Category: Miscellaneous

27 Jan 2023 19:46

Joined:	20/04/2018
Level:	Gold
Points:	55771

Points:	5

Too much concentration of wealth does not help at times

One of the biggest Corporate groups in India is now under a cloud. An independent research agency, based in the USA, has published rather disturbing details of questionable deals done through stock market deals.

This particular group has grown exponentially in the past few years. The crash in stock prices has affected the market badly and since the allegations are mere allegations at this stage, the stock prices will stage a comeback. There is no doubt about that.

However, the staggering debts that the group has are one indication that one has to tread very cautiously when dealing with the stocks of this group. The famous SPIC group had a big downfall, only because of bad debts. A similar story happened with the Essar group, which has always grown only through debts.

The problem with this kind of development is also bound to affect the Mutual Funds, where crores of rupees of public money are already locked up. We need to understand that too much of concentration of wealth in a few hands, does not help at all.

#769091

28 Jan 2023 16:13

Joined:	02/06/2009
Level:	Diamond
Points:	145329

Points:	4

I agree with the title of the thread decided by the author. Too much concentration of money with few people is very dangerous and not good for the economy. The gap between the rich and the poor will be widened and that will be a problem for the economy of the country.
But if there are big corporates where good business is going on and many people are working there and many families may be living based on these corporates directly or indirectly. So if their assets are increasing. Is it to be called that too much concentration of money in few hands.?
The change in the prices of shares is very common and there will be always an element of risks involved in the investments in this instrument and the risk may be somewhat less with mutual funds.

drrao
always confident

#769092

28 Jan 2023 17:02

Joined:	25/11/2014
Level:	Diamond
Points:	43273

Points:	5

Too much concentration of wealth within the reach of limited people would certainly cause dis balance of the economy since in that way, the gap between rich and poor is bound to multiply. The economy should move such a way that even the downtrodden people have the access of the growing economy. Now take the case of Tata Group doing business in multiple activities absorbing lakhs of people. This group takes care of their employees so that they remain comfortable in terms of perks and other incentives apart from excellent facilities for hospitals and schools for their employees. The surrounded villages have the electrification and road maintenance facilities undertaken by this organisation. Though this company is a privately managed company but the care and attachment shown by this company is unparalleled. They believe in overall growth of the society. Hence the entire workforce with this organisation have the potentials of churning out best graduates in the areas of management, engineering, medicals apart from ordinary graduates and other technicians. Entire private group should follow the strategies of Tata Group to give a new momentum in the economy.
We are not talking about the behaviour of share markets which might move erratically sometimes and so is the case of mutual funds. Rise and fall of share market is common and is not the indices of our real wealth.

#769099

28 Jan 2023 23:44

Joined:	10/07/2018
Level:	Gold
Points:	33389

Points:	4 (₹ 2)

I would request the author to clarify what he is trying to say through this post. There is a warning in the post about remaining cautious while investing in stocks of a group as there is news of questionable deals in that group. Is it a warning about investing in this group only or a general warning to remain cautious while investing in stock markets? I feel one always needs to trade cautiously in the equity market. A clarification is also required regarding the "concentration of wealth in a few hands".

Sankalan

"Life is easier when you enjoy what you do"

#769106

29 Jan 2023 11:33

Joined:	04/05/2009
Level:	Gold
Points:	31212

Points:	1

The author is correct. We are daily seeing people with a good volume of money cannot eat as they please because of their health disorders. In one Tamil cinema, hero doctor advised a rich person to have porridge daily and prescribed a poor person to have an apple daily. Both of them come to the compounder for medicines and annoying themselves on the advise of doctor. Compounder, comedy actor, console them as," both of you do not worry. Rich one can give apple to the poor and poor can offer his porridge to rich one". Though this is comedy, there is an equality and sufferings of rich with inability of eating as he pleased though possessed a good volume of money.
Moreover much concentration of wealth leads them to the worry of taxation etc., and pollute their mind by directing to other ways of hiding or avoiding taxation. Thereby their mental worry increases day by day.

