Namaste! Aaj ka news roundup, Newswala style!

MARKETS

Markets: The New Samvat kicked off on a rough note as the Nifty50 index plunged 500 points, hitting a fresh 4-month low after a broad sell-off. Despite a late recovery that eased some losses, the index closed just below the 24,000 mark, down 1.30% for the day.

TOP STORIES

Small Packs Create Big Challenges for FMCG

What Happened

Fast-moving consumer goods (FMCG) companies are feeling the pinch of rising input costs and food inflation, prompting them to reassess their entry-level price points, specifically the ₹5 and ₹10 packs.

As commodity prices like palm oil, coffee, and cocoa soar by 50-60% over the past year, companies are left with a tough choice. While some are considering reducing the size of these small packs, others are committed to maintaining these price points. 

Why It Matters

The struggle over small pack pricing isn't just a math problem; it's a balancing act between consumer demand and profitability. As companies like Nestle India move from ₹5 to ₹7 and then to ₹10, they risk losing budget-conscious consumers. With ₹10 packs now accounting for 16-20% of their business, these shifts could alter the landscape of affordable options in the FMCG market. 

Meanwhile, urban consumption, which constitutes about 65-68% of total FMCG sales, is showing signs of slowing down. This means that consumers might not be willing to shell out more cash, putting even more pressure on these firms.

Conclusion

While firms like Godrej Consumer Products are looking to increase prices and stabilize costs, many are finding creative solutions like reducing pack sizes to maintain margins. It appears the ₹5 and ₹10 packs are here to stay, but not without some serious adjustments. So, the next time you reach for that affordable snack, remember—it’s not just you; the companies are feeling the crunch too!

PAISON KA KHEL

Nvidia takes Intel’s spot on the Dow

Intel’s 25-year run on the Dow Jones Industrial Average is ending, and Nvidia is stepping in. Nvidia’s rapid rise in the AI world—thanks to chips powering everything from ChatGPT to self-driving cars—sent its shares up seven times in two years. 

Meanwhile, Intel missed the AI wave, and its shares tumbled by 54% this year. With Nvidia’s whopping $3.32 trillion value compared to Intel’s now modest $100 billion, this shake-up shows the big shift in chipmaking power. 

Revenue slide pushes Bosch to trim workforce

Bosch, the auto parts giant, is set to trim over 7,000 jobs in Germany after forecasting a shaky 2024. CEO Stefan Hartung admitted that Bosch won’t hit its financial targets this year, with sales returns expected to dip to 4%, down from 5% in 2023. Bosch reported €92 billion in revenue last year but is now facing industry slowdowns and EV transition uncertainty.

Despite the cuts, Bosch still has growth plans—like its €7.4 billion acquisition of Johnson Controls in July.

TOP STORIES

Is Global Tobacco Shortage a Ray of Hope

What Happened

Cigarette manufacturers in India are targeting a revenue growth of 9-10% for this fiscal year, following last year's similar increase. This optimism comes as the mid-premium cigarette segment expands and exports of leaf tobacco surge, thanks to a drop in tobacco production from key countries like Brazil and Zimbabwe due to adverse weather conditions. 

Why It Matters

As global tobacco production dips by 10-15%, India—now the second-largest tobacco producer—stands to benefit significantly. The country is well-positioned to fill the gap left by reduced output in major producers, allowing for a 30% jump in leaf tobacco exports.

With a stable tax environment and new product launches, around 90% of revenue is expected to come from the cigarette segment, while leaf tobacco exports are projected to rise from 2.4 lakh tonnes to nearly 2.9 lakh tonnes.

Zoom out

Even with the looming 15-18% increase in raw tobacco prices, cigarette manufacturers are strategically focusing on the mid-premium segment to drive their profits. As this category is anticipated to represent 55% of the market, it is poised to play a crucial role in sustaining revenue growth.

According to CRISIL, operational margins are expected to remain healthy at 62-63%, supported by a diverse product mix and solid liquidity. 

GLOBAL NAZARA

Canara Bank sets ambitious recovery target for bad loans

Canara Bank is setting its sights on recovering ₹6,000 crore from bad loans in the second half of FY25. After recovering ₹2,905 crore in the second quarter, Managing Director Satyanarayana Raju expects another ₹3,000 crore in both Q3 and Q4. The bank aims to minimize losses by backing good loans.

In addition, Canara Robeco Asset Management Company, the bank's mutual fund arm, is likely to launch its IPO by the end of this financial year, planning to sell a 13% stake.

Oil & gas subsidies cut by 85% in 10 year

India has slashed oil and gas subsidies by a massive 85% over the last decade, dropping from $25 billion in 2013 to just $3.5 billion in 2023, reports the Ministry of New and Renewable Energy. 

The government phased out petrol and diesel subsidies, while raising taxes on these fuels from 2010 to 2017—a “cut and redirect” strategy. Now, all that saved cash is powering solar energy, electric vehicles, and stronger electricity grids.

TOP STORIES

Coal India on track for dividend comeback

What Happened

Coal India, the country’s top coal producer, aims to make a comeback on the dividend list by 2025-26, thanks to improved performance at its Eastern Coalfields Ltd (ECL) subsidiary. 

• Currently burdened with ₹2,200 crore in losses, ECL is on track to wipe out two-thirds of these losses this fiscal year.
  

 Bharat Coking Coal Ltd, a previously loss-making subsidiary, has already returned to the dividend list. Meanwhile, Coal India’s production target for the year is a whopping 823 million tonnes.

Why It Matters

This dividend revival plan is more than a cash flow story—it’s a signal of stability for Coal India, which plays a central role in meeting India's energy needs. ECL’s progress, if sustained, could help Coal India reduce costly coal imports that currently hit foreign exchange reserves. 

Plus, the company is pushing to improve “first-mile connectivity,” aiming to cut inefficiencies like overloading and underloading. By building 150-200 km of connectivity each year, Coal India expects to save ₹150-200 crore annually. Notably, the Gevra mine, expected to be the world’s largest, will hit a production milestone of 70 million tonnes in two years, boosting Coal India’s output.

Conclusion

Coal India’s ambitious goals signal a promising shift in India’s coal sector. With a billion-tonne production target set for 2026-27, and plans to expand underground mining and solar initiatives, the company looks certain to cement its role in India’s energy space.

While challenges like monsoon impacts may temporarily slow production, Coal India’s roadmap could lead to both financial stability and reduced dependency on imports.

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