Inflation Tax Explained: How It Impacts Your Money & Economy | Porul.in
What is Inflation Tax?
Inflation tax is an implicit tax that happens when the government prints more money, leading to inflation. Inflation tax reduces the purchasing power of money held by the public, effectively transferring wealth from individuals and businesses to the government.
What is Inflation?
Inflation is the rate at which prices for goods and services rise, resulting in a decline of purchasing power over time. When inflation occurs:
- Each unit of currency buys fewer goods.
- Consumer prices generally increase.
- Savings lose value if interest rates don't keep up.
Central banks aim to maintain moderate inflation (typically 2-3% annually) to encourage economic growth.
Mechanism of Inflation Tax
- When governments face fiscal deficits and struggle to raise revenue through taxation or borrowing, they may opt for printing more money.
- This increases the money supply in the economy, leading to inflation.
- As prices rise, the real value of money held by the public declines. This means people can buy less than before with the same amount of money.
Money Supply & Inflation Rate in India (2015-2024)
Understanding the Impact of Inflation Tax
Source: Reserve Bank of India (RBI), World Bank Data
Effects of Inflation Tax
- Redistribution of Wealth: Individuals holding cash or fixed-income assets (like bank savings) suffer, while borrowers benefit as debt loses real value.
- Decline in Real Wages: If wages do not keep up with inflation, workers experience a reduction in real income.
- Erosion of Trust: Persistent inflation can lead to declining confidence in the currency and economic instability.
Standard Glass Lining Technology
Standard Glass Lining is a manufacturer of engineering equiment for pharmaceutical and chemical sectors in India. It Provides end-to-end solutions including design, manufacturing, Installation etc.
Company Snapshot:
- Key Information:
- Company Name: Standard Glass Lining Equipment
- Year of IPO : 2024
- Headquarters : Hyderabad
- Key Executives : Nageswara Rao Kandula (MD)
- Equity Symbol : BSE:544333, NSE:SGLTL
Business Model and Operations:
Standard Glass is a end-to-end solutions company operating in
- Reaction Systems: Equipment used in chemical synthesis and controlled reactions for Pharma and Chemical processes. They Manufacture Glass Lines Reactors, Stainless steel reactors etc.
- Heat Exchangers: Machines for transferring heat between mediums.
- Glass Lined Equipment: Corrosion resistant and durable glass-lined products used in various processes.
Glass-Lined Equipment Industry:
The Glass Lined Equipment (GLE) industry protects the contained media from exposure to water, other chemicals, alkalis, and corroison. GLE Technology is extensively used in various industries for its corrosion resistance and durability.
Heat Exchangers
Heat Exchangers :
A Heat exchanger is a system that transfers heat between a source and a working fluid. They are used in various applications like refrigeration, air conditioning, power stations, chemical plants, natural-gas processing, data centres etc. |
| Representative image |
Heat Exchangers market in India:
India Heat Exchanger Market Revenue Share
Fairchem Organics - Company Overview
FAIRCHEM is an Indian Speciality Chemical Company that specializes in Oleo Chemicals and nutraceuticals. It is engaged in the manufacturing of dimer acid, linoleic acid, sterols concentrate etc., which find applications in Various industries such as paints, printing inks, nutraceuticals, and more.
Company Snapshot:
- Key Information
- Company Name: Fairchem Organics Ltd
- Year of IPO: Via Demerger
- Headquarters: Ahmedabad, Gujarat
- Key Executives: Nahoosh Jariwala (Chairman and MD)
- Stock Symbol and Exchange: NSE: FAIRCHEMOR, BSE: 543252
- Sector: Chemicals
Business Model & Operations:
1. Fairchem business model revolves around manufacturing and supplying niche speciality chemicals and nutraceuticals intermediates derived from natural sources. Here's a small breakdown
- Raw material sourcing:
- fairchem uses waste by-products such as crude tall oil and other fatty acids derived from processing of edible oils and fats as feedstocks.
- Their model is based on recycling and value addition, as they convert low-value raw materials into high-value products.
2. Revenue streams: The majority of their sales come from direct relationships with businesses in industrial sectors.
Warrants Explained: An Investor's Perspective
What are Share Warrants :
A Share warrant is a contractual document issued by a company which gives the warrant holder the right or option to purchase or sell the company's share at a predetermined price.
 |
| Warrants |
Why do Companies issue Warrants ?
- Raise Capital: Warrants are often the preferred way to raise capital as it doesn't affect the share capital dilution immediately.
- Also, it gives an option for future source of funds as warrants can be converted into equities in the future.
- Attractive financing: Issuing warrants alongside other securities, such as bonds can make those securities more appealing to investors.
How does it benefit Investors:
- Warrants can offer leverage, allowing investors to get the benefits of significant price increase in the underlying stock with a initial smaller investments.
Risks for Investors:
- Though Investors get to benefit from the warrants as the share price increase, they equally carry risks for the investor. They can expire worthless if the stock price doesn't rise above the exercised price.
- Dilution Risk: If the company issues a large number of warrants, it can potentially dilute the value of existing share.
EMS Limited - Company Overview
EMS Limited is a multi-disciplinary EPC company, headquartered in Delhi that specializes in providing turnkey services in water and wastewater collection, treatment and disposal. EMS provides complete, single-source services from engineering and design to construction and installation of water, wastewater and domestic waste treatment facilities.
Company Snapshot:
- Company Name : EMS Limited
- Year of IPO : 2023
- Headquarters : Ghaziabad
- Key Executives : Mr. Ramveer Singh - Chairman
- Stock Symbol and Exchange : NSE: EMSLIMITED, BSE: EMSLIMITED
Business Model & Operations:
EMS Limited operates as an integrated engineering company specializing in water and wastewater management solutions. Their primary service include
- Sewerage Solutions: Designing and Constructing sewage treatment plants (STPs)
- Comprises around 30-40% of the order book.
- Water supply systems: Developing Infra for the collection, treatment and distribution of water.
- Comprises around 60-70% of the order book.
- Electrical Transmission and Distribution (T&D): Executing projects related to T&D of electricity and development of electrical infrastructure.
The Company's main revenue comes from North India particularly from Uttarkhand, Uttar Pradesh, Bihar and rajasthan. The Company is now diversifying it by bidding for projects in karnataka, West bengal etc.
Valuation:
As of December 6, 2024, EMS Limited's stock is trading at ₹893.60. To assess its valuation relative to peers, we can examine key financial metrics:
Price-to-Earnings (P/E) Ratio:
- EMS Limited's P/E ratio is approximately 28.94.
Price-to-Book (P/B) Ratio:
- EMS's P/B ratio stands at 5.78.
Market Capitalization:
- EMS Limited has a market cap of approximately ₹4,962.23 crore.
Aster DM Quality Care Ltd - Company Overview
Aster DM
Aster DM Healthcare founded in 1987 is one of leading private sector healthcare provider in India and Middle East. It recently merged with Blackstone-backed Quality Care making it one of top 3 hospital chains in India. The deal is expected to close by 3QFY26.
Company Snapshot:
- Company Name : Aster DM Quality Care
- Year of merger : 2024
- Headquarters : Bengaluru
- Key Executives : Dr. Azad Moopen - Executive Chairman, Mr. Varun Khanna - Managing Director
- Stock Symbol and Exchange (e.g., NSE: NSE:ASTERDM, BSE: 540975)
Sector: Hospital & Healthcare services
Business Model and Operations:
Aster DM Quality Care Limited will have a combined portfolio of four leading brands namely Aster DM, CARE Hospitals, KIMSHEALTH and Evercare. The combined entity will have around 38 hospitals.