Microsoft will get out of coronavirus crisis ‘pretty strong’: Nadella

He said the company’s cloud infrastructure and services have been holding up under increased demand.

Asserting that Microsoft is financially strong despite the challenges posed by the coronavirus pandemic, its India-born CEO Satya Nadella has voiced confidence that the company will come out of the crisis “pretty strong”.

In an interview to CNBC on Tuesday, Mr. Nadella, however, said the big question would be whether the demand holds up in the U.S. and Europe and other developed markets badly hit by the pandemic.

“We feel good about how we are able to meet the demands of work from home kits. On the supply side we are getting back on rails,” Mr. Nadella said when asked whether Microsoft would be able to deliver later this year certain products, like the new Surface devices and a revamped Xbox gaming console, it had promised before the COVID-19 outbreak.

“The question now would be getting the products done and the launch. We are mostly going to focus on quality as well the situation in terms of demand and more importantly safety for the people,” he said.

However, the company in a statement last month, said it would not be able to reach its revenue guidance range for the quarter for the division of the business that contains Windows. Several other companies have followed in taking down guidance.

Altogether, though, the company is holding up, Mr. Nadella, who is Microsoft’s third CEO, said.

“It is a healthy company in terms of financial strength. We have a great balance sheet, we are a very diverse business, we have a mix of annuity, non-annuity, that is also stronger than even the last time we even went into the financial crisis,” he said.

“I feel confident we’ll come out of this, frankly, pretty strong,” Mr. Nadella said.

He said the company’s cloud infrastructure and services have been holding up under increased demand.

If this was a previous generation of data centre architectures or software architectures, I don’t think we would have been able to deal with this crisis as effectively as we have been able to, he said.

Mr. Nadella, who has been working from home since the coronavirus outbreak in the U.S., said that he shares an office with his daughters and they’ve been helping him set up his desk.

Previously, he said, “I used to always work from my bed.”

Microsoft, who was one of the initial companies to advise work from home to its people, said the company would follow public-health guidance in every country where it operates when it comes to bringing employees back to facilities.

He said he supports any sort of fiscal stimulus from the U.S. government.

“I think the government is doing the right thing, which is, they’re focused on the employees who are most impacted and the industries that are most impacted, and small businesses,” Mr. Nadella said.

Because those are the parts of the economy that are bearing the burden of this quarantine and staying at home, he said.

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Aramco capex cut may hurt BPCL divestment

Company’s move amid declining oil demand is likely to affect Reliance Industries’ stake sale as well

The world’s largest oil firm Saudi Aramco’s decision to cut its capital expenditure (capex) by $10 billion is likely to hurt the divestment of Bharat Petroleum Corporation Limited (BPCL) and also the oil giant’s plans to buy a 20% stake in Reliance Industries Ltd.’s oil-to-chemicals business, according to analysts.

Saudi Aramco is planning to cut its 2020 capex to $25- 30 billion from the original $35-40 billion amid concerns over oil demand owing to the outbreak of COVID-19.

The oil major’s capex stood at $32.8 billion in 2019.

Saudi Aramco’s decision may have a direct bearing on the government’s plan to divest its 52.98% stake in BPCL as Saudi Aramco was seen as one of the front runners to buy the stake.

According to Saudi Aramco’s annual report, the company will focus on downstream in high-growth markets, including India.

BPCL’s market capitalisation has dropped by more than half to ₹56,910 crore as on Tuesday compared to almost ₹1,20,000 crore in November 2019.

BPCL shares on Tuesday closed down 2.62% to ₹262.35, valuing the company at ₹56,910.35 crore. At current price, governments 52.98% stake will be valued at ₹30,151 crore.

“It will be very difficult for the government to sell BPCL at this valuation,” said a Mumbai- based oil analyst.

Aramco’s focus now is to increase oil production up to 12.3 million barrels per day (mbpd) compared with its average production of 9.7 mbpd amid an oil price war.

Even as Aramco’s management is confident of meeting investors’ 2020FY earnings / dividend expectations even if oil price remains at about $30, the company will consider modifying 2021FY capex plan.

