Business

#BoycottChina has been trending on social media from the last few days. But is it as easy as it seems? To get into that, we have to take a sneak-peek into a few details…

Knowingly or unknowingly, most of us have used Chinese products in our day to day life. In fact, many of the electronic products we purchase in India, from Indian companies are also manufactured in China.

To give you an example, I recently purchased an OTG online from a leading brand in India which makes everything from motorcycles to household electrical appliances. However, I was very disappointed to see ‘Made in PRC’ printed on the box of OTG after I took the delivery.

So, considering this dependence on Chinese products, is it possible to boycott China? And how did it all start?

The story traces back to the period of lockdown in China to prevent the spread of Coronavirus, which halted the global supply chains for several industries in India as well as globally, which depend on China for both raw materials and finished goods.

Also, a few weeks back, PM Narendra Modi in his speech to the nation, stressed the need to make India self-reliant in the wake of acute shortages faced in specific equipment in India due to lockdown in China. In one of previous articles we wrote about how India can become more self-reliant by decreasing its dependence on China. You can check out the article here.

But was this enough justification for boycotting China?

The final nail in the coffin was the rising border tensions among India and China, that made it even more critical for India to be self-reliant than ever before.

But with a massive imbalance in trade between India and China presently, some are sceptical whether this is indeed possible. Afterall China is India’s biggest trading partner with India importing everything from toys, stationery, electronics, gems, chemicals, pharmaceutical raw materials and heavy machinery from China.

So, does this mean this is just a distant reality, assuming if it ever happens? Wait…

Boycotting China – A reality or a dream?

If you see, few sectors have been already doing that. Before I tell you about that, let me tell you a real-life incident.

In 2005, an Indian company partnered with a Chinese company to launch 100 cc motorcycles in India. A retail shopkeeper whose shop is just outside my building was one of the first people in our country to buy it.

I still remember the day he bought it and parked outside his shop, a small crowd had gathered in awe with many asking questions about the motorcycle and its brand etc. The most significant point which caught everyone’s attention was the dirt-cheap price of Rs. 30,000. On contrast, market leader Hero Honda Splendor motorcycle was retailing for Rs.44,000.

Fast-forward a year later, one day when I went to the shop, I noticed the shopkeeper’s bike which was covered with tons of dust and bird-droppings as it had not moved for several days. Out of curiosity when I asked him the reason why he is not driving the bike, he replied he was unable to source some replacement parts which had worn out in the bike.

Till date, the bike is still parked there rusted to the core and giving a grim reminder of cheap quality which, the Chinese were initially famous for. In 2005 when cheap Chinese motorcycles entered the Indian market, many predicted the end of Indian motorcycle companies like Hero MotoCorp, Bajaj Motorcycles and TVS Motors.

However, these Indian companies did not take the competition lightly. They were already prepared for such a situation for many years. And for this, they had invested significantly in developing world-class R&D teams, pumped in significant investments for the same and hired the best automobile engineers and designers they could afford.

The result of that was seen in terms of their consistent market share over the years despite the entry of Japanese motorcycle companies like Honda, Suzuki, Yamaha and Kawasaki, who decades back were the technology partners of Indian motorcycle companies.

But the success stories of Indian motorcycle companies like Hero, Bajaj and TVS do not stop there. Today India is the largest motorcycle manufacturer in world the beating even China. KTM which sells most bikes in Europe, is partly owned by Bajaj. Indian motorcycle companies have been on a global acquisition spree to reach global markets with TVS Motors acquiring the iconic British brand Norton, Mahindra Group acquiring Czech brand Jawa and British brand BSA.

Recently Bajaj Motorcycles have also tied up with Triumph Motorcycles to produce medium-capacity 200-700 cc motorcycles in India. All these efforts by manufacturers of Indian motorcycle companies have shown impressive results.

India exports motorcycles to its neighbouring countries like Srilanka and Bangladesh as well as countries in Africa, South America, Gulf and South East Asia.

So, don’t be surprised the next time when you spot a TVS motorcycle zooming past you while on a trip to Pattaya or if a motorcycle taxi you hire in Lagos turns out to be a Bajaj motorcycle.

Apart from beating the Chinese in the two-wheeler segment, India also has managed to establish a robust two-wheeler ancillary manufacturing and supply chain.

India’s two-wheeler exports increased by substantially in FY2019-20. The total two-wheeler exports, including motorcycles, scooters and mopeds, reached 35,20,376 units in FY2019-20, as against the 32,80,841 units exported FY2018-19.

The question now boils down to – Can we achieve the same success in other sectors as well?

It all boils down to the will of the manufacturers and of course, government support in the form of cheap and 24×7 electricity, improved labour laws and better infrastructure. With this necessary boost, can India become self-reliant? Definitely.

Read more:  How Long-term investing helps create life-changing wealth – TOI. 

Ever since the start of the lockdown towards the end of March, we’ve been hearing numerous stories on more people facing financial crunch.

Some of them have lost their jobs, some of them have had to face pay cuts, some are facing delayed salaries. Read more about how to deal with pay cuts or job loss.

