| | | Question of the Week Port Talbot, the site of the UK’s biggest steelworks which its current owner Tata Steel is threatening to shut down, has an unusual private museum. Name the attraction. | | |  | Here's a great value proposition A digital subscription to Mint premium can be yours at just ₹213 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 Any apprehensions about the success of the 5G spectrum auction were laid to rest on Day 1 itself as telecom operators put in bids worth Rs 1.45 trillion, setting the government up for a bonanza. Meanwhile, Tata Steel’s net profit dropped as the export duty on steel, rising raw material costs, and falling steel prices globally took their toll, but the company said its capex plans wouldn’t be affected. Good news, though, for Yes Bank with PE majors Carlyle and Advent buying a stake in the once-stricken bank. Elsewhere, Metropolis Healthcare has dropped plans to sell the company and is now looking for a strategic partner who can bring in capital, while shares of much-vaunted start-up Zomato dropped precipitously as investors bailed out the moment the one-year lock-in period ended. | | | | Successful Spectrum Auction a Win for the Govt. The 5G spectrum auction got off to a bright start with bids worth over Rs 1.45 trillion on Day 1, beating expectations and surpassing the 2015 record of Rs 1.09 trillion. Expectedly, mid and high-end bands, the 3300MHz and 26GHz bands, attracted strong bids, but for the first time, operators showed keen interest in the pricier 700MHz band, which was skipped completely in the previous two sales because of prohibitive costs. While Reliance Jio, Bharti Airtel, Vodafone Idea and the Adani group are in the fray, analysts believe Jio may be the most aggressive. With total proceeds by the sixth day of the auction surpassing the Rs 1.5 trillion mark, the government was in line to net at least Rs 14,843 crore upfront, according to estimates from Credit Suisse. The government, which has put over 72GHz of airwaves worth about Rs 4.3 trillion for sale, plans to complete spectrum allocation by 15 August with the hope that some 5G services can start by October this year. | | |  | | | | Tata Steel Soldiers on Despite Shrinking Profit Tata Steel posted a 12.83% decline in consolidated net profit of Rs 7,764.96 crore for the quarter ended 30 June but still topped analysts’ estimates on better-than-expected price realizations in India and improved profitability in Europe. The export duty on steel, rising raw material costs and drop in steel prices globally did impact the company’s performance. However, revenue from the operations increased 18.6% to Rs 63,430 crore. The company’s CEO, T.V. Narendran, said it had been a challenging quarter for the economy because of rising interest rates, supply chain constraints and a slowdown in China due to covid. However, despite the declining numbers and fears of a slowdown in demand, Narendran said the company would not slash its Rs 12,000 crore capital spending plan, targeted at doubling its steel production capacity by the end of this decade. The potential removal of the export duty could be a positive for the company, though the benefits from this move may be limited as export demand remains sluggish. Tata Steel expects the rest of the year to be challenging with the performance in the September quarter tapering sequentially, given the lower realization, which may not be compensated by the fall in input prices. Queering the pitch further, the company’s chairman N. Chandrasekaran indicated that it may close the Port Talbot site, the UK’s biggest steelworks employing some 4,000 workers, unless it receives £1.5 billion ($1.8 billion) in support from the UK government for its transition to greener steel production. | | |  | | | | | | | | PE Biggies to Buy Stake in Yes Bank Yes Bank’s resurrection from the dark days of 2020, when the Reserve Bank of India placed it under a moratorium, appears to be complete, with global private equity majors Carlyle Group and Advent International agreeing to buy shares and warrants worth Rs 8,898 crore ($1.1 billion) in the bank for a 10% stake each. Once necessary approvals are received this will mark one of the largest capital fundraises by a domestic private lender. Analysts said the deal would provide a much-needed boost to the bank’s long-term viability. It also comes on the heels of Yes Bank’s success last month in finding a partner in JC Flower to offload its pile of stressed loans of Rs 48,000 crore. | | | | Volte-face at Metropolis Healthcare An about turn at Metropolis Healthcare where the promoters who were looking to sell out till a few months ago are now looking for a strategic partner instead. In addition, the company is looking to raise at least $500 million through preferential share allotments and secondary share sales to finance acquisitions in the healthcare and diagnostics lab space. With the covid pandemic receding, demand for lab tests, one of the main lines of business for diagnostics firms, has slumped, seriously denting their profit margins. Metropolis shares have halved from Rs 3,457.45 on 3 January 2022 to Rs 1,515, wiping out Rs 10,000 crore from its market capitalization. | | | | Zomato Shares Go On a Diet  Shares of food delivery company Zomato plunged over 10% to an all-time low of Rs 47.55 the day the one-year lock-in period for investors who bought shares in the company’s initial public offering (IPO) ended. The stock continued to decline the next day, too, falling to Rs 43.95 before staging a minor recovery. With this, the company’s shares fell over 40% from the issue price of Rs 76 and over 75% below its all-time high of Rs 169. While some brokerages like Jefferies are still bullish on the stock, investment veteran Shankar Sharma felt that Zomato shares were a game over on the listing itself. Big bull Rakesh Jhunjhunwala too, had predicted such a fall in 2021, even when the stock was scaling new highs every day. He wasn’t the only one. Aswath Damodaran, professor of corporate finance and valuation at the Stern School of Business at New York University, had valued the Zomato share price at Rs 40.79 apiece on 22 July 2021, just one day ahead of its share listing on 23 July 2021. | | | | Here’s a video from August 2021 where Professor Aswath Damodaran explains his valuation of Zomato’s shares: | | | | Last Word  Buoyed perhaps by their bumper profits, Indian companies opened their hearts and loosened their purse strings in meeting their corporate social responsibility mandate. According to data from the ministry of corporate affairs, 9,374 companies spent more than the prescribed 2% on CSR in FY21, a 35% improvement over those who did so in the year before. At the same time, the number of companies that have not spent a penny on charity decreased to 2,926 in FY21, a reduction of over 71% from the 10,247 companies that did not loosen their purse strings for CSR the previous year. In all, over 17,000 businesses spent close to Rs 25,000 crore on CSR in FY21. Part of it may have had to do with the revamp in the legal provisions, including a penalty of at least Rs 1 crore for the defaulting company and Rs 2 lakh for each defaulting officer. In addition, companies now have the flexibility to spend more than the mandated 2% of their net profits on CSR in any given year with the option of setting off the excess amount spent against the CSR spending obligation in future years. Clearly, incentives help companies do good more easily. | | Answer to the Question One of the tourist attractions of Port Talbot is the Baked Bean Museum of Excellence, which describes itself as “The world’s first and only comprehensive haricot museum dedicated to all baked bean devotees.” It is owned by a maverick named Barry Kirk, who once worked in the computer department of the British Petroleum chemical plant nearby. | | | Do you have any questions? 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