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

 

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. read more

Promoters rooting for Change of Infosys Chair~Seshasayee to Subrahmanyam?

The Infosys Situation is getting as explosive as the Tata Group’s did with  Promoters rooting for Change of Infosys Chair~Seshasayee to Subrahmanyam?

Corporate (Mis)Governance Issues~First Tatas & now Infosys !~Chairman & Board under Attack by Promoters

It’s been disruptive global times in many ways with Trump now US President and India re-gearing up Post Demonetisation & the Indian Corporate Big League crying out “Me Too” .

Headlines were hogged for months as first Promoter Family’s Ratan Tata led the unusually aggressive initiative  in the illustrious Tata Group to fire it’s Chairman, Cyrus Mistry & now Promoter N R Narayana Murthy has called to replace Infosys Chairman with Prof Marti Subrahmanyam .Ex Directors T V Mohandas Pai & V Balakrishnan support Murthy on this  & are calling for the Chairman’s resignation for serious misgovernance on issues of High Severance Packages,Hike in CEO Package ,Director Appointments,Inducements to bag Contracts,non disclosures among others that strike at the very core values Infosys was build on

Narayan Murthy has just asserted in an interview that the unusually high severance package to the ex CFO was just hush money cloaked & that he was concerned about falling standards in corporate governance

Whoa ! That’s a criminal charge in my view !

N R Narayana Murthy is rooting to replace Seshasayee with Prof Marti Subrahmanyam,Charles E Merrill Professor of Finance at the New York University Stern School of Business.The Professor has already served as an independent director on the Infosys Board for thirteen years till 2011

Four Years ago in January 2013 I had an opportunity to interact with Prof Marti Subrahmanyam when he delivered a paper at BSE on the  manipulation of Libor Rates.I had blogged on this then.I had asked him if the  Banks simply had to rig the rates to survive & if this was the case then the orders had to come from the top.Prof was taken aback a bit by the query & clearly reluctant to confirm this.Expected truthful answer should have been “Yes” as the question was rhetoric.Instead he had brushed it off abruptly & I got the impression of an intellectual arrogance at display.That view has stayed as I’ve not got another opportunity to interact to be able to change this view …He’s quickly thrown in the hat to become Infosys Chairman.Clearly Narayan Murthy has been in touch with him on this before putting up his name to replace Seshasayee,Murthy has always been straightforward and blunt like in yesterday’s interview calling the severance pay as hush money !.Can’t imagine Subrahmanyam to be as straightforward & I daresay will be Murthy’s ‘Voice’ just as Ratan Tata,in my arguable view,wanted a ‘Yes’ Man Chairman to head Tata & which Cyrus Mistry turned out to be not read more

Equity ~Life Changers or Life Maimers ?

Equity ~Life Changers or Life Maimers ?

This Thought was inspired by a Whatsapp Forward received this morning titled Power of Equity .It listed many Life Changing Wealth Creators that grew many fold from just Rs 10000 invested in each  & carried a concluding Message in Capitals ” INVEST WISELY WITH LOTS OF PATIENCE “

This was the List & I’m assuming the Years & CAGR Maths is correct with Dividends not being considered :

  1. Eicher Motors-1992 => Rs 80 lakhs
  2. Asian Paints-1986 => Rs 90 lakhs
  3. HDFC -1990 => Rs One Crore
  4. Brittania – 1985 => Rs 1.06 crs
  5. MRF – 1985 => Rs 1.10 crs
  6. BOSCH -1985 => Rs 1.20 crs
  7. Amara Raja -1991 => Rs 1.25 crs
  8. Shree Cement -1990 => Rs 2.90 crs
  9. Infosys – 1993 => Rs 3 crs
  10. Dr Reddys -1986 => Rs 10 crs
  11. WIPRO -1981 => Rs 400 crs

Cannot Argue with this Message for I’ve seen three of my Scrips,in even relatively quick time inside five years of investment too becoming over 100 Baggers ~Matrix Labs( early Millenium & now delisted as sold to Mylan),Mercator(early Millenium) & WIPRO ( from 1997 to  early 2001)

It is rare for most investors to live the Conviction & Temperament to hold for long & ride the Huge Life Changing Gains.Imagine if more than Rs 10000 had been invested in each of the above,especially WIPRO!

However my Thought is what about Wrong Convictions on the High Fliers that became Wealth Destroyers &  Life Maimers !

Here are a few of them ,most yet listed & struggling to revive & how much worth would your Rs 10000 invested in each of them be now ….most are Horror Stories of the past decade or a little more…sure you can contribute more…My Horror Stories  have been the Damania Group’s Damania Capital Markets to mention one.Bad Judgement Call that Cost!It was compulsory delisted in July 2004.

