Starbucks was looking for a CEO again.

They needed his help.

This was not the first time Howard Schultz had been asked to become the CEO of Starbucks.

Not even the second time. It was the third time.

Why did he choose to return each time? And why did he leave in the first place?

To understand how Howard became Starbucks’ CEO a third time, we have to delve back in time.

Starbucks Not Founded by Schultz

Technically speaking, Howard was employed at Starbucks. He did not found the company.

Back then, Starbucks was a small coffee bean and coffee equipment supplier.

A trip to Milan, Italy, convinced Howard that Starbucks needed to open lively cafes where people hung out.

The founders of Starbucks were not interested.

So in 1985, Howard Schultz left to start his own company, Il Giornale.

Il Giornale was what Howard had in mind. The coffee beans were sourced from a reliable source (the original Starbucks).

Il Giornale did well. So well, in fact, that they wanted to in-house sourcing coffee beans.

Around the same time, Starbucks’ founders wanted to exit their company.

And thus, Il Giornale acquired Starbucks.

Il Giornale was a brand name proving to be difficult to associate for the American customers.

Howard decided to rebrand Il Giornale to a brand Americans were more familiar with — Starbucks.

This is why we can say Starbucks was not founded by Schultz. But technically speaking, Howard Schultz did found the company that acquired Starbucks.

So he was the founder of the company that is Starbucks today.

Schultz Doesn’t Own Starbucks

In 1992, Starbucks went for an IPO.

At that point in time, they had around 160+ Starbucks outlets.

Howard Schultz had needed money to reach this point.

At the time of IPO, he owned roughly 8% of Starbucks. The rest was with venture capital investors, angel investors, private equity, etc.

8% is significant, but in no way is it a controlling stake.

Since its IPO in 1992, Howard’s stake kept reducing as he sold some shares to diversify his own wealth, and Starbucks issued new shares.

In 2000, Howard decided to step down from the role of CEO.

He was tired from the intense grind of heading the company. By the time he stepped down, the cafe count had reached over 3,000 (from the 165 cafes at the time of IPO).

Howard became the Chairman and Chief of Global Strategy while handing over the role of CEO to Orin Smith (who was the COO till that point).

This era was one where Starbucks was rapidly expanding and quality suffered a bit, though the reach was getting better and better.

In 2005, Orin was succeeded by Jim Donald.

The expansion continued.

The in-cafe experience kept deteriorating. The baristas were not as well trained. The vibe was not what Starbucks had been known for.

It was becoming just-another-cafe-chain.

Schultz Is Back

Howard Schultz owned only about 2-3% of Starbucks by 2008.

As the chairman, he didn’t have much operational power to change things.

Howard wrote to the management about this in 2007, about the commoditization of the Starbucks experience.

The board agreed with him.

They fired Jim a year later and hired Howard Schultz as CEO again.

There was one famous evening when all 7,100 Starbucks outlets in the US were shut so the baristas could be upskilled.

Howard’s second stint as the CEO of Starbucks was marked by another round of consistent high-quality growth.

The number of stores expanded, the quality of service improved, and offerings were made more relevant.

The star work of this period, however, was the rewards program coupled with an app to pay. Most other companies in the space had not done this with success as well as Starbucks had.

In 2017, he decided to step down again. He would become the executive chairman and focus his attention on philanthropy, and some other responsibilities.

Kevin Johnson, the COO at the time, was appointed as the new CEO.

At the time of quitting, Schultz still owned around 2-3% of Starbucks. Roughly the same as his stake in 2008 when he rejoined as CEO.

But thanks to the immense growth, the market-cap of the company had gone from about $12 billion to about $80 billion.

And thus, Howard Schultz’s net worth had climbed proportionately.

The Kevin Era

The new CEO, Kevin, had come with tech experience.

He was previously at Microsoft and was driven to improve efficiency and integrate tech throughout the value chain.

Kevin scaled up customised drinks during his period.

He even navigated the brand through one of the toughest times in the global economy — the 2020 pandemic period.

At the same time, employee resentment was growing because of customised orders, poor equipment, and wage-related issues.

Kevin missed out on catching this development early.

Towards 2022, he announced his retirement.

The Starbucks board was faced with a mounting challenge of a rebellious workforce, and deteriorating trust.

Third Time

Desperate to find a good CEO who could restore the trust of its employees, they looked, once again, towards Howard Schultz.

He came back a third time as the CEO of Starbucks in April 2022.

This was going to be an “interim” role. In short, he was there till the board found the correct CEO for the job.

Howard moved quickly to restore order.

He suspended a share buyback plan and redirected $1 billion towards cafe equipment and employee benefits.

It worked.

A few months later, Laxman Narasimhan was hired as CEO. He shadowed Howard till March 2023, after which he took over the company’s reins fully.

The market-cap of the company was around $115 billion during this CEO transition.

Key CEO

Despite not holding a significant stake in the company, Howard Schultz remained a key figure at Starbucks for decades.

He became the firefighter who was brought back repeatedly — and brought back the company successfully each stint.

This story is an excellent example of promoters running their companies more effectively.

This is one reason why investors love keeping an eye on the promoters’ stake in the company. Although Howard himself didn’t change his stake much.

Starbucks’ challenges didn’t end in 2023 though.

Laxman Narasimhan left in only 17 months. Declining sales were cited as the main reason.

The next CEO was appointed in 2024, and news of his arrival was received with a 25% stock price increase.

A lot happened in that period.

That’s for another story altogether.

Quick Takes

+India’s wholesale inflation rose to 9.92% year-on-year in August compared to 9.78% in July. India’s retail inflation rose to 4.82% in August compared to 4.45% in July.

+The total revenue from allocated commercial coal mines was Rs 3,090 crore in FY25-26. The government expects annual revenue of around Rs 47,500 crore from the 147 coal blocks since 2020 across 9 states.

+SEBI issued a consultation paper, proposing changes to the Closing Auction Session (CAS), market timings and settlement rules for derivative contracts. It has invited public comments until 3 October.

+India’s unemployment rate fell to a 6 month low of 5.00% in August compared to 5.10% in July.

+The government introduced Merchant Discount Rate (MDR) of 0.4% on person-to-merchant UPI transactions above Rs 2,000 from 15 Oct. The MDR will be capped at Rs 300 for transactions above Rs 75,000. There will be no charges whatsoever on person-to-person UPI transactions.

+India’s trade deficit decreased to $26.86 billion in August compared to $31.98 billion in July.

+Passenger vehicle sales rose 36.5% year-on-year to 4.39 lakh units in August, according to SIAM data.

+The government approved increasing the EPFO wage ceiling to Rs 25,000 per month from Rs 15,000 per month. As a result, an additional 51 lakh employees could come under mandatory coverage.

+The government removed the requirement of certificate of registration for export consignments of up to Rs 3 lakh to lower entry barrier for MSMEs and first time exporters.

+The government said the possible US tariffs of 100% on Russian oil importing countries, including India, could impact bilateral ties. The bill is yet to be signed into a law.

+The government denied media reports alleging that MDR on UPI payments were introduced under any external influence.

+The government reduced windfall taxes on petrol exports to Rs 0.5 per liter (vs Rs 1.5 earlier); diesel, Rs 20 (vs Rs 25 earlier); ATF, Rs 15 (vs Rs 19 earlier).

+India’s textile sector exports rose 16.10% year-on-year to Rs 29,776 crore in August, from Rs 25,656 crore a year ago.

+India’s forex reserves fell $4.92 billion to $780.78 billion for the week ended 11 Sep.

+The government relaxed the existing 15 days’ stockholding limit on sugar for bulk consumers subject to conditions.

+The government approved multiple railway projects; a 38.21 km rail line worth Rs 493 crore near Maharashtra-Telangana border and doubling the 10.86 km Chouk-Karjat section worth Rs 497 crore.

+India’s net direct tax collections rose 12.96% year-on-year to Rs 12.12 lakh crore as of 17 Sep.

+India’s crude oil imports fell 11.17% in August to 19.01 million metric tonnes, from July: Petroleum Planning and Analysis Cell.

+Digital lending platform Social Worth Technologies (Fibe) got SEBI approval for IPO (fresh issue Rs 750 crore and OFS of 4 crore shares).

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

No news, no contact.

Four centuries ago, there was no satellite communication or internet.

Then they would return (if things went well) with traded goods.

The company that owned the ships was traded on the stock markets, just like today.

The stock markets are not new.

The tricks used to make a quick buck aren’t new either.

In the 1600s, Amsterdam was the biggest stock market in the world.

Just like us, they would trade stocks of companies. Very, very few companies.

Companies back then would offer shares to investors to raise money for high-cost expansion projects — also exactly like our times.

What was different was the industry.

Back then, sea routes to far off places had been discovered.

Namely, these were routes to India and South-East Asia. Spice routes, these sea routes were called.

A ship would leave European waters and sail down the Atlantic Ocean, around Africa, across the Indian Ocean, and enter India or other South-East Asian ports.

It would trade at those ports, and then come back to Europe.

As the ships appeared on the horizon, they would be spotted by men sitting by the sea holding telescopes.

As soon as a ship was visible, the telescope man would dart for the stock exchange. This man would be an informant.

He would give this newly acquired knowledge to whoever had hired him — someone trading stocks.

The trader would then buy large quantities of the stock before the rest of the market got wind of the news.

Some time later, as the ship entered the ports, the newly traded goods were offloaded and sold, money was made.

The new profits would cause the share price of the company to climb.

The trader who hired the man with a telescope would have bought the company’s stocks much before they went up.

So he would be sitting on fat profits made over a very short period of time.

Further Up Stream

Traders tried to get info about ships before they reached the ports.

The game was practically never ending.

These cargo ships were heavy and moved slowly. Other ships moving along the same routes were usually much faster.

Some traders would try to talk to the sailors on these ships to learn more about the cargo ships.

How was the weather? What was the economic situation in the port they had gone to trade at? Was the cargo ship loaded or did it look empty?

Whoever got wind of the information first could potentially make a killing over a short period.

The more innovative and rich traders would hire informants in different ports and have them write letters back to the traders.

Letters were often put on faster ships or light ships, resulting in the information arriving before the cargo ships did.

There were some coffee houses in cities like London and Amsterdam that were famous as meeting places for traders, sailors, and other informants.

Often, news picked up here could give a significant advantage to traders.

The cycle doesn’t end here.

There was always someone who wanted to move further up the stream.

Some tried to use letters carried over land routes to beat the mail-carrying ships.

Some used men on horse-back to cross the countryside from the nearest point any information could be picked up.

How?

Many times, the ships would reach European waters a few days before reaching the port since the port would be a little way further in.

A man on horseback would travel from this point to the stock exchange (horses were much faster than ships).

Things Have Changed: Efficiency

This race for speed has not changed even today. The best traders are desperately trying to get information faster than ever before.

What has changed is the duration.

Information travelled over days, weeks, and even months. Now, it happens in microseconds. Seconds at worst.

This has made the markets a lot more ‘efficient’.

What this means is, new developments get factored in and affect stock prices much faster than before.

The faster the information travels and affects share prices, the less time traders have to react to place their trades. Further, they have less time to process the news and decide how good/bad/neutral it is.

At the same time, information availability has improved massively. Which means that while earlier only a few people had information. Now, almost everyone has it.

So, more traders have the information about an event almost as soon as it happens.

This is one of the biggest reasons for trading being so difficult.

Only the traders who are the fastest to react are able to make a quick buck. The fastest to react are the ones using algorithms and a very fast network of computers.

At the same time, the same factors — information availability and speed — have made it much easier for another type of investor: long term investors.

Quick Takes

+NSE changes pre-open session rules, including new time windows for market and limit orders, separate period of order matching and opening price determination came into effect on 7 September.

+SEBI’s revised framework for ETF trading came into effect on 7 September. The framework revised base price norms, introduced dynamic price bands based on underlying assets, among others.

+The government approved Strategic Investment Plans (SIPs) worth Rs 735.70 crore for ITI clusters in Rajasthan, Uttar Pradesh, and Telangana.

+SEBI removed the regulatory requirement for FPIs investing in government securities to provide investor group details. This follows a recent RBI circular that removed concentration limit requirements.

+Alternative fuel vehicle sales overtook petrol sales in August, as per FADA. The combined retail sales of alternative fuels for passenger vehicles, including CNG, hybrids and EVs rose to 41.95% against petrol’s 40.85%.

+The government approved 3 multitracking projects worth Rs 10,783 crore across 14 districts in West Bengal, Jharkhand, Odisha, Madhya Pradesh and Chhattisgarh.

+The government approved 5 multitracking projects worth Rs 10,021 crore in 17 districts across Tamil Nadu, Andhra Pradesh, Karnataka and Telangana.

+Equity mutual fund inflows rose 18.75% to Rs 29,328.62 crore in August. Debt funds saw an outflow of Rs 8,127 crore in August vs an inflow of Rs 1.87 lakh crore in July.

+India’s forex reserves rose $44.90 billion to a record high of $785.70 billion for the week ended 4 September.

+The government notified that the Banker’s Books Evidence Act, which modernises the legal framework for the use of banking records as evidence, will be effective from 1 October.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

In just a month, they are required to set up an entire store.

The stores are almost always abandoned old shop spaces.

They would probably have been empty for months, even years.

Dirt, rats, non-functional lights and air conditioning are all part of the setup experience.

Sometimes, conditions can go from simply being uncomfortable to downright dangerous.

To make matters more challenging, about 50,000 workers working across 1,500 stores are all not full-time employees.

They are temporary workers who would have been hired mere days to weeks before the work started.

New employees, new locations, new stores, entirely new setups.

Somehow, these stores do get set up in about 4 weeks.

And then the business starts.

Buyers crowd Spirit Halloween stores looking for their favourite merchandise. The crowd turnout can be such that the footfall in areas where a Spirit Halloween store opens can shoot up by big percentages.

Prices are kept dynamic — they are updated regularly based on the demand for items.

This goes on for about 2 months.

At the end of this period, the discounts keep increasing for items that are selling in lower numbers.

After Season

Then, at the end of the period, the store shuts down.

The 50,000 workers will be without a job.

But before that happens, the same workers who were given a tight 30-day deadline to build the stores are asked to take down the entire store. The time, an even tighter 3-4 days.

Everything is quickly sold for a discount.

The few items that remain get put in boxes and loaded on trucks, along with shelves and other store furniture.

The store just vanishes.

And just like that, about 1,500 stores shut down.

This isn’t a one-time occurrence.

This elaborate (and fast) dance wasn’t a one-time activity.

It happens every year and has been happening for about 40 years.

Halloween is an annual festival celebrated in the West. People dress in various costumes that are supposed to be spooky, and go door to door collecting candy and treats.

It is a huge affair in the West, and people are very serious about what they wear.

While earlier, it was more about spookiness, the modern more evolved Halloween sees people dress in costumes that are not necessarily spooky.

Costumes can range from those of ghosts, to movie characters, cartoon characters, animals, and even objects like hammers, bombs, chocolates, and so on.

The creativity shown in costumes is stupendous.

People take the costumes very seriously and spend big money.

Spirit Halloween caters to that market — Halloween costumes and accessories.

As you’d know, this is an extremely peculiar company with an equally peculiar business model.

Business Model

Real estate is an expensive drag on many companies.

For a company focused on one festival in a year, real estate can be a massive money pit.

Spirit Halloween deals with this by avoiding year-round stores.

Their team specialises in finding real estate (stores mostly) that are lying empty for a long time. This space is then rented for just the few months they need it. June to just after October ends.

The rent is only for that period — the 1,500 stores exist only for those few months.

The 50,000 employees are temporary workers. They are working at Spirit Halloween for just the period the stores are active.

They are aware of the nature of their contract and work.

The company has box-kits for each store that are carefully designed to be able to be set up in a month’s time.

They try to heavily discount their items towards the end of the season so as to not have any inventory to store.

They are not inactive for the rest of the year.

As soon as the season ends, the company goes deep into analysing the sales and patterns. They try to understand the products that did well and those that didn’t.

This helps them place fresh orders for the next year’s season much in advance, at lower rates.

They also keep a close eye on cultural and social trends so as to be able to offer newer and more trendy costumes.

Now, they do maintain an e-commerce website year-round, but that does not require a store-front.

Do note that this company is held by a larger holding company that does business all-year round. It is not a standalone company operating on its own.

Investors

Not just business models, there are even investors who operate like this — seasonally.

Seth Clarman is an investor who has a habit of investing only in undervalued stocks. This means the window of opportunity for him to invest in is extremely small.

He is famous for holding as much as 50% of his total investments in cash.

This approach helped him during the 2000 dotcom crash and the 2008 Great Recession.

Post those crashes, he was sitting on huge piles of cash. He used that cash to buy discounted stocks post the two crashes.

Michael Bury is another such investor who made a killing during the 2008 recession.

When he was sure the recession was over, he chose to close his fund instead of trying to make money during the bull run.

Not all investors and businesses are active at all times. Some work only during certain seasons, and are inactive at other times.

Quick Takes

+India’s GDP rose 7.80% year-on-year in the April-June quarter compared to 6.90% a year ago.

+India’s fiscal deficit narrowed to 26.80% of the annual budget estimates between April and July, from 29.90% in the same period last year.

+The government released Index of Services Production data for June 2026. 18 out of 19 sub-sectors rose, led by real estate, retail trade and wholesale trade. Only air transport fell.

+India’s gross GST collections rose 14.80% year-on-year to Rs 1.99 lakh crore in August compared to Rs 1.74 lakh crore a year ago.

+The government reduced the stock holding limit for sugar dealers to 2,000 quintals from 4,000 quintals, effective from 15 September to 30 November. This was done to prevent hoarding and speculative trading of sugar.

+The government approved an 11 km bypass line worth Rs 272 crore between Adra and Joychadipahar, West Bengal to boost freight capacity.

+The government approved Rs 233 crore for electronic interlocking at 21 stations in Samastipur Division, Bihar to strengthen signalling infrastructure.

+The government levied windfall taxes on petrol exports to Rs 1.5 per litre from nil. Diesel export duty was raised to Rs 25 per litre from Rs 24 per litre. The export duty on ATF exports was reduced to Rs 19 per litre from Rs 19.5 per litre.

+Coal India subsidiary, Mahanadi Coalfields filed a DRHP for an IPO, consisting of an offer for sale of 66.18 crore shares by promoter Coal India.

+India received foreign inflows worth $136.38 billion through a special USD-INR forex swap facility from June to August, as per RBI. Foreign currency non-resident (bank) deposits saw inflows worth $127.23 billion during this period.

+MSCI Global will delete Swiggy from its MSCI Global Standard Index and MSCI Mid Cap Index effective 7 September, after the company reduced its foreign ownership limit to 49.50%, leaving no room for new foreign investors.

+India’s forex reserves rose $11.47 billion to $740.80 billion in the week ended 28 August.

+National Stock Exchange (NSE) along with 3 other companies received SEBI approval for their IPOs.

+SEBI will review the methodology used to determine settlement price for derivative contracts in the Closing Auction Session (CAS), following feedback from market participants.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

A railroad company went bankrupt.

Texas Pacific Railway Company.

In the late 1800s, there was a railroad boom in America, and many railroad companies were born, successful, and dead.

Texas Pacific Railway Company was one of those that had died.

Prior to its death in 1888, it had issued bonds to raise money to buy land for building railroads.

The land was roughly about 3 million acres.

Texas was not really a high-demand area. It was mostly barren, and not many people lived there. So land was cheap.

When Texas Pacific Railway Company went bankrupt, its bond investors did not get back any money they invested.

These bonds were secured though. Which means, the land was used as collateral.

The 3 million acres (30 lakh acres) belonged to the bondholders.

A trust was formed, and the ownership of the land was transferred to the trust.

The bondholders got shares in the trust.

Texas Pacific Railway Land Trust.

The trust was peculiar. It could not issue fresh shares. No new shares could be created.

The management of the trust could not create shares and reward themselves.

But they could buy shares and destroy them.

The trust’s only purpose was to sell the land and return money to the bondholders. It was created for the benefit of the bondholders, and nothing else.

Which meant the land was fixed; the shares could not be increased.

As the shares were bought and destroyed by the trust, the shares’ price would go up — the same land represented by a smaller number of shares.

So the purpose was to return the bondholders’ money.

The method of that was selling land. Using that cash to buy shares in the share markets. And destroying them.

Thus, whoever sold the shares got their money back.

Once that aim was achieved, the trust could be shut down.

There was no time limit imposed on the trust.

They could take their time in selling off the land. As much time as they needed.

Why?

One possible reason could be that if the trust sold too much of the land too fast, the land price would fall. And that would possibly mean the bondholders get a less-than-ideal price.

Not good for the bondholders.

So, the trust would sell only when it thought the price was right, and only quantities that it felt would not cause the land price to plummet.

That never happened — yet. It hasn’t happened in the 138 years since the trust was created.

The trust is very much around even today.

The shares of this trust are available on the stock markets.

Earnings

Texas Pacific Railway Land Trust (TPRLT) has been doing what it was supposed to ever since.

