MARIA SHARAPOVA CONFESSES TO FAILING A DRUG TEST

In some news from the world of sports…in Tennis…Russian player Maria Sharapova shocked the world last week by revealing that she had failed a drug test during the Australian Open earlier this year. This year’s Australian Open grabbed a lot of headlines after investigative reports claimed there was widespread match-fixing in the tournament with players willingly throwing in matches. This claim was quickly dismissed by the tournament organizers who insisted that the sport was clean.

In a press conference held in Los Angeles last week, Sharapova confessed to using a medication known as Meldonium which has recently been banned by the World Doping Agency. Meldonium is usually prescribed by doctors for patients dealing with magnesium deficiency. Sharapova also confessed to using the drug for more than a decade. The star player added that she didn’t bother to open an e-mail from the World Anti-Doping Agency (WADA) about the ban notification; an excuse perceived by many as frivolous.

Sharapova faces a lengthy suspension ranging up to 4 years along with a hefty fine. While some have called Sharapova’s confessions a brave move, others have labelled it as a smart public relations exercise. In fact many journalists who were invited for the hastily-called press meet thought the Russian player was using the platform to perhaps announce her retirement from the sport.

Sharapova is currently ranked number 7 in the world and hasn’t won a Grand Slam tournament in the past two years. Critics point out that despite WADA issuing multiple notifications about the proposed ban on meldonium, it’s baffling Sharapova was blissfully ignorant about the same.

Sharapova is a global brand in herself and is the face of many high profile endorsements like Porsche, Nike among others. Some of her sponsors like Nike have already distanced themselves from the star and have decided not to renew her contract.

Sharapova is likely to present her side of the case during a hearing in May before the International Tennis Federation. The Federation is likely to hand her a short suspension in order to maintain its credibility.

Sharapova is known to be one of the most-organized professional players on tour and a businesswoman with a successful candy line. She also doesn’t have many friends on the professional circuit and prefers being aloof most of the time. She is also considered as a role model for many young girls aspiring for a career in Tennis thanks to her rags-to-riches story. At the tender age of 6, Sharapova and her father moved to Florida with meagre savings of $700 and without knowing how to speak English, all in order to boost her Tennis career.¬†Forbes has named her the highest paid female athlete in the world for 11 consecutive years. According to the magazine, Sharapova earned US$285 mn including prize money since she turned pro in 2001.

However it is hard to believe she missed the notifications on the proposed ban on meldonium for 5 successive times! Sharapova might not stop playing tennis altogether, but the drug test failure will definitely cast a shadow over her professional career.

 

 

 

 

CRUDE PRICES CONTINUE TO TUMBLE

At the beginning of the year crude was trading close to 100$/barrel, today it is close to 46$/barrel. Since June this year, global oil prices have witnessed a sharp decline with the main causes being weak demand for oil thanks to slow economic growth & a surge in U.S. Shale gas production. Experts believe the decline is here to stay with some of them predicting the next targets at 30-20$/barrel

Organisation of the Petroleum Exporting Countries (OPEC), the oil cartel has decided not to cut down on production in order to support prices. The UAE (United Arab Emirates), Saudi Arabia, Qatar among others are key members of the OPEC who control a majority of the world’s oil reserves & production. A majority of the OPEC members are oil-dependent economies who need oil to be trading at 100$/barrel levels to support their growth.

Tensions are surfacing among OPEC members with a few of them like Venezuela opposing the move to keep output levels unchanged. Venezuela which is among the world’s largest oil exporter is at the brink of a recession thus making it hard to cut down production.

Last month Russia, one of the world’s largest oil producers had to defend its currency by hiking interest rates overnight to 17% as a result of sliding crude prices. The struggling Russian economy is expected to contract further this year if oil prices do not recover.

Experts believe that Saudi Arabia which is one of the most influential OPEC member is resisting a move on output cuts in order to crush U.S. Shale gas output. Saudi Arabia has deep financial reserves & can resist a downfall in crude prices for a while. In the past during a similar downfall Saudi Arabia cut down production only to suffer huge losses in revenue & market share. Having learnt a lesson from their mistake the Saudis are not willing to burn their hands again.

According to Columbia University, U.S. oil production is at its highest level in 30 years. Discovery & drilling of Shale gas from rocks has become faster & inexpensive compared to the past thus boosting output levels. Echoing similar sentiments the U.S. Energy Department expects domestic crude production to rise this year though growth could witness a slowdown.

However experts believe in the long-term low prices will make Shale gas production unviable. Consequently investments will be scaled down & low-sized firms will be forced to wind up operations.

