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Deepak Shenoy Profile picture
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15 Jun, 5 tweets, 2 min read
Don't buy Videocon. The resolution plan is out. You will get ZERO rupees.
The NCLT order, now public, says this: First step, delist. Some mergers etc. later, fifth step: WRITE OFF ALL CAPITAL TO ZERO. NIL. (Images attached)

Again: YOU WILL LOSE ALL YOUR MONEY IN VIDEOCON SHARES.
Yesterday people were complaining how a rumour brought down Adani group shares.

Today when you have real news from a court that Videocon shares are going to zero, it's on Upper Circuit.

You gotta love markets.
I hate saying I told you so, but to add a colour of what happened at DHFL:
Thanks to bse and nse for suspending videocon today itself .

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More from @deepakshenoy

Deepak Shenoy Profile picture
15 Jun
Understanding India's bankruptcy laws needs more nuance. A company like Patanjali that takes loans on its own balance sheet to buy a Ruchi Soya, doesn't mean the banks are lending to Ruchi Soya.
Patanjali also has to pledge the Ruchi Soya shares it purchases, as part of that deal. Apart from those shares, there are corporate guarantees. If it doesn't service the loan, banks can sell the shares, if that's not enough, they should invoke the guarantee.
In general, any bankruptcy purchaser will want to fund the purchase partly by equity, partly by debt, and it's quite likely the same banks provide the debt; to them, it's actually a different borrower.
Read 4 tweets
Deepak Shenoy Profile picture
9 Jun
We decode the massive 512.5 cr. fine on Franklin Templeton, by SEBI in an order, on the debt funds that were shuttered unilaterally by the AMC in April 2020.

capitalmind.in/2021/06/decodi…
A few follow ups: We had posted in December on a thread about what action we hoped SEBI would take, and I'm glad to say that SEBI has been incredibly open and listened.
Our original post when the funds where shut: capitalmind.in/2020/04/the-fr…
Read 4 tweets
Deepak Shenoy Profile picture
7 Jun
Be careful if you hear tips asking you to buy DHFL. The nclt has approved the resolution plan, where I believe the plan is for the shares to be written off to zero. Piramal will then get new shares. Today's shares will have zero value, beware.
Please read: capitalmind.in/2020/12/a-dire…
Meanwhile, today, 21 lakh shares traded at upper circuit. This will do good as a coin - DHFLCOIN - and go to the moon. Image
Read 7 tweets
Deepak Shenoy Profile picture
30 May
There's some brouhaha about salaries of founders in a private company, so let me do a little thread about why it's still probably tax efficient to pay yourself through salaries versus other mechanisms.
The dividend is the least tax efficient mechanism now. The company earns Rs. 100, pays Rs.25 tax, and if it distributes the remaining 75, that can get taxed at 42.74% (highest tax bracket) so the founder gets Rs. 43 (Effectively 57% taxes)
Salary is better. The company earns Rs. 100, pays Rs. 100 as salary, founder pays 42.74% tax, company has no profit so it pays no tax (salary is deductible). Effective tax rate: 42.74%.

But the companies act restricts payouts to 10% of profit (you need govt permission for more)
Read 8 tweets
Deepak Shenoy Profile picture
27 May
RBI balance sheet: 4 lakh crores added this year to 57 lakh crores (this is around 25% of money supply - quite large) They pay 99,000 cr. mostly because they didn't need to make provisions.

Quick thread on the RBI accounts.
Income from interest came down to 69,000 cr. from 109000 cr. Due to two things: lower rates (on indian and foreign bonds) and banks having to get paid for reverse repo.
RBI didn't generate as much profit selling dollars as I had thought. Only 50,000 cr. versus 30,000 cr. last year. Overall, income fell from 1.49 lakh cr. to 1.33 lakh cr.
Read 11 tweets
Deepak Shenoy Profile picture
25 May
The RBI dividend is smaller than I thought, but it's good. The RBI is overcapitalized, it knows it, and I've pleaded for making accounting profits off the massive FX hoard for ages, and I'm super glad the RBI did some.

Forex markets are okay. 72.77 USDINR, near 2021 lows.
Also, there has been no REAL RBI selling. RBI bought, and then did a sell-buy swap. So the $580 billion is actually around $660 bn if you consider that they own $80bn forwards.
See how much the RBI bought this year - it's 50% more than any other year, if you include that whopping huge Forex forward exposure they own.
Read 8 tweets

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