For all these decades, the trust has been selling land, buying back shares, and destroying them.

The total land owned has reduced by about 75%.

Most of this land was sold in the few decades after the trust’s formation.

About 1.1 million acres owned, down from 3 million acres.

Over the last 100 years, this number has only gone down slightly, to about 0.8 million acres.

But they did keep doing the buybacks. So, the shares have reduced faster than the land being sold.

What this means is that the land-owned-per-share has been rising consistently for decades.

Now, sharp minds would ask, about where they get the money to perform these share buybacks?

Well, the trust’s job is to protect the interests of the bondholders. It didn’t leave the land barren just like that.

The trust would license the land for various purposes — grazing rights to farmers, and oil extraction rights to oil companies.

Those licenses generate cash.

The cash thus generated is used for buying back shares and also giving dividends to shareholders (who were bondholders).

The beauty of this arrangement is that the TPRLT has to spend almost no money to earn money.

They do not buy any equipment. They simply rent their land to farmers and oil companies. All costs necessary are borne by them.

Discovery

For decades, this stock existed. And barely anyone ever spoke of it.

This is one of the most peculiar cases — it was not discovered for decades because GAAP regulations require companies to disclose the buying price of land. Not the current price.

So in its quarterly and annual reports, TPRLT was writing the price at which it bought all the land before 1888.

Trusts usually make for very dull returns. Most investors would not even bother investigating the stock.

And thus, no significant investor realized that this company owned so much valuable land. For decades.

The stock was making good returns (we’ll talk about it later). But nothing that would draw the attention of institutional investors.

Then, some technological breakthroughs occurred. No, TPRLT had nothing to do with these breakthroughs.

Shale Oil Revolution

The US has lots of oil trapped in shale rocks.

Taking this out is a nightmare. Too expensive to make it a viable business.

Around 2010, oil prices were touching scary highs. Despite that, digging for shale oil was not making much sense.

But then, technological revolutions in the form of horizontal drilling, slickwater fracturing, and underground imaging — suddenly made shale oil very viable.

The USA started pumping out oil like never before.

Guess who owned a lot of land with shale oil under it?

Oil companies lined up in front of TPRLT, asking for licenses to dig out oil.

In an especially smart move, TPRLT had even sold some land but retained the oil rights under that land.

All of these licensing fees became cash flow for TPRLT.

The company achieved a massive profit margin of around 80%.

Once a stock’s profit margin looks like that, it really is hard to ignore.

Wall Street suddenly found itself very interested in a trust’s shares.

In the decade after that, a lot of attention fell on the trust.

Around 2019, activist investors attempted to turn the trust into a corporation.

Their argument was that the trust was not transparent and was not acting in the best interest of its shareholders.

One example given by them was that of the trustee selection. The shareholders didn’t get to vote. The existing trustees chose one discretionarily.

The mechanics of this are a story in itself. We will not get into that today.

Just know this — Texas Pacific Railway Land Trust became a corporate company in 2021.

Earlier, index funds couldn’t invest in it. Now, the stock gets consistent money from them.

Now, let’s talk about the returns.

Returns

Over the last 5, 10, and 15 years, the TPRLT stock has performed better than the index S&P 500.

Yes, many other stocks have done that too.

But what’s interesting is that the TPRLT has also done better than some of the best performing stocks over the same periods.

Microsoft, Google, Apple, Amazon, and even Berkshire Hathaway have given lower returns than TPRLT.

Is this an apples to apples comparison?

No, TPRLT is a much smaller company. Still, it does highlight how well it has done.

But keep in mind that this immensely good performance is the result of this stock being “discovered” around 2010.

Else, this monumental run would not have been possible.

TPRLT’s stock has given great returns before that period as well. Just that it wasn’t as high as it is now.

There have also been periods when the stock has suffered big drops and remained flat for extended periods of time.

Many of these periods have coincided with oil prices being low.

This goes without saying — past returns are no indication of future returns. Maybe it will continue performing as it has.

Or maybe, its golden years are over now that it has been discovered. We haven’t done that research ourselves.

If you’re very keen, please do the research for yourself.

Takeaways

One of the most important takeaways of this tale is that published numbers don’t tell us everything.

It makes the case for fundamental research and understanding the business even stronger.

Another one is that inefficiencies exist in the system. The big institutional investors have not discovered all that there is to find. Even they miss out on great investments.

Yet another one could be that old companies’ (trusts in this case) cannot be written off as easily as we assume.

Maybe one of the most important lessons is that there will always be stocks that most of us miss out on. There’s no reason to feel regret.

Surely there would be many other lessons you would have observed while reading this piece.

The shortest takeaway is probably this: finding multi-baggers is hard.

If things go as originally planned, Texas Pacific Railway Land Trust will shut down sometime in the future — after it has sold all its land and performed buybacks of the last remaining shares.

Till then, this very peculiar stock will continue to draw eyeballs.

Quick Takes

+The government lifted the ban on exports of grains and permitted wheat exports as well as others like maida, semolina, etc, effective immediately.

+The service producer prices rose for 4 out of 7 sectors in the April-June quarter, compared to the previous quarter. Air (passenger) services rose the most, along with banking services, pension fund management, and railway services.

+The government revised the conditions for import of raw sugar. It removed the 31 October deadline to process and sell the refined product in the domestic market to a period not exceeding 2 months from date of filing Bill of Entry, as a relief to sugar importers.

+The net profit of Regional Rural Banks rose to a record high of Rs 10,176 crore in FY26. Both gross and net NPAs reached all time lows of 5.30% and 2.10% respectively.

+Finished steel production rose 4.70% year-on-year to 54.70 million tonnes between April and July. Consumption of finished steel grew 7.90% to 56 million tonnes in the same period.

+India and Seychelles held talks and discussed a possible dedicated MoU to strengthen cooperation in fisheries, aquaculture and the blue economy (including tuna fishing, marine farming and fisheries technology).

+India’s forex reserves rose $12.42 billion to a record high of $729.33 billion for the week ended on 21 August.

+India’s Industrial Production rose 6.70% in July compared to 7.30% in June. The July growth was supported by 7.30% growth in the manufacturing sector and 8.70% increase in the electricity and gas supply sector.

+Jio Platforms, Paras Healthcare and Bharat PET along with 4 other companies received SEBI approval for their IPOs.

+SEBI extended the implementation deadline for the new framework for exchange traded funds to 7 September from 1 September, based on the feedback from the stock exchanges.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

That was the headline of an article published in WSJ.

The heading was deliberately eye-catching.

In March 2004, Walmart was under fire for paying its workers too little. It was a cause that gained good traction in wider circles.

The workers’ unions and politicians backing them often mentioned Costco.

Their question was, why was Walmart paying its workers so little when Costco was able to pay so much better?

Costco operates in the same space as Walmart and is subject to the same factors.

Walmart is a publicly listed company. On Wall Street, Walmart was a revered giant. Their numbers were closely scrutinized.

So was Costco.

And yet workers, unions, and politicians somewhat admired Costco.

The flipside of this was that some investors did not speak favorably about Costco.

The article published in the WSJ was referring to that.

Some Wall Street analysts and big shots felt Costco was ‘leaving money on the table’.

A company’s purpose is to earn money for its shareholders. They accused Costco of not doing that. It was paying higher salaries and offering more employee benefits than necessary.

The accusation was that Costco was reducing its profits that way.

Many of the vocal Wall Street analysts had already been bitter about Costco’s higher spending on employees’ health benefits.

But while some analysts accused Costco of being irresponsible with money, there was no denying that Costco was a very healthy business — comfortably profitable.

Long-term investors of Costco were not bothered by this article. They were not even bothered by the higher salaries and employee benefits.

They had seen Costco pull off similar moves earlier and later as well.

Business Model

Costco’s business model was born many years before it.

In the mid 1950s, product makers could dictate a minimum selling price for their items. A seller could not legally offer lower prices even if it wanted to.

Sol Price, a lawyer-turned-retailer, found a way around this problem.

The rules prevented retailers from selling items to the public below the floor price. The rules didn’t say anything about selling inside clubs.

At his retail chain, FedMart, he introduced a membership fee. Only some eligible members could buy.

With this, he was able to circumvent the rules and sell items below the floor price.

The subscription fee was just a key to enable them to sell items at a cheaper price.

It was in Sol Price’s next company, Price Club, that they raised the membership fee and realized that the membership fee itself could be a source of income.

And because they were making substantial profits from membership fees, they were able to compromise on their earnings from sales even more — making items even cheaper for customers.

Sinegal was an employee at FedMart. He had joined at the age of 18 years only.

He worked with FedMart, and then at Price Club.

In 1983, he started Costco. The philosophy was the same.

So, Costco makes a huge chunk of its money from the annual membership fee.

Over 50% of its operating income comes from membership fees alone.

This is the main source of income.

Everything else is just to help keep customers renewing the membership every year. Over 90% of existing members renew their memberships. New members also join every year.

Currently, the annual membership fee starts at $65.

DNA

The DNA of Costco was the same as FedMart’s — membership gives you access to rock bottom prices.

One of the most famous/infamous signatures (depends on who you ask) is that they have put a cap on their per-product profit.

Not a floor price — not the minimum price they would sell for.

Costco capped their upper price — the max markup they could make selling an item.

It sits roughly at 14%. For their signature brand Kirkland, this is 15%.

Many other retailers keep this margin roughly in the range of 20-25%.

If an item gets cheaper because of lower raw material costs, Costco lowers its prices accordingly. Most others would simply continue with the existing price.

Another major decision Costco took was to sell fewer items. Instead of offering 10 different shampoo brands, they’d offer only 2 or 3.

Compared to other retail chains, they have 10-30 times less variety across different categories.

This lowered the number of items they had to deal with. Lower costs of handling.

Costco famously has fewer suppliers per category. Thus, they’re able to negotiate lower rates.

Costco famously does not sell small packages. They mostly sell bulk items. This reduces their handling costs per unit.

No/low advertising. Word of mouth only.

Unlike other retail chains, Costco is famous for paying higher wages to its workers.

Internal promotions are common too. Current Costco CEO, Ron Vachris, started his career as a forklift driver.

Costco sells everything from petrol to ready-to-eat cooked items to premium apparel — all with the same philosophy. Max 14-15% markup.

Short Term vs Long Term

Co-founder and CEO Sinegal (till 2011) is famous for his sharp words to investors.

One of his most famous quips against short-term-orientated professional investors was:

“On Wall Street, they’re in the business of making money between now and next Thursday. I don’t say that with any bitterness, but we can’t take that view. We want to build a company that will still be there 50 and 60 years from now.”

This one line set him apart from many other CEOs who were hell-bent on keeping numbers consistent, quarter after quarter. That often meant big sacrifices being made in the long run.

He was careful too.

Sinegal never said he didn’t care about shareholders. He just maintained that ensuring investors got good returns started with keeping customers and employees happy.

Sinegal’s manic quest for keeping customers happy and coming back again and again has done well for Costco.

Over the last 10 years, the Costco stock gave a return of ~22% per annum. This number was 19% per annum for 20 years.

By the way, these returns are in USD. If you convert these returns and measure in INR, they’ll be even higher.

Stocks on the stock markets often suffer from this problem.

Stock prices change every single day, in seconds.

Any small negative or positive news can influence the stocks almost immediately.

Many of the investors buying and selling these stocks do not wish to stick around. They are short-term traders who’d rather make a quick buck and move on to another stock.

To them, any stock that performs poorly even for short durations is unattractive.

Often this group also tends to be very loud and vocal.

Focusing only on the opinions of these traders can lead to good decisions in the short-term that actually end up harming the company in the long run.

Not always. But it definitely happens.

The job of the management of a company is to ensure the company performs well.

It is therefore necessary for them to listen to what investors are saying. It is equally important for them to know when to ignore what investors are saying.

There are companies that listened to traders too much and followed them too closely. So much so that they harmed themselves in the longer run.

Moat

Why don’t others just copy Costco?

It’s clear that the model works. So, might as well copy it.

Well — it is not easy.

This model doesn’t work if you’re small. It only works when you have a gargantuan scale. Most start-ups cannot start off with a giant network of stores. They must start small.

So right there, Costco has removed thousands of tiny competitors from being able to compete.

Now we’re left with the bigwigs.

They surely have the money and scale to compete.

For starters, no large company’s CEO is willing to cut their profits in half or more just to match Costco. That is exactly the kind of short-term (even medium-term) hit most other companies do not dare take.

Then there’s trust.

Costco has built a name for itself playing this exact game for decades. Even the largest of companies cannot replicate this over a short period of time.

Various competitors have copied parts of the Costco model.

But the Costco model isn’t just the various parts. It’s the entire system together.

That is Costco’s 100-feet-tall moat.

Quick Takes

+India’s unemployment rate fell to a four month low of 5.10% in July compared to 5.50% in June.

+RBI advanced the deadline for swap facility for FCNR(B) deposits to 31 August instead of the earlier announced 30 September, after inflows of over $56 billion.

+Regional Rural Banks’ gross loans rose 10.30% to Rs 578,349 crore in FY26 compared to Rs 524,163 crore in the previous year.

+DoT, Government of Chhattisgarh, CSBIL, BSNL and CHiPS signed an agreement worth Rs 3,942 crore for implementation of BharatNet program in the state to strengthen digital infrastructure and expand broadband connectivity.

+The government imposed a minimum import price of Rs 34,000 per tonne on clear float glass with 4mm to 12 mm thickness for a year to protect domestic manufacturers from cheaper imports. Imports below this threshold will face restrictions.

+The government approved upgradation of Muzaffarpur-Sitamarhi-Sonbarsa section of NH-22 in Bihar worth Rs 3,590.73 crore.

+India’s crude oil imports rose 41.24% year-on-year in July to $13.70 billion compared to $9.70 billion a year ago. The volumes rose 13.22% to 21.40 million metric tonnes in the same period.

+UK’s retail inflation rose to 2.90% in July compared to 2.60% in June.

+India’s infrastructure output rose 5.40% in July compared to 6.00% in June.

+SEBI has barred Copthall Mauritius Investment (owned by JPMorgan Chase & Co) and Mansi Share and Stock Broking from the securities market for manipulative trades under the Closing Auction System (CAS) and impounded a combined Rs 3.68 crore.

+SEBI permitted the use of digitally signed power of attorney documents for FPIs, removing the need for notarization and enhancing ease of doing business, effective today.

+India’s forex reserves rose $9.91 billion to $716.90 billion for the week ended on 14 August.

+The government announced measures such as permitting duty free import of 10 LMT of raw sugar, among other measures, to reduce sugar prices and boost supply during the festive season.

+The number of active individual traders fell 20% to 78.60 lakh in FY26 compared to a year ago. Net losses suffered by individuals fell. 87.70% traders still made losses in FY26: SEBI.

+29 FDI proposed investments worth Rs 4,895.65 crore were made under the revised framework as of 20 August. Entities based in Mauritius, the US, Japan, among others, invested across sectors like IT, AI, information and communication, manufacturing etc.

+India’s PMS industry’s AUM rose 2.0% month-on-month to Rs 44.11 lakh crore in July as per APMI. The client base increased 1.30% to 2.23 lakh accounts during the month.

+The government signed an MoU with Brazil to strengthen bilateral cooperation in Telecommunications and Information and Communication Technologies (ICTs) including Artificial Intelligence (AI), 5G and 6G, Open RAN etc.

+The government with Asian Development Bank signed a $230 million loan to modernise and expand Chennai’s water supply and sanitation infrastructure.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

In 2026, their cash pile had grown to ~$397 billion.

Then they spent some money. Now, it’s ~$365 billion.

They have that much lying around in cash.

Warren Buffett, who recently retired from his position as CEO of Berkshire Hathaway, is famous for buying good companies’ stocks at “good” prices.

He continues as the chairman of the company while Greg Abel has become the new CEO.

It appears that Berkshire is struggling to invest money.

So much so, their cash pile only keeps growing.

But Warren Buffett is one of the world’s most successful investors. One of the best to have ever lived.

And he is struggling to find stocks to invest in?

Right Price

If you track him closely, for decades now, he has made one thing absolutely clear.

Buying shares of good companies is not going to make you money.

Buying shares of good companies — at the right price — is going to make you money.

The stock markets are driven by supply and demand. Often some of the best companies’ stocks attract a ton of interest and money from investors.

This pushes their stock price up.

Beyond a certain level, it can be considered ‘overvalued’.

The challenge with overpriced stocks is that they can fall to what is considered a fair price.

And if an investor buys at overvalued levels, and the stock price falls to fair levels: the investors make losses.

According to him, stocks can remain overvalued for periods much greater than people realize.

For decades now, he has believed many stocks are overvalued. Which means, he cannot buy them.

This goes far beyond just stock price.

His method is to account for potential future revenues and earnings. And based on that, assess present stock prices. That’s how Warren Buffett and Berkshire Hathaway decide if a stock is worth purchasing.

This sounds simple when written like that. Of course it isn’t.

Stock Universe

25 years ago, the S&P 500 was dominated by a mix of companies — tech, financial, and healthcare mostly.

That has changed in this period. Now, almost all of the biggest companies in the S&P 500 are tech companies.

Warren Buffett used to famously say that he does not understand tech companies.

One crucial factor behind Warren Buffett’s, and therefore Berkshire Hathaway’s success, is that he does not invest in anything he does not understand.

(The S&P 500 is an index made of the 500 biggest companies on the US markets; also many of the biggest companies in the world).

Tech companies were not the biggest 25 years ago, and are now the biggest. This means they grew much faster than other stocks.

And Berkshire Hathaway was not investing in these stocks for a significant period of the last 25 years.

It’s wrong to say he missed out on these. He knew they were hot. But he intentionally stayed away, citing that he did not understand them well enough.

Warren Buffett has been vocal about admiring Jeff Bezos and his company, Amazon. He just never understood it well enough to take a bet on it. Eventually, he did invest in Amazon.

Berkshire did start investing in Apple in 2016. But that was more because he inspected Apple through the lens of a consumer company, not a tech company.

He did make one more attempt before this. He bought IBM in 2011 and sold it off in 2018. The investment was worth about $10 billion. The returns were subpar.

Too Big

Berkshire Hathaway has been a victim of its own success.

Their investments have worked out so well, they’ve become one of the biggest companies in the world.

Their cash pile is one of the biggest in the world.

At that size, there just aren’t enough places you can still invest money in.

This is why we can point out plenty of small companies that have grown spectacularly well. But Berkshire never really talks about them.

They’re growing well, but Berkshire can only invest a small portion of their total cash in them.

Which means, no matter how well those companies’ stocks performed, Berkshire’s overall portfolio would grow by only a tiny fraction.

So smaller companies’ stocks are off-limits.

When The Wallet Is Opened

So, he does not buy overvalued stocks — and he is extremely disciplined about it. He can wait for years and decades. As evident from his cash pile.

He also sticks to stocks that are well within his competence.

Some of his most successful investments have happened in sectors like consumer brands, banking and financial services companies, and utilities and railroads.

So when an investor as accomplished and cautious as Warren Buffett and his Berkshire Hathaway opens their wallet, everyone wants to know what they bought.

Last year they were in the news for what looked like an odd purchase — they had bought $15 billion worth of stocks in Japan total.

The buying started back in 2019.

5 different conglomerate companies based out of Japan but operating practically across the globe. To add to that, they weren’t making one product or operating in one industry.

They were conglomerates — they held stakes in companies that make everything from pens to ships.

So their revenue sources were well-diversified.

The Japanese markets had been underperforming for decades, and global investors tended to not look at Japanese companies with a lot of hope.

According to Warren Buffett, the valuations of these high-quality companies’ stocks were too cheap to ignore.

He still hasn’t stopped.

As of today, he owns roughly 10% of each of the 5 Japanese conglomerate companies.

Newest Purchase

His newest purchase is Google.

(Actually, it’s Alphabet, Google’s parent company.)

Google is spending hundreds of billions of dollars building data centers for the AI race.

And to continue doing so, they need more money.

What used to be a low capital expenditure business (mostly software) is now starting to look more like a high capex business (data center heavy).

Oddly, Berkshire Hathaway, the company that used to shy away from software companies, is now leaning towards them.

Warren Buffett had earlier stated he liked Google’s asset-light structure.

Oddly, Google is starting to look more like a utilities company than a software company with heavy investments in assets (data centers).

Warren Buffett has expressed regret at not buying Google earlier.

He has been buying the stock since the 2nd half of 2025.

The recent news cycle is about Berkshire’s latest investment in Google — a $10 billion investment for fresh issue shares.

Right now, Berkshire holds about $30 billion worth of Google stock.

As of writing this, Google is now the 5th biggest holding of Berkshire Hathaway.

Apple is still its biggest holding — though Berkshire did reduce its stake in the company in 2024-2025.

Apple followed by American Express, Coca-Cola, and Bank of America.

Quick Takes

+ India’s imports of Russian crude oil rose 2.10% month-on-month to 5.50 billion euros in July (vs 4.50 billion euros in June) and hit a record high for the second consecutive month.

+ The government removed physical duty payment challans for exporters to ease compliance burden and save transaction cost, effective on voluntary duty payments from 1 August.

