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

Elevators (or lifts) were used for hoisting goods.

What’s peculiar about elevators is that despite being thousands of years old, they were almost never popular for transporting people.

The chances of ropes snapping were high. Goods falling to the ground and getting ruined is an acceptable risk.

The same is not acceptable for humans.

In 1954, Elisha Otis arranged for a stunt. He got into an elevator that went up a few floors. He then cut the rope. The elevator fell only a few inches before the safety brake kicked in.

This stunt left the audience absolutely stunned.

He repeated the stunt several times over the following months.

The demo finally changed the public perception of the elevator. Their use for transporting people finally became acceptable.

When buildings are built, the shaft is custom-made for the elevator in use. So once an elevator is installed, changing the elevator is hard.

Additionally, elevators require mandatory inspections and servicing by law.

Otis got an early head start because of their safety brake.

Since potential buyers loved the safety it offered, more buyers bought it. To help service these lifts easily, Otis was quick to expand their service network.

This had a reinforcing effect.

Many new buyers bought Otis lifts simply because their service network was better.

More lifts sold. More service centers opened. Therefore, increased ease of servicing. Therefore, more new customers prefer Otis lifts.

They just continued to grow big faster than all others — helped because they were the biggest already.

And thus, today, we don’t think twice before boarding an elevator.

Big Becomes Bigger

This effect is called the Matthew Effect.

The big continues to grow bigger. The winner keeps winning.

There’s an investment philosophy centered around this very idea. It’s called momentum investing.

The idea is as simple as it sounds. Stocks that have been going up will keep going up.

Obviously stocks do not keep going up all the time. So, the strategy involves switching. You buy stocks that are going up and sell the ones that have slowed or have started going down.

But how is the Otis case any different from regular investing? Isn’t that literally what investing is all about?

You analyse companies and the business behind them. You try to get an idea for how the future looks. And based on that future, you buy shares to gain from its good future.

That’s just plain investing.

Top 40 Charts

Globally, many radio programs and playlists have top songs’ lists.

It’ll be something like ‘Top 10 Best Songs of the Year’ or month or some version of that.

Many observed that once a song made it into the list, it tended to get more popular. And the more popular it got, the longer it stayed on the charts.

Similar to Otis’ success?

As in, were these songs staying in the charts because they were that good? Or were they simply there because being on such a list ensures greater visibility.

That would mean that a song is becoming more popular not because it is actually good.

It would mean the song is on the charts simply because more people are able to listen to it more often.

A few researchers from Columbia University decided to answer this question.

They created a website called MusicLab where songs could be downloaded from. They had about 14,000 listeners.

They divided this group in two parts.

One group could only listen to songs and vote which songs they liked. The list of top songs were made based on listeners’ listening habits. But the list of top songs was never shown publicly.

The other group could see the list of top songs. Which means, they could see the songs the others were liking too.

The results were sort of expected.

In the second group, a few songs emerged as the top choices and made massive leads compared to the others.

It appeared that more listeners had started enjoying the songs simply because others were listening to them too.

It wasn’t the songs themselves. It was that they were also liked by others.

Different parties concluded different theories.

But by and large, it was agreed that a song enters the charts because it is good. Its success is because of it being good, not popular.

But once a song has entered and climbed higher on the charts, the climb to the absolute top may just be merely because of its popularity.

Momentum Investing

Momentum investing sort of tries to take advantage of this.

It isn’t just about catching a good business early on. It is also about profiting from the hype around it.

Value investing is about buying stocks that are undervalued and sticking with them as they climb and succeed.

If a stock should cost ~Rs 300, they want to pay ~Rs 250 for it. And then they would hope the price rises from there. They would not want to pay ~Rs 350 for it (at that point in time).

Value investors dislike paying a high price. They are not comfortable buying overvalued stocks.

Momentum investors are more comfortable with overvalued prices — if they think the prices will go up even more, often because they feel the market hasn’t fully priced in the company’s growth yet.

If they feel the stock price will reach Rs 400 soon, they’d rather pay Rs 350 rather than wait for the price to fall before Rs 300.

Momentum Strategies

Great, so the idea behind momentum investing as a concept is somewhat understood. But how does it look in actual investing?

It starts with a simple strategy. And gets more and more complex. The specific strategy being used would depend on what the investor feels is right.

Many advanced investors (and traders) develop their own way of using this strategy which can be extremely complicated and even proprietary.

Simplest:

The simplest would be time series momentum.

Invest in Nifty 50 if it has been up over the last 12 months. Sell if it is negative over the last 12 months.

Individual investors might have different versions of this.

Next level:

Another strategy is to use the strongest in a group. This is called relative momentum.

So take a group (could be an index, or a sector). Then define the top in that. Top 3 pharma stocks. Top 10 Nifty 50 companies. So on.

Invest on only those. Sell the ones that exit the top criteria and buy the new top criteria.

Another level higher:

Combine the two. Buy only if the group (sector, index, etc) is moving up. And then choose only the top from that group.

Further:

A more complicated version would depend on a moving average instead of using an absolute price point. So instead of defining a criteria like “has the index moved up in the 12 months”, the investor would craft a condition based on the moving average of that index or sector.

Further:

Sector based. The investor defines a particular number of sectors. Say, top 3 sectors.

Then, among all sectors available, he/she invests in only the top 3 best performing sectors.

Similarly more conditions may be added to this.

More complicated strategies would involve going in greater depth. So, instead of price, they would use conditions like revenue, earnings, earnings growth, etc to decide when to buy/sell.

We can go on and on. The strategies are endless.

When It Works; When It Doesn’t

Well, momentum sounds perfect.

Why are more folks not talking about it?

They are, sort of. But yes, not enough folks.

And there’s a good reason behind it.

Momentum as a strategy works well during certain seasons in the markets. And it tends to perform poorly in others.

In 2000, the legendary Warren Buffett was addressing Berkshire Hathaway’s shareholders through the annual letter.

What he spoke about has now become very popular as the ‘Cinderella Ball’.

He was not talking about momentum investing. He was talking about the dotcom bubble.

But what he described perfectly explains a situation when momentum strategy fails often.

He talks about the separation between investing and pure speculation. The line between where investing ends and speculation starts is very blurry. There is no clear point where it stops being an investment and becomes only speculation.