Things have taken a turn for worse for some, with few even resorting to extreme measures like suicide. Today, I want to share with you how a 74-year-old, retired man is living through the crisis with ease.

And yes, he has invested a substantial part of his savings in direct equities and mutual funds – and he is barely worried about them.

Why? How? What’s the secret formula he has followed?

Do you have these questions in mind? I am sure you do!

His words of wisdom

In his words: “I’ve been investing in the stock markets since 1985. I’ve seen many crises that the stock markets have faced. Initially, I used to panic, but then I knew that the fundamentals of the companies I had invested in were strong. After a couple of falls, I didn’t even bother. If I can give an example, during the fall of 2008, every single person I met told me to sell off everything and hold on to cash, I didn’t’.”

And he continued: “I’ll just advice you 3 things if you want to enjoy financial freedom:

1. Avoid debt as much as you can. Taking even a small loan can put you into a habit of living on loans.
2. Saving & Investing is not a one-time activity – it is a lifelong process.
3. Never indulge into panic buying or selling – even if you are at a risk of losing out on some profits or incur some losses.”

Well, I am talking about my very own father and when I see him enjoying his retired life (tension free), I am sure what he says makes sense.

And especially when I see people around buying those latest phones, gadgets, travel and do a hell of a lot of things on EMIs, and indulge into either short-term trading or panic buying/selling of their investments and come times like these, financial lives go into a complete mess. And I am sure if the financial part of the life is in a mess – it does affect the overall atmosphere at home as well. Right?

It is for reasons like these, that one needs to understand, plan & invest, not just for himself/herself, but by and large for the peace and prosperity of his loved ones as well.

Read more:  How Long-term investing helps create life-changing wealth – TOI. 

A few days back Billionaire Gautam Adani led Adani Power to announce its intention of Delisting of shares from Indian stock exchanges with its promoter firm Adani Properties, proposing to buy out the company’s publicly listed shares.

The promoter group collectively holds 74.97% of the paid-up equity share capital in the company, whereas public shareholders own 25.03% currently. The company has appointed a merchant banker named Vivro Financial Services Pvt Ltd to assess the proposal to delist its equity shares from NSE and BSE.

Headquartered at Ahmedabad in Gujarat, Adani Power Limited is the power business subsidiary of Indian conglomerate Adani Group. The company is India’s largest private thermal power producer, with a capacity of 12,410 megawatts across six states in India.

This move by the Adani group to delist Adani Power shares comes close on the heels of delisting plans of Vedanta Ltd. announced by its Founder & Chairman, Anil Agarwal.

Why Adani Group Stocks Are Falling? – Research & Ranking

Why Adani Group is planning on delisting of Adani Power shares?

As per an official statement issued by Adani Power, the proposed delisting of Adani Power shares is expected to enhance the company’s operational, financial and strategic flexibility.

“The objective of the delisting proposal is to enable the promoter group to obtain full ownership of the company and provide enhanced operational flexibility,” stated a disclosure issued by Adani Power.

This has left many unresolved queries in the minds of investors, with many not sure of how the delisting of shares will affect their investment.

Through this article, let’s take a look at the process of delisting of shares and its impact on the shareholders from a layman’s perspective.

Adani’s race to triple Adani green energy capacity within the decade

What is meant by the delisting of shares?

Delisting of shares refers to the removal of a company’s shares from a stock exchange platform, as a result of which the shares can no longer be traded on the exchange. Delisting of shares can be of two types i.e. voluntary delisting or involuntary delisting.

What is involuntary delisting of shares?

In the case of involuntary delisting of shares, the delisted company, its full-time directors, promoters and group firms are barred from accessing the securities market for ten years from the date of compulsory delisting. Involuntary delisting of shares can happen due to several reasons, such as if the company becomes bankrupt or fails to meet the compliance standards set by the exchange.

In the case of involuntary delisting of shares, the promoters of the delisted companies are required to purchase the shares from public shareholders based on a fair value determined by the independent valuer. In this scenario, investors don’t have any other option.

Kingfisher Airlines, Brandhouse Retails, Elder Pharmaceuticals and Varun Industries are some well-known examples of the companies whose shares were involuntarily delisted in the last few years.

What is the voluntary delisting of shares?

Voluntary delisting of shares happens when the company decides that it would like to purchase all of its shares or merge with another company. In case of voluntarily delisting, the company typically offers shareholders a premium over the current share price in the market.

UTV Software is an example of a company whose stocks got voluntarily delisted after Disney acquired the company.

As per the guidelines prescribed by SEBI, in case of a voluntary delisting of shares, the company has to follow the below process:

• Company will call for a board meeting after giving written notice to all board members. The proposal for delisting shares is floated, and a resolution to the effect is passed.
• Obtain a prior approval of shareholders by a special resolution passed at its general meeting.
• Make a public announcement through newspapers with detailed explanation and justification for the proposed delisting.
• Submit an application to the relevant exchange in the form specified by the exchange, along with a copy of the special resolution for delisting of shares.
• Promoters will offer an exit opportunity to the shareholders at a floor price, which shall be calculated on the basis of the average of 26 weeks traded price quoted on the stock exchange.

