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“In India, companies may fall sick, but promoters rarely do!”

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May 19, 2010

‘Tainted’ Telecom Minister A Raja ! ? The Conviction grows stronger…for his deliberately ‘gifting’ the 2G Licenses on a First Come First basis for just Rs 1000+ crs when the current auction of 3G Licenses has fetched over Rs 16000 crs!

In November 2008,I had covered in two blogs,what our Telecom Minister,A Raja had blatantly done….he had gifted 2G Licenses to vested interests at a pittance…just over Rs 1000 crs,when he could have got ten times more for the Government

Today, after a 34 days auction process it has been announced that the 3G Licenses auction has fetched the government over Rs 16000 crs !…..the 2G Licenses Question that has always been asked of A Raja now becomes really rhetoric !  

Yet A Raja continues to be supported by the PM and remains the Minister in the UPA Government….CBI even has some telephone voice recordings of leading TV News Hosts discussing with Ministers and Power Brokers in the Capital on how to favour D Maran or A Raja as the Telecom Minister…Bloody Shame ! The Government and therefore We,the People of India have been deprived of Thousands of Crores for the 2G Licenses

These were my earlier Blogs on this  2G Telecom Scam

Ctrl.Alt.Del….We need to Re-Boot November 17,2008…I had linked Paranjoy Guha Thakurta’s Telecom Scam expose in the Asian Age on this…but find Asian Age has since removed this link

Conspiracy of Silence : The Officially sanctioned loot of Rs 60000 crs in the Telecom Sector ! November 4,2008….I have referred to V Kapoor’s Telecom Scam expose in ‘the Afternoon’

It’s ostensibly Coalition Politics Blackmail at it’s worst !

Sad !….just saw a smug A Raja on TV…he’s probably taking credit for 3G,having deliberately wasted the 2G opportunity….and he’s not being made accountable for it ! 

But what 3G Auctions has done is got Rs 70000 crs for our FM…he had provisioned for Rs 35000 crs…but has got twice the amount !…it’s been a spectacular auction


India reflect Global Blues and Cues as Stock Indices drop a little under 3% today…confirm your Asset Allocation matches your Risk Profile…you’ll sleep sounder

Sensex just closed down 460.03 points (2.72 %)  at 16415.76 and Nifty dropped to 4921.40,down 144.80 points (2.86%) reflecting Global Blues and cues…..Volumes were relatively high and this does not augur too well for the immediate short term…tomorrow’s opening may just be weak too

There was red ink all over,with just a few specific stocks in the green…of the Sensex 30,27 were in the red with Tata Motors dropping over 8%…three barely were able to hold on to yesterdays closing

Sell offs in India are echoing rest of Asia….Tightening in China is playing this out…with Europe and USA scenarios adding to uncertainties

Sensex is back down below 16500 from my predicted top end range of 18000 for the first half of 2010…Expect more falls…Expect Volatility to persist….Seek Opportunities for Entering or increasing Exposure to certain Stocks….Larsen & Toubro being one of them…It had reacted to below Rs 1550 a few days ago…It surged back to Rs 1670+ levels this morning and again is moving back towards Rs 1600…Rs 1400 to Rs 1500 would be good buying into range with a three year outlook

Don’t Panic and Liquidate Part or Full Long Term Equity Portfolios as long as your Selections are Sound…ride this Volatility holding a Long Term View…don’t try to play the ‘Exit and Re-enter’ Game…It would be a Tactical Strategy that may not work …..and confirm that your Asset Allocation matches your Risk Profile…you’ll sleep sounder    

Tayals of Bank of Rajasthan are having their Cake and eating it too in the Amalgamation with ICICI Bank!

Ostensilbly under great pressure to vacate the banking field,the Tayals of Bank of Rajasthan are having their Cake at eating it too!

The Board of Directors of the Bank at their meeting yesterday have given an in-principle approval to amalgamate the Bank with ICICI Bank

The important issue here was what would the swap ratio be….Mrs Chanda Kochar,MD of ICICI Bank announced yesterday that,subject to due diligence,the swap ratio would be 25:118….for every 118 shares of BOR,the shareholder would get 25 Shares of ICICI Bank

Reacting to this,from morning BOR is 20% up on upper circuit at Rs 119.40,while ICICI Bank has dipped to Rs 855 from Rs 890 levels….if ICICI Bank remains at these levels,the BOR Price has to move past Rs 180 to reflect this swap ratio….that’s another 50% up

Tayal,who were always under some cloud or the other will benefit immensely

They had declared they held 28.60 % of the BOR Equity of Rs 161.35 crs (FV Rs 10)…However SEBI under an ex parte order of March 8,2010 have declared that Tayals have a 55.01% stake in the Bank

P K Tayal,claimed on TV yesterday that they were not selling any stake and it was only a 100% swap….however,what will prevent them from selling their stake in ICICI Bank on the swap….Considering their declaration that they hold 28.60%,it amounts to holding 4.61 cr shares of BOR…this would give them 97.67 lakh shares of ICICI Bank…At The price of Rs 855 now,this stake has a value of Rs 835 crs !

And if you take SEBI declaration as correct,Tayals hold 55.01 % in BOR…This means 8.88 crs shares which would be swapped for 1.88 crs shares of ICICI Bank….current value of this is over Rs 1600 crs!   

View this Bonanza in context of the Share Price of BOR when normally traded in the range of Rs 70 thereabouts,the whole Market Cap of BOR was below Rs 1200 crs !….This is today at Rs 1745 crs with BOR at Rs 119.40….when it touches Rs 180,the Market Cap will be over Rs 2900 crs !

Has SEBI won out here or have the Tayals ! ?….Clearly the Tayals….They have extracted Maximum Value for exiting the Banking Sector….their stake in ICICI Bank will be below 2%…..they have the Option to Hold it or monetize it by exiting fully or partially

No wonder P K Tayal had a Cheshire Cat Grin on TV yesterday…he’s awaiting the lickings !….and with him,the other shareholders too will benefit

Going by the Valuation of this Deal,look for other banks that may be forced to amalgamate as the Process of Consolidation quickens in the Banking Space….ICICI Bank has defended this swap Ratio stating it would have taken them another three years to build the current account and saving account relationships that BOR has + the Deal prices the market cap at @ Rs 6.5 crs per Branch of BOR….HDFC Bank had paid a Market Cap of @ Rs 26 crs per Branch when it acquired Centurion Bank of Punjab  read more

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