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

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Just a Reliance Power Thought for Anil Ambani as he forgoes Personal LPG Subsidy

The leadership Team of Anil Ambani’s Reliance Group has opted to forego LPG Subsidy on the PM’s request for well to do people to do so to reduce the subsidy burden

This triggered  a thought without offence or malice for Anil Ambani to consider and addressed to him in first person :

Your Reliance Power Market Cap is Rs 16410 crs at Rs 58.50 with 75% held by you as Promoter and most at par.The Public hold just over 14% while the big guys FIIs and DIIs hold 11%

The Shares were allotted in a heavily record oversubscribed IPO to Retail Investors in January/February 2008  at Rs 427.50,after a 5% discount on IPO Price of  Rs 450 and within months of the IPO Listing company issued a 3:5 Bonus in May 2008 under pressure to reduce holding cost of  retail allottees to Rs 267.19 per share

I don’t know how many of the original allottees yet continue to retain faith and hope and  hold the share but your records can identify such

The Thought for what it’s worth :

Why don’t you,Mr Anil Ambani  emulate Richard Branson who bought back Virgin shares at cost from shareholders and went private again when the share price had tumbled  after listing ?

Branson committed 182.5 Million Pounds in 1988 for this and wrote about it in his inspiring book ” Screw it,Let’s Do It”

You,Mr Ambani ,have just committed thousands of crores by acquiring Pipavav Defence recently.

Can you commit some more for this =>Reliance Power Equity is @ Rs 2800 crs and Public(excluding FIIs & DIIs) hold only Rs 390 crs of it of which only a portion would be original allottees in your IPO  seven year ago in January 2008.Even assuming all are original allottees or you also wish to compensate those who sold out you would need Rs 10500 crs to to so at their cost of  Rs 267.19

Or you wish to quote your good friend Amitabh Bacchan’s father’s great quote  ” Joh Beeth Gayi woh Baat Gayi”   

No Offence and No Malice,Mr Ambani but in one stroke you would have redeemed for the Reliance Power fisaco

May not be a practical exercise but even voicing Intention can be a great step

Forbes put your latest 2015 real time networth at US  $ 3.7 B down considerably from the US $ 42 b in 2008 when Reliance Power IPO ‘hit’ the market

I’ve got a great feeling that committing US $ 1.5 B to play out this above thought in Reliance Power will catapult your worth in more ways than one in quick time….Reliance Power was willing to pay US $ 2 B for Power Plants of Jaiprakash Group in July 2014 in a deal that came apart….believe me that you will create a much higher value intangible asset immediately that will lead to higher tangible worth going forward if my thought is played out read more

Pipavav on Lower Circuit Rs 68.85 despite or because Anil Ambani taking over !?

Pipavav on Lower Circuit Rs 68.85 despite or because Anil Ambani taking over !?

Pipavav under CDR with Heavy Debt,Huge Capacities but Few Orders to serve the Debt was up for sale and Mahindras & Munjals were interested if there was Debt Restructuring

However listed Reliance Infra &  it’s unlisted Reliance Defence of Anil Ambani has bought out most of Pipavav Promoter’s Stake at Rs 63  and will make an open offer to Other Shareholders for another 26% at Rs 66

This announcement was made post market hours yesterday

Pipavav which was hovering in the mid 70’s for a week  opened this morning down 10% on the lower circuit at Rs 68.85  on both NSE & BSE

Is this because the Buyout  & Offer Price  was lower  that yesterday’s closing of Rs 76.45 !?

This could be one reason…..but think about this ….after the Reliance Power IPO and post IPO mess up where Shareholder Wealth has been destroyed in the past five years  Anil Ambani had eroded a lot of his market credibility ~ Reliance Power is currently down at just Rs 60 from an IPO Price of Rs 450 which adjusts to @ Rs 270 after a Bonus from Premium collected to appease IPO Allotees !

He & his companies  were even banned from accessing the Capital Markets after a consent fine of Rs 50 crs for misuse of ECB Funds overseas

This begs the question…can Anil Ambani redeem himself with Pipavav Defence  even as his Power Company is Powerless yet in a sense ! ~ Market is ruthless and has given a huge thumbs down today !

Contrast this with the entry of Sun Pharma’s Dilip Shanghavi in Suzlon at Rs 18 last month with an Open Offer to coming at this price ~ Suzlon raced away over Rs 25 on this announcement !

Incidentally after Sun Pharma Price shot up yesterday,Dilip Shanghvi (US $ 21+ billion) overtook Mukesh Ambani (US $ 20+ billion as the Richest Indian

Don’t you wish even Dilip got into Defence ! 🙂

So which Anil Ambani Company now do you prefer at Rs 60 to Rs 70 ! ~ Reliance Power or Pipavav ! ?