~Suzlon -2005=>Rs 842  &  2008=>Rs 348 ! => 92% to 97% wiped out after considering 10:2 Split in January 2008 when it reached an all time high of Rs 2300 before split.Current Price Rs 16.Promoter Tulsi Tanti is yet on board though Dilip Shanghvi of Sun Pharma Group has acquired a major stake in it @ Rs 18 in February 2015.Mandatory Open Offer at Rs 18 to other Shareholders in January 2016 met with no success.The Share Price had raced to Rs 30 from where it has halved & is below the Open Offer & Stake Price of Rs 18.Shareholders hold out Hope of Revival back to Glory Days in the years ahead under Dilip Shanghavi.So far it’s been a muted share price trading range in recent months.

~Unitech-2006 => Rs 505 => 95% wiped out after adjusting for 12:1 Bonus & 10:2 Split in June 2006 & 1:1 Bonus in Aug 2007.Reached a high of Rs 14800 in 2006 before Bonus & split .Current Price under Rs 6

~Kingfisher Airlines-2006/7 => 0 ! => 100% wiped out & scrip suspended for trading from 2012/2013 & restricted trading from June 2015 ~ reached a High of Rs 335 in 2007 read more

Sadly Tree House Education Uproots Children Now after Shareholders

Sadly Tree House Education Uproots Children Now after Shareholders

The Market Cap is down to just Rs 100 crs at 20% lower circuit today at Rs 23.85

It’s Fall commenced in 2015 uprooting Shareholders Wealth dramatically from Highs of Rs 550 in Feb 2015 when Market Cap was over Rs 2300 crs ! ~ it’s a wipe-off of over 95% in Wealth!!! like you’re left with just Rs 5 from your original Rs 100 !!!

Now Children have been uprooted with Centres being closed overnight

I had blogged extensively on this debacle over a year ago on November 27,2015 with specifics on how there appeared to be cloudy money payments & accounting jugglery in the accounts.My Training Sessions cover TreeHouse when discussing Corporate Governance & Interpretation of Financial Statements when assessing Value vs Price

Tree House Education up Shit Creek & Down Market Big Time at Rs 169

Did not the  FPIs,Private Equity Funds & Venture Funds question this when investing Hundreds of Crs in the Company….and how did Independent Directors & Auditors allow all of this….& how did all such risk miss the eyes of many a Fundamental Analyst when recommending this for Investment !!! 

Shareholders Proxy Firm SES ,co-founded by MD & ex SEBI ED,Mr J N Gupta accuses the Company yet again.

They had raised similar suspicions in 2015 

Message Boards of Stock Portals went ballistic on Tree House last two years with many supporting a turnaround at Rs 150 & Rs 200 levels that it had dropped to end 2015 from Rs 550+ levels.Either they were paid stooges or simply living in Hope in the Squeeze of a Boa Constrictor.2016 actually tightened the squeeze leaving shareholders gasping for breath,dropping from Rs 175 levels beginning of the year to now just Rs 24 & falling.There’s a cloud on the merger too with Zee

And just look at this ironic Shareholder data !

March 2015 ~ 5300 Shareholders at Peak Highs of over Rs 500

December 2015 ~ 13552 Shareholders at Turnaround Hope @ Rs 175

September 2016 ~ 20577 Shareholders last notification count

Clearly Many Investors love standing in front of a Speeding Train ! ~ The Faster the Speed of the Fall the More Join in to commit suicide ! ~ Living in Hope only to Die in Despair ! ~ Sadly most of them could be Retail,sucked in by Positive Views on MessageBoards & by Experts on  Stock Portals & Channels

Earlier in 2013 I had lamented & even loudly warned on the blog (Checkout Category Kingfisher Airlines~ Machiacellian Mallyas) ,in my Forum Speeches & Training Sessions that over 240000 shareholders of Kingfisher Airlines should critically revisit their Investment before it was too late as to me it was simply an Airline that never really took off ! ~ Shareholders remain Holed up in a suspended scrip (last restricted trade was just Rs 1 in June 2015 when it was finally fully suspended even from restricted Trading after initial suspension from December 1,2014 ) while the Promoter Mallya is holed up in London ~ Tagline of my Blog “In India,Companies may Fall Sick but Promoters rarely do!” read more

SEBI is right in regulating those offering stock recos on Social Media

SEBI is right in regulating those offering stock recos on Social Media & Emails & SMSs.

SEBI’s latest salvo to brokers is a 29 Page New Compliance Directive issued in September 2016 while to Investment Advisers (IA) is a 30 page Consultation Paper of October 7,2016 for  amendments to IA Regulations 2013 & inviting comments by November 4,2016

This  Consultation Paper plans to ,among several amendments & clarifications,disallow Investment Advisers offering stock recos  on Social Media unless authorised by SEBI.This has been instantly bashed on Social Media itself for this with hash tags like #SEBIkidadagiri & #SEBIGoback

Looks like SEBI is in a Catch 22 ~ Damned if it Did & Damned if it Don’t !