There are several more steps involved until the final delisting is completed. From a shareholder’s perspective, a company which is delisting its shares voluntarily will keep its shareholders informed at different stages.

In case of delisting of Adani Power shares, given the low valuations due to market correction in March 2020, it can be considered as an attempt by the promoters to increase their stake at attractive prices. In the last 12 months, share prices of Adani Power fell from a high of Rs. 73.75 to the current level of Rs. 37.80, making delisting an affordable option for promoters. Retail shareholders who entered the stock at high prices, however, would be the biggest losers.

Events like voluntary delisting may be beyond the control of shareholders even if some shareholders of the company may not be in favour of it.

Hence it makes sense to invest in a well-diversified portfolio of 15-18 stocks for optimum wealth creation and diversification of risk. Click here to get started.

Create Wealth: Make your money work while you are asleep

Airlines stocks in India, have hit a rough patch amid rising Covid-19 pandemic associated lockdowns and travel restrictions across the country. All commercial passenger flights which were suspended in the country from March 25, to curb the spread of the novel coronavirus were resumed only on May 25 after a 2-month halt.

Budget airline SpiceJet’s share prices are currently hovering around the Rs. 55 levels, while market leader Indigo’s share prices are trading at around Rs.1080 levels.

The above chart depicts SpiceJet share prices over the past 1-year period

Compared to this, just a year back, the share prices of SpiceJet and Indigo were trading at around Rs.145 and Rs.1664 levels respectively.

The above chart depicts Indigo share prices over the past 1-year period

At current levels, SpiceJet and Indigo share prices are trading at significant discounts compared to their share prices a year ago. This has brought a significant question across the minds of many investors – are they value buys or falling knives?

To help you resolve this dilemma and make an informed decision, here’s a detailed analysis.

Despite favourable oil prices, SpiceJet and Indigo Share prices may take some time to recover

Before the crash in global oil prices, this year, aviation turbine fuel prices in India have been among the highest in the world. With oil prices crashing on account of low global demand and price war among oil-producing nations, aviation turbine fuel prices have also come down substantially, providing some relief to airline companies in India. Aviation turbine fuel (ATF) accounts for as much as 40% of the costs incurred by airlines in their daily operations.

Should you include SpiceJet and Indigo shares in your portfolio?

To find out the answer to this question, let’s go back a little in history. Fifteen years back, Jet Airways was the number one, airline company in India. Today the company exists only on paper, unable to find a suitable buyer despite several attempts.

The bankrupt airline, which was grounded in April 2019, owes over Rs 8,000 crore to various banks. In June 2019, The National Company Law Tribunal (NCLT) had admitted the insolvency petition filed by the lenders’ consortium led by State Bank of India against Jet Airways.

Total liabilities of Jet Airways exceed over Rs. 26,000 crore, including Rs. 10,000 crore of vendor dues, Rs. 8,500 crore along with interest owed to the lenders, over Rs. 3,000 crore in salary dues, and over Rs. 13,500 crore in accumulated losses over the past few years.

Kingfisher Airlines, another high-flying airline which started operations in 2005 came to a grounding halt in 2012 after mounting debt. The crash of the company also brought the downfall of the company’s founder and flamboyant liquor baron, Vijay Mallya. Once known as the ‘King of good times’ he is currently battling legal cases against him filed by lenders over non-payment of dues and financial mismanagement.

The state-owned airline, Air India too has a mountain of piling debt. The only reason it has still managed to stay afloat till date is timely financial help from the government.

As per to publicly available data, the national carrier posted a provisional net loss of ₹8,556.35 crores in 2018-19 and the airline’s accumulated losses have ballooned to about 69,575.64 crores in the last ten years.

An attempt by the government to privatize the debt-laden national carrier in 2019 had failed as there were no buyers.

Global outlook for the aviation sector looks grim

According to a recent forecast made by the International Air Transport Association (IATA), airlines across the world are set to lose as much as $84 billion in the current year due to the Coronavirus pandemic. The association also said that with most of the world’s airliners currently parked revenue is expected to decrease to $419 billion from $838 billion last year.

Don’t just look at SpiceJet and Indigo Share prices. Look at their business models and sector in which they operate.

The airline business is a risky business with high capital expenditure and low yields.

Here are a few reasons why airline business is very risky in India:

Cut-throat competition

Intense competition among airlines in India to capture market share has resulted in cut-throat competition and slicing of fares which results in less operating margins.

Deprecation of Rupee

With Indian Rupee falling to around Rs. 75 levels against the dollar, aircraft lease rentals have become costlier. It has also increased the cost of aircraft maintenance, ground handling and parking charges abroad.

High taxes on Aviation turbine fuel (ATF) 

ATF prices in our country are among the highest in the world. The reason behind this can be attributed to the 11% excise duty charged by central government and up to 30% state-level taxes levied by the state governments.

