New Industries Opening Up Are A Trigger For Long Term Markets
India's cabinet has approved sweeping changes to atomic energy laws and fully opened up the insurance sector to foreign investors
On Episode 751 of The Core Report, financial journalist Govindraj Ethiraj talks to Pranav Haldea, Managing Director at Prime Database and Sanjaya Mariwala, Executive Chairman and Managing Director at OmniActive Health Technologies.
SHOW NOTES
(00:00) Stories Of The Day
(00:20) The Take
(05:11) New Industries Opening Up Are A Trigger For Long Term Markets.
(10:00) Companies That Have Done Massive Offer For Sales With Promoters And Investor Selling Have Performed Better Than You Think.
(19:49) Oil Production In America’s Permian Basin, Its Bedrock Of Shale, Will Peak In December But Will Hold For Some Time.
(21:32) A Company Has To Meet Over 8,000 Compliances In India And The Same Company’s Plant In The US Has…
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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.
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Good morning, it's Monday the 15th of December and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital. We're halfway through the last month of 2025 and we've only got 15 more days to go.
The Take
Australia sparked a global policy debate last week by moving to restrict social media access for children under 16. While critics have fretted over the practicalities of enforcing this, Australia has currently diagnosed a crisis that transcends borders. It is time for India, which has been deliberating this issue on the periphery, to move from discussion to decisive regulation.
The anxiety over digital addiction in general and among children in specific is perhaps the one issue that unites Indian parents across all political and social divides. There is already much work being done in this space, for instance by the National Commission for Protection of Child Rights, NCPCR, which sits under the Ministry of Women and Child Development. Now consider the NCPCR's pandemic-era study of about 5,800 participants across six states.
It found that 60% of children were using phones, often their parents' devices, for instant messaging. More alarming was the rampant circumvention of age limits. It found that 38% of 10-year-olds possessed Facebook accounts and 24% were on Instagram, despite the platform's theoretical minimum age of 13.
The costs of these exposures are being paid in cognitive and physical health. Nearly 37% of children reported frequently reduced concentration levels, 24% admitted to using smartphones in bed, a habit directly linked to sleep disorders and anxiety. Later in November last year, the NCPCR also met with representatives of social media platforms in the context of child sexual abuse material and emphasised the need for enhanced safety measures on social media platforms, with a focus on keeping children safe from predators and explicit content.
A separate study by the Amity Institute of Forensic Sciences, published by the World Journal of Clinical Paediatrics, corroborates this, linking excessive scrolling to stress, anxiety, and depression. While some of these studies are slightly old, the context could have hardly changed or actually worsened. Now, India already has the legislative backdrop to move on this.
The IG rules of 2021 obligate platforms to curb harmful content. The Digital Personal Data Protection Act of 2023 explicitly prohibits data fiduciaries from tracking children or targeting them with ads. But all of these are more like guardrails, while the current crisis, if one may call it that, does require a gate.
Now, the government has also proven that it can act swiftly against digital harms when it chooses to. In August, it cracked down on real money games, effectively curbing an online betting industry that had attracted billions in venture capital and saw people losing, mostly young people, losing billions of their savings and income. So, the government correctly prioritised social welfare over invested returns, saving countless youth from gambling away their or their parents' incomes.
And the move was executed with clinical precision and speed involving both houses of parliament. Now, the question is, can the same resolve be applied to social media and how children access it? Now, emulating Australia's legislative ban is one path, but there are others. China, for instance, employs a minor mode linked to identity verification which restricts, for example, children between 8 and 16 to just one hour of daily access.
And if it's younger, then even lower. While Beijing is really a model for governance, particularly for democracies like India, the efficacy of its technical controls is undeniable. A prudent Indian policy could blend these approaches, strict age-gating technology, school-level bans and awareness, and of course, parental education.
If there is any lingering doubt about the necessity of restriction, one has to only look at the household rules of Silicon Valley's elite. Bill Gates, Tim Cook, and Peter Thiel have all famously limited screen time for children and their families. And for a long time.
