Today's news bulletin is dedicated to highlights the most recent happenings in the fields of Marketing, Finance, and Operations. We will be discussing the recent move by Google to stop selling user-targeted ads and how will this impact the digital ad industry. Further, we will discuss the impact of PLI schemes for MSMEs and manufacturing sectors and will also touch upon the acquisition of DHFL by the Piramal group. We shall look at the implications of each of the topics in detail. Read on to find out!
- Google to stop selling ads based on your specific web browsing
- Piramal’s financial structuring ahead of DHFL merger
- Impact of Production Linked Incentives on MSMEs
Google has marked its position in the digital advertisement space: The internet behemoth has announced that it will no longer market advertisements based on personally identifying information from web browsers. We already know that Google's Chrome browser will discontinue support for third-party cookies by 2022.
Google plans to stop selling ads based on individuals’ browsing across multiple websites, a change that could hasten upheaval in the digital advertising industry.
At the moment, marketers use data collected from people's online surfing to decide who to deliver advertisements to. The effectiveness of the advertisement is calculated by tracking if a targeted person goes on to purchase the advertised product,
Now, Advertisers would be unable to get a more accurate image of either after Google's update. This has caused tensions in the digital ad industry between protecting user privacy and promoting competition.
What Has Brought On This Change?
The firm has already decided to make a long-term bet on privacy at the expense of user-level accuracy. With this move, we can expect other companies to follow their path in the near future. Google claims that their latest ad targeting technology, “privacy sandbox” would be designed to encourage anonymity(privacy). It will not collect information about users from multiple websites but will focus on targeting a cohort of users with similar interests rather than an individual user.
How Does This Move Impact Google?
Some Ad industry executives said the move is positive for customers. They expressed confidence that Google's latest targeting technologies will continue to help advertisers meet their online marketing targets.
According to some experts, Google could profit from the end of cross-website monitoring because it is less dependent on data from other companies. Instead, it gathers a vast volume of information directly from subscribers of its sites, such as YouTube or Google Search. Google says it will continue to use the data, known as "first-party" data when advertising advertisements to be shown on its own websites. Many major advertisers have a lot of first-party details on their clients as well.
How Will This Impact The Digital Advertising Industry?
This decision may drive the market away from the use of individualized tracking. Individualized tracking has long been questioned by privacy activists and is under regulatory scrutiny.
Because of Google's clout, this move has the ability to reshape the digital ad market, where multiple businesses depend on monitoring individuals to target advertisements, evaluate ad efficacy, and deter fraud.
Piramal Capital & Housing Finance is raising up to Rs 3,000 crore through the issuance of bonds with an annual interest rate of 9.25 percent. The issue arises at a time when the firm is proposing to merge with struggling home loan provider DHFL.
Recently, Piramal Group had emerged as the preferred bidder for the mortgage lender beleaguered Dewan Housing Finance Corporation Ltd (DHFL) by a distance, beating back competition from Oaktree and Adani Capital.
Earlier in November 2019, DHFL was sent to the NCLT after the company defaulted on its debt worth Rs 90,000 crore and auditors found a Rs 15,000-crore hole in its books. The promoters of the company are currently in jail and facing money-laundering charges.
Why Does the Piramal Group Want To Acquire DHFL?
The acquisition is in line with the Piramal group’s strategy to diversify its loan book. It's a step towards the demerger of the group’s financial services and pharma businesses in the future. A Piramal group official said the company planned to merge its financial services business with DHFL and retain all employees; it could even hire additional staff to grow the business.
Piramal Group had previously announced that it had secured RBI approval for its Rs 34,250-crore acquisition of DHFL. The group also claimed that it would combine DHFL with Piramal Capital & Housing Finance. Further, the group had promised to invest Rs 10,000 crore of Piramal Capital’s equity in the merged entity.
How Will This Benefit Piramal Group?
The merger with DHFL makes sense as it would give it a stable cash flow from retail customers. This will come at a time when Piramal's own corporate loan portfolio is under stress due to a slowdown in the real estate sector. For the nine months ended December 2020, Piramal’s financial services business had a total book size of Rs 46,370 crore.
The bonds are graded AA by CARE and come with the promise that if the ranking slips by one notch to AA-, the coupon rate will be raised by 0.50 percent. Following that, the coupon will be raised by 0.50 percent on each notch of ranking downgrade. If the non-convertible debentures' long-term credit rating is downgraded to A- or below, the investors have the right to recall the remaining principal sum.
Jairam Sridharan, former Axis Bank CFO who joined Piramal over a year ago, will run the merged entity as CEO.
Production-Linked Incentive is a scheme that aims to give companies incentives on incremental sales (over FY 2019-20) from products manufactured in domestic units. The aim of the output-related incentive scheme (PLI) for large-scale electronics manufacturing is to provide incentives to manufacturers. This would be a big step toward making India a production and export center.
Production linked incentive (PLI) scheme would make a major impact to the country’s micro small and medium enterprises (MSMEs) ecosystem by creating the anchor units in every sector that will need a new supplier base across the entire value chain.
Who Will Benefit From This Scheme?
Registered companies in India involved in manufacturing goods covered under the target segments of the PLI scheme can apply. Eligibility under the scheme shall be subject to thresholds of Incremental Investment over the base year as defined.
An applicant must meet threshold criteria (i.e., incremental investment) that is a minimum of INR 10 crore (MSME) or INR 100 crore (Others) and a maximum of INR 1000 crore) to be eligible for disbursement of incentive for the year under consideration.
How Will This Impact The Manufacturing Sector In the Country?
The move is expected to draw foreign players in the manufacturing sector, also making India more competitive globally by investment. The scheme also aims to enable domestic firms to establish or enlarge existing manufacturing facilities in the region. MSMEs in the engineering sector play a vital role with strong backward and forward linkages and with significant value addition and employment generation.
The PLI scheme aims to take the share of the manufacturing sector in the GDP to USD 1 trillion by 2025 by significantly reducing the cost of manufacturing and encouraging global firms to invest in the country.
The scheme aims at helping domestic manufacturers scale up their production to reduce excessive reliance on imports. This can be done by achieving better economies of scale to become export competitive.
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