TMS Ep238: Development goal, Rakesh Jhunjhunwala, market, letter of comfort

TMS Ep238: Development goal, Rakesh Jhunjhunwala, market, letter of comfort

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hello and welcome to the  business standard morning show   i'm kanishka gupta and let's have  a look at the stories for the day prime minister narendra modi has urged citizens  to focus on five resolutions to make india   a developed nation in the next 25 years  it was the key highlight of the pm speech   which he gave from the ramparts of the red  fort on the 76th independence day on monday   so how will the country and  its economy have to perform   to achieve this ambitious goal by 2047.  today's segment will try and answer seventy-five years ago jawaharlal nehru  had addressed the nation from here as he   laid the foundation of a new nation  and this monday when prime minister   narendra modi addressed the country  from the ramparts of the red fort   he laid the foundation of the next 25 years the  sky was overcast with a slight nip in the air   wearing a tri-color turban pm modi asked people  to focus on punch front or five promises first   to move forward with bigger results and the  result of a developed india second to erase   all traces of servitude third to be proud of  india's legacy fourth to focus on india's unity   which is its strength and fifth to fulfill  the duties of citizens with honesty   but what is the ground situation like a comparison  with developed countries shows that the government   has a long road ahead if it wants to turn india  into a developed economy within the next 25 years   in 2021 india's per capita income calculated in  international dollars based on purchasing power   parity stood at and thirty three dollars and it  was less than half of china's in 2021. it was only   a seventh of organization for economic cooperation  of development countries per capita income of   forty eight thousand four hundred and eighty two  dollars oecd is a group of developed economies   while india's per capita income grew at double  the rate of oecd nations in the last 25 years   it would need to grow at 12.4 percent consistently  to catch up to oecd countries within the next 25   years it will need to grow at 8.2 percent just  to reach the level at which they are today   india will need to take similar leaps to catch  up when it comes to social indicators as well the   infant mortality rate the number of infant deaths  per 1000 lime births reduced from 76 in 1996 to   27 in 2020 but it was still over four times the  oecd average of six at the current pace india   will only be able to achieve an infant mortality  rate of 10. similarly life expectancy at birth  

would have to increase faster than it did in the  last 25 years to reach oecd levels at the current   pace it would fall short of oecd economies india  added 9 years to life expectancy for both males   and females between 1995 and 2020. prime minister  modi also listed equality specifically equality   for women as one of the five pledges citizens  must take it is a pledge that will challenge the   nation on many fronts one of the biggest spots  is the female labor force participation rate   it has dropped sharply and steadily in the last  decade and a half from 32 in 2005 to just 19.2 in   2021 although the latest data is small recovery  from 18.6 the lowest in 32 years in the first   pandemic year of 2020. however it is not all gloom  in the recently concluded commonwealth games 40 of   india's medalists were women though that is lower  than the 46.4 percent in the 2002 games the new  