Stock price correction

Nomura, while raising its weight on Reliance Industries (RIL) due to lower oil prices, said the recent correction in stock price (down 33% vs. Nifty down 28%) factors in potential failure to close the Saudi Aramco deal and lower refining and petrochem margins.

Saudi Aramco, in a conference call, stated that it was still conducting due diligence on a potential investment in RIL’s oil-to-chemicals operations.

Once the evaluation was complete, it would move to the next stage of the approval process.

RIL management, in its Q3 earnings briefing, reiterated that its March 2021 deleveraging target remained unchanged and was not conditional on any transaction (such as Aramco).

“We note that the RIL stock price is down 34% from its peak (in December 2019) and below the price at which they had announced stake sale to Aramco — implying the market is not factoring in this transaction,” said BofA Securities in research note to its clients.

“Aramco has the capability to close both the deals simultaneously as they believe their oil will last till eternity. They want long term buyers for Saudi oil.

“However, given the market conditions, the valuations of the both the deals could change to a great extent,” an official of an oil PSU told The Hindu.

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Confederation of Indian Industry bats for ₹2 lakh-crore stimulus

Reserve Bank must consider relaxing NPA norms: Kirloskar

Vikram Kirloskar, president Confederation of Indian Industry (CII), has written to Prime Minister Narendra Modi amid the spread of COVID-19, requesting him to provide a fiscal stimulus of ₹2 lakh crore to needy citizens through Aadhaar-based direct benefit transfer (DBT).

He also suggested the RBI consider relaxing the NPA recognition norms from 90 days to 180 days till September 30, 2020 to provide relief to the industry facing payment issues as well as banks which were under pressure on classifying loans as NPAs.

“The government may consider a strong fiscal stimulus to the extent of ₹2 lakh crore, to be given to the needy citizens through Aadhar-based direct benefit transfer. An amount of ₹5,000 for each individual, especially the rural and urban poor and ₹10,000 for the most vulnerable section— the elderly, may be given,” he said.

These measures will help industry and economy manage the economic impact of COVID-19 and also help the banking sector tide over the stress of NPAs due to delayed debt servicing arising out of disruptions in business operations, the CII said.

To help ease the cost of capital, the CII said the government could consider removing long-term capital gains tax of 10% and fixing the total dividend distribution tax at 25%.

GST payments

The CII requested that GST payments should be based on collection of bills rather than on raising of invoices, to avoid liquidity getting locked, in case there are delays in payments. On monetary measures, the CII suggested a 50 basis-point-cut each in cash reserve ratio and the repo rate, to ensure that banks had enough liquidity to lend to industry.

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DPIIT notifies decision to permit NRIs to own up to 100% stake in Air India

On March 4, the cabinet had taken a decision in this regard.

The Department for Promotion of Industry and Internal Trade (DPIIT) has notified a decision of the union cabinet to allow non-resident Indians (NRIs) to control up to 100% stake in disinvestment-bound Air India.

The FDI policy earlier permitted NRIs to take only 49% stake in the airline.

In its press note, the DPIIT said: “Foreign investments in Air India including that of foreign airlines shall not exceed 49 per cent either directly or indirectly except in case of those NRIs, who are Indian Nationals, where foreign investment is permitted up to 100 per cent under automatic route”.

On March 4, the cabinet had taken a decision in this regard.

The decision came at a time when the government has sought preliminary bids for 100% stake sale in the national carrier.

It also said that the condition that substantial ownership and effective control (SOEC) of Air India shall continue to be vested in Indian nationals.

An official statement has earlier stated that in light of the proposed strategic disinvestment of 100% of Air India by the government, it has been decided that foreign investment in Air India be brought on a level-playing field with other scheduled airline operators.

The national carrier will have no residual government ownership and will be completely privately owned.

Under the SOEC framework, which is followed in the airline industry globally, a carrier that flies overseas from a particular country should be substantially owned by that country’s government or its nationals.

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COVID-19 impacts demand for sugar

Prices also affected, says ISMA

Sugar mills have been witnessing lower offtake for the last two weeks because of the impact of COVID-19, according to the Indian Sugar Mills Association (ISMA).

