Good morning! You’ve heard of shrinkflation. But have you heard of sogflation? It is to do with staples getting more expensive due to shortages triggered by extreme precipitation. Bloomberg reports that Europe is suffering all-time high potato prices because much of the crop got destroyed in autumn 2023. The continent is dealing with both rising temperatures and heavier rains as a result of the climate crisis. Prices in England have shot up 81% year-on-year, and processing rates in the Netherlands—a key region for potato fries—are at the highest levels ever recorded for April. So much for the idiom “cheap as chips”.

🎧 Gig workers are facing the heat. Literally. Also in today’s episode: what’s hot in India’s coworking scene. Tune in on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Roshni Nair and Pushpita Dey also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: With elections just six months away, investors in the US are getting the heebie-jeebies. The Wall Street Journal reports that financial advisors are inundated with investor queries, some asking them to dump stocks, amid rising uncertainty over the government debt and tax regime. 

Trump-era tax cuts, pandemic spending, and massive support to industry have pushed up US government borrowing, which, the International Monetary Fund, warns is now fuelling price rise. 

Stock markets have so far largely ignored those concerns and rolled with the punches, initially pricing in possible Fed rate cuts and now accommodating higher rates for longer.  

Most Asian markets were in the green taking cues from the US. The GIFT Nifty indicates equity indices may open slightly up. 

FINANCE

All Is Still Not Well For MSMEs

While the Modi government has been vocal about the promotion of Micro, Small and Medium Enterprises (MSMEs) in India, the reality is different when it comes to their payment clearances. Data from the MSME Samadhaan portal reveals that as of April 2024, outstanding dues to MSMEs in India surpass Rs 20,765 crore. Notably, the public sector accounts for a substantial 40% of payment defaults.

MSMEs cannot seek working capital credit from banks or pursue legal action against large corporations or the government due to financial and procedural constraints. In a bid to address this issue, the Income Tax department implemented penalties on buyers effective April 1, wherein businesses are prohibited from claiming tax deductions for payments made beyond 45 days to MSMEs for the supply of goods and services. But the question remains as to whether this measure will alleviate MSMEs’ challenges. Read the full story at The Core.

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

Today, he speaks to Ved Jain, CA & past President, Institute of Chartered Accountants of India, on the new tax law that’s supposed to help MSMEs. Also in today’s episode: veteran cricket writer and commentator Ayaz Memon on the US hosting the T20 World Cup starting June 1.

WORK

Can I See You In My Awfis?

With WeWork exiting its India business—despite the global coworking company having a different trajectory in India than its loss-making business in western markets—the outlook for the IPO of rival Awfis Space Solutions is promising. Analysts expect the listing to be valued at 5x its sales, The Economic Times reports.

Even with post-pandemic back to work policies, Indian companies are favouring coworking facilities over traditional office spaces to reduce infrastructure and administrative costs. According to a Knight Frank report, offices in the country’s top eight cities absorbed nearly 60 million sq ft in 2023, up 15% year-on-year.

Awfis’ shorter lock-in periods and business model of sharing capex cost with developers while leasing at a premium gives it an advantage. It’s not the first coworking company to go public in India though. That credit goes to Pune-based flexi-space operator EFC.

MEDIA

Paramount’s Troubles Mount

It should have been straightforward: a 70-year-old Hollywood heiress sells her family’s four-decade old entertainment empire to a trustworthy collaborator for a pretty sum. But Shari Redstone, owner of Paramount Global, is struggling to close a sale to David Ellison’s Skydance Media even as her shareholders and top executives rebel against the deal. 

CEO Bob Bakish,  who argued that the Skydance deal benefits the Redstone family but leaves Paramount shareholders in the cold, has stepped down. PE firm Apollo Global may re-bid for the firm with Sony Corp. Paramount will report results for the March quarter later today.

Missed shot: Paramount’s dual share structure is the problem: it gives the Redstone family disproportionately more voting rights in company matters. Redstone previously resisted selling parts of her business piecemeal to potential buyers, choosing to integrate services like Showtime and Paramount+ into bigger, loss-making entities instead, The Wall Street Journal reported. She hoped a Big Tech buyer such as Apple may buy the whole business; no offer came and losses mounted.

The Signal

Paramount’s predicament is the same as that of most legacy media firms worldwide, including India. It could not abandon the profitable but sinking cash cow of cable TV, nor crack profits in their rapidly growing streaming business. It has no cash to tide over the interim. 

A timely deal with a patient, deep-pocketed investor could have helped with the situation, but Redstone may have held out too long.

FYI

Speed bump: Just four months into the job, Ola Cabs’ CEO Hemant Bakshi has quit, Moneycontrol reports; the company will lay off 10% of its employees as it prepares for an IPO. 

Empty your pockets: The Directorate General of GST Intelligence has served Baba Ramdev’s Patanjali Foods a showcause notice for undue input tax credit claims worth ₹27.5 crore. 

Explosive: An investigation by The Washington Post reveals that former RAW (Research and Analysis Wing) chief Samant Goel cleared the plan to assassinate Sikh separatist Gurpatwant Singh Pannun on US soil. National Security Advisor Ajit Doval was also probably aware of the plot.

Desperate times, desperate measures: Bloomberg reports that Boeing is planning to sell its debt as bonds after the company reported quarterly losses and nearly $4 billion in cash burn.

Done deal: The Financial Times has struck a deal with OpenAI to licence its content, on condition of linking back to the business publication, for the company’s AI products including ChatGPT.

THE DAILY DIGIT

~$19.24 billion

Or Rs 1.6 lakh crore. What the US collects from Indian students enrolled in higher education in the country every year. (Mint)

FWIW

All for the ‘gram: This April, so far, the Delhi Police has arrested and fined a couple in Spiderman costumes with a previous record, a young man lounging on a chair in traffic, and 28 bikers near India Gate on a single day, all for violating the Motor Vehicles Act. No, they aren’t members of some (weird) carjacking syndicate. They’re Instagrammers and YouTubers caught violating traffic laws while attempting to make content that can ‘break’ the internet. The Indian Express reports that Delhi Police has stationed personnel to monitor crucial highways and flyovers for wannabe social media stars looking to make viral content, usually featuring dangerous and illegal stunts. How dangerous and illegal? Last month, a YouTuber was arrested for setting a police barricade on fire.