+ The unemployment rate in urban areas was 6.70% (vs 6.60%) and the rural unemployment rate rose to 4.80% from 4.30%.

+ Equity mutual fund inflows fell 15% to Rs 24,697.39 crore in July compared to Rs 28,973 crore in June. Debt funds saw a net inflow of Rs 1.87 lakh crore compared to net outflow of Rs 1.09 lakh crore in June.

+ Nifty 50 and Nifty 50 Equal Weight indices will be reshuffled on 30 September. Wipro will exit the index and the BSE Ltd stock will enter the index.

+ The government approved the RBI’s proposal for introduction of one billion plastic notes of Rs 10 and Rs 20 for field trials. Plastic bank notes are proposed to be issued along with paper notes.

+ The government halved the incentives for electric two wheelers to Rs 2,500 per kWh from Rs 5,000 per kWh. The scheme has been extended by a year to 31 March 2028.

+ India’s retail inflation rose 4.45% in July compared to 4.38% in June. Food inflation rose 5.52% in July (vs 5.32% in June).

+ Net Direct Tax collection rose 23.09% year-on-year to Rs 8.11 lakh crore as of 10 August (compared to Rs 6.59 lakh crore a year ago).

+ SEBI Chairman said that they have observed no market manipulation under the Closing Auction System yet but data is being monitored continuously; as per media reports.

+ India’s merchandise exports rose to $44.24 billion in July compared to $36.98 billion a year ago. Petroleum Products, Electronic Goods, Engineering Goods, Organic & Inorganic Chemicals etc, were the major drivers of merchandise exports.

+ MSCI will add four companies (Adani Energy Solutions, Billionbrains Garage Ventures, Laurus Labs and Lenskart Solutions) to its Global Standard Index and it will remove Astral, Balkrishna Industries and SBI Cards, effective from 1 September.

+ India’s forex reserves rose $14.14 billion to $707 billion for the week ended on 7 August.

+ India’s wholesale price inflation fell to 9.78% year-on-year in July compared to 9.87% in June.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

He was bleeding from his chest.

This was a summer night in Chicago. The year, 1893.

He was taken to the Provident Hospital.

The founder of the hospital was a doctor named Daniel Williams.

Back then, many hospitals refused to accept black patients. Daniel was black and urgently felt the need for a hospital that readily accepted patients of both races.

And thus, with some support, he started the Provident Hospital.

It had only been a few years since starting. The hospital’s reputation had not been well-established just yet.

It was against this backdrop that this particular tense evening presented itself to Daniel.

Daniel rushed to the operating room.

While doing so, he pulled in 6 other doctors with him to the operation — two black and four white doctors. They were not there to help him. Their only job was to be witnesses to what he was about to do.

This might not make sense to us initially, but we’ll talk about that later.

In the small and cramped operating room, he inspected the stab wound.

He found an artery had been ruptured. He stitched it and reduced the bleeding.

Upon further inspection, he found a bigger problem.

The stabbing had ruptured the pericardium — the sac that surrounds the heart — and slashed a blood vessel in the heart.

This was a devastating discovery.

Common Convention

In those days, a problem like this would be solved by external treatment.

Doctors would wait and hope a heart injury would heal while providing salt water, and other support.

Most patients would die as the heart could not heal so quickly.

But the heart was never operated upon.

The common belief was that the beating heart was the final limit of the human capacity to operate.

Surgery could not be performed on it while it was still beating. But a heart that did not beat was a dead person’s heart.

Thus, heart injuries remained out of reach of surgeons.

In such cases, the risk of performing surgery was considered extreme as any opening of the chest cavity also entailed lung-related risk.

The heart itself is always moving and any operation on it carries the risk of worsening an already bad situation.

And so, doctors maintained that the heart must never be touched.

The Solution

1893 was an era when extreme skepticism followed black doctors.

Any death on their watch was scrutinised to a greater extent than in the case of white doctors.

For any deaths on their watch, they’d have to explain what went wrong.

People with injuries like James Cornish’s never made it. A knife stab that tore open a heart artery almost always led to the patient’s death.

It was because of this certainty that Daniel decided to take a risk.

This probably explains why Daniel had pulled in 6 doctors into the operation theatre, especially given that the majority of them were white.

It was because of what he was planning to do next.

Daniel decided to attempt to stitch the ruptured heart-artery.

He rinsed the wound, held the ruptured ends with forceps, and sutured the open wound. Then he stitched the sac that the heart sits in.

James Cornish walked out of the hospital 51 days later. His heart surgery had been a success.

James Cornish lived for another 20 years after the surgery.

Daniel’s decision to perform open heart surgery had proven to be a success.

This also happened to be one of the world’s first ever open-heart surgeries.

Despite the risk of reputational damage, and possible scrutiny, Daniel had the presence of mind to continue.

He saw an injury that looked treatable.

He took some precautions — the 6 witnesses.
He weighed his odds — the patient would probably die without surgery anyway.

And decided to go ahead.

It worked.

Templeton

This lesson on situation awareness — that of knowing when to go against the commonly established practices — is one of the most telling traits of successful surgeons.

It also applies to investors.

The investment world is filled with examples like these.

One such case was that of John Templeton.

He had practically retired in 1992, at an age of roughly 80 years old.

John had been a young man during the Great Depression of the 1930s.

After studying law, he had the unique experience of travelling to 35 countries. This period was marked by conflicts and economic hardship.

The voyages gave him a perspective few in his time had.

His trading and investment journey started in 1937 — a little before the time the Second World War started. In the thick of extreme pessimism and doom, Templeton saw what others were not seeing.

Even in that era, Templeton had spent considerable time researching history.

Wars mean certain sectors pick up extremely well.

Railroads were one such. Steel and manufacturing were others. There were a bunch of others like them.

He had carefully bought stocks that had the potential to turn around in times of war.

The success from this investing marked the start of his fortunes.

Owing to his global exposure, he started a mutual fund called the Templeton Growth Fund in 1954 — a mutual fund that invested in stocks across the globe.

Templeton was often called one of the world’s best global fund managers because of this mutual fund.

Between the fund’s inception in 1954 and John Templeton retiring in 1992, the fund gave a return of around 15% per annum.

In 1968, he moved to the Bahamas. His reasoning was that it was necessary for him to stay away from Wall Street in order to not mimic their mistakes. Some also speculated that it was for tax-saving reasons.

In 1992, he sold his mutual fund to Franklin Resources and retired.

His focus would now turn towards philanthropy.

2000s

And yet, despite retiring, despite being 87 years old, despite quitting the money management world — he was back to the markets in the year 2000.

The tech boom was at its peak.

Everyone else saw dotcom companies’ valuations reach astronomical levels. Nobody knew how to price these internet companies.

Many were trading almost 100x their earnings.

John Templeton just couldn’t resist.

He had seen many booms and busts. Unlike others, he was seeing a pattern.

Many dotcom companies were doing IPOs.

After the IPO, the founders and major investors (venture capitalists) were locked in. They could not sell their shares immediately.

But they could sell once the lock-in period ended after a few months.

These insiders (founders, venture capitalists, etc) knew that there was no way they could ever make enough earnings to justify a 100x valuation.

They would all start selling their shares as soon as the lock-in period ended.

John Templeton had never studied dotcom companies in history. They never existed in the past.

But from past experience, he knew what overhyped companies looked like. They looked like what he was seeing in the dotcom companies.

He started placing shorts on all these dotcom companies’ shares, starting in Jan 2000 when optimism and euphoria were touching new peaks.

He had a very specific strategy: the shorts were placed exactly 11 days before the lock-in ended.

With near-perfect timing, the shorts worked in his favour.

According to some reports, he made about $86 million from just shorting dotcom companies.

He lived till 2008, dying at the age of 95.

Quick Takes

+ India’s gross GST collections rose 15.40% year-on-year to Rs 2.11 lakh crore in July 2026 compared to Rs 1.83 lakh crore a year ago.

+ The government increased windfall taxes on fuel exports. The export duty on petrol was increased to Rs 3.50 per litre. Diesel export duties increased to Rs 25.50 per litre. ATF exports were raised to Rs 22 per litre.

+ LIC’s Rs 31,410 crore OFS was subscribed over 3.3 times from institutional investors on day 1. The government is selling up to 6.50% stake at a floor price of Rs 382 to comply with minimum public shareholding norms. The offer will open for retail investors tomorrow.

+ RBI kept the repo rate unchanged at 5.25% and maintained a ‘neutral’ policy stance.

+ The government operationalised the Inventory-based Cross-border E-Commerce Export Framework under the Foreign Trade Policy, 2023 for exports of goods manufactured or produced in India.

+ RBI Governor Sanjay Malhotra said that plastic currency notes will be in circulation from next financial year.

+ SEBI proposed allowing depository receipts to be issued against units of REITs and InvITs in a consultation paper. This is aimed at attracting foreign inflows.

+ The government approved construction of a 135.87 km, four lane Guwahati-Tezpur Corridor along the NH-15 in Assam worth Rs 8,970.20 crore.

+ The government approved Rs 23,731 crore for ‘GOBARdhan’-India’s national unified scheme for compressed biogas.

+ The government clarified that India is neither importing nor intends to import ethanol from the US for fuel blending. The fuel blending programme and ethanol procurement is entirely from domestic producers.

+ Coal production rose 7.51% year-on-year to 69.75 MT in July. Coal dispatch grew 18.03% in the same period to 86.85 MT.

+ India remained a net importer of steel in July. Finished steel consumption rose 6.50% year-on-year to 14.40 MT in July. Steel production rose 1.40% to 13.70 MT in the same period.

+ India’s forex reserves rose by $10.51 billion to $692.87 billion in the week that ended on 31 July.

+ Nine companies including Rediff.com India, Garuda Aerospace, and Playsimple Games Limited received Sebi approval for their proposed IPO.

+ SEBI streamlined inspection of market intermediaries by mandating joint inspections by stock exchanges and depositories.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

He had become a billionaire who started as a truck driver.

In 2020, Lim filed a direct and blunt legal affidavit. The affidavit was also read by major banks in Singapore.

The banks were flabbergasted. A wave of panic spread.

It led to arrests and sweeping regulatory changes.

But before that, let’s talk about who Lim Oon Kuin was.

Lim Oon Kuin

In the 1960s, Lim Oon Kuin (also known as OK Lim) arrived in Singapore from China. He was only 20 years old.

Singapore back then was not the developed city-state that it is today.

It was undergoing a phase shift. The government was trying to attract investors, encourage economic activity, and solve potential conflicts among different ethnic groups.

OK Lim owned one truck. He bought diesel wholesale, and sold it to fishing boat operators, bus operators, etc.

He wasn’t just a driver, he was also an oil trader.

OK Lim’s company was called Hin Leong Trading.

People who traded or worked with Lim described him as a hard working and determined man. He was able to expand his business and buy more trucks.

In 1968, he bought his first sea vessel.

This purchase changed the nature of his work. He was no longer limited to being a last-mile fuel delivery operator.

By 1973, he had added more vessels to his fleet. Hin Leong became an oil trading company.

Hungry for more, he started trading beyond Singapore and bought oil tanker ships for his operations.

In the 1980s, he started trading oil with China and that monumentally changed his fortunes.

The momentum only grew from there. By the 2010s, he had a fleet of over 100 ocean-going tanker ships.

By 2019, the company reported a revenue of around $20 billion. A staggering number for any company anywhere in the world.

Hin Leong Trading

What made Hin Leong Trading more unique was that this company had cast a wider net than its peers.

Instead of just buying and selling oil, they did other parts of the chain too.

Ocean Tankers was a company run by Lim’s son.

This was the company that owned close to 150 tanker ships that were used to transport the oil.

They also owned moored ships in the ocean that were used not to transport oil but merely as oil storage tanks.

Universal Terminal was another company. It was majorly owned by Lim’s family.

Universal Terminal owned oil storage tanks on land. They were in the business of only storing and not transporting oil.

There were a few other companies that were also owned by family members of Hin Leong.

The First Sin

Hin Leong used to trade in oil futures as a way to hedge against oil price fluctuations.

This can act as an insurance policy against unpredictable price swings.

But Hin Leong went a bit further. They tried to make extra profits using these futures trades.

The challenge with these speculative bets is that they can be a double edged sword as well — when the bets go wrong, losses can be huge.

For several years in the 2010s, Hin Leong Trading had been incurring losses from such speculative trading activities. These losses were hidden.

Fearing a backlash, Hin Leong never disclosed the losses it was suffering in these trades. Over time it had accumulated about $800 million in losses from these speculative trading activities.

To cover up these losses, they needed more cash.

Circle Trade

This is where Hin Leong got into a vicious cycle.

Hin Leong would sell oil to another company (Company 1).

Company 1 would take a loan for this purchase.

Then Company 1 would sell the oil to another company (Company 2).

Company 2 would take a loan to buy this oil. This would be paid to Company 1.

So Company 1 would be able to pay back its loan.

Then, Company 2 would sell the very same oil back to Hin Leong.

And Hin Leong would take a loan for this purchase.

With the money received from the sales, both Company 1 and Company 2 would be able to pay back their loans.

The oil changed hands on paper and returned to Hin Leong.

But now, Hin Leong has some extra cash on its hands.

Because it was technically selling oil successfully, banks were willing to lend it money to buy oil too.

This cycle would continue.

It artificially increased Hin Leong’s revenue to $20 billion.

This is called a circular trade.

Actual trade didn’t happen. But banks gave money to the company for it.

Circle Trade

Didn’t the banks check?

Valid question. Yes, they did.

They were using the oil as collateral. So to check, they would seek certificates of storage and transport from the companies involved.

But remember the two companies run by Lim’s daughter and son?

Universal Terminal, the oil storage company run by his daughter, and Ocean Tankers, the oil tanker ship company run by his son.

They were easily able to give (fake) certificates needed as proof of movement of oil.

There were other non-family-run companies that got in on this trade too, along with Hin Leong. Some claimed to know. Others claimed they weren’t aware of what they were doing.

Could the banks have been more careful?

Yes. But OK Lim’s reputation was such that banks trusted him after doing the basic required due diligence. He had built a name for himself over 5 decades.

Discovery

This was not unravelled by some detective or forensic expert.

Everything was going well.

The $800 million loss was from speculation — Hin Leong was betting the oil prices would rise. But they had not. That is how the losses increased further.

But then, the pandemic hit in 2020 and demand for oil collapsed globally.

His already loss-making futures bets expanded and became even bigger losses.

This made the entire act difficult to hide.

At the same time, remember banks used oil as collateral?

When the price of oil went down, banks called Hin Leong to increase the oil quantity kept as collateral (so that their collateral’s value still matched the loan value).

April 2020, various banks started calling the company asking for more oil, or for their money to be returned.

No replies.

On 17th April, OK Lim submitted a legal affidavit.

Plainly, without hiding behind legal words, he mentioned that he was responsible for all that had happened.

The total loans he had taken were worth $3.85 billion.

The company’s total assets were worth only $714 million.

Because the various banks had no simple way of checking with each other, many banks had given loans keeping the same oil as collateral.

Hin Leong Trading was using borrowed money to buy its own oil back from other companies.

This is called circular trading.

It is illegal.

It is illegal because the sales are not real.

It’s just deceptive accounting to show fake sales.

They sold something, took out a loan, and bought that thing back. The cycle repeated.

Revenue kept climbing.

Nothing the company sold was actually being consumed.

Quick Takes

+India received foreign capital worth $32 billion so far after measures announced on 5 June, said RBI Governor in media interviews. The current scheme has surpassed the 2013 level of $26 billion in 45 days. Majority of the inflows are through FCNR(B) deposits.

+India’s engineering goods exports rose 21% year-on-year in June to $11.48 billion. Shipments to China increased 74% to $361.47 million from a year ago. The US was the largest market for engineering goods at $1.95 billion in June.

+India’s Industrial Output rose 7.3% in June (vs 5.1% in May). This is the fastest pace of growth since July 2024. Manufacturing output increased 7.8% year-on-year in June (vs 5.2% in May).

+India’s exports rose to the highest ever at $863.10 billion in FY25-26. Merchandise exports stood at $441.80 billion and services exports increased to $421.30 billion. FTA’s with UAE, UK and Australia were the core drivers of growth.

+Regional Rural Banks reported the highest ever net profit of Rs 10,177 crore in FY25-26. Credit Deposit Ratio improved to 75.2% (vs 73.4% in FY25). Net NPA stood at 2.1% (vs 2% in FY25).

+India launches its first 40-wagon, direct commercial container freight train to Nepal under the revised India-Nepal Rail Transit protocol.

+Public Sector Banks’ net profit is at record high of Rs 1.98 lakh crore. Gross NPA was at a record low of 1.9% in FY25-26.

+The government released Index of Services Production (ISP) data for May 2026. 16 out of 19 sub-sectors grew, with accommodation & food and real estate growing the most. Air Transport, postal & courier and information and broadcasting were the only ones that fell.

+SEBI will replace the current volume-weighted average price method and use the Close Auction System to calculate the closing prices of shares that have F&O contracts from Monday (3 August).

+The US Federal Reserve kept the benchmark interest rate unchanged at 3.50%-3.75%.

+The government said that the Ethanol Blended Petrol programme trials confirmed that E20 is safe for use under prescribed standards and legacy vehicles do not exhibit any significant variation in performance or abnormal wear and tear due to E20.

+The Bank of England kept interest rates unchanged at 3.75%.

+Veritas Finance re-filed for an IPO with SEBI. The IPO will comprise a fresh issue of Rs 900 crore and an offer for sale of 1.28 crore shares. The company had earlier filed for an IPO in January 2025.

+India’s forex reserves rose by $6.11 billion to $682.35 billion in the week that ended on 24 July.

+India’s fiscal deficit widened to Rs 3.07 lakh crore in the April-June quarter compared to Rs 2.81 lakh crore in the same period a year ago.

+The government approved Rs 84,084 crore for the National Offshore Exploration Scheme of the Ministry of Petroleum and Natural Gas up to FY30-31.

+The government approved Rs 5,070 crore for development of 5,000 MW floating solar photovoltaic projects with energy storage systems.

+SEBI introduced the ‘GARUDA’ framework to simplify and expedite the launch of AIFs effective from 30 July. This allows AIFs to launch 10 day after filing a Private Placement Memorandum (PPM).

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

He was a financier and one of the richest persons in the world.

Morgan loved stability. He invested in companies aiming for good margins and consistency.

JP Morgan had a reputation for being a consolidator. He would often finance and merge two competing companies.

This would result in much less competition and better margins.

Too much competition destroys value was his mantra.

Andrew Carnegie was on the opposite side of this belief system.

Andrew Carnegie was also one of the richest people in the world. But his wealth did not come from finance or investing.

It came from steel.

Carnegie Steel owned the steel-making chain end-to-end. Iron ore mining, transporting, blast furnaces, steel mills, etc. His company owned them all.

It allowed the entire system to work closely and in an integrated manner. Its efficiency and cost savings were the kind others could not achieve.

Around 1900, Carnegie Steel was considered the world’s biggest steel producer.

Carnegie vs Morgan

Carnegie was not in the business of making steel end-products to a great extent. It was mainly a producer of steel.

Some of the companies Morgan had invested in were end-product makers. And they depended on steel bought from Carnegie.

Things were good until Andrew Carnegie’s gaze fell on end-products. These were steel items like rods, pipes, wires, buckets, nails, etc.

He thought about how much cheaper and more efficiently he could make end-products since he already owned the entire steel-making chain.

The news got out. The word reached JP Morgan.

He was obviously not pleased.

JP Morgan realised that if Carnegie started making end-products along with owning the entire steel-making process, his own companies would not be able to compete.

The solution?

JP Morgan’s companies would also have to set up their own steel-making system and expand existing ones.

Everything that Carnegie already had, they would have to get for themselves. That was how he would be able to put up a fight.

In short, both Andrew and Morgan would become owners of end-to-end steel and steel products making companies.

This would require massive investments from both companies.

More so from JP Morgan’s companies since the cost of setting up blast furnaces, iron mines, etc is much higher.

Charles Schwab

Today we talk about semiconductor technology and crude oil being crucial industries.

Steel was considered a crucial industry in the early 1900s.

America was rapidly industrializing, and steel was required in massive quantities.

This also coincided with a massive expansion in railroad networks in America.

A young man named Charles Schwab joined Carnegie Steel in 1880 as a stake driver. He was working on the factory floor.

He performed exceptionally well. Within a year, he was promoted to chief engineer and assistant manager.

And within 17 years of joining the company, Charles became the president of the Carnegie Steel Company.

Perceived as being very charismatic, Charles was well-regarded.

He was a great salesman. He would successfully sell not only products but also goals, and vision to the factory workers.

Charles would visit the factories often, talk to individual workers, remember their names, praise them publicly, and encourage a healthy sense of competition among them.

Charles Meets Morgan

In 1900, Charles Schwab attended a dinner at a club in New York.

This dinner was also attended by JP Morgan.

It was here that Charles Schwab floated an idea.