#769133

30 Jan 2023 13:24

Joined:	20/04/2018
Level:	Gold
Points:	55771

Points:	1

Mr. Battacharya, kindly notes that in this present case, close to at least Rs.89,000 crores or even more is money that really belongs to the public. The group is reeling under huge debts. There are reports that LIC and State Bank of India, both of which are public sector institutions holding your money and mine, will report far fewer profits. There is no doubt that some dealings of this conglomerate have to be investigated through SEBI.

There is no smoke without fire. Since mutual funds are also involved in this game, wherever they had purchased large volumes of this conglomerate's companies, they will also be affected. Any guy who has invested Rs.5000 would lose a substantial amount if it is a growth scheme. Recession is around the corner, and we all know what happened to Mutual Funds, in the year 2008, when there was a big financial meltdown in the USA.

That this conglomerate has grown so rapidly and its share values have been inflated so much in recent times, should ring a bell. It is emerging as one of the biggest monopolies with ports, airports, and huge other businesses within its control. This is absolutely ridiculous and dangerous for the economy. And everyone in India knows who supports this big group.

This is exactly what I sought to emphasize. Read the thread again. Nowhere have I mentioned anything about investing or not investing in this group. You should understand that a fall in the stock markets will affect the general sentiment and the crash can be very harsh for individual investors. I mean those who play in the market with just Rs.25000 or less. I know at least ten who have now lost money.

I have not mentioned the name of the conglomerate. It is there in the news, everywhere.

#769148

30 Jan 2023 21:53

Joined:	10/07/2018
Level:	Gold
Points:	33389

Points:	4

ABSivakumar, even your response @#769133 couldn't clarify the "concentration of wealth in a few hands" in terms of mutual funds/equity markets. Your response only indicates how a specific group flourished so rapidly and how it is dangerous for the economy. Haven't you mentioned on cautious investment in that specific group in the thread?

I am quoting a sentence from the thread that will speak for itself. "However, the staggering debts that the group has are one indication that one has to tread very cautiously when dealing with the stocks of this group". Doesn't it urge the readers to invest cautiously in this group's stock? Rather than responding to the issues related to a specific group, it would be better if the title relates to the content of the post.

Sankalan

"Life is easier when you enjoy what you do"

#769156

31 Jan 2023 16:21

Joined:	20/04/2018
Level:	Gold
Points:	55771

Points:	1

Ok. Granted. Let us take each stock. What has happened in the past five days is well known to all.

The stock values of the six traded companies have taken a huge beating. So, a fellow with say Rs2 lakh rupees in his pocket might be tempted to buy stocks of these companies since the prices are very low.

Now, look at the report published by the USA research organization. Now, Mr.Bhattacharya, there are economic experts, much more qualified than I am, who are on record that it is wise to stay away from the stocks of this group.

Now, there is a counter argument that money laundering was previously done as well. Mauritius is ons country considered a tax heaven. The conglomerate now under a fraud cloud is accused of starting hundreds or may be thousands of she'll companies where money laundering has taken place. Which means black money has been converted into white money.

Now, if Zee had done it, Vijay Mallaya had done it, there is no reason why this character, whose stock multiplied by 890 times, should also do it.

The TVS group and the Murugappa group of Chennai are highly ethical companies. Infosys and Wipro from Bangalore and the massive TATA group are well known for their ethical standards. Most of these companies have rewarded their shareholders quite well. TVS Motors is a Public Linited Company. Sundaram Finance is a highly ethical company quoted on the Stock Exchange.

On the contrary, we have this Conglomerate virtually loading over most of Corporate India. Ports, Cement, Power, and even Media. And now with huge debts.

Even the Ambanis seem to be more ethical than this group, that has milked it's political connections. But the truth will always shine. Do you know that as on date, Shri Azim Premji has donated at least 2000 crores of his personal wealth in supporting noble causes? We live in a country of two extremes.

Let the public stay away from anyone who is not worthy of any sympathy, since the particular conglomerate has no answer to fabulous research.

We just have to remember that it is possible to cheat some people for some time, but not possible to cheat to cheat all the people all the time.

Too much concentration of wealth does not help at times

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