"When my cats aren't
happy, I'm not happy. Not because I care about their mood but because I know
they're just sitting there thinking up ways to get even."
—Percy Bysshe Shelley
(English, 1792-1822)
Word
for the day
Conciliate (v)
To overcome the distrust or hostility of; placate; win over: to conciliate an angry competitor.
Malice
towards none
After denying Sahara Shri
any reasonable opportunity to get out of jail, now SC appears to be trying hard
to keep him out of jail!
First random thought this morning
The State Assembly elections in UP are always interesting. In post
Congress era (1989-current) UP has seen Janta Dal, SP, BSP and BJP in power,
either alone or in coalition.
2017 elections promise to be equally interesting. With 71/80 seats
in Lok Sabha from the State, BJP has taken the position of primary
defendant. SP is also a defendant being the party ruling since 2012. INC is
defending its choice of leadership. BSP is defending its position as the
principal opposition party, and therefore a natural claimant of power if people
vote for a change. JDU & RLD are marginal forces in the State.
The moot point is who is the challenger to CM Akhilesh Yadav?
Strategy for post GST era
After a decade long political scrutiny, the constitutional amendment bill that would enable implementation of a uniform nationwide indirect tax (GST) over next decade or so, is just few inches away from becoming a reality.
Regardless of the differences
amongst various stakeholders with regard to the rate structure, and rights and
obligations of the proposed GST council; the tax reform appears all set for
implementation sometime in the next two years.
As state last week "The
economic paradigm shifts with each progressive reform. The businesses,
investors and consumers need to fully assimilate it and adapt to the new
regime. Those who fail to adapt to the changed reality fast, run the risk of
becoming redundant under the new economic paradigm". (see here)
It is therefore pertinent that I
review my investment strategy to assimilate the changes that would occur due to
GST implementation.
The conventional wisdom suggests
that the following factors could majorly impact the performance of companies:
(a) The opportunity for tax evasion may diminish considerably, making
many unorganized sector businesses unviable. This should help the competing
large organized sector businesses gaining market share at the expense of
fragmented smaller players. Players with material underutilized capacity,
strong brands and market leadership will naturally be in a better position to
take advantage of the opportunity. Consumer electronics, packaged/processed
food, auto ancillary, textile, garments & footwear, and paints, lubes &
chemicals are some of the areas where tax incidence is material and the market
is fragmented with dominant share of unorganized sector.
(b) There could be a wave of M&A deals, as the smaller units find
it tough to survive under the new regime. The larger companies with stronger
balance sheets could take advantage of this round of consolidation to deepen
their market penetration.
(c) We may see serious rise in road traffic within 3years of GST implementation,
as road network improves further and Octroi check posts are demolished across
the nation.
(d) Building of supply chain, both in physical and virtual sense, is
one area that might attract maximum investment due to this change. Some
companies will benefit from capacity building in this area; the others are that
would benefit from the capex in capacity building.
(e) This change is not standalone development. This is accompanied by
a host of other developments aimed at standardizing the business &
compliance practices (ease of doing business) to attract the global investors
and businesses. On successful implementation of GST, we may see exponential
rise in competition for domestic players from the global businesses. I believe,
any business which is not globally competitive should not find place in my
portfolio....to continue
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