The First Forum is an initiative that focuses on covering the latest happenings going around in the world in a brief format. This is in lieu with the importance of catching up with these events in this fast-changing world.
In this Forty-Third Edition of The First Forum we would be covering the following:
1. Business
2. Economics
3. Finance

(By Mehak Gupta , Nikunj Gulati and Kanika Meena)

Business

ITC and Nestle can’t claim a monopoly over noodle brands says Madras HC
Ending a seven-year dispute between two FMCG majors overuse of ‘Magic Masala’ and ‘Magical Masala’ as expressions to market their noodles brands, the Madras High Court said they are common English and Indian words and both the companies cannot claim a monopoly over them as these words are laudatory and common to the trade. The order was issued in a dispute filed by ITC alleging that Nestlé India has used the expression ‘Magical Masala’ for its instant noodles brand Maggi in 2013. Read MoreITC had used the expression ‘Magic Masala’ with its noodles brand Sunfeast Yippee! in 2010. The high court also observed that Nestle used the expression magic earlier also and the expression Magic Masala was first adopted by Lays for its potato chips, according to information submitted by Nestle. Nestle argued that both the expressions have been used as a flavour descriptor and therefore are incapable of being protected. Hence, it felt the suit was liable to be dismissed.

RIL a net debt-free firm now will rope in investors in retail biz: Ambani
Reliance Industries (RIL) has turned net debt-free ahead of its March 2021 deadline and will rope in investors in its consumer and retail businesses in the next few quarters, chairman Mukesh Ambani announced. As of March 2020, Reliance had a net debt of Rs 1.61 trillion and the company managed to turn itself net debt-free after raising Rs 1.68 trillion via a 24.7% stake sale in Jio Platforms and its rights issue. Read MoreDuring the past two months Jio Platforms, the company’s digital services subsidiary, has raised Rs 1.15 trillion offering a 24.7% stake to a clutch of global investors including Facebook, marquee private equity firms, and sovereign wealth funds from Saudi Arabia and the UAE. Along with the proposed stake sale in the petro-retail joint venture to BP, the total fundraise will be in excess of Rs 1.75 trillion, the company said.

Drone start-up TechEagle to part ways with Zomato, venture into health care
TechEagle, the drone manufacturer and consultant start-up Zomato acquired in December 2018, has decided to part ways with the food delivery firm and said it will venture into the healthcare sector. It was well thought and a mutual decision to part ways with Zomato says the company. They further said that they were in discussion since December 2019. Read MoreHowever, the Covid-19 crisis accelerated the growth of the healthcare sector and no other time could have been better for TechEagle venturing into contactless medical and essentials delivery via drones which will see hockey stick growth in the near future, as said by Vikram Singh Meena, founder, and CEO of TechEagle.

How RIL became the first Indian company to top Rs 11 trillion in market-cap
Mukesh Ambani-led Reliance Industries has become the first domestic company to top Rs 11 trillion in market capitalization (m-cap). Shares of the oil-to-telecom behemoth soared 6.2% –most in two months—on 19th June as investors cheered the company’s announcement that it has become net-debt free. At a closing price of Rs 1,760, RIL is valued at Rs 11.15 trillion. If one adds the value of partly paid shares of Rs 67,500 crore, the company’s m-cap adds up to almost Rs 11.83 trillion. In dollar terms, Read MoreRIL’s m-cap translates into $155 billion, making it the 54th largest company globally. Shares of RIL have more than doubled from this year’s low of Rs 868 in March underpinned by a stream of investments in its arm Jio Platforms. Also, the successful conclusion of Rs 53,124-crore rights issue—India’s biggest ever—has further buoyed sentiment towards the stock.

HDFC’s board approves raising up to Rs 14,000 cr through various means
Mortgage lender HDFC on Friday said its board has approved to raise up to Rs 14,000 crore in tranches through various means. The funds will be raised through the issuance of equity shares or compulsorily-convertible debentures, non-convertible debentures along with warrants, foreign currency convertible bonds, or any other security, it said. HDFC said the fundraising plan can also be through any other security, whether secured or unsecured or listed or unlisted, or a combination thereof, either through qualified institutional placement and/or any other permissible modes, in one or more tranches. Read MoreThey said funds are being raised to augment the long-term resources of the corporation, to finance organic and/or inorganic business opportunities that may arise in financial services, including housing finance, and/or in areas where its subsidiaries operate, to maintain sufficient liquidity and for general corporate purposes of the corporation.

