Important Article by Anil Selarka*
The Crude Oil prices dropped to below Zero for first time ever in last 100 years history which bodes beginning of bad days for Mukesh Ambani of Reliance Industries Ltd. and Indian Stocks. With troubles staring at Indian PSU Banks in the form of NPA with biggest ever bad debts emerging from Mukesh Ambani’s Reliance which is the largest capitalized company commanding over 14% of BSE/NSE weightage. He will also lose the coveted title of richest man in Asia and will also drop several steps in global billionaires club. TCS will be numero uno of Indian stocks.
**At the same time, the fortunes of Anil Ambani will revive slowly and steadily.** With huge drop in crude oil prices, the prices of natural gas will also cascade down materially, and his once nearly bankrupt company Reliance Power which was seeking to produce power from natural gas, that was denied to him after Mukesh backed out of 20 years long supply deal from Cauvery basin, which made the Anil Ambani’s power plants unviable.
Mukesh Ambani is heavily indebted with over ₹450,000 crores of debt. He sought to reduce enormous amount of debt by tying up with Saudi Arabia’s ARAMCO in $20 billion deal which did not materialise in time. At that time Crude Oil was ruling at $60 plus and now almost below $10 in futures trade and $20 below in physical market. His Saudi deal is now in limbo. **When Saudi Arabia is losing over $ 200 Million per day or $6 billion in one month, where is the question of expanding in India with Reliance Industries Ltd?**
**I would not be surprised his stock is downgraded to “Strong Sell” with future prices estimated below ₹400 against ₹1200 plus now.**
His JIO will be doomed, and other players like Bharati AIrtel and Vodafone Idea may begin to breath oxygen. Mukesh Ambani did manipulate Supreme Court by engineering heavily biased AGR judgement which imposed over ₹147,000 crores of liability on major Telco players like Bharati Airtel, Vodafone Idea, Tata Telecom, Reliance Telecom (of Anil Ambani) and levying only ₹195 crores to JIO Telecom! **He was penalized by God for his variety of Sins and Misdeeds. It is the solid theory of Karma.**
His recent exercise to raise ₹10,000 crores via NCD did not fructify with bids falling apart. He could get only ₹9,500 crores and that too at higher interest rate suggesting **Mukesh Ambani’s might has fallen substantially. His name is no longer selling.**
The huge drop in crude prices will also hurt producers like ONGC and Cains Energy (of Vedanta group). They might find difficult to find money even for salary. **They spent over ₹800 crores to built Sardar Patel statue, which can not be sold.**
**The refiners like BPCL, HPCL, IOC,Oil India, Gas Authority of India Ltd., Petonet will gain substantially.** It is also a great news for Modi government, which will be immensely benefited from very low import bill on crudes. However, it may raise Excise duty to deny Indian consumers of low prices.
The critical Industries like Auto and Airlines will benefit from lower cost of ATF or Airlines Turbine Fuel prices. These Airlines, who can also import ATF independently will receive huge boost in profitability when the market reopens for fresh booking. **Forget Electric Vehicles for at least 3 years. Forget also BS6 vehicles. All Rikshaw pullers and Taxiwalla will come back to life if only Govt does not levy extra excise to keep petrol prices at same level.**
Auto Industry will also gleam and may see huge demand from Consumers in petrol driven vehicles. **Their worst days may disappear if only Govt of India does not play the role of Devil.**
If Govt of India is wise, it should build in huge quantity of Strategic Petroleum Reserve when the prices are so low
It can save enormous amount of foreign exchange, **and possibly the huge Current Account deficit may turn in strong Surplus, helping Rupee to rise in large single digit or low double digits. The Rupee is standing golden chance of appreciating towards ₹60~65 level unless GOI and RBI spoil the party by intervening in FOREX market by sterilising the rise.**
**Such huge appreciation may also rescue large $ corporate borrowers when over ₹600,000 crores of dollar denominated debt fall due for repayment or renewal.**
Thanks to Corona Virus. Corona Virus has come to India as Masterstroke from the land of heaven. **Who knew that by sacrificing just 700 odd Indian lives so much benefit may accrue to the Indian nation.**
It all hinges on notion that Narendra Modi does not flounder massive advantage by committing “harakiri”. **I do not have much admiration for his logic, common sense or intelligence. He is at best reckless Prime Minister.**
He should therefore lift his devastating decision of Lockdown within 7 days, and should not think of extending it under any circumstances. The god send opportunity has come and in all fairness capitalize on this golden opportunity.
**After his utter foolishness of “Notebandhi” and recently ” Deshbandhi”, he should rise from ashes like Phoenix and serve the nation competently. If he does so, then “His Saat Khoon Maaf”**
I prey God to give him common sense which is rarely common, taught by my father.