This week, we talk about Savitri Jindal and how, in 2023, her wealth grew faster than the likes of Mukesh Ambani and Gautam Adani. We also talk about India’s rising debt and what the IMF has to say on it, and how the government passed key bills amid a record number of suspensions from India’s parliament.
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Among the Hindu pantheon of gods and goddesses, Lakshmi holds an enviable position. She is the goddess of wealth, power, fortune, beauty and prosperity.
And yet, few Indian women, if any, ever top the country’s rich lists. Savitri Jindal changed that this week, at least to some extent, as she became the fifth wealthiest person in the country.
But that is not even the most significant metric that India Inc should be excited about. Citing the Bloomberg Billionaires Index, reports said that Jindal, who heads the OP Jindal Group, has seen the highest rise in her net worth among India’s richest over the past calendar year, with her fortune swelling by $9.6 billion. Jindal’s total wealth now stands at around $25 billion, putting her ahead of Wipro’s Azim Premji, who is worth $24 billion.
Reliance’s Mukesh Ambani remains the richest Indian, although his net worth grew by just $5 billion, to top $92 billion.
Gautam Adani, the promoter of the eponymous Adani Group, saw his net worth decline sharply by $34.5 billion, to $85.1 billion, although he remained the second richest Indian on the list.
The OP Jindal Group was set up by Savitri’s husband, the late OP Jindal, a Haryana-based businessman. The group owns listed companies such as JSW Steel, Jindal Steel and Power, JSW Energy, JSW Saw, Jindal Stainless and JSW Holdings.
So, who were the others who saw their net worth grow during the year? HCL’S Shiv Nadar added about $8 billion, while DLF’s KP Singh ended up richer by $7 billion. Kumar Mangalam Birla and Shapoor Mistry added $6.3 billion each. The other names on the list were MP Lodha, Sunil Bharti Mittal, Dilip Shanghvi and Ravi Jaipuria.
All this talk about the rich adding billions to their net worth is all very well. But have you calculated how much you added to your net worth over the past 12 months?
Deeper in debt
While wealthy Indians may be getting wealthier, the Indian government seems to be getting neck deep in debt, or at least that is what the International Monetary Fund (IMF) has said, and warned India’s policymakers against.
The IMF has warned that India’s general government debt may exceed 100% of gross domestic product (GDP) in the medium term, adding that long-term risks are high because the country needs considerable investment to improve resilience to climate stresses and natural disasters.
“This suggests that new and preferably concessional sources of financing are needed, as well as greater private sector investment and carbon pricing or equivalent mechanism,” the IMF said in a report.
The Indian government disagreed with the IMF’s assessment and said its sovereign debt risks are limited as it is mainly denominated in domestic currency.
K.V. Subramanian, India’s executive director at the IMF, said the IMF’s assertion that the baseline carries the risk that debt would exceed 100% of GDP in the medium term in the event of shocks which India has experienced historically sounds extreme.
“The same can be said of the staff prognosis that debt sustainability risks are high in the long term. The risks from sovereign debt are very limited as it is predominantly denominated in domestic currency. Despite the multitude of shocks, the global economy has faced in the past two decades, India’s public debt-to-GDP ratio at the general government level has barely increased from 81% in 2005-06 to 84% in 2021-22, and back to 81% in 2022-23,” he said.
Moreover, the IMF has also reclassified India’s exchange rate regime to “stabilised arrangement,” but India disputes this, emphasising the importance of exchange rate flexibility.
Having said that, the IMF gave a fairly optimistic outlook for India’s economy, saying it has the potential to grow faster than the fund’s forecast of 6.3% in the current and next fiscal years if the government undertakes key structural reforms.
To be sure, the government has been trying to bring down the public debt, finance minister Nirmala Sitharaman said in October. The central government’s debt stood at Rs 155.6 trillion, or 57.1% of GDP, at the end of March 2023. During the same period, the debt of state governments stood at about 28% of GDP.
The IMF also said that India needs “ambitious” fiscal consolidation over the medium term in order to curb its public debt. Indeed, India faces challenges in enhancing its credit ratings due to elevated debt levels and the substantial cost associated with servicing that debt. In fact, global credit rating agencies Fitch, S&P and Moody’s have the lowest investment-grade rating on India.
