Sat Aug 4 2018~Mumbai Funda Equity Workshop~Spotting Gold Mines & Side Stepping Explosive Ones

Fundamental Equity Workshop in Mumbai
Stock Selection ~ Value Vs Price

Indian Equity ~ Goldmine to a Few & Explosive Mine to Many ~ Training Minds to be Minesweepers to differentiate

Saturday, August 4, 2018

Wealth of Mind & Monies must move in tandem.Click above or here to attend my next Mumbai workshop on  Saturday August 4,2018.It’s yet again at my Fort HO,above Starbucks & Croma & a hop step & jump from the BSE

Q’ attend karey? 

‘Q’uality’~how to focus on it~ Discipline of never Deviating~never? what about that potential multi-bagger turnaround or sapling that carries high risks ? Equity is all about Growing Wealth while Protecting it ~ taking & managing risk

The above Registration link also displays the Workshop Template outlining what shall be covered & why you should invest one Saturday with me

We’ve had real Fun at all the Equity Workshops in the last three years with some lovely entertaining interaction with & between participants from all over India & Overseas while playing the Corporate Tambola  or  even playing around with ‘Experts’ Views on our Sensex & Nifty or what Trump will do or not do next ! or whether any North Korea Missile is pointed at our Sensex ! or   explaining & evaluating practical applications of Investment & Financial Concepts through discussion & debate in Company Case Studies with focus on  assessing ‘Value vs Price’…we’ve seen the impact of FPI flows,Interest,Inflation & Exchange Rates,Fx Reserves,Oil Prices & Budget Deficits…we’ve discussed the importance of Corporate Earnings on Valuation & in many cases how it’s the Assets that give Value…we’ve examined the four legs of the Equity table ~ Valuation,Liquidity,Sentiment & Momentum & how to gauge rising risk when Markets run ahead of fundamentals…many of you have been rewarded too at the workshop for great lively answers & interaction

Here’s another Opportunity in August 2018 in Mumbai to Train & sharpen Minds to become more efficient MineSweepers to spot & differentiate between Wealth Creating Gold Mines & Wealth Destroying Explosive ones

We’ve tackled Valuations & Risks of Bombay Dyeing,I B Ventures,HEG ,Yuken,Ruby Mills & HOV among many others in the recent past & discussed the serious Corporate Governance Issues in the Essar Oil Delisting,Kwality,JBF & Vakrangee among others & the huge Risks associated with  wealth destroyed companies GTL Infra,ESL,Suzlon,Subex & Uttam Galva that yet keep offering hopes of a turnaround

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Kwality destroyed 90 % from Rs 160 to Rs 21 in a year !~Blame the Brokers for going broke?

You were looking for 100% gains in a year…Poof ! now you see your Principal evaporating near 100% 

Kwality Limited’s Share Price has evaporated nearly 90 % from Rs 160 to Rs 21 in a year !

Blame the Brokers for going broke?  

Where was the Quality in the first place !...it was clearly basking in the sunshine of the surge in the share price of other Dairy Companies like Heritage & Parag Milk

I recollect how aghast I was when Kwality Ltd was recommended strongly by not one but several well known broking houses in 2016 & 2017 when it was being quoted in the Rs 110 to 140 range.Targets given by them were extremely tempting to succumb to ! ~ one gave Rs 263 ! ~ another projected Rs 200 !

I have often  mentioned this Company at my Fundamental Equity Value Vs Price Training Workshops when illustrating severe Corporate Governance Issues

A few months ago on March 27, 2018 Kwality had responded to the Exchanges on their concern of falling share price that there was no strategically significant development in the organisation or business & that they were committed to deliver sustainable value to its shareholders at all time…Wow!

The Problem perhaps was on news of Promoter Dhingra pledging shares…or the Company complaining to the exchanges that a broker was fradulently selling shares in the market .Earlier this month Kwality has also been put on the Additional Surveillance Measure (ASM) List.Their June 20,2018 Board Meeting to consider buyback and /or Bonus has been rescheduled to July 3,2018 as majority of the Directors could not make it

What’s going on here !

The Exchanges have just been notified of a downgrading of credit rating by Brickwork .It was just two months ago in April 2018 when Brickwork had given their last ratings  

Today Kwality  was  on lower circuit at Rs 21.15 with heavy volumes before opening up to hit upper circuit & closing a little lower at Rs 22.95 on BSE…relief rally or someone finds real value now !? …52 Week High was @ Rs 160 a year ago…that’s nearly 90% wealth destroyed  from a Market Cap of  @ Rs 3800 crs to just above Rs 500 crs !