“It is understood that sugar in the pipeline would have got sold in the wholesale and retail markets in the last couple of weeks,” the association said in a press release on Tuesday. It is expected that fresh buying from the sugar mills will take off soon and that should control sugar prices.

Sources in the association said that this was based on the market information and that actual offtake data was not readily available. The annual domestic consumption of sugar this season is expected to be 26.5 million tonnes. Though there is an impact now because of COVID-19, in the long run, consumption is expected to be at the expected level.

Further, the sugar mills have despatched nearly 30 lakh tonnes of sugar from their factories so far this season, which started in October 2019, for export against the MAEQ (Maximum Admissible Export Quantity) of 60 lakh tonnes.

“The current unprecedented situation due to outbreak of COVID-19 has impacted the global sugar prices also. However, the impact could be temporary,” the association said.

Till March 15 this sugar season, the sugar mills produced 215.82 lakh tonnes of sugar as against 273.65 lakh tonnes in the corresponding season last year.

In the case of exports, India exports mainly to West Asian countries, Bangladesh, Sri Lanka and African nations. The export demand is also expected to revive as there is a fall in sugar production in Thailand, the sources added.

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Coronavirus | Ford asks 10,000 employees in India to work from home

Volvo Car India and Tata Motors too have announced work from home as a safety measure for its employees due to the rising number of coronavirus infections in India

In wake of the coronavirus pandemic, U.S. auto major Ford has asked 10,000 employees in India, except those in business-critical roles, to work from home, a step which has also been taken up by Swedish luxury car maker Volvo.

A Ford India spokesperson said, in recent days, the company has concluded that the issue of coronavirus has taken on a different dimension.

The company is continuing to act in real-time to keep its “people safe and help limit the spread of the virus in communities where we live and work.”

“Therefore, starting Monday March 16, we have instructed much of our India workforce (over 10,000 people) including Ford India and Global Business Services — except those in business-critical roles that cannot be done away from Ford facilities — to work remotely until further notice,” the spokesperson said.

He further said, “The action will additionally help reduce the risk of spreading the coronavirus while maximising the health of our business. All necessary safety measures have been deployed at Ford locations as well as our dealerships to ensure minimum inconvenience to customers.”

In a similar development, Volvo Car India, the wholly-owned arm of Swedish luxury car company Volvo, also announced work from home as a safety measure for its employees due to the rising number of coronavirus infections in India.

The company which has around 40 employees on its rolls in India said all of them have been asked to work from home with immediate effect while necessary IT infrastructure has been put in place to facilitate business continuity.

It, however, said access to the office remains open for any employee who prefers to work from office, after informing respective manager.

Enhanced sanitation measures have been taken to ensure hygiene at office premises.

The company had also suspended all domestic and international travel since February, to limit the exposure of our employees to the virus, it added.

Volvo Car India further said it is also working closely with dealers to ensure their facilities are hygienic.

“Guidelines to dealers include ensuring cars that visit workshops as well as dealer demo cars are properly cleaned before next use. In addition, all demo cars to mandatorily have hand sanitiser,” it said.

On Sunday, Tata Motors had also announced work from home for its office-based employees at headquarter and regional offices.

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Economic slowdown, BS-VI transition take toll on automobile sector as sales go down 19.08%

Motorcycle sales last month declined by 22.02% at 8,16,679 units as against 10,47,356 units in the year-ago period.

The total wholesale automobile sales in the country declined by a little over 19% during the last month as consumer sentiment remained subdued amid economic slowdown, the Society of Indian Automobile Manufacturers (SIAM) said on Friday.

“The automobile industry continues to face hardship due to steeper decline in production and wholesale dispatches in all segments in February 2020,” Rajesh Menon, Director General at SIAM, said.

Vehicle sales across categories stood at over 16.46 lakh units in February 2020 as against sale of over 20.34 lakh units in February 2019, according to data released by SIAM.

Domestic sales of passenger vehicles (which includes sales of cars, vans and utility vehicles) fell 7.61% during the last month to over 2.51 lakh units from more than 2.72 lakh units.

“The decline in wholesale dispatches is primarily due to economic slowdown and lower production of BS-IV vehicles. Some upside on the registration numbers of VAHAN can be attributed to last-minute purchase by customers trying to advance purchase of BS-IV vehicles,” SIAM president Rajan Wadhera said in a statement.