He informed JP Morgan about how his goal of reducing competition and protecting margins could be met if he invested in Carnegie Steel.

He did not propose an offer. He did not suggest a move. He just wondered aloud about the idea in front of JP Morgan.

JP Morgan was interested.

After the dinner, they met privately and talked further. Morgan asked more about the potential deal Charles Schwab was proposing.

JP Morgan felt threatened by Carnegie’s desire to make end-products. JP Morgan had thought about setting up his own steelmaking factories.

But the proposition of acquiring an existing steel-making business seemed like an even better deal. It would allow him to make steel, and at the same time his end-product-making companies would not have to worry about supply.

Charles Schwab had taken a big risk here.

He was merely suggesting the idea to JP Morgan. He had not spoken to Andrew Carnegie about this at all.

But he had a deep understanding of steel-making, much like Andrew Carnegie had.

He had a good understanding of capital management of steel companies — the kind of the topic that JP Morgan dealt with.

And he was aware of some of Andrew Carnegie’s recent thoughts.

Armed with the knowledge that JP Morgan might agree to buy Carnegie Steel, he approached his boss, Andrew.

Charles Meets Andrew

Carnegie Steel was an extremely successful company that had essentially become a money-printing machine.

On the surface, there was little reason for Andrew to sell his company.

But Charles knew a few things about Andrew and felt he could push the topic.

Andrew Carnegie was at the peak of his successful career. He had built a behemoth company.

He could restart building a brand new vertical in his company — that of making steel end-products. That would be a fresh start requiring years-long effort.

But at the age of 65, Andrew was getting more interested in philanthropy. He wanted to build schools and libraries.

Charles knew that, and pitched the proposal accordingly.

Carnegie Steel was a private company. By selling, he could make his wealth more liquid. With money like this, Andrew could pursue his philanthropic endeavors like nobody else before.

Charles also highlighted that given this was not a distress sale, Andrew could demand a price he deemed fit for the company.

After some thought, he pitched a price. $480 million.

Charles took the number to JP Morgan.

According to reports, JP Morgan agreed to the price almost immediately.

United States Steel Corporation

JP Morgan didn’t just acquire Carnegie Steel, he consolidated a bunch of other steel companies.

He used a mix of bonds and equity shares sold to investors to raise the massive amount of money needed for this acquisition.

It became a system of steel industry companies composed of entities that did everything from mining, smelting, steel-making, end-product making, and so on.

The parent company came to be called United States Steel Corporation.

Combined together, United States Steel Corp was the world’s first unicorn company ($1.4 billion, to be precise).

And Charles Schwab was its president.

Quick Takes

+ India’s Infrastructure output rose to a five month high of 5% year-on- year in June. (vs 3.2% in May). The Index of Core Industries for June is the first data released with a revised base year of 2022-23.

+ The government clarified that there is no proposal to remove long-term capital gains tax on equities for domestic investors in the parliament. The clarification was followed by the decision to exempt FPIs from LTCG tax on investments in government securities last month.

+The government will sign an Implementation Agreement with Germany on 22 July to strengthen institutional capacity, facilitate knowledge sharing and foster technical cooperation. The agreement will be signed during the release of ‘AAROH-Annual Report on Mine Closure’.

+Sebi directed depositories to issue operational guidelines for freezing promoter holdings at the ISIN level during buybacks by 1 August.

+US President Donald Trump said that all imported generic drugs will have 100% tariff in 2028 and 200% a year after that. There will be no tariff for 2 years starting 1 August. This is done to reshore generic pharmaceutical production into America.

+The government approved two Electronics Manufacturing Clusters (EMCs) worth Rs 1,012 crore in Manallur and Pillapaikkam, Tamil Nadu.

+The government approved construction of a 14.52 km line between Nimpura and Midnapur, West Bengal for Rs 440 crore. The project is expected to support additional 3.52 MTPA traffic on the freight corridor to transport coal, iron ore, steel, etc.

+India’s forex reserves rose by $1.08 billion to $676.24 billion in the week that ended on 17 July.

+The government approved two additional railway lines in Karnataka and Andhra Pradesh (46 km network) with a total cost of Rs 1,264 crore.

+India’s services exports rose 8.72% to $421.3 billion in FY25-26, compared to last year. Telecommunications, computer & information services, and business services contributed the most to the growth.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

But there was a time when Louis Vuitton almost took over Gucci.

Almost. But it managed to save itself.

Louis Vuitton is a part of a larger group called LVMH.

And LVMH had made a bid to take over Gucci. It had built stakes or taken over various other luxury brands across Europe.

So it had reason to believe a Gucci takeover would be easily possible as well.

But Gucci had a few tricks up its sleeve. What followed were a few desperate measures by both sides. Some worked in favour of Gucci, some against.

The last trick Gucci used was what’s called a white knight.

But before we get to that, and what eventually happened, we must understand Gucci and LVMH individually.

Gucci Before This Episode

The first thing to understand about this story is that Gucci was no longer controlled by the family that started it.

It was an Italian leather goods shop started in Italy in 1921.

Over the decades, the Gucci brand had lost its sheen because of over-licensing their brand name. Luxury brands work on exclusivity, and the name appearing on too many products ruins that image.

That was one problem.

Family infighting had meant that gradually, the family as a whole did not act as one.

Internal disputes and conflicts meant that the company’s various shareholders (who were family members) were either leaving the company or were being pushed out.

Eventually, a family member sold enough stake to an investment company based out of Bahrain. This was a little over 50% of the company.

By 1993, Gucci became a fully non-family-owned company.

Over time, all family members sold their portions off.

Investcorp owned 100% of Gucci.

Investcorp made Domenico De Sole the CEO. Tom Ford was made the creative head.

Together, they started righting what was wrong.

A large number of branding licenses were cut. The brand focussed on newly designed products.

The brand started clawing back lost glory.

To raise fresh money, the brand went for an IPO in 1995. The price was $22 per share.

In this IPO, Investcorp sold off about half of its stake. It was still the largest shareholder.

Investcorp was not in for the long run. They wanted to turn around a burning ship and exit. They had succeeded.

By March 1996, the company’s share price had risen to $48 per share.

They were sitting on very handsome profits.

They did a secondary offering and sold off all their shares.

From this point on, Gucci was owned by various investors, but there was no single controlling shareholder.

Domenico De Sole continued as the CEO since the board of the company felt confident in his abilities.

LVMH This Episode

LVMH was essentially a holding company.

Bernard Arnault had bought Christian Dior’s parent company at a distress sale in 1984.

Since then, he’d gone on to acquire one luxury company after another. It worked well. Today, the company is the world’s biggest luxury brand holding company.

By 1998, LVMH had acquired top luxury brands like Sephora, Givenchy, and Loewe.

Unlike other holding companies, LVMH was a holding company/investor that operated almost exclusively in the world of luxury.

It had developed a system for running such companies. It knew that luxury companies were not run using the same principles as any other consumer goods company.

LVMH understood luxury.

The Episode

So now, we get to the LVMH vs Gucci battle.

Gucci shares were almost entirely available on the share markets. There was no single large controlling shareholder.

To make Gucci even more tempting, it was no longer a fledgling luxury brand that was directionless or losing reputation.

It was a healthy, functional, and growing luxury brand.

These conditions made Gucci nearly perfect for a takeover bid by LVMH.

In 1999, LVMH announced that it had bought nearly 5% of Gucci’s shares. LVMH positioned this as a pure investment interest.

It is difficult to take over a company that has large controlling shareholders. They usually tend to stick and not sell easily.

But since Gucci was almost entirely held by smaller groups of investors, Gucci seemed like an easy takeover.

The CEO of Gucci had feared about a day like this.

In the meantime, LVMH kept buying more shares of Gucci in the open markets. The CEO of Gucci had been correct to worry about it.

LVMH had built a business model out of this. They had lots of cash and could deploy the money fast. This helped them acquire companies rapidly.

Not long after that announcement, LVMH announced that it owned about 34.4% of the company.

34.4% does not give the company a majority. They were still far from 50%.

But they did become the largest shareholder, and that itself is powerful enough in a company where all other shareholders own smaller portions.

The CEO of Gucci did not like this.

Why?

CEOs are appointed by the boards of directors of companies.

The board of directors are elected by shareholders. So, the CEO and the board must act in the interest of the current shareholders.

De Sole, the CEO, was worried that LVMH might buy a little over 50% of the company and attain full control over it.

This, he felt, was unfair to the existing shareholders.

His pitch was that LVMH should take over the company and pay a fair price to all shareholders, not just 50%.

The Negotiation

With 34.4% stake, LVMH demanded board seats.

De Sole countered, saying LVMH should offer a price for all shares or reduce his stake to about 20% and accept a lower number of board seats.

Neither could meet in the middle. The tussle set off.

LVMH then tried to call for a shareholders’ meeting to let the shareholders decide who the members of the board should be.

In effect, he tried to get control over the company.

Poison Pill

De Sole decided to counter this with a shrewd move that is sort of a last resort for companies being taken over.

The move is called a poison pill.

What companies do is they create lots of new shares and give them to other shareholders (excluding the one trying to take over).

Gucci created new shares and gave them to employees via stock options (ESOP).

Since these were new shares entirely, the total number of shares increased.

Since LVMH was not given any new shares, the number of shares they owned remained the same. But the percentage they owned would drop from 34.4% to about 25%.

The move diluted the ownership percentage of LVMH.

This reduced their influence over the company.

Why is it called a poison pill?

Because it is a bit self-damaging to prevent a larger damage. It is trying to make the company less attractive to the party trying to take over. It makes it tougher for them since now they’ll have to spend even more money to acquire the same percentage of stocks as before.

There are numerous examples of cases where the poison pill method worked as intended.

White Knight

The poison pill failed.

This gets a bit complicated.

Companies are allowed to use a poison pill to defend themselves. The idea is that a company can use poison pills to protect shareholders.

In this case, the poison pill got challenged in court because LVMH was also a large shareholder and was effectively being targeted by the board.

Poison pills are supposed to help buy shareholders time.

It cannot be used to retain voting power when another buyer is buying shares and therefore voting power.

The argument made by LVMH was that the board was using its powers to retain control over the company without respecting all shareholders.

Remember, these were ESOPs. So even other shareholders’ (the various small and individual investors) stakes were being diluted. Even their voting power was being effectively reduced.

Many poison pills use a strategy where free new shares are given to all shareholders except the one trying to take over the company.

This is more often allowed.

Gucci’s poison pill looked more like voting power manipulation and less like protecting shareholders’ best interests.

The poison pill did not pass the court’s test.

So now you’d imagine LVMH has a straight path towards acquiring a controlling stake in Gucci. They had 34.4% shares and could increase or demand board seats.

But De Sole had one more trick planned.

In March 1999, they signed an agreement with PPR, a French retail company.

The deal was to raise money from them by issuing fresh shares. Specifically, $3 billion cash.

A company is allowed to raise capital by issuing shares.

This move was legal.

So, Gucci created new shares and sold them to PPR for $3 billion.

With this, PPR now had a little over 42% stake in Gucci.

LVMH was no longer the biggest shareholder. PPR had more voting power and was friendly with the existing board.

PPR became the large, friendly shareholder — the white knight!

How was this a friendly move for the board and existing shareholders?

PPR had agreed to buy the shares for a 7% higher price than the market price. Since the company was also raising more cash while selling shares for a higher price, the company was benefitting from the move.

Why would PPR pay a higher price?

They wanted an entry into the luxury space. Unlike LVMH, they were not already a luxury holding company.

So they were willing to pay a higher price.

Gucci is still with PPR (PPR changed its name to Kering in 2013).

And yes, Kering is now what it wanted to be. It is a luxury holding company.

Its portfolio includes Balenciaga, Saint Laurent, and several others — around 12 core brands.

Kering’s market cap is about $35 billion today.

Between 1999 and 2004, PPR continued acquiring more stake in Gucci. Today, it is entirely owned by PPR (or Kering).

LVMH gave up on the idea of taking over Gucci. By the end of 2001, they had sold off their entire stake in Gucci. A big portion of that was sold to PPR.

But it did not give up on its strategy. It continued to acquire other luxury brands.

Today, LVMH is the largest luxury holding company in the world with over 75 brands.

Its market capitalization is about $280 billion today.

Quick Takes

+ India’s annual inflation rate rose to 4.38% year-on-year in June (vs 3.93% in May).

+ India’s merchandise exports rose 15.5% year-on-year to $40.41 billion in June while imports grew 31% to $70.84 billion. The merchandise trade deficit widened to $30.43 billion.

+ Zetwerk has received SEBI’s approval for its IPO.

+ India’s Wholesale Price Index inflation rose 9.87% year-on-year in June (vs 9.68% in May)

+ India’s net direct tax collections rose 16.4% year-on-year to over Rs 6.51 lakh crore as of 13 July, 2026.

+ MoSPI released the first Index of Services Production (ISP) for April 2026, covering 19 sub-sectors which cover 60% of the services sector. 17 out of 19 sub-sectors grew, with accommodation & food and retail trade growing the most. Air transport and railway transport were the only ones that fell.

+ The government has updated the Foreign Trade Policy to prohibit the import of goods made fully or partly using forced labour. The rule will come into effect 30 days after its publication in the Official Gazette.

+ US inflation fell 0.4% in June (vs a 0.5% rise in May). Core inflation, which excludes food and energy, stayed flat in June (vs a 0.2% rise in May).

+ The India-UK Comprehensive Economic and Trade Agreement (CETA) came into effect, aimed at increasing bilateral trade.

+ India’s unemployment rate remained unchanged at 5.5% compared to May. The rural unemployment rate fell to 5% (vs 5.1% in May). Urban unemployment rose to 6.6% (vs 6.4% in May)

+ The government approved two railway projects in Odisha and Jharkhand worth Rs 3,907 crore.

+ The government approved Semicon 2.0 with a budget of Rs 1.27 lakh crore to support the semiconductor design and manufacturing ecosystem in India.

+ The Ministry of Ports, Shipping and Waterways (MoPSW) has given in-principle approval for two maritime projects: a new shipbuilding cluster in Porbandar, Gujarat, and another project at Vadinar in the Gulf of Kutch.

+ The government increased windfall taxes on diesel and Aviation Turbine Fuel (ATF) exports effective today. Diesel export duties increased to Rs 15.5 per litre (vs Rs 8.5 per litre). ATF exports were raised to Rs 14.5 per litre (vs Rs 7.5 per litre). The export duty on petrol, however, was reduced to Rs 2.5 per litre (vs Rs 4 per litre).

+ India’s first hydrogen-powered train with a capacity of around 2,600 passengers, will begin operations tomorrow. The train will run on the Jind-Sonipat section of Haryana.

+ India’s forex reserves rose $964 million to $675.16 billion for the week ended on July 10.

+ The government will revise the series of the Index of Core Industries (ICI) with the base year 2022-23 on 20 July. The number of core industries has increased to 9 from 8 with the addition of iron ore.

+ MakeMyTrip’s Indian subsidiary confidentially filed for an IPO with SEBI. The company and its subsidiary, ibibo Holdings, will sell shares in the IPO, as per its filing to the U.S. SEC.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

Gillette and Schick together had 90% of the US shaving market.

It was technically still a monopoly, as 70% of the market was dominated by Gillette.

One quirky video shot by Dollar Shave Club (DSC) rocketed it to popularity in 2012.

It was actually the founder of the company, walking around their warehouse, explaining how DSC was better.

There were props like a machete, forklift, and other such eye-catching details. It made things a bit edgy.

It worked well.

The proposition was simple.

Modern-day shaving razors had become too complicated and expensive — unnecessarily.

DSC shipped razors for just $1 a month.

Their servers crashed, and they got 12,000 orders within 2 days.

DSC was a Direct-to-Consumer (D2C) brand aiming straight at the big shaving razor companies.

In that year, blades by Gillette or Schick cost around $5.

These razors were quite unique and were not interchangeable. You could not buy a razor from one company and fit blades from any other company.

In short, the company sold you a razor and hoped to lock you in via blade purchases.

DSC challenged this model by offering each of their blades for around $0.60.

So what DSC promised was a pack of 5 blades for $1.

(Shipping was $2, so the final cost was around $3 a month).

It was a subscription. Unlike other blades that were bought at the department store, DSC blades just arrived at home via courier.

So once users subscribed, customers just stayed with their choice.

DSC

By 2015, some reports put DSC’s market share (USA) at around 5%.

Sure, that’s nothing compared to Gillette’s 70%. But definitely not worth ignoring.

Dollar Shave Club was acquired by Unilever for $1 billion in 2016. Unilever was a competitor to P&G (Gillette’s parent company).

At the time of acquiring, the D2C brand had revenue of around $150 million and was growing fast. And this was a sticky group of customers since they weren’t simply buyers, they were subscribers.

Almost simultaneously, chatter about the acquisition started doing the rounds.

Media, business school students, and several others were all asking what exactly Unilever acquired.

Why was that the case?

Their question was grounded in the fact that DSC did not have any manufacturing plants of their own.

Their blades weren’t unique in any real way.

They were sourcing blades from a Korean manufacturer that sold very similar blades under different brand names.

Some DSC customers actually started buying blades from this manufacturer directly since they worked out even cheaper!

But that was never DSC’s pitch.

DSC was a subscription service that eased the delivery of cheap blades to the customers. It was never promised it had its own manufacturing or R&D facilities.

In some ways, it was white-labelling the blades. And it worked.

Later though, DSC switched their blade sources and made them more proprietary.

Unilever had acquired Dollar Shave Club to grab a slice of a very fast subscription-based shaving market. Unfortunately for them, that didn’t pan out as expected.

In 2023, it sold 65% of Dollar Shave Club off to an investor while remaining a minority shareholder.

D2C: Distribution

Dollar Shave Club was a perfect D2C example.

Companies that operate in the Fast-Moving Consumer Goods (FMCG) space have incredible moats. It is tough to crack their markets.

One crucial link in their chain is that of the distribution network.

New companies do not have the supply chain that FMCG companies have built over years. This allows them to make their products reach stores in every corner.

FMCG companies do not own the entire chain. It is a well-oiled machine with many parties involved. Distributors, wholesalers, transporters, etc, each with their own little business model and tiny margins.

So when a customer buys a product, they are indirectly paying for that entire chain of companies working to get that product on the shelves.

Obviously a new company cannot match that from day 1. In fact, the complexity and difficulty of building the distribution network are one reason why this industry does not get as many competitors as some others.

The difficulty is a barrier.

D2C companies try to crack that.

They try to establish a connection with the final customer directly, skipping the wholesalers, distributors, etc in between.

The added advantage of this process is that they are able to offer much lower prices on their products. Not always, but many times.

The D2C space is not new. It has existed for a long time. But the internet, and then social media, made it that much easier for D2C brands to reach their target customers.

And that in turn led to more D2C brands being started.

In India, we have been seeing a particularly high number of D2C brands mushrooming in the last 5 years or so.

Modern e-commerce websites aid in this too.

D2C brands manage to attract customers via their social media and content while listing their products on Amazon and Flipkart.

That makes it easier for customers to trust them with their money since they already trust buying on Amazon and Flipkart with their hard-earned money.

Further, since e-commerce companies have existed in India for so long, many of the logistics bumps have been well-ironed out. Example: courier companies are well-versed with handling e-commerce packages, and even accepting payments.

But it isn’t just that reason that D2C brands have mushroomed in such numbers.

It’s also the manufacturing, or rather, the lack of manufacturing needed.

D2C: Manufacture

D2C companies don’t always manufacture. In fact, forget a factory, they might not even have a warehouse.

Of course, not all of them are that way. Many do have their own factories.

—White-Labelling—

White-labelling is a sticker job.

Some suppliers manufacture the products in bulk without any labels. When a brand wants to label the product and sell under their brand, they buy in bulk and add their own label to it.

This is why you will notice that certain products like power banks, chargers, trimmers, etc often look alike despite being from different brands.

White-labelling is also common in textiles and apparel, grooming & beauty products, pet products, etc.

Some D2C brands do go one step extra and put their own quality check measures on these generic sourced products.

—Private Label/Custom Spec—

Many D2C brands wish to change available products and make them more in line with their brand’s positioning.

In such cases, the brand specifies what they want, and the manufacturer makes the product accordingly.

Of course, there are levels to this customisation. For example:

Level 1: A sunscreen D2C brand might ask its supplier to put the cream in a customised container and packaging.

Level 2: In addition to that, the brand might ask its supplier to add a certain perfume and colour to the cream.

Level 3: In addition to that, the brand might ask its supplier to change the very formulation of the cream to increase its SPF count or reduce its viscosity.

If a D2C brand customises its products to this extent, it is getting close to what many large and established brands are doing.

—Contract Manufacturer—

This is an option even the biggest and most established brands use.

This is even more specialised than the previous option. In this, the product gets designed/formulated by the company.

And then the specifications are handed over to the manufacturer to make the product. The brand may even define how the quality of the products will be tested.

The key distinction between the Private Label model and contract manufacturer model is the level of customisation.

In the case of a private label, the brand makes minimal changes to a product already developed by the manufacturer.

In contract manufacturing, the brand has far more control over the product.