Speculation is not about the underlying business or the revenues or profits. It’s about gaining from others’ behaviour.

Warren is famous for preaching not to take part in speculation.

Dotcom stocks or tech stocks had caused the share prices to balloon to astronomical levels. Those share prices were not justifiable given the revenues they were earning.

He says nobody likes to leave a party while it is fun. But nobody wants to stay after the party has ended.

Everyone wants to leave before midnight (when the party ends). But the clock in the room has no hands. So nobody can tell the time.

He is trying to highlight that when a share price goes up due to speculation only, it is a bubble. And nobody knows when the bubble will burst. But it will burst for sure.

This applies to momentum as well.

It works well when things are going up and up.

It performs poorly when there is a reversal.

When a falling market turns around. Or, when a rising market crashes.

Proponents of momentum argue that over a long period of time, despite those reversals, momentum as a strategy has given higher returns over some very long periods of time.

But the volatility — the ups and downs during reversals — is not for the faint of heart.

Hence, if someone does plan to use momentum strategy, nerves of steel are a mandatory requirement.

🔢 Quick Takes

+ India and New Zealand have signed a Free Trade Agreement to boost trade by reducing tariffs and improving market access.

+ India’s industrial output rose 4.1% year-on-year in March (vs 5.2% in Feb).

+ The RBI issued final norms on asset classification, provisioning, and income recognition for banks, introducing a new Expected Credit Loss (ECL) framework, effective April 2027. The new rules require banks to set aside money in advance for loans that might go bad in the future, instead of waiting for defaults to happen.

+ The United Arab Emirates has announced it will leave OPEC (Organization of the Petroleum Exporting Countries) effective 1 May 2026, which would cause a major shift in oil markets.

+ The US Fed kept the interest rate unchanged in the 3.5% to 3.75% range for the third consecutive time.

+ India’s forex reserves fell by $4.82 billion to Rs 698.49 billion in the week that ended on 24 April.

+ India’s gross GST collections rose 8.7% year-on-year to Rs 2.43 lakh crore in April. Net collections rose 7.3% to Rs 2.11 lakh crore.

+ The commercial LPG prices in India have been raised for the third time since February, with a hike of around Rs 993: as per media sources

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

Team Groww Digest

Most of these climbs happen in the March to May window.

The weather is too extreme during other months.

Climbing the world’s tallest mountain is no easy task. It is a daring task. One that many want to be able to boast about.

Climbing works in an organised manner.

Aspiring climbers have to team up with local tour companies that specialize in this endeavour. Those companies have experienced mountaineers leading the expeditions.

These mountaineers team up with locals called Sherpas who are extremely adept at climbing the mountains.

On the way, there are 5 camps. The first is base camp. This has all support like food, shelter, medical aid, etc.

Then, there are camps 1, 2, 3, and 4.

Camp 4 is the last camp before climbers depart for the peak. The journey between these camps is roughly 4-12 hours long.

At each camp, climbers rest for a few days to acclimate to the height and lack of oxygen. At the top, there is only 1/3rd the oxygen there is at sea level.

The final camp is Camp 4.

After Camp 4, most climbers use oxygen cylinders to climb further, as the air is too thin. Some daring climbers do climb without cylinders, though.

From Camp 4, climbers start at night. The aim is to reach the peak by late morning. After touching the peak, they start to descend.

They maintain a cutoff time of 2 PM. They must turn around by 2 PM.

If they have not reached the peak, they must abandon the idea of reaching it and turn around.

The data are not crystal clear but 60-70% of climbers make it to the top. The rest return to Camp 4 without touching the summit.

All in, a little over 99% of the successful climbers return. The remaining small number is the percentage of people who die on the expedition — between 0.5% and 1%.

As far as expeditions go, the odds of survival seem pretty good.

May 1996

On the 10th of May 1996, a group set off from Camp 4.

This group was an eclectic mix.

Two of the most reputed mountaineers led the groups. Along with them were other experienced mountaineers, a journalist, a socialite, adventure junkies, and Sherpas.

There was another group that was on this expedition on the same day. It was a group of ITBP jawans.

In total, there were over 30 people headed for the summit.

Like every other group, they started at night.

The weather was stable. Many climbers were using oxygen cylinders.

By the morning around 6 AM, they had reached the first major milestone.

By 9 AM, they had reached the next milestone.

Beyond this, the trek leads and Sherpas noticed that the ropes that climbers held on to while climbing the steep climb were missing.

This was a setback, but not rare. In these regions, this happens.

The Sherpas set off, putting new ropes for the climbers to use.

It took 1-2 hours for the ropes to be set, which is when the climbers started climbing again.

The climbers were not all together. They were spread out with gaps of around 1-2 hours. So while the first few climbers touched the summit and turned around, many others were behind and still climbing.

Several climbers reach the summit by 2 PM and turn around.

Among the climbers were two expedition leads with their own respective clients.

A client named Doug had attempted and failed the year before. His lead, Rob, was eager to help him.

They had not reached the summit by 2 PM, but were quite close to it.

Probably backed by his experience of climbing Everest several times, Rob decided that going past 2 PM for a few minutes would not be a big deal.

A few other climbers also decided the same.

1% Chances

To make a long story short, they became a part of the 1% of climbers who do not make it back alive.

When they started descending, they had consumed more of their oxygen cylinders. There was not enough oxygen to last them too long.

Tired from the arduous climb, they struggled to move fast.

Sometime between 2 and 4 PM, the weather started to worsen unexpectedly. A severe snowstorm hit between 4 and 6 PM, leaving many climbers to run for cover.

Many climbers got lost in the chaos.

The low oxygen and fatigue made critical thinking that much more difficult.

They remain stuck and stranded for the night in extreme conditions.

By the time the storm cleared, various climbers remained stuck at different points in the path.

Some made a desperate attempt to reach Camp 4 and succeeded. Others tragically died.

A total of 8 lives were lost. It was one of the worst accidents in the history of the Everest expedition.

Low Probability of Ruin

This is one of the most classic cases of probabilities being misunderstood.

Let’s say you are flipping a coin. Heads vs tails.

If you start counting the heads and tails, eventually, the distribution will be 50:50.

In the start, when the number of flips is low, this number could be varied. But as you increase the number of flips, the distribution will be closer to 50:50.

