On SII & Its Big Gamble On Covid Vaccine

On SII & Its Big Gamble On Covid Vaccine

The Serum Institute of India (SII) announced mass production of Covid-19 vaccine even before its clearance, taking a chance to ensure speedy delivery of vaccines if they clear the tests. Let us take a look at the history of the firm, with several achievements already in its collection.

Crux of the Matter

Serum Against Covid
The Drugs Controller General of India (DGCI) recently cleared the Serum Institute of India (SII) to conduct Phase II and III trials of Covid-19 vaccine in India, after successfully clearing the Phase-I. The vaccine is named ‘AZD1222’, and is being developed by the Oxford University in tie up with the British-Swedish pharma giant AstraZeneca.

SII CEO Adar Poonawalla had announced to start production as soon as the Phase-I was cleared, and the institute has initiated the production after the recent clearing of Phase-I. The aim to make the vaccine available on a large-scale in a short time is cited as the reason for starting the production before the clearance, and the vaccines would be available to public only after the clearance of all requisite tests.

Poonawalla recently declared that he would be spending $450 million on the mass production of the Oxford-AstraZeneca vaccine.

Serum Testing
Mylabs Discovery Solution and the SII recently launched Covid-19 testing kits that can conduct 32 tests/hr.

History Of The Serum Institute Of India

  • The Serum Institute of India (SII) is the largest vaccine producer in the world, producing over 1.5 billion vaccine doses per year against diseases like Polio, Tetanus, Hepatitis-B, etc.
  • The company was founded in 1966 by Dr. Cyrus Poonawalla, who started with a fund of $12,000 to “diversify” his income from ‘horse-breeding’. The Poonawalla family owns the largest stud farm in India.
  • Currently, Dr. Cyrus is the 165th richest man in the world with a worth of $11.8 billion, and was ranked 19th in the list of the richest Indians (2019).
  • The company started with the production of ‘Tetanus Antitoxin’ in 1967.
  • The SII recorded a revenue of $840 million as of November 2019.
  • The Poonawallahs invested $4.1 billion to open the Poonawalla Biotech Park in Majari, Pune, which is the largest vaccine facility in the world.

Vaccine Empire

  • 65% of children worldwide are estimated to receive at least one vaccine dose produced by the SII.
  • 2010: The SII launched the Nasovac nasal vaccine for H1N1 (Swine flu) virus, which is a single dose vaccine to be sniffed once in each nostril.
  • 2012: The SII acquired Bilthoven Biologicals of Netherlands, and obtained technology to make the IPV (Injectable Polio Vaccine, Salk) which was possessed by only 3 other vaccine producers earlier.
  • November 2014: Serum signed a deal with Cipla to market its paediatric vaccines across the world.
  • May 2015: Cipla agreed to market the influenza drug made by Serum across India.
  • 2017: The SII launched Rabishield (Rapid action drugs against Rabies) in partnership with the University of Massachusetts Medical School.
  • July 2020: The SII developed the first Indian vaccine against pneumonia, named the “Pneumosil” or ‘Pneumococcal Polysaccharide Conjugate Vaccine (PPSV23)’.
    The firm is expected to produce 100 million doses per year, with 40-50 million doses being reserved for Indians.
  • SII has received approbation for its low cost of vaccines, with doses of several of Serum’s vaccines costing as low as ₹5 per dose.

  • Dr. Cyrus S. Poonawalla is an Indian Parsi businessman, also known as the “vaccine king of India”. Hurun Global Rich List – 2019 listed Dr. Poonawalla as the 4th richest person in India and 100th in the world with a net worth of $13 billion.
  • Adar Poonawalla is the chief executive officer (CEO) of Serum Institute of India. He initiated and launched in 2014 Serum Institute’s oral polio vaccine, which became a bestseller for the company. In 2017, Modi nominated Adar Poonawalla as brand ambassador for Swachh Bharat.
  • Serum is the fluid and solute component of blood which does not play a role in clotting. The study of serum is serology. Serum is used in numerous diagnostic tests as well as blood typing.

Space Tech Startups In India

Space Tech Startups In India

As the Indian Government has opened the space sector for private players, many startups are mulling to increase their research and development to take a lead in the market. Launching process and space exploration contribute only 10 % in the space economy, leaving the rest 90% of the space economy for private players to work on data analysis, ground equipment, and other services. Currently, there are 100 private companies working in space sector in the world. Let’s have a look at the recent government announcement and private space tech startups in India.

