Arvind's Newsletter

1.Airtel to exit non-core biz for digital growth: Sunil Mittal; Mint Interview

The group is looking to exit non-core businesses that have failed to scale-up, such as insurance, food and skilling. The transformation of Airtel into a digital entity is now centre stage, and it will also bolster its burgeoning Africa operations, its payments bank, and satellite broadband ventures. The carrier’s enterprise business, he said, had the potential to become worth $10 billion from $3 billion right now. 

The group will also pare its holding in Airtel to bring it on par with SingTel’s through stake sales over the coming years, with Bharti Telecom, which currently holds 40% in Airtel, becoming the only entity holding all the stake in Airtel between the Bharti Group and SingTel. Currently, Bharti Group’s effective stake, including direct and indirect holdings, stands at 24.57% and SingTel’s stands at 30%.

Amid these strategic shifts, Mittal acknowledged the competitive pressure from Elon Musk's Starlink in the satellite broadband space, and advocated for the immediate allocation of satellite spectrum before the new telecom law is enacted. Read on for full interview.

2.Home business grows faster than overseas for India's biggest MNCs

About 15 years ago, leading Indian companies, such as Tata Steel, Tata Motors, Hindalco, Bharti Airtel, and Motherson Sumi, embarked on an ambitious global expansion and this was achieved through multi-billion-dollar acquisitions in North America, Europe, Africa, and Southeast Asia. Most of these acquisitions have proven financially successful, and the global operations of these Indian multinationals now overshadow their domestic business. 

But over the past five years, these companies’ revenues in India have grown at a faster pace than their overseas revenues. As a result, the contribution of Indian business to consolidated revenues has steadily increased.

In FY23, Indian operations accounted for 41.6 per cent of the consolidated revenue of India’s top five multinationals, up from 34 per cent in FY18 and 33.2 per cent and 34.2 per cent in FY21. The combined revenue of the Indian businesses of these five companies rose from Rs 2.23 trillion in FY18 to Rs 4.22 trillion in FY23, growing at a compound annual rate of 13.6 per cent over the five-year period. 

In the same period, the combined revenue of their overseas businesses grew at a CAGR of 6.4 per cent, from Rs 4.33 trillion in FY18 to Rs 5.92 trillion in FY23. The overseas operations accounted for 58.4 per cent of the consolidated revenue of these companies in FY23, down from 66 per cent in FY18 and 65.2 percent in FY21.

However, the results for FY24 suggest that the tide has now turned in favour of their overseas operations. The combined overseas revenues of these companies increased by 11 per cent year-on-year during the April-December 2023 period (9MFY24), compared to a 1.3 per cent Y-o-Y growth reported by their Indian business during the period. As a result, the share of overseas operations in their consolidated revenue grew to 60.5 per cent in 9MFY24, nearly 200 basis points higher than in FY23.

3.India's three-wheelers segment charged up with electric transition

According to data from the Vahan dashboard of the Ministry of Road Transport and Highways (MoRTH), approximately 54 per cent of the 986,797 three-wheelers sold in the country in FY24 so far are running on electricity. In FY19, the share of these categories was 15 per cent.

The CNG three-wheeler sales also witnessed a steady climb, growing from 198,616 units in FY19 to 303,817 currently, representing a 53 per cent increase.

However, not all green fuels have enjoyed the same success.Liquefied petroleum gas (LPG) saw a surprising decline, with sales falling from 103,950 units in FY19 to 25,442 currently. This is due to increased competition from CNG and electric options.

Industry experts say that the rise in electric three-wheeler (e3W) sales is fuelled by the government’s push for electric mobility and the rising cost of diesel and petrol. The national capital doesn’t allow any public transport to run on diesel. Many other states are following suit by shifting to CNG or electric.

However, there is a flip side to the rise of e3Ws. A majority of them — around 70 per cent according to industry estimates — runs on lead-acid and not lithium-ion batteries.

4.Roche launches multiple sclerosis drug Ocrevus in India

The company said Ocrevus is the first disease-modifying therapy (DMT) for both relapsing multiple sclerosis (RRMS) and primary progressive multiple sclerosis (PPMS) and targets 150,000-200,000 patients diagnosed with multiple sclerosis in India.

