 "Anil Agarwal, Vedanta")
We had an easy day in the Business Standard newsroom on Thursday. We did not have to spend any time deciding which story to lead with on the front page. Governor Das did that for us. It was such as shoo-in that Shailesh Dobhal, this newspaper’s editor, gave us the lead headline in the early afternoon itself. Weekend Bites feels no compunction in appropriating it as the headline of the Story of the Week.
Tuck in!
Story of the week: A pause, not pivot
The stage was set for another increase in the repo rate — the rate of interest at which commercial banks in India borrow money from the Reserve Bank of India. Most market participants were braced for it. Consumer price inflation remains above 6%, the upper end of the Reserve Bank of India’s tolerance range. Eight out of 10 respondents in a Business Standard poll expected the rate to rise by another 25 basis points (a basis point is a hundredth of a percentage point).
But the RBI’s Monetary Policy Committee, in its first meeting of the new financial year, decided to keep the policy rate unchanged. Benchmark indices of the stock markets, the Sensex and Nifty, rose for a fifth consecutive day in response to the pause. Realty and auto firms welcomed it. Bond yields softened.
Does this pause mark the RBI’s decoupling from central banks in other countries that continue to raise rates? Perhaps not.
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Shaktikanta Das, the RBI governor, started the post-policy media interaction by saying: “It’s a pause, not a pivot.” The job is not done, he said.
The finance minister said it was a good call. Tamal Bandyopadhyay said it was a hawkish pause Soumya Kanti Ghosh called it a prudent comma. Our Edit said the policy action and the accompanying statement raise several questions about the future course.
In other news…
The World Bank and the Asian Development Bank cut their economic growth forecasts for India for the current financial year ending in March 2024 citing global as well as domestic risks.
The Kalyani family, usually discreet, is locked in a court battle over a 1993 pact. The Pune-based family, which owns Bharat Forge, is caught in a court battle. Sugandha, sister to the 74-year-old family patriarch, Baba Kalyani, and her husband, Jaidev Hiremath, are seeking control of the chemical firm, Hikal. The Kalyani and Hiremath families own 34% each of Hikal and the former says there is a 30-year old agreement under which the Kalyanis must sell their holding to the Hiremaths.
Finland joined the Nato military alliance, doubling the length of the border Nato shares with Russia and drawing a threat of countermeasures from Moscow. Out Edit called it a snub for Putin and a risk for Europe. Finland is an escape route for young Russians fleeing military conscription.
Tech that: Word from the world of technology and start-ups
Indian dating apps are swiping right for Bharat. Small town India looks for long-term friendships, not an evening out or a one-night stand, has users of an older age-profile, and does not mind paying for subscription. Made-in-India dating apps are leveraging this uniqueness.
Twitter owner Elon Musk booted out the social media platform’s iconic blue bird and replaced it with the image of a Shiba Inu, the logo of the niche cryptocurrency, Dogecoin.
Watch it: From our hot audio-visual serving
The usually smooth curd ran into a bit of friction when it found itself at the centre of a Hindi versus regional languages debate. The Food Safety and Standards Authority of India said the Hindi word, dahi, should be used on the labels selling curd along with the local name, but the matter quickly turned sour. Dive deep into it with The Morning Show.
What is Suveen obsessing over these days?
Shortly before noon on March 22, Anil Agarwal tweeted a picture of himself holding a steel plate laden with a dozen littis, the baked or fried ball of atta filled with sattu that has become a fashionable snack in the national capital. The chairman of Vedanta Resources Ltd is unshaven in the picture but has a grin of contentment that usually comes with a plateful of home food.
On the business front, though, Agarwal seems to have bitten off more than he can chew. The biggest bone of contention right now is Hindustan Zinc Ltd’s proposal to buy Vedanta Ltd’s global zinc assets for nearly $3 billion. Vedanta holds 65% equity in HZL, a company it bagged during the Vajpayee government’s disinvestment drive. The government, which continues to hold about 29.5%, reportedly finds the deal unpalatable.
If this proposal finally gets nixed, it will be the second big idea by Agrawal to get scuttled. A year ago, he had planned to merge the debt-laden Vedanta Resources with the cash-rich Vedanta Ltd but could not pull it off.
Vedanta Resources, controlled by Agrawal’s family, owns 70% of BSE-listed Vedanta Ltd, whose board approved a fifth interim dividend for 2022/23 on March 28. With this the company’s total dividend payout for the year touched Rs. 37,730 crore, its highest in a year. Vedanta Resources intends to use the dividend proceeds to repay debt worth $11.8 billion. HZL is paying a record dividend of Rs. 32,000 crore this year.
What do so many zeroes add up to?
This is a time when highly leveraged conglomerates are in the spotlight, thanks to a report by a short-seller that has had everyone aflutter for weeks and led to the shrinking of a business empire that had made rapid strides in the last eight years or so.
To be fair to Agrawal, his debt pile, which he has managed to reduce a bit, is only about a third of the group mentioned above. And there are those who believe Agrawal will be able to meet his obligations. But refinance risks prompted Moody’s to downgrade VRL’s rating in March.
The zinc deal could have been the answer to Agrawal’s prayers. HZL, which has a pile of cash, was to buy THL Zinc Ltd, Mauritius from Vedanta Ltd in a cash deal worth $2.98 billion. But the government won’t play ball. And it will take more than a plate of litti-chokha to make it happen.
Have a fun weekend and a productive week ahead. This is Suveen signing off. See you next Saturday. Please send comments, news, or views about anything — pause, pivot, or littis — to suveen.sinha@bsmail.in.