clarion call given by the prime minister will call  for all levels of government both centre and state   in all sections of the citizenry irrespective  of caste creed or religion to work hand-in-hand   while policies and their effective implementation  will be the primary levers to achieve this goal   ensuring unity and thus a unified purpose  should be the first step towards mission 2047 investments in securities market are subject   to market risks read all the related  documents carefully before investing he had a pension forest taking and carried an air  of optimism around him he was a living embodiment   of calmness in a volatile market prime minister  narendra modi led the nation in paying tribute   to ace investor rakesh chinchinwala who died at  the age of 62 on sunday our next report offers   a peek into the ace investors journey the big bull  of dalal street india's warren buffet man with the   midas touch the eternal india optimist and king  of the stock market the legendary investor rakesh   jin jinwala carried many nicknames his death on  sunday at 62 prompted an outburst of tributes from   business persons politicians and investors big  and small who followed his insights and stock bits   jinjinwala's investing career started in 1985 with  5000 rupees of borrowed money at the time of his   death his net worth was estimated at 5.8 billion  dollars or 46 000 crore rupees his first big   profit came from the 5 000 shares of tata tea he  bought in 1986 in three months zhinjanwala tripled   his money there was no looking back after that in  the late 1980s the qualified chartered accountant   made a leveraged bet on iono exporter cesar  goa which brought him his first course   he bought the stock at 25 to 26 rupees and  sold the holding in tranches riding the stock   till it reached 2200 rupees his investment in tata  power also paid off at the time junction walla's   affinity for tata group stocks continued in fact  tata's titan company made him the most wealth he   first purchased the jewelry and watchmaker shares  in 2002. his other stock holdings from tata group   were tata motors indian hotels company and tata  communications he also multiplied his investment   several times in stocks such as lupin and crystal  his biggest holding at the time of his death   remained titan accounting for over 11 000 crore  rupees or one third of disclosed portfolio value   although famous for his bets in listed stocks  junjonwala did not shy away from taking bigger   risks through private market investments he reaped  a windfall when three of his portfolio companies   nazara technologies metro brands and star health  and allied insurance hit the public markets last   year a business standard analysis showed that 76  percent of the value of jinjunwala's disclosed   portfolio emerged in the last seven years  after he turned 55 and the biggest gains came   in the past two years the value of his disclosed  portfolio rose from 8431 crore rupees in march   2020 to thirty thousand six fifty two crore rupees  in august 2022. his love for india is love for the   market and love for the friends and love for the  life he was more than just a person he was a india   bhakt i would say so he was a terrific uh india  storyteller uh terrific believer you know bo you   know he was a great uh great human being of course  he made money but he wanted generally he wanted   his friends his relatives his uh actually the  masses he wanted people really to make money he   was a philanthropist he always said 25 30 percent  one third of the his earnings must go to charity   i met you first in 1998. and since then i have  been seeing his conviction on india convention   on stocks conviction on the state of the market  became more and more you know confident as the   times went by he would always say it's not about  making money it's about being right so he would   always believe in predicting predicting about the  company about the economy about the world also one   level he was the economic philosopher also first  thing is he had tremendous sense of markets where   the market is where the stock is the stocks in  which he has researched he would be so much ahead   of time he would obviously tell us that this is  what i bought for and this much i have got he   would not hesitate disclosing his position which  is very unlike many people i remember buying a   titan in 2003 kind of convection he brought and he  had tremendous liking for tata group of companies   he was a terrific bargain figure he had that  foresight or capability to see the future always   uh wanting to help friends you know whosoever has  come in touch with him he has tried to help one   the other not only money but in every other  aspect whether it is guidance whether it is   having views and you could consult him on anything  you know even on inheritance you know what people   don't realize is that he was a brilliant chartered  charter accountant to start with and he was   self-made rakesh jinjinwala was astute not just as  an investor who picks stocks for long-term holding   but as a trader do in 2018 he said that he made  a lot of money by shorting stocks and one of his   biggest fortunes came from short selling in 1992  when the harshad mehta scam roiled the markets   jinjinwala had his misses in stocks too  like dewan housing finance corporation   db realty and mandana retail while some of  his private investments paid off handsomely   in march last year he acknowledged that half  of his 20 private equity investments by then   had turned out to be flops his last bet was  akasa in which he held a forty person stake   mutilal oswald's ramdev agarwal described this  bet as the ultimate bargain as junjadwala made   the most of the discounts offered by the aircraft  manufacturer junjonwala made his last public   appearance at the inaugural flight of akasa on  august 7th among india's notable philanthropists   junchanwala's faith in the india story and  bullish commentary on the economy and markets   were visible till the very end such was his  infectious optimism for india that junjanuala   told a business news channel just six days before  his death that regardless of global developments   indian markets will grow but at a slower pace  according to him india was entering a golden age market are subject to market risks read all the  related documents carefully before investing a widely shared video of jinjin walla says a lot  about his indomitable spirit bound to a wheelchair   and suffering from a serious ailment jin jinwala  couldn't stop himself when someone tuned in famous   bollywood item number kajirari he almost slept  out of chair while dancing his sudden death has   left the entire investor community in the state  of shock let us now move on to india inc struggle   with inflation companies hiked prices to cushion  their margin but it hit the volumes especially   in the rural markets with the commodity prices  cooling off will the upcoming quarters be better   for india inc or will global growth risk keep  the ride bumpy let's find out in our next report   a look at the june quarter earnings presence a  mixed picture of india inc while commodity users   both the brunt of elevated raw material prices  commodity suppliers enjoyed abnormally high   profits profit margins however squeezed across the  board as corporates couldn't pass on the entire   increase in costs to consumers analysis of about  1940 companies excluding financials shows that   while aggregate net profit rose from 1.41 trillion  rupees to 1.58 trillion rupees on a year-on-year   basis in q1 fy 23 the aggregate profit margin  contracted from seven point nine percent to   six percent sequentially net profit fell from two  point zero three trillion rupees and margin shrank   from 8.3 percent within the nifty 50 universe  profits of the 31 nifty companies that had  

