On Episode 859 of The Core Report, financial journalist Govindraj Ethiraj talks to Atanu Mukherjee, CEO at Dastur Energy as well as Thomas V Abraham, Research Analyst at Mirae Asset Sharekhan.

SHOW NOTES

(00:00) Stories of the Day

(01:19) Markets slide as oil prices rise again

(04:12) Nestle bucks sluggishness in FMCG, stock hits fresh high

(04:44) Indigo, Air India have told the Government they are under extreme stress and on the verge of "stopping operations" because of high prices

(06:43) UAE has quit OPEC

(07:38) Decoding the medium to long term outlook for oil and gas production in India

(23:39) Sun Pharma’s $12 billion acquisition of Organon will double its size, a deep dive

(30:42) New data centres take off in India but concern about them on OpenAI brass

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Wednesday the 29th of April and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital. Another reminder, this is a holiday shortened week and we will have no edition on Friday.

Our top stories and themes…

The stock markets slide as oil prices rise again on West Asian uncertainty.

Indigo and Air India have told the government they are under extreme stress and on the verge of stopping operations because of high aviation turbine fuel prices.

Decoding the medium to long-term outlook for oil and gas production in India

Sun's $12 billion acquisition of Auragnon will double its size a deep dive.

Nestle bucks the sluggishness in FMCG, stock hits a fresh high.

The United Arab Emirates has quit the OPEC and OPEC Plus, dealing a heavy blow to oil exporting groups.

New data centres are taking off in India but there are concerns about them amongst OpenAI brass.

Markets, Gold, GDP and Nestle

Like we've discussed before, the only indicator to watch and get a sense on where the war in West Asia is headed is Brent crude.

It may not be the most reliable indicator since it has been swinging to sentiment and statements emanating from the White House but it is the best there is. Stock markets, as we've discussed, are fairly divorced from the energy shock sweeping across the world, leading the pack of course is Wall Street which is pretty disconnected while other markets in India, less so. But none of them clearly reflect what the real economies are facing right now across the world.

So oil prices did rise on Tuesday as investors weighed the latest signals from the US-Iran negotiations. All said and done were less confusing because there were less statements being made than compared to previous ones where there were many many mixed signals. Of course the uncertainty does continue.

Brent crude futures were at about $111 per barrel on Tuesday afternoon and rising for the sixth consecutive session that was on Monday. And US West Texas Intermediate or WTI was at $98.50 also higher according to Reuters which said that US President Donald Trump and his national security team discussed a proposal from Iran to reopen the Strait of Hormuz conditional on Washington lifting its blockade and ending hostilities. The Nifty and the Sensex ended lower after spending some part of early trade in the positive.

The Nifty 50 was down 97 points to $23,995 and the Sensex was down 417 points to $76,886. Broader markets did better. The Nifty mid cap and small cap indices were up 0.28 and 0.42% each.

Now gold has fallen to a more than three week low on Tuesday after that rise in oil prices which in turn was because of the stalled US-Iran talks. Reuters reported that markets are weighing inflation risks and interest rate concerns and gold is now at $4,605 per ounce as of Tuesday afternoon. Meanwhile India's economic growth outlook is broadly unchanged despite the US-Israel war with Iran according to a Reuters poll of economists.

The economists warned however that data will not capture a hit to India's large informal sector. Although India's new GDP series has increased data inputs in an attempt to better capture the informal economy, economists told Reuters that more needs to be done to get a clear picture. India's GDP is expected to grow 6.7% this fiscal year according to a poll of 54 economists conducted by Reuters between the of April and that 6.7% figure is a slight slowdown from the 7% predicted for the current fiscal year.

Economists also told Reuters that the disruption to the informal sector would not be captured very significantly by the country's GDP reading and which is why they have not really changed their GDP projections much at this point. Meanwhile for all the sluggishness in the consumer products and FMCG sector, shares of Nestle India hit a new high of 1,441 on Tuesday on expectation of better volume performance according to Business Standard. In the past one month Nestle's stock has risen 22% as against a 8% gain on the Nifty 50 index.

