India's Strategies on Space!! Defending the Space!!

Space is an amazing place, you can escape the world through it or you can destroy the world by dropping a bomb through it. With defence technologies becoming increasingly deadly, it’s important for any country to develop their own space deterrence technologies to defend themselves from above.

India is one of those countries understanding the importance of this geopolitical development and has been actively investing in space and space related applications. Under the motherhood of ISRO, India has been constantly working on technologies for civilian use but what has caught up most eyes is its involvement in development of next-gen technologies for defence applications.

For a country like India which dreams of becoming a superpower in the near future, it's justified why they have been developing their own Space Situational Awareness (SSA) capabilities by building data processing units across the world.

Under ISRO Telemetry, Tracking and Command Network (ISTRAC), ISRO launched a programme named Telemetry, Tracking and Command (TTC), to build a world-wide infrastructure to track and communicate with India's space assets and provide the country with a precise and effective deterrence tool so as to defend against any incoming hypersonic projectile with a potential nuclear warhead. The system provides India to reduce its time lag of activating the nuclear doctrine.

Under TTC, India has been able to established tacker systems in Port Louis in Mauritius, Bear Lakes in Russia, Biak in Indonesia, Brunei, Svalbard in Norway, Troll in Antarctica, Vietnam, Gatun Lake in Panama, Sao Tome and Principe in West Africa.

Another project code named Project NETRA or the Network for Space object tracking and Analysis was launched recently to add on to India's Space Situational Awareness Capabilities.

This system guarantees effective deterrence against incoming threat via space by supporting the Prithvi Air Defence system and also the anti-satellite defence system under project Mission Shakti. NETRA efficiently combines with the pre-programmed chip of Shakti defence system for active retaliation against threat to India's space assets in Low Earth Orbit and has future plans to extend the range up to 36000 km.

The ongoing expansion of Indian defence in the fifth domain of warfare that is space, only after land, air, sea and cyber can well be linked to the recent events faced by the country. India is trying to go solo and self-reliant in cutting edge technologies to support its key assets without the fear of foreign intervention or effect of international sanctions. With the new education policy announced, it is clear that India is now focusing on making the country future ready with prime focus on cyber world. As the world is moving away from a non-aligned movement and everyone is trying to make their group stronger and capable, both in terms of economy and diplomacy, India needs to be vigilant before making any decision on geopolitical front.

 It is important for the country to not be a part of any block as a result of international pressure. India's space advancement brings the country at par with major players of the world and therefore ensures a safer ecosystem for their economy and a stronger stance in international forums.

Communication and intelligence are the base of any war and a country's space assets ensure the relay of those aspects. Destroying the entire communication system of a country means under supply of any external intelligence as well as internal data sharing. So, it's important for a country like India which heavily depends of its military and communication satellites for data communication, to develop deterrence technologies to protect its land and sovereignty.

 

Note : All images used in this post has been taken from Google Images and the copyright of each of the images lies with their copyright holders.

The views expressed above are personal and belong to the author.

This post has been written by Rishav Kumar.

Also See : Is Indian Ocean the Next Battleground?, Bleeding China!! Is this the Beginning of the End?, India's Nuclear Ambitions, India's Future Plans : Exploring Space

Investor's Pick : Return on Equity

 

 

Warning: This article is filled with quirks which you never knew about a ratio which you've all heard of. Be it Novice or a Veteran investor, both use this metric extensively for picking quality stocks. Read at your own discretion!

 

To run a Business there are broadly two sources from where an entrepreneur can get funding money aka equity:

• The primary being the Shareholder, in which a venture capitalist invests a certain amount in a company, and in return is given some percentage ownership and is also entitled to take part in major decisions and policy reforms.
• Then comes Debt, which you all know is borrowing money from banks at the cost of collateral.

 

Now, before I start my surgical analysis on ROE, there is something you guys need to understand. Most people have this pre-conceived notion that these financial ratios are some hi-fi figures that economists calculate and it requires a qualified expertise to do so but truth be told that anyone can do it, be it a soccer player or an English teacher. No I'm not going to tell you some gibberish formula which will simply go over your head and frankly mine too.

Let’s illustrate this with a simple example. Say you own a company whose management team is highly efficient and recently your performance has been sensational compared to your peers as you shattered your own records by a high margin. So as an investor I would be interested in your business & do a simple analysis to find the ROE. Assuming your company has a total equity of 500cr. 250cr from shareholder's money and 250cr from Debt. Let's Say, 2019 was a profitable year & your Company netted a revenue of 100cr. Now keep in mind that this isn't the final amount which will come to your company's coffers as you'll also have to pay taxes and the interest amount on your debt.

 

 

To find out the net profit, I'll make use of basic math by deducting the interest amount say 10% of debt from the revenue. 10% of 250cr gives 25cr. So the net profit comes out to be 75cr, which I found out by subtracting the interest i.e. 25cr from the revenue i.e. 100cr. Now to calculate ROE I divide the net profit by 250cr which is the shareholder's equity. Finally, the ROE of your Company comes out to be 30%, which is phenomenal! But before coming to conclusions I would also check your peer company's ROE, which will give me a true insight on how your business is doing. Let's say that your peers have an average ROE of 25%, which would lead me to conclude that you are an amazing CEO.

Kudos!!

Now that you've got a hold of how to find out ROE, let me define it for you.

Return on equity (ROE) is a measure of financial performance which is calculated by dividing net profit by shareholders' equity. This provides the investors an insight into how effectively a company’s management team is using its assets which is the shareholder's money to create profits. Simple right? Let's delve deeper!

