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 

read more

Saturday Equity Workshop~You Guys Rocked! Now Go Rock the Markets!

Saturday,February 17,2018  Fundamental Value Vs Price Equity Workshop in Mumbai

You Guys Rocked! Now Go Rock the Markets! ~ for what’s Academics & Theory without Action & Application

Full House with all pretty knowledgeable & many market veterans from Mumbai,Dubai,Sangli,Kolhapur,Hyderabad,Thrissur & Gokak~from small Investors to High Networth ~from Broking,Corporate,PSU,MNC Banks,MNC IT companies & FPI fraternity too…from a confident 25 year old to a 60 year old who has seen it all & wants to see some more !

Great Interaction literally from 9 am to 9 pm ! & the Bulls remained alive & kicking on & around the Conference Room table throughout !

We covered them all & more!~Valuing on Assets & Earnings & assessing against Market Price ! ~ Demergers  & Delistings  & Rights &  Non Linear Earnings & Holdings & Acquisitions & New Parentage & Turnarounds & Changing Dynamics in Sectors & Themes like in PSU Banks again! & the GST Impact…& of course hopelessly hanging on to Wealth Destroyers & even averaging in them over the years !

Where are the Sensex & Nifty headed in the coming years…should we be bothered about them & other Macros or simply continue focusing bottom up on specific selections for serious wealth creation…Passive or Active Investing…we discussed all

We covered  Investor Gurus Warren Buffett & Peter Lynch & Investor Mistakes of Confirmation Bias,Anchoring & Improper Framing among others…how Multi disciplinary thinking evolves ones into a better person & investor

Corporate Tambola too was fun with prizes for three full houses & instant chocolates to those who correctly guessed the companies…A Special Praise for Hemal,who had enquired if this workshop would be for Beginners,& turned out guessing many companies !

Some other prizes too for some fabulous answers…like the hilarious one from Daya that I should seek another session,this time one to one ,with the pretty girl who had emailed me a query to clear a concept which was not a financial one…she had asked my views on whether Marriage was necessary in modern times & should not ‘live in’ be good enough ! Daya’s response brought the house down!

Chowdhary from ONGC lucidly explained his views on ONGC going forward

Vijay Desai,a clear market veteran, won  for being the best participant with some great interaction right throughout

read more

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

read more

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

read more

Scooters India up @ Rs 75~BSE IPF Oct 2017 Report farcical?

Scooters India up @ Rs 75~You may have shunned it on reading the Oct 12, 2017 BSE Investor Protection Fund (BSE IPF) Commissioned Report

Why have I questioned it as farcical?

Well…who selects which Company should be covered in such Reports by the BSE IPF ? For in Scooters India the Performance really is secondary at this juncture,even though their Vikram Three Wheelers have got a market share in UP at least where they are manufactured near Lucknow  ~ what is moot is the proposed disinvestment & the assets,including land of 125 acres, that goes with the company  ~ Valuation is essentially ultimately a factor of Earnings &/or Net Assets

The Point is that any Report that the BSE IPF commissions to serve the Investors ,needs to be impactful & serve the purpose for which it has been commissioned

Their Initiative of course deserves applause & support

It is not,of course the job of  the Preparer to give a View to Buy or Hold or Sell the Scrip being commented on & their statement & disclaimer covers this in the report.They have rightly stated that this is not a recommendation & the purpose is to only make available publicly information to the readers in an easy to read format

As an illustration take this October 12,2017 Report on Scooters India covering the June FY 18 Quarter Overview

http://www.bseindia.com/download/Research_Report/Report/505141/2017-18/Scooters%20India%20Ltd.pdf

The Performance was clearly sub par & any reader would not have looked to seriously consider Scooters India in their portfolio…more so as it was also,I believe, in the double margin XT category then on the BSE…in fact if any held it,they may have considered to dispose at the Price levels of Rs 41 then

Then why is it on 5% upper circuits for the past few days & was Rs 75.95 today

Well there are three reasons for this & in my view ,it would have been great if at least the first should have been mentioned in the October 12,2017 report prepared under the Initiative of the BSE IPF

If the Terms of Reference for preparing the Report was merely to present the Quarterly Performance in any easy to read financial format through tables & graphs & a brief commentary on what’s gone up or down then BSE IPF needs to increase the scope so as to include all publicly available significant information to make the report meaningful

As I keep reiterating at my Value vs Price Fundamental Valuation Workshops that the Key to Fundamental Evaluation is RELIABLE,RELEVANT & TIMELY Information & Data & Good to Great Interpretation thereof

read more