Weekly News Roundup at 10:00 am on 14th January 2024

Let’s begin – Hindustan Unilever, the country’s largest consumer goods company, is pushing large or family packs into select general trade outlets in top 100 towns, as it seeks to shore up volume growth, at least three distributors from Maharashtra, Gujarat and Madhya Pradesh have told FE. The move is also aimed at bringing large general trade stores, those measuring 1,000-1,200 sq ft and above in terms of size, up to speed with modern trade by providing them large packs commonly found in modern trade outlets. The initiative has been rolled out across soaps and detergents, foods, beverages and personal care in what HUL calls ‘Bharat ke Shehar’, distributors said.

Next up – The government may earmark around Rs 90,000 crore for the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme in the Budget estimate for 2024-25, an increase of 50% over 2023-24 BE, in a strong signal to the poor ahead of approaching general elections. Rampant misappropriation of funds allocated under the flagship scheme was one of the main triggers for the Centre to make a five-year-low provision of Rs 60,000 crore in the FY24BE for the jobs programme. A likely higher upfront allocation for the jobs guarantee programme for FY25 means the government would largely stick to it through the year, without seeking supplementary grants, an official said.

In another development – Bajaj Auto’s board has given the green light to a massive buyback Rs 4,000 crore share at a substantial price of Rs 10,000 per share, marking a 43% premium over the last closing price of January 8. The company plans to repurchase 40 lakh shares via the tender route, equivalent to 1.41 percent of Bajaj Auto’s outstanding shares. Notably, the promoters, holding a 54.94 percent stake in the company, will actively participate in this buyback initiative. To facilitate the process, a Buyback Committee has been constituted by the Board, with the authority to undertake all necessary actions related to the buyback at its discretion. This marks Bajaj Auto’s second share buyback in as many years.

Meanwhile – Indian exporters are yet to see any large-scale rejection of export consignments or demand to re-negotiate contracts as a result of the Red Sea blockade, but are increasingly worried that any inordinate delay in the resolution of the crisis might seriously jeopardise their business. Exporters of textiles and apparel have already started witnessing an increase in transit time in some cases, and a rise in freight, but still have the buyers’ confidence intact. In most cases, it is the buyer who pays for transport, sources from the exporting community say. Managing director of Joyti Apparels said that sensing delays, some of the buyers are opting to take cargo by air, especially of seasonal fashion items because any delay will mean missed sales.

Moving on – After the spectacular rally in the US stock market in 2023, investors were expecting the S&P 500 to continue rising and reach its first all-time high in almost two years. However, 2024 has started on a much more cautious note for investors as the market seems to catch its breath before its next move. A slow start makes sense as many were caught on the wrong side in 2023, as they predicted gloom and doom but the S&P 500 jumped more than 24% despite bank collapses, recession fears and the highest borrowing costs in decades. The Federal Reserve’s decision to raise interest rates to curb inflation has led to increased market focus on risks beyond monetary policy.

In other news – In response to the recent incident involving an Alaska Airlines Boeing 737 Max 9 aircraft, the Directorate General of Civil Aviation in India conducted emergency exit checks on Boeing 737-8 Max planes, ensuring the safety of passengers and aircraft operations. Aviation regulator on Monday announced that the inspections of emergency exits on Boeing 737-8 Max planes have been completed satisfactorily. These checks have been satisfactorily performed on the fleet of operational fleet of Boeing B737-8 Max aircraft by Air India Express (4), Spicejet (8) and Akasa (20), DGCA said in a statement. Moreover, Akasa Air also includes one B737-8200 aircraft with a mid-cabin door, and the operational check on this door was also completed satisfactorily.

Lastly – State Bank of India on Wednesday raised $600 million through issuances of five-year US dollar-denominated bonds at a coupon rate of 5.1%. The bond sale, conducted by the London branch of SBI, evoked strong response with global investors putting in bids worth $3.5 billion. A source told FE that participation in the bond sale was from large high quality long only asset managers from Asia and Europe, Middle East and Africa. The bond issuance was priced at a spread of 150 basis points over the five-year US Treasury yield. Proceeds from the bond issue will be used for general corporate purposes and to meet the funding requirement of SBI’s foreign offices and branches.