This is not to condemn the Broking Houses or vilify them…after all the Money & Risk is all yours…no one held a Gun to your head to invest in Kwality !…so don’t blame the brokers for going broke in this ! even if they had any vested interest in recommending the Company for Investment

Just to warn you not to be carried away by momentum & sentiment in bull markets & follow anyone blindly

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On Kochhars & Videocon is the ICICI Bank Board itself an NPA?

Outset Disclaimer

Neither my family nor me are shareholders of ICICI Bank or Videocon.

  • I do know the Kochhars only on a casual greeting basis when we came across each other on ‘Open & Speech Days’ at the School where our children studied. I did however 14 years ago, in and around 2004, meet up with Deepak Kochhar, at his request through a good common friend, at the Cricket Club of India Swimming Pool Cafe in Mumbai to explore the possibility of advising on his Family’s Equity Portfolio. It did not happen as we disagreed on how India was taking off. I had opined that the next few years would be great & they were, with GDP at 9% & Markets zooming in the 2005-2007 period. There was no further meeting after that  
  • In the 1990’s I had a private audience for just five minutes with Mr Dhoot of Videocon, at his request, in his car after he had attended a Rotary Meet in Ahmednagar to hear my address. It was a courtesy brief engagement
  • In the past I have, at the request & invitation of ICICI Bank, conducted a two day Securities Allocation & Portfolio Management Training Workshop in Mumbai for their Private Wealth Management Clients Group Managers from across India

On Kochhars & Videocon Link Controversy is the ICICI Bank Board itself an NPA? 

Caesar’s wife must be above suspicion

It’s always got to be Substance over Form, so we’re drilled into, while studying for Professional Accounting & Auditing Qualifications

So let me state that the Kochhars & the Dhoots of Videocon go back a long way into the 1990s… more on this later below 

So while the Form may be legit, albeit through a chronological maze of shareholdings changes & transactions, the substance of these have come into public glare recently on the alleged quid pro quo between Kochhars & Dhoots

While it remains to be established by investigative agencies & SEBI on any violation of disclosure norms & any conflict of interest and this quid pro quo between the Kochhars & Videocon on the Consortium Loan of Rs 3250 crs extended to Videocon by ICICI Bank in 2012, I raise this question to the ICICI Board as am concerned & angry to say the least, with this ‘Sense of Entitlement’ that continues to prevail in the upper echelons of our Institutional, Banking, Corporate, Political & Bureaucratic World. There are figuratively & often even literally Marriages of Convenience in these circles to strengthen the nexus. Perhaps a Competitor of ICICI Bank, like alleged even in controversies before, is again at play here… but the allegations are serious enough & the Bank’s Board has to be seen to really get behind all this before giving a clean chit. The Perception is that they are not doing so & the intent for this comes into question… more so after the response of the Bank’s Chairman on the current controversy to the Indian Express raises more questions than answered.

ACT ~ Accountability, Conscience & Transparency 

For me the Simple Question in this Matter that begs an answer is this :

Is ‘D’ a ‘Duh’ to give & forgive Rs 64 crs ?