But flipping a coin does not harm you.

If you keep betting on heads and keep getting tails in the start, there’s no harm. Eventually, you will be right about the 50:50 ratio.

So you can continue playing this game since you know the probability in the long run.

But what if heads means you will get Rs 1 lakh and tails means you will be shot dead? Will you then consider playing this game?

Will probabilities still apply when you are unable to play the game in the long run?

In the second case it seems like a dumb idea to play (no matter what the probability).

So a game like that must never be played.

What if you were allowed to play multiple rounds but would be shot dead if you had accumulated 5 tails but a lower number of heads?

Then maybe you could try your luck, and if you accumulated 4 tails and a lower number of heads, you could quit before risking your life.

This way, you are taking advantage of the risk but ensuring there’s enough safety margin to continue to live.

In short, you are taking a risk, but not ruining yourself.

Or, if there is a probability of ruin, you shouldn’t play the game.

On Everest, the 2 PM rule was a generally accepted cutoff time after which the probability of a disaster was too high.

It didn’t mean if you stayed past 2 PM, you would see a snowstorm. But you could.

Before 2 PM? That chance was much much lower.

The climbers who have turned around before 2 PM from the summit have mostly made it back just fine.

In the world of finance, what this means is that you never make an investment such that you could be ruined.

Once your investment value is Rs 0, it gets incredibly hard to climb back up.

In short, have a “2 PM” amount from which you can recover even if your high-risk investments don’t perform as planned.

This is why we don’t always invest all our money in the ‘highest returns’ option.

Some money must be kept in low-risk options (which often means low returns).

Quick Takes

+ India’s infrastructure output of core industries fell by 0.4% year-on-year in March. Coal, crude oil, fertilisers and electricity output fell while natural gas, steel, cement and petroleum refinery products output rose.

+ India and South Korea signed 15 agreements to boost cooperation in areas like trade, AI, and shipbuilding, and aim to double bilateral trade to $50 billion by 2030.

+ The Ministry of Defence signed contracts worth Rs 975 crore with Bharat Earth Movers Limited (BEML) and Electro Pneumatics and Hydraulics (India) Private Limited for the procurement of TRAWL Assembly for T-72 and T-90 tanks.

+ SEBI has reduced the minimum investment in social impact funds from Rs 2 lakh to Rs 1,000 to widen retail participation on the Social Stock Exchange.

+ The RBI has issued new rules for recurring digital payments (e-mandates) allowing auto-debits up to Rs 15,000 without extra authentication after one-time approval. It also included pre and post payment alerts, security checks, and better control over subscriptions and auto-debits.

+ A SEBI panel has recommended that the National Stock Exchange (NSE) pay about Rs 1,800 crore to settle its long-pending regulatory cases: as per media reports.

+ India’s manufacturing PMI rose to 55.9 in April vs (53.9 in March) as per preliminary estimates. Services PMI rose to 57.9 (vs 57.5 in March). Composite PMI (manufacturing + services) rose to 58.30 (vs 57.0 in March). This means economic activity rose more in April than in March.

+ India’s forex reserves rose by $2.36 billion to $703.31 billion in the week that ended on 17 April.

+ India’s net FDI turned positive to $4.6 billion in Feb after six months of outflows.

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

Team Groww Digest

Omelek Island.

It is covered in sandy beaches, coconut trees, and not much else.

The island itself is only about as big as 8 football fields. And nobody lives on it.

It is really remote.

It is part of the larger group called Marshall Islands.

Between 1946 and 1958, the US conducted 67 nuclear bomb tests in this island group. The islands are so far from any major civilisation that the US didn’t stop at nuclear tests.

Once they were done testing nuclear bombs, the US used them to test the accuracy of missiles fired from California.

When the tests were done, most islands returned to being the way they used to be — empty and deserted.

Omelek Island saw one key event though.

A rocket took off from the tiny island on 24th March 2006 and failed. Another one took off in March 2007 and failed. Yet another one failed in August 2008.

This was a bunch of engineers led by Elon Musk. They were almost out of money.

On 28th September, 2008, they got their first successful launch. And with that, was cemented SpaceX’s pitch. Space transportation.

The SpaceX Journey

SpaceX found it difficult to launch any rockets from sites in America. So they chose Omelek Island because of its remoteness.

SpaceX’s story from its early days is a wild mix.

The team had visited Russia to buy Intercontinental Ballistic Missiles (ICBM). They thought they could use the missiles to send rockets to space. (The plan did not work out).

The successful launch in 2008 was one of many. It was also one of many others that failed.

For SpaceX to be viable, it had to do much more than just launch a rocket. It had to lower the cost of transporting items to space.

When rockets are sent to space, they are spent. A rocket is used once and never again.

Billions of dollars worth of rockets were single-use vehicles.

If sending items to space had to be made cheaper, this cost would have to be brought down many times.

SpaceX had the grand idea of reusing rockets; of sending rockets up and then bringing them back to be reused again, like a car.

Many failed attempts took place.

Then, on Dec 21, 2015, SpaceX’s Falcon 9 rocket went up, came back, and landed vertically, on its own power.

A near impossible site.

This marked the beginning of the era of reusable rockets. They did more such tests over the next few months.

In March 2017, they reused a rocket that had landed on its own.

This completed the promise. Reusable rockets were real.

It was incredible and unbelievable. Elon Musk had promised this feat for years. And it had become real.

From then on, progress, no matter how incredible, became routine.

SpaceX started reusing rockets. More rockets were sent up. More were received back. More were sent up again.

More incredible feats came along. In 2024, the rockets were caught by robotic arms mid-air, instead of landing on the ground.

This can allow the rockets to be sent up again within hours. Like a modern day passenger plane.

When space flight first started, the cost of transporting 1 kg of items to space was more than $50,000.

In the 1990s and early 2000s, it was around $7,000 to $10,000.

Today, SpaceX’s reusable rockets have caused that price to fall to $1500. Estimates suggest a further reduction of this cost.

Business

So far, this sounds like a fantastic engineering project. It is. One of the world’s best projects, too.

SpaceX is a company. And companies need to make money.

SpaceX got its first paying customer way back in 2009, right after its first successful flight. It was to put a small satellite in space.

In 2012, they carried cargo to the International Space Station (ISS).