Crux of the Matter

The government has set up the Indian National Space Promotion and Authorization Center (IN-SPACe) to prompt the private players in the space sector, which will also help them grow and survive global competition. Going to be functional in a few months, IN-SPACe will look after a “friendly regulatory environment” for private space entrepreneurs. Now, private players will be allowed to access remote sensing data except for strategic remote sensing data. Moreover, private companies will be allowed to use ISRO facilities. Private players can start applying; their application will be accepted and studied on a case by case basis. ISRO will continue to focus on space exploration, innovation, and research and development.

Indian Space Tech Startups

Agnikul Cosmos
Srinath Ravichandra and Moin SPM founded Agnikul Cosmos in 2016 in Chennai. It designs & manufactures small launching vehicles. The firm uses 3D printers to develop cryogenic rocket propulsion. Agnikul Cosmos is focusing on the market of launching satellites up to 100 kgs. Pi Ventures, Speciale Invest, etc have invested in the company.

Skyroot Aerospace
Naga Bharath Daka, Pawan Kumar, and Chandana founded Skyroot aerospace in 2018 in Hyderabad. The company designs and makes space launch vehicles. It has developed Vikram series rockets with an aim to carry rockets weighing 250-700 kgs and others to low-earth orbits. Vikram rockets can be assembled and launched within 24 hours. Moreover, the company is working on making space airlifts cheaper. The company’s first launch is expected in 2021 at 1/3rd the normal cost. So far, it has raised $4.3 mn from Mukesh Bansal, Ankit Nagori, Solar Industries, and Vedanshu Investments.

Bellatrix Aerospace
Rohan M Ganapathy, Vivek Murugesan, Saagar Malaichamy, and Yashas Karanam founded Bellatrix aerospace in 2015 in Bengaluru. This firm makes propulsion systems for satellites and has started rocket designing to maneuver satellites via small engines. It has made an electric propulsion system that runs on water and is more eco-friendly than the one running on hydrazine fuel. It has also developed green fuel that is 30% more efficient.

Kshitij Khandelwal and Awais Ahmed, students of BITS Pilani started Pixxel in 2018. Pixxel is planning to set up a constellation of 30 satellites in low-earth orbit to develop high-frequency earth imaging capabilities. Its first microsatellite – a 15 kg cube – will be launched to low-earth orbit in November 2020. It has raised $681,000 from Techstars Starbust, GrowX, etc.

Blue Sky Analytics
Abhilasha and Kshitij Purwar founded Blue Sky Analytics in 2018. This Gurugram based company is planning to build a platform to provide real-time updates on air and water quality across India through an app. It has also launched BreeZo, an AQ data visualization platform.

  • Vikram Sarabhai was an Indian physicist and astronomer who initiated space research in India. He is internationally regarded as the Father of the Indian Space Program.
  • A P J Abdul Kalam was an Indian aerospace scientist and politician who served as the 11th President of India. He is known as the Missile Man of India for his work on the development of ballistic missile and launch vehicle technology.
  • The Thumba Equatorial Rocket Launching Station (TERLS) is an Indian spaceport established on 21 November 1963, operated by the Indian Space Research Organisation. It is currently used by ISRO for launching sounding rockets.

Viral Acharya Raises Critical Points For RBI & Govt

Viral Acharya Raises Critical Points For RBI & Govt

Former RBI Deputy Governor Viral Acharya in his latest book “Quest For Restoring Financial Stability In India”, says that fiscal dominance in India has become a mainstream practice that hinders the growth of banks and eventually results in the slow growth of the nation. His critical views on RBI’s functioning and the central bank’s relationship with the government have become the talk of the town. Let us simplify them and understand.

Crux of the Matter

Acharya on Fiscal Dominance
Viral Acharya is a former RBI Deputy Governor and currently a professor at NYU Stern. He has mentioned that Fiscal dominance is hampering the growth of India. Fiscal dominance is a situation in which the government has high debt and deficit. Because of limited funds, the government is unable to recapitalize public banks when they have to recognize bad loans in the books. Instead, the government pressurizes RBI to ease credit norms so that banks can avoid NPA recognition. This is like keeping the house clean by shoving al the dust under the carpet. Acharya said that it is not too late to infuse capital into banks and NBFCs.