Another reason for the pressure on crude prices has been the strengthening U.S. Dollar. Since commodities like oil & gold are priced in U.S. Dollar it is expensive for consumers buying it with any other currency thus reducing its demand.

Meanwhile World Bank has cut its global growth outlook which is adding further pressure on crude prices. World Bank expects the world economy to grow by 3% this year compared to its earlier forecast of 3.4% for 2015.

DEFENDING THE ROUBLE: RUSSIA’S ECONOMIC WOES

Earlier this week the Russian Rouble hit a new low against the U.S. dollar sending the Russian economy into a tail spin & causing a panic in global financial markets. Falling oil prices & sanctions on Russia by western countries continue to weigh on the currency.

According to analysts since June this year, the Russian national currency has declined by 59% to the U.S. Dollar. A major currency crash can lead to inflation for any country & consequently imports become expensive.

Russia’s Central Bank has unsuccessfully tried to stabilize the currency by hiking interest rates twice to 10.5% & 17%. The emergency middle-of-the-night hike to 17% resulted in a big slide in the Rouble’s values. A higher interest rate means lending becomes expensive which in turn causes an economic slowdown.

In the wake of the currency crisis the Russian Government announced it would spend $7 bn to prop up the currency, which helped in calming the volatile fluctuations.

Russia is facing sanctions from Western powers for its support to Ukrainian rebels which is adding pressure on its oil-dependent economy. Oil & Gas makes up for 50% of the country’s revenues & 60% of exports. In the same week Brent Crude hit a five-year low of almost $60/barrel down from $105 levels at the beginning of the year. If oil continues to trade in the $60 range, Russia’s Gross Domestic Product (GDP) could contract by 4.5% next year. As per Russian Government’s own forecasts economic growth for next year is likely to be a meager -0.8%.

Oil prices continue to fall since demand in most advanced countries is tapering off thanks to weak economic growth & new efficiency norms for vehicles. OPEC, the world’s largest oil cartel has decided not to cut down production thus aiding crude’s free fall. Statistics from the International Energy Agency reveal that oil supply is expected to be much higher than actual demand.

Kremlin needs oil prices to continue an upward trend to maintain the country’s rising living standards. For the Russian middle-class imported goods & holidays abroad become unaffordable. According to analysts almost half of Russia’s population feed off the State Budget in the form of Government employees & pensioners among others. In the aftermath of the currency crisis many pensioners flocked to buy goods before prices increased in order to protect their savings.

Kremlin has banned food imports from the U.S., European Union (EU), Norway, Australia among others in response to the sanctions imposed on the country. Banned importers are being replaced by local suppliers who are located on the outskirts thus resulting in higher transportation costs. This is turn has caused a sharp spike in prices of vegetables & fruits. Russia’s declining agricultural sector needs time to cope up with the new crisis.

At his press conference Russian President Vladimir Putin accused the Western powers of creating a ‘virtual Berlin Wall’. There are whispers in Russia that the U.S. & Saudi Arabia have joined hands together to deliberately weaken oil prices to bring down Kremlin.

The biggest pinch of the currency fall is being felt by auto manufacturers with leading brands suspending deliveries to Russia. Manufacturers are finding it tough to adjust prices quickly enough to counter the wild currency swings. While for most European auto manufacturers Russia accounts for only 3% of global sales, any suspension will create a negligible financial dent in the balance sheets.

It remains to be seen how Russia will avoid slipping into a recession in 2015. Analysts believe the country could impose drastic capital controls in the near future which has been shot down officially by the Russian Government. Drastic spending cuts or tax hikes could have serious political implications for Putin.

Manufacturing & growth can only pick-up when corporates are assured of a stable & corruption-free environment. Unfortunately the country’s corruptions rankings have gone from bad to worse. Putin surely has his hands full.

GOODBYE VIMAL; RELIANCE TO SELL ICONIC BRAND

After dressing up India for five decades, Reliance Industries (RIL) has decided to sell its iconic textile brand Vimal. Rumours of the impending sale have been doing the rounds from the past two years but the company refused to comment on the same officially.

The Mukesh Ambani-led group has decided to sell 49% in Vimal to Chinese textile firm Shandong Ruyi Science & Technology Group (RUYI) for an undisclosed sum. Remember the textile segment was the first major venture of the group started by the late Dhirubhai Ambani.

The textile business which is located in Naroda, Ahmedabad today constitutes a meager 1% of the firm’s annual revenues, thus indicating a low priority in the current scheme of things. Vimal was popular in the synthetic suiting fabric segment in India & was considered a marquee brand. The brand started off with sarees before diversifying into men’s suiting & home furnishings under the ‘Harmony’ brand.

