Tata Motors to turn passenger vehicles unit into a subsidiary

Assets to be transferred; central functions to remain at TML

The board of Tata Motors Ltd. (TML) has given in-principle approval to turn the company’s Passenger Vehicle (PV) business (including electric vehicles) into a subsidiary by transferring relevant assets, intellectual property rights and employees directly related to the PV business, for it to be fully functional on a standalone basis through a slump sale.

However, certain shared services and central functions will be retained at TML to deliver cost efficiencies for the entire group.

The proposed transfer shall be implemented through a scheme of arrangement, which will be tabled for approval to the TML Board over the next few weeks.

One-year timeline

Implementation of the scheme will be subject to regulatory and statutory approvals as applicable, including approval of shareholders and creditors. “We expect the transfer process to be completed in the next one year,” TML said in a statement.

“The PV business landscape is seeing rapid transformation in the form of tightening emission norms, push towards electrification, enhanced disruptions from autonomous and connected technologies,” it said.

“Additionally, India continues to remain an attractive market for global OEMs, while the aspiration levels of the Indian consumer continue to rise requiring stepped up investments in contemporary products in a competitive market,” it added.

Over the last few years, the PV business has implemented a turnaround and launched a slew of products like Tiago, Tigor, Nexon, Hexa, Harrier, Altroz and Nexon EV.

The company said the move towards subsidiarisation of the PV business is the first step in securing mutually beneficial strategic alliances that provide access to products, architectures, powertrains, new-age technologies and capital.

Along with this move, TML has announced the appointment of Shailesh Chandra, president, EV and Corporate Strategy, as president, PV business, including EVs, with effect from April 1, 2020.

He will be assuming responsibility for the PV business from Mayank Pareek who will be superannuating from Tata Motors at the end of February 2021.

“Mr. Chandra’s appointment at the start of the new financial year gives him the opportunity to shape the organisation as we ready to operate as a subsidiary once the necessary approvals are in place,” the statement added. TML shares closed with a loss of 0.21% at ₹70.65 on the BSE.

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As petro demand declines, IOC cuts refinery throughput

Firm to raise LPG output; no need for panic-booking, it says

India’s largest fuel retailer Indian Oil Corporation (IOC) has cut down the throughput from its refineries across the country by almost 30% as the demand for petroleum products such as petrol, diesel, aviation turbine fuel (ATF), fuel oil and bitumen, has reduced substantially following the outbreak of COVID-19 in the country.

“Keeping this (falling demand) in view, Indian Oil has regulated crude oil throughput at most of its refineries by 25% to 30%,” said IOC in a statement.

“Offtake of finished products from refiners in the last one week has helped upcountry bulk storage locations of the Corporation build up their stocks for future-readiness once the countrywide lockdown is lifted and the demand picks up again.

“The Corporation is keeping a close watch on global cues and the changing market scenario and initiating action accordingly, IOC said.

In the midst of a reduction in demand for major petroleum products, there has been an increase in demand for LPG cooking gas.

Optimising operations

“To meet the rising demand for LPG, Indian Oil is taking steps to increase LPG production at its major refineries by optimising operations, improving LPG yield in LPG-producing units like FCC/Indmax, etc. Bottling plant operations and LPG refill deliveries are being streamlined accordingly,” said IOC, adding adequate stocks were available and there was no need for panic-booking by customers.

In these trying times, Indian Oil also said it was committed to ensuring emergency fuelling across all permitted modes.

The Corporation’s bulk storage installations, LPG bottling plants, fuel stations and LPG distributorships have been advised to operate under the advisory of their respective State governments/local administrations to maintain essential services in their geographies. The fuel stations are operating with skeletal staff to ensure personal hygiene and social distancing norms.

The Corporation has taken several precautionary measures with special emphasis on the health and safety of its employees, service-providers, contract work-force, petrol pump dealers and customer attendants, LPG distributors and delivery boys, etc.

A high-level committee has been formed to deal with all matters related to COVID-19, which has streamlined the working at the Corporation’s non-critical locations with work-from-home norms to ensure proper social distancing norms. However, adequate work-force is being deployed at critical refining, supply & distribution locations, with all health, hygiene and safety measures in place. Manning has also been rationalised in round-the-clock shift operations, fire and safety, medical and other essential services.

In the wake of the countrywide lockdown, the Corporation is addressing several issues related to movement and turnaround time of POL tank-trucks; restricted mobility and attendance of work-force at LPG distributorships and fuel stations; and restricted business hours of fuel stations at a few places.

Despite the many constraints, Indian Oil remains committed to ensuring fuel availability for its customers and emergency services while taking all the necessary precautionary measures.

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Coronavirus | Air India to incur ₹30-35 crore loss per day following suspension of operations

Air India’s total earnings per day are around ₹60-65 crore and 90% of this comes from passenger revenue.