On Non-Performing Assets
In an interview with India Today, Acharya said that growing NPAs during Covid-19 would be a concern. NPAs are expected to rise to ~12.5%, i.e. of the ₹100 loans given by a bank, ₹12-13 would be unrecoverable and banks will have to set aside a provision for the bad loan.

NPAs are loans that cannot be recovered. Viral Acharya also criticized the practice of evergreening of loans in India. Let us understand it through an example what it means and what are its implications:

Mr. A took a loan of ₹10 lakh but is now unable to pay back the principal amount and/or interest. Now, Mr. A may take an additional loan to pay off the interest, or principal and interest both. Banks allowed this practice because that particular loan would not have to be categorized as an NPA and hence, no provision amount needed to be set aside.

On RBI’s Autonomy
Acharya writes in the book that RBI’s autonomy was being compromised and hinted that he left for the same reason. Acharya left the post before the completion of his tenure. He also pointed out that Former RBI Governor Urjit Patel would have also left for a similar reason.

The government was trespassing on the autonomy of the regulator, rowing back on prudent measures and making unreasonable demands.

Viral Acharya, Former RBI Deputy Governor

Urjit Patel’s Resignation
Urjit Patel possibly resigned amidst the government trying to dilute the clause of Prompt Corrective Action. PCA is a framework under which banks with weak financial metrics are put under watch by the RBI. Besides that, the government wanted RBI to formulate policies to help it borrow more and ease up on defaulters. It also wanted the RBI to transfer surplus funds in the form of an interim dividend a few months before the 2019 Lok Sabha elections. All these factors might have caused Patel’s exit.

Also Read: Changes In RBI Accounting Year To Put Curbs On Contentious Interim Dividends

  • “Yaadon Ke Silsile” is a music album by Viral Acharya. The funds raised through the album were funneled into charity – Pratham – which works to educate children.
  • “The Third Pillar: How Markets and the State Leave the Community Behind” is a book by Raghuram Rajan. The book was shortlisted for the financial times and McKinsey business book of the year award 2019.
  • As of January 2017, Viral was appointed to serve a three-year term as a Deputy Governor of the Reserve Bank of India. He resigned from the post in July 2019 with 6 months left for his completion of a term.

Understanding REITs and Mindspace IPO

Understanding REITs and Mindspace IPO

Mindspace Business Parks Real Estate Investment Trust (REIT) announced to go public to raise a sum of ₹4,500 crores – the IPO closed on 29th July. Till now Embassy Office Parks was India’s only listed REIT. The concept of REIT was introduced in 2007 by the Securities and Exchange Board of India (SEBI). Before investing it is important to know what REITs mean and how do they function? Let’s understand it.

Crux of the Matter

What Are REITs?
There are plenty of investment options like gold, government bond, equity, debt, real estate, commodities, etc. Generally, real estate investment requires large sums of money to be invested for a long period of time – 5-10 years or more. The bottleneck with such investment is that if in times of need someone wants to sell this investment, it is not likely that it would be sold quickly and without incurring price reduction. So investors’ money remains blocked for a long time. However, REITs make real estate investment more liquid and affordable.

REITs were first introduced in the US in 1960. A REIT is a company that owns, operates, or finances income-generating real estate. REITs pool units of a portfolio of real estate assets and allow investors to invest in parts of it through stock or share in the portfolio. REITs’ stock derives value from its underlying asset, real estate.

What is Equity REIT?

  • Let’s say ABC owns 5 commercial office spaces in Bengaluru.
  • XYZ is a REIT that buys these properties from ABC.
  • For investors investing in XYZ’s REIT, their stock derives value from the value of the underlying asset, here ABC’s 5 commercial spaces in Bengaluru.
  • XYZ earns through the rent received and thus pays REITs dividends from it.
  • XYZ would be categorized as an equity REIT.

What is Mortgage REIT?

  • ABC owns 5 commercial office spaces in Bengaluru.
  • XYZ is a REIT that gave a loan to ABC to develop these spaces.
  • For investors investing in XYZ’s REIT, their stock derives value from the value of an underlying asset, here the performance of the loan given to ABC
  • XYZ earns through the interest received on loan and thus pays REITs dividend from it
  • XYZ would be categorized as a mortgage REIT

REITs in India
Investors get benefits from REIT as it is obliged to return a certain portion of the money back on a yearly basis to investors. More importantly, REITs’ dividends are not taxed in India. An investor gets a share in the profit earned through real estate investment. The minimum subscription limit to invest in REITs has been reduced from ₹2 lakh to ₹50,000.

