Business News

Bengaluru, called India's Silicon Valley for its storied software companies, has a persistent hardware problem: poor infrastructure. It has become notorious for traffic jams and floods. Last month, it suffered another reputational problem when it began running short of water. Many people even started thinking of leaving the city as water wasn't enough for taking showers or using toilets.Bengaluru's condition is only going to worsen. Extremely hot weather in future is going to compound its water problem, creating a crisis for its tech businesses. It is home to $245 billion IT industry. Scorchers aheadOnce known for its gardens, lakes and year-round pleasant weather, Bengaluru is heading for a dry, hot and congested dystopia. Extreme heat will soon become its another problem in addition to traffic, flooding and water scarcity.Bengaluru experienced its highest maximum temperature for March in the past five years, reaching 36.4 degrees Celsius on March 29. This temperature marked the fourth highest in the past 15 years and the third highest in the last decade for March. Meteorological experts attribute this intense heat to global warming and the El Nino effect, which leads to the warming of the Pacific Ocean. A Prasad, a scientist at the IMD in Bengaluru, noted that due to the impact of El Nino, Bengaluru received minimal rainfall in March, resulting in a notably dry climate.Someone wrote on X about seeking refuge in an OYO hotel due to the escalating heat. Another X user wrote how Bengaluru had turned hotter than Gurugram. As per IMD, the city is going to remain hotter than Mumbai as well as Delhi in the coming days. To add to the misery, the city is experiencing some of its warmest nights on record, with minimum temperatures touching new highs over the past few days. According to IMD, Bengaluru, Monday and Tuesday marked the warmest nights in the city in the past 12 years, with temperatures recorded at 24.5°C and 24.3°C, respectively. Summer nights are usually cool in Bengaluru, offering relief from the day's sizzling heat. However, meteorologists & health experts have expressed concern over the trend of warmer nights combined with scorching daytime temperatures as it could lead to severe health issues. A health and family welfare department officer explained that usually cooler nights in summer helps the human body cool down. "If summer nights too become warmer, it disrupts this physiological process resulting in increased heat stress on the body. It could have a severe impact on kids and the elderly," the doctor said. Also, there are reports of water crisis impacting sales and rentals of apartments.As heat waves become a new normal in coming years for an already parched Bengaluru, it can become inhospitable for its tech business. One of the most congested cities in the world, it surpassed Delhi last year to become the Indian city with the highest number of private cars. As of March 31, 2023, Bengaluru had a total of 23.1 lakh private cars, exceeding Delhi's 20.7 lakh.After leading India's tech wave, Bengaluru powered India's startup phenomenon, becoming home to India's top unicorns. But with its multiple civic challenges such as congestion, flooding, water scarcity and heat waves, how long before its businesses start shifting to other places? The decline of BengaluruWith hot weather likely to become a new normal for Bengaluru, which will worsen the water and power problems, the city is going to lose its sheen. Udit Goenka, the Founder and CEO of Little SaaS, a software development firm, triggered a debate on X yesterday when he said Gurugram was better than Bengaluru for tech startups."If you are building a "tech" company...Gurgaon is the place to be and not Bangalore! Good talent is more affordable; huge buyer's market; no bubble and humble people; decent weather except summers (manageable since you will be inside AC rooms); super affordable offices," he wrote. Of course, many challenged his views. But what Goenka's post shows is that people have started comparing Bengaluru to other cities when it comes ot tech business. The civic challenges faced by Bengaluru will fuel this discourse further.ET has recently written about a report by Nasscom-Deloitte which says many Tier II cities could emerge as new tech hubs as businesses move form traditional tech hubs such as Bengaluru and Hyderabad to other smaller cities. The report says 26 Tier II cities have emerged to represent the ‘next wave of technology hubs’, providing an opportunity for sustainable and scalable growth for the tech industry. Several technology enterprises have strategically established their operational centres in emerging locations to fully capitalise on the diverse opportunities available to them.Of course, shifing operations from Bengaluru to Ahmedabad or Jaipur is not going to be quick or easy. It might take decades for Bengaluru to be abandoned by tech businesses for new locations. Meanwhile, either the city will find a way to solve its multiple civic problems or turn into an urban dystopia.

Alaska Air Group said on Thursday that Boeing had paid about $160 million to the airline in the first quarter as initial compensation to address the hit from the temporary grounding of 737 MAX 9 jets. The payment is equivalent to lost profits in the quarter, the carrier said in a filing, adding it expects additional compensation. An Alaska Airlines-operated MAX 9 jet experienced a mid-air cabin panel blowout in January, which led the U.S. aviation regulator to order a temporary grounding of 171 jets for inspections. "Although we did experience some book away following the accident and 737-9 MAX grounding, February and March both finished above our original pre-grounding expectations," Alaska said. The airline will now exclude the compensation from its calculation for first-quarter adjusted loss per share, which is expected to be $1.05 to $1.15. It had earlier planned to include the payment in its results. Boeing was not immediately available for comment on Thursday. Alaska and United Airlines bore the brunt from the grounding of 737 MAX 9 aircraft following the panel blowout that has sparked a manufacturing and reputational crisis at Boeing and supplier Spirit AeroSystems. Reuters reported on Wednesday that 737 MAX production at Boeing has fallen sharply in recent weeks, which is expected to ripple through the airline industry desperately seeking aircraft to meet a boom in travel demand. Last month, Alaska said its 2024 capacity plans were in flux due to the Boeing crisis. The carrier does not expect to get all of the 47 planned deliveries from the planemaker over the next two years, its CEO Ben Minicucci has said. The aviation industry's other major aircraft supplier Airbus SE is sold out until the end of the decade for single-aisle jets.

