Deleverage

Deleverage is generally termed as reducing one's debt by selling one or few of the assets. In my personal opinion it can also be termed as reducing one's debt by repaying through the profit earned in businesses or investments. Deleveraging is one of the best way to increase the profit. Deleveraging also attracts investors and share holders

In India, now many companies are following this process of repaying their debt's through the profit earned in the businesses. This is one of the reason Indian economy is growing post covid pandemic (Though it is not official announced as covid is over, as the businesses are running as normal as pre covid. It can be considered as covid has come to an end). One can argue that the petrol prices are higher and job losses are still not recovered fully and the poverty level is getting higher in India and how we tag ourself as growing economy ?

Yes, we should agree that Fuel prices are higher, Jobless are not recovered and Poverty percentage is increased. But due to these reasons alone can we say Indian economy is not growing ?. India closed the financial year 2020-2021 with only 9% decline in total fuel consumption over the same period last year. According to the data shared by the Petroleum Planning and Analysis Cell, India's total consumption of fuel is

• 194.63 Million Tonnes (mt) in 2020-2021
• 214.13 Million Tonnes (mt) in 2019-2020
• 194.60 Million Tonnes (mt) in 2016-2017

We were almost half of the year under lockdown in 2020-2021 and still our fuel consumption was low only by 9% compared to last year or as same as 2016-2017. This indicates our transportation need is higher now. This is because our businesses are growing inspite of increase in the petrol price

Yes, as per CMIE (Center for Monitoring Indian Economy) data, the national unemployment percentage increased to 8.32% in September 2021. One of the reason for this can be automation, technology growth and increase in new entrepreneurs. As per the details from IBEF (India Brand Equity Foundation), MSMEs in India increased by a CAGR of 18.5% from 2019 to 2020. Loan disbursal to MSMEs stood at Rs. 9.50 Trillion, a 40% increase compared with Rs. 6.80 Trillion in FY20. The number of registered MSMEs grew to 2.5 Million units in 2020

When many new companies are launched and more loans to new MSMEs are given, how can we consider only jobless for economy growth. We should also consider the new business growths turned employees to entrepreneurs. This is clearly a sign of Economy Growth

When comes to poverty percentage increase in India, it is not only in the hands of government. It should also be in the hands of every citizen and they should change their mindset from Saving to Investing. It should be like Earn, Save and Invest, not just Earn and Save. To beat any inflation, we should educate ourself through the the technology (internet) available and move towards growth. So, even this cannot be considered as the reason for negative economy growth. Government cannot keep giving money to poor to overcome the poverty. There are many opportunities in India and we need to educate ourself to be qualified for those jobs to overcome poverty

Companies in India are increasing, be it small scale or medium scale companies. Investments are flowing into these companies and import and exports are made simple these days. Due to these reasons, the companies are reducing their Debts and increasing their profits. This is a clear sign of boom in Indian economy. Few big companies in India who reduced their debts or deleveraged are below

• 
  Dixon Technologies - Reduced its total debt in FY20 by 37% to Rs.107 Crores on Y-O-Y basis. In FY21, the stock price has jumped around 170% in 1 year. In October 2020, the stock was trading around Rs.1,850 and now trading around Rs.5,100 touched an all-time high of Rs.6,243.60

• Fertilisers and Chemical Travancore - Reduced its total debt by 44% to Rs.1,105 Crores on a Y-O-Y basis. In FY21, the stock price has jumped around 160% in 1 year. In October 2020, the stock was trading around Rs.46.50 and now trading around Rs.121.00 touched an all-time high of Rs.153.00

• GTPL Hathway - Reduced its total debt by 49% to Rs.148 Crores on a Y-O-Y basis. In FY21, the stock price has jumped around 130% in 1 year. In October 2020, the stock was trading around Rs.119.00 and now trading around Rs.270.00 touched an all-time high of Rs.313.90

Above are few companies to mention and are many more companies fall under this category. This is a clear sign of increase in economic growth. According to RBI data, the slowdown in credit growth continues well into FY22. As of April 2021, non-food credit was down 0.8%. Petroleum industry credit was down by 8.6%. Iron and Steel company credit was down by 6.8%. This is a clear indication of deleveraging by companies and growth in Indian economy. The secret is to stay invested with the growing companies to beat the inflation and wealth generation.

Disclaimer: I am not in favor of any political party to speak Indian economy is growing and companies are deleveraging. It is my personal opinion with facts. This blog is not an investment or trade advise. This is for informational purpose. Consult your financial advisor before investing. 

Have a Great Day

B G Nareshkumar