Flushing out Gameskraft
Also in today’s edition: Toyota bends to investor wishes; Bloodbath in global markets; Consumers light up ecommerce; Apple's fintech is glitching
Good morning! Dragonflies in and around Delhi are falling victim to climate change, reports the Business Standard. Unpredictable rainfall confused the dragonflies, which means they laid eggs much before winter could begin. They are also growing shorter wings because of higher water temperature. It affects their ability to chase mosquitoes. On a good day, they eat 30-100 of the bloodsuckers. Grim news for us.
If you enjoy reading us, why not give us a follow at @thesignaldotco on Twitter and Instagram.
The Market Signal*
Stocks: Fear of an equally aggressive stance by the US Federal Reserve in the next policy meeting spooked markets on Monday. The RBI is also expected to raise rates later this week. As was the case with major currencies, the rupee tanked to new lows against the US dollar. The Sensex lost over 2,000 points in the last four days, leaving investors poorer by ₹13.30 lakh crore ($163 billion).
Early Asia: The SGX Nifty inched upwards (0.29%) at 7.30 am India time. Nikkei 225 (0.77%) also advanced ahead. The Hang Seng Index (-0.048%) declined marginally.
Crafty Accounting, Says Taxman
India’s tax authorities have accused Bengaluru-based online gaming company Gameskraft of evading ₹21,000 crore ($2.5 billion) in indirect taxes. That’s nearly double the controversial demand that the tax department made on Vodafone in 2007.
Crux of the matter: Gameskraft, which operates platforms such as RummyCulture and Gamezy, offers games of chance rather than skill, the Directorate General of GST Intelligence (DGGI) believes. And thereby, it should pay 28% GST. Gameskraft maintains it offers games of skill, which fall in the 18% GST bracket.
But also: DGGI claimed Gameskraft is paying GST only on net commission it earns after discounts, rather than the buy-in amount paid by users. It also accused Gameskraft of not issuing invoices to customers and submitting fake/back-dated invoices.
Alarm bells: Gameskraft’s peers (and their chartered accountants) will be watching closely. After all, it’s hardly the only online gaming company offering card-based games and fantasy sports.
Toyota gets An Earful, Promises Green Pivot
Japanese carmaker Toyota, which has been facing flak for its cautionary stance on electric vehicles (EVs), is holding discussions with critics and investors to polish up its green image.
To boot: Toyota has also been talking to Greenpeace, the global organisation that ranked it last among automobile firms for decarbonisation. The Japanese automaker only recently outlined strategies to make its factories carbon neutral by 2035 and sell 3.5 million EVs by 2030.
Case in point: US oil giant ExxonMobil too faced rebuke from shareholders last year for not doing enough to stave off climate disaster. It later kicked off a plan to carry out carbon capture and storage.
Plus: Salesforce clearly sees an opportunity in companies' need for carbon credits to offset emissions. It has launched a carbon credit marketplace.
How Bad Is It, Really?
If 2020 and 2021 dealt sledgehammer blows to many economies, 2022 is going berserk with a wrecking ball. By the end of August, the IMF had given out a record $140 billion in loans to countries, according to the Financial Times. It’s not over yet. Total commitments stand at $268 billion. But even that may not be enough.
Debt buildup: A study showed that 55 of the world’s poorest countries will need to repay $436 billion in the next six years—$61 billion this year and the next, and another $70 billion in 2024.
Risk is also building up in individual institutions just like in 2008-09. Credit Suisse Group is desperately looking to raise capital even as its shares plunged.
Political and economic risks are at insanely high levels as central bankers wage war on inflation. The UK pound sterling fell to historic lows after investors gave a big thumbs-down to Prime Minister Liz Truss’ economic plan. A new far-right government led by Euro-sceptic Georgia Meloni could break ranks with France and Germany, which is in the doldrums, on multiple issues, especially Ukrainian refugees. She could also be hard on business.
Wall Street is also spooked by China; and the big banks, including JP Morgan Chase, Societe Generale, and UBS Group have told local offices to prepare emergency plans. That could mean anything, from hitting the pause button to keeping the getaway car ready should things go south.