 

General thumb rule is, higher the ROE, more efficient a company's management is at generating income and growth. But this isn't always the case and I'll cover this later in detail. The formula I mentioned above is especially beneficial when comparing companies belonging to same industry since it tends to give an accurate indication of which one is operating with greater financial efficiency. Whether a company's ROE is deemed good or bad will depend on what is the average among its peers.

 

Pro Tip : Target an ROE that is equal to or above the average for the peer group.

 

Now you might be wondering why an average or slightly above average rather than an ROE that is double or triple the average of their peer group. Aren’t stocks with a very high ROE a better value?

 

Sometimes a higher than usual ROE is a good thing if net profit of a company is extremely high compared to the shareholder's equity because that would indicate a next level efficiency. However, an extremely high ROE can also be an alerting sign.

 

An unusually higher than average ROE can happen mainly due to inconsistency in generating profits. Imagine there's a company ABC that has been unprofitable for several years. The losses keep adding up year after year and because they are a negative value on the balance sheet, shareholder's equity is used up to neutralize the losses. But in the most recent year ABC has a turn around and makes a profit. Going by the formula, the denominator which is the shareholders equity in the ROE calculation is now very small after many years of losses, add to that the recent profit which when used in numerator to calculate the company's ROE will make it misleadingly high.

 

Pro Tip : Whenever you come across an unusually high ROE, make sure that you check the past profit records so that the ROE doesn't mislead you.

 

By Now I'm sure you must've understood why ROE is a really important metric for all the stock investors out there. For financial nerds, my article on P/E Ratio is worth checking out. More importantly, you have now taken the first step in learning how to pick quality stocks to add to your portfolio and grow your wealth.

Happy Learning!!

Note : All images used in this post has been taken from Google Images and the copyright of each of the images lies with their copyright holders.

The views expressed above are personal and belong to the author.

This post has been written by Somaditya Singh.

Also See : P/E Ratio

Bleeding China!! Is this the Beginning of the End?

Image Source : IMF

Ever since the rise of China in 1980, it has been seen as a rival to challenge the US supremacy. Never the less, China has proved itself worthy of becoming the next power-house of the world with its world-class infrastructure, supply-chain, monetary and military might. However the recent clashes of China with the US is hurting both the economies with China taking the maximum hit, thanks to US's superior economy and say in the international forums.

 

China's GDP growth has been slowing down consistently and the numbers projected by Chinese Communist Party (CCP) has been under constant scrutiny by economists around the world.

Post trade war and ongoing COVID-19 crisis, country's industrial growth has also been hit hard.

Image Source : Statistica

 

China's manufacturing sector has been performing well throughout trade war and has recovered post peak COVID outbreak. Manufacturing sector has outperformed the global manufacturing index partly because of the massive dependence of the world on the raw materials and world-class supply-chain of the country. The country has also emerged as an unparalleled and unmatched destination for integrated industrial solutions.

 

The current rage against China has pushed its current account deficit to $29.7 billion, which I personally feel won't be a disaster for them considering the fact that the country maintains a Forex reserve of $3.399 trillion as of July 2020, and will be able to efficiently fund their future endeavors without much friction. But the worrisome part is the ever increasing pace of national debt to GDP which has mounted to 70%.

A figure like that is sure to scare away investors in the long run and hurt the overall business sentiment and confidence.

Image Source : Statistica

 

However, the area which is hurting China the most is the defaults made by many African countries that has huge Chinese investments under BRI (Belt and Road Initiative).  Africa owes more than $150 billion to Beijing, but the recent global events have pushed these financially unstable African countries into defaulting on their payments. Though these fundings could have been a part of the larger plan of China's debt trap diplomacy, it seems that it has backfired and triggered a chain reaction of voices speaking against China.

 

“Stop treating Africa as if we are unable to govern ourselves. When you talk to us, talk to us about how we can partner with you – and in a faster way",  Amani Abou-Zeid, the African Union’s commissioner for infrastructure and energy said.

 

China is a huge economy but not huge enough to write off 1000 loans to 49 countries just in Africa for the loss of the BRI and no debt trap in action.

 

Image Source : Statistica

China's domestic market is massive and is still not tapped completely. According to the "Consumer Meet 2020",  average household expenditure has touched $3000-$12000 in 2019.

 

Sales of premium product grew at 20% YoY.

Sale of luxury SUV saw a 10% YoY.

28% people buy impulsively, 46% buy from renowned brand, 14.5% buy online and 5% through retail creating a $3 trillion market.

 

But the year 2020 saw a drastic decrease in demand hitting the economy and stock market to reach an all-time low of 6% negative. And finally the government was forced to come up with a stimulus package of $173 billion.

 

Number of NPA (Not-Performing Asset) is at an all-time high.

Small and Medium size banks are at high risk of declaring bankruptcy.

 

Most of the Chinese markets are suffering from Coronavirus which has added to the burden of slowing domestic demand. The impact of Trade War has also played its part in ensuring decline of China.

 

Image Source : Statistica

The world saw the rise of USSR, but also the decline of USSR. The world saw the rise of China, and the world may also see the decline of China if it continues on its path of territorial expansionism.

 

China is a country which has proved everyone that democracy is not the only option and has pulled hundreds of millions out of poverty, prioritized education, spent on technology, and took tough stance to protect their national integrity.

 

China is a natural leader but if the leader fails to respect everyone, the bleeding wound never clot and the leader will be finally replaced.

The views expressed above are personal and belong to the author.

This post has been written by Rishav Kumar.

Also See : Is Indian Ocean the Next Battleground?