Over the years, they have served many clients, transporting cargo and satellites. Now it is also in the business of transporting astronauts to space.

The company made no revenue in its initial years. $0.

Then, the revenue jumped to $100 million in 2008-09 with its first order.

About 5 years later, the revenue was around $1 billion.

5 years after that, 2019, the revenue was about double that.

And another 5 years later, 2024, it was a massive $13 billion. In 2025, it crossed $15 billion.

That is an impressive rise.

Building rockets requires a lot of money. It is no surprise that SpaceX has been raising money all these years.

Well, it started with a fat amount. Elon Musk brought his personal $100 million to the table right at the start of the company.

It received funding over multiple rounds since then. The total is somewhere around $11 billion in investments.

To add to that, it received billions of dollars worth of government aid in the form of grants, tax breaks, and contracts. Some estimates put that between $20 and $40 billion worth of aid.

Building reusable rockets is not easy. Nobody had done it until SpaceX.

No surprise then that SpaceX has been a giant money sucking machine for many years. No surprise that it was running at a loss for all these years.

But that began to change in 2023. They made $800 million in profit that year. The year after that, $2.2 billion in profits.

So, rockets started making a profit?

Starlink

Not quite.

SpaceX is a telecommunications company, not a space transportation company (at least as of now). Why?

In 2019, they launched their Starlink product.

Starlink is a satellite internet service provider. You have to buy a Starlink device (similar to a Tata Sky dish, but for getting internet).

These satellites orbit lower over the surface of the earth.

In 2021, there were 1944 Starlink satellites orbiting the earth. That number nearly doubled in 2022. It kept growing that way.

Today, there are about 11,000 Starlink satellites orbiting around the earth.

As of today, there are over 10 million paying customers.

These Starlink customers are a major source of revenue for SpaceX. It helped the company finally become profitable.

Space Economy: Mining, Transport, More

Space is a frontier companies have been dreaming about for decades now.

Space mining has been the ultimate space fantasy for scientists for ages.

Except for a few hundred kgs of moon dust and some grams from comets and asteroids, we haven’t really gotten much down to the surface of the Earth.

But the promise of vast minerals and abundance holds.

This is what makes space so ever tempting for many scientists and entrepreneurs.

Besides, satellites much closer to earth also have incredible potential.

Elon Musk says he started SpaceX with the aim of making humans a multi-planetary species. He wants us to get to Mars.

SpaceX is the business he runs to be able to do that.

IPOs

SpaceX is reportedly heading for an IPO this year.

When companies head for an IPO, they price their shares based on the future potential of revenues and earnings.

So many times, the present valuation looks a bit stretched, but it makes sense when its future potential is looked at.

When Microsoft went for its IPO, it valued itself at $519 million. Its revenues were $197 million. So, it was asking for a valuation of ~2.5x its revenues.

That can be deemed extremely conservative.

When Google went for its IPO, the revenue multiple was around 7x. Which seems more “fair”.

Facebook’s IPO happened at around 28x.

Now, that might seem “too high”. Yes, but in hindsight, it worked fine.

Why? Because Facebook’s future potential was so high, that valuation worked fine in the long run. The company’s future revenues and profits caught up.

Alibaba at its IPO in 2014 was valued at 20x. It worked fine.

SpaceX has revenues of around $15 billion. And it wants to be valued between $1.75 and $2 trillion.

That makes it valued at more than 115x its revenues.

Why?

There are some justifications.

Starlink is one of the biggest moats the company has.

Since SpaceX owns the rockets, it costs them 70% less than their competitors to put up a satellite into orbit.

This gives them a massive advantage over their competitors.

To add to that, it costs very little for SpaceX to add new customers since the satellites are already in place.

This allows them to continue adding new customers without much cost. The global TAM or Total Addressable Market (potential customer base) is incredible.

That gives them an edge like no other.

That coupled with xAI (which SpaceX owns).

xAI is the company making Grok, a competitor to OpenAI (ChatGPT maker), Gemini, and Anthorpic (Claude maker).

xAI’s revenues are around $100 million in a quarter while suffering losses in billions as it trains its models.

SpaceX does not have many competitors.

There’s Blue Origin that’s owned by Amazon’s founder, Jeff Bezos. It has competing products and has shown very promising results.

But it is a private company still in its early stages and will take time to mature. So we cannot directly look at its numbers for reference.

There is one company that is a SpaceX competitor that also happens to be listed on the stock markets.

Rocket Lab.

Rocket Lab has annual revenues of around $600 million (looks tiny compared to SpaceX). On the stock markets, the company is valued at around $50 billion. That’s a revenue multiple of around 80x.

Looks like the stock markets are indeed willing to pay a high price for rocket companies.

At an IPO valuation like that, SpaceX will be the biggest IPO ever, in the history of the earth.

115-130x multiple? Is that too much? Or is it okay given the future potential?

Hard to say. We have never seen rocket companies go IPO. So we don’t quite know how they should be valued.

This is similar to the confusion that ensued internet-tech companies’ IPOs back in the 2000s.

Investors struggled to determine if the valuation they demanded was deserved.

Quick Takes

+ India’s inflation rate rose to 3.4% year-on-year in March (vs 3.21% in Feb).

+ India’s merchandise exports fell 7.4% year-on-year in March. Imports fell 6.5%. The trade trade deficit narrowed to $20.67 billion.

+ India’s unemployment rate rose to 5.1% in March (vs 4.9% in Feb).

+ India’s passenger vehicle sales in FY25-26 grew 7.9% year-on-year to 46.43 lakh units, the highest in a financial year. Sales in March rose 16% to 4.42 lakh units: SIAM

+ India’s wholesale inflation rose 3.88% year-on-year in March (vs 2.13% in Feb).

+ China has overtaken the USA to become India’s largest trading partner in FY25-26. The value of India’s total trade with China is around $151 billion, with a trade deficit of about $112 billion (vs total trade of about $140 billion with the US).

+ India’s forex reserves rose by $3.83 billion to $700.95 billion in the week that ended on 10 April.

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 lasted from 1861 to 1865.

One half of America fought the other half of the country.

It had only been a few decades since trains had come into existence. Their expansion had started in the UK and soon they arrived in the US.

Unlike the UK, the USA was a much more vast country.

Population density was lower, but so was the potential for growth.