Far from it, so there has to be more to it 

Let me spell out the chronological scenario to put it in perspective “

  • Why would ‘D’ of ‘V’ in Jan 2009, within 20 days of his entering into a 50:50 JV ‘N’ with ‘K’, completely sell of his 50% in ‘N’ to ‘S’ at par & also sell of at par his own private company ‘S’ holding of 9990 shares of FV Rs 10  to a ‘third party’ (this would be his associate ‘M’), as he defends his actions to Indian Express stating “… relinquishing my right, title and interests in the said shares, giving up control and management of Supreme Energy and completely disassociating myself from both the Companies all on the same day”? 
  • Why would then ‘D’ of ‘V’ give Rs 64 crs to  Company ‘S’ from his listed ‘V’ or any other of his entities  to give to ‘N’ alleged to be a Loan which was then converted to an allotment of zero coupon Fully Convertible Debentures allotted in March 2010 & finally converted to shares in March 2016?
  • As on March 31, 2015 ‘S’ held 47496 shares in’N’ apart from the Rs 64 crs FCDs. These shares should be the 24996 shares sold by V to S in Jan 2009 as above + 22500 shares sold by ‘P’ owned by K Family to ‘S’ in June 2009
  • In April 2012, ‘I’ Bank in a consortium extended Rs 3250 crs lending facility to the ‘V’ Group of ‘D’
  • In September 2012 ‘PE’ Trust of the K Family purchased at par FV 10 all 9990 shares of ‘S’ from ‘M’ (See above to recollect… the same shares sold in Jan 2009 by ‘D’ to ‘M’ at par)… this gave ‘K’ Family ownership of ‘S’
  • In April 2013 the ‘PE’ Trust of K Family subscribed at par Rs 10 to a further 80000 shares of ‘S’ which held held 47496 shares in ‘N’ apart from the Rs 64 crs FCDs in ‘N’. This is the @ Rs 9 lakhs Equity investment in ‘S’ by  the ‘PE’ Trust of K that is the accusation levelled at ‘D’ & ‘K’ as being a pittance of a price for handing over ‘S’ to ‘K’ Family’s ‘PE’ Trust
  • So as it stands we need to question & investigate the status of the original Rs 64 crs given by the listed ‘V’ or a ‘D’ Entity or any other Entity to ‘D’s originally owned private company ‘S’. Was it a loan to ‘S’? & if so has it been returned ? or was it an investment in Equity in ‘S’? which then does not have to be returned… of course this money was in turn given by ‘S” to ‘N’ as above… this probably also explains why ‘D’ of ‘V’ sold of his 9990 shares in ‘S’ in Jan 2009 itself to an associate ‘M’ so as not to disclose the transaction as a related party in the books of listed ‘V’ when ‘V’ is alleged to have later in 2009/10 extended Rs 64 crs to ‘S’… I went through the 2009/10 Annual Report of ‘V’ & there is no disclosure of any such Loan or Equity Investment in ‘S’…. so was it routed through another company of the ‘V’ group or one of ‘D’s private companies or was it some other entity ? 

There are other Alphabets in play too (these are elaborated later below), but the above should suffice to conclude that :

  • Rs 64 crs invested in ‘N’ by ‘S’ in 2009/10  finally through FCDs allotted in March 2010 by ‘N’ was converted to Equity in ‘N’ in March 2016 & as of date both ‘N’ & ‘S’ are owned by the K Family…. so ‘N’ does not need to repay this to ‘S’…. but what about ‘S’ having to repay this to listed ‘V’ or any other ‘D’ related entity  or any other entity if it was indeed given as a loan? 
  • The ‘PE’ Trust of the K Family bought out ‘S’ at a pittance only in September 2012 after ‘I’ had sanctioned &  disbursed  consortium lending of Rs 3250 crs to the ‘V’ Group of ‘D’

To jog your memory there is an age old link between the Kochhars & Videocon even before they initiated this 50:50 JV in 2008 in NuPower Renewables

Did you know ?

  • The Kochhar Brothers, Rajiv & Deepak ran a listed company in the late 1990’s called Credential Finance Ltd. Rajiv was the Executive Chairman while Deepak was the Managing Director. It was last traded in December 2001 on BSE & BSE Records show it as compulsory delisted only last year on August 23, 2017…such a delisting,as different from a voluntary delisting, as per SEBI directives involves barring promoters from raising monies from capital markets for 10 years besides other stipulations. It was incorporated in 1992 as per MCA Records & till October 1, 1996 it’s name was Bloomfield Builders Ltd. In 1997 it’s Equity Capital was Rs 5.63 crs of Face Value 10 & it had declared a 6% dividend for 1996/7. If I remember correctly, the Shareholders included many top industrialist groups at the time had subscribed to shares at obscene premiums at the time when Income Tax Regulations to justify Issue Prices & Valuations were not in existence (these came in 2011/12). Do I need to spell out why ! Videocon directly or indirectly held a stake & it is important to note that Venugopal Dhoot’s right hand man & group financial advisor, S K Shelgikar was on the Board of Credential Financial. I recollect Credential had even sponsored a Squash Tournament as the Kochhars were avid Squash Fans & Players at the National Level. Rajiv has since promoted the Avista Advisory Group based in Singapore & India while Deepak has set up the NuPower Renewables Group