Steve Jobs, CEO of Apple until his death in 2012, revealed in a 2011 New York Times interview that he prohibited his kids from using the newly released iPad. We limit how much technology our kids use at home, Jobs told reporter Nick Bilton. Last week, YouTube CEO Neil Mohan joined the chorus, telling Time Magazine that his children's use of media platforms is controlled and restricted.
We do limit their time on YouTube and other platforms and other forms of media, he said. So, if the architects of the algorithm won't let their own children consume it unchecked, why should India's parents be expected to?
And that brings us to the top stories and themes of the day…
New Industries Are Opening Up And That's A Trigger For Long-Term Markets.
Companies That Have Done Massive Offer For Sales With Promoters And Investors Selling Have Actually Performed Better Than You Think On The Bosses.
Oil Production In America's Permian Basin, Its Bedrock Of Shale, Will Peak In December But Then Will Still Hold For Some Time - The Iew Segment
And A Company Has To Meet Over 8,000 Compliances In India To Stay In Business, But The Same Companies Plant In The US Has, Well, Stick On To Find Out….
Long-Term Triggers
The medium to long-term prospects for the Indian market depend on a factor that not many people may notice on a daily basis, which is the number of newer sectors opening up for greater private participation or expansion in general. If one goes back a few decades, areas like telecom, power, airlines, media, automotive, defence, space, and many more have benefited from some form of opening up or even full liberalisation. If you were to look at defence, clearly the entry of private drone operators is one such recent addition.
Now the good news is that more can and will join the fray. India's cabinet has approved sweeping changes to atomic energy laws and fully opened up the insurance sector to foreign investors, according to Reuters. Now these moves are aimed at attracting fresh investments and expanding capacity, for example, in the case of nuclear power by 12 times by 2047 to 100 gigawatts.
In insurance, the government wants to remove a cap on foreign ownership of Indian insurance companies currently at about 74%. Now in the case of insurance specifically, it's not likely to lead to a flood of fresh investment because the industry itself is not as hot as perhaps it used to be once, but the signals are welcome overall. And of course, useful for markets who are looking for overall fresh signals on change and economic liberalisation.
On Friday, the stock market's extended gains for a second straight session thanks to a global rally and strong buying in metal stocks. Prime Minister Narendra Modi spoke with US President Donald Trump on Thursday, and the discussion was centred around strengthening economic ties. Now this does not mean a deal is around the corner, but it appears to suggest that there is a thaw.
Now this does not mean that a deal is around the corner, but it does appear to suggest that there is a thaw in the frosty relations, even if small, and maybe some good will come out of it in coming weeks and months. The census was at 85,267, or rather close at that, higher by about 449 points, while the nifty 50 was up 148 points to 26,046. All of this is on Friday.
The same day, the nifty mid cap was up about 1.2%, and the nifty small cap was up about 0.9%. Elsewhere, inflation was up to 0.7% in November from 0.25 a month ago as the pace of decline in food prices has slowed, and this is something that was predicted by many economists. Earlier, the Reserve Bank cut interest rates by 25 basis points, and it said that the Indian economy is in a rare Goldilocks phase of strong economic growth and moderate inflation. So far in 2025, the Reserve Bank has lowered rates by 125 basis points.
And now on to metal, silver prices were down 3% on Friday after hitting an all-time high earlier in the session, while gold rose to a 7-week peak according to Reuters. Silver was at about $61.70 per ounce and had hit a high of $64.64 earlier. Gold is at about $4,293 per ounce.
In India, silver prices have crossed the historical 2 lakh rupees or 200,000 rupees per kilogramme milestone on Friday, and this is a rally that now has seen silver prices rise about 130% this year, while gold is up 75%. The rupee was down. It hit a record low on Friday and also saw its second weekly fall in a row as investors continue to watch the delayed US-India trade deal.