Burman-Religare tussle
Meanwhile, the country’s market regulator, the Securities and Exchange Board of India (SEBI), is reportedly inquiring into the open offer made by Religare’s biggest shareholder, the Burman family (that also promotes Dabur), to public shareholders of the financial services firm, which led to a spat with the current management.
According to media reports, SEBI has asked Religare for “complete details and sequence of events, starting from the time of first discussion regarding the open offer transaction till the stock exchange announcement dated September 25, 2023.” It has also sought personal and official details of all the persons involved in discussions, along with “documentary evidence.”
The regulator has also reportedly asked for the Burmans’ shareholding in Religare from 1 January 2018, till date.
The Burman family first invested in Religare by subscribing to share warrants, representing a stake of about 10%. The share warrants were subsequently converted into equity. They then increased their stake in Religare to about 22% and subsequently announced a proposal to acquire 5% of the company’s shares from the secondary market, as well as an open offer for an additional 26%. An open offer has to be made once the holding exceeds 25%, under the takeover code.
SEBI has reportedly also sought information of all trading activities by designated persons – employees, directors and others – in Religare stock including employee stock options (Esops) that have been exercised.
The Burmans have alleged that Religare chairperson Rashmi Saluja sold a portion of her personal holdings in the company soon after a meeting with one of their representatives, at which she was told of the open offer plan. The family has also written to Sebi and the stock exchanges, seeking a probe into Saluja’s trades.
New laws
Unprecedented events have been taking place in India’s parliament over the past couple of weeks. A record number of 141 members from both the houses were suspended after they heckled treasury benches and demanded statements from the home minister and the prime minister, following a massive security breach earlier in the month, exactly 22 years after India’s seat of democracy was attacked.
With nearly two-thirds of the opposition benches suspended, the government hurried through key legislations including the telecom bill and the post office bill as well as bills to reform the country’s criminal laws.
The telecom bill is controversial as it effectively grants the government the authority to temporarily take control of telecom services in the ‘interest of national security’. Under the passed legislation, the government can halt transmission and intercept messages ‘during public emergencies to prevent incitement for committing offences.’
The three bills on criminal laws also give the government wide ranging powers from expanding detention in police custody from the current 15-day limit to up to 90 days, bringing terror, corruption and organised crime under ordinary legislation for the first time to decriminalising homosexuality and adultery.
Market Wrap
To say that this was a volatile week in the Indian stock markets would be an understatement. Both the benchmark indices—the 50-share Nifty and the 30-stock Sensex—scaled new highs, during the week.
While the Sensex went past the 71,900 mark and came within kissing distance of 72,000, the Nifty climbed up above the 21,590 mark and looked set to breach the 22,000.
But then both the indices, as well as the broader markets saw a sharp correction, which, analysts said, was long overdue as the market had entered an overbought territory.
However, towards the end of the week, the market began climbing again. While the Nifty ended the week down just about 0.5%, the Sensex lost about 0.3% in the five trading days between Monday and Friday.
Nifty stocks that ended the week in the green included Coal India, Britannia, Hindalco, Tata Consumer, State Bank of India and ONGC. Others among the gainers were Reliance Industries, Tata Consultancy Services, LTIMindtree, NTPC, Asian Paints, Cipla and Infosys.
Among the Nifty losers in the week were two life insurance companies—HDFC Life and SBI Life, followed by Adani Ports & SEZ, Adani Enterprises, Tech Mahindra, Mahindra & Mahindra, Maruti, UPL, ICICI Bank, Axis Bank and Bajaj Finserv and Bajaj Finance.
Other headlines
- JSW Group chairman Sajjan Jindal accused of rape; business tycoon denies allegations
- Adani Green Energy plans to raise up to $1.5 billion via equity warrants, debt
- Flipkart in talks to raise $1 billion, Walmart commits $600 million
- Crisil downgrades Bandhan Bank’s NCDs on poor asset quality
- Sony to enter into negotiations with Zee to extend deadline for merger
- Govt to start giving performance-linked incentives for auto companies in FY25
- Allcargo Logistics and Allcargo Gati approve scheme for business restructuring
- Waaree Energies to build 3-GW module manufacturing facility in Texas
- Air passenger demand in December strongest since pandemic
- Japan’s MUFG to build India operations amid economic slowdown in China
- Donald Trump disqualified from 2024 ballot in Colorado, says court
- Bezos’ blue origin readies return to space after more than a year
That’s all for this week. Until next week, happy investing!
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