will have the capability to produce BS-VI fuels,” he added.

Surana further said the 9 mt greenfield refinery-cum- petrochemical project coming up at Pachpadra in the Barmer district of Rajasthan has achieved significant progress.

“Engineering activity is in progress and construction has commenced. Financial closure has also been achieved for this project. The project is being implemented at a cost of Rs 43,129 crore,” Surana said.

The company is, he said, laying a thrust on pipeline network expansion.

“Ongoing pipeline projects with total estimated investment of Rs 5,555 crore are in various stages of completion,” he added.

The company also plans to build second-generation ethanol production facilities, and market compressed bio-gas.

Its net profit for fiscal 2019 stood at Rs 6,029 crore and gross refining margins (GRM) averaged at USD5.01 a barrel.

Stock Markets Likely To Rise High As Sebi Eases Norms For FPIs

Indian stock markets may tick higher while tracking global cues and as the Securities and Exchange Board of India (Sebi) has eased norms for foreign investors.

Asian stocks went ahead on Thursday after the Wall Street got a boost from strong retail data, while bonds retreated as US policy makers sounded conflicted on whether to cut interest rates as sharply as markets were wagering.

MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1%, continuing the see-saw pattern of recent sessions.

On Wall Street, the Dow had gained 0.93%, while the S&P 500 rose 0.82% and the Nasdaq 0.90%.

Minutes of the Federal Reserve’s July meeting showed policymakers were deeply divided over whether to cut interest rates, but were united in wanting to signal they were not on a preset path of more easing. Indeed, while a “couple” of Fed members favoured a deeper cut of half a point, “several” favoured no change at all.

That reluctance did not seem to gel well with the market’s aggressive pricing for over 100 basis points of easing by the end of 2020.

Treasuries were sold in response and two-year yields rose to 1.59% and away from last week’s low of 1.467%.

Hopes for US fiscal stimulus also got a knock when President Donald Trump reversed course and said he was not looking at cutting payroll taxes. Much now depends on how dovish Fed Chair Jerome Powell chooses to be in his Jackson Hole speech on Friday.

Back home, the markets regulator Sebi on Wednesday eased regulatory and compliance framework for foreign portfolio investors (FPI) by broad-basing their classification, and simplifying their registration, entry and know-your-customer (KYC) norms in a bid to boost investments.

In another key move, the Sebi relaxed buyback norms for listed firms that own non-banking financial companies (NBFCs) and housing finance companies (HFCs) subsidiaries. This move will free conglomerates from the restrictive debt-to-equity ratio (DER) norms calculated on a consolidated basis for guiding buybacks.

Members of the Reserve bank of India’s Monetary Policy Committee at its rate review held on 7 August agreed that supporting growth will remain their top priority in the midst of inflation remaining stable within the next one year, according to the minutes of the meeting released on Wednesday.

The dollar had already bounced overnight, rising to 98.263 on a basket of currencies from a low of 97.948. It also reached 106.57 yen from a trough of 106.21. The euro edged back to $1.1089 from a top of $1.1107, not helped by a gloomy economic outlook from Germany’s finance ministry.

A range of manufacturing surveys from a host of countries are due later on Thursday and risk is they will show a further slowdown in economic activity, especially in Europe.

Also due are minutes from the European Central Bank’s last policy meeting and markets are looking for more detail on exactly when and how aggressively it might ease policy.

In commodity markets, spot gold was steady at $1,502.53. Oil prices firmed after US government data showed a drawdown in domestic crude stocks. Brent crude futures rose 25 cents to $60.55, while US crude gained 34 cents to $56.02 a barrel.

DLF Shares Hit 31-Month Low After SC Issues Non- Disclosure Notice

Shares of real estate giant DLF dropped down by 19.4 percent on August 22 as it hit its 31-month low after gaining a notice from the Supreme Court for non-disclosure of key information in Qualified institutional placement (QIP).

The stock fell 23 percent in three straight sessions to Rs 138.30, the lowest level since January 31, 2017. It was quoting at Rs 144, down Rs 27.60, or 16.08 percent on the BSE at 0952 hours.

Petitioner KK Sinha, on whose complain SEBI had earlier barred DLF promoters from markets and imposed a penalty, told SC that DLF failed to mention key cases regarding the violation of the Haryana Land Ceiling Act, 1972, where adverse orders were passed by the Punjab and Haryana High Court, and the matter is pending with the SC, it was reported. 