Nestle also reported a 27% year-on-year increase in net profits for the fourth quarter that is and a 22% increase in sales with the highest ever domestic sales for that quarter.

Aviation Industry Struggles

Air India, Indigo and SpiceJet have told the government that the country's airline industry is under extreme stress and on the verge of stopping operations as they sought a revision in aviation turbine fuel or ATF pricing and financial support. The Economic Times is reporting quoting a letter written by the Federation of Indian Airlines or FIA on the 26th of April.

Aviation turbine fuel accounts for about 40% of a carrier's operational expenses. The FIA has said that in order to survive, sustain and continue operations they request the government's urgent intervention for immediate and meaningful financial support. They've also sought a temporary deferment of excise duty on ATF which is at 11% according to them with the abnormal increase in ATF prices from the pre-crisis period adding repeat appreciation to the increased prices.

11% excise duty also increases manifold for the airlines and adds to the total ATF price leading to a big impact. Last month the government limited the hike in ATF price to 15 rupees per litre for domestic operations but for international the price rose by 73 per litre. So the airlines are saying that the situation has practically made international operations along with domestic completely unviable and there were significant losses for the aviation sector this month that's in April.

The federation has asked for a transparent pricing framework under the crack band mechanism as it's called that was implemented in October 22 that's 2022 saying there was a fair and reasonable margin for oil marketing companies. For instance it says that's the FIA says the largest aviation hub in India that's Delhi has the second highest value-added tax of 25% on jet fuel while the highest is 29% in Tamil Nadu. The other major aviation hubs like Mumbai, Bangalore, Hyderabad and Kolkata are between 16 and 20 percent and these six cities cover more than 50 percent of the airline's operations within India.

UAE Exits Opec

Elsewhere the United Arab Emirates said on Tuesday it has quit the Organisation of Petroleum Exporting Countries and Organisation of Petroleum Exporting Countries plus that's OPEC plus dealing a heavy blow to the oil exporting group and their de facto leader Saudi Arabia at a time when the Iran war obviously has led to a energy shock across the world. Reuters is reporting that the stunning loss of the UAE a long-standing OPEC member could create disarray and weaken the group which has usually sought to show a united front despite internal disagreements over a range of issues from geopolitics to production quotas. Now this could also be a win for President Trump says Reuters because Trump has accused the organisation of ripping off the rest of the world by inflating oil prices.

He also linked U.S. military support for the Gulf with oil prices saying that while the U.S. defends OPEC members they exploit this by imposing high oil prices.

Outlook for Oil and Gas in India

More on energy latest figures indicate that India is able to meet 70 percent of its commercial LPG requirements and 100 percent of domestic LPG or cooking gas and all of crude oil requirements. India imports over 85 percent of its crude oil at this point and obviously the sourcing of that has changed quite a bit in the last two months.

So given that there are several initiatives that have been announced to reduce longer-term dependency on imported crude oil and gas where do we stand? For instance reports have suggested that exploration giant ONGC may spend up to 20 billion dollars to hire deep water drill chips and semi-submersible rigs for a five-year offshore exploration programme that's part of the government's Samudra Manthan mission at increasing domestic hydrocarbon reserves. Now deep water drilling rigs and floating offshore units designed to explore oil and gas and water depths usually going beyond six to seven hundred feet and up to even 12,000 feet could change the game but that depends on whether they could find oil. So what are India's options at this point of time as we look ahead? I reached out to Dr. Atanu Mukherjee CEO of Dastur Energy a global technology engineering and advisory firm driving energy transformation across the energy industrial and power sectors and based between the United States and India.

I began by asking Atanu who was also elected to the world's who's who in science and engineering in 2012 how he was seeing overall oil flows right now.

