In a case of worsening relations between the US and China, the US Commerce Department confirmed that the restrictions on 33 Chinese firms would take effect from the 05 June. The economic black list included companies that have been accused of spying on the Muslim Uighur population of Xinjiang province. Some of these companies also had alleged links with China’s military. This black list will restrict the sale of US components to these companies. According to the US Commerce department, these black listed companies focused on artificial intelligence and facial recognition as part of state agenda.
After a sharp rally over the last few weeks, Brent Crude closed weak on Wednesday after there were serious doubts raised over the sustainability of the supply cuts. The OPEC and Russia had committed to supply cuts to the tune of over 9 million bpd, but Russia was unwilling to commit to these cuts for a 3 month period. That had been the OPEC demand. In the last one month, the price of Brent Crude had rallied from $16/bbl to $43/bbl on the back of supply cuts and dwindling inventories in the US. A lot would depend on how demand for oil picks up globally once the COVID-19 lockdown is fully lifted.
Reliance rights issue closed on June 03 with the rights book oversubscribed to the extent of nearly 1.6 times. Against the rights issue size of Rs.53,100 crore, the company received bids to the tune of Rs.84,000 crore. The rights issue saw record trading till 29 May in the Rights Entitlements (RE) window. The rights issue is seen as a back-up fund raising plan as RIL moves towards zero net debt by March 2021. Reliance had recently raised close to Rs.78,500 crore by placing 17.5% stake with marquee global investors like Facebook, Vista Equity Partners, Silver Lakes, General Atlantic Partners and KKR.
Franklin Templeton has run into trouble on its winding up of the 6 debt funds after the Gujarat High Court ordered a stay on the shareholder vote process. Ironically, Templeton had given two choices to either vote for liquidation or to vote for appointment of Deloitte as the valuer. Both were unfair to the unit holders and there was no reason for them to pay for the unnecessary risks taken by the fund manager. The Gujarat High Court accepted the argument of the petitioners that liquidation of a mutual fund required prior consent of unit holders and redemption of units; and Templeton had done neither.
It was a stellar quarter for Aurobindo pharma as it reported a 16.% growth in revenues at Rs.6158 crore. The net profits of the company were up by 45% at Rs.849 crore in the Mar-20 quarter. The growth was largely driven by a 22.5% growth in its core formulations business. While the API sales were lower in the Mar-20 quarter, it was the formulations sales that more than made up for it. The company reported that it had showed very good growth in its two core markets of the US and Europe. The formulations business of Aurobindo also got a boost from two factors. Firstly, the demand for medicines is higher in India and abroad. Secondly, the COVID-19 syndrome has forced the US FDA to adopt a more lenient approach towards Indian Pharma. That obviates one of the biggest challenges of the last five years.