Economics

Fitch Ratings revise India’s outlook to negative from stable
Fitch lowered the outlook on India’s long-term foreign currency Issuer Default Rating (IDR) to ‘negative’ from ‘stable’ but affirmed the rating at the lowest investment grade of BBB-, citing the risks due to continued acceleration in the number of COVID-19 cases as the country eases lockdown curbs. The moves come after another rating agency Moody’s earlier this month downgraded India’s sovereign rating by a notch to the lowest level for the first time in 22 years. Read MoreIn a statement, Fitch said that the coronavirus pandemic has significantly weakened India’s growth outlook for this year and exposed the challenges associated with a high public debt burden. It expects India’s debt levels to climb to 84.5% of the GDP in the FY21, against 71% in the last fiscal. It also predicted that GDP to contract by 5% in the FY21 due to strict lockdown measures. Structurally, India’s new GDP growth is much weaker due to financial sector risks and lack of reform implementation, Fitch said. 

UK unemployment worse than the Great Depression 
The number of workers on the UK payrolls dived more than 600,000 between March and May, official figures suggest. Experts warned that the UK is on the course for its biggest job crisis in at least a quarter of a century. The people out of work claiming work-related benefits in the UK jumped 23% to 2.8 million last month as the coronavirus crisis forced thousands of businesses to close. Wilson said unemployment is rising faster than during the Great Depression in the 1930s and is set to top 3 million this summer. TRead Morehe statistics agency also said the number of people on payroll fell by 2.1% or 612,000 between March and May. The office for National Statistics said that the so-called claimant count which includes both people who work on reduced income or hours and those who are unemployed was 125.9% higher than in March when the country was under lockdown. Analysts said that it represented the most dramatic worsening of Britain’s labor market for more than 100years, beating the early period of 1930s depression. The figures will put pressure to provide further measures to prevent a rise in unemployment. The UK government is expected to announce a big fiscal stimulus in the coming weeks. 

Developing Asia to ‘barely grow’ in 2020
The Asian Development Bank said countries in developing Asia will ‘barely grow’ in 2020 as containment measures to address the coronavirus pandemic is expected to hamper economic activity and weaken the external demand. The Indian economy is expected to contract by 4% during the current financial year, the ADB said in a supplement report to its Asian Development Outlook (ADO). China, however, is expected to record positive growth of 18% in 2020 sharply down from 6.1% in 2019. Read MoreDeveloping Asia refers to a group of over 40 countries that are members of the ADB.  For the countries, it forecasts the growth of 0.1% in 2020. This is down from the 2.2% forecast in April and would be the slowest growth for the regions since 1961, it said. ADB speculates Asia likely to hit the weakest ever growth rate in the last six decades. 

UK debt is now larger than the size of the whole economy
The UK debt is now worth more than its economy after the government borrowed a record amount in May. The government borrowed $55 billion last month as lockdown caused turmoil and the figure was nine times higher than in May last year and the highest since records began in 1993. Public sector debt is bigger than the whole economy for the first time since 1963. Read MoreDebt exceeds the GDP for the first time since 1963. The total level of debt has risen by £173bn over the last year to reach £1.95tn, or 100.9% of GDP, as ministers introduced unprecedented support for businesses and households during the coronavirus crisis. The chancellor Rishi Sunak said that the figures confirm that coronavirus is having a severe impact on our public finances. The best way to restore our public finances to a more sustainable footing is to safely reopen our economy so people can return to work.

India – China border tension unlikely to impact trade relations in the short term: Experts
According to the Experts ongoing India – China border tensions may not have any immediate impact on bilateral trade relations. However, if the situation aggravates further then it could affect bilateral trade relationships. Apparel Export Promotion Council of India (APEC) Chairman hinted that the trade may take a hit if both the countries would not be able to resolve the issues soon. Other Experts say that putting any kind of trade restrictions on China may have implications for India. Read MoreOur dependence on China is huge for several critical goods and there is no alternative or market for the same. The only solution left is to strengthen domestic manufacturing in critical sectors. Turning a border dispute into a trade war is unlikely to solve the issue. India and China’s trade war will hurt India far more than China. If India and China stop trading then on the face of it China would lose only 3% of its exports and less than 1% of its imports, while India will lose 5% of its exports and 14% of its imports. 