INTERVIEW TRANSCRIPT

Atanu Mukherjee: From an oil perspective, certainly yes, it's a shock, and I distinguish between a structural shock, a structural change, right, which has got a long-term effect, and a transient shock, like this is a geopolitical shock, right, which will go away over time, right? The question is how long, and that determines the nature of the disruption. So given India's position on the oil side, you know, you're talking about 5, 5.5 million barrels per day of total refined consumption and production, right, 90% of that is imported, right?

But again, given that, if you look at India's dependency on oil, it has diversified a lot compared to what it was 10 years back. 35 to 40%, for example, now is dependent on chromosome, you know, on the Gulf Coast area, right, compared to what, like 65, 70% about 10 years back. So that's a definite departure in terms of resilience that you can get, right?

Of course, Russia helped, and other avenues are also coming in, in terms of oil supplies from Guyana, for example, from the Atlantic Basin. So I think all that combination helps in terms of giving you better resilience. And so therefore, while it is very challenging, it's not a panic situation, like you can say, right?

It'll abate over time, in terms of oil disruption that we have got. Having said that, we've got a couple of political things that help us. One is the fact that, you know, we have got a lot of supplies in terms of refined products that go outside for exports.

It's about 1.5 million barrels on the top side. Again, the last resort measure, one could certainly turn that supply inward, right? Instead of exporting out, that'll have an effect on the exchequer, but from a supply perspective, you're still a buffer for worst case scenario.

So it's not as bad as people think about, or as what you call, disruptive as people have thought about. There's a national buffer that we have got built in, based on some diversification, more coming in the offing, and of course, all these safety valve taps that I call we have. That said, I think the drilling, your own exploration helps.

Samudra Manthan and those kind of programmes are certainly helping. But, you know, deep sea drilling is a very long-term project, and they have got outcomes which are uncertain over time. So if you look at it, three to seven years, typically, is the timelines for these.

The cost of these deep sea drillings are pretty high, $100 million of dry wells. So if you come up with a dry hole, you're in the hole by $100 million, which is not exactly very nice. So I think, well, from a long-term perspective, it is important, and it is important for us to continue in that path and as a deep sea drilling, especially because once you strike, your volume flow is very high, and the scale at which it operates is very high.

And so even though you have infrastructure costs that go in at some cost, you know, your effective protocol, resilience and supply security of oil right into the volumes becomes much better. So I think absolutely, we should do that. But I think importantly, we must look at how do we kind of like avoid concentration?

How do we diversify our geographic concentration? And how do we look at mechanisms of obviously looking at demand abatement to some degree that we can, that takes time. And I think some of the things that we do in the oil side has got to do with, for example, obviously things around transportation sector, efficiency increases and electric vehicles will help to some degree, right?

And so I think all these combinations together, a diversified approach would probably help us getting there in terms of a security on the oil side. But I do not think that in the near medium and the long term, we will become independent, you know, from importing oil, that's going to be there.

Govindraj Ethiraj: Yes. And the percentage, I mean, it's more than 85% of crude that we import of our total requirement. So that's a large number.

But you know, we've talked about an 18 to $20 billion investment in deepwater drilling. Now, the reserves for any country or its surrounding areas are more or less known, aren't they? And my next question, therefore, is how much ever we spend?

I mean, is there a chance that we may strike something that's completely out of the world?

Atanu Mukherjee: It's possible, but unlikely, right? I mean, that's the nature of deepwater exploration for oil. If you look at Exxon, Chevron, all these large companies, they're spending billions and billions of dollars, right, continuously over years, and then you're striking a few.

But when you strike one, right, those are pretty large volume gushers of oil. So the likelihood if you could strike is low. But if you continue spending and investing, right, over a period of seven to 10 years, the likelihood that you will strike one high volume gusher is not very small.

So I think that's the way this thing works. So the question is, you're obviously the opportunity in terms of what the geography says, and then within the geographic bounds, what you can get. Now, the Indian subcontinent bounds haven't shown that kind promising likelihoods in terms of oil discovery.