In my Considered View it’s better it Did

The major grouse by those against such strong regulation is impinging on Freedom of Speech & Expression in a Democracy & why is it ok to give advice on TV and not on Social Media & SEBI just wants to get the Fees….but believe me there is a lot of Nonsense going around & make no Nonsense of it !.SEBI is simply endeavouring to stamp it out as much as it can and Fees are incidental to this objective though this is an ammunition for the critics who say that  SEBI operates in creating a Fear Psychosis environment among Capital Market Intermediaries…..let me tell you this….for decades many such Intermediaries had a free untamed and often arrogant run ….often like wolves in pack that run together in nexus that has revealed one scam after another at the cost of retail investor suckers.In the early 1990s SEBI got it’s infancy teeth and as the years rolled by  it’s wisdom teeth….also sadly in the early 1990s lobbying got the Controller of Capital Issues (CCI) body to be abolished allowing Companies to flood the Primary Markets with IPOs at obscene Premiums  in Bullish Times when it was easy to sucker a greedy Investor base.Without Strong Investor Education & Protection base in Place the Investors were left to swim & drown in the Capital Markets Sea full of Sharks

Just penning a few thoughts on the Consultation Paper & may add more as I think them….

  • Wish SEBI had invited me to be on their Committee or even as an Advisor when Planning the Regulations….sure would have added serious & fair value without bias
  • Where there is Money there will be Stink!…and with Sensex nearing 30000 again with Market Cap at Rs 11230121 crs or US $ 1.7 Trillion and expected to climb into 2017 you can imagine the Stink!…call it ‘Nexus’ if you want !….The Stakes are getting Higher in the Game !
  • It has removed some exceptions & rightly got MF Distributors who offer advice too ,IFAs & those where advisory was incidental to business & those utilising automated tools for advisory (robot advisory) within the purview
  • It’s Luck more than Skills that often determines Success & Luck gets Luckier in Bullish Times .Like worms out of  woodwork,advisors proliferate giving specific trading and investment and even speculative equity and derivative calls without much fundamental depth or basis & its easy for small investors to get swayed and seduced and influenced in the lure to make some quick monies in stocks.They often entice with free trials(this is planned to go) & play the 50/50 probability game where those who lose drop out and those who win continue till they lose while referring more suckers
  • SEBI may ban equity advice on Social Media but how would they pursue those who flout this as its difficult to trace those who use Bulk SMS & hide behind Servers & IP walls
  • Thankfully SEBI has not included Training in Capital Markets Services requires Registration.However for incisive Training I have to fundamentally analyse & value listed companies & opine on the Value Vs Share Price.I have been doing this for over 30 years .Can this Opinion for Educating & not Commercial or Investment or Disinvestment Recommendation Purposes in my Training Sessions &  on my blog linked to Social Media too,construe as Advice and which requires SEBI Registration ?…this is the reason many good analysts have stopped Blogging all together.In my view this a great disservice to small retail investors.Where would they get reliable & good reasoning advice from ? from Brokers &  Experts on Bubble TV Stock Channels?.They have their own axe to grind & I daresay are not part of the Human Race in this context!…so far for years I have turned down sponsored & paid blogger invite meets & offers of  guest & paid blogs and advertisements from many finance institutions and individuals,many of them well known to avoid any blog bias and conflict of interest.
  • Does Registration with SEBI guarantee the quality of the Advice of registered advisors and research analysts?~any individual with just a lakh of networth and who can attain at least 60% in the NISM Certification examination can register to be one stating some unverifiable experience in this field
  • Let SEBI Be a Watchdog not a Bloodhound….we are taught this the first thing when studying to be a Chartered Accountant….it cannot be a mindset for “Guilty till proven Innocent”
  • Would this be protecting the vagabond listed companies rather than Investors as no one can air an opinion or view on the company’s doings unless they are registered with SEBI!?….read many of my blogposts on such errant companies & you shall know what I mean…In the past I have fundamentally warned with reasoning ,without charging any fee, on Satyam,Geodesic,Arshiya International,Cranes Software,Karuturi etc that went on do become duds  ….now to do so I may have to seek  SEBI Registration !
  • There is a growing argument that SEBI is just frying the small…Not True….it’s got Sahara too
  • Doctors,Lawyers ,Chartered Accountants all need to be qualified and registered to practice…so should Equity Advisors….self regulation does not work as they will protect their own….we saw this with ICAI in the Satyam Matter & even AMFI in many MF matters.Having said this,just like CA’s are licking their lips on incremental work on GST roll out,Lawyers specialising in SEBI Matters too will increase & flourish as additional litigation work should flow to them
