| | | Question of the Week A year before the controversy over land acquisition in Singur for the Tata Motors plant, the Left Front government in the state faced another major setback in its industrialization efforts. Which infamous incident was that? | | |  | 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 | | The News in Summary Already reeling from a spending cutback in its major markets, Indian IT market leader Tata Consultancy Services (TCS) is now looking at a $450 million hole in its annual business as clients like Deutsche Bank restructure their business. Elsewhere, Zurich Insurance Co. will buy a majority 51% stake in loss-making Kotak Mahindra General Insurance for an enterprise value of Rs 6,000 crore, while Tata Steel posted a Rs 6511 crore loss in its latest quarter on account of an impairment charge for its Port Talbot plant in the UK. Meanwhile, Punit Goenka is back in charge at Zee after a Securities Appellate Tribunal (SAT) overturned a ban by the Securities and Exchange Board of India (Sebi) on him and his father, Subhash Chandra. Finally, an arbitral tribunal ruled that Tata Motors can recover Rs 766 crore from the West Bengal Industrial Development Corp. Ltd (WBIDC) in the last remaining dispute over its Singur automobile plant. | | |  | | | | Client-level Changes Hurt TCS’s Revenue Stream  TCS, the country’s biggest IT services firm, is staring at a nearly half-a-billion dollar hole in its revenue stream following the reworking of deals by some of its large clients. Thus, with Germany’s biggest bank, Deutsche Bank, announcing that it would shut almost half of the 550 branches of Postbank over the next two years TCS faces a potential loss of $60 million in annual business by 2025. That’s because, in November 2020, TCS bought Postbank Systems AG, Postbank’s IT firm, along with its 1,500 engineers, to manage all of the German bank’s technology needs. Similarly, business from another of its clients, Nielsen, will drop to $139 million a year from 2025 onwards, down from the $320 million a year which was part of the original commercial agreement signed in 2017. Finally, in June, Transamerica Life Insurance Co. scrapped a $2 billion, 10-year partnership five-and-a-half years after it awarded the contract to TCS. The combined impact of these changes is a loss of $450 million in annual business for the IT market leader, already grappling with a slowdown in its major markets of the US and Europe. | | | | Zurich Insurance to Buy Controlling Stake in Kotak’s Insurance Subsidiary  In what will be the single-largest investment by a global strategic insurer in an Indian non-life insurer, Swiss insurer Zurich Insurance Co. is buying a majority 51% stake in Kotak Mahindra General Insurance for Rs 4,051 crore. And since regulations mandate that Kotak Mahindra Bank must limit its stakeholding in an insurance company to below 30% or maintain it above 51%, Zurich will purchase another 19% more over the next three years. Jaimin Bhatt, chief financial officer of the Kotak Group, however, explicitly stated that it had no intent to exit the business. In fact, with the funds that came in, the Kotak Bank subsidiary, which reported a net loss of Rs 117 crore in FY23 and has a market share of just 0.5% in the crowded Indian non-life insurance market, plans to expand its business which includes motor, health and home insurance. The transaction is subject to regulatory approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India, and the Competition Commission of India. | | | | | | | | Tata Steel Posts Huge Loss on Impairment Charge The £1.25 billion decarbonization project at its Port Talbot plant, for which it recently reached an agreement with the UK government, took its toll on Tata Steel’s latest quarterly numbers. With the steel maker booking a Rs 6,358 crore impairment charge for the joining investment plan, it reported a loss of Rs 6,511 crore for the three months ended 30 September from a profit of Rs 1,297 crore a year earlier. Its consolidated revenue from operations fell 7.5% in the same period on account of the global economic slowdown, but with domestic demand remaining robust, the Indian business generated a higher margin of around 20%. With lower average selling prices (ASP) brought on by lower ferrous prices, as well as slower seasonal demand, analysts had predicted the steel industry would record mixed results in Q2FY24. Tata Steel’s drop in earnings, therefore, was on expected lines. | | | | Amid Challenges Before Sony Merger, Punit Goenka Back in Charge at Zee With a Securities Appellate Tribunal (SAT) overturning a ban imposed by the Securities and Exchange Board of India (Sebi), Punit Goenka was reinstated as the managing director and chief executive of Zee Entertainment Enterprises Ltd (ZEEL). The move which clears the way for Goenka to lead the proposed merged entity of Zee and Sony Pictures Networks India, comes at a time when the two-year-old deal faces closure delays due to regulatory approvals and objections from financial creditors of Zee promoters, Subash Chandra and his family. In the latest development on the issue, The National Company Law Appellate Tribunal (NCLAT) has transferred pleas filed by Axis Finance and IDBI Bank challenging the merger to the bench of the chairperson, Ashok Bhushan, which is already reviewing IDBI’s insolvency plea against Zee Entertainment Enterprises Ltd. (Zee) due to outstanding dues. The uncertainties surrounding the merger have had an impact on the performance of the company, which posted a sharp decline in its revenue for the July-September quarter of fiscal 2023-24, along with mounting losses. | | | | Tata Motors Wins Arbitration Award in Singur Land Case  Fifteen years after it was forced to shut its Singur automobile plant following protests led by the then opposition party, the Trinamool Congress, Tata Motors has scored one final moral victory. An arbitral tribunal awarded the company Rs 766 along with interest at 11% starting from September 2016 to be paid by the West Bengal Industrial Development Corp. Ltd (WBIDC), the state’s industrial development agency. The latest ruling caps an unfortunate end to what started as Ratan Tata’s pet project to manufacture its Nano model, touted to be the world’s cheapest car, in Bengal. But after the then West Bengal government, led by the Left Front, turned over several acres of land to Tata Motors for the plant, it faced violent opposition from some local farmers and the Trinamool Congress’s Mamata Banerjee, on the grounds that the compensation paid for the land acquisition was inadequate. With protests turning violent, Tata decided to move out of the state and set up the plant in Gujarat’s Sanand. | | |  | | | | | | Last Word Just two years after it became the poster boy of the entrepreneurial universe with its sky-high valuation of $48 billion, WeWork, the co-working firm funded by Softbank, looks to be headed for bankruptcy. With its stock tanking over 50% following media reports about the impending bankruptcy filing, the company’s worth is down to barely $120 million. Many of the long-term office leases the company had signed in good times will probably need to be restructured or written off, putting further pressure on its sagging financials. The once prized startup made a complete hash of its initial public offering (IPO), and with its co-working model coming unstuck during the covid-19 pandemic, it has been in rapid decline for the past year. WeWork’s woes are a warning about what happens when the hype surrounding PE-funded startups finally hits the reality of the more critical public markets. | | | | How does a company go from a valuation of $48 billion to barely $100 million in just a few years? That’s the mystery about WeWork as it heads to the insolvency court. This podcast by The Alarmist discusses the troublesome history of the WeWork empire: | | | | Answer to the Question In 2007, the West Bengal government under chief minister Buddhadeb Bhattacharya ran into trouble when inhabitants of Nandigram in West Midnapore protested against the setting up of a chemicals hub, with investment from an Indonesian conglomerate, the Salim Group, in their village. The crisis came to a head when, on 14 March 2007, 14 protesters were killed in police firing in the village. | | | 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. | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Shad Hasnain. 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 | | | | |
