[kiku007]

Since you mentioned Theranos, I thought of tagging this bestseller book about it. Loved it.


https://www.amazon.com/Bad-Blood-Sec.../dp/152473165X

[Samurai]

Here is an interesting news...

The RIL reports $110 billion in assets and 250,000 employees across its various ventures. Therefore, it employs five workers for each $2.2 million in assets. Shahi Exports, which is India’s largest apparel exporter, has assets worth $185 million and employs 106,000 workers in its apparel factories. Therefore, it employs 1,260 workers for every $2.2 million in assets. For the same investment, Shahi Exports creates 252 times the jobs that RIL does.

Read more at:
https://economictimes.indiatimes.com...campaign=cppst

[Shreyas_H]

Originally Posted by Samurai

Here is an interesting news...

The RIL reports $110 billion in assets and 250,000 employees across its various ventures. Therefore, it employs five workers for each $2.2 million in assets. Shahi Exports, which is India’s largest apparel exporter, has assets worth $185 million and employs 106,000 workers in its apparel factories. Therefore, it employs 1,260 workers for every $2.2 million in assets. For the same investment, Shahi Exports creates 252 times the jobs that RIL does.

That's a very unfair comparison IMO.
The nature of the industry defines the amount of workforce you will need. RIL has a lot of business reliant more on heavy machinery and telecom infrastructure. An apparel exporter will need more hands on deck to stitch/sew clothing material. It's simply the nature of the product they sell.

Also, that 2,50,000 figure for RIL excludes the huge number of contractual workforce that the company also works with. Technically they are on a different payroll but they work for RIL itself. If I remember right, the jamnagar refinery itself has around 1,00,000 contractual workmen.

The quantum of secondary jobs RIL creates is insanely huge.

[amitk26]

How on earth most labour intensive garment industry can be compared with refinery and telecom network with highest possible automation applied ?

Both have different place in economy.

Originally Posted by Samurai

Here is an interesting news...

The RIL reports $110 billion in assets and 250,000 employees across its various ventures. Therefore, it employs five workers for each $2.2 million in assets. Shahi Exports, which is India’s largest apparel exporter, has assets worth $185 million and employs 106,000 workers in its apparel factories. Therefore, it employs 1,260 workers for every $2.2 million in assets. For the same investment, Shahi Exports creates 252 times the jobs that RIL does.

Read more at:
https://economictimes.indiatimes.com...campaign=cppst

[ValarMorghulis]

Originally Posted by Shreyas_H

That's a very unfair comparison IMO...
...excludes the huge number of contractual workforce...
The quantum of secondary jobs RIL creates is insanely huge.

Agree

Originally Posted by Samurai

Here is an interesting news...

The RIL reports $110 billion in assets and 250,000 employees across its various ventures. Therefore, it employs five workers for each $2.2 million in assets. Shahi Exports, which is India’s largest apparel exporter, has assets worth $185 million and employs 106,000 workers in its apparel factories. Therefore, it employs 1,260 workers for every $2.2 million in assets. For the same investment, Shahi Exports creates 252 times the jobs that RIL does.

This is a specious argument to make and pretty much a red herring. I understand the credentials of the author are beyond reproach but this is a misdirected statistic. By the same comparison Apple, Alphabet(Google), Amazon, etc. all are worse than even Reliance. But given a choice, I'm sure the country would love to have any of these in India than Shahi Exports.
Do we need companies that need uneducated, unskilled labour? Yes.
Does that mean we don't need profitable big companies? No

[Samurai]

Originally Posted by ValarMorghulis

I understand the credentials of the author are beyond reproach but this is a misdirected statistic.

The author was previously Chief Economist at the Asian Development Bank. In the past, he has been a professor of economics at the University of Maryland at College Park. He has also worked for the World Bank, International Monetary Fund, World Trade Organization, and the United Nations Conference on Trade and Development (UNCTAD). He holds a Ph.D in economics from Princeton University.

In other words, he doesn't represent the business world. He is not thinking about stock market, profits, etc. So, it is pointless to talk about Apple, Google, Amazon, etc. Don't call him a socialist now, he is actually wary of minimum wage in that article.

But, He is obviously talking from human development point of view. Who cares... you might say. Let me give a different perspective. Couple days back I saw this stats on MSNBC about US job losses, and I was quite shocked.



Between Feb-Aug, 18.9% of people with less than 12th grade education lost their job. At the same time 0.1% of the degree holders lost their jobs. Same pandemic, very different impact. I don't think the stats will be different in India, it may be even starker here.

