Merger Air India & Vistara, EAM Jaishankar On Manufacturing, Zomato Shifts To Payment Aggregator, Retail Inflation, Chabahar Port Update, Etc

Market Briefs

Main Briefs

Air India-Vistara Merger Progresses Towards 2024-End Completion:

Merger Status Update:

• Air India and Vistara anticipate completing their merger by the end of 2024 or early 2025, as conveyed in a town hall meeting with employees.

• 120 pilots have been integrated by Vistara and Air India, and the National Company Law Tribunal (NCLT) hearing on the merger has been concluded, awaiting official orders.

Operational Integration:

• Vistara has seconded 60 non-flying staff to Air India, with the overall integration of approximately 7,500 employees nearing completion.

• The merged entity will comprise 2,500 flying staff, 3,500 non-flying staff, and personnel from sales, marketing, engineering, and accounts.

Infrastructure Development:

• Air India plans to launch South Asia's largest aviation academy and establish an aircraft maintenance, repair, and operations facility in Bengaluru, supported by SIA Engineering.

• Tata-Group airlines will supply half of the 470 ordered aircraft to Air India, with the remaining allocated to Air India Express.

Regulatory Approvals and Brand Transition:

• Singapore Airlines, Vistara's promoter, has applied to become a minority investor in Air India, with approvals expected soon.

• Conditional nods from Singapore's Competition and Consumer Commission and India's Competition Commission have facilitated the merger.

• Vistara will operate under its brand until 2025 before merging fully with Air India.

Employee Challenges and Unrest:

• Employee unrest, including coordinated sick leaves by Air India Express cabin crew and disruptions at Vistara due to pilot absenteeism, has impacted operations.

• Concerns over HR-related issues amid the merger have led to protests, including letters to Tata Group leadership highlighting dissatisfaction and grievances.

Consolidation Strategy and Employee Concerns:

• Tata Group's consolidation involves merging Air India and Vistara as a single full-service carrier, and Air India Express and AIX Connect as a unified low-cost carrier.

• Employee unions have raised concerns over reduced flying allowances, leaves approval, roster stability, and an unsupportive work environment, urging proactive measures from Tata Group leadership.

EAM Jaishankar Emphasises Manufacturing and Sunrise Sectors to Propel Bharat Forward:

Key Points from Jaishankar's Address:

• Prioritises manufacturing, infrastructure, food, and health security for India's progress.

• Highlights the significance of focusing on sunrise industries such as semiconductors, chips, electric vehicles, drones, and space to enhance competitiveness globally.

• Stresses the need for self-reliance in meeting the country's needs while acknowledging the importance of global integration.

• Advocates significant investment in agriculture production and input processing as part of the Make in India initiative.

• Critiques unequal playing fields in global trade and manufacturing, advocating for fair competition.

Sunrise Industries as Catalysts:

• Identifies semiconductors, chips, electric vehicles, drones, and space as pivotal sectors for technological advancement and economic growth.

• Urges India's active participation in emerging industries to secure its position in global supply chains.

• Highlights the potential for India to leverage its demographic dividend and technical expertise to become a key player in global supply chain diversification strategies.

Competing with China:

• Encourages competition with China in manufacturing, emphasising the need for India's self-sufficiency.

• Advocates reducing dependency on China for critical supplies and building autonomous capabilities, particularly in semiconductor production.

• Positions India as a viable alternative for global companies adopting China+1 strategies, citing demographic strengths and technical capabilities.

Investment Imperatives:

• Underscores the urgency of investing in autonomous semiconductor production to avoid supply chain vulnerabilities.

• Emphasises the need for strategic decision-making and autonomy in critical sectors to ensure India's economic resilience and competitiveness.

Global Economic Dynamics:

• Acknowledges the evolving dynamics of global trade and manufacturing, advocating for India's proactive role in shaping international economic discourse.

