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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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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2020 & 20-20 ~ Mumbai Equity Workshop Sat Aug 5 2017

Historic Saturday,July 1,2017~Indian Govt launches the much awaited huge Indirect Tax Reform ~ GST ~ Goods & Services Tax ~ 🙂  Here’s my GST Launch & Announcement too ~ Gaurav’s Saturday Training

2020 & 20-20 ~ The Long & Short of it ~Announcing a Full Day Mumbai Fundamental Equity Workshop on Saturday, August 5, 2017  ~ Register here => http://www.jsalphaa.com/register.php

On the back of a  fantastic Mumbai Workshop on Saturday,June 17,2017 here’s another opportunity to invest the first Saturday in August 2017 with me ! ~ especially for those who could not make it or could not be accommodated as Registrations had closed within a week of opening ~ expecting a few repeat participants too ~ what better endorsement could there be ! ~🙂 While you can call it an Encore ,this time in this Stock Selection ~Value Vs Price Workshop have kept another exciting Theme to spot & assess both Long & Short Term Opportunities in Equity :

2020 & 20-20 ~ The Long & Short of it

As Limited Seats would advice to Book Your Seat right away here => http://www.jsalphaa.com/register.php

Plan to cover over 25 Fundamental Opportunities in Specific Sectors & Companies  to assess Value vs Price both in the Short Term & the Longer Term ~ thus ideal for both Traders & Investors

Here’s some fresh feedback from participants of the very recent June 17,2017 Mumbai Fundamental Workshop on Stock Selection : Value Vs Price~ Wealth Destroyers : Potential Multibaggers where we conducted Macro & Micro Earnings & Asset Basis Valuation exercises & more & even played an animated Corporate Tambola !  ~ Some participants came in from Dubai,Malaysia,Delhi,Cochin & Ichikaranji too ~ & what a lovely & lively Mix from retail investors to HNWI market veterans & professionals from FPIs,Fund & Broking Houses & Institutions ~ spread in age from early 20’s to the 60’s

“Again Sir you Rocked & it was my fortune to attend your wonderful workshop that too three times in a row ~ it is your simplicity, down to earth nature & great FUNDA knowledge ( how to value a stock so precisely ) made me motivated to attend your w’shop again and again & i hope in future also, I will be able to attend your w’shop ~ Every w’shop is so unique”

 

“indeed a great learning & educational experience….totally luv your analysis of stocks….looking forward to the next one”

“Always fortunate to attend…get motivated by your knowledge & the attitude  you carry with…thanks for sharing your knowledge & helping people like me to grow better”

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Saturday Fundamental Equity Workshop ~ Tambola & Time just Flew!

Workshop Photos

It was a wonderful Saturday for all of us ~ a Full House ~Time just Flew!

The Mumbai Equity Workshop on Wealth Destroyers having the Potential to bounce back kicked off at 9.30 am stretched into 7 pm…began with a Tambola or Housie where they had to guess the Wealth Destroying company on the questions posed & strike off the name if it’s there on their Ticket…In fact each pulled out a question & posed it for all…Prizes for Jaldi 3 & Two Full Houses & a question Bank on 25 companies…like “Chor ! Chor!” & they got it ! ~ Kingfisher Airlines ! or Ethopian Counsel yet destroyed his Company  &  promptly the answer shot back “Karuturi”! Chocolates were given for each correct answer too while I spoke a minute or two on each company & how it was destroyed & whether it can revive

Covered Valuation,Sentiment,Momentum & Liquidity…the power of Compounding for Wealth Creation…FPI Flows Impact…Impact of Global & Domestic Economic & Geo-Political Head & Tail winds…the impact of three leading rates~inflation,interest & exchange….how to protect capital while growing it through the discipline of asset allocation & when to adopt tactical strategies & staying true to ones’ risk profile

…& if convinced on Equity & India…showed them why they should be…then should you go for passive index investing through Mutual Funds Schemes & be content with CAGRs of 10% to 15% over the years or should you go directly into Equity for specific selections for potential of higher gains…& why the latter should be your strategy…& why Fundamental rather than Technical Approach…& not to mistake luck for skills in such bullish markets

Tea & Coffee & a variety of Cold Beverages & Biscuits & Wafers were served through the day & we had to switch from a Copper Chimney Lunch Buffet arranged to a Soup,Salads,Sandwich & Desserts Buffet at Pizza By the Bay as the former’s kitchen had grappled with a fire the previous day & was closed on Saturday

Must Thank the Full House with Participants coming in specially from Dubai,Malaysia,Delhi,Cochin & Ichikaranji too…there were a few repeats from earlier workshops in Bangalore & Mumbai ~ take that as a thumbs up!…gratifying that within three to four days days of announcing this workshop end May 2017,it got full…surely Sensex at 31000+ and climbing has something to do with this ! 🙂

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Wealth Destroyers as Potential Multibaggers~ Mumbai Equity Workshop Sat June 17 2017