Bankers expect the currency to keep drifting lower in the near term with interventions by the Reserve Bank keeping a lid on volatility, according to Reuters, which added that the rupee closed at Rs 90.41, that's 0.5% on the week, on Friday, and it had earlier fallen to Rs 90.55, which was an all-time low on Friday and then went up even as the central bank stepped in. Now we mentioned this earlier when we compared the rupee to the pound and the euro and even the Singapore dollar, all of against whom it's been depreciating. Now, German luxury car makers Mercedes and BMW are saying that they will hike vehicle prices from next month as they try to offset the impact of the weakened rupee against the euro.
They point out that the euro-rupee exchange rate has traded persistently above the 100 rupee mark this year, increasing operational costs. Mercedes-Benz India MD Santosh Iyer said in a statement that the prolonged volatility affects every aspect of our operations, from imported components for production to completely built units. BMW's India chief said forex fluctuation is a big dampener.
We were looking at somewhere around 93 to 95 rupees against the euro this year, but it's actually around 103 to 105. So it's a 10% deterioration versus our expectation, which puts a lot of pressure on pricing and profitability.
The Offer For Sale Surprise
Now offer for sales have come in for some bashing, given that companies who have gone for IPOs have seen most if not all the money raised going to promoters, founders, and early investors, and the offer for sales have obviously helped them exit or raise funds for themselves. Now, the data back question to pose obviously is how have these IPOs done versus those who've raised funds for the business itself or the venture itself or a combination of both? Well, a study by Delhi-based Prime Database going back 10 years shows that OFSs have actually delivered a surprise to those invested in the companies that launched them. What are they? Well, I spoke to Pranav Haldea, Managing Director of Prime Database, and I began by asking him to walk us through his findings.
INTERVIEW TRANSCRIPT
Pranav Haldea: So, you know, there are clearly two eras, so to speak, as far as OFS and fresh capital are concerned. One is the period from 1989 going up till 2012, where on an average, 13.5% of the total issue amount was offer over sale, and the balance 87 odd percent amount which was raised was all fresh capital. And from 2013 onwards, which is about 13 years, you had 68%.
So from 13.5%, it's gone up to 68% of the total IPO amount, which is actually an offer for sale and the balance 32% being fresh capital. So completely stock periods.
Govindraj Ethiraj: The quantum obviously has also changed quite dramatically. We are seeing far greater OFS or offer for sales in the last five years than ever before, isn't it?
Pranav Haldea: Yes, I mean, if you just look at the last five odd years, you spoke of period after COVID. I think the OFS amounts on a year wise basis ranges anywhere from about 60% to 85% for a particular year. And of course, this needs to be kept in the context of the fact that even in terms of overall IPO volumes, so 2021 was a record year, 2024 was a record year and 2025 already is going to be another record year.
So even in terms of overall amounts, we're talking about much bigger figures than for the period from 1989 till 2012 that you just talked about.
Govindraj Ethiraj: Right. And is there any link with how stocks perform when let's say either there's more money going into the company versus more money being taken out by the promoters or early investors?
Pranav Haldea: Before we get into that, what I really want to say about this is that when we're talking about fresh capital and raising concerns about companies not raising enough fresh capital and most of this money going to promoters and TVCs, I think we would do very well to remember the 1990s and the early 2000s when, like I just said, most of the amount which was raised was fresh capital. Some of us do remember what happened with those companies. They either shut shop as their businesses did not work or they also vanished with the investors' money.
And what essentially was happening at that time was that companies were coming to the IPO market much earlier in their lifecycle and they were seeking that growth capital, that risk capital. And one of the biggest changes which has happened in the Indian capital market is that this risk capital over the last few years is now being provided by angel investors, venture capital investors, private equity investors, an industry which we all know has come of age. And these investors help the company grow, reach a certain scale, establish governance mechanisms, and companies which are able to achieve all of these then come to the public market much later in the lifestyle.
So one point is that because they've already grown to a certain scale, they may not necessarily require funds for expansion at that point in time. And second of all, I have been saying this a lot that this is a sign of a maturing capital market ecosystem. And you were asking earlier about how it might be in the West.
I think this is something which is very akin to what you will find in the US or European markets, where at the time of IPO, the founders of the companies are typically left with single digit holdings. And now coming to your point about the returns. In fact, it's interesting that you asked that.