Basking In Festive Glow
Ecommerce sales were up 28% during the first weekend of the festival season compared with the previous year, indicating a consumption uptick.
Grooming demand: Just as Google mobility index has become a marker of economic activity, big festival sales of online retailers Amazon and Flipkart are keenly watched for consumer appetite and, hence, are a proxy for consumption. Interestingly, personal care was the fastest growing segment, possibly driven by people returning to offices. The real picture of broader demand will, however, be known only when reports trickle in from physical stores in rural areas.
Competition is also heating up, with JioMart ramping up seller on-boarding and becoming a one-stop ecommerce platform. On cue, advertisers are raising ad spends that are expected to total ~₹30,000 crore ($3.7 billion), 15% more than 2021.
No Stage For New iPads
Top execs at Apple, Samsung, and Xiaomi may soon develop worry lines. The Indian government is nudging the tech giants to integrate their smartphones with its homegrown navigation system, NavIC, by January 2023. This could disrupt planned product launches and increase production costs.
What, now? Luckily, Apple is no stranger to such requests: It already supports navigation systems for Russia and China. Also, coming soon: made-in-India iPhones.
Low-key: According to Bloomberg, the company is going old school with press releases to launch its iPads and Macs instead of the rumoured October keynote event. Technical challenges are barring the release of its Pay Later feature. In some respite, Apple fanbois are opting for the Pro edition, which could raise its margins.
Bonus: Rihanna will finally take to the stage. We are talking about the 2023 Super Bowl Half-Time Show, where Apple has replaced long-time sponsor Pepsi as the new partner. Which begs the question. New album, when?
🎧 After much talk, Apple will finally assemble the latest iPhone 14 series in India. NYC has a case against former US Prez Donald Trump. What happened? The Signal Daily is available on Spotify, Apple Podcasts, Amazon Music, and Google Podcasts, or wherever you listen to your podcasts.
Exit: Unilever CEO Alan Jope will retire in 2023 after a five-year stint that was marked with hiccups, including a botched up acquisition attempt of a GSK arm.
Suit up: Consulting firms such as McKinsey, Boston Consulting Group, Ernst & Young, PricewaterhouseCoopers, and Deloitte plan to ramp up hiring via campus placements in India.
Receipts: Microblogging site Twitter informed the Karnataka High Court that 50%-60% of tweets the Centre asked to block were harmless. It was being asked to pull down accounts without warning users.
No-go: European telecom companies urged Big Tech to pitch in with network costs, bringing up the energy crisis and climate change goals. But Google thinks it's a bad idea.
Winter is here: Flag carrier Garuda Indonesia has filed for bankruptcy under Chapter 15 of US bankruptcy law.
Putin’s cover: Edward Snowden, arguably the world’s most famous whistleblower, is now a Russian citizen.
In the bag? E-grocer BigBasket will receive ~$200 million in an upcoming funding round, from a clutch of investors including Tata Digital. Its valuation could touch $3.5 billion.
Movie of the moment: ...James Cameron’s 2009 release, Avatar. The movie came, saw, and conquered. Disney is looking to collect $30 million in ticket sales globally from its re-release. The box office money is only a bonus since the director wanted to test the waters before it releases the long-delayed sequel. Nice try.
Cooped up no more: At least that's what a bunch of outdoor enthusiasts hope for. The Melbourne city council is urging its citizens to get out of their homes. Pop-up libraries across run-over stores and reading booths are being set up in the hope that people step out. It doesn't help that return to office remains an unpopular option across Australia. Baby steps.
Big (Expensive) Mac: McDonald’s Japan is raising its prices for the second time this year thanks to a weakening yen and the highest inflation in decades. The price of about 60% of McDonald’s products will go up by 10-30 yen ($0.07-$0.21) from September 30. This was after the yen slid to a 24-year-low, making imported ingredients more expensive.
Enjoy The Signal? Consider forwarding it to a friend, colleague, classmate or whoever you think might be interested. They can sign up here.
We recently got funded. For a full list of our investors, click here.
Want to advertise with us? We’d love to hear from you.
Write to us here for feedback on The Signal.