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- Bit by Bit 23rd Jan || China’s Reopening Complicates Global Fight Against Inflation || Charging infrastructure needs a big push as EV adoption grows in India. & more
Bit by Bit 23rd Jan || China’s Reopening Complicates Global Fight Against Inflation || Charging infrastructure needs a big push as EV adoption grows in India. & more
Good Morning Readers!
Here are:
"5 amazing stories in 5 minutes to make you future ready"
Happy reading!
MARKET UPDATE
(Markets were closed on 22/01/2022, Sunday)
ECONOMY
Key Facts:
Global elite at Davos has raised concerns about what China’s reopening might mean for inflation.
Some economists have warned that if this proves to be the case then the U.S. Federal Reserve might have to keep raising rates further
The Story:
China’s economic reopening might boost global growth, but the business leaders and policymakers at the World Economic Forum this week are also a little anxious on its potential inflationary impact.
China’s decision to welcome tourists again as well as to make it easier for those in the country to travel abroad has been one of the most discussed topics at the Davos gathering in the Swiss Alps.
Overall, this is seen as one of the most important economic events in 2023 and the business community is noticeably excited about making new deals with the world’s second-largest economy. On the other hand, however, there are concerns about what this means for inflation and the cost of living.
The International Energy Agency has warned that European companies might face higher costs when looking to purchase natural gas this year as there will be more competition for the commodity. Inflation has been one of the biggest challenges for European citizens for the last year, mostly driven by higher energy bills.
FMCG
The Story:
Hindustan Unilever Ltd (HUL) managing director and CEO Sanjiv Mehta defended the hike in royalty payments to Unilever. The company gets immense value from its parent and these arrangements provide it with a significant competitive advantage, he said.These payments are justified and are in the overall interest of HUL," Mehta told ET in an interview. "I am very confident that once we start engaging with the investors, they will fully understand the merit of these arrangements. As far as the phased increase of 80 basis points (bps) is concerned, the investors know our track record of increasing ebitda margins especially in the last 10 years when we increased margins by 1,000 bps.
HUL's share price fell nearly 4% on Friday, a day after the company said the royalty it pays to parent Unilever Plc is being raised for the first time in a decade to 3.45% of the total turnover from 2.65%.
HUL's performance is considered a proxy for broader consumer sentiment in India.
Green Shoots Last week, the company posted a 16% growth in sales entirely driven by price hikes as volume growth or actual products consumers purchased grew 5%. However, rural markets, where value growth fell a few months ago, have seen marginal growth, which implies that people spent more money than in the same period last year.
AUTOMOTIVE
The Story:
To help India realise its EV dream, creating a vast network of public and community charging stations (in societies) in crucial metro cities is daunting. Currently, the country stares at a massive gap as EV adoption increases, especially in the two-wheeler segment.
According to the Ministry of Power guidelines, the EV charging infrastructure is categorised into five broad areas. These are Electric Vehicle Supply Equipment (EVSE), Public Charging Stations (for the masses), Battery Charging Stations (where the discharged or partially discharged batteries for EVs are recharged), Captive Charging Stations (exclusive stations owned or under the control of owners of the charging station), and Battery Swapping Stations (where any electric vehicle can get its discharged battery or partially charged battery replaced by a charged battery).
"By 2025, India's market share of electric passenger vehicles is expected to increase to more than 6 per cent. In terms of EV adoption, the three-wheeler segment is leading the market with a 4 per cent share, followed by two-wheelers (3.5 per cent) and passenger vehicles (1.3 per cent)," Soumen Mandal, senior research analyst, IoT, automotive and devices ecosystem at Counterpoint, commented.
The government has supported the EV industry through schemes such as FAME1 and FAME2, with a significant focus on charging infrastructure. It has set a target to electrify 70 per cent of all commercial vehicles, 30 per cent of private cars, 40 per cent of buses, and 80 per cent of two-wheeler and three-wheeler sales by 2030. Sohinder Gill, CEO of Hero Electric, commented that the company is focused on strengthening the EV charging network by partnering with many EV tech companies like Statiq, BOLT, Charzer, Massive Mobility, and Log9 Materials to install over 1 lakh charging points across India.
TECH
Growth with bumps: a year of margin recovery for IT firms as talent costs normalise
The Story
For IT firms, it was an explosive start to the year 2022, literally.
While enterprises were getting back on their feet after severe waves of the Covid-19 outbreak and gradually launching digital transformation programmes, Russia invaded Ukraine, adding an unforeseen layer of geopolitical complications to the global tech demand-supply cycle.
Though the first half of the calendar year was replete with soaring business and talent demand, the chinks soon started showing from June.
So, by the time IT leaders had put out their third quarter financial results earlier this month, sector watchers had received mixed signals for what was in store this year for the $220 billion industry.
On the one hand, attrition rates overall have started dipping, margins are showing signs of recovery and most companies have surpassed Street estimates on revenue performance. But on the other hand, talent addition has hit a record low, there is a sense of uncertainty about how the geopolitical situation in Europe will pan out and clients are taking longer to close deals.
Fersht of HfS Research said while attrition may have slowed down, the Great Resignation is not over yet. So, even as companies insist that margin recovery is possible from higher automation, the model has yet to scale up.
Anything Interesting
The United States is being attacked by 300 nuclear missiles. In order to eliminate all land-based intercontinental ballistic missile silos in the nation, Russia undoubtedly launched this pre-emptive assault. Many of the approaching rockets cannot be destroyed by anti-missile defences, which means 2 million Americans will perish.
I just took the oath of office as president of the United States, and now I'm here in the Oval Office watching television news of conflict that is getting worse in Europe. I suddenly hear a secret service agent enter the space and order me to leave right away. My senior national security officials join me as I descend in the elevator to the Situation Room in the White House, where they brief me on the impending attack. I've got fifteen minutes to answer. As time runs out, I am given three choices, all of which call for retaliation attacks against Russia that are expected to result in the deaths of 5–45 million people. What shall I do?