Gradually, the railroads started getting built. They were mostly localized, built by companies operating them.

The Civil War brought their true role to the forefront. The trains proved their worth transporting troops and equipment.

Ultimately, the North won. Their railway network played a key role.

Railway Boom

During the war, the US government understood the value of having a superior rail network.

In 1862, they passed the Pacific Railway Act.

The act facilitated the first transcontinental railway line. The railway line that would start on the East Coast and run till the West Coast of the USA.

The US government had funded the Civil War using war bonds. The bonds were offered to investors by the government as an investment option. The bonds were backed by the US government.

It worked well.

Since a lot of money was being raised by the government for the war, lots of bonds were available. The Civil War bonds popularised the idea of investing in bonds among individual citizens much more.

In that backdrop, offering railroad bonds seemed like a great idea.

Building railroads required vast amounts of land, iron, and manpower. Lots of money was needed again.

Railroad bonds became mainstream — somewhat like Civil War bonds.

But there was one key difference. War bonds were offered by the government of the US. Railway bonds were offered by private railroad companies.

Bonds

Bonds are essentially loans.

The bond issuer = the loan taker
The bond buyer/investor = the loan giver

So, if you buy a bond, you are giving a loan to the person giving you a bond.

A bond is a certificate. On the certificate, the bond issuer says that they promise to pay you a certain amount of interest and will return the borrowed amount by a certain date.

Coupon rate = interest rate
Maturity date = when it will be paid back
Principal = amount they are borrowing
Schedule = schedule of payment of interest & principal

And of course, the bond mentions the issuer’s details. In the case of the government of the USA, the bond issuer is the government itself.

If the issuer is a private company, then its name is mentioned.

The coupon rate or the interest rate is a crucial factor in the case of bonds.

Bonds promise to pay back the money along with interest. Fixed interest, fixed returns.

But can you trust the bond issuer’s words? Will they not cheat?

Even if they are well-intentioned, can they still fail and shut down?

These questions always arise when buying bonds.

No doubt, some bond issuers are more likely to pay, while some are less likely.

This is why the interest rate offered is different.

Bond issuers who are less likely to pay back (for whatever reason) offer a higher interest rate to compensate for the risk.

More stable and secure bond issuers offer lower interest rates.

Companies can fail, or worse, cheat. Governments can fail too.

The US government bond rates are some of the lowest in the world (in present times). They are considered incredibly reliable and stable.

Other countries’ government bonds usually have higher rates but are still considered pretty stable. India’s government bonds are also considered very stable.

Very large and diversified companies are also considered very reliable (though still less reliable than governments).

So, in short, higher risk, higher return.

Which many take to mean, guaranteed higher returns. The “risk” part of this gets ignored.

Why?

Probably because the bond certificate clearly mentions the interest rate and payment schedule.

There’s one more detail. Bonds can also be sold.

Let’s say you own a bond certificate. You can sell the bond to your friend for a price you want. Once sold, the bond certificate is your friend’s. All pending interest and maturity amount belong to that friend.

Just like stocks can be bought and sold, bonds can also be bought and sold on the exchanges (till they mature).

Railway Bonds

So, private companies are being helped by the US government.

The government wants more railroads to be built in the country. So they offer grants, land, and other such schemes to railway companies to encourage them to build railroads.

Unfortunately, this attracts problems of its own.

Seeing railroad lines come up in various parts of the country, individual investors turn very bullish.

They noticed how once a railroad and stations are built, the economy of the region changes for the better.

Movement of people and goods becomes easier, faster, and more convenient.

When the initial few railroad bonds started maturing, early investors got the lucrative returns they were promised by the bonds.

Couple this observation with the recent success of government-issued war bonds, and bonds start seeming more and more irresistible.

Seeing success stories around them, more investors wanted to invest in railroad bonds.

And this is where more railroads started being built. Once companies ran out of routes to build on, they moved to less populated areas. The future traffic was assumed to be high.

Many of these assumptions were wrong.

But the funding was cyclical. Companies raised more money using bonds, to build more lines. But many of the lines were not profitable or lucrative.

The industry came to depend more on money raised via bonds, and less on its profits from operating railroads.

It became a vicious cycle.

The domino crashed when one of the biggest sellers of railroad bonds, Jay Cooke & Co, was unable to sell more railroad bonds in 1873.

Seeing this, panic set in. Investors rushed to sell off their railway bonds. This sell-off crashed the bond prices.

Since the bonds were not wanted anymore, railroad companies struggled to raise more money. They did not have enough money to pay interest. They started defaulting, and going bankrupt.

The contagion spread.

Banks started experiencing bank runs. Railroad companies started collapsing. The economy started stuttering. The impact was on all parts of the economy.

The impact was so massive, the US economy entered a depression that lasted about 6 years. It came to be known as the Panic of 1873.

Eventually, the economy of the US picked up again. Some of the earlier built railroads started to make money.

More lines started being built. Investors gradually started trusting railroad companies again — and slowly, they started buying railroad bonds again.

The period between 1850 and 1900 is called the Gilded Age. Most of America’s railways were built in this era.

Boom & Bust

Once something of this scale happens, one would imagine it would not repeat.

Unfortunately, history is filled with examples of this exact cycle repeating again and again.

A crisis happens.
Investors become cautious.
Bonds start giving reliable returns.
More investors flock to invest in bonds.
More bond issuers flock to issue bonds.
Caution is relaxed.
Bad quality bonds start being offered.
This builds.
Eventually, the bubble bursts.
And, a crisis happens.

The Panic of 1873 was not the first. There were many before it. There were many after it.

Some of the biggest financial crises across the world exhibit this trait.

Argentine Bond Crisis AKA Baring Crisis (1890)
Great Depression (1929)
Asian Financial Crisis (1997)
Global Financial Crisis (2008)

These are some of the most talked about examples.

But these are not the only ones. There are many many more such examples on much smaller scales (thankfully).

It appears that investors tend to assume that all bond issuers are the same; that promised returns will always be paid.

It almost seems like investors don’t differentiate between bonds issued by the likes of the US government and those that are issued by companies with questionable track records.

The past cycles show us the same repeating pattern.

Whenever investors lowered their caution to chase after higher returns, things have not worked well for long.