In fact, in this, the manufacturer might be asked to carry out operations that it does not already do.

D2C brands that employ this model are often seeking higher quality, product distinction, and/or have a large order size.

—Co-developed Product—

Some D2C brands, and even large established brands might work closely with their manufacturer and their capabilities to develop a product that is highly customised and unique.

This obviously is more expensive and requires a large order size or high margins.

—Fully Integrated—

The last step in this chain is the fully integrated option.

Not even all big and established brands use this. But many do.

And some D2C brands also make use of it. Especially in cases where they want absolute control over the final product.

D2C: Suppliers and Manufacturers

Companies that work in this space are usually very secretive about brands they supply to. They sign contracts and NDAs to ensure word does not get out.

When Dollar Shave Club’s sourcing news was out in public, everyone was talking about Dorco, the South Korean razor blade manufacturer that used to supply to many brands.

There are similar companies in many product categories.

Cosmax is a South Korean company that plays in the skincare industry. The company does not reveal the brands it works with.

But it does clearly talk about its offerings — including cream products that can be white-labelled, customised, manufactured-to-spec, tested, packaged, etc.

Pou Chen works similarly in the world of sports footwear.

Even the energy drink industry have their own set of manufacturing companies offering all sorts of options from ready-made energy drinks to custom-formulated fruit juices.

Refresco is one such company operating in Europe and the Americas.

This might help explain how some popular YouTubers who specialise in making content suddenly start selling energy drinks, apparel, etc.

Safilo does the same in the world of eyewear.

You’d be surprised.

There are such companies serving D2C brands even in sectors like babycare, pet food, home care, and supplements.

Ease

So by now, it must be clear that starting a D2C company might be more accessible than you think.

If a person has reasonable knowledge about a product and its sector, knows what he or she wants to make, and reaches out to the right vendors, the input costs can be incredibly low.

Some D2C brands have nothing more than a small office space and a few employees.

Clearly manufacturing was never really a challenge.

There are enough options. White labelled products are available for companies that do not have the resources to support a R&D team of their own.

Warehousing — that is offered too, often by the same folks who manufacture.

The supply chain has become a well-oiled machine.

And thanks to social media, distribution has gotten much easier too.

Often, many D2C brands are nothing more than branding and marketing companies for products that have been developed and manufactured by someone else.

This does make it incredibly easy for new entrants.

And that’s where D2C brands have some drawbacks.

Many D2C brands are often unable to answer what makes their product better or unique. It’s often the case that they’re not unique at all.

Customers may trust them less since they are new and their standards are less known.

To make matters worse, their products are easily copied by competitors. So many D2C brands die early deaths because their products suffered due to imitation.

That said, D2C brands are often able to do what big brands can only dream about.

Many D2C brands are excellent at finding a niche audience and serving them exactly what they want.

Think about a D2C wrist-watch brand that caters to fans of astronomy. Examples like that.

They’re also excellent at listening to feedback from these customers and making adjustments accordingly.

Storytelling plays a big role when it comes to targeting niche markets, and D2C brands are much better placed to do just that.

India’s many D2C brands have all sorts of examples that have performed well and risen through the ranks to become established players themselves.

Can you think of any companies that are operating in the Indian D2C space?

You’d be surprised to know some top-favourite brands today started off as D2C brands.

Quick Takes

+ The Defence Acquisition Council (DAC) approved proposals worth nearly Rs 52,000 crore to procure advanced indigenous military hardware, including Akash Tarang electronic warfare systems, Kamikaze drones, anti-tank missiles, and naval unmanned aerial systems.

+ The India-Israel Bilateral Investment Agreement (BIA) came into force on 4 July, establishing a secure legal framework to boost cross-border capital flows while safeguarding both nations’ sovereign rights to regulate public policy.

+ India and Indonesia signed multiple MoUs including agreements on defense cooperation for BrahMos and Astra missile systems, critical minerals and steel supply chain technology, medical product regulation, disaster management, telecommunications, agriculture, etc.

+ Manipal Health has received SEBI’s approval for a Rs 8,000 crore IPO.

+ Cult.fit has filed draft papers with SEBI for a Rs 950 crore IPO.

+ The US-Iran ceasefire collapsed with the US launching airstrikes on 80 targets in Iran and revoking its oil sanctions waiver after Iran attacked 3 commercial shipping tankers in the Strait of Hormuz. This triggered retaliatory attacks on US bases in Bahrain and Kuwait.

+ India’s auto component industry grew 12.7% year-on-year reaching a turnover of Rs 7.6 lakh crore in FY26.

+ India and Australia signed a Joint Declaration on Defence and Security and fast-tracked negotiations for a CECA (Comprehensive Economic Cooperation Agreement) while concluding strategic partnerships in maritime security, civil nuclear administrative arrangements, and critical tech supply chains during the 3rd Annual Leaders’ Summit in Melbourne.

+ Zostel has approached SEBI to review Prism’s (Oyo’s parent company) updated Rs 6,650 crore IPO prospectus, claiming it conceals critical facts about their decade-long 7% equity ownership dispute.

+ India’s forex reserves rose by $0.73 billion to $674.19 billion in the week that ended on 3 July.

+ Equity mutual funds saw a net inflow of Rs 28,973 crore in June (compared to Rs 22,908 crore in May). Debt funds saw a net outflow of Rs 1.09 lakh crore in June (compared to a net outflow of Rs 96,948.51 crore in May): AMFI.

+ The Indian Railways has approved 2 projects: Rs 175 crore to set up additional maintenance facilities for 250 three-phase electric locomotives at the Raipur Diesel Shed and Rs 206 crore to install the ‘Kavach 4.0’ Automatic Train Protection system across 680 route kilometers of the Northern Railway.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

Melvindale, Michigan (USA), 15 Aug 2003.

It was at a local oil refinery. The explosion resulted in what looked like smoke or steam rising from the site.

Unsure, the authorities feared the worst. They acted as though some toxic gases had been released.

Not wanting to take chances, they evacuated an area roughly equal to 550 football fields.

A little over 700 km away, in Sudbury (Canada), another accident was making life difficult for local authorities.

170 miners were working at a mine 4,000 ft below the surface. Their hoist lift stopped working. In damp and dark conditions, the lights went out, and miners had no real source of food.

They had water and their battery-powered flashlights still worked. But there was no way for them to leave.

In New York City, all metro trains ground to a halt. 4 lakh passengers were being helped out of the underground metro system.

800 km or so from there, workers at an amusement park were helping riders down a 200-ft tall roller coaster. It was stuck and wouldn’t move.

The water supply was affected in several cities in the Northeast of the USA and Southeast of Canada.

A whole host of systems were failing. Traffic lights weren’t working. Metro rails halted. Elevators trapped people. Cellphone communication became unreliable as many towers failed. Flights were disrupted. Hospitals were struggling.

A very long list of systems failed over a very large area.

Why were things going so wrong in such far-off cities? And that too at the same time?

Because they were linked to one essential system. The power grid.

This particular power grid was called the Eastern Interconnection. And parts of it had lost power on 14 Aug, 2003.

The event came to be known as the Northeast Blackout of 2003.

Even today, it remains the biggest power outage event the USA has experienced.

(In case you’re wondering — the smoke in Melvindale was mostly steam; all the trapped miners at Sudbury were rescued the next morning).

What Happened?

What happened is quite obvious. Power cut.

But why and how?

The summer was upon the region and power consumption was increasing (fans, ACs, fridges, etc).

Hot summers cause the power cables to sag (heat leads to expansion). Further, since more power was being drawn, more current was flowing through each, further heating the power cables.

The grid is connected in an interesting manner. It’s not connected in a straight line. It’s more like a web of connections.

So if one line goes out, power still reaches via the other lines.

And to deal with sudden issues like touching trees or even overcapacity, there are safety mechanisms in place.

Circuit breakers kill sections of the grid to protect them.

On 14 Aug, the hot power cables expanded and sagged. And at some locations, they touched untrimmed trees.

Immediately, those sections went off.

As soon as one cable touched some trees, it went off. A cascade of events was set off. A large part of the Eastern Interconnection grid was shut off.

There were many existing issues in the grid. But the trees sort of started the domino effect.

Events like these highlight the extreme importance of grids in our lives. They also make us curious about a part of the modern economy that we often take for granted.

The Grid

It is a giant net. There is no single point of entry or exit for electricity.

Think of a lake of water. Water is entering the lake from multiple streams. And multiple consumers are pumping water out of the lake.

It’s something like that.

The grid has many different power producers all contributing electricity to the system. And various consumers take out this electricity and consume it.

Electricity is produced at a certain voltage.

Its voltage is increased for sending over long distances. This is done because it is more efficient. Sending low-voltage electricity over long distances results in more power loss.

Then, at the destination, its voltage is lowered because the high voltage is too dangerous to be sent to homes, shops, and offices.

Once the voltage is brought down, it can then be distributed to various consumers.

For the system to sustain, the frequency needs to be within certain limits. If the frequency falls below the limit, there is a power cut.

If it increases above a certain limit, the power is cut or controlled to prevent overwhelming other parts of the grid.

Since there is no storage in the grid system, power consumed must be roughly equal to the power produced.

In recent times, many battery systems are being incorporated in the grid. So grids are starting to add storage (battery).

When demand for power goes up, the frequency starts falling. That’s when power producers start making more power. And vice versa.

This is why whenever there is a drastic change in frequency, parts of the grid automatically shut down (using breakers and relays). It is intended to prevent damage and contain the spread of a disturbance.

The voltage is stepped down in stages since different consumers require different voltages of electricity.

Example: factories need higher voltages than homes and offices.

Parts of Grid: Fuel Supplier

There are many different sources of electricity. Many come from burning some kind of fuel.

Companies that find, gather, and supply the fuel form the very first layer in the grid.

So, coal mining companies, oil and gas companies, uranium mining companies, etc.

Of course this layer of companies does not exist in the case of renewable sources like wind, solar, and hydroelectricity.

The thing to understand about these companies is that they are not dedicated to the grid.

Most companies that are digging for coal or oil & gas are doing so for all sorts of customers, not just power plants.

Parts of Grid: Power Generation

These generate the power.

They run thermal power plants (coal), gas turbine plants, hydroelectric dams, nuclear power plants, wind farms, etc.

This sector has many companies specializing in one kind of power generation. So some companies stick to hydroelectric power only, some stick with coal, etc.

The ability to produce power is measured in megawatts (MW) or gigawatts (GW). Where 1 GW = 1,000 MW.

Power generation companies have something called installed capacity. This is the designed output of the facility.

Many plants produce electricity that is under the capacity. Only during high demand periods does the plant reach full capacity. This is true for thermal plants and gas plants. Many other types always operate at capacity all the time.

Power generation companies often report their total capacity by adding all their plants’ installed capacity. This gives an idea of how big the company’s operations are.

Many companies also report capacity that is under construction or even planned but not started.

MWh (megawatt-hours) or GWh are units to measure the actual electricity generated by a plant over a period.

Plant Load Factor (PLF) and Capacity Utilisation Factor (CUF) help understand how much of a plant’s capacity was actually used.

In each type of power producer, there are metrics that measure the efficiency of the process. Example: thermal power plants use thermal efficiency as a measure of efficiency of the plants.

Then we have power transmission companies.

These companies transmit the power that’s generated over large distances.

So it is their job to increase the voltage of the electricity and send it over long distances.

In India, this field is dominated by one very large government-owned company, though there are other players in the space as well.

In India, distribution of power is primarily done by DISCOMs (Distribution Companies) that are predominantly government owned and operated.

These DISCOMs are responsible for the last mile of power distribution. They maintain the wires, poles, transformers, etc along with taking care of meter installation, billing, etc.

Parts of Grid: Equipment

The list of companies in this space is enormous. Primarily because the equipment list itself is very vast.

Yes, there are companies operating in the space that make wires and cables (which is literally what a grid is made up of).

Electricity meters, fuses, relays, etc are all in this ecosystem.

One crucial link in the equipment list is the transformer. And this space is one to watch out for.

Transformers are the devices that change the voltage of electricity. So they are a part of the grid from the power plant to the end-consumer.

Transformers that increase voltage are called step-up transformers; those that decrease it are called step-down transformers.

This is how the voltage changes across the grid.

+Power generation at plant terminal: Output at 11–25 kV
+Generator step-up transformer: 11–25 kV to 400 kV
+Bulk transmission substation: 400 kV to 220 kV
+Sub-transmission substation: 220 kV to 132 kV
+Regional distribution substation: 132 kV to 33 kV
+Primary distribution substation: 33 kV to 11 kV
+Local distribution transformer: 11 kV to 415 V
+End-consumer supply: 230 V or 415 V

Every time the voltage changes, a transformer is involved.

Transformers obviously come in various sizes and shapes.

There are quite a few transformer makers in India. Similar to many industries, the smaller, lower capacity transformers are easier to make. And thus, there’s more competition in that space.

The larger ones are more difficult to make and there’s less competition there.

When we say “bigger” we mostly mean the transformer’s ability to handle more power through it (measured in kVA or MVA). Of course, handling higher voltages requires more complex engineering than lower voltages.

Obviously there are a ton of different equipment involved other than those listed above. Many of them are made by the same group of companies.

These are things like breakers, towers & poles, capacitors, batteries — this list is very long.

India’s Power Game

Why are we talking about this sector?

Well, it started with our research into data centres. Many are being built in India and they’ll need a lot of power.

But then we realised that India is on a mission to expand its power capacity and that this sector needed to be looked at independently.

India’s peak electricity demand as of 2026 was about 270 GW. India is projected to have a peak demand of ~340 GW by 2030, and ~440 GW by 2035.

This is going to require a massive amount of everything.

Those of you who follow this sector closely would be right to point out we haven’t covered many sectors in this report, like the companies involved in building the plants themselves.

Further, each type of power source has multiple layers. For example, nuclear power has tons of different types of companies right from miners, to refiners (not actually called that in the industry), to suppliers, and equipment makers, and so on.

This sector is so vast, it cannot be covered in one write-up.

We’ll keep adding more reports on this sector in the future.

Quick Takes

+ India’s industrial production grew 5.1% year-on-year in May (vs 4.9% in April). Manufacturing production rose 5.5% (vs 6.1% in April).

+ The government has extended the customs duty exemption on key imported petrochemicals until 15 July 2026 to keep supplies stable and help manufacturers and consumers.

+ The government has lifted temporary fuel sale restrictions from 1 July, allowing bulk buyers to resume normal purchases as fuel supplies have stabilised. The restrictions, introduced on 12 June, had capped diesel sales at retail outlets at 200 litres per customer/vehicle per day.

+ Indian Railways has approved three projects: Rs 499 crore for doubling the 44.40 km Mansi–Saharsa section in Bihar, Rs 432 crore for Electronic Interlocking at 27 stations/cabins in Asansol Division, and Rs 200 crore for laying 48-fibre OFC over 1,696.2 route km across South Eastern Railway.

+ The government has kept interest rates on all small savings schemes, including PPF and NSC, unchanged for the ninth straight quarter from July to September 2026.

+ India’s manufacturing PMI fell to 54.2 in June (vs 55.0 in May). This means manufacturing activity rose less in June than in May.

+ India’s gross GST revenue rose 13.9% year-on-year to 1.95 lakh crore in June. Net GST revenue rose 11.2% to 1.62 lakh crore.

+ The government approved Rs 7,145.14 crore for the construction of a 117.7 km access-controlled Kanpur-Kabrai section of the NH-34 greenfield highway in Uttar Pradesh.

+ The government approved Rs 6,969.67 crore for the construction of an 8.1 km, 6-lane road tunnel (NH-148AE) in Delhi.

+ India and Japan signed a Memorandum of Cooperation (MoC) with an investment of $10 billion in AI, semiconductors, clean energy, and economic security.

+ Carlsberg has filed draft papers with SEBI for an IPO through the confidential route.

+ India’s composite PMI fell to 57.1 in June (vs 59.3 in May). Services PMI fell to 57.4 (vs 59.8 in May). This means overall economic activity grew less in June than in May.

+ India’s forex reserves fell by $5.65 billion to $666.93 billion in the week that ended on 26 June.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

Based out of Toronto, Andrew owned a desirable SUV.

A GMC Yukon. This SUV was kept parked right outside his house.

Andrew and his wife had returned from a trip and had been suspicious since then.

The car’s steering wheel was slightly bent. The seat position was adjusted differently.

In 2024, he looked outside after dinner and saw what he had been fearing — the car was gone.

Andrew had worried about this situation. To try and prepare for such a day, he had installed two AirTags on his car.

The idea was that if the car was stolen, he’d be able to track it in real-time. He hoped that that information would help the police recover his vehicle for him.

Andrew checked his phone and could see that his SUV was still very much in the city.

He did not waste time. He called the cops. To be doubly sure, he even hired private investigators.

The police officer who responded to his calls went after the car based on the live location shared by Andrew.

Some time later, the cop sent pictures of shipping containers loaded onto a train. The cop was sure the car was inside one of the containers.

He had managed to trace the car, thanks to Andrew’s AirTag.

But Andrew did not have any reason to be happy.

The cop informed him that he couldn’t just go and open the containers. He didn’t have the authority to do so. He would have to raise the matter with the train authorities.

While he was still figuring that out, the train departed as per its schedule.

Andrew watched his car’s location update live on his phone. It was now moving towards the Port of Montreal.

Different authorities, bodies, and agencies were involved in each part of this network.

The authorities were still figuring out a way to flag the container’s contents as stolen.

The container had already been put on a ship. And that ship had sailed out to the seas.

Andrew watched it all on his phone, live.

The live tracker went offline as it left the port.

Andrew got an update a month later. The car had been offloaded at a port in Belgium, Europe. A few days later, it showed up in Dubai.

Andrew’s private investigator found the car in a used car showroom in the UAE.

A theft of this kind, where the car can be tracked live, and yet not stopped, is possible thanks to the incredibly efficient global supply chain network.

And central to that system is one single invention — the container.

Shipping Container

Trade by sea. There’s nothing new about it. It had been happening for centuries.

Grains were put in sacks and loaded on ships. Boxes for easily broken items. Baskets for fruits. Some items were loaded directly onto the ships.

In the mid-1900s, Malcolm McLean was working in this very industry.

He was in the trucking business. He hated the long waiting time. Once he reached port with his truck full of cargo, he often waited an entire day for them to load the items onto the ship.

The lines were long and seemed like a monumental waste of his time. While he viewed the situation from the perspective of a trucker, the same logic applied to the ship.

It was an expensive machine wasting time just standing.

With nothing much to do while waiting in queues, he eventually started wondering if simply loading the truck’s trailer itself would save time.

The idea evolved and he concluded that the wheels were not needed either.

Large boxes loaded on trucks would make loading and unloading ships and trucks much faster.

He took out a loan, bought 2 ships, and started using large steel boxes for easy loading and unloading. McLean’s patented steel boxes had posts on all corners that enabled them to be locked in place.

This allowed them to be easily loaded on truck trailers.

These boxes were also made sturdy enough to be stacked up to a certain height and load limit.

In 1956, his first ship completed its first journey with 58 containers.

The trucking and shipping industry veterans were watching keenly.

There were obstacles but all of them paled in comparison to the advantages.

The shipping costs were lower, the items arrived safe and dry, and the loading/unloading time was much shorter.

His company, Sealand Industries, was off to a flying start.

McLean understood that for these containers to be truly efficient, they needed to be standardized. Fixed sizes of containers. One type of corner locking mechanism.

A lot needed to change before these containers became the standard.

Ports would have to be better designed with cranes for loading and unloading containers. More truck-trailers that could handle containers were needed.

Above all else, ships designed exclusively for containers would need to be built.

Mass Adoption

The idea was simple, yet brilliant.

Sealand Industries had the patent to their container design. But unlike other companies that profit from keeping their design exclusive, Sealand needed mass adoption.

Without others adopting the same standards, Sealand wouldn’t be a widespread success.

So they offered the patent to many other companies operating in the same industry, for free.

And the trick worked.

Soon, more truck-trailers started being built optimized to carry the containers. Trains too. Ships started being built specifically to ferry containers.

The supply chain industry adapted to shipping using containers better.

The ease and speed was such, the container enabled globalized trade like never before.

Toys could be made in a factory in one remote corner of the world and loaded in a container.

That would then ride on trucks, trains, and ships to reach children on literally the other side of the globe.

This meant that containers were built, repaired, handled, and customized by companies across the world. Nearly 70 years later, the container hasn’t changed. It’s still pretty much the same in the external shape, size, and locking mechanism.

Today, some of the world’s biggest ships can easily carry more than 24,000 TEU (Twenty-foot Equivalent Unit).

Which means, these ships can carry 24,000 containers that are 20 ft long.

Compare that number to the 58 containers carried by the first ship.

Just to be clear, the containers these ships carry are most often 40 ft long. Which means, a ship with 24,000 capacity would be able to carry around 12,000 containers that are 40 ft long.

Some estimates say there are 40 million containers in the world.

About 250-300 million containers are moved per year (the same containers do multiple trips in a year).