But again, I would say don't limit yourself to geography. Limit yourself towards opportunity space that you can get to. So if you want to spend $20 billion, really, it doesn't matter if you want to move it to African, what we call basin compared to Indian basin.

It's a question of where do you get security from and where is the highest likelihood. And I think that's what should determine how we should spend.

Govindraj Ethiraj: So is deepwater drilling the only bet, the big bet that we have now? Of course, it's big in terms of investment, or India, speaking from a geophysical point of view, or a geological point of view, are there other prospects?

Atanu Mukherjee: Not that I know of to that degree, right. Certainly, we can prospect, but again, the basins in which the likelihood is high are not known to be that prospective in Asia at this point of time. That doesn't mean you will not strike, yes, it's likely, but the likelihood in other basins where it's better categorised for discoveries is higher.

So I would look at that nuance in terms of how you look for oil. Think about, for example, shale in the United States. It was known that there is shale oil reserves of different kinds for a long, long time.

The question is how to get to it technically, economically. That was what was the innovation which made shale oil happen, or happen in the United States. But such proximate probable reserves still are not very clear in India.

So I think it's a question, something that we need to look at carefully.

Govindraj Ethiraj: Right. Let me come to gas, both LPG, which is sourced from refineries, and LNG, which is sourced from oil fields or gas fields. We have a gap there too, and we've already abated or seen an abatement in demand because there is a physical shortage leading to curtailment in supplies, particularly for commercial LPG.

How are you seeing those two areas and what could we be investing in today to maybe ensure that things are better tomorrow?

Atanu Mukherjee: Yeah, so LPG is really a vulnerability for India. It is so because a lot of it, of course, has got to do with households, as we all know, and that's very sensitive. And of course, then of course the industry.

But importantly, I think, given the fact that 60% or more is important for us, and the concentration is very high, 90% coming out of that pond, as I call it almost. And so that's got a significant risk with LPG. So a couple of things.

One is that I think it's unlikely that you're going to get over to something else which substitutes LPG in the near term, or the medium term for matter, in a large scale. That's a reality because of the nature of consumption that we have, both in the household sector as well as the industrial sector. So the question then becomes, again, I come back to the same thing, that how do I reduce concentration?

And so if you look at, one, LPG supplies that we get, how do I reduce concentration? And just not look at the average price because any resilience has got a certain amount of cost, which pays off for the shocks of this disruption that happened. So I would say that, look at the United States, for example, North America.

It's oversupplied with LPG and propane and butane. And so how do I use that as an import mechanism? And so if you look at the United States, we hardly import 7% of our total LPG from the US, but US capacity is very high.

And it's completely contracted right now with China and others, and it's increasing. So we should figure out mechanisms to do that. And that can substantially alter things in that direction.

And so a more balanced supply will help certainly in terms of reducing the risk and the concentration will go away. And the second thing is, of course, substitution. And to what degree?

One is, of course, how do we look at our local endowments like coal? And can we utilise coal to, using gasification technologies at fairly large scale, to convert to something like DME, dimethyl ether, which is utilised for blending with LPG? You probably can go over time to maybe 15, 20% as blends in the volume.

And that, of course, reduces your dependence by that degree. That's one more thing you can do. But you got to also understand there's a cost to it.

Much as people would like to say that DME is one-to-one substitution, that's really not because the cost of DME on an energy basis is probably more than LPG on normal times on an energy basis. So we got to look at that factor. As a combination of diversification into the basins where it makes sense, reducing concentration, and that's entirely possible, and substitution to some degree with respect to DME with LPG is going to help.