Wealth Destroyers as Potential Multibaggers~ Announcing a Full Day Mumbai Fundamental Equity Workshop on Saturday, June 17 2017 

🙂 This time in this Stock Selection ~Value Vs Price Workshop have kept an exciting Theme :

WEALTH DESTROYERS : POTENTIAL MULTIGAGGERS

As Limited Seats would advice to Book Your Seat right away here => http://www.jsalphaa.com/register.php

Plan to cover over 25 Wealth Destroyers to assess any Turnaround Value vs Price & thus a chance to redeem themselves and become Wealth Creators from here… or should just one move on in many of such Wealth Destroyers that are now beyond redemption

Here’s what some participants said of the December 2016 Mumbai Fundamental Workshop on Stock Selection : Value Vs Price…and this was before IB Ventures zoomed 7 x in months from Rs 20 to Rs 140 & HOV doubled in the same time to cross Rs 300… we had covered both these & more in Earnings & Asset Basis Valuation exercises

“Amazing… Awesome Session about Fundamental Stock Selection & Wealth Creation ”

“Full of Inspiration, filled with wisdom…. am really proud to be a part of this wonderful session”

 & from a repeat participant “recreated the same old magic of Bangalore in Mumbai… great Saturday”  

Would love to interact with you ~ So do invest one Saturday ,June 17, 2017 with me in my Mumbai Fort Office near BSE and above Starbucks & Croma

Register here => http://www.jsalphaa.com/register.php

Here’s the Detailed Template of this Workshop if you want more details on coverage

gap-master-class-mumbai-17june2017

🙂 See you Saturday, June 17, 2017 at my Mumbai Fort Office Conference Room… we’ll figure out if Suzlon will continue to be ZZZZZlon!  & dissect many such Wealth Destroyers!

Cheers !

Sterlite Tech Shareholders short circuited in the Demerger ! ?

Sterlite Technologies (STL) Shareholders short circuited in the Demerger ! ?

I was approached to buy some unlisted shares of Sterlite Power Transmission Ltd (SPTL) & then was astounded when told an offer had already come in for Rs 270 already !

So what’s the Big Issue ? ~ How Can the Value of unlisted SPTL change dramatically upward by over 300% from Rs 112.30( as on March 31,2015 cut off date) that the company offered for in the demerger of STL  and paid in August 2016 & just eight months later value the same atR s 464.46 ! on March 2,2017 when they announced an EGM for March 29,2017 to issue new shares !(Details Below)

It’s thus  to do with the low Valuation of unlisted SPTL as on cut off date March 31,2015 that was the subsidiary of listed STL that got the Power Division of  STL in the Demerger & then ceased to be a subsidiary post demerger.

Haribhakti & Co LLC did the valuation on a NAV (for Holding Co) & Income DCF Approach (for Operations) at a maximum of  Rs 111.50 /share.Price Waterhouse & Co LLC also used similar Valuation approach and got  mariginally higher Maximum Valuation of Rs 112.30.Both had valued SPTL below Rs 900 crs only ! despite Income Approach having to consider Potential of Scale Operations in coming years.Both Valuation Reports are dated May 18,2015 in sync with STL Board Meeting Date as below.STL has gone with PWC

These are the relevant Dates  & all relevant documents for Shareholder/Court/Exchanges Permissions & Approvals can be found here :

May 18,2015 ~ Board of STL in a corporate restructuring decision approves the Scheme of Arrangement between the Demerged Company STL & Resulting Company SPTL (then subsidiary of STL)effective date April 1,2015.Decides to keep SPTL unlisted unlike the Adani Group that listed Adani Transmission after their restructuring exercise

December 15,2015~ Court Convened Meeting of STL Shareholders passes the Scheme

April 22,2016 ~ Mumbai High Court issues an Order approving the Scheme

May 23,2016 ~ Order becomes effective on date of filing with Registrar of Companies

June 15 & 16,2016 ~ STL begins ex demerger quote on June 15,2016 as Company has set June 16,2016 as record date for STL shareholders entitled to receive Demerger benefits of SPTL.SPTL ceased to be a subsidiary of STL on this Demerger & it was decided to keep it unlisted unlike the Adani Group which demerged & listed Adani Transmission.

June 27, 2016 to August 8,2016 ~ Election Date Range for @ 122000 shareholders in STL up from under 120000 shareholders at June 30,2015 when the Demerger plans were announced in May 2015 and I wrote a detailed blogpost in July 2015 (see later below) .There were two options for Resident Shareholders ~ receive Equity Shares of  SPTL at Rs 112.30 (FV Rs 2) in a 1: 5 ratio for shares held in STL or go for the 8% Preference reedeemable shares of Rs 112.30 in the same 1: 5 ratio that would be reedeemed at Rs 125.55 in eighteen months from allottment.FPI/FIIs?Non Resident shareholders had to sell their shares back to the Promoters or their affiliates.

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