"My coming to
faith did not start with a leap but rather a series of staggers from what
seemed like one safe place to another."
—Anne Lamott (American, 1954)
Word
for the day
Whigmaleerie (n)
A whimsical or fanciful ornament or contrivance; gimmick.
Malice
towards none
Now you know why AAP is
running its publicity campaign on public money - It has no money left of its
own!
First random thought this morning
A Reuters headlines yesterday screamed "Naming of new RBI
chief shows Modi government regains composure after Rajan shock". It was
promptly carried out by the local media and discussed at various forum
including social media.
I wondered - "when did the government lost if composure over
the issue of extending the term of extant governor. It was the studio experts,
some celebrated markets experts and opposition leaders who lost their
composures and added sinister motives to the government decision.
All is not Well!
Target Corporation Inc of USA, one of the largest customers of
Welspun India terminated its business relationship with the Vendor alleging
that Welspun substituted Egyptian cotton with a cheaper variant of cotton while
supplying it bedsheets.
Reportedly, Wal-Mart Stores Inc, Welspun's third-biggest customer,
is also reviewing the company's cotton certification records, and if found
irregular, it may also consider cancelling the contracts with the company.
Welspun in a conference call on Monday stated that it was
investigating the product specification issue and would hire a Big Four
accountancy firm to review its supply processes. The company was evasive in
answering the specific queries and completely failed in assuring the investors.
Already two days have elapsed since the issue had first arisen.
However, we have not heard anything from the government authorities on this.
One may argue that it is purely a business matter and government
may not have any role in this. But I strongly disagree. I believe that these
kind of matters have serious implications for the economy and markets and
therefore require serious and prompt government intervention.
At this point in time we do not know if the allegations against
the company are true. Nonetheless, it is pertinent to consider the following
points in this regard:
(a) The company is one of
the leading exporters of the bad and bath linen from the country. It claims to
be exporting to over 50 countries. If the allegations against the company are
proven correct, it may seriously damage the image of other Indian exporters
also.
(b) As of end FY16 the
company has a net debt of over Rs2500cr and an annual interest outgo of over
Rs200cr. A contagion effect of Target Corp's action may lead to more order
cancellations, thus jeopardizing the debt servicing capabilities of the
company. We have seen similar instances in case of some diamond merchants. To
this extent it could be a systemic problem.
(c) The stock price of the
company has seen an erosion of ~38%, inflicting serious losses to its
investors.
(d) We are already
witnessing a serious quality assurance crisis in the pharmaceutical industry due
to callousness of a few players. We may not want this contagion to spread to
other industries also.
My simple point is that if our government is serious about its
Make in India mission, it needs to build a strong quality assurance and audit
mechanism to ensure that all manufacturing in and exports from the country
adhere to the top global standards.
We just cannot become a major manufacturing and export hub with our Jugaad
mindset - both inside and outside the government
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