In today's weekly wrapup, we'll talk about the Vodafone Tax Saga, why Adani is betting big on airports, why people are dumping junk bonds, the 30% Google commission, and what happens when things aren't as they seem. But first, a look at this week's Market edition.
Crisis at Lakshmi Vilas Bank
Last week, in an unprecedented move, shareholders of Lakshmi Vilas Bank ousted seven directors from the company all in one go. Insiders stated that the decision was predicated on the fact that Lakshmi Vilas Bank had been underperforming for a while now. But here’s the thing. There’s more to this story than what meets the eye. And so today, we will talk about what really went down at Lakhsmi Vilas.
Vodafone Tax Saga explained
On Monday, we talked about the latest ruling on the Vodafone Tax matter. The case begins with Hutchison Telecommunications International Limited (HTIL), which is based in the Cayman Islands. Now, HTIL was managing one of India's leading telecom players, Hutchison Essar, through a web of companies based in Mauritius and the Cayman Islands. Until one day they decided to sell it off and exit the country.
The Dutch based Vodafone International Holdings was interested in buying the entity from them, and they paid $11.1 billion for it. Hutch Essar became Vodafone Essar. And that should have been it. But then, the taxman cried foul. Find out why here.
Why is Adani betting big on Airports?
On Tuesday, we talked about airports, Adani and break even equations. Adani has been on a winning streak like no other. In just two years, the company, which has had no experience in running an airport, is all set to become India’s largest airport operator. They currently own a majority stake in Mumbai Airport and are on the cusp of running six more airports in India — Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati, and Thiruvananthapuram . This, after having won the bidding war every single time.
It’s quite something actually. But how did the company get here? We'll tell you all about it here.
The Junk Bond Dilemma
On Wednesday, we talked about Junk Bonds. Imagine you’re a distressed business owner. Your finances are in shambles and you haven’t had much luck of late. Your last hope is to borrow money from investors and pray that you tide over this crisis. But you won’t have many suitors looking to fund you at this hour. After all, there’s no guarantee that you’ll repay in full. Furthermore, an independent analysis will show that you are most likely to default on your obligations. That’s pretty bad news.
Meaning, at this point, you’ll have no choice but to issue junk bonds. So what are these bonds all about? We answer that here.
Pay up the Google Tax
On Thursday, we talked about Google's new policy. Here's the thing- whoever sells digital goods on any application marketed on the Google Play Store is expected to offer Google a 30% cut on every sale they make in-app. However, some apps like Spotify and Netflix managed to get around this inconvenience by simply asking users to enter their credit card information and nudging them to pay directly.
So Google recently announced that it will soon clamp down on a loophole that allows these applications to side-step this 30% commission. But what are the implications of this move? We discuss them in detail here.
When Sachin wasn’t a cricketer
On Friday, we talked about Parachute Oil, Sachin Tendulkar, and KitKat. You see, on Thursday, the Irish Supreme Court ruled that bread sold by fast-food giant “Subway” wasn’t actually bread at all. Irish laws mandate that a product will be classified as bread so long as the sugar content does not exceed 2% of the total weight of flour. But all of Subway’s bread options contained ~10% sugar, violating this requirement.
The court ruled that the classification was inappropriate and stated that their bread is not a staple food anymore and would no longer be exempt from Value Added Tax.
Anyway, we thought it would be really cool to illustrate similar cases from India for you. And we've done that here.
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And that's a wrap! Have a great weekend. :)