I did some analysis a few days back about how do the post IPO returns stand as far as pure OFS IPOs are concerned, as far as pure fresh capital IPOs are concerned, and IPOs which are a mix of over sale and fresh capital. So we ran this analysis from 2015 onwards, which is around 10 years back. You would be shocked to learn that there were about 103 pure OFS IPOs, which on an average have delivered an absolute return of 351%.
There were 81 pure fresh capital IPOs, which delivered 173%, roughly half of what the pure OFS IPOs did. And the combination IPOs which were there, they delivered about 159%. So even in terms of returns, the pure OFS IPOs seem to have delivered much better.
In fact, you know, India's largest IPO, which happened last year of Hyundai was a pure OFS, 27,000-28,000 crores being raised, significant amount. And I think last I checked, it was about 30-35% above issue price.
Govindraj Ethiraj: Right. But there is something to be said about the companies themselves, right? So when you quoted Hyundai, so obviously Hyundai is a well established brand in name and profitable globally and locally, and it was a subsidiary.
Now, the point that you made about venture capitalists now taking the load of what maybe investors were doing earlier in India, many of the companies are still loss making. Because earlier, if I remember, you were not even allowed to come to markets if you're loss making, whereas today you could. And I don't know whether maybe it's early to judge, but how you see that?
Pranav Haldea: The point that you made about Hyundai, you're absolutely right. And which is why I actually prefer to stay away from post IPO returns analysis, whether it's doing three months later, six months later, 12 months later, because obviously, depending on the quality of the company and how it performs, how the sector in which it is, how that is performing, how the broader economy is doing, all of these will eventually impact all stock prices, including companies who have come out with an IPO.
But for the lack of a better alternative is when we look at some of this analysis. Coming to your point about venture capital investors and then them investing in loss making companies.
Govindraj Ethiraj: You contrasted the IPOs of yesteryears. And you said that the problem there was that Indian investors were essentially acting as venture capitalists, because they were really coming in at too early a point. Today, your point is that for several years, maybe for three, four or five years, there are other institutional venture capitalists who are coming in, bringing the business up to a point and then taking it public and obviously also exiting through offer for sales.
But my question there is, but we're also seeing in that mix, a lot of companies who are fundamentally loss making, which was not the case in the earlier decades, because they were not, as I understand, even allowed to go public.
Pranav Haldea: Yes, you're absolutely right. And the regulations changed about four or five years back when I think taking cognisance of the kind of companies and especially the startups in the Indian market, the regulator amended the regulations to make a provision wherein loss making companies could also launch an IPO, albeit with the lesser allocation to retail and greater allocation to institutional investors.
Govindraj Ethiraj: Right. But I think your fundamental point is that companies that have done offer for sale, at least in your study starting 2015, have done much better and delivered better returns.
Pranav Haldea: Yes, they have. And you know, I think even as far as VCP investors are concerned, we should accept that they also need an exit so that they can return money to their own investor. And in that process, they will be able to raise more money to invest in the next set of growing companies.
So that is how you know, envision the ecosystem to evolve. And even as far as promoters are concerned, you know, just funnily, it's very human nature to always be very concerned about how much the other person is making more than even what we are making ourselves. And which is why you keep on seeing all these news articles about the kind of returns that some of these PVC investors or the promoters are making in their IPOs.
But you know, I feel we shouldn't grudge them for these multi-bagger returns. As far as VC investors are concerned, we should remember that for every multi-bagger, they would have five failed investments too. Let's, you know, talk of India's largest startup till a few years back in the tech space.
That money's all gone.
Govindraj Ethiraj: Thankfully, it didn't go public.
Pranav Haldea: Yeah. And even as far as promoters are concerned, history tells us that, you know, only one or two out of 10 entrepreneurs actually succeed. So if, you know, for the huge risks that they take, if they do take some money off the table, it's not necessarily a bad thing.
