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Good morning. In today’s edition — how India is warming up to refurbished phones; will the strong run of engineering, procurement, and construction (EPC) companies continue in markets?; and Indian conglomerate ITC is demerging its hotel business. 

CORE CONVERSATION

How The Business Of Refurbished Phones Works

Even as the usage of smartphones in India grows, there is a strong market for used and refurbished phones. There are companies that have set up pipelines to collect used phones, refurbish them and put them back on the market. 

Gurgaon-based Cashify is one such company that deals in refurbished phones. Their recent survey found that the sales of 5G models rose from 13% in H1 2023 to 17% in H1 2024. Refurbished phone sales increased 109% from January 2024 to H1 2024.

Mandeep Manocha, co-founder of the company, told The Core Report, “Essentially, our business caters to people’s aspirational needs — people who buy a refurbished or used smartphone, people who do not have the money to buy a new product, but who are very, very aspirational. And that's what we have seen as a trend trickling down at all the stores that we run.” 

This highlights a growing awareness and acceptance of refurbished mobile phones among a certain section of consumers.

The survey found that 63% of respondents have a used phone sitting unused at home. Moreover, 60% of people have at least one phone at home that needs repair, but they choose to buy a new one due to the high repair cost.

In the interview Manocha also spoke in detail about how each device is collected and examined, who the Cashify customer is and why using a refurbished phone is good for the planet and the customer’s pocket. 

PODCAST

Markets In Steep Fall On Us Interest Rate Fears

On Episode 461 of The Core Report, financial journalist Govindraj Ethiraj talks to Anshuman Magazine, Chairman & CEO (India, South East Asia, Middle East & Africa) at CBRE as well as Tarun Pathak, Research Director at Counterpoint Research.

• Markets in steep fall on US interest rate fears.

• Rupee hits fresh low, oil prices slide.

• The Reliance stock is now in negative territory for 2024.

• Data centre investments could cross $100 billion by 2027. What’s driving it?

• Why AI embedded smartphones are yet to catch fancy and overall trends.

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CO:RELATION

Engineering an upscale

Engineering, procurement, and construction (EPC) company shares have had a strong run over the past month. It was mainly in anticipation of higher capital expenditure from the government in the second half of the year. The first half saw a sharp slump in capital expenditure due to elections and monsoon. Fewer road or infrastructure projects were awarded. The government will likely increase the expenditure over the next few months. 

However, operationally, there is a chance that the government could focus on the build, operate and transfer (BOT) model and hybrid annuity model rather than just awarding specific contracts to the lowest bidder, according to India Ratings, an affiliate of global credit ratings agency FITCH. That could be a challenge for mid-tier EPC contractors like Afcon, IRB and others. Companies with a sizable balance sheet would continue to be favoured for large government EPC contracts. Concession periods are long here, and companies must stay in the business. India Ratings observed that mid-sized EPC players typically exhibit a moderate to high geographic and client concentration level, often operating in specific states or sub-sectors with varying levels of order book sustainability.

CORE NUMBER

2 Million

This is the number of cars Maruti Suzuki manufactured in 2024, up from 1.934 million in 2023. Sixty percent of the vehicles were produced in Haryana, and 40% in Gujarat. The top models were Baleno, Fronx, Ertiga, WagonR and Brezza, with Ertiga being the 2 millionth car. Maruti operates three plants, with a combined capacity of 2.35 million units annually. Despite a flat market, the company plans to increase production to 4 million units by FY31, with a new greenfield facility in Kharkhoda, Haryana.

FROM THE PERIPHERY

—⚡ India's renewable energy capacity has increased in 2024 with 15 gigawatts (GW) added between April and November 2024, which is almost double the previous year's figures. This progress aligns with India's goal of achieving 500 GW of non-fossil fuel capacity by 2030. Notably, November alone witnessed a fourfold increase in capacity addition, according to an Economic Times report. The total installed capacity of non-fossil fuel sources as of November stands at 214 GW, a significant 14% rise compared to the month last year.

—💻 Taiwanese laptop maker Micro-Star International (MSI) has begun manufacturing operations in India, launching its first facility in Chennai under the Make in India initiative. MSI will locally produce two models—the Modern 14 and Thin 15—priced at Rs 52,990 and Rs 73,990, respectively. With India emerging as one of MSI’s fastest-growing markets for high-performance laptops, the company plans to expand touchpoints through Croma, Reliance Retail, and dedicated brand stores. The company also aims to introduce advanced configurations of its Thin series, further strengthening its position in India's booming tech ecosystem.

—🏨 ITC Ltd announced January 1, 2025, as the effective date for the demerger of its hotel business after securing approval from the National Company Law Tribunal (NCLT). The NCLT's Kolkata Bench sanctioned the arrangement between ITC, ITC Hotels Ltd., and their shareholders in October. Under the demerger, ITC will hold a 40% stake in the new entity, with the remaining 60% distributed to shareholders, Mint reported. ITC's shareholders will receive one ITC Hotels share for every 10 ITC shares held. ITC will charge a nominal royalty for brand usage and has also consolidated holdings in Oberoi (EIH Ltd) and Leela (HLV Ltd).

😷 UGGH

The central government’s air quality panel reimposed Stage IV of the Graded Response Action Plan (GRAP) on Monday with air quality in the Delhi-NCR going back to the ‘severe’ category. This includes a halt on all construction activities including those meant for public infrastructure. GRAP also likely affects the logistics sector as there is a restriction on the entry of trucks except for essential goods and fuel. The next step, which would be the emergency level, could also put a halt on non-essential commercial activities. The Core had last year reported on how air pollution takes a toll on businesses and daily wage workers.

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