The drug is being launched in India after almost seven years of it being approved by the US Food and Drug Administration (FDA) for global use. 

The company declined to reveal the price details of the drug. However, according to industry experts, Ocrevus will be available in India for around ₹3 lakh per dose.The current list price of the drug for the US market is $75,102 annually which may vary based on the insurance coverage of an individual.

5.Adani answers Modi’s call to arms, reported Financial Times

India’s arms industry passed a milestone in January with the unveiling of the country’s first intelligence, surveillance and reconnaissance drone, which was made by the defence arm of the Adani conglomerate in a joint venture with Israeli military producer Elbit. 

The Drishti-10 Starliner is named after the Hindi word for “vision”, and India has a lot to keep its eye on — its land and maritime borders with 11 nations stretch many thousands of kilometres and include a disputed frontier with arch-rival China over which the Asian giants have repeatedly clashed. But India remains the world’s biggest arms importer, forced to shop overseas even for basic equipment such as assault rifles — something New Delhi is pushing the private sector to help address after decades in which state-run groups have struggled to build a world-class defence industry.

“Adani’s move into defence is not something unique or specific to them but part of a broader attempt by the government to lure companies in,” said Walter Ladwig, a senior lecturer in international relations at King's College London.  Over the past 10 years private conglomerates including Tata, Bharat Forge, Reliance and now Adani have heeded calls by the government of Narendra Modi for more “indigenisation” of arms production, often in partnership with foreign companies that New Delhi has been pressing to invest.

The Drishti-10, which is initially being supplied to India’s navy and army, is built at the Adani Aerospace Park in Hyderabad. With a carrying capacity of 450kg and able to stay airborne for 36 hours, the unmanned aerial vehicle is based on the architecture of Elbit’s Hermes 900 drone with additional capabilities as required by its Indian customers. 

Adani’s UAV programme is among the highest-profile elements of a push into defence launched in 2018 by the group founded and led by India’s richest man Gautam Adani. His conglomerate is also among those that New Delhi has been prodding more broadly to “Make in India” as part of a drive to create business and jobs in its underperforming manufacturing sector and to boost exports.

Another of the company’s factories, in the state of Madhya Pradesh, is building small arms for the Indian armed forces, reported by local media to include light machine guns, assault rifles and pistols.

6.Hungary approved Sweden’s NATO bid

After more than a year and a half of stalling, Hungary’s Parliament voted yesterday to approve Sweden as a new member of NATO. The move allows Sweden to clear the final hurdle that had blocked its membership. It comes at a critical time for the alliance, which has been trying to isolate Russia over its war in Ukraine.

The parliamentary vote followed a decision by Sweden to provide Hungary with four Swedish-made Gripen fighter jets and a promise that Saab, which manufactures the warplanes, would open an A.I. research center in Hungary. 

Hungary’s prime minister, Viktor Orban, who has maintained cordial relations with President Vladimir Putin, has a long record of using Hungary’s veto power over key decisions in Europe to try to extract money or rewards.

The long, drawn-out process to get to this point is likely to leave a bitter aftertaste, and will not quickly change Orban’s reputation as a troublemaker more interested in cozying up to Putin than in supporting the alliance.

After Putin invaded Ukraine, both Finland and Sweden rapidly applied to join NATO. Finland was admitted to the alliance last April, but the strategic defeat that move dealt to Putin had been undermined by the delays in approving Sweden.

7.BYD has an electric supercar to rival Ferrari

The world’s leading EV maker, BYD, is taking aim at exotic car manufacturers like Ferrari and Lamborghini with the new Yangwang U9. BYD officially launched the Yangwang U9 electric supercar with a 0 to 62 mph (0-100 km/h) sprint in 2.36 seconds and a $233,400 (1,680,000 yuan) price tag.

After launching its cheapest electric models (starting under $14,000), declaring a price war with gas-powered cars, BYD is taking aim at a new market.

BYD launched the Yangwang ultra-luxury brand last January, showcasing the off-road U8 and U9 electric supercar. In December, the brand began deliveries of its first vehicle, the U8 off-road SUV, with starting prices over $150,000 (1,089,000 yuan).

