Breaking today — DHFL does not want to break its losing streak. So it defaults on another loan…!!!

Markets

Can't pay you back, Sorry 🙇

In a corporate filing yesterday, DHFL announced that it has defaulted on debt obligations worth Rs. 1,571 crore, its highest ever, with regard to interest payments & principal amount.

Here’s a Refresher course on the entire saga

  1. Back in September, DSP, the mutual fund house offloaded DHFL's bonds at a discount. Translation- DSP felt DHFL was unlikely to pay them back. So they begged someone else to take the burden off of them by offering a huge discount. They said it was routine. But come on. Who are we kidding right?
  2. When news of the sale spread, DHFL stock crashed 60%🔻 dragging other NBFCs along with it. Because you know… They are all of the same ilk.
  3. After considerable damage had been done, credit rating agencies waltzed into the room, had one good look at DHFL and said — “Yup, knew it. They are going to default”.
  4. And then all the banks and the fund houses that ever loaned money to DHFL took a back seat and said “ Yeah… This is bad”

Anyway, after assuring investors that everything was fine and dandy for a good few months the company finally stated that it was going through substantial financial stress in July. It even confessed that its ability to raise more money was considerably impaired and its future existence, now doubtful.

But despite the sombre statement, it seemed like the company was still trying to figure out a repayment plan that was acceptable to all its lenders. Unfortunately, no such thing has materialized as of today.

Actually scratch that, just as I was about to finish this story, news started pouring in that a resolution plan has in fact been submitted to the RBI. Now if the RBI rubber stamps this thing, maybe DHFL could wiggle themselves out of this mess?

Developing story this. We will definitely have more on this soon

Infographics

An Essential Guide

Also since so many people have been talking about this story. We thought we could help you out with this essential glossary on the whole “NBFC Crisis”

Business

Cook meets Trump

So recently, Apple’s CEO Tim Cook had a heart to heart with Mr Donald Trump where he expressed concerns about the impact of trade tariffs imposed on China, over his business. 💼

Sources said Tim softly whispered  — “The 10 percent tariff will hurt, Mr. Trump🤕”

Just Kidding

Now it's worth remembering that Apple doesn’t actually manufacture most of their products in the US. In fact, a bulk of it comes from China. Partly because it's cheaper. Partly because they can get stuff done very very quickly. However, with the ongoing trade war, things have taken a pretty interesting turn.

For one, those cheap products are no longer cheap because Trump has repeatedly threatened to impose tariffs on Chinese goods and followed through on it. Also, it makes the company less competitive against the likes of say, a Samsung, who have manufacturing plants the world over. So they couldn’t care as much about the whole trade war.

In addition, iPhone sales growth has been saturating.

Think of a person who owns an iPhone 6. Clearly, there is no immediate need to splurge another kidney 😂 on an iPhone 8. I mean, the iPhone 6 is good enough.

No? Okay…

In fact, multiple analysts claim that the only way Apple’s been sustaining high revenues is by selling phones at even higher prices. But that strategy is slowly losing steam.

Which brings us to today. It's very important for Apple to keep chugging along, even if it's one of the most profitable companies in the world. And it’s not like Trump is averse to hearing them out yeah?

Apple, after all, is a yuuuge contributor to his MAGA(Make America Great Again) ambitions. And after the meeting, he did say Tim Apple... I mean Tim Cook made a very compelling argument, so he is “thinking about it”

So let's see how things shape up. Because you know a costly iPhone is always better than a costlier iPhone ;)

What else is happening?

  • Corporate tax rates reduced, owners of big companies rejoice
  • Also McKinsey now thinks emerging markets are at significant risk. Check our twitter story on the matter

Yeah, that's about it for today. Until tomorrow then.