Quick Takes

+ India’s composite PMI (manufacturing + services) fell to 57 in March (vs 58.9 in Feb). Services PMI fell to 57.5 (vs 58.1 in Feb). This means overall economic activity grew more in Feb than in March.

+ The government doubled the daily allocation of 5 kg Free Trade LPG cylinders for migrant labourers in each state beyond the earlier 20% limit, based on demand. Natural gas supply to industrial and commercial sector networks has been increased by 10% to meet rising demand.

+ Zepto received in-principle approval from SEBI for an IPO: as per media sources.

+ The US and Iran agreed to a 2-week ceasefire after more than a month of military conflict.

+ The RBI kept the repo rate unchanged at 5.25%.

+ The government approved Rs 26,069.50 crore for construction of Kamala hydro electric project in Kamle, Kra Daadi & Kurung Kumey districts of Arunachal Pradesh. It also approved Rs 14,105 crore for a 1200 MW Kalai-II hydro electric project in the state’s Anjaw district.

+ An Indian delegation will visit the US capital later in the month to discuss the trade deal which was put on hold due to the US-Iran conflict. India also announced the launch of the India-USA Trade Facilitation Portal to boost ties between the countries.

+ The government announced relief measures for domestic airlines, including a 25% cut in landing and parking charges for three months to reduce operational costs amid global disruptions.

+ India’s forex reserves rose by $9.06 billion to $697.12 billion in the week that ended on 3 April.

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 was once a bustling trading city — 2000 years ago.

Trade shifted, times changed, the city declined.

A horrible earthquake effectively wiped out the city. Most homes, administrative buildings, and such perished.

But nothing happened to the buildings carved in the red sandstone. Those structures still stand today, drawing tourists from all over the world.

Why?

Carved out of one rock.

A single piece of rock is stronger than anything built by joining together many rocks.

Similar examples of ultra strong buildings can be found across the world.

In India, the 1200-year old Kailasa Temple is one such. It still stands. Other structures around it came and crumbled.

Designers and engineers have been fascinated by this idea for a long time. Manufacturing techniques and costs have held them back.

Around 2008, Apple decided that its new laptop would have a unibody frame.

Until then, all laptops were a sandwich design. Multiple different parts were screwed together to make the frame.

Apple wanted their frame to be carved out of one block of aluminum alloy.

The challenge was that nobody had the capability to do this job at scale. This kind of a job requires specialised CNC machines.

And that was not it. It required skilled technicians who could operate them fast enough. Lots of such technicians.

Apple was working with many vendors. Apple did the design. The vendors did the actual manufacturing.

One relatively new vendor had grown to become a particular favourite of Apple’s. They had made a mark manufacturing the iPod.

Foxconn.

When the requirement arose, Apple and Foxconn went about acquiring CNC machines.

This effectively meant that the only companies that could make these CNC machines had their order books full for months. Apple’s competitors wouldn’t be able to get their hands on these CNC machines for some time.

Foxconn rapidly trained staff to work on these CNC machines and began churning out unibody Macbooks.

This made Macbooks incredibly light, yet strong, and better at heat management.

Seeing the unibody design work well, Apple introduced the unibody frame to the iPhone 5 and beyond.

Only Foxconn had the large-scale capability to manufacture unibody frames.

This was not the first time or last time Apple had relied on Foxconn to pump out pioneering technology by the hundreds of thousands.

Foxconn has been vital to Apple’s product strategy.

Foxconn was one of the biggest reasons why Steve Jobs had once said that making the iPhone in the US was not going to happen.

Foxconn Scale

Longhua Science and Technology Park is often called Foxconn city.

The Foxconn campus is so large, it has its own hospital, fire department, sports center, library, banks, etc.

At any given time, it can house 3-5 lakh workers.

Foxconn city is centered around manufacturing. Inside the campus are multiple factories dedicated to making different devices for different brands.

Yes, Apple is Foxconn’s biggest customer. But they are certainly not the only client Foxconn serves.

Sony Playstation and phones are made by Foxconn.

Microsoft Surface tablets, Pixel, Xiaomi, Huawei, Motorola, OnePlus are some of the other brands that get their devices made by Foxconn.

Foxconn is so vital to companies that many features become possible only after Foxconn is able to make and assemble them.

This campus can output lakhs of iPhones per day.

Not just entire devices, Foxconn also makes parts of devices that are sent to other factories to be assembled.

Foxconn isn’t just about manufacturing phones or tablets or laptops.

They are about manufacturing, period.

They make phones, tablets, laptops, gaming consoles, servers, networking devices, routers, etc.

Components like PCBs, display panels, battery cells and cases, cooling solutions, etc. are also done by them.

This ever-expanding list goes on — they’ve started manufacturing electric cars too.

In the early 2010s, it was said that 40% of all consumer electronics in the world were made by Foxconn — not just iPhones; not just phones.

Yet, most people have not heard of them. For the longest time, Foxconn was a manufacturer to other brands.

There was no ‘Foxconn’ branded consumer device.

In more recent years, Foxconn has bought other brands and has products that are effectively Foxconn products.

If you recently bought a TV by Sharp, you’re buying from a Foxconn-owned brand. If you bought a dongle or USB charger branded ‘Belkin’, you’re buying directly from Foxconn.

History and Beginnings

Foxconn has extremely basic origins.

Today it is categorized as an EMS or Electronics Manufacturing Services company. But that was not how it started.

Terry Gou founded Hon Hai Plastics Corporation in Taiwan in 1974. This later became Foxconn.

He had 10 elderly workers and they manufactured plastic knobs for black-and-white TVs. Not the entire TV, just the plastic knobs people turn to change the volume or channel.

A few years later, they landed a contract manufacturing joysticks for Atari.

Terry Gou spent year after year building capacity to manufacture rapidly and at scale.

Electronics companies back then were focussed on R&D of newer products. Manufacturing seemed like a blindspot in their planning.

Determined to keep scaling, Terry Gou spent months doing road trips around the US. He would simply turn up at companies’ offices asking for a meeting with the leadership.

He was often kicked out by security. Sometimes, he would land a meeting.

And some of those meetings would translate to manufacturing contracts.

From something as basic as plastic knobs in the 1970s. They moved into other plastic parts from that.

Then, they started making connectors in the 1980s and wire assemblies.

In the late 1980s, Foxconn started opening factories in China helping it scale rapidly by taking advantage of a large number of low-salaried skilled workers.