Reliance Penalised Again for KG Gas Underproduction ~ Pyrrhic Government Victory

At the outset let me state I’m neither a hater nor baiter of Reliance Industries and it’s Ambani Family Promoters…on the contrary   had applauded the late Founder Dhirubhai Ambani for his guts and gumption to create the Reliance Group in adverse,hostile and a monopolistic scenario where he broke down several barriers of entry to  enrich millions of shareholders along with him right from 1970s and arguably making him the Father of the Equity Cult in India  ….even today Reliance Industries has nearly Three Million Shareholders who keep the faith

However the debate is yet out whether Means justify the End or the End justifies the Means !

The near Three Million Shareholders must be aware of the Risks associated with a Reliance Investment….look at it as an opportunity cost for better  returns in equity elsewhere

Sadly I had to remove Reliance Industries in 2012/13  as a Core Recommendation because of such Risks involved and Corporate Governance Issues as below….Though I do not hold any shares,many of my clients continue to do so and are part of the three million shareholders…I hold no emotional grievance or grudge for this continued holding but refrain from advising them on the Earnings Performance & Growth Plans and the possible impact on the Share Price and whether they should Buy or Hold or Sell…left it to them to decide

Reliance Penalised Again for KG Gas Underproduction ~ Pyrrhic Government Victory

Reliance KG Penalties for Gas underproduction

Thus far the Penalties aggregate US $ 2.376 billion =>Rs 14256 crs at Rs 60=US$

Has Reliance got to actually pay these in Cash !?….. No

Reliance has gone in for arbitration for this

These are simply disallowed expenses and deducted from the Capex Expenditure & Investment Shown by Reliance and which has been cleared by the Directorate General of Hydrocarbons....the Director General from November 2004 to October 2009 was ex UPA & Congress Minister Mr Kapil Sibal’s Brother Mr VK Sibal….and it is interesting to note that when the Ambani Brothers were at each others throats in 2009 and 2010 after the Group was split, the younger Anil Ambani had openly accused his elder brother Mukesh Ambani’s Reliance Industries for hugely padding and gold-plating the Capex Spend for Clearance….he is known to have stated that the actual expenditure was just Rs 15000 crs but was shown as Rs 45000 crs and cleared in 2006 and the government stood to lose Rs 30000 crs in Gas Revenues !

….so these penalties simply reduce the Expenditure allowed to @ Rs 25000 crs…..the Directorate General began these penalties only last year in 2013 after gas production dropped below 30 mscmpd (equivalent to 180000 barrels of Oil per day)….the total investment is US $ 8.8 billion read more

Union Budget 2014 ~ Will Sensex continue to Humour as Jaitley does not!

Have a look at our first impression posted  after our FM ‘s Union Budget Address and during market hours

Union Budget 2014 ~ Will Sensex continue to Humour as Jaitley does not!

Think he missed a great opportunity to provide us with the ‘Naya Soch’ of the new NDA Government

His Speech stated quite a few challenges and objectives like tackling Black Monies,raising Tax to GDP ratio,lowering Inflation and Fiscal Deficit % but stopped short of spelling out the specifics of solving these

Having just 45 days after NDA was elected he has opted for the easier option of simply following the UPA budget process and numbers too that the UPA FM Mr Chidambaram laid out in his Interim Budget in February 2014….whether it be Disinvestment or Tax Receipts or Fiscal Deficit Control Targets…made right noises but was tokenism in a few areas like social expenditure…thankfully nothing really adverse or anti poor though direct tax incentives are not really cause for any celebration

Sensex had quite a roller coaster ride today as to be expected….opening stable & pre budget speech at 25514 in the morning then sliding before noon over 300 points to 25117 from yesterday closing of 25445 during the budget speech before strongly racing away by over 700 points to 25920 …over 400 points previous day closing post budget speech only to reverse all the gains and close at 25373,down 72 points  from previous day closing

Will the Sensex continue to Humor us in the near term despite not an iota of Humor in the FM’s Speech !? …sense is that any correction will be a hiccup on the onward march towards 30000 on the back of increased FII Net Infows & Big Corporate Infra spending  

I see some clear big winners in the Infrastructure Space across the Board from Shipping to Power to SEZs to Real Estate to Highway Road Construction Companies and Pipeline Companies



Two Interesting News Bytes ~ SAT adjourns Reliance Insider Trading Appeal & UMPP Tenders revived

Two Interesting News Bytes ~ SAT adjourns Reliance Insider Trading Appeal  &  Government announces to revive UMPP Tenders Bids