There are different types of containers too now. But the overall form factor remains the same.

The scale and speed of this is absolutely staggering. Things move so fast, countries and border police have a difficult time ensuring illegal items don’t get transported.

This greatly explains why Andrew’s car left Canada before the police could intervene.

Containers & Modern Life

Modern life is impossible without containers.

It just isn’t possible without these steel boxes.

Just look around. Most things would have been inside a container. The device you are reading this write-up on has definitely been inside a container.

If something was made outside India, it would have almost certainly been inside a container and on a container-carrying ship too — through the various ports and supply chain systems.

Some examples of item-categories transported in containers.

Obviously, a lot of things are better not transported by containers. Some examples:

Revenue & Profits

An industry that is so essential, the world would crumble without it. Surely that’s a great moat to have for companies in this space?

Not quite.

In fact, the container industry and industries around it are infamously low margin. It’s all down to fierce competition and thin margins.

In that sense, it is very similar to the airline industry — absolutely essential and yet brutally difficult to survive in.

— High Capex —

This is a very high capex or capital expenditure industry. Everything requires spending lots of money before the first dollar starts coming in the form of revenue.

To make matters worse, the industry goes through violent cycles.

There are periods when the margins are non-existent. Sometimes, even below operating cost.

And then there are periods when margins are thick.

Half the trick is being able to survive a thin-margin period till the next cycle of thick-margins.

— Competition is Fierce —

Containers are containers. There’s not much different that companies can offer. It’s easily replicable across the world. Same with ships carrying them, ports loading and unloading them, and so on.

So competition among the players in this space is fierce. They keep eating into their margins.

— Scaling Up or Down Takes Time —

If demand for global shipping increases, new containers cannot just be added. They take time to manufacture and put into service.

Conversely, if demand subsides, companies cannot just get rid of excess containers. There’s a lot of it and needs storage when not in use. Or, they need to be sold as scrap/recycled material.

All of those require time, effort, and money.

The above is true not only in the case of containers, but also in the case of the very ships that carry them.

— Demand Unpredictability —

Now, all of this ties into the unpredictable nature of demand.

Yes, many industries face unpredictable demand. But most of those industries never face the kind of challenges the container industry (and related industries) face in scaling up or down.

Wars, interest rates, inflation, crude oil prices, manufacturing output, tariffs, ports, weather, changing demand trends — there’s a lot that can move demand for the container space.

As for Sealand Industries, it was acquired by different companies until it was finally acquired by Maersk.

Maersk is one of the world’s biggest shipping companies. For a few years, they used the Sealand brand name.

As of today, even that does not exist. It’s just called Maersk.

Quick Takes

+ India’s infrastructure output of core industries grew 0.5% year-on-year in May (vs 1.7% in April). Electricity, cement and steel production increased, while coal, crude oil, natural gas, petroleum refinery products and fertilizer production declined.

+ SBI Mutual Fund received SEBI’s approval for a Rs 13,000 crore IPO.

+ India’s manufacturing PMI fell to 57.4 in June (vs 59.3 in May) as per preliminary estimates. Services PMI fell to 54.5 (vs 55.0 in May). Composite PMI fell to 57.3 (vs 59.8 in May). This means that economic activity grew less in June than in May.

+ The RBI sold a net $8.9 billion in April to protect the rupee amid West Asia war tensions, while physical gold holdings remained unchanged: RBI

+ The government will auction securities worth Rs 28,000 crore on 25 June, including Rs 17,000 crore of 6.68% GS 2040 and Rs 11,000 crore of 7.43% GS 2076.

+ Ministry of Statistics and Programme Implementation (MoSPI) will launch the Index of Services Production (ISP) in July 2026, a new monthly indicator to track growth in India’s services sector, similar to the Index of Industrial Production (IIP) for manufacturing.

+ The government has approved 96 road projects worth Rs 211.71 crore in Tripura under PMGSY-IV. The projects will cover 163.9 km.

+ RBI has proposed draft guidelines requiring banks to strengthen governance and risk management of AI and machine learning models.

+ The government has removed restrictions on the supply of commercial LPG cylinders and restored supplies to pre-West Asia crisis levels. It has also resumed bulk LPG supplies at 50% of pre-crisis levels.

+ The government is planning to estimate the economic value of India’s coal reserves, helping track their role in the economy and environment rather than their market price.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The discussion went on for a few years.

This was in the 1970s.

The challenge was that Brazil had vast Cerrado grasslands. These grasslands were mostly flat and vast.

This made these grasslands potentially ideal for agriculture.

But the soil quality was inferior. It was too acidic, lacking in nutrients, and often had elements that killed agricultural plants.

The soil needed to be treated.

This is where the Japanese came in.

They started a program to jointly work together starting in 1979.

The Japanese provided expertise, infrastructure, and funding for the initiative. The soil was treated with multiple different methods. Crops were rotated to increase biomass availability.

It all started bearing fruit in the 1980s.

Brazil obviously wanted that for itself. They wanted food security. They had been independently working on it for decades.

The Japanese assistance catalysed the effort.

Sometime in the 1980s, Brazil went from being a net importer of food to a net exporter of food.

Today, Brazil is also the world’s biggest producer of soybeans.

Japan and Brazil are a world away from each other. Why did they involve themselves in this initiative half a world away in Brazil?

The answer is that a long chain of unexpected events pushed them to it.

Peruvian Anchoveta Crisis of 1972

Peru was one of the biggest suppliers of this fish called the Peruvian anchoveta.

This tiny fish is not a particular favourite among people. But this fish had become an extremely integral part of the world’s food supply chain system.

Peruvian anchoveta was used as fishmeal. It was the food fed to fish and chickens. And fish and chickens are what is critical in the global food supply chain system.

In 1972, Peru suddenly banned fishing for the Peruvian anchoveta.

Every year, fishermen would go out into the Pacific Ocean to catch them.

In 1972, the population of these fish was so low, Peru had no choice but to ban the fishing outright.

Why?

In April, the waters had suddenly turned warmer than usual, and the fish either didn’t reproduce enough or were driven away somewhere else.

Seeing the record low numbers, scientists warned the government about the risk of damaging the existing population from overfishing.

Thus, the ban was enforced.

The warm waters alone weren’t responsible for the fish population crash. Overfishing too was a factor. But the warm waters really pushed it over the edge.

Despite the warnings of the scientists, the government allowed fishing again with strict restrictions.

Still, the chain effect of damage had been done.

Peru was one of the biggest suppliers of these fish. In the absence of this fish, farmers turned to another crop to feed their fish and chickens. Soybeans.

The US was already a large producer of soybeans. But the Peruvian anchoveta shortage was so large, the US decided to restrict the export of soybeans in 1973.

And that was where the Japanese came in. They were heavy importers of soybeans.

Over-reliance on the US for these beans spooked them. They wanted to diversify their soybean supply, among other food items.

They looked across the world. One of the few countries they decided to rely on was Brazil.

Today, Brazil is the world’s largest producer of soybeans, and the US is the second largest.

Combined, today both these countries supply over 65% of the world’s soybeans.

Eventually the Peruvian anchoveta’s population recovered. But the farmers who relied on them to feed their fish and chickens had switched to soybeans.

Many never went back to the anchoveta.

Now, why exactly did the Pacific waters turn warm in 1972?

El Nino

El Nino. That’s the effect’s name.

The oceans are kilometers deep. The top layer of the ocean gets heated by the sun. The bottom layers do not get much sun. So it remains cooler.

Trade winds blow across the Earth’s equator. They blow from the east to the west.

The Pacific Ocean is the world’s biggest ocean. If you took a flight from South America to Australia, it would take you 12 hours to cross the Pacific Ocean.

Over this vast ocean, the winds blow from east to west, from near the Americas to Asia and Australia.

These winds push the topmost water layer towards the west.

So we get more warm water near Asia and Australia. To fill the empty space, colder water rises from beneath the ocean and rises to the surface near the east.

The cooler water from below is rich in nutrients. They support abundant life. Which is why the East Pacific Ocean makes for such great fishing waters.

Normal years:

Sometimes, these trade winds weaken.

This means that not enough warm surface water gets pushed west. So, it stays near the Americas. The less nutrient-rich warm water leads to fewer fish.

This is called El Nino.

El Nino years:

It does not occur at fixed intervals. It can happen anywhere from every 2 to 7 years. When it does occur, it lasts for about 9-12 months. Some have lasted longer than that though.

El Nino is why Peru experienced the 1972 Peruvian Anchoveta Crisis.

That, unfortunately, is a fairly localised event.

El Nino has a far greater impact. In fact, its impacts can be felt across the globe.

Effects

The global weather is linked.

One change in one part of the world can affect another.

Given just how massive the Pacific Ocean is, any change in surface temperatures can have a chain impact across the global weather system.

Its effects can be felt across the Americas, Africa, South Asia, Southeast Asia, and Australia.

The regular weather patterns get broken. Some parts experience more dryness than normal. Some experience more rainfall and storms than normal.

The dryness can result in forest fires that are hard to control. The excessive rains can cause flooding and infrastructure disruption.

In India, it often manifests as less-than-normal rainfall in the monsoons. It may also manifest in the form of higher than normal rainfall in winters in parts like Tamil Nadu and Kerala.

During El Nino years, the entire Earth becomes slightly warmer.

What sounds like a minor inconvenience is actually a disruption of giant proportions.

Farming and food supplies get hampered. Loss of livelihood and migration becomes a common pattern in these regions.

Thousands of people die every El Nino event because of the effects of the disrupted weather.

El Nino History

El Ninos aren’t always the same.

Some are massive. Some are less intense.

One of the strongest El Nino years in recent times was only about 2 years ago, in the 2023-24 period.

It was rated as being one of the strongest in the last 2 decades.

Another one in 2015-16 was similarly strong.

Other noteworthy El Nino years have been 2009-10, 2002-03, 1997-98, and 1991-92.

The Peruvian anchoveta example is one example that might help us get a sense of how unexpected and far-reaching the effect of El Nino can be.

Some more examples might aid here.

1991-92

In the 1991-92 period, higher than normal rain led to a vegetation boom in the Southwestern part of the USA.

The denser vegetation resulted in an explosion of mice. A higher-than-normal mouse population led to greater human-mouse contact. And that led to more diseases.

This El Nino resulted in a hantavirus outbreak in 1993 in the region.

1997-98

This El Nino created excessively dry periods in the Southeast Asia region.

Forest fires became so common that they affected tourism, airports, shipping, and health systems. El Nino didn’t directly cause forest fires, but the lack of rains resulted in uncontrollable forest fires.

1876-78

This one’s about 150 years old but is infamous for being one of the deadliest.

It resulted in famines across India, China, parts of Africa, and Brazil. Indirectly, it killed 50 million people.

2026-27

Yes, this year is an El Nino year too.

Yes, there will be disruptions.

And yes, this one’s supposed to be a big one.

What could it mean?

Well, this isn’t the first time. We’ve seen these come and go. We’ve also seen some El Nino years in the recent past.

The challenge with these is that we cannot fully understand all that will happen.

The general expectation is that the country might face severe heat in some parts and extreme flooding in some parts.

That’s the first and most immediate effect. How that will play out for the rest of the system is hard to predict.

We can look at yesteryears to get some sense of this.

One of the most common patterns is less than normal monsoon rainfall.

That impacts the food and agriculture products grown in the country. Any shortages there lead to higher prices of food items.

But then, does it always manifest in that way? Not really. Many times, governments stockpile food in cold storages to prepare for El Nino’s drought years.

So we cannot even say for sure that food prices will climb. They may climb.

Beyond that, the more wacky chain of events cannot be predicted.

It’s not a normal year. But it’s also not a once-in-a-century event.

But we’ve been through these before.

Quick Takes

+ India’s wholesale inflation rose to 9.68% year-on-year in May (vs 8.26% in April). Fuel inflation rose 30.33% year-on-year (vs 24.89% in April).

+ India’s merchandise exports rose 18% year-on-year to $45.2 billion in May while imports rose 20.6% to $73.41 billion. The trade deficit increased to $28.21 billion (vs $22.56 billion in April)

+ India’s unemployment rate rose to 5.5% in May (vs 5.2% in April).

+ Razorpay has filed for an IPO with SEBI through the confidential route.

+ India’s passenger vehicle sales grew 27.3% year-on-year to 4.39 lakh units in May: SIAM

+ India’s Union Minister Nitin Gadkari has officially signed rules giving legal recognition to 100% ethanol fuel (E100) for vehicles in India.

+ The sales of India’s listed private non-financial companies grew 13.9% year-on-year in the Jan-March quarter.

+ The government has increased the export duty on diesel to Rs 14 per liter and aviation turbine fuel (ATF) to Rs 12.5 per liter, while leaving petrol levies unchanged.

+ The US Fed kept the interest rate unchanged in the 3.5% to 3.75% range.

+ The US and Iran have officially signed an interim peace agreement to end the West Asia war. Iran has agreed to dilute its enriched uranium in exchange for major economic relief. In return, the US will lift its naval blockade and waive oil sanctions, while Iran will reopen the Strait of Hormuz.

+ The India-UK Free Trade Agreement (CETA) will officially take effect on 15 July, 2026, significantly reducing tariffs for both sides.

+ NSE has filed draft papers with SEBI for a Rs 30,000 crore IPO.

+ India’s forex reserves fell by $9.98 billion to $671.63 billion in the week that ended on 12 June.

+ Jio Platforms has filed draft papers with SEBI for an IPO with a fresh issue of up to 27 crore equity shares.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

Yes, it’s famous for many others as well. But tequila is an easy recall.

And maybe that’s why we now talk about the Tequila Crisis of 1994 (it wasn’t about tequila at all).

In the 1990s, Latin American countries were starting to look tempting.

They were viewed as “emerging markets”. Among them, Mexico was a particular favourite among international investors.

It was right next to the USA. It had a large working age population.

Foreign money started entering the country.

It was really in 1988 when the newly elected president raised the level of optimism among foreign investors.

With the signing of NAFTA, Mexico was supposed to become the ‘factory of the USA’.

Mexico had a history of rebel factions fighting the government. They threatened to destabilize the “hot new emerging market” narrative.

NAFTA came into effect on Jan 1, 1994.

Confidence was high, backed by the then president’s promises.

And then a rebel uprising in the south of the country raised a few eyebrows.

“Is Mexico really as stable as we were assuming?”, thought investors.

And then, the presidential candidate was assassinated. Investors lost more confidence.

Eventually, they started selling their investments and exiting the country.

That was the gradual start of the crisis — The Tequila Crisis of 1994.

The Peso (Mexican currency) started spiralling down.

The formal name is the Mexican peso crisis.

International observers nicknamed it the “Tequila Crisis” or “Tequila Effect” because Mexico’s financial shock quickly “spilled over” into other emerging markets, especially in Latin America, much like a hangover spreading beyond the original party.

If you’re not familiar with how currency exchange rates work, the above few lines might confuse you. Let’s try to understand that in depth, and the Tequila Crisis will start making more sense.

Strengthening & Weakening

Currencies are often traded. Which means, you can buy them — like buying shares or bonds or milk.

When you visit Italy, you cannot use Indian Rupees. You have to use Euros. So you buy some euros to use in Italy (you pay for them using your Indian Rupees).

Once your trip is done, you return to India, where Euros are not accepted. So you need to convert the Euros you have back to Indian Rupees.

So you use your Euros to buy Indian Rupees (you pay in Euros to buy Rupees).

The moment buying and selling is involved, there’s supply and demand.

And we know all too well that supply and demand can increase or reduce the price of a commodity.

When too many people are trying to buy Euros (by selling their Indian Rupees):

+demand for Euros is up
+therefore supply of Rupees is also up

The obvious happens. The price of Euros goes up. The price of Rupees falls down.

If earlier you had to pay Rs 120 to get €1, now you might have to pay Rs 125 to get €1 (example).

So we will say ʼthe Euro strengthened and the Indian Rupees weakenedʼ.

This is called the exchange rate — the amount of one currency needed to buy another currency.

The above was an example of the Euro-Indian Rupee exchange rate.

At any point, millions and billions of currencies are being bought and sold. This keeps the net price at a similar level.

When trades lean one way more or the other, the exchange rates increase/decrease accordingly.

BoP

So what’s the problem? What happens if the exchange rate goes too high or too low?

A lot can happen. It can be good. It can also be bad. People worry mostly about the bad parts (of course).

If a country imports food products, a falling exchange rate can mean more expensive food. Very worrying — not good.

Similarly, if it imports critical items and relies on them heavily, it will hurt the country’s economy and people.

The opposite does not automatically mean good.

For exporting nations, a strong currency is not good.

Many countries have factories that are appealing to richer countries because factory-worker salaries are cheap. If the country’s currency strengthens, those salaries automatically go up.

It could mean that fewer orders come to those countries, resulting in loss of trade and jobs.

Countries that rely heavily on exporting actually intentionally weaken their currency too.

By now you would be able to guess the positives here.

A strengthening currency is good if you’re importing. A weakening currency is good if you’re exporting.

In fact, it isn’t just about imports and exports. Money enters and leaves a country due to several other factors.

Some of those factors are:

+Import & export of goods (already discussed)
+Import & export of services
+Remittances (people working in foreign countries sending money home)
+Foreign Direct Investment
+Portfolio investment (investing in stock markets, bonds, etc)
+Borrowing and repayment of loans (companies taking loans from foreign lenders)
+Sending back profits to home country (foreign companies do this)
+And a few others

Each of these causes money to flow in and out of a country. And therefore, each of these affects the exchange rate of a country.

This is called Balance of Payments (BoP).

The balance is between payments coming in and leaving from the country.

Mexico

Back to Mexico.

The Tequila Crisis was a Balance of Payment Crisis.

The Mexican peso exchange rate with the US dollar was kept stable thanks mostly due to incoming investments.

So when investors started pulling out, the exchange rate started crashing. That made it difficult for them to import essential items which only worsened the situation.

Actually, initially, the Mexican central bank was able to control the exchange rate fall. How?

Central banks can control the exchange rate to some extent. They do so by maintaining reserves of foreign currencies.

When demand for the peso fell, Mexico’s central bank sold dollars from its reserves and bought pesos. This created demand for pesos and helped slow the fall.

Since the supply of the foreign currency goes up because of this, it can offset the effect of the increased supply of the local currency.

But it can only work for some time. The reserves eventually run low and the central bank can’t do much after that.

The crisis left a deep scar in Mexico’s economy. But they did bounce back from it after reforms and some loans being extended.

There have been many famous big BoP crises.

+Asian Financial Crisis of 1997
+Black Wednesday (UK) of 1992
+BoP Crisis India in 1991
+Argentina in 2001-2002
+Russia in 1998

It’s an interesting list. Each of them makes for an interesting read.

Quick Takes

+ India has launched E85 fuel, an 80-85% ethanol blend designed specifically for flex-fuel vehicles, across 48 retail outlets. It is priced around Rs 20 less than normal petrol (per litre). A flex-fuel vehicle is a vehicle equipped with an engine that can run on petrol, ethanol, or any blend of the two.

+ India’s current account surplus narrowed to $7.1 billion (0.7% of GDP) in the Jan-March quarter (vs $13.7 billion or 1.4% of GDP in the same quarter last year).

+ Zepto has filed an updated DRHP (Draft Red Herring Prospectus) for a Rs 8,010 crore IPO.

+ Fresh military strikes have taken place between the US and Iran, disrupting talks for a peace deal.

+ The government has approved Phase 2(A) of the Ahmedabad Metro Rail Project at a cost of Rs 2,169 crore.

+ CMR Green Technologies IPO listed on the stock exchanges at a premium of 39.58% over the issue price and closed 25.62% up at the end of the day.

+ The government has extended its zero-tax (no excise duty) exemption on petrol blended with higher levels of ethanol from E22 up to E30.

+ India’s annual inflation rate rose to 3.93% in May (vs 3.48% in April).

+ India’s forex reserves fell by $0.71 billion to $681.61 billion in the week that ended on 5 June.

+ The government has banned industrial and commercial users from buying bulk petrol and diesel at retail petrol pumps. Retail diesel purchases are now capped at 200 liters per vehicle daily for the next 90 days.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

There was Louisiana, which bordered the USA on the west.

People familiar with the map of the USA would know that today, Louisiana is actually a small state in the US.

But that’s not what we’re talking about here. We’re talking of a much larger region called Louisiana.

This Louisiana was controlled by the Spanish people.

In 1800, Spain and France signed a treaty that allowed France to take Louisiana from Spain.

Thomas Jefferson became the President of the USA in 1801.

Jefferson was famous for his strict adherence to the constitution. His philosophy was that the USA was a federal republic.

This means that the individual states created the central government or the federal government. He believed in the absolute power of the constitution.

Jefferson was known for having been extremely vocal in trying to prevent the federal government from taking action in cases that were not defined by the constitution.

Before he became president, Jefferson was famous for vehemently defending free speech by rallying against a bill being brought in by the federal government.

His argument was that the federal government’s jurisdiction did not involve controlling free speech in any manner whatsoever. So it could not ban it in any manner.