Flag carrier Air India is expected to incur losses to the tune of ₹30-35 crore per day following the suspension of operations in the wake of coronavirus pandemic, according to a source.

With stringent border controls across the countries to restrict movement of people, many countries have barred international flights in their territory amid COVID-19. India has also announced a temporary ban on flying.

“We will not be operating a single commercial flight along with other domestic carriers as per the government’s order, yet our daily losses will still be in the range of ₹30-35 crore.

“Though there will not be ceratin costs such as fuel, ground handling, airport fee during the suspension of oprations, we still will have to make payments towards salaries and allowances, lease rentals, mimimum maintenance, besides the interest payment, among others,” the source told PTI.

Air India’s total earnings per day are around ₹60-65 crore and 90% of this comes from passenger revenue, he said adding, “the expenses too are in the same range. So we are earnings before interest, taxes, depreciation, and amortization (EBITDA) positive or in a way meeting our all expenses.”

Air India’s salary bill stands at around ₹250 crore per month while the aircraft lease rentals outgo is around $30 million per month as per the source.

The airline has 21 Boeing B787-800s on lease in addition to 27 Airbus A320Neo planes. The lease rental for each Boeing 787 is $1 million per months and $400 per month for an A20Neo, as per the source.

Besides, the airline has to make as much as ₹225 crore per months towards interest on borrowings among others.

Watch | Govt selling 100% stake in Air India

 

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Amended: BT In Talks To Sell French Domestic Operations To Computacenter; Stock Up

(Amended the story to say BT will retain a strong presence in France)

Shares of BT Group plc (BT_A.L,BT) and Computacenter plc (CCC.L) were gaining Tuesday morning in London after the companies announced Tuesday that they have entered exclusive negotiations for the sale of BT’s domestic operations in France to Computacenter.

The transaction is subject to consultations with works councils over a minimum period of two months. The deal will then be subject to regulatory approval, with completion expected to take place by the end of 2020.

BT’s domestic operations in France include management and maintenance of IT and network infrastructure, as well as networking and related professional services. In the year ended in March 2019, the business generated total revenue of about 104 million pounds.

BT said the planned divestment is part of its ongoing transformation of its Global unit, while Computacenter expects the acquisition would strengthen its existing business in France.

BT Group added, “BT would retain a strong presence in France serving multinational businesses and organisations, including access points to its global network and a cyber security operations centre.”

BT and Computacenter also intend to enter into a partnership agreement in France, ensuring continuity for existing customers and future growth opportunities.

Tuesday morning, in London, BT shares were trading at 123.58 pence, up 4.92 percent, and Computacenter shares were trading at 1,111 pence, up 4.61 percent.

BT shares closed Tuesday’s trading up 12.8 percent at 132.82 pence, and Computacenter ended the trading 9.7 percent higher at 1,165 pence.

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Curaleaf Gets Essential Services Designation; To Buy Three Dispensaries

Curaleaf Holdings Inc. said it has received an ‘Essential Services Designation’ in key markets, allowing its medical dispensaries to remain open during the COVID-19 outbreak. The Massachusetts-based cannabis company added that it will hire across its retail, cultivation and processing facilities.

In addition, Curaleaf said it will acquire three Arrow Alternative Care or AAC dispensaries in the state of Connecticut, and reported a wider net loss for the fourth quarter.

Curaleaf noted that following receipt of the essential services designation, its dispensaries will remain open in Arizona, Florida, Maine, Maryland, Massachusetts (medical only), Nevada (delivery only), New Jersey, New York and Oregon.

The company has adjusted its dispensary schedule to accommodate increased demand and prioritize vulnerable customers, including dedicated hours for seniors.

It is also enforcing social distancing, increasing sanitation and hygiene measures, and using technology to minimize contact as well as increase safety by working to employ curbside delivery, mobile pre-ordering, express pickup and a waitlist ordering app.

Further, Curaleaf said it will acquire three Arrow Alternative Care or AAC dispensaries in the state of Connecticut.

AAC operates three out of the eighteen total cannabis dispensary stores currently operational in Connecticut. AAC’s first store opened in Hartford in 2014, while the Milford store opened in 2017 and the Stamford store opened in January 2020.

Curaleaf is one of the four licensed growers in Connecticut and currently operates a 60,000 square foot cultivation facility in Simsbury that provides cannabis products to over 40,000 patients throughout the state.

Curaleaf has been cultivating and processing medical cannabis in Connecticut since 2014. The Company currently offers a range of flower, extracted oil and edible products.

The newly acquired AAC dispensaries will sell Curaleaf products along with select cannabis products from other Connecticut producers.

In addition, Curaleaf’s attributable net loss for the fourth quarter widened to $26.56 million or $0.06 per share from $11.20 million or $0.03 per share in the year-ago period, reflecting higher income tax expenses and one-time charges. However, total revenue for the quarter surged to $75.46 million from $31.96 million in the year-ago period.

