Arvind’s Newsletter

1.India Inc's revenue growth weakest since September 2021: CRISIL report

India Inc is likely to log 4-6 per cent revenue growth in the January-March quarter of 2023-24, marking the slowest quarterly growth since recovery from the Covid-19 pandemic which began in September 2021, said a Crisil report.

The report is based on an analysis of 350 companies which exclude financial services and oil and gas sectors firms.

The moderation follows stronger growth in previous years, the report said, adding "among the 47 sectors monitored by CRISIL, only 12 are expected to have clocked an improvement in revenue growth both sequentially and on-year for the quarter."

Consumer discretionary products and services are expected to have led the show in the January-March quarter.Among discretionary products, the automobiles sector was steered by healthy growth in passenger vehicles on the back of higher volumes and price hikes in the past year.

2.MSME industry is struggling to collect its receivables on time and this effecting their viability.

Buyers must pay MSMEs within 45 days of goods or services provided, according to the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. But this has done little to stop buyers from defaulting on their payments. According to data from the MSME Samadhaan portal, the total outstanding amount owed to MSMEs in India as of April 2024 exceeds Rs 20,765 crores.Notably, the public sector accounts for a substantial 40% of payment defaults.

 Now, the new rule, effective from April 1, prevents businesses from claiming tax deductions for payments made beyond 45 days to MSMEs for the supply of goods and services. As the new rule kicks in, stakeholders aren’t too hopeful and expect little change.

3.IndiGo to develop multiple hubs for non-stop flights to international destinations

India's largest domestic airline IndiGo has set a clear target for itself with its first wide-body aircraft order that placed recently. It wants to develop multiple hubs in the country, providing direct connectivity to faraway destinations from different metro cities with Airbus A350 and Airbus A321 XLR (extra long range) aircraft, set to join its fleet 2025 onwards.

The Airbus A321 XLR planes are expected to be used for non-stop, 7-8 hour flights to Europe and the Far East countries.

In a conference call on the induction of wide-body aircraft, IndiGo chief executive officer Pieter Elbers said that the airline sees potential of different strongholds across various parts of the country such as Delhi, Mumbai, Hyderabad, and Bengaluru, and given the country's geographical position, it is optimistic of seeing some overlapping as well as unique connections through different metro cities.

"There is a linear decline in market share of Indian carriers in international markets beyond 5-6 hours. Indian carriers are signifiantly under-represented in wide-body, long-haul market. We should be able to compete with global aviation hubs," Elbers said.

4.Non-competes do not work, yet employers insist employees sign them. Why?

Non-compete clauses are still very much part of employment contracts in India, despite being unenforceable under the law, according to legal experts. Earlier this week, the US Federal Trade Commission banned such clauses for US workers. These typically restrict a worker’s ability to join a competitor for a certain period after quitting and are aimed at dissuading employees, particularly those at the senior level, from going over to rivals. Companies also say such clauses are needed to ensure security of data.

While Indian law is clear on the unenforceability of a non-compete clause operating beyond the term of employment, companies still include it in contracts, particularly for senior executives, as it’s seen as a soft deterrent, said Jay Parikh, partner at Luthra and Luthra Law Offices. Employees would rather comply than bear litigation costs and carry the burden of being sued by their previous employer.

5.Universal blood transfusions near

Newly developed enzymes that can remove blood-type markers raised hopes for universal blood transfusions. 

Patients’ blood type dictates who they can receive transfusions from: Antigens in the donor’s blood are detected by the immune system and rejected if they don’t match the recipient’s.

A new study found that cocktails of enzymes would remove the sugar molecules that denote A, B, AB, and O blood types, and other previously unnoticed markers: One author said they were “close to being able to produce universal blood from group B donors,” although type A blood was more complex and required more work. Universal donation would significantly reduce the shortage of blood needed for transfusions, especially for those with rare types.

6.Apple targets Google staff to build artificial intelligence team

Apple has poached dozens of artificial intelligence experts from Google and has created a secretive European laboratory in Zurich, as the tech giant builds a team to battle rivals in developing new AI models and products.

According to a Financial Times analysis of hundreds of LinkedIn profiles as well as public job postings and research papers, the $2.7tn company has undertaken a hiring spree over recent years to expand its global AI and machine learning team. The iPhone maker has particularly targeted workers from Google, attracting at least 36 specialists from its rival since it poached John Giannandrea to be its top AI executive in 2018.

The Zurich site is reportedly driving Apple’s efforts to build a generative AI model to rival OpenAI and Google’s Gemini, even as it weighs licensing Gemini to power iPhone AI features. AI is increasingly the battleground for Big Tech.

7.A Strong U.S. Dollar Weighs on the World

The strength of the US dollar risks rattling Asia’s economies. Every major global currency has fallen against the dollar since the beginning of the year, The New York Times reported, in part because of a strong American economy and diminished expectations that the US Federal Reserve will cut high interest rates soon. That has ripple effects abroad, intensifying inflation, since countries have to pay more in their home currency for imports priced in dollars.

Japan’s yen fell to its lowest level against the dollar since 1990 early Monday, but the entire region has “1997 like vibes” longtime Asia columnist William Pesek wrote, recalling the late-1990s financial crisis. Asian countries are “still too reliant on exports for comfort” Pesek argued. “A runaway dollar is wrestling capital away from emerging economies everywhere.”