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17th May 2021
Good Morning! 

Happy Monday!!
Things seem to be improving slightly here in India with new Covid Cases per million people and positivity rate decreasing. You'd think it may be because of lesser tests but there too it seems like we have slightly improved.
Let us hope this improvement continues and we can vaccinate as many people as we can ASAP.
  MARKETS
 

SENSEX

48,732.55

+ 0.09%

NIFTY

14,677.80

- 0.13%

US$

73.29

- 0.18%

GOLD

47,677

+ 0.50%

10-YR

5.99%

- 2.3 bps

OIL

4,786

+ 2.44%

*As of market close

  • Markets: Headline stock indexes closed more or less flat on Friday, but broader markets underperformed.  Midcap and smallcap indexes were down around 1.5% each. Barring the Nifty FMCG index, all other sectoral indexes closed lower, with metal and realty stocks falling the most. 

Law

Whatever It Takes


Where's My Money?

Do you guys remember the whole Cairn Energy retrospective tax case that our government was fighting?

The final decision of the International Court of Arbitration at The Hague was in favour of the UK-based energy company, and our government was ordered to pay it $1.2 billion. (You can read about the whole saga here.)
This was back in December 2020, but the amount still has not been paid. And so, Cairn Energy has decided to take more legal action to get what they owed.

Finding it hard to get money out of the government directly, they have now sued Air India in the United States.
Cairn Energy has moved a New York court, saying Air India is “the alter ego” of India. And since it is owned by the government, it should be held responsible for the government’s debts too.

But can Cairn really do that?

Well, India is a signatory to the ‘Convention on the Recognition and Enforcement of Foreign Arbitral Awards’ or what’s commonly known as the New York Convention.
The whole aim of this convention is to get foreign arbitration cases enforced by local courts, so yes, we do have a legal obligation to pay up.
And Cairn has the right to sue government agencies outside India.

The Impact

Along with putting India on the (rather embarrassing) list of countries where global corporates are looking to seize assets, it will also probably hurt the chances of Air India being sold in a hurry.

If you’ve been a regular reader of The Gyst, you’d be familiar with the number of times the government has tried to sell loss-making national carrier Air India.

The Tata Group is/was the last known front runner in the race to take over the airline, but now with this extra demand of $1.2 billion or approx. Rs 10k crores, we’re not sure they’ll want to go through with the deal.
Air India already has ~Rs 60k crores of debt and in the previous financial year lost around Rs 20 crores per day!

Corporate

The Sun is Shining!
Let's Negotiate

The sun really seems to be shining bright on the Adani Group's fortunes. Literally and metaphorically.

Seth Adani has been on an expansion spree over the past few years.
After consolidating his position in the natural gas and ports business, his group is aggressively looking at growing its solar energy business.
Adani Green Energy Limited (AGEL) is apparently ‘in advanced talks' to buy SB Energy Holdings Limited

It's okay if you’ve never heard of SB Energy before today (we hadn’t either). And that’s because it is a privately held company.

The Companies

SB Energy Holdings is owned 80-20 by the SoftBank group from Japan and Bharti Enterprises Limited. The company has a 7.7 GW solar power portfolio spread across India.
SoftBank is apparently keen on offloading its stake and was in talks with CPPIB of Canada for a sale worth $525 million.

That deal didn’t happen for some reason, and now AGEL is the next best candidate.

AGEL has been on an acquisition spree, having recently bought Sterling & Wilson’s75MW solar power portfolio, along with SkyPower Global’s 50 MW project in Telangana. They've also struck up some deals with French energy giant Total to set up more solar energy projects in India.

The Deal

The deal with AGEL is said to be an all-stock transaction, which means the shareholders of SB Energy will get shares of AGEL instead of cash.

This looks like a sensible decision for AGEL at least, considering the super run almost all Adani group stocks have seen over the past year or so.
The AGEL stock is up almost 400% over the past 1 year and its market cap is now well over $20 billion! So this $500-600 million deal, paid in stock seems relatively affordable

Tech

Blocked Chain
Making Moves
 

With all the news about Bitcoin, Doge etc crypto transactions have been booming here as well in India.
Obviously, you'd expect our crypto exchanges to be in dreamland.
But as it turns out they've had a nightmare of a week.

What's Happening Here?

There have been plenty of rumours about how our government wants to ban crypto out here.
The RBI passed a circular in 2018, asking banks and other financial institutions not to provide banking services to any startups dealing with virtual currencies.
The Supreme Court last year specifically set aside RBIs circular.


But something strange happened last week with most of our leading banks distancing themselves from crypto exchange platforms.
Even most of the top payment gateways (Razorpay etc) were instructed by banks to distance themselves from these crypto exchanges.

Naturally, with that happening, all the platforms were left scrambling for payment options.

Paytm stepped up for a bit to be the knight in shining armour.

Paytm The Knight(for a bit)

Most crypto exchanges switched to Paytm Payments bank to facilitate payments since they were kind of the only option.
But Paytm also ended up closing down accounts of some exchanges, and it feels like only a matter of time before they too stop supporting them completely.
But Paytm currently denies this.

The Takeaway

There is tremendous uncertainty in the Indian crypto industry right now.
There don't seem to be any official reasons as to why banks are distancing themselves from crypto exchanges.
The NPCI(which is in charge of UPI and Rupay) has even come out and confirmed they aren't involved.
Some people think it is because of the sudden influx of new inexperienced investors-- so banks are looking to protect customer interest.
Others talk about how the RBI and the government are looking to ban crypto and they've instructed banks to not support crypto exchanges.
Only time will tell what is actually happening here.

On a Lighter Note

If like us you've been feeling a bit low over the past few weeks, here are few stories of humanity helping each other out to start your week right.

If you have more time ...

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