| Trouble viewing this email? View in web browser |  | | Tuesday, 7 June 2022 | | | Company Outsider | | A weekly newsletter that keeps track of the business of companies | |  | | By Sundeep Khanna | | | | Question of the Week The 500 billionaires in the Bloomberg Billionaires Index had a combined net worth of $8.4 trillion at the beginning of this year. What was the share of the 18 Indians on the same list? | | |  | Here's a great value proposition A digital subscription to Mint plus WSJ can be yours at just ₹292 per month. Check out the convenient and affordable plans we have for you here. | | Good Morning Prefer audio? Now you can listen to your favourite newsletter. | | The News in Summary After losing the bid to acquire Holcim's cement assets in India, Ultratech is doubling down on efforts to boost its market leadership by investing a further Rs 12,866 crore in capacity expansion. Meanwhile, retail pioneer Kishore Biyani's troubles seem unending, with creditors now contemplating invoking the personal guarantees he and his family had given to recover unpaid loans. Vodafone India, another debt-laden company, was reported to be in talks with Amazon for a large funds infusion, while at Nasdaq-listed Indian SaaS provider, Freshworks, neither the continuing losses nor the steep decline in market cap has stopped the top team from rewarding itself generously. | | | | Ultratech to Spend Big on Capacity Addition Not content with being the country's largest cement producer, UltraTech Cement Ltd is planning to spend Rs 12,866 crore on boosting its capacity by an additional 22.6 million tonnes per annum (mtpa) on top of the 119.95 mtpa that it already has. The company plans to do this through a mix of greenfield and brownfield expansion. As part of the latter, it did make a bid to acquire the 70 mtpa cement assets of Holcim India though it eventually lost that race to the Adani group. The urgency to add cement capacity is driven by the government's plan to spend a record Rs 7.50 trillion this year on building roads and ports to boost growth, along with the revival of capital spending by the private sector. The 2024 Union Elections, now just two years away, are also expected to spur demand for cement as governments traditionally announce new projects and complete planned ones to lure voters. | | |  | | | | Kishore Biyani's Troubles Far From Over Lenders to the cash-strapped Future Group are exploring the possibility of invoking personal guarantees given by its founder Kishore Biyani and his family to recover unpaid loans given to group companies. In the past, while securing loans worth Rs 10,216.77 crore for group companies and Rs 1,441 crore for Future Retail, Biyani had signed agreements specifying that in case of defaults in repayments, the lenders would have the right on any monies, securities, bonds and other properties held personally by him to the extent of the guaranteed liabilities. It is these unconditional, irrevocable guarantees that the lenders are now threatening to invoke. For Biyani, once the poster boy for Indian retail, the collapse of the potential deal to sell all his retail assets to Reliance Industries for Rs 24,713 crore has also meant a slump in his personal net worth as the company's shares tumbled. Looking for a bailout, he is in talks with Reliance Industries (RIL) to sell the group's supply chain and logistics businesses and with at least three large investors, including Azim Premji's Premji Invest and billionaire investor Rakesh Jhunjhunwala to sell Future Lifestyle Fashions. Neither of the two units is part of Future Coupons, which has been the focal point of his year-long dispute with Amazon. | | |  | | | | | | | | Vodafone India & Amazon Eye Marriage in the Clouds  Vodafone India was back in the news with one report claiming that Amazon was planning to invest Rs 200 billion in the debt-laden telco, with Rs 100 billion to come in the form of equity and the other half in debt. The company promptly issued a clarification stating that there was no proposal currently that was being considered by the board. But in the clarification itself, there were clues to the possibility of such fundraising since it did not state that the company would not consider such an offer in the future or had considered such a proposal in the past which may or may not be awaiting certain other developments to happen before it fructifies. That development is probably the conversion of Vodafone Idea's back dues to the government into equity, without which any new deal can't go through. Needless to say, Vodafone Idea needs funds desperately to bid for the 5G spectrum in the coming auctions, without which its long-term future could be in jeopardy. Amazon, for its part, needs Vodafone Idea's terrestrial networks to seamlessly link its cloud services with its enterprise clients. | | |  | | | | Loss-Making Freshworks Continues to Reward CEO Nasdaq-listed Indian SAAS firm Freshworks continues to give executive compensation a bad name. Even as the company's net loss for 2021 widened to $192 million from $57.3 million in 2020, it rewarded its founder and chief executive, Girish Mathrubootham, $233.41 million in stock awards that will vest over the next seven years. That makes it one of the biggest compensation packages received by an Indian business leader in recent years. Not that Freshworks was holding back earlier. The generous reward to its CEO comes at a time when its equity-based pay costs already totalled $173.4 million, or about 47% of its $371 million revenue last year. There is a minor kicker, though: for Mathrubootham to receive 100% of the award, the company's stock price, currently languishing at $15 a piece and down nearly 60% from its issue price of $36, would need to average at least $200 for two months before January 2029. But there's a hedge against that too. In the worst case, if the company falls short of these targets or if the CEO leaves the company, Mathrubootham is still assured of a third or 2 million of these performance-related restricted stock units. | | | | | | Cost Inflation Drags India Inc's Profits Down Expectedly, soaring energy and raw material costs hit profit margins of Indian companies, despite gains in sales. Data compiled for 2,100 companies, excluding banks and financial firms, showed March quarter revenue grew 25.5% from a year ago, but margins were squeezed with total expenses keeping pace. Smaller firms were the ones which bore the brunt of surging inflation as they lacked the power to pass on cost increases to consumers. Earnings also varied sharply depending on how much the sector was exposed to the inflationary pressures with auto, consumer, consumer durables, steel and cement companies which saw a big surge in raw material costs feeling the heat. However, input cost pressures were relatively mild in sectors such as telecom and commodities. Things could get worse before they get any better, with analysts warning that the full impact of higher costs would be felt in the June quarter since the Russian invasion of Ukraine happened in late February, sending crude oil and commodities prices soaring. Interest costs are also set to rise with the Reserve Bank of India raising rates to cool prices. | | Last Word Not only is the Indian startup ecosystem going through something of a meltdown, but its big benefactors, the venture firms that provide the financial ammo, are also showing signs of strain. Recent events at Sequoia Capital which cautioned its portfolio companies against doing business with a Bengaluru-based law firm Algo Legal, run by Sandeep Kapoor, its general counsel in India from 2010 till 2019, are odd, to say the least. The "concerning details" that the storied VC firm said came to light following a recently concluded investigation are a matter of serious concern since they remain unspecified. The extent to which they involved its investee companies, as well as the nature of their engagement, raises serious issues that should bring other investigative agencies into the picture. | | | | Law firm Algo Legal is suddenly in the news for the wrong reasons. Here's a two-year-old interview of the firm's founder and managing partner, Sandeep Kapoor, who is in the eye of the storm: | | Answer to the Question The 18 Indians on the list had a net worth of $415 billion, just under 5% of the total. | | | Do you have any questions? Send in your queries to sundeepkkhanna@gmail.com Were you forwarded this email? Did you stumble upon it online? Sign up here. | Please share your feedback with us What do you think about this newsletter? | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Samiksha Khanna. Send in your feedback to newsletters@livemint.com. | | | | | Download the Mint app and read premium stories | | | | | | View in Browser | Privacy Policy | Contact us You received this email because you signed up for Mint Top of the Morning or because it is included in your subscription. Copyright © HT Digital Streams. All Rights Reserved | | | | |
