India’s copper conundrum

Welcome to Top of the Morning by Mint, your weekday newscast that brings you five major stories from the world of business. It's Wednesday, March 27, 2024. My name is Nelson John. Let's get started:

Indian benchmark indices broke the three-day streak of higher close to end the trading session on the red on Tuesday. BSE’s benchmark index Sensex closed down 0.5 per cent, while NSE’s Nifty closed 0.42 per cent below its open. 

It's election season, and across the country, people are being encouraged to vote for their preferred political candidates. It's one thing to have a political party knocking on your door asking for your vote, but retail shareholders of ICICI Securities are facing a different kind of voting pressure altogether. In the run-up to a significant voting deadline, these retail shareholders reported an unusual campaign from ICICI Bank employees. ICICI employees have been urging them to vote in favour of a proposed demerger. In June, the boards of private sector lender ICICI Bank and its broking arm ICICI Securities approved the delisting of equity shares of ICICI Securities. This aggressive outreach, which includes calls and home visits confirmed by shareholders, has raised eyebrows over privacy concerns and the unwarranted access to shareholder data. Mint’s correspondents Shayan Ghosh and Nehal Chaliawala report on this peculiar method of shareholder outreach employed by ICICI. 

Credit card nerds are a different breed. They put in a lot of effort to carefully curate their spending — yes, curate — to maximise the benefits from any given card. Some go the lengths of opening a fixed deposit with a bank only to get a credit card. Axis Bank's offerings were too good to pass up for many. But last week, Axis devalued all of its cards: a process in which the benefits were watered down. Users who pay anywhere between 2,500 rupees to nearly 60,000 rupees as joining or renewal fees were shocked to hear of this news. Airport lounge visits, which were earlier free, are now dependent on spending at least 50,000 rupees in three months — this is over and above the fees mentioned earlier. Mint Money's Shipra Singh and Shashwat Mohanty report that some of these users are going to sue Axis Bank for this sudden devaluation, and explain the reasons for why Axis has taken this step.

The rescue of struggling businesses through the insolvency and bankruptcy code or IBC is poised for a big jump this year. The expectation for this year is set around a 50 per cent increase to about 275 cases. Mint’s senior editor Gireesh Chandra Prasad spoke to insiders who credited a more efficient process at the tribunal benches for this boost. The need for quick turnarounds under the IBC is clear - it's about cleaning up the financial mess in companies and banks, paving the way for fresh investments. Since the IBC kicked off in 2016, it's chalked up approvals for 891 companies, with creditors cashing in 3.2 trillion rupees. 

After a period of enjoying some breathing room with expanding gross margins, fast-moving consumer goods or FMCG companies might be hitting a bit of a snag. Recent spikes in the costs of crucial raw materials like crude oil, palm oil, coffee, and cocoa threaten to put a stop to margin growth seen over the past few quarters. With cost pressure building up, companies are thinking twice before passing these price hikes onto consumers. Suneera Tandon, who writes on consumer companies for Mint, examines a recent report from BNP Paribas  which seems to be waving red flags for the FMCG sector. This shift spells trouble for the sector, suggesting that the days of margin expansion might be behind us, with revenue growth also expected to slow down. From coffee to crude oil, price hikes are feeling pretty widespread. For example, coffee prices have seen a significant leap of 15.3 per cent from last year in March. And it's not just coffee feeling the heat; maize and wheat prices are on the rise too, fueled by demand and government plans related to ethanol production.

Sterlite Copper, part of the Vedanta group, has had a tumultuous 22-year history in Thoothukudi, Tamil Nadu. Since its inception in 1996, it's faced multiple shutdowns over pollution norm violations, leading to a  permanent closure by the Tamil Nadu government in 2018. The decision was upheld by the Madras High Court in 2020. Despite these challenges, the Supreme Court hinted at a possible revival in February this year, citing the plant's significant contribution to India's copper production. India has dropped from being a net exporter to a net importer following the closure. However, by the end of February, the Supreme Court upheld the closure, emphasising the importance of adhering to pollution norms over economic considerations. India's copper demand is surging, driven by infrastructure development, renewable energy, and electric vehicles. The closure of Sterlite Copper puts more pressure on meeting this demand, especially as domestic production relies heavily on imports and a single major producer, Hindalco Industries. The impending start of Adani's copper smelter in Gujarat offers some relief, but the country's long-term copper self-sufficiency faces hurdles, including ore availability and global market dynamics. Mint’s N Madhavan takes a deep dive into issues that India’s copper industry faces, especially the metal being in high demand with the advent of an EV revolution.

To read any of the stories in today’s episode, please click the links in the show notes.You may send us feedback, tips or anything that you feel we should be covering from your vantage point in the world of business and finance.

That’s all for today. Thank you for listening.

We'll be back tomorrow with a fresh episode of Top of the Morning. Have a wonderful day ahead!

Show notes:

Why ICICI Bank employees are dialling ICICI Securities shareholders

Devaluations are normal. So, why is it hurting Axis credit card holders?

Bankruptcy rescues have soared this year. Here is why

As raw material prices inch up, FMCG firms brace for margin pressure

This industrial metal can electrify India’s growth. But where are the ores?