The brand was famous for using cricketers to endorse its products. The likes of former West Indies Captain Viv Richards & former Autralian captain Allan Border have endorsed the brand in the past. Anyone in India growing up in the 80’s cannot forget some of the brand’s iconic television commercials brought out in association with advertising agency Mudra. Mudra was a company RIL specifically invested in to execute its advertising strategy.

With the entry of brands from the Aditya Birla Group & Raymond the branded apparel market began to get crowded & Reliance lost out to competition. Labour unrest & volatile cotton prices also hurt the textile division’s revenues.

Under the deal RIL will hive off the textile business into a separate new joint venture where it will hold 51% stake & the rest will be held by the Ruyi Group. Back in 2012 the company had appointed merchant bankers to sell the business. However due to tepid market conditions & poor response the sale was called off.

In its 2012 Annual Report the company said certain Government policies on cotton & cotton yarn exports had impacted the sector’s growth. Problems in sourcing cotton & a huge inventory pile-up due to panic buying further compounded the firm’s woes.

Today the company is dedicating a major portion of its future investments towards expanding in sectors such as Petrochemicals, Retail & Telecom. Thus the textile business does not go in sync with the new strategy. Today the brand only has sentimental value for the firm & analysts believe the company dragged it’s feet on the sale decision for a long time.

Ruyi which is a leading textile player in China also has a global presence in America, Europe & Japan among others.

VETTEL TO RACE WITH FERRARI, BIDS ADIEU TO RED BULL

Quadruple Formula One champion Sebastian Vettel earlier this week officially joined Ferrari & bid adieu to Red Bull. Rumours of Vettel’s impending exit have been doing the rounds for quite sometime but were kept in wraps until a formal deal was signed.

Vettel has inked a 3-year deal with Ferrari, thus replacing Fernando Alonso. Ferrari Scuderia is one of the sport’s oldest teams & by joining the Italian giant Vettel is following in the footsteps of his childhood idol Michael Schumacher. Vettel will partner Kimi Raikonnen at Ferrari; the last man to win a World title with Ferrari way back in 2007.

At Red Bull Vettel has endured his worst season in 2014 failing to win a single race compared to 3 victories by his rookie teammate Daniel Ricciardo. The German was increasingly frustrated at the team’s growing preference for the rookie Aussie. Another year of racing for Red Bull & being overshadowed by a rookie would have impacted his racing credibility.

Before bidding a final adieu to Red bull Vettel visited the team’s factory in Milton Keynes where he chatted with staff members & signed numerous autographs. The German joined Red Bull in 2009 & won 4 consecutive drivers’ championships between 2010 & 2013.

Since leaving Red Bull Vettel wasted no time & visited his new team’s factory in Maralleno, Italy. He even completed a 100 laps drive in the Fiorano test circuit. By fulfilling his childhood ambition the German has indicated he is hungry to win more championship titles & is keen to revive the lost glory of Ferrari. Interestingly the moves comes at a time when the team is going through many uncertainties & a management reshuffle.

Meanwhile McLaren have confirmed they are in negotiations with Fernando Alonso for 2015. If the deal materializes the Spaniard will make a comeback to the team after just one season in 2007 following a spat with team boss Ron Dennis.

One needs to wait & watch can the new Ferrari pair can prove a serious threat to Mercedes & Red Bull.

RUCKUS IN MAHARASHTRA ASSEMBLY; FADNAVIS WINS CONTENTIOUS TRUST VOTE

Amid high drama earlier this week Maharashtra’s new Chief Minister Devendra Fadnavis won the trust vote in the State Assembly. The results which were recorded through a voice vote drew sharp protests from Shiv Sena & Congress which accused the BJP of ‘strangulating democracy’ & failing to prove it’s majority. There was no division of votes which is the usual practice.

Remember the Elections threw up a hung Assembly with BJP emerging as the single largest party followed by the Shiv Sena. Post-poll alliance talks between the Sena & BJP collapsed over ministerial berths for the former in the new Government. Following hectic parleys the Shiv Sena finally decided to stake claim to the Leader of Opposition in the Assembly & nominated Eknath Shinde for the post.

The NCP was left stunned at the end of the proceedings. Even before the party’s 41 MLAs could react the Speaker had already declared that BJP had won the Vote of Confidence. Remember post the results the NCP didn’t lose out on an opportunity to cash in & reiterated its outside support to the new Government.

Meanwhile 5 Congress MLAs have been suspended from the Assembly for 2 years. The MLAs blocked the State Governor Vidyasagar Rao’s entry into the house in protest against the Speaker’s decision to hold a voice vote. The Governor was about to address a joint sitting of the legislature.

