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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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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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

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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 !

Nah ! for Nakoda 46 paise ~ warning was issued three years ago

On December 6,2013 following on a blog reader Dinesh Sampat’s request I had posted the warning below with elaborate reasoning:

Nah ! or Wah ! for Nakoda Ltd at Rs 10.50!? ~ This is for you Dinesh Sampat 🙂

Posted on

This Tuesday morning the Times of India edition carried a brief coverage of CBI arresting the Promoters of Nakoda for forging papers and manipulating accounts to avail of Bank Loans of over Rs 2000 crs which were siphoned off

Here’s the coverage & here’s BSE asking for clarification from the company  on the same

The Share Price is 46 paise on BSE …yes it’s still quoted

 

Planning a Training Workshop that has a classic Theme for such low priced Wealth Destroyers & how & when to spot a turnaround & take the risk,if indicated  ….should announce it shortly

Do not get seduced by low below par quotes & a mindset as “what could go wrong…the down side is limited !”….you’ve already been foolish in Global Trust Bank  (vapourised) & Kingfisher Airlines(suspended but as good as vapourised) just to mention a few black sheep