SEBI’s earlier ‘Panga’ with Videocon & Hindustan Lever & its Directors

In 1998, the infamous late Harshad Mehta of the 1991/92 Scam, through his Damayanti Group, had played up shares of BPL, Videocon & Sterlite in alleged connivance with their managements. Top Brokers too were involved as was the Shriram Mutual Fund. SEBI Chairman DR Mehta at the time in April 2001 had passed an order barring  Videocon International for Three Years from raising Monies from the Public in the Capital Markets & to pursue prosecution of the Directors, Mr V N Dhoot, Mr S K Shelgikar & Mr S M Hegde. They had appealed to the Securities Appelate Tribunal (SAT) who set aside the order in 2002 

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3 Seats Left ! ~ Sat Feb 17 2018 Mumbai Funda Eq Workshop

3 Seats Left ! ~ Sat Feb 17 2018 Mumbai Funda Eq Workshop

Reserve yours now =>  http://www.jsalphaa.com/register.php

Fundamental MasterClass in Mumbai Stock Selection ~ Value Vs Price – 2018 ~ Markets Major & Mature ~ Sensex 36000 ~ Taking Stock

Saturday, February 17, 2018

At the previous Funda workshops in June & August 2017  we thread-bared Bombay Dyeing at Rs 70 to assess Value Vs Price in the price range of Rs 70 to Rs 85 & participants got excited to lap it up….in months it raced away to Rs 300 & now stands at Rs 250…of course Markets have been kind too…we had covered over 50 companies across sectors like Yuken,Rama Steel & Grauer on Valuation through Assets & Earnings & Situational Studies like M & A, Delisting & Turnarounds & the outcomes have been quite enjoyed by most participants as the feedback shows……. for what’s Academics & Theory without Action & Application

As Usual there’s already a good mix of participants from retail to HNWI & from FPIs, broking houses,PSUs  & MNC Banks….coming even from overseas & outstation for this Mumbai Workshop

Do try & make it….will be fun interacting fun-da-mentally with all of you on Re-positioning & Reinvestment Risks & on Corporate Governance & Controversies as we play the Corporate Tambola and exercise other Mind Gums on the Magic of Compounding & the holding of Convictions of Fundamental Selections through even steep market corrections especially if fully invested !

When I had announced this workshop just a fortnight ago the Sensex was at a record 36000+ and featured in the Workshop Title…In days since then following a global correction and arguably an uninspiring Union Budget that re-introduced Long Terms Capital Gains Tax the Sensex fell sharply below 34000 with many non large caps taking a hit of even 30 % with Vakrangee decimating over 50% from over Rs 500 to under Rs 200 on Corporate Governance issues

Even Warren Buffett’s Berkshire Hathaway’s Equity Portfolio has taken a US $ 11.2 billion hit ~ of course he’s not bothered ~ should you be when closer home we continue to be suckers in Company Price Run Ups where Quality is clearly suspect & where our PSU Banks continue to reel under the weight of NPAs with SBI announcing a huge Q 3 Loss,the first in many quarters, because of this ? ~ Capitalisation & Consolidation process is on  ~ are PSU Banks potential wealth creators going forward?

What Now ! ?

See You Sat

Cheers !

Sat Feb 17 2018~Mumbai Funda Equity Workshop~Taking Stock at Sensex 36000

Hey ! Here’s the Announcement that’s been eagerly awaited for the next Mumbai Fundamental Equity Workshop after Full Houses in June & August 2017

Just Click on it to register

Fundamental MasterClass in Mumbai
Stock Selection ~ Value Vs Price – 2018 ~ Markets Major & Mature ~ Sensex 36000 ~ Taking Stock

Saturday, February 17, 2018

As usual it’s on a Full Saturday .This time on February 17,2018 at my Fort HO in Mumbai.The Investment,inclusive of GST etc, is Rs 18000 or Rs 16200 each for 3 or more registrations from a group

As Limited Seats,do sign up quick for debating & discussing wealth creation & destruction through direct Equity in Indian Listed Companies

We are at all time Highs on the Sensitive Indices with the Sensex at 36000+ & Nifty at 11000+

At my last August 2017 Workshop the Sensex & Nifty were at 32300 & 10000 levels.They’re up 10%+ since then in six months but the magic has been in Specific Scrips which have recorded life changing surges if you were only invested in them !

