Capital Carnival: Who’s Nibbling away my time Value?
I will pen down a few thoughts about the inefficiency costs of litigation in India and its consequent impact on the performance of listed equity. Further, we shall try to explore via a few case studies as to whether or not are there any Dead-weight losses associated with protracted litigation procedures and more importantly, we’ll try and find out whether it is the litigators who appropriate that DWL. Is an Out-of-court settlement a more practical/efficient outcome as far as business continuity and shareholder value is concerned. A part of this angst is also related to being a shareholder in some entities involved in litigation procedure in India. How do insolvency and illiquidity (both caused by escalated indebtedness and bad business cycles or exogenous factors like Covid-19) impact the fortunes of an indebted group, its employees wage receipt consistency and retrenchments. How do Credit Ratings function for entities embroiled in litigation procedures like the IBC and does that permanently damage their balance-sheet, making it an irrecoverable victim of stunted growth and ROCE (on account of a distorted WACC)?
I will try to deconstruct this via:
The 2G Spectrum allocation and the consequent fallout of 2010/11
The Coal Block confiscation and re-auction of 2015/16
The Debate around “ Interest on Interest”, Moratorium and Restructuring
The IBC and its victims
The tidings of Vodafone Idea
The business separation of the Ambani Brothers and what followed
Demonetisation, RERA and Benaami Act: The death of Real Estate in India
Spare a thought about Intra-Rate Cycle legal battles: Reddy’s Hikes to Rajan’s cuts
How has Demonetisation paralysed MSME Rating profiles and borrowing appetite for good and how Covid has interred whatever hope was left
Are Litigators acting as option writers and accruing long-term consistent income as a consequence of Judicial oversight and lack of priority for expeditiousness: All this at the cost of the Shareholder and Lender
Who will value the Time Value of Money in this Capital Carnival?
I’ll try to find an answer to all this in my prospective articles. All feedback is most welcome :)