Garment industry with little investment will be able to provide massive numbers of employment to those who really got impacted by pandemic. That is what he is trying to say. RIL will be great for the stock market, and for white collar jobs mostly, who are not nearly as impacted as the blue collar workers.

[ValarMorghulis]

Originally Posted by Samurai

Garment industry with little investment will be able to provide massive numbers of employment to those who really got impacted by pandemic. That is what he is trying to say. RIL will be great for the stock market, and for white collar jobs mostly, who are not nearly as impacted as the blue collar workers.

I get where he's coming from but, IMO, this is plain statistic chicanery.
A company like RIL, Apple, Amazon is great for the stock market, country, GDP and a lot of people.
A garment industry is good too but one doesn't need to excel instead of the other. The article seems to portray that RIL isn't good enough for job creation.

tl;dr (IMO)
RIL=great for economy
Garment company= great for economy too

[digitalnirvana]

Sorry for wading in the middle of this very interesting discussion (thanks Samurai and VM and do keep it going)

While I'm a big admirer of what Jio has done in telecom (am biased because I briefly worked with them and was convinced that they're building a world-class product), I'm also worried that the over reliance (pun not intended) on a few blue-chip companies means we're moving towards an oligopoly.

As an end consumer it doesn't impact me yet but it would be healthy for the nation to have a larger mix of strong companies coming up.

Back on topic, am sure that Jio will shake up the retail world and firmly establish Reliance's pivot towards being a tech company. They already had exceptional expertise in projects delivery. They're taking it to the next level with a clear growth multiplier strategy. And of course backed by deep funds, and MDA's vision.

[Samurai]

Originally Posted by ValarMorghulis

I get where he's coming from but, IMO, this is plain statistic chicanery.

Hardly, he is pointing out that most of the investment is going towards high profit sector which generates lot less jobs, instead of lower profit sector which generates lot more jobs.

The whole concept of fiscal spending is about generating jobs, rather than profits. Right now, India needs fiscal spending to generate demand. As an economist he is thinking correctly. Keynes would approve.

Originally Posted by ValarMorghulis

A company like RIL, Apple, Amazon is great for the stock market, country, GDP and a lot of people.

Yes, but it benefits few, while most are left in the lurch.

Originally Posted by ValarMorghulis

tl;dr (IMO)
RIL=great for economy
Garment company= great for economy too

No, RIL will be great for stock market. But mass job generators like Garment company will be good for economy. We recently had a long discussion in the economics thread on how stock market doesn't really represent the economy. Let's not repeat that here.

[AMG Power]

Finally someone that calls Reliance a spade.

https://www.financialexpress.com/mar.../1667166/lite/


https://www.google.co.in/amp/s/m.bus.../1/370917.html

Liabilities increased from 19 to 65 billion in 4 years

Payables are higher compared to global and Indian peers.

FCF negative for more than 6 years

Jio's weak ARPU, low RoCE, capitalisation of expenses to the tune of $ 2 billion (!!!) and other issues - none of this would matter to MZ though, he has a different agenda.

As a result of all of the above MDA activated plans to pare down debt in 18 months.

Credit Suisse hence raised its rating from "underperform" to "neutral".

https://m.economictimes.com/markets/...w/70763891.cms


18 months is a long time away, and certainly not a period you can trust Reliance with to carry through on statements which may have even made to trigger market sentiments, with some initial moves to pare debt making it appear genuine.

[v1p3r]

Originally Posted by Samurai

No, RIL will be great for stock market. But mass job generators like Garment company will be good for economy. We recently had a long discussion in the economics thread on how stock market doesn't really represent the economy. Let's not repeat that here.

This is passing the buck for family planning to RIL now. Just because the BIMARU states have failed miserably at population control (and most other HDIs), after all these years we still need low-tech mass employment generating industries and schemes. If these states were better run and a net positive to the exchequer, this entire conversation would be moot.

I don't see why it's RIL's job to generate mass employment. Its job is primarily to enrich its shareholders by running a successful and profitable enterprise. Notice I said primarily, before people pay into me for being a capitalistic pig.

Originally Posted by AMG Power

Finally someone that calls Reliance a spade.

https://www.financialexpress.com/mar.../1667166/lite/


https://www.google.co.in/amp/s/m.bus.../1/370917.html

Liabilities increased from 19 to 65 billion in 4 years

Payables are higher compared to global and Indian peers.

FCF negative for more than 6 years

Jio's weak ARPU, low RoCE, capitalisation of expenses to the tune of $ 2 billion (!!!) and other issues - none of this would matter to MZ though, he has a different agenda.

As a result of all of the above MDA activated plans to pare down debt in 18 months.