I think there's also one thing that you can do, refineries today. We can do maybe a million tonnes, 2 million tonnes more, because right now, if you look at the LPG composition domestically, it comes mostly from the refineries, maybe about 8 to 10 million tonnes, and the rest from the gas processing of the natural gas produced in India. So can I improve the refinery cuts in terms of pushing that from 3% to maybe I can push it to 4%, 4.5%, but that's something that needs to be policy-driven because that affects the economics and the GRMs of the refineries. So that can help to 1, 2 million. So I think a combination of these things and also not industry, but domestic case, if I can look at induction heating as a mechanism to substitute a lot of these things, I can move that LPG to industry in that case. And so a combination of these levers probably would help us in terms of looking at really securing and making this gas LPG supply more resilient over a period of time, you know, probably two to five years, but we should start working now on that.

That's what I think.

Govindraj Ethiraj: Last question. So since you do divide your time between Texas and India, how are you seeing the energy sector now, or what's your sense about how things are likely to shape up given where we are, given the fact that US production is increasing, and how could that affect? Because I think we've touched and talked about supply all this while, and obviously there is supply and that's not an issue in itself, despite what's happening in West Asia, but price is an issue.

So how do you see, one is price, of course, but how are you seeing things as they look from the sort of Houston, Austin, Texas point of view?

Atanu Mukherjee: I think from North America perspective, any change in price of oil has definitely positive impact on earnings of the United States companies, right? And so, so I think that's certainly one thing that's happened, right? In terms of bettering their balance sheets and their cash flows, you know, because the oil price has moved up, but I think that's more of a temporary phenomenon, which will even out over time.

US is supplied, you know, shale is well supplied. And so I think exports is increasing to fill some of the gaps. And so I think generally the oil exports and the oil trade, it looks better in the United States.

Having said that, the other thing that's happened is just like they've benefited from that, the global oil prices, right, are obviously affecting consumers all over the world. They're globally traded. So if you look at the gas station and the gas pumps, right, cost of oil on average in the United States, the gas stations is about $4, right?

It's caught up by about 25, 30, 40% right over the past one month, which is not exactly exciting. And so that hits the economy in terms of inflation, spending power, you know, downstream activities. And so that's something that's happening at this point of time in the United States, as we said, but US is probably less affected, least affected, I would say, compared to the other parts of the world, right?

I think the other thing that's happened from the oil is the gas sector. US is the dominant supplier of LNG, right? It's got about 15 million tonnes of capacity running at about 90, 95% in terms of capacity utilisation.

So that again, given the LNG prices, the spot markets have kind of like evolved into things that can give you fair returns. And so there's a lot of LNG movement that's happening. It's a combination of spot and additional capacity that can be extracted that US has got.

So that market is also looking good. So I think US is from a gas and oil perspective is fairly well positioned at this point of time and probably going into the future too, in terms of compared to other parts of the world. So yes, there is an impact, you know, because of Qatar's, which is about 20% of the total LNG supply in the world, you know, which is going down.

But again, you've got to understand that, you know, United States has got capacity coming up. It has got already significant capacity, other capacity coming up. That's going to be there in the market, you know, over the next one to two years.

You've got Australian capacity, which is there. Again, I think backfilling the Qatar LNG capacity is challenging. It'll take some time, but again, given the nature of gas LNG capacities around the world, I think this will even out over time.

And US has obviously got a big role to play in terms of adding to that capacity and supplementing capacity. So that's how the general market looks like out there in terms of US, less affected, obviously impacted positively because of the oil prices in the near term. Inflation obviously is something that is a concern because of the oil prices, gas prices flowing to the US economy, affecting the consumers.

And that's of course got political ramifications over time. So I think overall US is less affected, more positive, but other parts of the world, I think are more Asia-Pacific specifically, significantly affected. And the demand destruction that we talk about mostly is happening because of pricing in Asia-Pacific rather than the other parts of the world, you know, and so hopefully we'll see that a bit somewhere over time.

Govindraj Ethiraj: Thank you so much for joining me.

Atanu Mukherjee: Okay, absolutely. Thank you so much.