Flying routes under route dispersal guidelines (RDG)

According to government rules under route dispersal guidelines (RDG), airlines are required to operate a certain percentage of flights on smaller routes. Government’s intention behind this rule is to establish connectivity with remote and less accessible areas such as Jammu & Kashmir, Andaman & Nicobar Islands, North-Eastern India, Lakshadweep and airports in Himachal Pradesh and Uttarakhand. Airline companies in India, however, have been claiming that flying on such routes are unviable and affect their overall profitability.

Bottom line

During the last few years, the aviation industry in India has emerged as one of the fastest-growing sectors in the country. India currently ranks fifth in the world in terms of domestic civil aviation and is expected to become the third-largest air passenger market by the year 2024.

Covid-19 may have put a temporary speed-breaker to India’s aviation industry which has enormous growth potential. With growing purchasing power among the middle class, air travel would definitely become the preferred mode of transport in the next few years.

However, unless the issues affecting the profitability of airline carriers like bringing ATF under GST regime, freedom to opt-out of non-profitable routes, high taxes and airport charges are taken care of, airline carriers in India will continue to bleed financially.

So rather than considering a dip in SpiceJet and Indigo share prices as a reason to invest, look at the overall picture of the aviation sector in India to make an informed decision.

There are many investment opportunities available in the market currently. Click here if you wish to build a solid and well-diversified portfolio of 15-16 stocks that don’t just have the potential to survive this pandemic, but also having a high potential to grow manifold in the coming time.

The telecom sector in India is on fire these days. From tech giants like Amazon, Google and Facebook to large private equity firms like Silver Lake, Mubadala, Vista Equity Partners, General Atlantic and KKR, the one sector in which every company across the world wants to invest in currently is the telecom sector in India.

The latest to join the bandwagon is Bharti Airtel with media reports emerging on Friday that American multinational conglomerate, Amazon is planning to buy a stake in it. The alleged investment reports, if true, would translate to Amazon acquiring around 5 percent stake based on the current market value of Bharti Airtel.

The immediate impact of the news was seen in the stock with Bharti Airtel Share prices gaining as much as 2.93% to Rs. 590 on the BSE on Friday morning.

However, Bharti Airtel share prices lost some of its early gains after the company issued a clarification to the exchanges saying that “no such proposal is currently under consideration”.

Why Amazon may be interested in buying a stake in Bharti Airtel Shares?

The telecom sector in India has seen a flurry of activities in the last two months with Mukesh Ambani’s Reliance Jio bagging multiple investments to within a short span of six weeks. Next came the news of tech giant Google’s planned investment in Vodafone Idea which the latter denied in a statement issued to BSE. Read more.

Despite intense competition from Reliance Jio, Bharti Airtel has managed to hold the fort and even staged a turnaround by raising required capital. This came even as multiple telecom companies perished over the last 4-5 years in India.

In an attempt to reduce its debt, promoters of the company had recently sold 152 million Bharti Airtel shares for about Rs. 8,500 crores in a block deal when the stock was at an all-time high. Airtel shares have risen sharply this month after it reported a massive jump in average revenue per user (ARPU) and revenues for the March quarter. This has also resulted in enormous market share gains as compared to Reliance Jio, whose average revenue per user grew only marginally.

Bharti Airtel is a strong player in the telecommunications sector in India, and its product offerings include cellular services, fixed line services, broadband, and enterprise services. Bharti Airtel also offers Digital TV Services, video-on-demand and m-Commerce services.

With digitization and work/shop from the home culture on the rise in India in a world post-Covid-19, by purchasing a stake in Bharti Airtel, the deal would help Amazon access Airtel’s 300 million-strong subscriber base.

Should you invest in Bharti Airtel shares?

Bharti Airtel share prices have outperformed the market and have witnessed over 26% increase in the last one year.

From Rs. 353.80 on 6^th June 2019, Bharti Airtel share prices have surged to a high of Rs. 584 on 5^th June. However, this in no way implies that Bharti Airtel share prices may continue its uptrend in the near future.

The telecom sector in India is one sector where many heavyweights who once ruled the roost have bitten the dust. In 2005, Reliance Communications was the market leader. Today it is nowhere in the scene. Similarly, Reliance Jio was not there in the market before 2016, but in just four years, it has become the market leader.  Vodafone Idea which also once ranked among the top players in the telecom industry in India, is now reeling under massive debt.

Irrespective of whether Amazon invests in Bharti Airtel or not, as an investor it is your duty to exercise due caution before investing your hard-earned money. Telecom sector is highly capital intensive and operates on thin margins. On top of this, any change in technology can change the fortunes of the operators like what happened in the case of Reliance Communications which continued with the outdated CDMA technology while other players raced ahead with 3G and 4G GSM technologies.

Click here if you wish to know about best investment opportunities currently available in the market.

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Read more:  How Long-term investing helps create life-changing wealth – TOI. 

Let me talk to you about the Prime Minister Narendra Modi’s vision of ‘Self Reliant India’, the snags in the journey and the inherent advantages.