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COVID-19 lockdown | Flipkart suspends operations

Amazon India to stop shipment of low-priority products

Walmart-owned Flipkart on Wednesday said it was suspending its operations temporarily as India entered into a 21-day lockdown to contain the spread of COVID-19 pandemic.

“Consequent to the order issued on March 24 by the Ministry of Home Affairs announcing a 21-day lockdown across India to contain the spread of the novel coronavirus causing Covid-19, we are temporarily suspending our services,” Flipkart said in a blogpost.

The blog further said “we will be back to serve you as soon as possible.”

On Tuesday, Prime Minister Narendra Modi announced a complete lockdown across the country for 21 days, asserting that social distancing is the only way out for the country in its decisive battle against the coronavirus. More than 500 people have tested positive for coronavirus in India with 12 deaths.

Amazon stops shipment of low-priority products

Amazon India had on Tuesday said it has temporarily stopped taking orders and disabled shipment of low-priority products as it focuses on delivery of essential items like household staples, hygiene and other high-priority products.

Also read: What will be available and what will be closed during the 21-day lockdown

E-commerce players, including Bigbasket and Amazon India, have been facing disruption in delivery of even essential products to their customers.

The government, however, in its notification has allowed delivery of all essential goods including food, pharmaceuticals and medical equipment through e-commerce.

Industry watchers have said there is an urgent need for uniform classification of essential items across various states, and that instructions need to flow down clearly to the last mile, where the delivery agents are facing issues.

Industry experts also flagged challenges around movement of delivery personnel and staff, as well as interstate movement of goods amid lockdown across the country.

Some e-commerce players are also urging the government to expand the scope of essential products beyond food items and medicines to include other products, like cable and routers that may be required for customers who are working from home.

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Murugappa Group firms, Ramco, India Cements down shutters

Companies, banks tweak operations as curbs take effect

To ensure the safety and well-being of staff and stakeholders in the backdrop of COVID-19 scare, several firms in the city have announced the temporary suspension of manufacturing activities while extending ‘work-from-home’ facility.

Murugappa Group firms — Tube Investments of India Ltd. (TII), Cholamandalam Investment and Finance Company Ltd. and Carborundum Universal Ltd. — suspended operations across units to comply with the directives of the Union and the State governments and the local authorities.

“The duration of disruption/suspension of the company’s manufacturing operations is not foreseeable at present and would depend on an improvement in the situation and on further directions to be received from the Central and the respective State Governments and other authorities in this regard, said TII said.

India Cements halted its operations in Tamil Nadu, Andhra Pradesh, Telangana, Rajasthan and Maharashtra. Ramco Cements suspended work at its grinding unit in West Bengal. For other units, Ramco said, it would follow the orders issued by respective State governments.

TTK Healthcare said that the field operations of the company have been fully/partially closed. The company had already moved over to work-from-home policy for all its office employees/field staff, it said.

As an interim measure, Sundaram Clayton suspended its operations at all its manufacturing facilities and offices for two days from Monday. Further steps would be taken after reviewing the situation, it said.

Meanwhile, Indian Bank and Lakshmi Vilas Bank asked customers to use digital medium to do bill payments or fund transfers and avoid coming to branches for now. Indian Bank has also tied-up with hospitals to provide immediate medical facility to its staffers who show any symptoms.

Weekly/daily collections of several microfinance institutions in India are likely to be severely impacted as some States had clamped Section 144 till March 31, sources said.

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Auto firms halt on COVID-19

Jobs and salaries will be protected, the firms say

With many districts under a lockdown across the country amid efforts to stop the spread of COVID-19, automobile and auto component makers are temporarily shutting down their manufacturing plants.

Industry bodies for the sector — Society of Indian Automobile Manufacturers (SIAM) and Auto Component Manufacturers Association of India (ACMA) — have issued statements, requesting members to consider plant shutdown for a limited period so that workers are not exposed to the virus.

Work from home

On Monday, TVS Motor said it would halt all manufacturing operations at its plants in India and Indonesia till further notice. “All relevant employees have already been provided with work-from-home facility,” the company said, assuring it will protect jobs and salaries. Kia Motors also temporarily suspended operations at its Anantpur plant in Andhra Pradesh “in view of the unprecedented situation arising out of the spread of COVID-19 and keeping in mind the safety and well-being of all our consumers, employees, workers, partners, and associates pan India plant.

General Motors, too, has suspended production at its Talegaon facility in Maharashtra till March 31. India Yamaha Motor has suspended operations at its plants in Tamil Nadu, U.P. and Haryana till March 31.

