Chakri LokapriyaManaging partner, RSB Limited Liability Companythe current says Supreme Court ruling on mines, allowing states to collect Past quotas will mean an expenditure of about Rs 60,000 crore for state-owned companies alone and another Rs 100,000 crore for private companies. So, Rs 160,000 crore will have to be repaid in the next 10 to 12 years. Now, that completely eliminates the capital expenditure that these companies plan for the next few years, which means the jobs they were going to create and the ANP that they will create in the banking system, have multiple ramifications from job creation to the NPAs.
Sure In recent months, the situation has become quite interesting for investors because it seems that the supply glut is over. Do you still think that history has not been fully discovered and discounted or do you think that perhaps the best is already in the price?
Chakri Lokapriya: I think the price increases largely reflect the increased costs they are required to bear. They now have to cover existing diseases, and on top of that, the price reviews that insurance companies face are periodic compared to other prices, such as medical costs, which are continually increasing. Adjusting for all factors, I don’t think 7-10% price increases will address the risks and cost increases, but they won’t increase profitability.What is happening with the metals package? Since the Supreme Court has ordered states to collect arrears of dues, it seems that this is going to hit the mining companies quite hard as the sector suffered a sharp fall around 11 o’clock on Wednesday. But what is your take on these companies, especially the mining companies? mining companies?
Chakri Lokapriya: This is reminiscent of what happened when coal licences were cancelled about 18 years ago, leading to a huge spike in bank NPAs. For the next 10 years, the banking sector struggled and finally the balance sheets are now healthy. The current Supreme Court judgement on mines is about Rs 60,000 crore for state-owned companies alone and another Rs 1 lakh crore for private companies – Rs 1,60,000 crore of which will have to be repaid over the next 10-12 years. Now, that completely wipes out the capital expenditure that these companies are planning for the next few years, which means that the jobs they were going to create and the NPAs they will create in the banking system have multiple ramifications – from job creation to NPAs.
Sure In recent months, the situation has become quite interesting for investors because it seems that the supply glut is over. Do you still think that history has not been fully discovered and discounted or do you think that perhaps the best is already in the price?
Chakri Lokapriya: I think the price increases largely reflect the increased costs they are required to bear. They now have to cover existing diseases, and on top of that, the price reviews that insurance companies face are periodic compared to other prices, such as medical costs, which are continually increasing. Adjusting for all factors, I don’t think 7-10% price increases will address the risks and cost increases, but they won’t increase profitability.What is happening with the metals package? Since the Supreme Court has ordered states to collect arrears of dues, it seems that this is going to hit the mining companies quite hard as the sector suffered a sharp fall around 11 o’clock on Wednesday. But what is your take on these companies, especially the mining companies? mining companies?
Chakri Lokapriya: This is reminiscent of what happened when coal licences were cancelled about 18 years ago, leading to a huge spike in bank NPAs. For the next 10 years, the banking sector struggled and finally the balance sheets are now healthy. The current Supreme Court judgement on mines is about Rs 60,000 crore for state-owned companies alone and another Rs 1 lakh crore for private companies – Rs 1,60,000 crore of which will have to be repaid over the next 10-12 years. Now, that completely wipes out the capital expenditure that these companies are planning for the next few years, which means that the jobs they were going to create and the NPAs they will create in the banking system have multiple ramifications – from job creation to NPAs.
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