Is The Adani Bubble Over?

Is The Adani Bubble Over?

After a steep rise in stock prices of Adani’s companies in the last year, the news of alleged manipulation in the stock prices by 3 FPIs resulted in a loss of ~₹50,000 crores of wealth of Gautam Adani. The shares have also fallen drastically in the first half of trading. Let’s understand what happened.

Crux of the Matter

In News
National Securities Depository Ltd. (NSDL) froze accounts of 3 Foreign Portfolio Investments (FPI) that together hold ~₹45,000 cr worth of shares of 4 Adani firms. FPI accounts of Albula Investment Fund, Cresta Fund and APMS Investment Fund were frozen on or before 31st May, 2021.

Officials claim that the disclosures made by these funds were insufficient. All 3 of them are based out of Mauritius at the same address in Port Louis.

FPI Funds Consolidated In Adani Group

SEBI, in a separate probe, is investigating whether share prices of companies of Adani group were manipulated.

Share Prices
All 6 stocks of Adani Group of companies hit lower circuit in the initial hours of trading on 14th June.

As per Forbes real time billionaires list, ~55,000 crore of Gautam Adani’s wealth was erased as of 10 AM 14th June.

Curiopedia
  • National Securities Depository Limited (NSDL) was founded 24 years ago on August 8, 1996. Based in Mumbai, it is the central securities depository and falls under the jurisdiction of the Ministry of Finance, Government of India.

Meet China’s Uber: Didi Chuxing

Meet China's Uber: Didi Chuxing

China’s leading ride hailing startup Didi Chuxing is looking to go public in US markets by July 2021. In this light, we will be diving into this unicorn’s China market, its shareholding pattern and compare some key statistics with Uber. Spoiler Alert: Uber China gave up its business to Didi back in 2016, owing to major revenue losses! Read the story to know more about this growing giant.

Crux of the Matter

In News
On 10th June, Didi Chuxing filed an IPO with the US stock exchange. By raising $10 billion, the listing is estimated to take the firm’s valuation to ~$100 billion. It will go for public offering by July 2021.

Background
It was founded by Wei Chang (CEO) and Bo Zhang (CTO) in 2012, in Beijing. Major offfering includes mobile platform for application based transportation services. It received a total funding of $23.2 billion.

Shareholding Pattern

Growth Via Acquisitions

  • 2015: Kuaidi Dache
    Kuaidi Dache claimed up to 45% of ride hailing market share in China. The newly merged entity is valued at $6 billion.
  • 2016: Uber China (UC)
    Post the acquisition, UC held a minority stake in Didi. In return, Didi invested $1 billion in Uber.
  • 2017: 19 Pay
    It acquired this third party online payment platform for $45.4 million.
  • 2018: 99
    Didi acquired control in Brazil’s major ride sharing firm for $1 billion.
  • 2018: Bluegogo
    It partly acquired assets of the Chinese bike sharing company for an undisclosed amount.

DiDi V/S Uber

Operational Map

Curiopedia
  • Ola, an Indian ride-sharing company, was founded by Bhavish Aggarwal and Ankit Bhati on 3 December 2010. For the financial year of 2019, the company generated a revenue of ₹2,544 crores.
  • Based in San Francisco, California, Lyft, the vehicle hiring and motorcycle sharing app was founded in June 2012 by Logan Green and John Zimmer. It operates in 644 cities in the United States and 12 cities in Canada.

How Are Global Nations Trying To Control Big Tech?

How Are Global Nations Trying To Control Big Tech?

The G7 nations recently met to address tax avoidance by big tech companies. Tech companies have been using ‘Tax Havens’ for many years to reduce their federal tax liability. Let’s have a look at how G7 decided to crackdown on tech companies and other MNCs doing tax avoidance.

Crux of the Matter

What is The G7?
Group of Seven is an informal group of world’s 7 largest developed democracies. The objective is to address issues regarding world economy. G7 includes United Kingdom, United States, France, Canada, Germany, Italy, and Japan.

G7 Summit 2021
G7 made a “historic” deal for taxing multinational companies. This deal was made to prevent tax avoidance by making MNCs pay tax in the country they operate. Countries will now charge 15% minimum corporate tax rate on the MNCs.