The report said the court had ordered directed investigation into DLF group companies and its admitted subsidiaries for violation of land ceiling laws and other laws, matters concerning benami purchases, licensing, stamp duty payment and transfer pricing issues.

But Ashok Tyagi, Wholetime Director of DLF said in an interview to CNBC-TV18, “All material disclosures had been made in the QIP and complaint is about 5-6 acres of land by a co which is not company’s arm.”.

He further said, “DLF has received the notice from Supreme Court a month ago and SC notice does not ask us for any disclosures. SC has asked DLF & SEBI whether the complainant should be impleaded in the case.”

The report said if there is an adverse decision by the apex court then it could impact DLF investors as petition prays that the company be asked to return more than Rs 5,000 crore that it raised via two qualified institutional placements (QIPs), one of which was in 2019.

In addition, DLF patriarch K P Singh has stepped down as whole-time director but will continue to be its non-executive Chairman, the realty firm said on August 19.

Zomato Makes Changes In Paid Program, Will Allow No Login Sharings Or Multiple Gold Usages In A Day

Online food delivery app Zomato is tweaking its paid membership scheme Zomato Gold resulting into putting limitations on the benefits available to the customers. The company has proposed three major changes which will restrict multiple logins of one subscription effective this 15 September, said founder Deepinder Goyal in a statement to restaurant partners.

The company has also said that Gold usage will be limited to a single use per day. Further, customers will no longer be able to use more than two Gold unlocks per table. Zomato has also bumped the Gold subscription price to almost double; from Rs 1,000 to Rs 1,800, to ensure “high-quality user base via Gold”.

Doing away with the monthly trial pack of Gold, Zomato has also come up with a feedback system for customers as well. The restaurants will be allowed to rate users to “churn out users who consistently show bad behaviour at a restaurant,” founder Deepinder Goyal said. Currently, several other apps use this feature such as ride-hailing app Uber.

In a bid to keep its restaurant partners appeased, food aggregator giant Zomato is tweaking its paid membership scheme Zomato Gold, significantly limiting the benefits available to the customers. Among three major changes proposed, Zomato will restrict multiple logins of one subscription effective this 15 September, Zomato founder Deepinder Goyal said in a statement to restaurant partners, a copy of which was seen by Financial Express Online. The company has also said that Gold usage will be limited to a single use per day. Further, customers will no longer be able to use more than two Gold unlocks per table. Zomato has also bumped the Gold subscription price to almost double; from Rs 1,000 to Rs 1,800, to ensure “high-quality user base via Gold”.

Doing away with the monthly trial pack of Gold, Zomato has also come up with a feedback system for customers as well. The restaurants will be allowed to rate users to “churn out users who consistently show bad behaviour at a restaurant,” founder Deepinder Goyal said. Currently, several other apps use this feature such as ride-hailing app Uber.

FB & Twitter Close Down Chinese ‘State- Backed’ Accounts Trying To Calm Hong Kong Protests

China has adopted Russia’s playbook for spreading disinformation on Facebook and Twitter, deploying tactics in its increasingly heated information war over the protests that have convulsed Hong Kong.

In recent weeks, Facebook and Twitter accounts that originated in China acted in a coordinated fashion to amplify messages and images that portrayed Hong Kong’s protesters as violent and extreme, the two social media companies said on Monday. On Facebook, one recent post from a China-linked account likened the protesters to IS fighters. And a Twitter message said, “We don’t want you radical people in Hong Kong. Just get out of here!”

Facebook and Twitter said they had now removed the accounts. For over two months, anti-government protests have gripped Hong Kong, with anger rising over China’s growing influence. Facebook said it eliminated seven pages, three Facebook Groups and five accounts involved in the disinformation campaign about Hong Kong protesters. Twitter deleted 936 accounts and said it would ban state-backed media from promoting tweets after China Daily and other state-backed publications placed ads on its service that suggested the protesters were sponsored by western interests and were becoming violent. The microblogging site added that these accounts were a part of a larger, spammy network of approximately 200,000 accounts, which Twitter suspended before they were substantially active on the service.

“These accounts were deliberately attempting to sow political discord in Hong Kong, including undermining the legitimacy and political positions of the protest movement on the ground,” Twitter said. “We have reliable evidence to support that this is a coordinated state-backed operation.”