He further said, “Supply chain disruptions from China is also a concern, which may impact the production plans for companies going forward” while welcoming the government’s step to issue a “notification of Force Majeure for coronavirus and 24×7 clearance of shipments at all customs formations”.

According to SIAM, domestic passenger vehicle sales declined by 7.61% to 2,51,516 units in February from 2,72,243 units in the year-ago month. Car sales last month were also down 8.77% at 1,56,285 units as against 1,71,307 units in February last year.

Watch | All you need to know about BS-VI fuel

Total two-wheeler sales in February fell by 19.82% to over 12.94 lakh units as compared to over 16.14 lakh units in the same month last year. While motorcycle sales tumbled 22% to 8.16 lakh units, scooter sales dipped 14.27% to 4.22 lakh units.

Sales of commercial vehicles were down nearly 33% to 58,670 units as against sales of 87,436 units in the same month last year. Companies dispatched 35,245 units of light commercial vehicles during the month under review, down 28%, and 20,425 units of medium and heavy commercial vehicles, a fall of over 40%.

As per data shared by Federation of Automobile Dealers Associations (FADA), the retail sales of vehicles in the country — as measured by vehicle registration numbers, grew 2.60% to over 17.11 lakh units in February 2020. While sales of passenger vehicles declined by 1.17% to over 2.26 lakh units, that of two-wheelers and commercial vehicles were up 1.52% to 12.85 lakh units and 13% to 92,805 units, respectively.

Mr. Wadhera said some upside on the registration numbers can be attributed to last minute purchase by customers trying to advance purchase of BS-IV vehicles.

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Silicon Labs To Buy Redpine Signals’ Connectivity Business For $308 Mln In Cash

Silicon Laboratories Inc. (SLAB) announced Thursday that it has entered into a definitive asset purchase agreement to acquire Redpine Signals’ Wi-Fi and Bluetooth business, development center in Hyderabad, India, and extensive patent portfolio. The cash consideration for the deal is $308 million.

The Redpine Signals acquisition includes an at-scale design center with approximately 200 employees in Hyderabad, India.

The integration of the Redpine Signals technology is expected to accelerate Silicon Labs’ roadmap for Wi-Fi 6 silicon, software and solutions.

Silicon Labs expects the transaction to add approximately $20 million in incremental revenue on an annualized basis for FY2020. The company also expects the deal to enhance its IoT revenue growth rate at comparable gross margin, and to be accretive to earnings per share on a non-GAAP basis in 2H 2021.

The transaction will add approximately $15 million of non-GAAP operating expenses on an annualized basis.

The acquisition is expected to close in the second quarter of 2020, subject to customary closing conditions. The deal has been approved by the boards of directors of both companies and the stockholders of Redpine Signals.

J.P. Morgan Securities LLC served as exclusive financial advisor to Redpine Signals.

Tyson Tuttle, CEO of Silicon Labs, said, “The acquisition of Redpine Signals’ ultra-low-power Wi-Fi and Bluetooth products and extensive intellectual property portfolio will expand our leadership in IoT wireless technology. The addition of these products into our worldwide sales and distribution network will drive further momentum in the smart home, industrial IoT and commercial markets for customers who want to get to market quickly with Wi-Fi enabled connected devices.”

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Savills FY19 Profit Rises, Lifts Dividend; Buys Macro Consultants In US

Savills plc. (SVS.L), a real estate advisor, reported Thursday that its fiscal 2019 profit before tax increased 6 percent to 115.6 million pounds from last year’s 109.4 million pounds.

Basic earnings per share increased 8 percent to 60.6 pence from 56.2 pence last year.

Underlying profit before tax was 143.4 million pounds, compared to last year’s 143.7 million pounds. Underlying basic earnings per share were 78.0 pence, compared to 77.8 pence a year ago.

Group revenue grew 10 percent to 1.93 billion pounds from 1.76 billion pounds a year ago, driven by strong performance in Less Transactional business lines.