Credit Suisse hence raised its rating from "underperform" to "neutral".

https://m.economictimes.com/markets/...w/70763891.cms


18 months is a long time away, and certainly not a period you can trust Reliance with to carry through on statements which may have even made to trigger market sentiments, with some initial moves to pare debt making it appear genuine.

I wouldn't put too much store in historical data for this scenario. The main reasons for that are that MDA has shown the ability to raise money from the world's best institutional investors during a market meltdown with huge uncertainty. The second is the fact that he did this in 18 months, which is largely unprecedented. There are specific reasons why he did this - he doesn't care about debt himself - but I'm not going into those here.

Keep in mind the fact that ratings agencies themselves aren't the most reliable. Sure, international ones are better than our local clowns, but only by so much. Curiously, Moody's has rated RIL (and Infy and TCS) as higher than India's own sovereign rating. So we should really be worried for our own lives, not for MDA!

[Samurai]

Originally Posted by v1p3r

Just because the BIMARU states have failed miserably at population control (and most other HDIs), after all these years we still need low-tech mass employment generating industries and schemes.

Come on, this is an old trope. Same overpopulation helped China & India outgrow most other economies during the globalization time. Population is not the real problem.

Read this: https://science.thewire.in/health/in...ite-resources/

Since most of us are not used to thinking about inequity, we don't feel most investment going to RIL is a problem.

Originally Posted by v1p3r

I don't see why it's RIL's job to generate mass employment. Its job is primarily to enrich its shareholders by running a successful and profitable enterprise. Notice I said primarily, before people pay into me for being a capitalistic pig.

Even I don't think it is the job of RIL to generate mass employment. What gave you the idea? Entrepreneurs like you and I are reluctant job creator. We hire because we have no choice. We didn't start a company to create jobs or with a sense of altruism. I know of such people who did, but 99.99% businesses were started to make profit.

I don't expect RIL to have altruism or create jobs for the masses. That is wrong expectation. This book explains the fallacy of philanthropy fixing the world.

But I expect the government to create policies that generate mass employment. Not by starting public sector companies, but by policies that generate mass employment. I have discussed before what I expect from government.

They often do this. For example, if a car manufacturing company wants 1000 acres of land in a state for low price, government may ask that they generate X number of jobs in the area in return. If the company doesn't like it, they can buy the land in market price, or go somewhere else. Government is very powerful because of their monopoly on issuing permits.

My dad was not a graduate, but he understood inequity. When my elder brother didn't graduate and I did, I overheard my dad saying this to a relative. I am not worried if my kids will succeed in their chosen career, but I am really worried about the big difference in their success. I didn't understand him then, now I do as I look upon two of my kids, one of them being autistic.

[v1p3r]

Originally Posted by Samurai

Come on, this is an old trope. Same overpopulation helped China & India outgrow most other economies during the globalization time. Population is not the real problem.

Read this: https://science.thewire.in/health/in...ite-resources/

Since most of us are not used to thinking about inequity, we don't feel most investment going to RIL is a problem.

A large population comes with its own advantages. We have a large domestic market for consumption, and enough skill to export - it's literally what has grown our economy. In every other way, economic, political or governmental, we are no better than middling, if that. Our demographic dividend hides a lot of our character flaws.

On the other hand, the more subtle point I was making was that we have had decades of misgovernance especially in the BIMARU belt. This is most easily shown by the constant decrease or depression in per capita income and tax paid, as compared to the more developed south. No one in their right mind has moved to that region in the last 25 years in search of a job.

Successive administrations have ruined the prospects of that area. Now there is talk that the central govt should put in place schemes that encourage mass employment. This will most likely come at the cost of small, low labour industries. This will also be pan-India and will impact us, quite possibly negatively. We have enough overbearing regulation anyway, what's a little more?

The point I'm trying to make is that it's always the honest taxpayer and the honest employer who picks up the slack.

P.S. That article has picked a roundabout way to say exactly what I'm saying. Governments failed at creating basic infrastructure to keep up with the population. My addition is that this difference is far more stark in BIMARU.

[Samurai]

Ultimately the problem in India is misgovernance and corruption. It can be solved only by fixing the problem, and not by blaming over-population and letting the government off the hook.

BIMARU states also contribute a lot into labour markets where more educated/prosperous states hardly contribute. Think of Indian army or skilled labour, etc. If you try to hire a carpenter or mason in Bangalore, 8/10 times they are from BIMARU states. So let's not belittle their contribution to the nation.

[AMG Power]

Originally Posted by v1p3r

So we should really be worried for our own lives, not for MDA!

The reality is that we should be worried because of MDA, not for MDA.