Thinkpad: Pivot, Pivot, Pivot
Happy Sunday folks.
Lots of big events last week which gave us something to think about. Each event analysed and discussed threadbare. But we see a common theme tying them together — pivots. Some successful, some work-in-progress, some much-needed.
The annual RIL AGM extravaganza took up a lot of attention as always. Shareholders and RIL enthusiasts have undoubtedly parsed through the announcement so we won't repeat them here. But zoom out and you can't help but appreciate a mammoth organisation (it's almost an economy in itself, as we facetiously said) that is constantly in motion — from being a largely industrial conglomerate, to an industrial + consumer play, to an industrial + consumer + tech play. As Bloomberg Opinion’s Andy Mukherjee asked, is Reliance now aiming to take on Tencent, Huawei, and Xiaomi? Read here.
As an aside, Reliance also appears to follow a 'BOM' or ‘Build-Operate-Monetise’ model, which helped it raise a cool Rs 2 lakh crore this year. Some lessons for the government here?
Moving on to another attempted pivot.
The reconstructed Yes Bank launched a Rs 15,000 crore FPO this week. The bank didn't meet its full fundraise target but it did bag a sizeable Rs 14,267 crore. The fundraising size was large, particularly so for a weak bank, so maybe we should cut it some slack. Even short of the target, the FPO brought to a close a two-year fundraising saga for the bank.
But the bigger message in the issue is that there is money in this market to raise. Companies and banks would do well to raise it sooner rather than later. Incidentally, one of the comments on last week’s ‘Thinkpad’ was that while we debate the market-economy disconnect, we must recognise that it’s allowing companies to raise much-needed equity capital. And that’s good news.
On to a pivot that is desperately needed.
This week brought back two reminders that we need bigger ideas and bigger money for the ‘repair and resuscitate’ job still needed on the economy. What was looking like a ‘V’-shaped rebound is now looking more...‘W-ish’. Acknowledging the delayed recovery due to local lockdowns, ICRA now expects real GDP to contract by 9.5%.
It’s about time, the government pivots to a bolder economic strategy.
On that topic, we want to flag-off two interesting conversations, you may want to put on your ‘to-watch list’.
The first is this chat between Quintillion Media's Sanjay Pugalia and Feedback Ventures’ Vinayak Chatterjee. Chatterjee makes a strong case for a public works program to lift India out of the Covid-induced recession. Forget Keynes, the efficacy of public works to counter recessions can be traced to Lucknow's Immambara and further back. Hope the government is thinking about this seriously.
Another—and significantly longer conversation—organised by SPJIMR brought together a collective of ideas from Pronab Sen, Rathin Roy, V Anatha Nageswaran, and Ananth Narayan. Even if you can’t sit through the entire 90-minute chat given the myriad distractions around, read the results of this spot poll on the five things each of them would do if they were the finance secretary. Some good ideas in there. One that resonates — don’t let the availability of finance dictate choices in the current situation. Settle on the fix. The money can be found.
Till next week.