And in fact, it can be an encouraging sign for future entrepreneurs as well. I think one important metric which all investors, however, should look at is how much skin in the game is still left after they have exited. Both promoters and PVCs.
If PVCs are exiting completely, then it needs to be looked into as to why are they not, you know, continuing with their investments.
Govindraj Ethiraj: Got it. I think the only question, and that's my last question as well, Pranav, for today, I'm going to come back on this theme a little later again, and very soon. Whether this is really sucking out more from the capital markets than they can maybe manage.
So one reason, for instance, the market's not going up right now and being subdued is that there's a lot of money that's going into IPOs. It's not a right or wrong question, but it's a question.
Pranav Haldea: Well, you know, I've always believed that, you know, the Indian market does not have any liquidity concern. And I will give you a very recent example of this, which is just in October when you had the two mega issues of Prada Capital and LG. You know, there was a lot of commentary going on that given the size of these issues, you will see a big correction in the secondary market.
And actually, what did we see in the week that they were launched? The secondary markets actually went up 5%. I firmly believe that if there is good quality paper at attractive valuations, whether in the primary market or in the secondary market, there will be enough money which will find it as an investment.
Govindraj Ethiraj: Right. Wonderful note to end on. Pranav, thank you so much for joining me.
Pranav Haldea: Thank you for having me.
India Energy Week Segment
Oil production in the Permian Basin, which spans the southwestern United States, mostly covering West Texas and southeastern New Mexico, is poised to peak in December, a watershed moment for the US shale boom that has lifted and maybe held up the global energy market for the past 15 years. And yet, drilling innovations means output in America's most prolific oil patch will hold steady for years to come, according to a column by Thomson Reuters Energy columnist Ron Busso.
The Permian has been the core of American shale oil since the industry took off about 15 years ago, helping the US become the world's largest oil producer as of 2018 and accounts for nearly half of total US production of 13.6 million barrels per day in 2025. The Permian Basin is set to produce a record high 6.7 million barrels per day of oil in December, which is only slightly higher than the November's total, according to the US Energy Information Administration in its latest short-term energy outlook in that Reuters column. Elsewhere, oil prices closed lower on Friday, which led to a 4% weekly decline thanks to a supply glut and a potential Russia-Ukraine peace deal, which outweighed worries about impact of US seizing an oil tanker near Venezuela.
Brent crude futures were at about $61.12, so about $61 on Friday, according to Reuters.
The Challenge Of Compliances
The government last month announced the implementation of four labour codes on wages, industrial relations, social security, and occupational safety, health, and working conditions, rationalising 29 existing labour laws.
The government's point being that by modernising labour regulations, enhancing workers' welfare, and aligning the labour ecosystem with the evolving world of work, this would lead to a future-ready workforce. Remember, many of India's labour laws date back to the pre-independence and early post-independence era, that's 1930s to 50s, at a time when, quite obviously, the economy and the world of work were fundamentally different. Remember, gig workers are a new thing.
Now, other countries have moved on in this area, and India is catching up. But how do these new codes stack up in the context of overall compliances that Indian companies have to face in doing business? Or, put differently, how easy is it to do business today? Last week, I spoke with Sanjaya Mariwala, former president, IMC Chamber of Commerce and Industry, chairman and managing director of Omni Active Health Technologies, and founder-president of the Association of Herbal and Nutraceutical Manufacturers of India, and began by asking him how he would list the compliances companies like his have to meet, at least as an illustration.
INTERVIEW TRANSCRIPT
Sanjaya Mariwala: I think compliance has been the biggest ask, okay, honestly, because the sort of compliances was a mess. If you look at total compliances that a company like ours does, and we are not a large, very large company, okay, we are a reasonable size company, maybe 1000-1500 crores of revenues, right? And we employ about 600 people.
Now, I have a software that runs the compliance management. 8600 compliances as a company per year. Now, how are you going to keep track of 8600 compliances?
This is non-financial or financial? This is all encompassing. Now, if you take out of that, I think the labour and industrial compliances, IR, what you call industrial licencing and labour-related or factory-related compliances, must be about 2800 or 3000 compliances per year.