Finance

RBI raises PMC Bank withdrawal limit to Rs 1 lakh
In a relief to the depositors of fraud-hit Punjab and Maharashtra Cooperative (PMC) Bank, the Reserve Bank of India (RBI) enhanced the withdrawal limit to Rs 1 lakh from Rs 50000, while extending the regulatory restriction on the cooperative bank by another six months till December 22. With this 84% of the bank’s depositors would be able to withdraw the entire deposit. Read MoreThe RBI had put a six-month regulatory restriction on the bank on September 23, 2019, after finding out certain financial irregularities, hiding and misreporting of loans given to real estate developer HDIL, which has now been extended. Putting the co-operative bank under its lens, the RBI barred PMC Bank from renewing or granting any loans or making investments without its prior approval. The bank, over Rs 6,500 crore loans to HDIL, turned sour with a shift in the fortunes of the now-bankrupt company.

Bank credit grows 6.24%, deposits rise 11.28%
In the fortnight ended June 5, the bank credit grew 6.24% while the deposits increased by 11.28% to Rs 102.54 lakh crore and Rs 139.55 lakh, respectively, according to the latest data by the Reserve bank of India (RBI). On a fortnightly basis, bank advances grew 0.3% or Rs 32,022.49 crore in the week to June 5 as against Rs 102.22 lakh crore in the week ended May 22, 2020, while the deposits grew 0.9%, or Rs 1.25 lakh crore. Read MoreIn a recent report, Crisil Ratings had said that bank credit growth is likely to nosedive to a multi-decadal low of 0-1% this fiscal as economic activity is sharply impacted by the Covid-19 pandemic. This year the loan growth to service sector decelerated to 11.2% from 16.8% last year, personal loan growth also decelerated to 12.1% from 15.7% in 2019.

Iranian Rial hits lowest value ever against the dollar
Iran’s currency has dropped to its lowest value ever at 190,000 rial for each dollar as the country grapples with U.S. sanctions and low oil prices amid the coronavirus. The Iranian rial has plummeted more than 600% against the dollar since Iran and world powers in 2015 signed a nuclear deal. Before Iran recorded its first case of the coronavirus in mid-February, the rial was trading at around 140,000 against the greenback. Read MoreU.S. President Donald Trump withdrew from the nuclear deal in 2018 and reimposed crushing sanctions that sent the economy into a tailspin and fueled inflation. Due to the US sanctions, Iran’s oil exports fell sharply and the Senior Vice-President Eshaq Jahangiri said that Iran’s oil revenues have plummeted to USD 8 billion from USD 100 billion in 2011.

AIIB approves loan of $750 million to India
The government of India and Beijing-based Asian Infrastructure Investment Bank (AIIB) signed a deal for a $750 million loan to strengthen India’s Covid-19 response. Co-financed by the Asian Development Bank (ADB), the loan will go towards bolstering economic aid for businesses, including for the informal sector, expanding social safety nets for the needy, and strengthening the country’s health care systems. Read MoreThe beneficiaries would be families below the poverty line, farmers, healthcare workers, women, women’s self-help groups, widows, people with disabilities, senior citizens, low wage earners, construction workers and other vulnerable groups. The multilateral lender initially set up its Covid-19 CRF, with a $5 billion investment which was later doubled to $10 billion, to make funds available to its members for urgent economic, financial and public health pressures and quick recovery from the crisis.

PNB trims loss in Q4; asset quality improved
Country’s second largest public sector bank, Punjab National Bank (PNB) has reported fall in its standalone net loss at Rs 697.20 crore in the quarter ended March 2020, compared to Rs 4,749.64 crore of loss in the corresponding quarter of the previous fiscal year. The asset quality of the company has improved as the Gross Non Performing Assets (NPA) was at 14.21% for the quarter ended March’20 versus 15.50%, YoY. Read MoreThe net NPA also reduced to 5.78% as against 7.18% as on December’19 and 6.56% as on March’19. Its provision coverage ratio (PCR) improved to 77.79% from 74.50%, YoY. Domestic deposits of bank increased by 4.9% YoY to Rs 6,86,493 crore and domestic advances increased by 1.1% YoY basis to Rs 4,95,045 crore. Shares of PNB closed at ₹34.50, up 1.77% over the previous day’s close, at National Stock Exchange on Friday.

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