yes you cant be doing it if it is a pvt ltd company. but mine is a sole proprietorship. also you are right there are clauses in the T&C of some loans that you cant be using the loan for speculative stuff. but i saw no such thing in cash credit facility or over draft facility with bajaj finance flexi hybrid loan and ICICI overdraft account. so leagally i am in the clear (i think).
you see the spikey spikey pattern in my account value curve? it is beacsue of what i explained earlier… i get money into my zerodha account on wednesday… i take positions (WITH UPSIDE RISK ONLY) i.e. CE options contracts trading at Rs. 1-2…without hedge (i never take overnight downside risk NO MATTER HOW BULLISH THINGS SEEM)
on thursday’s i go all-in with company funds+personal funds+overdraft funds for intra-day…(i do ONLY far far far OTM options, i dont aim for anything beyond 0.2-0.5% on capital deployed).
after i am done on thursday, i place a withdrawal request and receive back the funds on friday and refill my overdraft account… so i pay interest ONLY for those 3 days.
overdraft interst @ 18% (plus the 1% annual maintenace cahrge) comes out to approx Rs. 55 per lakh rupees per day… so for any given expiry (include Rs. 9 + GST transaction charges on zerodha)…for 3 days i spend around Rs. 200 per lakh…
so assume 30 lakh on any given expiry… 10L my funds + 10L company running capital (both interest free) + 10L overdraft funds (Rs. 2000 cost of capital)…
BECAUSE i do this, it gives me an edge over my competitors. I dont need to make a profit in my manufacturing business. I under quote my competitors, to a point where I can just barely cover my fixed & variable expenses of running the business, i can pay my employees well above market rate (my shop floor employees – semi skilled- guys have a high turn around rate… i.e. they stay anywhere between 6 months to 2 years; but my core team has been with me for 7 years now).
I focus on generating larger and larger revenue (not profit), by Q4 FY 2024-25 i plan on doubling my current asset value by buying 2 more new machines valued at 1 Cr each (using the CGTMSE scheme, and removing my pledged assets completely outta the equation)… which will again repeat the cycle of depreciation and i expect it to more than double my turnover…
all this was done using a piece of land that we weren’t using and 30L initial investment in 2018 (yeah the pandemic was tough, if it wasnt for that, i would’ve already been sitting on 4Cr. worth of machinery). the business now has a book value of 1.2Cr… that is a 4x appreciation of my initail investment in 5 years… in my world, that is good enough…
i am 37 now, and hopefully by age 40 i’ll have a business generating good cash flow, with zero exposure of assets (no pledging family assets any more) and all invested amount (30L adjusted for inflation) recovered.