Telecom regulator Trai on Thursday sought stakeholders' views on the auction of three new spectrum bands in higher frequency range that will make available around 4,000 megahertz radiowaves for mobile services. The regulator has sought views on pricing, allocation norms, and payment terms, among others, for spectrum in frequency bands of 37-37.5 GHz, 37.5-40 GHz and 42.5-43.5 GHz for mobile services. This is the first time three spectrum bands in 37-37.5 Ghz, 37.5-40 Ghz and 42.5-43.5 Ghz are being proposed for the auction that will make available 4,000 Mhz spectrum for 5G services in the future. These blocks are different from the bands -- 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 2,500 MHz, 3,300 MHz, and 26 GHz -- which will be put on the block in the upcoming spectrum auctions scheduled for June 6. "The Telecom Regulatory Authority of India (Trai) has today released a consultation paper on 'Auction of Spectrum in 37-37.5 GHz, 37.5-40 GHz and 42.5-43.5 GHz bands Identified for IMT," an official release said. While the 37-37.5 GHz band is for mobile services, the other two bands 37.5-40 GHz and 42.5-43.5 GHz are for mobile and Satellite Gateway links. Trai, in the consultation paper, has sought the industry's opinion on various nuances of the auction of spectrum in these new bands, including pricing, validity, preferred block size, spectrum caps, rollout obligations, and other terms and conditions. The spectrum in new frequency bands can be utilised to provide 5G and 6G services. "These millimetre wave bands offer much higher capacity for small cell coverage and are critical for 5G and 6G services rollout for critical sectors, such as health, robotics and industry 4.0," ITU-APT Foundation of India (ITU-APT) President Bharat Bhatia said. The Department of Telecom approached Trai in August 2023 to seek its recommendation on pricing, allocation norms etc. The new set of spectrum bands was selected by the DoT after a consultation held by an internal committee with all major stakeholders, including representatives from the telecom and space sectors in 2022. The DoT committee deliberated on the allocation of a higher frequency band of 66-71 Ghz. The panel concluded there is no immediate requirement of the band for space and telecom service and therefore did not recommend its auction. Trai has asked the industry to submit written comments on the issues raised in the consultation paper by May 2, 2024, and counter-comments by May 16, 2024. "Whether the entire available spectrum in each of the frequency ranges 37-37.5 GHz, 37.5-40 GHz, and 42.5-43.5 GHz, should be put to auction for IMT...In case you are of the opinion that any of the frequency ranges viz. 37-37.5 GHz, 37.5-40 GHz, and 42.5-43.5 GHz should be put to auction at a later date, what should be the timelines for auctioning of such frequency bands for IMT," it asked. Trai also asked if spectrum in these frequency ranges should be assigned for 20 years as prevalent in the existing frequency bands, or for a shorter validity period. Other questions thrown up by Trai in the consultation paper are whether these radiowaves should be assigned for the existing Licensed Service Areas (LSAs) for access service (that is telecom circles/metros), or whether they should be assigned for smaller service areas. "Whether the value of spectrum in 37-37.5 GHz, 37.5-40 GHz and 42.5-43.5 GHz spectrum bands be derived by relating it to the auction determined price/value of spectrum in any other band by using spectral efficiency factor," it questioned. The sector regulator also sought stakeholder opinion on what should be a method of valuation of the spectrum and "should international spectrum prices that is the auction determined price/ reserve price of other countries in 37-37.5 GHz, 37.5 - 40 GHz and 42.5 - 43.5 GHz spectrum bands serve as a basis for the purpose of valuation of these bands. Satellite industry body SIA-India Director General Anil Prakash said that SIA-India reaffirms the importance of reserving key satcom bands for satellite services. "These bands hold immense significance for space research, Earth Exploration Satellite, Broadcasting, Ground Stations, and Radio Navigation Satellite services. Furthermore, overzealous allocation towards IMT services from the potential Satellite bands could deter satellite services, which have a promising future with significant investments already made by the industry," Prakash said.

ET Intelligence Group: Some good news for investors who are lured by the potential of smallcap stocks to deliver hefty returns but are worried about the high risk associated with such bets. Historical data suggests that quality matters even in the case of smallcap selection. The Nifty Small Cap 250 Momentum Quality 100 index — a smallcap index where constituents are selected based on momentum and quality — has gained 25.4% annually over the past 10 years thereby outperforming the Nifty Small Cap 250 index by nearly 500 basis points. The smallcap stocks have been under pressure over the past month after the market regulator warned about the frothy valuations in the segment. During the period, the smallcap quality index was still able to beat the broader smallcap index by 77 basis points vindicating the historical trend that the market continues to reward high-quality companies. The smallcap index with a combination of momentum and quality has outperformed the Nifty 250 smallcap index in 17 out of the 19 calendar years. The smallcap quality index has been able to generate alpha in the excess of 4% on a daily rolling basis with 94% probability over the past five years; the probability increases to 100% when the time frame is seven years. The quality index trades at 4.3 times its book value compared with 3.7 times in the case of the benchmark small cap index. The Nifty small cap 250 momentum quality 100 index is composed of 100 smallcap stocks that are selected based on momentum and quality score. The momentum score is computed by computing price returns in six and twelve months adjusted for volatility while the quality score for each company is derived from return on equity, debt-equity ratio, and earnings growth variability in the past five years. The weight of each stock in the index is based on the combination of the composite momentum-quality score and its free-float market capitalisation. Among the top sectors, the financial services sector has the highest weight of 24.9% in the smallcap quality index followed by capital goods at 17.2%, and IT at 12.1%. On the stock front, KEI Industries, BSE, MCX, Apar Industries, and Birlasoft are the top five constituents of the smallcap quality index.