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July 9, 2008

Every SILVERLINE has a Cloud !…from Rs 180 to under Rs 20 after Capital Reduction too!

In December 2007, SILVERLINE relisted at Rs 180 after  Capital Reduction of Rs 9 in every Original share of Face Value Rs 10 and then consolidation of ten shares of reduced FV of Rs 1 each to one share of FV Rs 10…..It was quoted at Rs 13 on the original Face Value of Rs 10 before suspension in 2007 for completing this reduction process…Therefore technically it should have opened at Rs 130,but actually opened higher at Rs 180 as BSE,for reasons best known to it,gave Rs 180 as the base price on relisting,instead of Rs130 that it should have given based on last closing price of Rs 13 before suspension to complete the capital reduction process.

It is now available at below Rs 20 after reduction and consolidation…this means under Rs 2 of original face value of Rs 10 !

After meeting the promoters in December 2007,I had asked clients to await performance promised…but did a quick u turn when I realised this was just not going to happen and sold off lock stock and barrel between Rs 120 and Rs 130…a few clients did miss out on selling but their exposure to SILVERLINE is very minimal in their portfolios. 

What a fall!…once again into oblivion,perhaps?…..Big Noises were made ,by promoters and even the advisors to the restructuring ,of a rebirth and achieving a turnover of over Rs 400 crores for year ending June 30,2008 and a profit of over Rs 60 crores on reduced capital of under Rs 40 crs

Believe it or not advertisments in Economic Times were placed by the Company and the Advisors seperately at the time of relisting claiming this upcoming performance !  

 Silverline has sunk shareholders with silver lightening speed…Token shares in Silverline Animation were given in the ratio 4:100 of original shares held in Silverline Technologies to shareholders when the Animation Division was demerged….Silverline Animation still has to be listed…it was to be in January 2008

This is the same SILVERLINE that was infamously manipulated to rocket past Rs 2000 in 2000. 

How many chances do you want SILVERLINE ?…just one more so that you can commit another breach of faith !

How is HOV only at Rs 105?

Am I missing something here !

How is HOV Services only at Rs 105 ?

On  June 7,2008 it was on a 20% Upper circuit at Rs 120.45  and on June 10,2008 hit a 10% upper circuit at Rs 132.45 before reacting………All of this movement was on announcement of great results and an offer of US $ 202 million for it’s wholly owned subsidiary HOV Services LLC,and it’s Hong Kong Subsidiary…This offer is being considered and if approved will give HOV Shareholders an option to take cash of US $ 91 million or  Rs 170/share or One share in buyers company for every share held in HOV…They will continue to retain original share in HOV !

Does not this mean you buy HOV at Rs 105 today and get Rs 170 in cash back from them on approval and closure of the sell off of some of their subsidiaries to the promoters controlled company itself ! and get to retain the original share you bought too!?   

 

HOV came out with an issue in September 2006 at Rs 10 + Rs 190 =Rs 200 which was oversubscribed twice in the retail segment and thrice in QIB segment

 

The Company has earned a consolidated Rs 82 crs  before Minority Interest (MI) and Rs 54 crs after MI on Income of Rs 907 crs for ye March 31,2008 showing a strong EPS of Rs 43 (after MI)on Capital of Rs 12.50 crs ( FV Rs 10)

 

 

 

Important Questions to ask

 

  • What is the Valuation of HOV Services LLC and the Hong Kong Subsidiary and have adequate disclosure been made to HOV Shareholders on order book positions etc as the offer has come from a company controlled by the promoters and  some shareholders of HOV in other words is US $ 202 Million too less?

 

  • Full Disclosure should be made of the Names and shareholdings of all promoters and shareholders who are common to both HOV and the Company making the offer…this will reveal as to how much of the US $ 202 million will be returned to them at Rs 170/share of their holding in HOV

 

  • What is the Income and Profit contribution of the Subsidiaries for which offer received in the Consolidated Accounts ?

 

  • If Subsidiaries are sold what will parent HOV Services do as virtually all business is in subsidiaries?
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