Daily Pulse India: Crackdown On ‘Dal Hoarders,’ Amtek's All Starry Eyed, Meru’s International Foray

The uncomfortable rise in prices of cereals bang in the middle of the crucial Bihar elections has prompted the government to crack the whip. Finally. State governments carried out a series of raids on trader warehouses and seized 5,800 tonnes of grains and declared limits on trader holdings. In Bihar, the rising prices provided a good opportunity for the candidates to point fingers at each other. Hopefully, the raids combined with the imports of cereal by the MMTC will bring prices down soon. At the moment, they have doubled from a year ago, even taking festival demand into account.

 ***

Meru Cabs has gone international with a tie up with France’s Taxi G7. Customers of both companies can use each other apps to hail cabs. With Uber’s international reach and Ola’s links with Didi Kuadi, the pressure was on Meru to go overseas as well. It’s one of India’s oldest cab hailing companies but has taken a decidedly more conservative approach, which may have cost it market share, especially with Ola’s aggressive approach with its Softbank funding and Uber’s $1 billion investment in India.

 ***

A three-way merger is apparently in the works in the telecom industry, according to one newspaper report quoting one source. Reliance Communications, Sistema and Aircel are in talks to merge, but the high debt burden on RCom and Aircel may be a roadblock. Both companies are in the process of hiving off assets to cut debt and if it succeeds, we’re looking at India’s third-biggest telecom operator after Airtel and Idea Cellular. To be sure, consolidation is long overdue in the telecom industry, as the astronomical spectrum costs in the last auction have broken the backs of the smaller players, while the deep-pocketed large players are still left with appetite for more bandwidth. This is surely the first of the many moves that we will see in this fast growing business.

*** 

Speaking of telecom companies, Airtel is selling its telecom towers in Africa, as it scales down its international business and turns the focus homewards. It has raised another $400 million from the sales, taking its total proceeds from the Africa sales to $1.7 billion. For the existing Africa business, the company plans to lease some of the towers back, keeping costs low. Meanwhile, that’s $1.7 billion more that Airtel has in its pockets to pour into the India business.

*** 

And while on the topic, the call drops penalty will bring down operating profits of the companies by as much as 5 percent, according to a BofA-ML report.

 ***

The tax department is working on a transfer pricing tax model to reduce disputes that are making headlines and putting off wary investors. High profile tax disputes, for a variety of matters, such as those with Vodafone, Cairn and Shell have been making headlines globally, and the government is keen to put an end to those.

 ***

HCL Tech has bought the external IT businesses of Swedish vehicle maker Volvo for $138 million and the auto major will outsource its IT infrastructure operations to the India IT company for five years.

 ***

Amtek Auto has gone all starry-eyed and the banks and mutual funds are not amused. The debt-ridden auto parts company has repaid Bollywood stars and other influential people, leaving the banks and funds, which hold most of the debt, in the lurch. It defaulted on its bond payments last month and JPMorgan was forced to limit redemptions on its bond plans, as the expected repayment didn’t come through. After a crisis like that, when the little money that is coming out of the company goes to stars and directors, one can imagine the ire in the boardrooms.

***

Cover Image: Higher food prices hit home. Opposition Congress party workers stage protests with cooking vessels in Mumbai on Tuesday.

Other Interesting Reads From 

“And I thought my job was hard,” says Flipkart CPO Punit Soni after a day of being the “delivery boy” Here’s his story.

 Why I think it’s the right time for women in India to startup by Upasana Taku

Breaking down the changesin the Indian banking industry with Naval Dulloo.

Every morning, we'll share the top news from India that professionals need to know. Click on the follow button above to not miss one.

• Follow the India in Business channel here.
• Follow the Daily Digest channel here for the global Daily Pulse, published twice a day. Or catch up here:
  
  
• For more news, download the Pulse app. And for even more, follow us on Twitter and Facebook.