Skip to main content

Whelved Whales

Standard & Poor's (better called the S&P), Fitch and Moody are the three prominent players in the world of credit rating. Their words have such a significant impact on the speculative markets all over the world that one can safely call them the ventriloquists of the modern era. But reputation is a goose laying golden eggs; it must be well-fed and well-kept. Therefore, it's surprising that when Fitch's holding CreditSights reported that the Adani enterprises were deeply debt leveraged, the regulating authorities should have batted their eyelids. A lousy bureaucracy is no excuse for a country aspiring to be in the top 5 of the world's stock markets. In fact, a BBB- is a stern warning that we are looking at the humble origins of the 2008 subprime crisis. 

A bigger and yet more straightforward question is what drove the Adani stocks so much? And quite a bit of the answer comes from the defence Adani group put out to the Hindenberg research - a rising nationalist sentiment. Although politics is an economist's poison, few can resist the female fatale. When Adani was busy acquiring ports (both air and water) and floating, holding one after the other, there was some confidence that it was the company chosen to shoulder the new and rising India. Although it's a domain in which L&T and the Tatas have been relatively more active, Adani was the challenger everybody wanted to bet on. So much so that the usually indolent LIC and SBI jumped on the smoking gun. 

There is a lack of evidence to point out that Adani was at fault, But if the stock markets were a great poker game, Adani's dominating position in the flop is heavily challenged in the turn. Unsettling questions like how a stock could skyrocket on the basis of simple acquisitions, the Adani's are no Apple, which aims at disrupting the market; they are building an empire, which often gives a slow and tedious growth. Yet, there is a final show of hands left as the river approaches; with the FPOs delayed and a bloodbath in the markets, Adani's have to quickly summon their gear and prevent the deemed collapse. As with Hindenburg, are they conjuring a conspiracy or uncovering a con with their opprobrious report; time will tell.

Popular posts from this blog

Birth of a flood - a poet's admire of rain

The sky is almost dark, save for those last golden tinges that would fade in no time. As palm trees mark the oblivion, a muddy reflection forms the ground. The last few days were mostly rainy. So profound is our love for rain. And why wouldn't we? Unlike most other seasons, rain is so tender. A drop of patience which is about to reach its final destiny. Every time I look at raindrops, they remind me of a struggle. A journey that begins with summer in an aura of dry and burning heat. And in no time, the drop loses its sources. The long-held identity of its mother. With the loss of identity, an awakening awaits. The pleasure of reaching out and bonding. As our drop moves up and up the end of the sky, it realises the futility of pride and the necessity to bond. This comes with age. Not until it is near Earth does it agree to meet with other wanderers of the new world. And finally, all our drops reach the cold atmosphere. The coldness makes life dreary and lonely. As the youthfulne...

Turning back from pull to push

Two recent campaigns deserve attention from marketing enthusiasts, one of Campa Cola (reenergised by the Reliance Group) and of Tata Sampann's species. The challenges these two brands face are too distinct from one another. Campa, on the one hand, aims to fight the global brands like Pepsi and Coca-Cola, whereas Sampann looks to create a market in indian spices that has been dominated by local players like MDH and Everest. However, their strategies have something in common: getting the distributors to stock more of their products on the shelves. Campa is offering the distributors twice the margins, while Sampann is leveraging its vast portfolio to make stocking only Tata products a win for the distributors. Image credit: Economic Times To understand why this is happening, and what makes this interesting, one has to look back on the history of marketing, more specifically the shift from a push to a pull-based marketing, where the focus of the brands shifted from pushing their produc...
Ideas and beliefs are abstract terms. In fact, the triumph of humans in the race of the intellectual has been attributed to our understanding of the abstract. No other animal in this world builds a society because it understands society as a concept. They merely do so to enhance their food and livelihood security. But for humans, some reasons arise out of understanding the abstract. If our knowledge is to be stripped down to bones, we might find that we are slaves to our abstraction. We revere value in paper notes, honour in metal medals and fear in stone statues. Ideas are what have made this imaginative creature the ruler of the planet. Our success as a species rests on the coherence and usefulness of the ideas we bear. So, the concepts passed upon to us or occur to us in episodes of creative hallucination can change the face of this earth. So, it is the most remarkable creation of humans and, thus, the origin of property. This blog aims to capture some of such thoughts. Believe, or ...