Ending Note On Mindspace
Mindspace is raising money for the underlying asset of Business Parks in India. Experts say that at a time when Work From Home is becoming the new normal life due to Covid-19, Mindspace IPO is a wrong offer at the wrong time. However, the IPO was oversubscribed 13 times. Experts say it could be because investors demand such products for diversifying their portfolio.

  • The Irvine Company, LLC. is an American private company focused on real estate development. Its owner, Donald Bren, is the wealthiest real estate developer in the United States, with a net worth of more than $15 billion.
  • REITs were created in the United States after President Dwight D. Eisenhower signed Public Law 86-779, sometimes called the Cigar Excise Tax Extension of 1960. The first REIT was American Realty Trust founded by Thomas J. Broyhill, cousin of Virginia U.S. Congressmen Joel Broyhill in 1961.
  • A real estate bubble or property bubble is a type of economic bubble that occurs periodically in local or global real estate markets and typically follows a land boom. A land boom is a rapid increase in the market price of real property such as housing until they reach unsustainable levels and then decline.

History Of Rafale

History Of Rafale

After negotiations spanning over decades, the Rafale jets finally arrived in India, providing a boost to Indian Air Force’s capabilities.

Crux of the Matter

On 29 July2020, the first batch of Rafale jets arrived at Ambala in Haryana state.

  • 1999: The Indian Air Force (IAF) demanded an upgrade in defensive capabilities after the Kargil war.
  • 2001: 126 Medium Multi-Role Combat Aircraft (MMRCA) were demanded by the IAF. The NDA Government issued the RFI (Request for Information) in the same year.
  • 2007: The UPA Government cleared the request for 126 MMRCA. 6 companies were issued the RFP (Request for Proposal) in the same year, demanding 126 MMRCA.
  • 2011: Dassault Aviation for Rafale was selected for exclusive negotiations.
  • 2012: Dassault Aviation for Rafale won the contract, and also signed a Memorandum of Understanding (MoU) with the Reliance Group to partner in defence sector and to facilitate the Rafale deal. Dassault agreed to help Reliance to set up ₹1,500 crore factory in Bangalore to produce wings for jets created by HAL in India.
  • 2015: The BJP Govt withdrew the tender of 126 jets.
  • 2016: India and France agreed on a €7.87 billion deal for 36 jets in “flyaway condition”.
  • 2020: 5 jets arrive in India, with all 36 jets to be present in India by 2022.

Problems In 2012 Negotiations

  • 18 Rafale jets were to be obtained in “fly away condition” – 108 to be developed by HAL using transfer of technology
  • Warranty: India wanted warranty of jets produced by HAL from Dassault, which was initially declined.
  • Dassault envisaged 30 million man-hours to produce 108 Rafale jets in India. However, HAL estimated the man-hours as 2.7 times of the Dassault proposal.

Offset Clause And Reliance
The Deal was agreed with an offset clause, meaning that 50% of the total budget would be invested in India by Dassault. Consequently, Dassault agreed with Reliance to form Dassault-Reliance Aerospace (DRA), done after their 2012 Memorandum of Understanding (MoU). The key components for the jets would be made in India by DRA. In its 2018 statement, Reliance stated that it will get 25% of the offset, with the remaining to be shared between Thales, Saffran, MBDA, etc.

  • The Rim Fire was a massive wildfire that started in a remote canyon in Stanislaus National Forest, in California. The fire was caused by a hunter’s illegal fire that got out of control, and it was named for its proximity to the Rim of the World vista point, a scenic overlook on Highway 120 leading up to Yosemite.
  • The first evidence of wildfires is rhyniophytoid plant fossils preserved as charcoal, discovered in the Welsh Borders, dating to the Silurian period (about 420 million years ago). Smoldering surface fires started to occur sometime before the Early Devonian period 405 million years ago.
  • A controlled or prescribed burn is a fire set intentionally for purposes of forest management, farming, prairie restoration or greenhouse gas abatement. A controlled burn may also refer to the intentional burning of slash and fuels through burn piles.