In the 1990s, they were making laptop frames. Towards the end of the 1990s, they started assembling components into the computer frames.

Their big break came when Apple asked them to manufacture the iMac G3 computer.

The partnership grew from there.

Speed, Scale, and Capability

Before the first iPhone was launched, Steve Jobs was testing the iPhone and noticed a major flaw.

The screen was easily getting scratched when kept with keys in the pocket.

He decided the screen could not be made of plastic. It had to be glass.

This was in May-June 2007. The launch was due in June 2007. They struck a deal with the glass-making company.

The glass arrived at Foxconn’s factory a few weeks before the phone’s launch.

Foxconn was able to retool the assembly lines in just 4 days. It started pushing out 10,000 iPhones per day — saving Apple the embarrassment of a delayed launch.

Foxconn is excellent at doing this.

They can make very sophisticated things, very fast, in high numbers.

The MegaCorp

At one point, nearly 90% of all of Foxconn’s earnings came from its plants located in China.

During the peak of pandemic lockdowns, Shenzhen was completely shut down. China was following a complete lockdown model.

Foxconn’s factory wasn’t able to ship out any products.

Terry Gou apparently wrote to the Chinese government to let the plants become active again. He claimed the company would lose market share irreversibly if the plants did not restart.

They were able to restart. This is probably a good demonstration of just how significant Foxconn is.

Foxconn has since started expanding in other parts of the world.

India is one of Foxconn’s biggest projects outside China.

As of writing this, about 25% of all iPhones in the world are made in India.

Besides India, Foxconn has also expanded into Vietnam, Malaysia, Thailand, Mexico, and on a smaller scale, even in Europe and the Americas.

The company today is worth about $72 billion.

Its revenue is greater than many countries’ GDP (over $200 billion), with earnings of around $6 billion.

Foxconn isn’t one of a kind. There are many like it — EMS companies.

Brands mostly rely on a handful of EMS companies to make their products.

Apple itself relies on Foxconn’s major competitors like Pegatron and Wistron.

Smaller competitors are also cropping up. We have a few such competitors right here in India — Dixon Tech and Keynes Technology are examples.

But when it comes to size and scale, the second biggest competitor, Pegatron, is a fraction of what Foxconn is.

Foxconn remains indispensable to the world’s electronics supply.

Quick Takes

+ India’s industrial production rose 5.2% year-on-year in Feb (vs 5.1% in Jan).

+ The Central Mine Planning and Design Institute Ltd IPO listed on the stock exchanges at a discount of 6.98% over the issue price and closed 10.43% down at the end of the day.

+ The Ministry of Defence signed a contract worth Rs 1,950 crore with Bharat Electronics to procure indigenous mountain radars for the Indian Air Force.

+ India’s net GST collections rose 8.2% year-on-year in March to Rs 1.78 lakh crore. Gross GST collections grew 8.8%, crossing 2 lakh crore rupees.

+ The government has introduced a temporary one-time relief allowing SEZ (Special Economic Zone) units to sell manufactured goods in the domestic market at concessional customs duty rates to ease global trade disruptions, with a minimum 20% value addition requirement and a cap of 30% of export value.

+ India’s manufacturing PMI fell to 53.9 in March (vs 56.9 in Feb). This means manufacturing activity grew less in March than in Feb.

+ State-run Oil Marketing Companies (OMCs) raised the prices of commercial cylinders in metro cities by around Rs 200 from 1 April as the Saudi Contract Price (the global benchmark for LPG) rose 44% due to the continued conflict in West Asia.

+ Powerica IPO listed on the stock exchanges at a discount of 7.34% to the issue price and closed 1.27% down at the end of the day.

+ India’s forex reserves fell by $10.29 billion to $688.06 billion in the week that ended on 27 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

Attempts to kill key nuclear scientists in Iran are not unheard of.

The West absolutely did not want Iran to develop nuclear weapons.

Their intelligence agencies were hard at work to prevent Iran from making nuclear bombs.

Iran is in a neighbourhood where lots of countries dislike each other. If one of them got nuclear weapons, others would also start their own nuclear programs.

The West did not want this at all.

In fact, nuclear armed nations do not want more countries to become nuclear armed.

Iran wanted nuclear arms. Why?

Because they heard Iraq was developing its own nuclear bomb. A war between Iran and Iraq in the 1980s convinced Iran of the desperate need for a nuclear bomb.

The West had been clamping down on Iran via economic sanctions. Any company found dealing with Iranian companies would have to suffer.

At first, it was mostly the West who were against the Iranians.

In 2002, when it came to light that Iran was working on nuclear bombs, the world got together and isolated Iran.

Economically cut off, Iran couldn’t do a lot of business with others. Its growth was greatly slowed.

The Situation

Now, we cannot go into the history of how, what, when, and if in this article. This isn’t about that at all.

What this is about is the situation the world had, and how it was dealt with.

How two different key figures saw this. And what they thought was the right way to deal with Iran.

The situation the world faced in the 2010s is this: Iran was developing nuclear weapons. Many countries knew it. And most countries were against it.

America’s president around this time was Barack Obama. He was under pressure to deal with the situation; to do something about it.

He did what he thought was right. He signed a historic deal with Iran in 2015.

Only 3 years later, the new US president, Donald Trump, came and threw that deal out of the window.

Uranium Enrichment

We have all heard that uranium is the raw material needed for nuclear power and bombs.

To proceed, we will have to understand uranium a bit more. So, here goes.

There are two types of uranium (isotopes). There’s U-238 and there’s U-235.

Naturally, 99.3% of uranium is made up of about U-238. The remaining 0.7% is U-235.

You can probably guess where we’re going with this — U-238 is not useful in this case.

For nuclear purposes, U-235 is what’s needed.

But 0.7% of U-235 is too low. So they have to increase the concentration of U-235. The process of increasing concentration is called enrichment. Uranium enrichment.

Once U-235 reaches ~4%, it can be used for nuclear power generation.

At 20%, it becomes useful in medical research and treatment.

For weapons, it needs to be above 90%.

Enrichment is not easy. Uranium is first turned into gas. Then it is put into spinning tubes (centrifuge). The spinning causes the U-235 to be concentrated in the centre. This can be extracted carefully.