  • SEBI Registration requires a minimum Academic or Professional Qualification~Why should Politicians who stand for Elections not be qualified too !?….ah perhaps that’s what leading to faking degrees!…to register to be an Investment Adviser,one has to pass the Investor Advisers Certification Exams by NISM.To be a designated as a Research Analyst one has to have passed the NISM Research Analyst examination.This is also a requisite for registering with SEBI as a Research Analyst.After 30 years I gave an exam again!~ In July 2016 scored over 90% ,attempting 98 of the 100 questions and getting 92 right! in the online NISM Research Analyst Certification Test…This allows me legally now to be designated as a Research Analyst but I have to seek SEBI Registration to practice as one for Consideration!
  • SEBI should regulate but not over regulate or else there is danger in killing the goose that lays the egg.It must remember that Investment in Equities are inherently risky in that there is no guarantee of any return.While it protects Investors through stringent advisory regulations ,it cannot lay the ground for litigation option for these investors against the advisors and research analysts every time when their specific advice leads to a loss.Stocks are traded in real time and can go up and down.That’s the essence of Equity markets in that there is a Buyer & Seller of a specific stock at a given time and price & Prices are a factor of Liquidity,Sentiment,Momentum,Valuation & Demand & Supply & Vested Interests.Advisors can be pitted against Advisors on specific selections & thus one has to come out on the other side of the road
  • Only 515 registered Investment Advisers registered with SEBI as on September 28, 2016 ? come on !
  • Is it best left to Institutionalise the Markets and force retail investors to route through MFs?
  • SEBI clarifies the distinction between Investment Advisor & Research Analyst and that many register as latter to avoid higher compliance in the former.It now will direct even Research Analysts to make no distinction between Class of Clients in timing and comprehensivness of the Research Report being communicated.They will also have to comply with Chapter III of the Investment Advisers Regulations 2013 in that such advice has to be suitable for the client’s financial position and investment objectives.This would mean engaging in KYC and not  merely offering subscriber research reports
  • Many perceive SEBI  stands for ‘Systematic Elimination of Brokers & Investors’ ! ~ such measures reinforce this perception
  • One of SEBI’s planned measures is to ban all schemes,games,leagues & competition relating to Securities.It does not specify whether any consideration is received or not for such.I understand this was specifically aimed at all those Trading Competitions & Leagues initiated by zero discount broking houses.This was a great legally allowed Scam in itself in my view as the Broking House made lots of Crores while seducing Traders to enroll with Performance Prizes in just a few Crores.One even has legendary Cricketer Kapil Dev as it’s Brand Ambassador ! He better watch out as there are now strict accountability for Celebrities endorsing Products & Services.The trap was they had to trade a minimum number of transactions in a week that too in only the Specified Group of Scrips or else they would not qualify for the Prizes on offer.In my fundamental concept view this went against the very tenets of  making Equity Investments for Wealth Creation over the Long Term as it encouraged Quickies in Trading leading to overtrading just so they achieve the minimum transactions per week.The Mathematics were great for the Broking House !.Imagine this with just 10000 (& there are more)registered traders for such schemes ~ Five Transactions a Week a Must & Rs 20 brokerage/transaction for 52 Weeks is a cool Rs 5.2 crs!~ that’s Rs 10 lakhs Brokerage a week at just Rs 100 per trader !~ Now imagine the Maths at 1 lakh participants!…a whopping Rs 52 crs at Rs One Cr a week….Now Imagine even more than One Lakh Traders participating !…It’s literally & figuratively a Steal for the Broking House
  • For a few years on this Blog I have been successfully offering a TAP GAP Poser to all blog readers without charging any fees and instead awarding the gauravblog hampers to answers I decide are winning ones.One such Poser is an annual one at the end of the year for any participant from the public who reads my blog to suggest up to three specific equity picks that in their view will perform the best in the coming year.I may have to stop this even though there is no consideration involved.Will take SEBI’s guidance on this as their Consultation paper has even defined what construes as ‘Consideration’

As far as SEBI’s September salvo to Brokers for more compliance,it’s been a mixed reaction from brokers….some feel compliance costs will rise on account of more manpower required and new software with high annual maintenance charges & in fact it will be difficult to comply and this would lead to selling out or consolidating with other brokers….dwindling broking fees and rising costs will sound the death knell to small brokers.Who then will serve Retail Investors,if at all they are not scared away again from markets?…while some Brokers feel it will cleanse the system of manipulative & dishonest brokers & even those who cannot cope with servicing clients under stricter compliance.“kachro saaf thayi jashey” is their assertion read more