Good morning. Massive protests against government job quotas in Bangladesh led to Sheikh Hasina resigning from the post of prime minister on August 5. While an interim government is in place, things are far from going back to normal, especially for cross-border trade and that’s affecting businesses in India. Read on to know more. 

In other news, the Supreme Court of India has set aside a settlement between troubled ed-tech start-up Byju’s and the Board of Control for Cricket in India (BCCI). Meanwhile, Google is starting to assemble its Pixel 8 in India. 

P.S. There won’t be an edition on Friday as the team at The Core is taking the day off for Independence Day. We will be back in your inboxes on Monday. However, there will be a new episode of our podcast The Core Report, which you can listen to here. 

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DE[CODE] THE NEWS

Bangladesh Crisis Leads To Trouble For Indian Exporters

The political crisis in Bangladesh is severely impacting businesses, not just within the country but in India as well. Indian exporters are struggling, facing issues with delayed payments and missed business opportunities, disrupting their usual operations.

Kolkata-based exporter Aditya Manaksia, who is also a member of the Entrepreneurs’ Organisation (Kolkata Chapter), began exporting food products to Bangladesh last year with the aim of growing his business. 

In the financial year ending March 2024, he exported coconuts to Bangladesh, making substantial profits.

Manaksia told The Core, “We had planned to supply coconuts for oil and food consumption, building on last year's successful trial. Unfortunately, the current situation has put these plans on hold.”

With the political situation still in turmoil, exporters are facing significant payment problems with their Bangladeshi clients because some banks in Bangladesh are not operational.

Arun Garodia, chairman of the Engineering Export Promotion Council of India told The Core that there was an ongoing payment issue that hasn't been addressed positively and remains widely unmentioned.

Recent updates from Bangladesh show a positive shift as the Army has handed power to the interim government. But what does this mean for the future of import-export trade and foreign investments?

CO:Relation

Pidilite Pins Hopes On Rural Recovery

If you have doubts about rural recovery, you should listen to or read the commentary by the management at Pidilite Industries. Pidilite, the maker of Fevicol and other adhesives, is relying on a double-digit volume growth for the nine months ahead. This outlook, they said, was based on a significant rural recovery it has witnessed over the past few quarters. The word ‘rural’ was featured 17 times in its analyst conference call.  

But for the company, the first quarter was a weak one with slow volume growth. Severe heat waves and election season also added to this. Despite all that positive commentary, the company's share price has merely moved in tandem with the NSE Nifty over the past five years. The valuation of Pidilite Industries is significantly higher than the Nifty 50. That is unattractive to investors despite most analysts considering the financial performance good.

CORE NUMBER

2.04%

This is what India’s Wholesale Price Index (WPI) cooled to in July, due to a sharp reduction in food prices. The index, which measures the country’s wholesale inflation, was at a 16-month high of 3.36% in June. Inflation in food prices also fell to 3.45% in July, compared to 10.87% in June. 

FROM THE PERIPHERY

—❌ Not so soon! US lenders to the edtech platform Byju’s have managed to get the Supreme Court to stay the settlement between BCCI and the company. Byju’s was about to get out of the insolvency proceedings against it by paying the dues of Rs 158 crores. However, the lenders argued that this repaid money was part of $533 million that had gone “missing” and that they are still owed $1 billion. The court ruled that the NCLAT order be stayed and the money already paid be kept in a separate escrow account.

—📱 Google is now assembling Pixel 8 phones in Tamil Nadu, India through Wowtek Technology India, a subsidiary of Bharat FIH, part of Foxconn. This move follows Google's earlier shifts from China to Vietnam in 2019 due to US-China tensions. The company plans to shift the majority of its smartphone assembly to India within three years once the production stabilises. Initially, production will be limited, but it will ramp up over time. Foxconn, doubling its Indian capacity, will also create 100,000 direct jobs, up from 50,000, to meet the increased demand for iPhone and Pixel assembly in the country.

—🚗 The number of cars sold wholesale fell by 2.5% in July, in the wake of high unsold inventory at dealerships across the country. Manufacturers adjusted their dispatches to dealers as slow sales in the last few months have led to high levels of unsold stock at dealerships. The upcoming festive season is expected to boost sales, however, overall sales growth for this fiscal year is projected to be moderate. 

—🗣️ Talk to us. The media industry is unhappy with the Broadcast Services Regulation Bill and wants the ministry of information and broadcasting to hold an open discussion and consult the stakeholders of the industry. While the first draft which came out in November 2023 was made public and comments were invited, the second draft was circulated in a hush-hush manner with selective stakeholders in late July. On Monday, the MIB said it will release a fresh draft after the consultations.

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