In his fifth address to the nation on 12th May 2020, Prime Minister Narendra Modi charted a plan to recover from the crisis, a Rs 20 lakh crore stimulus package and his vision to make India ‘Atma Nirbhar Bharat’. Read more about government’s dream of Self-Reliant India here.

In his exact words, “Friends, we have been hearing since the last century that the 21st century belongs to India. We have seen how the world was before Corona and the global systems in detail. Even after the infliction of the Corona crisis, we are constantly watching the situation as it unfolds across the globe. When we look at these two periods from India’s perspective, it seems that the 21st century is the century for India. This is not our dream, rather a responsibility for all of us. But what should be its trajectory? The state of the world today teaches us that a (Atma Nirbhar Bharat) “Self-reliant India” is the only path. It is said in our scriptures – Eshah Panthah That is – self-sufficient India.”

Let me preface this story by stating that I truly believe that making India self-reliant is the only way. Now there are various ways to do it. If you listened to the entire speech of our Prime Minister, he signaled the plan to attract firms set up their manufacturing capacities in India that exit China.

But the question that arises is – Will India again miss this bus to becoming a major player? Will the 21st century truly belong to India just by turning the current pandemic crisis into an opportunity?

Well, let the time give the verdict. All we can do is fasten the seatbelt and analyze the probability of India becoming a humongous player.

Let’s rewind to the past

If you look into the past, India missed opportunities, where China won big. First in the 1990s and then in the 2000s. In 1990, China joined the World Trade Organization (WTO) and became a part of the multilateral trading system. We missed the bus here. The second was the growth of the internet which paved the way for manufacturing setup in the most competitive place. We lost here too somewhere.

And that led a strong foundation for China to become the biggest beneficiary with these two developments in place.

Please don’t take it from me. Let the numbers speak here.

In 1990, China’s and India’s GDP were more or less the same. Not much difference, right? In just 10 years, between 1990 and 2000, after China joined the WTO, China’s GDP grew 235%, while India’s GDP grew by only 46%. Also, post dot-com bubble, China grew by 403% between 2000 and 2010, whereas India grew by just 258%. The reasons can be attributed to weak labour laws, poor infrastructural growth, low productivity, which made it look like a hostile country for doing business.

But this is past. What about now, with many countries mulling the shift in the global supply chains? Considering the ongoing pandemic, many countries like U.S. and Japan are considering moving out of China or setting up ‘China plus one’ strategy. For starters, looking at ways to tap alternative supply chains to reduce dependence on one country is called ‘China plus one’ strategy.

But will India grab the opportunity and eat a major chunk of ‘China plus one’ strategy?

Well, to become a global manufacturing hub to attract firms that wish to move out of China, we need to put ourselves into the shoe of these companies that are willing to minimize their exposure to China and understand on how they take such decisions.

For that, two factors play of paramount importance.

1. Risk vs reward: The number 1 criteria would be to consider the costs and benefits while shifting their manufacturing capacities. Firstly, do they want to shift, and if yes, where? The key parameter one would look at is the rate of return on their investments. The climb in ease of doing business ranking (63rd rank among 190 countries) and low labour wages as compared to China will work in favor of India. But that won’t be enough. To become an attractive FDI destination, India needs to lay out a plan to offer the best ambience for doing business i.e. low risk and low cost of doing business.
2. The next is stability. With political stability and stable companies/institutions, India has an inherent advantage here to curate a strategy that is low risk, low cost while doing business here.

In fact, Secretary of State Mike Pompeo quoted, “The US is in talks with its “friends”, including India, for restructuring the global supply chains.”

Even behemoth companies are already eyeing India

Recently, I came across the news with a title ‘Apple may take a bigger bite of India’s manufacturing pie.’, which talked about a possibility of Apple shifting nearly a fifth of its production capacity from China to India.

But till then, to capture a significant chunk of the supply chain that will move out of China, India needs to build a more secured environment, work on stability and transparency of labour laws and taxation policies, while doing away with the uncertainty and ambiguity in laws.

The Modi government has started working in this direction by adopting a plug-and-play model in industrial estates to enable investors to scout for plant locations. For this, the government to promote industry and internal trade is working on GIS-based model, which will cover dozens of locations for investors to compare.

With this, it is also working on sorting technological issues and deploying electronic tracking and monitoring system for central and state-level clearances, investment clearance cell, additional funds for creating new economic zones, leveraging the inherent advantage of the states to attract investments in the country.

Now this is just one part of the story of how government shall attract companies.

What makes India attractive as an FDI investment destination is thanks to our:

• Urbanization
• Demographic dividend
• Digitization
• Sheer scale

No matter how you dissect the market segment of India, you end with the size of another country. Today, there are approximately 300 million smartphone users in India, which is the population of the U.S. Maharashtra’s population is 114 million which is slightly less than Japan’s population of 126 million. Any company that can tap the majority of any market segment will witness humongous growth in the future!