Sun Pharma To Buy Organon

Sun Pharmaceuticals as we reported yesterday will buy US drug maker Organon and company in an all-cash deal valued close to 12 billion dollars including debt for the largest acquisition by an Indian pharmaceutical company. Sun is stepping up to push into high margin speciality medicines with a sharper focus on areas like dermatology, oncology and obesity also to offset declining US sales according to a Reuters report.

A Bloomberg report meanwhile said that Sun will double in size and Organon will boost its global presence by 40 countries including China. Organon will bring an established portfolio of 50 brands 15 of which make an annual revenue of 100 million dollars each and add 1.8 billion dollars well established women's health product line and take it from having no presence in biosimilars to becoming the seventh largest in the world. There is also a massive debt component because Sun Pharma will take about 9.75 billion dollars in loans.

Sun is also doubling its size in one stroke by acquiring a business with equal revenue and a marginally higher profit margin according to that Bloomberg report. I reached out to Thomas V Abraham, equity research analyst focused on pharma at Mirai Asset Share Khan and I began by asking him what he thought were the key takeaways.

INTERVIEW TRANSCRIPT

Thomas V Abraham: In terms of Sun Pharma and the overall industry in general in India, this is a big step, simply because for a company like Sun Pharma to grow, it is important that, you know, not just the organic route, the inorganic route, it's all being looked into. So, acquiring a company of this magnitude and opening itself to new segments and brands, that is very positive news. Let's also understand the fact that they have plants in the US and in the European Union, so that helps them to push forward with their products in both regions, especially at a time when, you know, looking at Trump imposing certain limitations on companies that have presence in the US.

At this moment, it could affect Sun, but it's, you know, in the longer term, it's something better to be part of. So, it works both ways. Eventually, I think if I'm not wrong, something on 30% of the OCF is Capex when it comes to both the companies.

Now, we would imagine that the R&D and, you know, all the costs would actually go towards, Organon to actually be able to bring their products across and for Sun to bring their products across to the 140 countries that they are in as well. So, a lot of push is going to go into this deal per se, which will help Sun grow. Also, in respect to the industry in general, we've had historically a habit or a process of being a generic manufacturer.

If you look at the last few years, we've been slowly moving towards biosimilars and innovative products, but, you know, it's still yet to really take off. If you look at companies like Lupin, they've already reached a certain point. They've been able to perform well in that segment and the valuation is justified.

So, it's important that innovative drugs and biosimilars, etc., that leap is taken forward for the Indian pharma sector in general. So, this is something, biosimilars is an aspect that Organon still has a presence in, though not significant, but then they do have a presence. So, that's another area in which Sun Pharma will be looking to further expand.

Govindraj Ethiraj: If I were to look from the overall India pharma point of view, what does this move strategically reflect? I mean, apart from the US part, which you mentioned having a foothold in the United States, what else does it suggest or reflect?

Thomas V Abraham: It suggests moving from the generic segment. It looks opening up to different avenues of growth. We generally did lesser of the R&D, but more of a generic manufacturer.

Now we are focussing on expanding into different segments. So, I understand that the R&D and the cost associated with these are higher. What happens is when you acquire, you naturally, on its own, you're actually getting into the higher margin business.

So, that's going to improve your cash flows in the long run and be able to fund further R&D. So, it's a big step forward. There has been a certain valuation range.

The ones that have already taken that step, they've moved to a higher valuation range. So, that's how the growth is going to be for the pharma sector in the future.

Govindraj Ethiraj: And Sun is also going to take a huge amount of debt for this transaction. So, do you feel that it's going to pan out? It's a long-term story, right?

Thomas V Abraham: It's not something that we'll immediately be able to gauge. Now, exactly how they plan to merge or bring about the synergies is not clear yet. We will come to know in a few quarters as to how they actually plan to go ahead with this acquisition, what their further plans are.