Louisiana

The east side was the US. Then there was Louisiana. And then, there was the rest of the wild west — where America wanted to expand to. This area was controlled by the British, Spanish, and other native folk.

But that was not the only complexity. The river Mississippi formed the eastern border of Louisiana. And the USA depended on it heavily for trade and transportation.

The USA had signed a treaty with Spain for using the river.

For the USA, the Spanish were predictable. The treaty they had signed was enough for them to feel relaxed.

But with the territory going back to France, tensions rose.

Napoleon’s ambitions of territorial expansion had the Americans worried.

If the French were present in Louisiana, they could limit or prohibit them from accessing the Mississippi river.

Not just access to the river, Jefferson was worried about military threats from Europe.

Jefferson’s Idea

Jefferson had a simple idea.

He sent his trusted envoys to France to talk to Napoleon. They were authorised to spend a sum of $10 million (a lot lot more in today’s value).

And they were given a task that seemed monumentally difficult: try to buy parts of Louisiana to ensure access to the river.

They arrived in France and pitched the idea to the French.

Napoleon, the then ruler of France, had imperialist ambitions. He wanted to expand French territory in Europe and the Americas.

But the plans weren’t going as per his wishes. A revolution in Haiti spoiled his plans, and there were risks of wars starting on multiple fronts even in Europe.

He was running short on money and would need more to continue fighting.

When the Americans approached the French with an offer to buy parts of Louisiana, the French had a counteroffer that was hard to believe.

The French were offering to sell the entire Louisiana territory. All of it.

The two countries negotiated for a period, eventually agreeing to $15 million.

The deal was on.

The news was made public on the 4th of July, 1803.

The Challenge

Upon its announcement, the idea was more or less well received.

But for Jefferson, there was a small problem. A problem that he was more likely to be targeted for than others.

The constitution had no provision for the President of the USA to buy land.

The opposition was ready to target him for being a hypocrite.

Jefferson, being the strict follower of rules that he was, called for an amendment of the constitution to allow the president to buy land and incorporate it into the territory of the USA..

They wanted to finish with it before Napoleon changed his mind.

They were running out of time and would need to convince the opposition to allow for expanding the federal government’s powers.

This was peculiar because it was Jefferson’s side that was most famous for wanting to limit the federal government’s powers.

On Oct 20, 1803, the Senate voted and ratified the treaty.

And thus, Louisiana became a part of the USA — all 830,000 square miles of it!

The USA’s size doubled (that’s how much territory it bought).

Jefferson

This episode is a great example of how many times we first decide what we want to do, and then justify doing so later.

Jefferson knew the deal was too good to miss. He realised that the opportunity was massive and would solve many problems for the USA.

He decided to find ways to justify going beyond his constitutional power later. First, he wanted to ensure he got the territory.

And it worked.

After the treaty was signed, some senators still believed the move was unconstitutional. But it was never challenged in court.

Investing

If there’s one lesson for investors in this tale, it’s this: do not be so rigid with criteria that you miss good opportunities.

Warren Buffett was a strict believer in value investing. That is, buying stocks that were trading below their intrinsic value.

But over time, he changed his methods as the best of his investments happened to be great companies — even if not undervalued.

Charlie Munger bent the rules for Costco. Despite being considered overvalued by many, he never sold the shares.

Had he sold, the shares would have been sold at a much lower valuation.

Quick Takes

+ India’s manufacturing PMI rose to 55 in May (vs 54.3 in April). This means manufacturing activity grew more in May than in April.

+ India’s industrial output rose 4.9% year-on-year in April (vs 4.1% in March).

+ The government reduced export duties on petroleum products, effective 1 June to ensure domestic availability. The Special Additional Excise Duty is revised to Rs 1.5 per litre on petrol, Rs 13.5 per litre on diesel, and Rs 9.5 per litre on aviation turbine fuel (ATF). Domestic duties will remain the same.

+ India’s fiscal deficit for FY25-26 stood at 4.4% of the GDP, in line with government estimates.

+ Commercial LPG prices have been raised by around Rs 42 to Rs 53.50 per cylinder. This is the 4th hike in a month.

+ SEBI passed an interim order against Rajesh Exports, a gold refining and jewelry export company, over alleged misrepresentation of Rs 15.15 lakh crore in the revenue. This accounts for nearly 99.8% of the company’s consolidated revenue over 5 years. The company’s chairman has denied the findings.

+ India’s composite PMI rose to 59.3 in May (vs 58.2 in April). Services PMI rose to 59.8 (vs 58.8 in April). This means economic activity grew more in May than in April.

+ The government approved a one time Rs 10,000 crore Price Stabilization Fund to provide interest-free loans to Oil Marketing Companies. The aim is to stabilize jet fuel (ATF) prices to shield Indian airlines from West Asia crisis shocks and prevent extreme fare hikes.

+ The RBI dismissed rumors that it sold gold worth $12 billion to defend the Rupee, clarifying that its physical gold reserves remain entirely steady at 880.52 tonnes.

+ The US proposed tariffs up to 12.5% on goods from India and around 60 other countries, claiming these countries failed to block products made with forced labor from entering their markets. The India-US bilateral trade talks are currently underway.

+ Oyo’s parent company Prism received SEBI’s approval for a Rs 6,650 crore IPO.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

It is no longer a functional mine.

Opened in 1971, it used to be the world’s biggest olivine mine.

Lefdal was an underground mine in which olivine was extracted by making tunnels. Over the decades, the mine had become massive.

Each tunnel was sufficiently tall and wide.

In case you’re wondering, olivine is a green mineral. It looks fit for use as jewellery but its primary use is in the steel industry.

Only 10 km from Lefdal, they found another olivine site. Here, the olivine was on the surface, not underground.

Once this was discovered, it made no sense to take the effort to dig and bring out olivine from underground.

The Lefdal Olivine Mine shut down in 2009.

The entire mine was about 13 lakh square feet in size. That’s about 1,000 times the size of a regular 3BHK urban apartment.

The space was not being used for anything. Until some folks had an idea for it.

Re-opening

In 2017, it opened again. It was back, not as an olivine mine, but as a data centre.

The massive mine had many traits that made it perfect for use as a data centre.

1: It already existed

When a new data centre is commissioned, the first step is to acquire land, and build the building that will house the data centre.

The land needs to be levelled. Fences need to be erected. Then the building’s foundation, walls, roofs, etc follow.

In Lefdal, all of this was already done. It was a giant underground system of wide tunnels.

Yes, a lot more work was needed to make it a data centre. But still easier.

2: Secure

One of the biggest headaches with data centres is security. Data centres are the backbone of the global tech industry.

So for bad actors, data centres are a good target. It could be to steal data, harm the operations of a company, disrupt communications, interrupt supply chains, and the list is endless.

Data centre owning companies spend a big portion of their expenses on securing them.

Deep underground, surrounded by rocks on all sides, this risk reduces by a massive degree.

Lefdal had that massive advantage as well.

3. Cooling

If you have been following the data centre boom of late, you would have realised that they get hot. They need cooling.

Lefdal sits right next to a 565 m deep and cold fjord. The fjord is able to supply a constant and steady stream of cold water.

4. Power supply

Norway happens to be a country with a massive hydroelectric power supply — renewable green energy.

Hydroelectric energy is non-polluting, renewable, and consistent. Another vital feather in Lefdal’s cap.

5. Norway

Norway is a developed, rich, stable, and influential European country. This further sweetened Lefdal’s appeal to international companies.

Less surprises like geopolitical tensions, surprise red tape, interruptions, etc.

Today, the Lefdal Olivine Mine is an expansive network of tunnels that operates as one of the world’s most efficient, green, and secure data centres.

You’d be amused to know, some of Mercedes’ servers are housed in this data centre, maintained by Infosys!

Data Centre Boom

Now, of course you have heard about all the hype around data centres in recent times.

If you have not, just know this: whatever hype around AI and LLMs you have heard, it sits on these data centres.

What is a data centre?

It’s just a computer. Or many computers. It looks more like a desktop computer without a screen. Everything you see on the internet is stored, processed, and passed through one or more servers across the world.

Your WhatsApp message passes through a server before reaching your friend. Your online pictures are passed through servers and stored on them too.

“Cloud” anything is literally a server something.

Cloud compute means instead of processing something on your computer, the processing will happen on a computer server somewhere in a data centre. Cloud storage — you get the idea.

So, what’s happening is, with AI, the need for computation power has shot through the roof.

The demand for AI products is only multiplying and so, the need to build data centres is also multiplying.

The challenge with data centres is that most of them are not as ideal as Lefdal Olivine Mine in Norway.

Most bring a set of challenges with them.

Power

Because of the massive demand for power thanks to AI, shuttered nuclear plants are being brought back to life.

In fact, many regions across the developed world had reached some sort of an equilibrium. Power demand had flattened and enough power was being produced.

Now, the demand has risen sharply. Some estimate that power demand from data centres will rise by 160% by 2030.

So sharply, in fact, that some developed areas with a history of consistent power supply are experiencing power cuts.

Data centres cannot do without power 24x7. So to deal with shortages, they often stock diesel generators. These can cause noise and air pollution.

Water

We have all heard about data centres requiring water. Data centres get very hot and require cooling.

This is true.

Since data centres are evolving rapidly, they are becoming more efficient with time. Many data centres require a constant stream of water.

Many are able to work with seawater also. Some are coming up with a closed-loop system where water is filled once and not needed again (similar to a car engine’s water & coolant system).

But these are still evolving, not fully ready.

As of now, anyone building a new data centre needs to worry about sourcing water.

Like electricity, there are places in the world that are facing water shortages because of new data centres opening up near them.

Land

Like factories and warehouses, data centres also need land.

And similar to those other industrial buildings, data centres also have a laundry list of location-based requirements.

They want to be in a location where land is relatively cheap, but it must be well connected via roads and highways.

It shouldn’t be too remote such that finding employees for the data centre becomes difficult.

The location should be safe and secure from a crime perspective as well as from natural factors like flooding, storms, extreme heat, etc.

Further, data centres need to be connected to the internet — so they cannot be too far from existing fibre optic cable highways.

To reduce latency, data centres can’t be too far from their customers (enterprise or individual).

Equipment

All the above are factors that can be supplied and solved by different competing parties.

There are many different power sources, water sources, and locations.

A real bottleneck unique to the data centre industry — equipment.

Data centres or servers are just computers. And computer parts are supplied by a small number of companies.

Because of excessive demand, those companies’ order books are filled for years.

Supply of memory, CPUs, and GPUs is one of the biggest bottlenecks of the industry today.

Growth of Data Centres

Countries across the world have deeply internalised the importance of data centres, compute capacity, and data storage.

In a world where everything runs via computers, data centres are as important as any other national infrastructure like highways, telecommunications lines, etc.

Many countries now want more data centres within their own borders.

India has rules requiring finance and fintech companies to store customers’ data on Indian servers. The AI boom means that the ones who own the data and compute decide the next big breakthrough in AI.

As of 2025, the US is the biggest in this regard. They have over 5,000 data centres. The second is Germany with about 500 (that’s not a typing mistake).

Measuring data centres in numbers is a wrong way to go about it. Because data centres can be tiny or massive. So saying ‘3 data centres’ does not automatically mean it is bigger than ‘1 data centre’.

One way to measure data centre is by the amount of electricity they consume.

Measured like that, we see an interesting pattern.

We see that the data centre capacity has been rising consistently for many years, not just after the LLM boom.

The table below is data from a Goldman Sachs report where they highlight how power consumption from the Americas, the EU, and the Asia-Pacific region has consistently risen over the last decade.

Now, CPUs and GPUs are getting more powerful and efficient. This means that these metrics don’t represent processing power accurately.

A modern data centre might use less power than an older one and yet be more capable.

Most data centres are never “finished”. They are always being upgraded with the latest equipment.

This is why neither power usage nor number is a good measure.

Some simply prefer to measure in square footage. The assumption here is that everyone will be able to upgrade to the latest CPUs and GPUs soon.

So the one with the largest physical space is the one who will have the most compute power.

But wait — what if two data centres are 100,000 sqft each but one of them has a 3 m roof and other has a 6 m roof?

Obviously the second one will be able to house more servers?

Yet another way to measure capacity is number of servers. How many servers can a data centre house? That is another measure.

There are many more. It’s a bit messy. The unit you would use would depend on what you’re trying to talk about.

Real estate folks would use area (square feet or meters). Environmental analysts would care about water usage and heat generation. Power industry folk would care about the power needed. Data centre engineers would talk in terms of storage capacity, compute capacity, server count, rack count, etc.

And so on.

The Biggest Players

This industry has two types of companies.

Data centre companies and tech companies.

Data centre companies offer their services to other companies. They simply own and maintain the servers while others pay rent to use them.

Tech companies tend to develop, maintain, and use their own data centres. Theirs is not available on rent for others.

The 3 biggest data centre owners in the world today are cloud companies. They offer cloud services (storage and compute) to others and themselves.

Amazon Web Services, Microsoft Azure, and Google Cloud — these are the cloud companies owned by Amazon, Microsoft, and Google, respectively.

India

Yes, India is turning up the heat too.

Many new data centres are planned, and being built. Some are active.

India has a strong policy push in this space as well. The government wants more data centres. Data localisation is a dominant theme.

India’s active tech and IT sector also means that data centres have a natural pull.

Most of these serve local India based clients.

There are some existing tech companies who own data centres. Some legacy companies are also choosing to enter this new industry.

The thinking many investors have is that in an AI gold race, data centres are the shovels. This line makes a lot of sense if you have heard about the gold rush in Western USA in the 1800s.

But as usual, valuations and potential upside matter more than many investors give importance.

Besides, ability to execute on plans and quality of leadership also matter.

And of course, we can never rule out the possible negative and positive effects of luck in the mix.

Quick Takes

+ India’s petrol and diesel prices were hiked by around Rs 2.50 per liter, for the 4th time in the last 11 days.

+ Gas distributors in India have raised CNG prices across different cities by Rs 2 to Rs 5 per kg, the 4th hike in 11 days.

+ India and the US signed a bilateral Critical Minerals Framework to deepen cooperation across the critical minerals and rare earths supply chain for advanced technology and energy.

+ The government approved Rs 1,427.61 crore for a 4-lane Thiruvarur Bypass on NH-83 in Tamil Nadu.

+ The government has launched a 2 day offer-for-sale (OFS) for Coal India to divest up to a 2% stake in the company.

+ India’s forex reserves fell by $7.5 billion to $681.38 billion in the week that ended on 22 May.

+ India and Canada launched the Canada-India Trade and Investment Forum for new commercial partnerships and increased business engagement.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The Bahamas is a group of islands out in the Caribbean Sea.

Back in the 1980s, the network was poor practically everywhere. The Bahamas being a more remote location, had a much poorer network.

When Karen returned, she complained about it to her husband.

Her husband, Bary Bertiger, was a senior executive at Motorola. After listening to his wife’s complaint, he had an idea.

What if there was a cell network in every part of the world? No dead zones.

He pitched it to his company. Motorola’s then chairman was a daring person who loved the idea and pushed for it to be pursued.

The project kicked off in 1987.

It was called Iridium.

They had calculated that Iridium would need 77 low-Earth satellites across the earth to achieve its target. 77 is the atomic number of the element Iridium. So they chose Iridium as its name.

Oddly, technological improvements later enabled them to achieve the same results using only 66 satellites. But the name stayed.

It was not easy by any measure. It was one of the hardest technological challenges of that time.

So hard in fact, that Motorola decided to spin it off into a separate entity.

Iridium

In 1991, Iridium was created as a separate entity in which Motorola was a backer.

Motorola was a healthy publicly listed company. It could not be seen to be investing so much money into a new venture that was not ready yet.

This separate entity allowed Motorola to shield itself from Iridium. It also allowed Iridium to raise more money from other lenders and investors.

Motorola had signed on Iridium as the primary contractor. Motorola would make and maintain satellites for Iridium. This was a $3.37 billion contract along with a maintenance contract.

This was Motorola’s masterstroke.

The technology was incredibly complicated. It took many years of research and development.

But the promise of being able to talk on the phone from anywhere in the world was too tempting.

Their target audience was high-net-worth clients like CEOs, military personnel, oil barons, etc.

It was an 11-year effort. An extremely complicated and intricate technology was developed and rolled out.

Through the years, investors were enamored by the promise of the satellite-enabled communication. To many investors, it seemed like an obvious and easy bet to take.

It seemed like Iridium would have a monopoly over the global satellite communications network.

But to operate in various parts of the world, it would need local partners for permits and regulations.

Iridium decided to offer many other companies working across different countries a chance to invest in the company.

This would allow Iridium to operate in those countries. On the other hand, the companies would get a chance to invest in what was to be a monopoly company.

Companies from the USA, Europe, Japan, S Korea, Taiwan, and a few others lined up and bought stakes in Iridium.

The largest controlling shareholder was still Motorola. It owned around 20% of the company.

About $1.75 billion came from Motorola and a consortium of various companies. About $1.55 billion was from a consortium of banks in the form of loans. About $1.45 billion came from issuing bonds. The company also went for an IPO in 1997 and raised $240 million. There were a few other sources.

All in all, Iridium received around $5 billion.

The Moat

What made Iridium so irresistible?

The moat? There seemingly were many.

Motorola had practically invented the cellular industry. Their engineering was seen as the top of the chain. To bet against a company as good as Motorola was considered blasphemous.

And this tech sat on an investment that was unparalleled. Motorola and Iridium had been able to gather money to an astronomical level. Gathering this much investment interest was beyond most competitors.

There were some competitors, but none came close to Iridium’s satellite communications technology built on $5 billion cash.

The fact that the product was targeted towards wealthy clients who were usually willing to pay fat amounts for convenience made the project that much more tempting.

The absolute masterstroke was the use of strategic investments. Getting other companies to invest in Iridium would ensure all those companies (across different countries and continents) had an incentive to get all necessary legal and regulatory approvals.

To further sweeten the deals, Motorola and Iridium’s management had gathered investors who would also be suppliers (parts suppliers, maintenance companies, etc).

So if Iridium did well, their own businesses would get more orders from Iridium.

It was an extremely difficult to beat offer.

Launch & Post Launch

The product was launched on Nov 1, 1998.

It was a big handheld device that was roughly the size of a mineral water bottle. The Vice President of the USA, Al Gore, made the first call. It worked flawlessly.

Iridium kicked off its global advertising campaign. Orders started coming in. But not fast enough.

Further, they were not able to serve the orders. Motorola and other suppliers were not able to manufacture enough devices on time. They were busy fighting hardware and software glitches.

The device cost $3,000.

The big flaw in it started becoming loudly highlighted as more customers received their handsets. For the satellite phone to work, it needed to make direct contact with the sky.

So, the phone wouldn’t work inside buildings, inside moving cars, even under a tree.

In the meantime, telecom companies had invested billions in expanding their network. They set up towers and laid wires. The regular cellular network by now had started to offer very good network coverage.

It worked indoors and was much cheaper than Iridium’s satellite phone.

For the business model to work, Iridium needed 52,000 paying customers. They had only about 10,000. Some sources say they needed 5,00,000 subscribers and had only 20,000 or so.

Either way, the point still holds — they didn’t have enough paying customers to break even.

The only customers who needed the satellite phone were oil rig workers, military personnel, and sailors.

The market size of such customers was too tiny to pay back for their $5 billion investment.

Lenders soon realised that their hypothesis was wrong. The company was bleeding money to keep their satellites in orbit.

Less than a year after its launch, the company filed for bankruptcy.

It became one of the 20 biggest bankruptcies in the US.

The company’s assets eventually sold for $25 million (0.5% of what it received as investments and loans).

Today, it’s still alive. It was acquired and its technology was put to use. The company is doing quite well now.

But it is still nowhere near where investors thought it would be.

The case of Iridium is a pertinent example of how even the biggest and most prestigious investors and lenders can be very, very wrong.

Often, many such cases have an element of fraud and cheating in them.

Iridium was not that.

Nobody had bad intentions.

It was a case of very smart and ambitious people. They had the pedigree and required background. Their reputation was excellent.

They just got it wrong.

Quick Takes

+ India and Netherlands have elevated their bilateral ties to a Strategic Partnership and signed 17 MoUs in areas like semiconductors, renewable energy, critical minerals, defence, etc.

+ India and Norway signed 5 agreements to expand co-operation in science and innovation, clean energy, offshore wind, sustainability, geosciences, and academic collaboration.

+ The Indian Railways approved multiple infrastructure projects including the Rs 993 crore Arakkonam-Chengalpattu doubling project in Chennai, the Rs 962 crore Kiul-Jhajha 3rd line project on the Howrah-Delhi corridor, and safety and rehabilitation work on the Jammu-Shri Mata Vaishno Devi Katra section worth Rs 238 crore.

+ India’s petrol and diesel prices were raised by approximately Rs 0.90 per litre, to offset the losses due to the West Asia crisis. This is the second hike in five days, following a Rs 3 per litre increase.

+ The Indian Rupee hit a fresh all-time low, closing at Rs 96.84 per USD.