In case the BJP’s minority Government had collapsed it would mean a fresh round of Elections & none of them would get the same number of seats they have today. Thus it was in everybody’s best interest to maintain a status quo.

There are high expectations from the Fadnavis’ Government but that said the new Government has got off to a poor start. By not winning the confidence of the Assembly through fair means the party is sending out the wrong message to voters. Senior Shiv Sena leaders suggest the BJP adopted this route since it was unsure of its own MLAs voting for the Government. Political analysts suggest that the BJP was queasy about taking the NCP’s support with the former jittery about a last minute back-out.

The Shiv Sena has already lodged a formal protest with the Governor alleging irregularities & violation of norms by BJP to win the Vote of Confidence. Questioning the new Government’s ‘constitutional legacy’ the party is also exploring legal options.

The future wont be a smooth sailing for the new Government with the Sena breathing down its neck. The Shiv Sena is already raising questions over the clean image of Fadnavis. The Sena also plans to rake up corruption cases against it’s arch rival the NCP. Since the BJP is relying on the NCP for outside support it will find it tough to initiate any action against the leaders of NCP. The Sena could also resort to disruptive tactics to raise noise about the various issues faced by people.

MAHARASHTRA POLLS: BJP MAKES HANDSOME GAINS, CONGRESS RECEIVES A DRUBBING

As predicted by opinion polls Maharashtra’s state Assembly Polls have thrown up a hung verdict. The Bharatiya Janata Party (BJP) has emerged as the single largest party but is still a little shy of the half-way mark. At 123 seats its the party’s best performance in Maharashtra so far. It’s one-time ally Shiv Sena has emerged as the second major party in the results declared on Sunday. The result has put an end to 15 years of uninterrupted regime of the Congress-NCP rule in the state.

Immediately after the results were announced the Nationalist Congress Party (NCP) jumped into the fray & offered unconditional support to BJP in order to form a Government. The surprise move stunned not only the Shiv Sena but also the BJP. Remember just before the polls the 25-year-old alliance between Shiv Sena & BJP collapsed since the former insisted on the Chief Minister’s post in the new Government. The NCP had called of its alliance with Congress over seat-sharing differences, thus making the polls a 5-way contest with the Maharashtra Navnirman Sena (MNS) as the fifth player.

Meanwhile a humbled Shiv Sena which was expecting a call from BJP to form Government decided to give in with party chief Uddhav Thackeray calling upon Prime Minister Narendra Modi & his top aide Amit Shah. Reports suggest that Thackeray hinted at burying the past & moving forward. With Rajnath Singh postponing his visit to Mumbai Thackeray sent two of his trusted aides to hold negotiations over Government negotiations in Delhi.

Sources indicate with the BJP having an upper hand, it is in no mood to bargain with the Sena. This means the Sena is unlikely to get the Deputy Chief Minister’s post or any heavy-duty portfolios in the State cabinet. In all likelihood the Sena will offer unconditional support to the BJP. It would be difficult for the party to watch itself overruled by a party which was its ally for 25 years. Hence a certain section of the party felt its better to ally with its erstwhile ideological partner.

A potential storm over the Chief Minister’s post between Nitin Gadkari & Devendra Fadnavis seems to have calmed down. Union Minister Gadkari has ruled out his return to state politics, thus paving the way for Fadnavis. Fadnavis is the Chief of BJP’s Maharashtra unit & a legislator of Nagpur. In one of his rallies Narendra Modi described Fadnavis as ‘Nagpur’s gift for Maharashtra’ thus giving credence to speculations that he is the top pick for the coveted post.

For the Congress after the Lok Sabha debacle where it managed to win only 44 seats, this was another black day in its history. Despite the huge loss outgoing Chief Minister Prithviraj Chavan accepted moral responsibility for the defeat. The current leadership led by Sonia & Rahul Gandhi has proved to be incompetent. The Chief of the Maharashtra unit Manikarao Thakre has quit from his post. A massive overhaul in the party’s state structure is expected.

After the defeats in Haryana & Maharashtra the Congress is no longer even a regional party & is presently ruling only 9 states, which together account for a mere 78 Lok Sabha seats. Afraid that the blame might fall on Sonia & Rahul Gandhi the state leadership took the onus of defeat upon themselves. Instead of learning from its past mistakes the party is busy criticizing Modi’s election campaign.

Meanwhile the MNS fortunes in the state continue to dwindle & it managed to win only seat in the polls. Inconsistencies in Raj Thackeray’s ideologies & lack of strong organisation skills are being blamed for the party’s poor performance.

The new Government has it’s task cut out. The immediate priority would be fixing the infrastructure & pushing reforms in the business capital of Mumbai.