• Recognizes the imperative for inclusiveness, good governance, and human resources development to facilitate India's economic transformation.

Zomato Shifts Strategy, Surrenders Payment Aggregator License:

Financial Performance:

• Zomato reported consolidated net profit of Rs 175 crore for Q1 ended March 31, 2024, contrasting with a loss of Rs 188 crore in the previous year.

Strategic Decision:

• Surrenders payment aggregator licence and withdraws application for mobile wallet licence.

• Writes down Rs 39 crore invested in wholly owned subsidiary Zomato Payments, considering it as impairment losses.

• Clarifies that other operations of the payments subsidiary will continue despite the decision.

Reasoning:

• Evolution of India's payments landscape since the application for licences.

• Acknowledges lack of significant competitive advantage against incumbents in the payments space.

• Deems payments business as commercially viable at the present stage.

Regulatory Environment:

• RBI's stringent KYC norms for payment aggregators influence the decision.

• Zomato, a new entrant in the space, would have faced competition from existing players like Razorpay and Cashfree.

Implications:

• Reflects shifting priorities and strategic focus within Zomato.

• Withdrawal suggests reassessment of market opportunities and competitive positioning.

• Indicates a strategic pivot towards core food delivery business amidst evolving regulatory and market dynamics.

Briefs, You Can’t Miss:

1. AM Green finalises a term sheet with Yara Clean Ammonia for the sale of renewable ammonia.

2. Warburg Pincus announces a Rs 1,000 crore investment in Shriram Housing to enhance its operations, as stated by Umesh Revankar.

3. Retail inflation slightly decreased to 4.83% in April, despite ongoing increases in food prices.

4. Grew Energy plans to establish a 3.2 GW module solar plant in Jammu and Kashmir.

5. Coromandel acquires an additional 7% stake in drone manufacturing firm Dhaksha.

6. Hyundai partners with Laxmi Group to commence production of Venue in Nepal.

7. Chabahar, as per India Ports Global (IPGL), has the potential to become a significant global trading hub amidst geopolitical competition.

8. India's diesel exports to Europe declined by a fifth in April due to increased competition from US and Gulf suppliers, coupled with softening demand.

9. Blinkit, owned by Zomato, moves towards profitability, achieving positive adjusted Ebitda for the first time in March.

10. RBI data reveals a 40% increase in domestically held gold reserves over the past 5 years.

11. Shareholders inform NCLT that ICICI Securities has breached shareholder privacy rules.

World Briefs

• The Canadian government imposes a penalty of Rs 82 lakh on Infosys for suspected underpayment of taxes.

• Suzuki declares plans to further broaden its SUV lineup in India to regain market share.

• The UAE introduces visa support for Indian nationals hosting destination weddings in Abu Dhabi.

• Hyundai collaborates with Laxmi Group to initiate Venue production in Nepal.

• Intel nears an $11 billion agreement with Apollo for a facility in Ireland, according to reports.

• Amazon's self-driving robotaxi division, Zoox, is under investigation by the US following two rear-end collisions.

AI Briefs

• TCS plans to establish a groundbreaking human-centric AI centre of excellence in France.

• OpenAI introduces GPT-4o, a free model capable of interacting with visual, audio, and text inputs.

• Senior diplomats from China and the US will engage in the inaugural high-level dialogue on AI.

• Google collaborates with Airtel to provide cloud services and GenAI products to businesses in India.

Company Of The Day

Company Name: ZEPTO

• Founder: Aadit Palicha, Kaivalya V.

• Year Of Foundation:  2020

• Headquarter: Parel, Maharashtra, India

• Industry:

  Zepto offers a 15-minute grocery delivery service through an e-grocery app that affects the grocery buying experience.

• Why Is It in the News?

  E-commerce giant Flipkart purportedly engaged in discussions with quick-commerce startup Zepto regarding acquiring a stake in the latter. However, the talks eventually dissolved, and there are no indications of them being revived.