How Tech Giants Are Taxed?
They are taxed based on where they are headquartered. The international tax system, since pre-digital era, focused on labour, production and capital. In case of tech companies, no physical product is produced and thus identification of where economic activity is taking place is difficult.

Tax Havens
It is a place where tax rates are low. Tech companies set-up shell companies in such countries and channel their profits through them. Countries lose around $427 billion every year due to tax evasion (2019) whereas India lost around $10 billion due to similar evasion (2019).

Problems With The Proposal
Some countries rely on low taxation rates to attract foreign investments. Global minimum taxation rate will take away the tool which these developing countries have. This will slow down the economic growth of such countries.

Impact On India
It won’t affect the MNCs doing business in India as India’s effective corporate taxation rate is higher than the global minimum tax rate. India attracts foreign investment through cheap labour rates and large internal market instead of lower taxation rates.

War In India – Google Tax
Tech giants can avoid paying 6% ‘Google tax’ in India if they set-up an Indian unit. The new IT rules also compel tech companies to set up Indian units for grievance redressal. However, if they set up Indian unit to avoid Google tax or for grievance redressal, they will be taxed at a higher rate of 40%.

Curiopedia
  • Originally called BRIC, the name was an acronym of the countries Brazil, Russia, India and China. The term was coined by economist Jim O’ Neill in 2001. South Africa joined the organization in 2010 officially and the acronym since then is BRICS.

Thanks To NPCI 24X7, Your Salaries Can Now Be Credited Even On Sundays!

Thanks To NPCI 24X7, Your Salaries Can Now Be Credited Even On Sundays!

RBI announced that from 1st August, NPCI operated NACH payment system will be enabled to make transfer 24×7. Hence, soon payments and settlement systems will be functioning for 365 days a year, barring zero exceptions. Let’s see how that would function.

Crux of the Matter

NPCI 24X7
India’s payment settlement system National Automated Clearing House (NACH), operated by NPCI, will now be available for 365 days a year.

Real Time Gross Settlement (RTGS) facility will now be functional on bank holidays as well. NACH is primarily used to make one-to-many payment transfers like salary, dividends, pension, etc.

Nations Which Avail Such Services
Few nations in the world, such as the UK, Sweden, Australia, Hong Kong, SA, South Korea, Singapore, and China avail such round the clock payment transfer services.

Curiopedia
  • Founded in 2008, NPCI is currently governed by the Reserve bank of India and the ministry of finance. It has Dilip Asbe (IAS) as its MD and CEO. NPCI governs systems like RuPay and Aadhar enabled Payment system.

Adani Is India’s Growing Port & Airport Tycoon

Adani Is India's Growing Port & Airport Tycoon

With an addition of $43bn in 2021 alone, Gautam Adani recently became the second richest person of Asia. The shares of the group companies have risen between 200 – 1100%! This prolific growth occurred due to Adani’s two of the most popular business arms: Airports and Ports. Read the story to know more.

Crux of the Matter

Airports
As of May 2021, Adani Airports Holdings Limited (AAHL) became India’s largest airport company accounting to 10% of air passenger traffic. The customer base reached 200 million with 80 million being passenger and 120 million being non passenger. AAHL will soon be launching an IPO at a valuation worth $3.5 -4 billion.

In February 21, AAHL acquired 23.5% stake for ₹ 1,685.2 cr. from ACSA and Bidvest to own 74% stake in Mumbai International Airport Limited (MIAL). The comapny also won the rights to develop the Navi Mumbai airport.

Adani Ports
It is India’s largest private port operator and grew via acquisition strategy. The company acquired 3 major ports in last 8 months for consolidated value of ₹18,000 cr. The ports are: Krishnapatnam Port, Dighi Port, and Gangavaram Port.

Statistics

Curiopedia
  1. Owned by Adani Wilmar Limited(AWL), Fortune is India’s largest edible oil brand. Other brands under AWL are Fryola, King’s, Avsar.
  2. Adani Power is India’s largest private sector power producer. While India’s largest power producer is NTPC Limited.