Further, the company announced a final ordinary dividend of 12.05 pence, higher than last year’s 10.8 pence. This makes the ordinary dividend for the year of 17.0p, up from last year’s 15.6p.

In addition, a supplemental interim dividend of 15.0p, down from 15.6p last year, is declared, based upon the underlying performance of Transaction Advisory business.

The ordinary and supplemental interim dividends comprise an aggregate distribution for the year of 32.0p per share, representing an increase of 2.6 percent.

Looking ahead, Mark Ridley, Group Chief Executive, said, “While we continue to monitor the impact of global uncertainties on investor and occupier demand for real estate, we have made a good start to 2020 with the first two months outperforming the same period last year on all measures. As a result of the dynamic situation in respect of COVID-19 it is difficult accurately to predict its impact on our business for 2020 as a whole, although we do expect a greater weighting of activity to the second half of the year.”

Separately, Savills announced the acquisition of Macro Consultants LLC, a project management firm in North America. The acquisition completed on March 11.

The deal is part of the firm’s strategy of expanding the complementary real estate consultancy services offered by Savills US and its other businesses around the world.

Macro employs more than 90 staff located in offices across New York, Los Angeles, Washington D.C, Denver and Philadelphia.

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'COVID-19 outbreak could help agri exports'

Ministry marks 21 products wherein India can grab part of China’s market share

In the wake of the COVID-19 outbreak, the Centre has identified 21 agricultural products, including honey, potatoes, grapes, soya beans and groundnuts, in which Indian exports could benefit from trade restrictions against Chinese goods.

The total value of China’s global exports of these products amounted to $5488.6 million in 2018. India exported $4,445.9 million worth of these commodities in the same period and could now have a chance to grab part of China’s market share.

Also read | Viral economies: On coronavirus impact

“There may be opportunities for Indian exporters of agri-items, in case some countries impose restrictions on Chinese goods in response to outbreak of COVID-19. Opportunities may arise in case of other countries imposing import restriction on these tariff lines,” said an analysis of the impact of the virus outbreak on India’s agricultural trade, prepared by the Ministry of Agriculture and Farmers Welfare. The report was submitted to the Finance Ministry last week, as part of a wider exercise to analyse the disruptions in global supply chains due to the COVID-19 crisis and chart a government response. Supply shortages and trade restrictions have already had a harsh impact on China’s total exports, which dropped more than 17% in January and February, in comparison to the previous year. Chinese imports fell 4% in the same period.

“There are 21 agri tariff lines where China’s global exports and India’s global exports are more than $25 million and where India is price and volume-wise competitive and capable to provide an alternative,” said the Agriculture Ministry analysis, seen by The Hindu.

Some of these products include natural honey, onions and shallots, chillis, potatoes, vegetables, guavas, mangoes, grapes, tamarinds, cashew apples, lychees, black fermented tea, spices, groundnuts, soyabeans, paddy, sesamum seeds, vegetable seeds for sowing and plants used in perfumery or pharmacy. Major markets which currently buy these products from China include Vietnam, USA, Japan, U.K., Philippines, Malaysia, Russia and Korea.

‘Won’t affect us’

The Agriculture Ministry has also said that the impact of the virus outbreak on import of agri items from China “may not affect us to an extent that may lead to any crisis”. India imported agriculture items worth $109.74 million from China in 2018-19, with seven products, including kidney beans, bamboo, cassia, fresh grapes, live plants and plums and sloes, accounting for 84% of that.

“The import of these items are likely to get impacted in case of supply disruption occurs in wake of COVID-19. However, it may be noted that out of the top seven items, only two items – bamboo and kidney beans – are imported in bulk from China in the sense that they respectively represent 35.5% and 41.2% import from China out of India’s total imports from the world,” the analysis stated. In the case of those two items, India is still striving for self-sufficiency through the Bamboo Mission and the National Food Security Mission.

With regard to Indian exports to China, two items — cotton linter and mango pulp — may get impacted, as they are used as raw material by China for further processing and then export. Apart from these two, most major items are used for domestic consumption in China and may not be too badly hit, said the Ministry analysis. India exported agricultural items worth $191 million to China during 2018-19, including capsicum, isabgol and cumin seeds.

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