But I would suspect that, like I said, 30% CAPEX, OCF has been going for CAPEX. In terms of R&D, how much they would actually spend, we'll have to look at it. But I'm sure they would be streamlining it in such a fashion that there is sufficient cash flows and they are not impacted significantly.

But nevertheless, there is this concern when it comes to the shareholders, the minority ones especially, because Sun Pharma does pay a dividend of Rs. 116 per share yearly. Now, that is something we'll have to see how they will actually do.

The company has said that they will be continuing to pay that dividend or they've earmarked accordingly. But what that actually means, see, it might end up being a story of dividend plus growth, a significant growth for the shareholders.

Govindraj Ethiraj: In this acquisition, they've got women's health products. So, how is that you feel adding again value?

Thomas V Abraham: Women's health product is something that's been growing across regions, across many regions. Now, they themselves have presence in 140 countries. Now, if you assume bringing those, some of them and a larger segment of them to India even, you're actually looking at increased competition or increased product.

And then that would reduce the overall price of the products. So, that is one aspect. And even with not just with women's products, even their biosimilar as related products in it.

Now, bringing that would overall reduce the cost as well. So, when they enter more markets and when they are present in more markets, overall, it would tend to become more affordable, become more something that is more cashier. That's something that can generate a lot of revenue for them.

So, it is a big market. It is a significant presence that they're going to actually get across these markets.

Govindraj Ethiraj: And finally, do you see more acquisitions happening from other Indian pharma companies now that this has kicked off?

Thomas V Abraham: I think recently Lupin had one with Visu Pharma. And yeah, we definitely should be looking at this as a possibility. If not, companies itself will say sometimes brands, sometimes segments across certain regions that we've already been looking into our companies.

This is definitely one way to continue the growth for the pharma companies. We had to move out of the generic space and we are doing that strategically now.

Govindraj Ethiraj: Thomas, thank you so much for joining me.

Thomas V Abraham: Thank you. Thank you so much.

Data Centres, Meta Acquisition Blocked, OpenAI Woes

Andhra Pradesh Chief Minister and Chandrababu Naidu on Tuesday laid a foundation for a 15 billion dollar Google artificial intelligence data centre near Vishakhapatnam and said it will be a growth engine for India.

The 135,000 crore rupee Google data centre investment will emerge as the pride of the North Andhra region he said and termed it Asia's biggest such facility. The announcement for this of course has been made earlier. Elsewhere in the world of AI China has blocked Meta's acquisition of AI startup Manus a move which has attracted criticism saying it will heighten risks for global investors looking to invest in advanced tech firms with ties to China.

The National Development and Reform Commission in a rare case ordered on Monday that the two billion dollar acquisition by Meta be unwound under China's national security review mechanism of foreign investments that came into effect in 2021 according to Reuters. More on AI, OpenAI recently missed its own targets for new users and revenue and stumbles have raised concerns among some company leaders about whether it will be able to support its massive spending on data centres according to a Wall Street Journal report. The company's CFO apparently told other company leaders that she's worried the company may not be able to pay for future computing contracts if revenue doesn't grow fast enough.

Board director says the Wall Street have also more closely examined the company's data centre deals in recent months and questioned CEO Sam Altman's efforts to secure even more computing power despite the business slowdown. The senior executives are now seeking to control costs and instil more discipline in the business at times putting them at odds with their CEO who is of course gearing up for a gigantic initial public offering according to the Wall Street Journal. In a joint statement issued later Altman and the CFO said that they were totally aligned on buying as much compute as they could and working hard on it together every day.

Altman has put OpenAI on the hook for some 600 billion dollars in future spending commitments and tied much of the tech sector success to OpenAI according to that Wall Street Journal report which adds that OpenAI missed an internal goal of reaching 1 billion weekly active users for ChatGPT by the end of last year. It also missed its yearly revenue target for ChatGPT as well after Google's Gemini saw massive growth late last year and ate into OpenAI's market share according to that report.