With the sheer scale, consider this: 450 mn millennials, high internet penetration with propensity to spend. The eventual outcome would be buy, buy and buy. Considering the strong and rigid consumption growth story of India, any foreign company would want to grab a pie of this spending.

To cut the long story short – well, to put it in black and white, it is difficult to say whether India will board the bus this time or not.

But considering the advantages that would work in our favour, we have our fingers crossed. If this happens, India can become more self-reliant by decreasing its dependence on China. India’s total imports from China was around $70 billion in 2018-19, with China’s share in the country’s total imports being about 14%, second after Middle-East. Also, if it is able to woo foreign companies, then nothing can deter India to emerge as a more powerful economy.

Until then, stay calm, stay patient, stay home and invest sagaciously. Not just India, this is your time as well to turn crisis into an opportunity. And you know it how.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

Today, if you read news, most of the news you are likely to come across may be quite disturbing.

If daily news about rising Covid-19 cases look repetitive, you will surely be moved by the news and photos of migrant workers making hazardous journeys from cities to their villages by foot or on overcrowded trucks. And yes, not to forget the recent locust attacks.

Covid-19 cases across the globe have touched a dangerous 5.9-million mark with over 3,66,913 deaths. Among the worst-hit countries are the United States, Spain, Russia, UK, Germany, Brazil, Italy, France, and the count is increasing every day. 

The United States happens to be the worst-hit country with positive cases toll at 1,793,530, including 104,542 deaths, followed by Brazil with 4,68,338 cases including 27,944 deaths.

India is not too far behind in the list with over 1,73,763 cases which makes it the 9^th worst affected country in the world.

With manufacturing coming to a standstill due to lockdown across many places in India, and many people losing their jobs from diverse industries such as travel, hospitality and other sectors, the economic situation looks grim. Even the number of cases of infections and deaths is rising by the day.

To add fuel to the fire, there have been other reasons to worry like the recent devastation caused by cyclone Amphan, locust menace, border tensions between India-China.  Besides these, there are also rising USA-China trade war tensions, as the USA and its allies have accused China of not doing enough to stop the Covid-19 when it originated as well as proposed changes by China in Hongkong’s autonomy.

Stock markets in India too have also seen a huge decline with share prices falling with some random intermittent recoveries in between. India’s benchmark indices the Sensex and Nifty are trading way too below at 32,073 and 9,470 levels as compared to their lifetime highs of 42,063 and 12,385 respectively.

So overall, it does appear that as the economy is shrinking and livelihoods are being lost, stock prices are falling and there is no end in sight. If you ask, when things would be back to normal? Or when would the lockdown end? No one will be in a position to provide a definitive answer.

At this point, the answers to all these questions look quite difficult, and there seems to be a lot of uncertainty around.

However, even in such dark times, there is a light of optimism which most people are overlooking.

An exodus of companies from China could benefit India

The supply chains of many global companies suffered due to lack of materials from China in the wake of the Covid-19. Besides several countries have accused China of deliberately hiding facts about the origin of the virus. All these have created an environment where many global companies are looking at developing supply chain teams completely independent of China. India could be the biggest gainer as it has the potential for filling part of the supply chain vacuum that is created by companies looking to shift from China.

Savings of around $40 billion in crude oil spending

Falling oil prices have turned out to be a great boon for India with savings on oil imports is estimated to be around $40 billion in the current financial year. As per a report by Livemint, every fall in oil prices by $10 per barrel helps reduce the current account deficit by $9.2 billion, which amounts to nearly 0.43% of the GDP.

A self-reliant India

Covid-19 crisis has shown why nations can no longer be dependent on others in especially in the times of crisis. Recognising this as a catalyst for creating a self-reliant India, the government has set an ambitious target of achieving self-reliance in over 12 sectors such as food processing; organic farming; iron; aluminium and copper; agrochemicals; electronics; industrial machinery; furniture; leather and shoes; auto parts; textiles; and coveralls, masks, sanitisers and ventilators. Read more about government’s dream of a self-reliant India here.

Low market cap-to-GDP ratio

India’s market cap-to-GDP, a ratio used to determine how over, or under-valued a market is currently at 55% per cent, which is much below its long-term estimate of 75% to 85%. The low market cap-to-GDP ratio shows that the overall market is currently undervalued, which means many exciting investment opportunities are available for long term investors.

Bottom line

Covid-19 pandemic has ravaged economies across the world, with India being no exception. However, even in these difficult times, there are some silver linings in the clouds as we have seen above.  Besides these, there have been other benefits too, like less air and water pollution, a drastic drop in road accidents and better family relations.

It is said that “After every storm, if you look hard enough, you will find a rainbow appear”. In India’s case, the rainbow is already there, it is just that many of us are not looking hard enough to spot it.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

In our previous article we took a look at the PM Modi’s speech where he stated that the government would take all possible measures in an effort to convert the current crisis into an opportunity. You can read it here.

Taking it ahead from where Prime Minister Narendra Modi concluded his address to the nation on Tuesday, Finance Minister Nirmala Sitharaman announced the first leg of the post-pandemic financial package to help boost the economy.

