Tata Steel Europe restarted negotiations with Germany's Thyssenkrupp for a possible merger. Airlines in India will resume some domestic flights from May 25. Private equity firm General Atlantic became the 4th international investor to buy stake in Reliance Industries’ Jio Platforms. Ride-hailing company Ola and food delivery start-up Swiggy announced employee layoffs. Walmart explained how Flipkart, its Indian e-commerce business, was affected in the country’s coronavirus lockdown. Here is more on what made news this week.
- India will allow airlines some domestic flights to resume from May 25, two months after the government imposed a ban on air travel as the country went into lockdown to curb the spread of the coronavirus. Airlines including IndiGo, the country's largest carrier by market share, SpiceJet Ltd, Vistara, a joint venture between Tata Sons and Singapore Airlines and state-run carrier Air India were forced to ground planes from March 25.
- ACME Solar has cancelled a contract with state-run Solar Energy Corp of India to supply power at India’s lowest tariff due to project delays and uncertainty over the coronavirus, it told the federal electricity regulator. The company urged the regulator to prevent state-run utilities from encashing its bank guarantee and letter of comfort for the project.
- Tata Steel Europe has restarted negotiations with Germany’s Thyssenkrupp for a possible merger, almost a year after the two companies called off a joint venture proposal, citing the European Commission’s objections. Investment bankers say the two companies face a tough financial situation and will take steps to sell some assets so that they can meet Europe’s anti-competition norms.
- American retailer Walmart said its international business was affected in the first quarter when Flipkart, its Indian e-commerce arm, had to restrict deliveries to essential items during the lockdown to contain the coronavirus. Walmart also said that gross profit rate for its international business has risen primary due to Flipkart. Online retailers in India were permitted to sell only essentials during the lockdown that began on March 24. The government has since eased the curbs.
- SoftBank Group-backed ride-hailing company Ola will cut 1,400 jobs, or about 35 per cent of its workforce, as it navigates a coronavirus lockdown that has halted 95 per cent of its business. Ola and rival Uber companies have been hammered by a two-month-long lockdown. Media reports said Uber has cut700 of its estimated 2,000-2,500 employees in India.
- Swiggy said it would lay off 1,100 employees, or nearly 14 per cent of its workforce, to cut costs, as the coronavirus outbreak hits demand for online food ordering. The company also said it has shut several of its cloud kitchens—facilities that only cater to takeaway orders. Zomato, Swiggy’s rival, a week ago announced it was laying off more than 500 employees, or 13 per cent of its total workforce.
- Reliance Industries announced selling 1.34 per cent stake in its digital services subsidiary, Jio Platforms, to private equity firm General Atlantic for Rs 6,598.38 crore to accelerate consumer business and cut debt. This is the fourth such stake sale within a month and it values Jio Platforms at Rs 4.91 trillion on an equity basis and Rs 5.16 trillion on an enterprise-value basis.
A few links for further reading
Insecure and uncertain in insurance business as Covid-18 damage claims mount
Insurance companies around the world were sailing smoothly, helped by growth in emerging markets and strong capitalisation. Things changed in late February when markets realised that Covid-19’s impact on insurers could be significant. Insurers are yet to know the full impact of the crisis as governments and regulators nudge them to give moratoriums to policyholders and quickly settle claims too. India’s insurance regulator has set strict deadlines for medical insurers to settle Covid-19 claims. General insurers face damage claims from businesses devastated by the national lockdown to contain the disease. Is insurance secured to survive, Joydeep Ghosh explains
There was a time when pay cuts we see today were a complete no-no; govt and public sector jobs were considered safe, as pay and pensions were both assured. Not any longer, it seems, writes T N Ninan
Quick approval, grace period
The COVID-19 pandemic has brought home the significance of health and life insurance like nothing else earlier. Even those who were blasé about these covers in the past are now looking to buy a new policy or want to enhance the sum insured on their existing ones. Meanwhile, the Insurance Regulatory and Development Authority of India (IRDAI) has been issuing a slew of guidelines to health/general and life insurance companies aimed at easing matters for customers.