For illustration when guiding on Valuation with regards to Non Linear Earnings Potential  in the June & August Workshop I had the participants engage in a Valuation exercise for half an hour on Bombay Dyeing at Rs 70 to Rs 82 levels & draw conclusions with some convictions.It raced away to Rs 300 & it’s now at Rs 250 levels ~ yet over 200% inside six months…of course Markets have been kind too in this period

In the August Workshop we played out a 20% CAGR scenario over 5 years to explain the Magic of Compounding.We used Yuken at Rs 1877 as an illustration taking into account it’s financials,past,present & future potential.If at 5 years in 2022 it would reach Rs 4670 it would give this 20% CAGR.It’s up 150% absolute touching Rs 4700 today inside 6 months ! …Life Changing Wealth Creation in Equity is simply the Magic of Compounding in a right Selection based on the Valuation leg of the Equity Table

What Now? What Next?

Bank of America thinks Sensex will slide & close at 32000 end 2018 ….Of course in 2015 they had forecast it would be 54000 ! yes ! 54000 by end 2018 ! & Ambit thinks we are in the last stage of the Rally ~ but they’ve been remarkably bearish all of 2017 & am sure their clients must have missed the 2017 gravy train in Equities ~ While Many think we are in a huge Bull Rally for Years to come & one even has called 35000 as the new Sensex Bottom ~ Should we care about what they think ?

Or should we simply care about how to grow serious wealth through direct equity in Indian Markets & protect it while growing it ? That’s what this Workshop is about

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Insider in Panacea Biotec~up 30%~but Exchanges let it go!

Panacea Biotec~Insider~ but Exchanges let it go!

On January 12,2018, loss making,litigation led Panacea Biotec kept slumbering at Rs 230 levels with Volumes below 10000 on BSE

Suddenly it woke up on January 15,2018 shooting up to Rs 250 levels with Volumes of over 100000

This morning it’s crossed Rs 300

Company :PANACEA BIOTEC LTD. 531349

Period: 12-Jan-2018 to 23-Jan-2018

All Prices in Rs

Date Open High Low Close WAP No. of Shares
12-01-2018   38.05  239.90   231.45  233.25  235.03 9,775
15-01-2018  231.00  266.95  231.00  253.35  255.36 1,19,748
16-01-2018  253.35  264.00  252.15 253.70  257.60 24,406
17-01-2018  254.80  264.15 244.55  256.90  258.24 64,132
18-01-2018 262.90  283.95 260.00  264.70 272.82 2,61,399
19-01-2018 273.00 273.80 265.05 270.20  269.45 52,920
22-01-2018 273.35  291.00 265.00 288.45 282.78 1,26,136

BSE did seek a clarification from the company on  the morning of January 16,2018

https://www.bseindia.com/corporates/anndet_new.aspx?newsid=8304f7c6-8c7d-4074-b2ba-d21cdc5d1e3f

& of course Panacea did send it a reply the same day

http://www.bseindia.com/xml-data/corpfiling/AttachHis/41beb1d5-3505-4dc3-8852-ed5ab92889a2.pdf

It’s signed by Vinod Goel, Group CFO & Head Legal & Co Sec with a paragraph extract as below

“Further, the Company believes that there is no pending information/ announcement which in its opinion may have a bearing on the Volume behaviour in the scrip of the Company”

BSE of course, as is bound, put up this clarification for public view on their website

Wow ! because then promptly two days later on January 18, 2018 the Company makes a big Announcement being delighted to announce a collaboration through two long term agreements  with Serum Institute of India Pvt Ltd  & it’s subsidiary  for two Vaccines which have huge Global Potential

http://www.bseindia.com/xml-data/corpfiling/AttachHis/5a977535-fd5c-4298-91e8-5551146c4071.pdf 

This too is signed by Mr Vinod Goel.I’m sure he has a good explanation for this & I for one would love to hear it.Did he not know about the Collaboration just two days before he announced it ? Nah! ~ Of course he was not obliged to disclose it on January 16,2018?…but he could have worded his January 16,2018 clarification better

The Volumes on NSE of course are larger than BSE

In light of the big announcement by Panacea on January 18,2018,just two days after company claimed there is no pending information or announcement that could have affected Volume behavior the Exchanges must follow through with Panacea on this .It’s also easy to bring up who brought the shares of the company from January 15 to the morning of January 18,2018 before the Public Announcement of the tie up

They obviously knew before hand

That’s why the Price has moved past Rs 300 this morning with view that these vaccines could be game changers and literally life savers for Panacea if they achieve Scale Sales as potential declared in the press release as above.a ‘beaming’ Mr Adar Poonawala of Serum Institute says it’s a historic deal as the release states.Dr Rajesh Jain of Panacea too is buoyant

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