Instead of giving you detailed information, let me share my analysis that will be of more relevance to you.

The first of the three announcement tranches focused heavily (6 announcements) on MSMEs and primarily because of the employment concentration there.

Government means business

The measures showcase that the government means business and is ready to give the required confidence to help propel both – employment and demand.

And that is exactly what was showcased by the Finance Minister yesterday when she said that the Rs. 3 lakh crore loans can be availed by the MSMEs would be collateral free minus of any fees & will be guaranteed by the government.

The same was shown when she said that the government will facilitate Rs. 20,000 crore liquidity as subordinate debt for stressed MSMEs which are in need of equity support or Rs. 50,000 equity infusion in MSMEs through equity funds of funds.

Boost for NBFCs

Moving on, for the NBFCs there will be an additional pumping of Rs. 75,000 crores for NBFCs, HFCs and MFs. Of this, the GOI will provide partial credit guarantee worth Rs. 45,000 crores. This will further enhance liquidity in the markets and help boost businesses & demand.

The next big announcement was with regards to EPF. Again – the sole reason is to boost overall liquidity in the system and hence give a boost to demand.

Reduction of TDS rates

The last of the big steps was the reduction of TDS rates by 25%, and this will be applicable to all non-salaried specified payments made until 31st March 2021 – just another step towards leaving more disposable income in the hands of the people.

And there were other announcements with regards to Rs. 90,000 crores in DISCOMS to as a one-time emergency liquidity infusion and the relaxation of RERA rules by citing Covid-19 as an “Act Of God” and hence allowing extension of registration and completion dates of real estate projects.

The government is showing signs that it wants to fast track the recovery process.

Saying this, I am looking forward to the announcements made in the last few days as I am looking forward to more steps taken by the government towards boosting businesses in India and also inducing demand growth.

Read more:  How Long-term investing helps create life-changing wealth – TOI.

I am sure we all heard PM Modi\’s speech at 8 PM on 12^th May. And I am also sure you would have received nothing less than a thousand social media messages around it.

Let me share with you my perspective and to make it simple, to the point and highlight pointers relevant to you.

First and foremost, let me bring to you the question why we were all glued to our television sets – The Lockdown. There was a marathon 6-hour meeting with the CMs of every state where a lot of CMs urged the PM to enable states to decide on the lockdown within their states instead of a blanket lockdown all across the country. Based on that, the PM asked the CMs for a blueprint on how they would want to manage the lockdown in their respective states going forward.

4th phase of the lockdown to witness easing of rules

Giving a hint yesterday, the PM categorically said that the 4th phase of the lockdown wouldn\’t be the same as it has been for the past almost 2 months. It would be with a lot more easing of rules. We will need to wear masks, we will need to maintain social distancing, but we need to now open up. The rules will be disclosed before 18th May 2020.

The second point mentioned in the PM Modi speech I want to highlight is probably the key highlight of the announcements made yesterday. He announced a package of Rs. 20 Lakh Crores to help India deal with the current pandemic. That is close to 10% of India\’s current GDP.

He did mention that there would be reforms for small businesses, MSMEs, corporate sector, taxpayers like you and me, farmers, labourers of both, the organized and the unorganized sectors, etc.

The package will ensure continued reforms in land, labour, liquidity and laws.

The FM will be unfolding various measures over the coming few days.

Making India self-reliant

The third announcement by PM Modi stressed a lot on making India self-reliant (Atma Nirbhar). And he stressed on it quite a few times in his speech. And to make India self-reliant, the government would be paying more attention to the 5 key pillars.

The 5 Key Pillars he mentioned:

1. Economy
2. Infrastructure
3. Technology Driven Systems
4. Demography
5. Demand

And while I talk about this, there was another important message – Promote local products – and this clearly means he wants to focus more on manufacturing than before.

What this means to me is that the government is looking at 2 key aspects – generating internal demand & developing the infrastructure and economy to transform India as a Global Manufacturing Hub.

It obviously shows that there is a bigger plan in place to get a sizeable chunk of business that could potentially leave China. And to make it even more obvious that there is a plan in place, he also mentioned about India playing a bigger role in the Global Supply Chain.

Interestingly, it was just earlier in the day yesterday, Apple Inc. is heard to shift 20% of its manufacturing out of China and move to India and would invest $ 40 billion over the coming 5 years.

The last and the most important takeaway for me was his repeated stress that the 21st Century will belong to India.

Be it the Make In India or the Aatma Nirbhar Bharat, there seem to be enough indications that are given by PM Modi that he means business and the government would take all possible measures in an effort to convert the current crisis into an opportunity.

Before I end for the day, there are some pessimists around and they would always be around who want to pick holes in whatever good is happening. Would you want to fall prey to their pessimism, or would you want to be a part of the now even bigger India growth story by investing in the best investment opportunities?

Read more:  How Long-term investing helps create life-changing wealth – TOI.

When I stepped out for some essential shopping yesterday at the local grocery store, I bumped into my neighbour an avid online shopper in the queue ahead of me.

