Morning Scan: All the big stories to get you started for the day


India Inc plans to step up its capital expenditure and investment plans

Corporate India is going ahead with major capital expenditure and investment plans in the near future, The Economic Times reported.

Why it’s important: India Inc sitting on healthy cash reserves after the Covid blues.
It is aided by stronger balance sheets.

The main reason for the flush of funds is a mix of factors such as accommodative monetary policy and lower interest rates, reduced corporate tax rates and government incentives such as the PLI scheme, global liquidity and an upward commodities cycle.

Nilesh Shah, MD of Kotak Asset Management Co. says:

“Corporates are sitting on cash as profitability has picked up in the post-pandemic period. They are looking to invest to capture available opportunities of increased government spending, divestment, consumer demand revival and export market.”

Visa, Mastercard plan ‘Buy Now Pay Later’ mode

Visa and Mastercard plan to launch Buy Now, Pay Later (BNPL) platforms in India by the end of FY22, The Economic Times reported.

Why it’s important: The global card network majors are looking for partners to set up platforms.
This will enable retail brands and online merchants to directly tie-up with banks and offer their customers various payment options.
Visa and Mastercard have approached local lenders with the suggestion.
Mastercard announced the launch of a new BNPL platform in the US, the UK, and Australia.
Mastercard thinks BNPL could lead to a 45 percent increase in average sales and a 35 percent reduction in cart abandonment.

Visa has launched BNPL in Canada and Malaysia

Corporates to link investment in social good to CEO pay

Some of the major companies are planning to add environmental, social and governance as a new parameter in the CEO variable pay, The Economic Times reported.

Why it’s important: Such conglomerates are also making it a part of the key result areas for top management.
These follow after a push from investors to allocate capital in companies that not only generate financial returns but are also invested in social good.
The pandemic pushed many boards to talk about ESG issues.

Investors, boards, employees and consumers are also keen on this social change.

Harsh Goenka, chairman of the RPG Group, says:

“A significant amount of the board’s time is today spent on discussing ESG matters. Going ahead, companies’ market cap will be judged on the basis of this, hence making it a key part of the top management performance metrics.”

Google invests $ 75 million in Meesho

Google has invested $ 50-$ 75 million in social commerce startup Meesho, The Economic Times reported.

Why it’s important: Meesho is expected to use the fresh capital to become a consumer-facing e-commerce entity that can compete effectively against dominant players Amazon India and Flipkart.
Google’s investment is part of its strategy in betting big on promising Indian startups such as Dunzo and Glance.
The investment is part of Meesho’s recent financing round and values the company at $ 4.9 billion.
In September, Meesho raised $ 570 million from Fidelity and Eduardo Saverin’s B Capital.

Meesho raised over $ 900 million so far in 2021.

Lion Meadow, EuroPacific among funds to bid for Airtel rights issue

Lion Meadow Investment, Mirae Asset Large Cap Fund, EuroPacific Growth Fund, SBI Life Insurance, LIC, ICICI Prudential MF, SBI MF and Nippon MF are among the big-ticket fund houses that have bid for shares in Bharti Airtel’s near Rs 21,000-crore rights issue that closed Thursday, The Economic Times reported.

Why it’s important: The rights issue has been subscribed by approx. 1.44 times, according to Bharti Airtel’s BSE filing.
Some large global fund houses and private equity players including Blackrock, Vanguard, and HSBC have renounced their rights entitlements and sold off their holdings at a decent premium.

The telco plans to use the issue proceeds to bolster its balance sheet and build a war chest to clear its statutory dues, expand 4G networks, and prepare for an upcoming 5G spectrum auction.

Indian Hotels to buy balance stake in Roots Corp, raise Rs 4,000 crore

Indian Hotels Co. Ltd (IHCL) said it plans to buy the remaining 40 percent stake in Roots Corp. Ltd for Rs 500 crore, Mint reported.

Why it’s important: Roots runs the Ginger brand of economy hotels.
The IHCL board also plans to raise up to Rs 2,000 crore by selling shares to existing investors.
Another Rs 2,000 crore by selling shares to financial institutions.

The money will be used to fund capital expenditure and become a zero-debt company.

GAIL to procure India’s largest hydrogen unit

GAIL (India) is planning to procure a 10-Mw electrolyser, an equipment used to extract hydrogen from water, Business Standard reported.

Why it’s important: A global tender has already been floated. It will be deployed in the next 12 to 14 months in Vijaipur, Madhya Pradesh.
This electrolyser will outmatch the 5 Mw one that NTPC is planning to set up.
GAIL’s 10-Mw electrolyser is expected to generate 4.5 tonnes of green hydrogen in a day.

GAIL is also planning to enter LNG retailing for long-haul vehicles.

Paytm may skip pre-IPO round to fast-track listing

Paytm is mulling to not go ahead with a pre-IPO share sale, Business Standard reported citing its sources.
Why it’s important: The move is to fast track the company’s market debut timeline.
Paytm is going for an IPO at a valuation of $ 20-22 billion.
Paytm plans to raise $ 2.2 billion from its share sale, according to its draft prospectus.A company source says the plan of shelving the pre-IPO fundraise is not related to any valuation differences.