Issue 8- On Oxygen, super apps, and turnarounds
In today's Finshots brief, we talk about
- Why Indian hospitals are running low on oxygen
- Tata's super app ambitions
- Anil Agarwal's plan to turn things around
Low on Oxygen
Over the past month, India has added more coronavirus cases than any other country, taking our total tally to over 61 lacs. And this surge in infections has strained India’s medical infrastructure to the limit, exposing key shortages. Among them is something almost as important to managing the pandemic as it is to life itself: oxygen.
According to the World Health Organization, around 15% of Covid-19 patients require help with breathing. Even if they don’t have any outward respiratory distress, their oxygen levels may be critically low. Needless to say, hospitals treating the virus have to keep enough oxygen supplies on hand.
Now, India does well on the oxygen production front. We have around 500 factories that extract and purify it from the air. Then there are gas plants that artificially produce it. But the thing is, oxygen is not only used for breathing. It is also used in industries that manufacture steel, chemicals, pharmaceuticals, and paper. In fact, in the pre-pandemic days, medical oxygen only accounted for 15% of the total supplies. Now, the share has moved up to 55%. In absolute numbers, medical oxygen demand has surged from 40 metric tons a day to 100 metric tons.
At the same time, industries across the country are slowly getting back on their feet, leading to more demand from these folks as well. And striking a balance between the two is hard. Industries have already been ravaged by the pandemic, and as such, denying them a key production material isn’t really an option. At the same time, we can’t put lives in danger.
Grappling with this dilemma is especially difficult for states like Delhi, Madhya Pradesh, Rajasthan, Telangana and Andhra Pradesh. The reason being that a majority of the plants producing medical oxygen are located in eastern and western India, forcing the central and northern states to depend on them for the lifesaving gas. Get this- Delhi, Bihar and Madhya Pradesh, with a combined population of some 20 Cr don’t have a single unit manufacturing oxygen.
Moreover, most plants are situated near large cities and towns, posing a big transportation challenge for remote areas. Medical oxygen needs to be transported using special trucks carrying cryogenic tanks. And India only has about 1500 of these things.
Also, before the pandemic, medical oxygen would be shipped in a radius of about 125 miles from where it was produced. Now, it’s going 10- 20 times that distance.
Price is another concern. You see, medical oxygen can be sent to hospitals in two ways. Large hospitals in cities usually buy it in liquid form, wherein they can get it directly from the manufacturer through a series of pipelines. But most smaller and remotely located hospitals use cylinders that can be placed by a patient’s bedside. Saket Tikku, the president of the All India Industrial Gases Manufacturers Association summarises the pricing challenge here nicely - "The government has capped the price of oxygen in cylinders, but has not capped the price of liquid oxygen. It is like fixing the price of the finished product, but not the price of the raw material."
Well, all these supply issues combined are leading to stressful situations and several close calls in hospitals across the nation. This is surprising for experts like Ramanan Laxminarayan, the director of the Center for Disease Dynamics, Economics and Policy. As he said- “We had many months to prepare. The hope would have been that this calculation would have been done, because the oxygen was at the very top of the list of things critical to controlling a pandemic.”
And yet, here we are.
Tata’s new Super App
The Tata group’s $113 billion conglomerate spans across businesses like food and groceries, consumer electronics, insurance and financial services, jewellery, apparel, over-the-top services, education and bill payments, among others. And now, the behemoth is all set to bring all these varied offerings under one super app!
The app is set to be launched in January 2021, and the Tata Group has been trying to attract investors to this new endeavour. According to a report by Livemint, the biggest among them could be Walmart. An anonymous source said Walmart could invest upto $25 billion in the app. It may even be launched as a joint venture between the two entities. If that happens, Flipkart’s offerings could also be brought into the same platform. Wouldn’t that be something?
As one of the sources said, “Walmart is keen to get a strong brand backing its e-commerce business, while Tata group wants a global name and an established player in the online space to boost sales of products currently sold through Tata group’s retail subsidiaries and online platforms to be able to compete against Reliance Industries’ Jio Platforms and Amazon."
Anil Agarwal is back at it
Indian commodities tycoon Anil Agarwal initially made a lot of his money by buying beleaguered state companies like Bharat Aluminium and Hindustan Zinc, and fixing them up. And now, he’s planning to return to the same strategy.
The Vedanta Resources billionaire is trying to raise an investment fund that targets turnaround opportunities in India- of which, there are plenty right now. You see, the Indian government needs to raise a lot of money to battle the pandemic and get the economy back on track. Also, they want to rid themselves of certain PSUs that are performing way below the mark. So, they’ve launched a massive 2.1 trillion-rupee divestment program to sell these companies. Agarwal wants to select the winners among them and use his industry influence and business acumen to turn their fortunes around. But that’s not all - he’s also planning to target companies restructuring under India’s bankruptcy regime, as well as private firms.
For this proposed India Direct Investment fund, he’s working with Centricus Asset Management Ltd, and they’re planning to raise a whopping $5 billion!
Well, if this venture is successful, it could be a win-win for everyone involved. So fingers crossed.
The Tupperware Rally
The pandemic has forced a lot of people to eat at home instead of going out. This has boosted the sales of kitchenware like storage containers and baking sets. And this, coupled with a corporate rejig, has made made Tupperware one of the hottest stocks on Wall Street. Know more.
UAE’s Diversification Drive
There's been a steep decline in oil demand this year, with an adverse impact on prices. So, the United Arab Emirates wants to reduce its dependence on the commodity. And it seems the Gulf country is looking at space exploration as a viable diversification strategy. Learn more.
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-Written by Vedika Agarwal and Akshay Tater