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This is a roundup of the day’s top stories in brief.
1. HUL, GSK Consumer To Merge
Unilever Plc agreed take over GlaxoSmithKline Plc’s nutrition business and then merge their Indian units in a deal worth £3.1 billion or $3.8 billion.
- The deal involves the merger of GSK Consumer Healthcare Ltd. with Hindustan Unilever Ltd., according to their filings, adding India’s No. 1 malted-milk drink Horlicks to HUL’s portfolio.
- The transaction will give GlaxoSmithKline approximately 5.7 percent stake in HUL, while Unilever’s holding in its Indian unit will drop by 5.3 percent to 61.9 percent.
- GSK Consumer Healthcare shareholders will get 4.39 shares of HUL for every one share held.
- The transaction values the total business of GSK Consumer Healthcare at Rs 31,700 crore.
- The deal is expected to be completed in one year subject to regulatory and shareholder approvals.
"I am confident that this merger will create significant shareholder value through both revenue growth and cost synergies" - Sanjiv Mehta, Chairman And Managing Director, HUL
2. Indian Markets Rise Marginally
Indian equity benchmarks rose for sixth straight day, with NSE Nifty 50 Index clocking its longest winning streak since April. However, the gains were capped as Sun Pharmaceutical Industries Ltd., Reliance Industries Ltd. and Mahindra & Mahindra Ltd. came under selling pressure.
- The S&P BSE Sensex rose 0.13 percent or 47 points to 36,241.
- The NSE Nifty 50 Index was little changed at 10,884.
- Fifteen of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Power Index's 2.5 percent gain.
- On the other hand, the S&P BSE Healthcare Index was top loser, down 1.2 percent.
- The rupee had its worst day since Aug. 13, closing 1.2 percent lower against the U.S. dollar at 70.46.
3. Qatar To Quit OPEC
Qatar will withdraw from the Organization of Petroleum Exporting Countries from Jan. 1, Minister of State for Energy Affairs Saad Sherida Al-Kaabi said in Doha.
- The decision to withdraw is “technical” and country intends to focus on natural gas production; it will not be bound by OPEC’s agreements after exit from the group, Al-Kaabi said.
- The decision comes as OPEC prepares to meet this week to review its output and just after Saudi Arabia and Russia reaffirmed their commitment to manage production to balance the oil market.
- Walking away from OPEC’s production controls could mean Qatar may increase output after leaving the group, undermining efforts to support prices.
4. Shankara Building Products Expects More Pain
Shankara Building Products Ltd., which has lost about 70 percent of its market value in the last one year due to expensive valuation and weak earnings growth, expects more stress as it focuses on competition and improving its balance sheet.
- The home improvement products maker plans to offer lowest prices to its customers to become the “best priced store” and increase “cash sales” over credit, Sukumar Srinivas, managing director of Shankara Building, said in a conference call on Nov. 30.
- That will weigh on its margin at least in the ongoing financial year, he said. “But it will lead to a healthy balance sheet. This strategy will ensure lower receivables, inventory and bank borrowings by March 2019.”
- Shankara Building expects its earnings before interest, tax, depreciation and amortisation margin for the financial year 2019 to be in the range of 4.5-5 percent against 6.9 percent it earned in the previous year.
5. Manufacturing PMI Hits 11-Month High
India’s manufacturing sector activity improved in November and touched an 11-month high as new order flows encouraged companies to lift production amid strong demand conditions.
- The Nikkei India Manufacturing Purchasing Managers' Index strengthened to 54.0 in November from 53.1 in October, signalling the strongest improvement in the health of the sector in almost one year.
- This is the 16th consecutive month that the manufacturing PMI remained above the 50-point mark.
- Pollyanna De Lima, Principal Economist at IHS Markit and author of the report, further noted that the relatively weak demand environment seen earlier in the year showed signs of abating, as clients are placing more work orders regardless of rise in output prices.
6. The Zuckerberg-Ambani Alliance
Facebook Inc., WhatsApp’s parent, and Mukesh Ambani, who started Reliance Jio, are teaming up to draw hordes of customers with cheap phones, rock-bottom rates and handy messaging services.
- Facebook’s role in all this is so central that, in rural regions, handsets with Net access are dubbed “WhatsApp phones.”
- The two companies are building a massive user base that will boost their own fortunes.
- At the same time, they’re creating the foundation on which business like online retail, digital payments and food delivery can be built.
7. India Per Capita Income Lags
India may continue to stake claim to being among the fastest growing major economies, but even at these growth rates it will take the economy years to catch up with other countries in terms of per capita income.
- The per capita income of economies like Indonesia, South Africa, China, Mexico and Brazil is many times that of India, said Goldman Sachs’ economists Prachi Mishra, Vishal Vaibhaw and Andrew Tilton in a report released on Monday.
- Indonesia, which is often considered the closest comparable economy to India, has a per capita income twice that of India.
- If India continues to grow its per capita income at the current rates, it would still take the economy 35 years to catch up with Indonesia, according to Goldman’s model.
- To catch up with the U.S. would take 56 years, estimated the research house.
8. MPC Faces A Changed World In Just Two Months
Since the last monetary policy decision, there has been a sea change in the financial markets, in India and around the world, writes Neeraj Gambhir.
- Crude oil prices have since retraced sharply.
- U.S. yields have seen a pull-back to 3 percent level from a high of 3.25 percent.
- In India, inflation continues to be benign and growth data continues to be a mixed bag.
9. Long Wait For 5G iPhones
Apple Inc. plans to hold off until at least 2020 before offering an iPhone that can connect to the next generation of high-speed phone services coming next year, people familiar with its plans told Bloomberg News.
- The delay may make it easier for rivals like Samsung Electronics Co. to win over consumers to phones that connect to 5G networks, which will provide a leap forward in mobile data speeds when they are introduced in 2019.
- As with 3G and 4G, the two previous generations of mobile technology, Apple will wait as long as a year after the initial deployment of the new networks before its main product gets the capability to access them, said the people, who asked not to be identified discussing the company’s plans.
10. How India’s Laws Made It A ‘Hindu-Secular’ State
Secularism in India has oddly been considered to be consistent with state endorsement of Hinduism, writes Abhinav Chandrachud.
- In 2010, the Gujarat High court held that a Hindu prayer on the court premises was secular because it was meant for the greater good.
- Scheduled Caste Hindus who convert to Christianity are not entitled to contest elections from reserved constituencies.
- Article 48 of the Constitution calls upon the state to prevent the slaughter of cows.
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