The luxury SUV has generated hype as a Mercedes G-Class and Land Rover Defender rival with 1,200 hp and premium features like tank turns and tire blowout stabilization.

8.A new answer to the biggest climate conundrum: Electrification of industry; The Economist

One of the more robust reasons for hope about the future of the climate comes from two simple facts and a delightful kicker. The facts are that electricity is a wonderfully versatile way of powering all sorts of things, and that lots of technologies can now generate it without emitting greenhouse gases. The kicker is that one of these technologies, solar power, is both very cheap and getting cheaper.

This suggests a simple strategy. Make the grid emissions-free and do everything you can with electricity. The obstacles to the first part of this nostrum—which include restricted access to capital in poor countries, constrained grid capacity and a lack of storage to offset fluctuating supply—are no less daunting for their familiarity. But they are increasingly the target of policy and investment. Last year, for example, the world spent more on new stationary electricity-storage capacity than it did on constructing nuclear-power stations.

To get the most out of all these efforts, though, electricity needs to become even more versatile. One of the key challenges is providing heat to industry. If you want to dry, cure, melt, smelt, set, distil, reform or otherwise change the state of something, as industrial processing so often does, heat tends to be involved. In 2016 providing such “process heat” produced almost seven gigatonnes of carbon-dioxide emissions, roughly 20% of all those from fossil fuels.

The fact that electricity does not have much of a record of providing heat has led to the idea that these emissions are “hard to abate”. This is taken to mean that sorting them out needs new kinds of infrastructure. Carbon dioxide produced at the plant where the fuel is burned could be pumped into an underground repository, a process called carbon capture and storage (ccs); natural gas could be replaced by hydrogen. In the meantime, natural gas would continue to be used as a “bridge fuel” to a future both greener but also, alas, far off.

This presumption is now coming under attack. Innovative entrepreneurs and imaginative incumbents are finding ways to turn electricity into useful forms of heat, from scaled-up heat pumps of the sort used in some houses to space-age containers filled with white-hot molten tin and graphite plumbing.

These technologies offer advantages in and of themselves. Heat from renewable or nuclear sources is safe from volatile fossil-fuel prices. In general, heat pumps are a lot more energy-efficient than combustion. Systems that store heat for later use, sometimes called “thermal batteries”, can be charged up when electricity is cheap, which is good both for owners and grid operators who increasingly want demand that can be managed.

The biggest advantage, though, is that when industries use clean electricity they slash their carbon-dioxide emissions. If the world is to keep global warming well below 2°C, as it very much should, that sort of slashing is mandatory.

Unfortunately, this advantage reaches a company’s balance-sheet only when industries come under some sort of carbon-pricing scheme. Such schemes have tended to concentrate on electricity generation. One reason for this is that, unlike electricity-generating companies, industrial producers compete in global markets. If their goods carry a charge for the carbon emitted in making them, these producers will be at a disadvantage to their untaxed competitors.

The obvious solution is a system of tariffs that level the playing-field: what is called a carbon border-adjustment mechanism. Such measures risk being captured by incumbents and becoming a channel for protectionism. But that risk is worth taking. If carbon prices are to cover more of the global economy, sorting out these trade effects will become necessary. In addition, well-designed adjustment mechanisms provide an incentive for industries outside the pricing system to decarbonise.

Pricing carbon emissions from industrial heat would help a phalanx of innovative technologies whose benefits to society are currently unrewarded. It would be bad news for the natural-gas suppliers that dominate the provision of heat. The effect on decarbonisation by way of ccs, either at the plants where heat is used or at the facilities which turn natural gas and steam into hydrogen, is harder to predict.

Progress on ccs has been uninspiring, to put it mildly. Widely discussed for decades it is still, in operational terms, a rarity. It has not seen the sort of innovative ferment that electrification is exhibiting. Many climate advocates see it as an excuse for inaction that locks in fossil fuels as the default option.

ccs may, for all that, have a vital role to play, and sincere proponents of its potential should welcome the spur to innovation that increased uptake of electrical options will provide. It seems highly likely that some applications and some forms of industrial cluster will be best served by ccs or hydrogen. Competition is the best way to find out which. ■