But, one round of doing this only improves the concentration very slightly.

So they run multiple centrifuges, one after the other.

Hundreds or thousands of centrifuges are required to run constantly to enrich uranium. Even to enrich uranium to use in power plants can take a few years for countries who don’t have the infrastructure.

Back to The Situation

In the late 2010s, Iran was sitting on enough enriched uranium to run power plants (~4% enriched uranium).

It even supposedly had some medical grade uranium (~20% enriched uranium).

This scared the West. Panic set in.

Since Iran was sitting on so many tons of enriched uranium, they were close enough to enriching some of it further and getting enough weapons grade uranium (~90% enriched uranium).

The US president at that time, Barack Obama, felt the need to do something about the situation.

Obama’s Solution

Away from the public eye, the Obama administration started talks with the Iranian administration.

The talks lasted about 2 years. Through various ups and downs, they reached terms both sides agreed upon.

JCPOA or Joint Comprehensive Plan of Action had many details. But the summary of it was this:

+Iran would not enrich uranium to more than ~4% required for power generation
+Iran would not reduce the total enriched uranium it had at any time
+Iran would also reduce the total number of enrichment centrifuges it had

There were many more details. But these were the biggest takeaways.

Using these methods, Obama wanted to prevent Iran from reaching a stage where it could easily and quickly make a nuclear bomb.

The most critical part of this deal was that many of these restrictions had a sunset clause.

Which meant the restrictions were in place for a fixed period (15 years, 25 years, etc).

They signed the JCPOA deal on 14th July 2015.

Obama The Lawyer

Obama seemed to lean much more towards diplomacy and talks.

Much before Obama became president, he made a speech in 2002 that had made him famous across the USA. The line to take away was, “I am not opposed to all wars. I am just opposed to dumb wars”.

This was right in the thick of the US-Iraq conflict.

He spoke about the challenges of having wars running unnecessarily wasting money and resources.

He was deeply critical of the Washington style of dragging the US into long conflicts, especially in the Middle East.

Obama grew up outside the mainland US and got a chance to understand how the world viewed the US.

He became a lawyer who championed civil rights.

One of the deals he is most famous for (before he became president) happened when he was in his 20s.

A public housing project had an asbestos problem. The authority that was responsible was famous for being corrupt and unresponsive.

Obama carefully coordinated meetings between the officials and the residents where he forced the officials to answer questions from the residents.

These questions were specifically about the asbestos.

He was extremely logical and fact based in his approach.

Using evidence, and direct discussion between both parties, he was able to get the authorities to start work towards solving the asbestos problem.

Trump’s Counter

On May 8, 2018, US president Trump pulled back from the deal with Iran.

Trump had a few counter arguments. He called it a “disastrous one-sided” deal.

His biggest opposition was to the sunset clause. That is, what happens after 15 years or so when each clause no longer applies?

Many key restrictions had such sunset clauses, including the number of centrifuges they could have, the enriched uranium they could keep, etc.

In short, he argued that the deal only delayed Iran’s nuclear bomb plans, not prevented the development of the bomb entirely.

Trump was also critical of the fact that the deal did not address Iran’s missile programs (the delivery mechanism of the nuclear bombs).

He had more concerns beyond these.

Trump was sure he could get Iran to sign a better deal. That was his signature move: he championed himself as an excellent deal maker.

Obama actually countered what Trump said.

He was of the opinion that the sunset clauses bought America time to further negotiate and normalise ties with Iran.

He also fought back saying the most crucial part — that of not developing weapons — had no sunset clause.

Since Iran was suffering due to economic sanctions, they wanted to trade more with the world. And hence, Obama was of the opinion that they too wanted some sort of a deal.

Trump The Realtor

Donald Trump was the son of a realtor from New York state.

Already wealthy while growing up, Trump grew up with a deal-making philosophy very different from Obama’s.

While Obama was looking for the middle-ground in the deal, Trump believed in a more aggressive approach.

His style was to “win” a deal. He did not like a balanced deal where both sides walked away equally satisfied. That was not winning the deal.

One of Trump’s most famous deals was of that nature.

There was an abandoned hotel in central Manhattan that was an eyesore. The local government was desperate to have it up and running.

Trump did not have enough money to buy the hotel but he convinced the city that he had enough money to buy it.

On the other side, he convinced the owners of the property that he had “special right” that would enable him to turn the hotel around and operate it.

Then, he used that to negotiate with the city. He got a 40-year tax break from the city. This was unheard of in that period.

It established Donald Trump as a real estate mogul in the city.

Trump is well known for his pressure tactics and attempts to “win” at deals.

The Person

If there’s anything to learn from this, it is that no matter how much democracy we have, we will still be dependent on individual figures.

America is a democratic country that elects its president every 4 years.

And yet, we see that the person who gets elected has a disproportionate impact on the decisions being made.

Some of the biggest and most impactful decisions are made by individuals.

And those individuals have their own reasons and biases for acting in the ways we do.

Whenever we try to get a picture of what a person might do, it makes sense to look at what they have done earlier.

Quick Takes

+ The RBI has injected Rs 79,256 crore of liquidity into the banking system through an overnight variable rate repo auction to ease tightening cash conditions in the financial markets.

+ India’s composite PMI (manufacturing + services) fell to almost a 3 year low of 56.5 in March (vs 58.9 in Feb) as per preliminary estimates. Manufacturing PMI fell to 53.8 (vs 56.9 in Feb). Services PMI fell to 57.2 (vs 58.1 in Feb). This means economic activity grew significantly less in March than in Feb.

+ The government has approved a Rs 28,840 crore Modified UDAN scheme to improve regional air connectivity. The plan includes developing 100 airports and 200 helipads.

+ The government has approved Rs 1,800 crore to extend the immigration and visa system (IVFRT) for 5 years till March 2031 to make visa processing faster and more digital.

+ India has approved new climate targets aiming to cut emissions intensity by 47% and increase clean energy share to 60% by 2035.

+ The government has reduced excise duty on petrol and diesel by Rs 10/litre. The fuel prices won’t change, as the duty reduction is to accommodate underrecoveries by fuel companies.

+ The Defence Acquisition Council (DAC) has cleared equipment procurement proposals worth Rs 2.38 lakh crore for the Indian Armed Forces.

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

Team Groww Digest