I was surprised because I know that usually, he buys everything from grocery to medicines and electronics online.

Before I could say anything, he pre-emptively told me that all the delivery slots are full for most online grocery providers for the next few days and hence he had come down there to buy some stuff.

Yes, this is so true. Most online retailers who delivery grocery and household items have their delivery slots full due to the tremendous demand amidst the current lockdown.

Welcome to the new world of changing consumer behaviour.

As amid Covid-19 lockdown goes on, consumers have started living with changes. At the same time, for some customer-centric businesses like restaurants, airlines and gyms, it may never be business-as-usual at least for some time.

A recent survey by McKinsey & Company reveals that 67 per cent consumers are likely to reduce spending, as over 52 per cent feel insecure about their jobs, and 85 per cent were deeply concerned for their family’s safety. As a result, they were more inclined to spend on hand sanitizers, masks, and immunity boosters rather than on fashion, travel or eating.

To understand the changes in consumer behaviour amid Covid-19 on consumption, travel, entertainment, etc., we conducted an exhaustive survey on 765 participants. I will also be sharing the outcome of the survey with you ahead.

In one of earlier article we had a detailed look at how life and equity investing will change post Covid-19. You can check out the article here.

Let’s first take a detailed look at how consumer behaviour has changed drastically in the last few weeks:

More spending on grocery and household supplies

The sudden nationwide lockdown announced on March 23^rd caught most people unaware. Despite PM Modi’s assurance on television that all essential items will be available as usual during the lockdown period, people panicked and started panic buying of grocery and food products.

While panic buying is no longer there, consumers are spending more on basics such as groceries and household supplies. It is also seen that consumers are also not shying away from other brands in the absence of their regular brands. To give you an example, during the lockdown, stocks of Maggi, the market leader in instant noodle category with over 60% market share got sold out quickly. In the absence of it, Yipee another instant noodle brand, has become a huge hit with stocks of if flying off the shelves quickly.

Based on our survey, 86.5% of respondents replied that they have stocked up on food grains, pulses and wheat flour by over 1.5 to 3 times their normal requirements., while 43% stocked up tea, coffee and sugar more as compared to their normal requirements.

Increase in demand for hygiene and healthcare products

Sales of hand sanitizers, disinfectants and floor cleaners have witnessed a drastic rise during the lockdown period. So has the demand for health care supplements like Chyawanprash, multi-vitamin tablets and immunity-boosting products. Even in a world post-Covid-19, the need for such products are likely to continue as the importance of good health takes precedence among consumers.

63% of respondents in our survey stated that they have now started using handwash and hand sanitizers more and more on a regular basis than ever before. Again, in this category, in the absence of their regular brands, consumers are trying out new brands. For example, in the disinfectant category when established brands like Dettol and Savlon ran out of stocks, consumers are trying out new unknown brands which are readily available.

Less preference for dining out and out of house entertainment

The restaurant and movie theatre businesses have a taken a massive hit due to the current lockdown.  Even in a world post-Covid-19, consumers are likely to shun eating out or visiting a movie theatre as it would be challenging to practice social distancing in such places.  In the case of a Wuhan restaurant, the virus travelled through the air conditioner duct at the restaurant and infected three families sitting in the vicinity of each other who never engaged with the other. The emergence of such cases will inevitably change the dining patterns of people in the post-pandemic world.

In our survey, 51% respondents said that they will wait at least for a month to visit multiplexes after the current situation normalizes.

Business leisure travel and vacations may decline

With the nationwide lockdown in place, the travel and hospitality industry has taken a huge hit. However, even when the situation normalizes, people are likely to choose local holiday destinations which they can drive to rather than flying.

71.2% of respondents in our survey said that they would prefer to wait for at least a month to resume their travel outside the city once flights and trains resume services.

More preference for online shopping

Online shopping, which was earlier considered as a secondary channel for shopping, has taken the lead over physical shopping amidst Covid-19 pandemic. Buying necessities and food items have become the first preference for most people with fashion and other unnecessary shopping taking a backseat.

As the recent Mckinsey study in China suggests, consumers are more likely to prefer online shopping over physical shopping in crowded supermarkets or shopping malls for groceries and personal care even post Covid-19 world.

To summarize, Covid-19 has changed consumer behaviour. It has completely changed the way we shop, our travel and entertainment choices.  Even when the malls and supermarkets open few weeks or months down the line, it will take some time for shoppers to shift back from convenience and safety of online shopping to the traditional way.

To encash on this unprecedented demand, even big offline supermarket chains such as Metro Cash and Carry, Big Bazaar and Spencer’s Retail, have spruced up their efforts to serve customers online.

Post 9/11, there was a considerable paranoia about flying, resulting in passenger traffic decline of over 30%. However, things went back to normal after a few years and air travel peaked by 2004.

As our country progresses along the contagion curve, there may be a shift in both how people shop and what they shop back to the way it was earlier. Only time will tell. As of now, digital shopping looks like a clear winner.

Read more:  How Long-term investing helps create life-changing wealth – TOI.