The removal of the Chinabacked accounts signal an escalation in the global disinformation wars. In 2015 and 2016, Russia pioneered disinformation techniques when it used social media to disseminate inflammatory messages intended to divide Americans in the 2016 presidential election. Since then, governments in many other countries — including Bangladesh, Iran and Venezuela— have also used Facebook and Twitter to sow discord at home and abroad. Twitter said it discovered the China-linked accounts during a probe that spanned several weeks. Some of the accounts used Twitter from unblocked IP addresses, the firm said. Since Twitter is not permitted in China, an unblocked IP address is a sign that the accounts were approved by the government.

Trump Postpones Meeting With Denmark PM On Grounds Of Lack Of Interest In Greenland Sale

US President Donald Trump on Tuesday announced that he is postponing a planned meeting with Denmark’s prime minister because of the lack of interest in selling Greenland to the United States.

“Based on Prime Minister Mette Frederiksen’s comments, that she would have no interest in discussing the purchase of Greenland, I will be postponing our meeting scheduled in two weeks for another time,” Trump tweeted.

“The Prime Minister was able to save a great deal of expense and effort for both the United States and Denmark by being so direct. I thank her for that and look forward to rescheduling sometime in the future!” the US president wrote.

The Wall Street Journal first reported that Trump had expressed interest in the self-governing part of Denmark — which is mostly covered in ice — asking advisors if it would be possible for the US to acquire the territory.

Trump confirmed Sunday that he was indeed interested in buying Greenland, but said it was not a priority for his administration.

“It’s something we talked about,” he told reporters.

“The concept came up and I said certainly, strategically it’s interesting and we’d be interested, but we’ll talk to (Denmark) a little bit,” he said, stressing that it was “not number one on the burner” for the government.

When asked if he would consider trading a US territory for Greenland, Trump replied that “a lot of things could be done.”

“Essentially, it’s a large real estate deal,” he said.

Denmark colonized the 772,000 square-mile (two-million square kilometer) island in the 18th century. It is home to only about 57,000 people, most of whom belong to the indigenous Inuit community.

Greenland’s ministry of foreign affairs insisted Friday the island was ready to talk business, but was not for sale.

“#Greenland is rich in valuable resources such as minerals, the purest water and ice, fish stocks, seafood, renewable energy and is a new frontier for adventure tourism,” it tweeted.

“We’re open for business, not for sale,” it added.

Redmi Note 8, Note 8 Pro Set To Launch On August 29 In China

Redmi Note 8 and Redmi Note 8 Pro are set to launch on August 29 in China, announced Xiaomi sub-brand Redmi through a Weibo post. The launch will notably take place at the event where the company is also planning to unveil its first Redmi-series smart TV.

The Redmi Note 8 and Redmi Note 8 Pro both will debut as the latest entrants in the company’s Redmi Note family and will come as the successors to the Redmi Note 7 and Redmi Note 7 Pro, respectively, which were launched just earlier this year. The Redmi Note 8 Pro will also debut as the first Redmi phone to sport a 64-megapixel primary camera sensor.

The Weibo post announcing the formal launch date of the Redmi Note 8 and Redmi Note 8 Pro shows a teaser image. This essentially shows off the presence of a quad rear camera setup along with an LED flash on the Redmi Note 8 Pro. Further, the image also confirms the 64-megapixel camera sensor.

It is, however, unclear whether the 64-megapixel camera will be exclusive to the Redmi Note 8 Pro or it will also be featured on the Redmi Note 8.

Earlier this month, Xiaomi announced that it would bring a new Redmi phone with a 64-megapixel camera. The camera sensor will be Samsung’s ISOCELL Bright GW1, the company said. It also revealed that the phone with the new sensor would make its way to India in the fourth quarter.

Like Xiaomi, rival Realme is also leveraging the Samsung innovation and is set to launch the Realme XT as its first 64-megapixel camera phone in India in late September.

The new camera sensor, which was unveiled in May, is equipped with Tetracell and 3D HDR technologies. It is designed to capture images with additional details.

Some recent leaks pertaining particularly to the Redmi Note 8 have claimed that the new phone could come with 18W charging support and a USB Type-C port.

At the August 29 event, Xiaomi is also set to launch the new 70-inch Redmi TV. CEO Lei Jun recently teased the smart TV through his Weibo account. Furthermore, an official image that has been released just earlier this week suggested thin bezels on the Redmi TV.