Now, that's a huge... So, what are the other 5000, broadly? Everything to do with, you know, safety, okay, that is to do with the labour, the factory inspector, the weights and measures, okay, the tankage capacities, how you monitor your liquids, fluids, the weights of your products, okay, how do you track pollution, smokestack emissions, noise, you know, the other waste disposal, the health of people, do you have an ambulance on site, you don't have an ambulance on site, all these issues are covered in these processes. I think today, there's been a nice cover of this, the IR, the people-related issues, which are the most effective, because that affects most people, okay, and I think that's been a good step in the right direction. I believe there are repeated exercises necessary in each area to eliminate...
Govinraj Ethiraj: So, if you say 8000 now, and you have offices overseas as well, and you're working with manufacturing partners and so on. So, if there are 8600 compliances here, what would be roughly the same...
Sanjaya Mariwala: So, we're just setting up a plant in the U.S., for example, right now, and we talked about...
Govinraj Ethiraj: Is it because of Trump tariffs?
Sanjaya Mariwala: Because of Trump tariffs, okay, yes, it is because of Trump tariffs, but because in anticipation of Trump tariffs, we had planned this, and then we said now we'll watch it for this talk of it going off. Today, I just heard that it's now pushed to December. I don't know whether it's ever going to happen.
So, I think we don't know what Trump is thinking. So, we said we'll go ahead with our plant in any case, because even in the long run, it will be a beneficial interest for us in servicing customers. Anyhow, we have to expand.
So, we should rather do an expansion in the U.S. and we'll release capacity here, which we'll use for the other markets. So, when I'm looking at the U.S. plant, we have about 35 compliances that we need to take care of before we start, and about six to seven forms to fill on an annualised basis. That's it.
That's it. Right, we'll start with pre-... But, I mean, that doesn't sound logical.
No, no, I'm telling you, it's illogical. It's like we've done a KYC for a bank. How many forms do you sign and how many times do you sign it?
Govinraj Ethiraj: Maybe 15, 20 times you have to sign it.
Sanjaya Mariwala: And every year you do this. And for every bank you'll do this. What we need is a central agency that can distribute this.
And they have, they've created a central agency for KYC. But Horena is still not enabled.
Govinraj Ethiraj: And where in the U.S. are you setting this up?
Sanjaya Mariwala: In New Jersey.
Govinraj Ethiraj: Okay. So, even in the U.S., I'm sure, I mean, there will be and there are guidelines for, let's say, you talked about smokestack, safety, the plant, whatever. I mean, the plant, how the plant is distributed or set up and so on.
So, who monitors and how is that monitored?
Sanjaya Mariwala: There's a very simple process. There's a department that you need to go to. You don't have to go to 16 departments or 20 departments.
We need to go to one functional area and everybody falls into it. State has a local department or the municipality has a local department, depending on which part of the state you are in. And they will tell you what you have to do.
All you have to say is there's a set of guidelines issued by the industries department in consultation with the unions as well as with the specific industry parameters. And pollution board and everybody has been factored into it. So, the environmental EPA has said, given their input into it, all those standards have been set together and put.
Even we have those things. In fact, those are standard prescription. And the question is who implements it?
I think there's a simple one agency that is appointed to implement it. And their job is to make sure that if they give you a municipal licence to operate, okay, they have checked each one of these and they file the required documentation with the EPA to say that they have approved it. Now, if something goes wrong and it could, then things have happened in other parts also.
It starts with the inspector or the authority that has approved you and goes up the chain to figure out where the leakage has taken place. It's a simple formula to get by. It's not complicated at all.
Govinraj Ethiraj: So, you're saying that the onus is on you as a self-regulated entity of sorts to make sure... To ensure that you comply with all of this. It's not that you have to comply with less things, but...
No, you don't have to comply with everything. But you don't have to...
Sanjaya Mariwala: Keep filling 8,600 forms every year.
Govinraj Ethiraj: That's the challenge. Sanjay, thank you so much for joining me.
Sanjaya Mariwala: Wonderful talking with you.
