This one should be a Happy Dilemma for the C Suitors !
I was following this story for some time now. It shows the Problem of Plenty ! Yes. Being Cash Rich ! Sitting on a Rich Cash Pile ! Sitting on the Horns of a New Dilemma - Not One but 126 companies in India apparently are enjoying the Cash is the King situation.
There is a New Government in India which is about 15 days old (sic !) and I wonder what do they think about this situation?
Experts say, "This increase in cash-surplus companies is not because of increased prosperity, but rather due to rising deceleration in industrial activity," said G Chokkalingam, managing director of Equinomics Research & Advisory. I am sure, the Commerce and Industry Ministers would be taking note of this as this is a frightening scheme of things for businesses.
Some public sector companies and IT firms have historically been cash rich. In the absence of industrial growth, there have not been many opportunities for investing the surplus cash.
Among the companies that didn't have a cash surplus, debt is a big drag for many. The total debt of the 414 non-bank non-financial companies which form the BSE 500 stood at almost five times the cash held by them. Five years ago, this ratio was a little over three times, and this indicates that the overall ..
I am a believer of 'Cash is the King'. 'Free cash flow is the best situation in business'. The current situation is a build up which has occured over last few years and if some one were to track and do an internal shareholder research into some of these companies individually it may show a lack of Innovation, shortage or in some places bankruptcy of ideas, too strict and compliant regime or plain simple 'Lethargy' typical of a Rich Indian businessman who are known to flaunt money.
The fact is, this is the time for the New Government's managers to sit down with the Industries - especially those who are Cash-Rich and sitting on stockpiles of money and plan things together. Government is into business. Many of the businesses are poor competitors to the Indian private businesses. Why not invite participation Or better still, DIVEST and get free cash flow to do developmental projects and building Infrastructure so needed in the country.