Renault India said it has temporarily suspended production at its alliance manufacturing facility, Renault Nissan Automotive India Private Ltd. (RNAIPL) in Chennai. “The health, safety and well-being of all Renault employees, dealers and other partners, their families and community at large is of utmost priority. In view of the escalating COVID-19 situation and to help prevent spread of the virus, production has been temporarily suspended at our alliance plant We will await further notifications from the State government to resume operations,” said Venkatram Mamillapalle, country CEO & Managing Director, Renault India Operations.

Rockman Industries, the auto-components arm of the Hero Group, has suspended all operations at its seven facilities till March 31. “All Rockman employees, contractual and permanent, will be retained. Rockman has an employee strength of 7,200 spread across their operations, the company said in a statement.

On Sunday, automakers including Maruti Suzuki, Hyundai Motor, Honda Cars, Hero MotoCorp, Fiat Chrysler Automobiles and Honda Motorcycle & Scooter India (HMSI) had announced temporary plant closures.

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Coronavirus | Soap makers reduce prices, increase production

HUL has also ramped up the production of Lifebuoy sanitizers, Lifebuoy Handwash liquid and Domex Floor Cleaners

FMCG players like HUL, Godrej Consumer and Patanjali said they are helping fight the Covid-19 outbreak by reducing the prices of soaps, hygiene products and ramping up production of these items.

Market leader Hindustan Unilever Ltd (HUL) on Friday committed ₹100 crore to help in combating the coronavirus pandemic.

“In the public interest, HUL is reducing the prices of Lifebuoy sanitizers, Lifebuoy Liquid handwash and Domex floor cleaners by 15%. We are commencing production of these reduced-priced products immediately and these will be available in the market in the next few weeks,” HUL said in a statement.

“HUL has also ramped up the production of Lifebuoy sanitizers, Lifebuoy Handwash liquid and Domex Floor Cleaners and is committed to scaling it up even further in the coming weeks,” it added.

HUL will donate 2 crore pieces of Lifebuoy soaps in the next few months to the sections of the society which need it the most.

HUL CMD Sanjiv Mehta said, “in a crisis like this Companies have a big role to play. We are working closely with the Governments and our partners to ensure that we overcome this global health crisis together.”

Haridwar-based Patanjali Ayurved said it has slashed prices of aloe vera and haldi-chandan soap variants by 12.5%.

“In the light of the common man’s problem, Swami Ramdev has decided to reduce the prices… to help the common people battle against the coronavirus,” Patanjali Spokesperson S.K. Tijarawla said.

No raw material price burden

Godrej said it has decided not to pass on raw material price hikes to consumers.

“Pricing in the soaps category has seen significant deflation in 2019. However, in recent months, we have seen a 30& increase in raw material inputs. We were planning for a price increase to partially cover for this spike in input costs.

“However, given the spread of Covid-19, we have decided to hold off this increase, currently. It is our sincere endeavour to ensure that stocks are replenished across all channels so that our consumers can adopt better hygiene practices and stay safe, Godrej Consumer Products CEO (India & SAARC) Sunil Kataria said.

There are reports of panic buying among consumers and several online retailers like Grofers, BigBasket and offline retailers like Walmart and Metro Cash & Carry have witnessed a spike in sales of personal care and hygiene products.

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HDFC sees lower credit card spend

Card metrics for March show slump, says UBS report

Private sector lender HDFC Bank, the largest issuer of credit cards in the country, is witnessing reduced credit card spending in March after a steady January and February.

“Credit card spends remained healthy in January-February 2020 but have reduced in March. [The] management is currently tightening the underwriting standards for the bank,” UBS Securities wrote in a note to its clients after a conference call with the HDFC Bank management.

“People have shifted to online spending; and food delivery and online spending have increased. But in the case of a complete lockdown, the management expects a decline in customer spending,” the report noted.

The spread of COVID-19 is impacting consumer demand with some States contemplating a complete lockdown. The Maharashtra government announced on Friday that all shops, private establishments and offices in Mumbai Metropolitan Region, Pune, Pimpri-Chinchwad and Nagpur will be closed from midnight till March 31, with the exception of banks, essential services and shops selling essential commodities.

The HDFC Bank management has said that the trends in unsecured retail asset quality are stable as 80% of the unsecured loans are to salaried employees.

The bank said the SME portfolio is well diversified — geographically and industry wise — and the bank does not expect significant impact on the asset quality.

“[About] 70-75% of SME loans are secured. The bank also has accounts of promoters and employees that helps the bank in tracking the health of SMEs. The bank has low exposure to airlines. It has limited exposure to restaurants and hospitality business but believes the situation is too early to comment upon,” the report said.

HDFC Bank expects a 50 bps rate cut in the next two quarters. The lender has recently reduced fixed deposit rates but not the savings interest rates.

“The asset-liability committee is likely to take a call on the same. While some States have directed government departments to keep deposits with PSU banks, the recent RBI advisory should offset any impact,” the report said.

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