+ India’s infrastructure output of 8 core industries rose 1.7% year-on-year in April (vs 1.2% in March).

+ SEBI has clarified that clients of non-discretionary PMS (ND-PMS) can pledge their portfolio securities as collateral for loans as long as the client makes the choice themselves and for their own benefit.

+ India’s manufacturing PMI fell marginally to 54.3 in May (vs 54.7 in April) according to preliminary estimates. Services PMI rose marginally to 58.9 (vs 58.8 in April). Composite PMI (manufacturing + services) rose to 58.9 (vs 58.8 in April). This means overall economic activity grew marginally less in May than in April.

+ The RBI will conduct a $5 billion dollar-rupee swap auction on 26 May to inject liquidity into the financial system, stabilize the Rupee and boost forex reserves.

+ The National Commodity and Derivatives Exchange (NCDEX) announced the launch of India’s first exchange-traded weather derivatives contract based on Mumbai’s monsoon rains, starting 1 June.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

It had to pay back a $134 million loan that day.

Filing for bankruptcy was formally saying they wouldn’t be able to pay or needed more time.

Sears was a department store in the USA that touched its peak some time in the 1980s.

In the 2010s, it was a struggling company with a large debt on its head.

Investors were aware of the company’s condition. It didn’t happen all of a sudden. It was a slow march downwards.

Its shares had been trading at a peak of around $115 in 2007. Since then, it had been on a downward path with some upward pulls in between.

When the company announced bankruptcy, it was not a shock to the investors. They saw it coming.

Long before Oct 2018, the share price had fallen below $1.

After the announcement, the share price more or less stayed in the same range. Somewhere moving above and below the $0.50 mark.

Why?

Why did it not fall to $0?

Well, it had fallen to a very low value because most investors thought it was not going to recover. So they sold and sold and sold.

Then, it reached a price that was incredibly low. At these levels, the only investors who were still holding the stock (or buying it) were those that believed that the company would turn around.

Many didn’t necessarily believe the turnaround would happen. But they bought anyway just in case (because the price was so low, they didn’t mind losing it).

Some were buying and selling every day (they didn’t care about the company). All they cared about was how the price was behaving. They were playing more on the human psychology of fear and greed.

The final nail in the coffin came a year later in 2019.

It was declared that the shareholders would get nothing. The company would be shut down. Its assets would be sold to recover the debt dues.

Shareholders would get nothing.

And yet, the share price did not fall to $0. It kept hovering somewhere in the $0.20 to $0.40 range.

Why?

It was declared that shareholders would not get anything. Why were there investors who were still buying these shares? Why didn’t all buyers vanish and the price fall to $0?

Different investors. Different ideas.

A very tiny portion of shareholders were still hoping for a miracle. Some did not understand the gravity of the situation and expected a bounce back.

Some didn’t care. They were just trading and speculating using the stock — playing games like passing a ball between two players.

Eventually, the shares were delisted and taken off the share markets. They were cancelled on 31st Oct 2022.

The last traded price was $0.10 (and not $0).

The message here is that the stock markets are filled with many different kinds of investors and traders. They all have different philosophies and timelines.

Those philosophies and timelines might not match. And that’s the beauty of the markets.

Because everyone is thinking in different ways, the buyer almost always thinks they are making a good deal. The seller (who is literally selling the same stocks to the buyer) is also thinking they are making a good deal.

The funny thing is, they both can be right in their own ways!

Types of Market Participants: Long Term

That heading, it’s just a fancy way of saying “Types of Investors in the Stock Markets”.

There are a few different types of ‘market participants’. They all may be in it for different durations, different goals, different returns, and different philosophies.

The one thing that unites them, though, is this: make money.

Let’s look at the major investing groups.

Promoters:

They are the founders or owning family of the companies that are listed. In India, they often command large portions of the share market.

That is, a large portion of Indian shares are owned by promoters. It is not uncommon to see promoters own 40-50% of a company. In the case of Western companies, this number is usually lower (closer to 10-20%).

This category of shareholders tends to stick around the longest. They almost never sell. They may sell small portions of their holdings during overvalued bull phases and buy the same shares back during undervalued bear phases.

Sometimes, they may sell or buy for other reasons.

But the point still holds. They do not usually sell. For them, it’s more about control over the company.

By the way, the Government can also be a promoter of a company. It’s not always a private player. That’s what happens in the case of PSU (Public Sector Undertaking).

Pension Funds:

In the case of India, this would be EPFO.

They blindly invest in index funds or ETFs. They are buying every month. They don’t care if the markets are undervalued, overvalued, or fairly valued.

They don’t even care if the company they are investing in has good future prospects or otherwise. Index investing only.

For that reason, they are incredibly long term investors. Running for decades. When a company falls out of an index is when they also sell.

SWFs:

SWFs or Sovereign Wealth Funds, are funds that are government-owned. It’s like a mutual fund with only one customer: a government body.

Different countries have different SWFs that invest across the globe. Norway’s SWF is one of the biggest in the world. Singapore’s SWF is also quite huge. There are many like that.

They often do actively choose the companies they want to invest in. But again, they are very patient investors. They do not invest in and exit companies very fast.

It is common to see them hold on to stocks for more than a decade.

Mutual funds:

Mutual funds usually hold stocks long-term. When they buy a stock, they do so with an aim of holding for a few years at least.

Yes, they do exit before that if some negative event happens or they feel the stock has reached an overvalued state and profit booking is possible.

But it is possible that they sell before that as well.

PMS:

PMS or Portfolio Management Services are similar to mutual funds, but for higher amounts.

They are allowed to accept a minimum of Rs 50 lakh. This is clearly designed for an investor comfortable with risk.

PMS tend to behave similar to mutual funds. But they can be more opportunistic. Which means, they can sell much sooner than mutual funds.

It is not uncommon for them to sell within 1-3 years of holding. Sometimes, they sell even before that.

Family Offices:

These investors are usually investing for one family. They tend to stick around long term, usually.

UHNIs (Ultra High Net Worth Individuals) and family offices are often the same thing or behave similarly.

Their investments could be held for any period from a few years to decades.

Types of Market Participants: Short Term

So far, we spoke about the kind of investors who buy and usually hold a stock for months, years, and decades.

When you go to buy or sell a stock, most large stocks are available almost all the time. Which means, someone is selling or buying those stocks all the time.

This is possible only if there are many different long term holders. So, inevitably, there is always someone buying or selling.

Or, there are other investors who buy and sell over much shorter periods of time.

Which do you think is the case?

Yes, there is a class of investors buying and selling over much shorter periods of time.

The reality is that we are easily able to buy or sell stocks because both long term and short term investors are plentiful in the markets.

Let’s look at some of the short term investor types.

Arbitrage Traders:

These are some of the fastest traders in the market. They do not care about what the company’s shares are, or how the company is doing.

They simply use arbitrage opportunities to trade.

The simplest example of this is if a stock is trading on two different exchanges (NSE and BSE), they monitor the shares’ price on both. If the price is even slightly different, they buy shares from the cheaper exchange and sell on the more expensive exchange.

This actually causes the share price to rise (where it used to be cheaper) and fall (where it used to be more expensive).

This is why shares of the same company have a very similar share price even on different exchanges. The difference is negligible.

This is how they earn their profit.

They can buy and sell shares in a matter of seconds or even milliseconds.

HFTs:

Similarly, High Frequency Traders (HFTs) rely on various strategies to buy and sell shares. They usually buy and sell within milliseconds.

HFTs can use a multitude of strategies that vary from HFT to HFT.

But the common theme across them is their speed.

Retail Traders:

These are individual traders. If you have a job or business, while also trading stocks, and you operate individually (not as a team), you come under this category.

This segment of investors tends to hold anywhere from a few minutes to a few hours (in case of intraday trading).

Many retail traders also take positional bets which may last a few days to few weeks.

Retail Investors:

These are individual stock market investors (not traders) who pick their own stocks.

This segment is very varied — there are all sorts of different investors, and they invest differently.

They usually hold a stock for anywhere from 1 year to a couple of years.

The Other Side

If there’s one thing you need to understand from this write up, it’s this: you never know who is on the other side of the trade.

And you do not need to.

There is an exception to this though.

Block Deal:

A block deal is a trade where both parties know each other. This is more like a traditional deal. Two parties meet. One is the seller. The other is the buyer. They agree on the number of shares, and the price per share.

At a fixed hour, their trade is settled. The shares change hands.

In India, this happens during two windows: 8:45 AM to 9:00 AM and 2:05 PM to 2:20 PM.

Block deals can only take place if the value of the deal is worth more than Rs 25 crore or a large number of shares are changing hands.

Since the price is fixed, it does not affect the share’s demand and supply in the open markets. So, it does not change or affect the live share price.

But when the news of a block deal gets out, many investors get influenced. Some might see it as a good event. Some might see it as a bad event. Buying/selling because of the news of a block deal can certainly affect the share price.

This must not be confused with another type of a deal called bulk deal.

Bulk Deal:

A bulk deal happens when one investor (or investing entity) buys/sells more than 0.5% of a company’s shares.

This happens during market hours and the buyer/seller does not need to know each other. It is an open market buy/sell order just like any other buy/sell order.

It’s just that this order is so big, it can affect the share price (increased demand leads to increased price and vice versa).

So there you go.

When you sell, you have no clue who the buyer is. When you buy, you have no clue who the seller is.

Maybe the other side is selling because they know something bad is going to happen. Or maybe, it’s all good but they need that money for a personal reason.

Maybe they found another better investment while this one continues to be very good.

They have their reasons to do what they are doing. You have yours. Win-win.

Quick Takes

+ India’s annual inflation rate rose marginally to 3.48% in April (vs 3.40% in March).

+ The Indian Rupee reached an all time low, falling beyond Rs 95.5 per USD.

+ India’s equity mutual funds inflows rose 58% year-on-year to Rs 38,440.20 crore in April (vs an inflow of Rs 40,450 crore in March). Debt funds inflows rose 12.9% to Rs 2.47 lakh crore (vs an outflow of Rs 2.94 lakh crore in March): AMFI

+ The government approved a scheme worth Rs 37,500 crore to support coal and lignite gasification projects, aiming to reduce India’s dependence on imports like LNG, urea, ammonia, and methanol.

+ India has signed an MoU with South Korea’s HD Korea Shipbuilding & Offshore Engineering to develop a mega greenfield shipyard at Thoothukudi, Tamil Nadu.

+ India’s wholesale inflation rose 8.3% year-on-year in April (vs 3.88% in March). Wholesale fuel and power inflation rose to 24.71% (vs 1.05% in March).

+ The Indian Rupee hit a fresh all-time low, crossing Rs 96 per USD during the day before settling at Rs 95.92 against the US dollar.

+ India’s merchandise exports grew 13.79% year-on-year in April and imports grew 10.03%. The merchandise trade deficit rose to $28.38 billion.

+ India’s forex reserves rose by $6.3 billion to $696.99 billion in the week that ended on 8 May.

+ India’s unemployment rate rose marginally to 5.2% in April, (vs to 5.1% in March).

+ India’s passenger vehicle sales rose 25.4% year-on-year to 4.37 lakh units in April: SIAM

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

‘Meditations’ by Marcus Aurelius, is a book heavily praised by many.

One such modern example is that of James Mattis, the former US Defence Secretary.

James Mattis has been through some very difficult phases in the US’ military operations.

His appreciation comes from being in somewhat of a similar position to Marcus.

Marcus Aurelius was the emperor of Rome about 2,000 years ago.

As a ruler, he had a hard life. He was constantly up north in his territory, fighting invaders, and protecting Rome from losing territory.

During Marcus’ reign, Rome was the biggest it had ever been. It was in its golden era.

Rome had been stable for about a century with well established internal systems. During this period, 5 emperors had ruled over Rome. Marcus was the 5th emperor.

It was not easy.

The role required a deep understanding of human nature, self control, and discipline.

‘Meditations’ was not a philosophical book written by Marcus. It was not a book at all. It was a personal diary. The writings were letters to himself. He wrote them throughout his life.

Marcus’ tenure was marked by many struggles.

Of the roughly 20 years he ruled, many years were spent in military tents. He believed in fighting wars from the front, not by sitting in the capital.

Rome was under attack and his struggles ranged from military strategy to arranging funds for the war effort.

Wars are expensive and Rome was always arranging money for them.

It didn’t help that simultaneously, Rome was suffering through a plague that resulted in the deaths of a significant portion of its population.

The plague itself caused death, illness, labour shortages, and an economic slowdown.

At the same time, only a few of Marcus’ 13 children survived to reach adulthood.

We also see a co-emperor of Marcus who had revolted and launched a campaign to break off from the Roman Empire.

Marcus was always under attack figuratively and literally.

It was in this setting that he wrote to himself in his diary. ‘Meditations’.

His demeanor, restraint, discipline and approach to life earned him the title of being a ‘philosopher-king’.

Today, he is most famous for ‘Stoicism’ — the philosophy of not reacting too much to any situation, and maintaining composure.

Rome was marked by constant chaos. While the kingdom gained and expanded, the internal chaos remained constant.

There were a string of absolutist rulers. They viewed their position as permission to do whatever they felt like.

Power led to reckless behaviour. Killing and seizing the property of citizens was easily possible. All sorts of rumours used to float around. Punishments based on the rumours, without verification, were also common.

Extreme amounts of internal politics and backstabbing coupled with assassinations were common among the ruling classes.

The period of the 5 emperors is often referred to as the golden period in the history of Rome.

Among other rules, one particular rule that enabled this period was that of succession.

Emperors of Rome were often appointed because the older one had been killed or forcefully replaced. If not that, then the son of the current ruler would take over the throne.

In Rome, the next ruler was selected from the existing senior bureaucrats. It was merit based. The best candidates were promoted.

The winner would then be adopted to become the son of the present ruler.

The adopted son and father would rule together until the death of the father. Then, the adopted son would continue as the ruler from there on — after having learnt the ropes along with an experienced ruler.

Marcus was extremely intelligent and able.

However, he did not follow this succession rule.

He simply appointed his biological son, Commodus, as the successor.

This was despite being well aware of Commodus’ faults.

Commodus was one of Marcus’ children who had survived to be an adult.

Commodus just wasn’t interested in being a ruler. He was more interested in keeping himself entertained.

Things didn’t go well after Marcus died.

He did not spend time on the frontiers. Rome was his primary location. He signed deals with others easily and without much pushback.

Commodus delegated most of the work to his favourite senior senators (many were corrupt).

Internal fault lines formed. Corruption, bureaucracy, inefficiency, and general public resentment built up.

Over time, many senators grew unhappy with Commodus. A general sense of trust in the system vanished. Everyone was suspicious of the other. Internal struggles started to take place.

All the while, Commodus thought of himself as a gladiator.

Gladiators were wrestlers who fought each other, sometimes to death. The public used to gather to watch these fights (similar to any sport).

He took a keen interest in these sporting events and even fought (staged) fights himself.

Commodus’ reign ended with his assassination.

After 5 great emperors selected by merit, Rome’s golden age ended.

Rome went back to utter chaos – similar to the situation before the 5 emperors.

Rome went from a good ruler to a bad ruler.

Domitian to Nerva

Domitian belonged to an era when the emperor’s throne was seen as family property. It was inherited.

Domitian inherited the throne from his brother.

He spent money building vast palaces and monuments, distancing himself from the public and senators.

He was afraid and suspicious. He was always scanning the room for rivals. When he noticed a rival voicing his opinions strongly, Domitian would have him killed.

This created a sense of fear in the senate’s atmosphere.

Senators avoided saying anything altogether. This resulted in crucial work in not getting done, including passage and amendment of laws.

The condition of Rome as an empire worsened. The period before Domitian hadn’t been any good.

Over time, Domitian became distrustful of most people around him.

He was left with an inner circle who he trusted.

Skepticism and doubt soon entered this inner circle as well.

Domitian started targeting members of this inner circle who he developed suspicions against.

He maintained a diary which he kept under his pillow. The diary contained the names of the people he wanted killed. They even found his own wife’s name in that diary.

In an act of self preservation, the senators and advisors who were a part of this circle started making plans to get rid of Domitian.

They planned his assassination.

But, before they assassinated him, they made preparations to prevent Rome’s collapse into chaos.

They chose Nerva.

Nerva was a senator who had been a diplomat and a lawyer.

He was old and had no sons. He did not have dynastic ambitions. His coming to power would signal the rule of law.

Because of his past work, it was believed that he would act as a good bridge between the military and the senators.

Nerva started facing problems soon after he took power.

He realised the army needed someone strict and strong, not a diplomat like him. Before leaving, he drafted a key rule: succession of power.

Nerva is credited with the merit-based succession system.

The one that allowed 5 great emperors to rule over the golden era of the Roman Empire. He laid the foundation for the era to start.

He was the first of the five emperors. Marcus was the fifth.

Rome went from a good ruler to a bad ruler.

Rome’s Golden Era

Nerva marked the start of one of the best periods of the Roman Civilisation.

As Nerva was getting old, he handed over the reins to his successor, Trajan.

Trajan was at the border areas when this happened. Instead of rushing back to Rome, Trajan decided to continue manning the frontiers, leading the military forces.

This signalled that he valued Rome more than personal power.

Trajan ruled for about 20 years. His death was sudden but the successor had already been selected. His name was Hadrian.

On his way out, Hadrian selected Antoninus as his successor. In fact, he even made Antoninus adopt Marcus.

In short, Hadrian ensured two generations of rulers had been appointed.

When Antoninus died, Marcus simply stepped into the role.

This century in Roman history was marked with unseen stability, peace, prosperity, and economic expansion.

Many new cities were built. Urbanisation became the theme.

An extremely fair system was built. People from newly conquered and ethnically different territories could rise through the ranks and become senators.

Trade flourished and the Roman economy grew stronger.

More peaceful professions like philosophers, architects, and intellectuals were celebrated.

It is said that Marcus was the peak of the golden era of Rome. He was the culmination of the great work done by the four emperors before him.

Between each of these five emperors’ succession, no blood was shed, no civil war took place, prosperity didn’t suffer.

Rome went from one good ruler to another good ruler.

Transition of Power

The lesson we are trying to highlight from Roman Civilization is this: a change of leader can mean many things.

You would have noticed that the section talking about transition from a good state to bad state is much longer.

The one that talks about going from good to another good ruler is relatively short.

That’s mostly because when things are good, there’s not much to record.

Any leadership change is an opportunity. But it can also be a threat.

But when done absolutely right, it barely feels like news.

As investors, we can see this happen all too often in corporate circles.

Good to Bad

This can be a bit controversial since these names can be opinion based.

Disney.

Bob Iger spent years building Disney to what it was. Then, Bob Chapek was appointed CEO of Disney in 2020.

The poor performance and loss of confidence led to a 40% drop in share price in the 2 years he was CEO. Market forces were involved too but the board was unhappy for other reasons as well.

Bob Iger was brought back from retirement and re-appointed the CEO of Disney.

Yahoo!

Marissa Mayer, an ex-Google top executive was hired as CEO of Yahoo. Under her, the company made some poor acquisitions and Yahoo! continued to perform poorly.

Bad to Good

Ford.

Alan Mulally was appointed CEO of Ford in 2006. Until his hiring, the previous CEO had struggled to build trust in the company. He repaired the culture in the company.

Ford was the only American car company that did not require a bailout post the 2008 Recession.

Microsoft.

This one’s a controversial one. Many argue that Steve Balmer had not done justice to his role as CEO of Microsoft.

Though the company was indeed profitable, it was losing ground fast. He was blamed for missing the smartphone revolution which was taken up well by Google (Android) and Apple (iOS).

He was succeeded by Satya Nadella, who turned the company’s fortunes around and took at back to the top — to being one of the top 10 biggest companies in the world.

Good to Good

PepsiCo.

Indra Nooyi took over as PepsiCo CEO from Reinemund.

She propelled an already successful brand into the 21st century and ensured the leadership transition was absolutely flawless.

Apple.

Steve Jobs leaving Apple was seen as a drastic change. But the new CEO, Tim Cook, took over the reins and continued pulling the company to newer heights.

Apple today is facing yet another power transition as Tim Cook steps down and the new CEO John Turnus, takes over.

Quick Takes

+ India’s manufacturing PMI rose to 54.7 in April (vs 53.9 in March). This means manufacturing activity grew more in April than in March.

+ India’s LPG consumption fell 16.2% year-on-year in April (vs a fall of 12.3% in March): Ministry of Petroleum and Natural Gas

+ SEBI has proposed allowing online bond platforms to offer overseas-listed debt securities regulated by the International Financial ​Services Centres Authority (IFSCA), as part of ease-of-doing-business measures.

+ The government approved the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, providing 100% government credit guarantee for MSMEs and 90% for the non-MSMEs as well as the airline sector to boost liquidity amid the disruptions due to the West Asia conflict.

+ India’s composite PMI (manufacturing + services) rose to 58.2 in April (vs 57.0 in March). Services PMI rose to 58.8 (vs 57.5 in March). This means economic activity rose more in April than in March.

+ India’s forex reserves fell by $7.79 billion to $690.69 billion in the week that ended on 1 March.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest