Episode 378

Business News at 05:30 pm on 6th February 2023

Listen to the latest news on business and finance where we talk about the DA hike of government employees, surge of Vodafone Idea shares, FMCG companies facing demand slump, Job cuts in Dell. We also bring to you the latest on the Indian Share Market.

Today’s Latest Business News at 05:30 pm on 6th February 2023.

[Disclaimer: This transcript is auto-generated]

Government Employees may get the good news on the dearness allowance hike soon. The announcement of the Dearness Relief Hike for Central Government Pensioners is also expected. According to a report, the Central Government is expected to hike dearness allowance by 4 percentage points to 42%. The existing DA rate is 38% as per the agreed formula. The calculation of the DA hike is done on the basis of the latest Consumer Price Index for Industrial Workers, which is prepared by the Labour Ministry’s Labour Bureau every month. The DA/DR hike is usually announced in the months of March and September. While the Finance Ministry is expected to formulate a proposal to hike DA with its revenue implication and put it before the Union Cabinet for approval, the date of the DA hike announcement is not yet final. However, the next DA hike, irrespective of the date it is announced, would likely be effective from January 1, 2023. In case there is a delay in the DA hike announcement then the Government may provide arrears.

Speaking of the Market, Vodafone Idea shares surged 25% in trade on Monday as the government permitted converting the telecom operator’s interest dues into equity. Vodafone Idea scrip touched an intraday high of Rs 8.55, up 24.8% from Friday’s close of Rs 6.85. The net present value of the interest dues regarding the AGR dues and deferment of spectrum auction installments amounts to Rs 16,133.10 crore which will be converted into a 33% stake in the loss-making operator. The market capitalization of the company rose to Rs 26,819 crore on the back of this news. As a result of the government’s reform package, VI will issue 16 billion fresh shares, adding to its existing base of 32 billion fully-paid up equity shares. The issue price of Rs 10 came at a premium of 45.9% to Friday’s closing price. The latest TRAI data suggested that Vodafone Idea held a 21.32% market share, with 249.82 million subscribers.

Moving on to Industry, Major FMCG companies feel the demand slump has bottomed out and there are green shoots of recovery in the rural markets, which has been under stress since the last few quarters. With abating commodity price pressures, firms such as HUL, Godrej Consumer Products Ltd , Dabur, Marico and Emami expect a gradual recovery in consumption going forward and are increasing upfront marketing investments in advertising and promotion . In the third quarter ended December 31, 2022, the companies reported growth in the urban markets. Modern trade channels and e-commerce also posted growth. But FMCG sales from traditional trade channels such as kirana stores were flat. Rural markets, which contribute around 35 per cent of FMCG industry sales, were still sluggish in Q3. However, the companies said they are witnessing signs of improvement on the back of encouraging winter crop sowing, indications of higher farm income and continued government stimulus. Home-grown firm Dabur said the impact of inflationary pressures was more pronounced in the rural markets as marked downtrading and shift to more affordable and smaller packs led to rural growth lagging urban markets for the second quarter in a row for the company.

Meanwhile, Dell Technologies Inc., facing plummeting demand for personal computers, will eliminate about 6,650 jobs, becoming the latest technology company to announce it will let thousands of employees go. The company is experiencing market conditions that “continue to erode with an uncertain future,” Co-Chief Operating Officer Jeff Clarke said. The reductions amount to about 5% of Dell’s global workforce, according to a company spokesperson. After a pandemic-era PC boom, Dell and other hardware makers have seen cratering demand. Industry analyst IDC said preliminary data show personal computer shipments dropped sharply in the fourth quarter of 2022. Among major companies, Dell saw the largest decline — 37% compared with the same period in 2021, according to IDC. Dell generates about 55% of its revenue from PCs. Clarke told workers that previous cost-cutting measures, including a pause on hiring and limits on travel, are no longer enough. The department reorganizations, along with the job reductions, are viewed as an opportunity to drive efficiency, the spokesperson said.

Lastly, The BSE Sensex fell 165.82 pts or 0.27% to 60,676.06 and NSE Nifty 50 dropped 71.10 pts or 0.40% to 17,782.95. The top gainers on the Sensex were ITC, Axis Bank, State Bank of India, Larsen & Toubro and IndusInd Bank while Infosys, HCL Tech, Tech Mahindra, Wipro and Asian Paints are the top losers. The Bank Nifty rose 46.95 pts or 0.11% to 41,546.65 with Bank of Baroda, Bandhan Bank, IndusInd Bank, Axis Bank and IDFC First Bank leading gains.

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Business News at 05:30 pm on 6th February 2023