Current Affairs Jan 2023

While Hindenburg Research and Adani group have hijacked the news coverage, here are the some hot picks from January 2023 current affairs. Find our coverage on Short Selling, a key part of Hindenburg Research here.

Legalization of Demonetisation

On 8th November 2016, at 8 pm, Prime Minister Narendra Modi appeared on national television and made a shocking announcement. All the ₹500 and ₹1,000 notes in people’s wallets and cupboards would be “demonetized.” It would become worthless overnight. That meant that 86% of the money would vanish from the system. And we only had a few weeks to go to the bank and exchange the old bills for new ones. 

Many people were dissatisfied and decided to petition the Supreme Court, questioning its legality. The supreme court issued a decision on January 2nd 2023 confirming the legality of the first petition six years after it was filed. Demonetisation had two main goals: to promote a cashless economy and to reduce the circulation of black money. The former clearly failed, as 50% of transactions are still in cash, and the latter also failed, as 99% of the running was cash deposited. Though the black money market slowed for a while, as the circulation of Rs.500 and Rs.2000 increased, so did the illegal economy.

Following demonetisation, the economy slowed by at least 2%. There was insufficient cash to support transactions, and the economy sputtered. So, while the government most likely intended to repair a system with a well-intended scheme, the damage was significant.

mamaearth IPO

Honasa Consumer, which owns the popular personal skincare brand Mamaearth, has filed a DRHP to go public through an initial public offering (IPO).

Draft Red Herring Prospectus (DRHP), or offer document, is the preliminary registration document prepared by merchant bankers for prospective IPO-making companies in the case of book building issues

According to the DRHP documents, the company intends to raise Rs. 400 crores through a fresh issue of shares, in addition to an offer for sale (OFS) of approximately 4.7 crore shares. Though neither the company nor its book-running lead managers have confirmed its current valuation, a Reuters report from June stated that the Sequoia and Sofina-backed company is valued at $3 billion, or approximately Rs. 24,000 crores. In terms of valuation, this would place Mamaearth among the most expensive companies. The company was valued at $1.2 billion in its most recent round of funding, which took place in January 2022. This raised concerns about how a company’s valuation can more than double to $3 billion in less than a year.

The company has only turned profitable in FY22. While the revenues jumped eight times over FY20-22 on a relatively low base of Rs.110 crore, it would be unwise to expect for such an exponential growth to continue in future on a large base despite the fact that beauty and personal care (BPC) products are expected to report growth rate of 12 percent and online growth of 28 percent over 2021-2026” says Jasani.

Reliance’s bet on Women’s IPL

Viacom18, a media company owned by Reliance Industries, is paying Rs.951 crores for the right to broadcast the women’s IPL from 2023 to 2027 which rounds upto Rs. 7 crore per game. This is the world’s second-highest deal for a women’s sports league with t he 25-year-old women’s basketball league (WNBA) in the United States at the top.

According to the statistics, Sony began with Rs. 11 crore per game for men’s IPL in 2008 and has since increased to Rs.116 crore per game! Though women’s IPL is much less expensive, it is the beginning of something new. This could increase female sports viewership – statistics show that the recent ICC cricket tournament drew 1.8 billion viewers, with approximately 42% of them being women. This could also open up new investment opportunities as well as avenues for the branding and advertising of more female-centric brands.

The Renewable Energy Sector Budget

India’s installed renewable energy capacity increased by 118 per cent between 2014 and 2022, reaching 166.4 gigatonnes (GW). Despite this exponential growth over the previous decade, India is still a long way from meeting its 2030 target of 500 GW of renewable energy, or 50% of total installed power capacity. We were assured by Finance Minister Nirmala Sitharaman that steps would be taken to reduce the carbon intensity of the Indian economy, meet clean energy targets, and provide large-scale green job opportunities in this sector.

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