released their results till the end of july rose  12 year-on-year single-handedly driven by bfsi   if one were to exclude banks and financials the  profits would have declined one percent year on   year analysts say unusually high inflation was  the biggest soar point for earnings along with the   high inflation the price high has negatively  impacted the demand scenario across the sector   guidance given by the most of companies also  reflects the concern of declining demand   and have reduced their growth guidance on its part  the reserve bank of india has height repo rate by   140 basis points and cash reserve ratio by 40 bps  so far in fy 23 yet it has kept fy 23 inflation   estimate unchanged at 6.7 percent year-on-year  market may even say the status quo on inflation   above the upper tolerance level of six percent  entails risk of destabilizing demand expectations   overall fy 23 earnings has been downgraded by  over four percent driven by aviation metals   and energy going forward earnings growth will  hinge on commodity prices vetri subramanyam of   uti amc for instance believes with the retreat and  commodity prices the worst of the margin pressure   is behind us earnings estimates in sectors  where volumes and pricing are sensitive to   global growth trends could see challenges  as concerns about growth motilal oswald ii   says earnings miss by heavyweights reliance  industries and tata motors led to aggregate   earnings miss in q1 fy 23. however as the benefit  of the recent moderation in commodity costs   start accruing in the second half of fiscal 2023  we expect laggards of q1 to contribute in growth   stock markets will be guided by global  queues and stock specific action today are subject to market risks read all the  related documents carefully before investing the reserve bank of india recently disallowed  the use of letters of comfort which may impact   loans worth 35 000 crore rupees so what is this  letter of comfort find out in our next segment   in april this year the union finance ministry  had barred ministries and departments   from issuing letter of comfort the idea was to  usher in transparency and now the reserve bank   of india has disallowed such quasi bank guarantee  instrument provided by a corporate so what is this   document a letter of comfort is a support document  issued to a borrower that adds some strength to   the transaction when giving loans letter of  comforts are usually issued by a third party   or a stakeholder in the transaction for instance  a holding company can give a letter of comfort on   behalf of its subsidiary or a government can issue  a letter of comfort for public sector enterprises   the letter of comfort can also be issued by  banks nbfcs and auditors the letter of comfort   is not legally binding or an obligation  by the holding company to repay the loans   it is just an assurance to the lender that the  holding company is aware of the transaction   the policies of the subsidiary and its intentions  in seeking a loan this provides some comfort to   the financial institution to lend money for short  term or long term one can say that the letter of   comfort could become a moral obligation and  not a legal one in some cases the letter of   comfort can become legally binding sometimes the  wording used in the letter could be interpreted   in a way to force legal obligations and  hence those issuing it are doubly careful   a letter of comfort is different from a letter of  guarantee as spelled out in the name the letter of   guarantee acts as a commitment to the lender that  the issuing company is taking responsibility for   the repayment it is also legally binding and  the transaction becomes an obligation for the   guarantor holding companies usually give letters  of comfort when they are unable or unwilling   to give letters of guarantees according to a  recent report in a leading daily loans worth   thousands of crores are at risk of downgrade as  the reserve bank of india disallowed letters of   comfort provided by a corporate the rbi has also  directed all credit rating agencies to rely on   explicit guarantees and not letters of comfort or  support while assigning credit enhancement ratings i'm backed by the nation's trusted bank sbi   the banker to every indian meanwhile the finance  minister recently permitted state-owned nbfcs to   issue letter of comfort to banks for fund tire  for infra projects that is all for today we will   be back with more news and analysis on our next  episode stay tuned and thank you for watching if you like this video share it  and subscribe to business standard   for more news views and insights  log on to www.business hyphens  

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2022-08-20 12:47

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