SAT adjourns Reliance Industries Insider Case Appeal to October 11,2013

This Case is a hot potato with apparent heavy political overtones

The Securities Appellate Tribunal adjourned the Reliance Insider Trading Case to October 11,2013 and also dismissed the intervention petition of an Urdu Editor,M Furqan to be made a party to the appeal.He edits the UP Daily ‘Sach Bilkul Sach’ and had accused collusion between SEBI and Reliance Industries to settle the matter ~ A Three Judge Bench said the petitioner can approach the High Court or the Supreme Court ~ Darius Khambhatta,the Mahrashtra Advocate General was representing SEBI while Janak Dwarkadas was representing Reliance Industries ~ Reliance had appealed to SAT that SEBI  had rejected it’s Consent Application to settle the matter

This matter relates to Insider Trading in November 2007 where it is suspected that RIL made a killing of hundreds of Crores inside a fortnight on insider news ~ supposedly Rs 513 crs but could have been much higher

From FY 2002/3 all penalties go directly to the Consolidated Fund of  India and not into SEBI.What SEBI does get are the Fees and Charges from FIIs,Brokers and Derivative Dealers etc.SEBI’s Annual Report of FY 13 shows Rs 149 crs collected through such fees in FY 12/13

SEBI has a strong case and last year it came out with stricter regulations that does not allow for consent applications in Insider Trading cases ~ had blogged on it as below

In the Right Direction ~ SEBI announces that Insider Trading and Front Running and Fraudulent Practices will not be allowed in applications for Consent Orders…Well Done SEBI ~ Clean Up our Markets so that Promoters no longer Can!

Saturday, May 26th, 2012

For those who are interested in some details of how the Insider Trading is purported to have transpired have a look at these two blogs I posted in August 2008

Proof Of Insider Trading in RPL…Yet Blind Eye Turned by SEBI

Wednesday, August 6th, 2008

Mukesh Ambani coterie accused by Samajwadi Party for Insider Trading in RPL and Jai Corp

Tuesday, August 5th, 2008


Private Companies may not fuel India’s Ultra Mega Power Plans 

The last Ultra Mega Power Plant Tender was awarded to Reliance Power in 2007 for Tilaiya.The Tender had attracted 20 bidders

The Government,through it’s nodal Agency Power Finance Corp is now again set to invite bids for two UMPPs in Odisha and Tamil Nadu.In fact the Bid Invitation on a DBFOT Basis for the 4000 MW  Cheyyur UMPP in Tamil Nadu has also been announced today

Private  Players had requested the Government to allow UMPP on a Build ,Own and Operate (BOO) Basis instead of the current Design,Build,Finance ,Operate  & Transfer (DBFOT) as the DBFOT Model was found to be unbankable and unviable

So far Four UMPPs have been awarded.Tata Power is constructing at Mundra in Gujarat while Reliance Power has got the other three at Sasan in Madhya Pradesh,Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand read more

Financial Technologies @ Rs 144 ~ A Story of Guts and Glory now Guttered !

Financial Technologies (FTIL)  @ Rs 144 (FV Rs 2)~ A Story of Guts and Glory now Guttered ! ?….though Jignesh Shah ,the Founder Chairman and MD of the FTIL Group (MCX,NSEL and others)states this in his message in the FY 13 Annual Report “….these are tough times the Company is facing and Financial Technologies is making all efforts to come out of such situation” 

I don’t own any shares of the FTIL Group but I do have some very good friends and associates who work for it and are extremely wise and forward thinking and manage the FTKMC admirably and who graciously invited me for the MCX Equity Exchange Launch at Hotel Trident where our FM,Mr Chidambaram in his inaugural speech lamented Insider Trading and Speculation but amusingly went on to sound the gong for the Exchange’s first and symbolic Future trade !

Media has justifiably gone to town on the NSEL and FTIL Group Plight ~Realms can be written on this and am sure a Best Seller Book too will finally be published to reveal what went wrong ! and was it a deliberate sinster plan right at the outset ! ~ and what is the extent of Political patronage at the highest level that’s keeping the Group alive and kicking till now !

For Now this is all that I’m going to say…….

From Rs 1224 on November 13,2012 last year the Share price of FTIL sank to Rs 102 on August 30,2013 and had recovered since then to Rs 160 levels

However today the Share Price intraday dropped over 10% to Rs 140 levels as yesterday on the eve of the AGM the Auditors Deloitte Haskins & Sells has announced that their report of May 30,2013 on the standalone and consolidated results of FTIL results as on March 31,2013 should no longer be relied on ! 

Remember the Satyam fiasco and how the Auditors Pricewater House had released a similar note warning that the last 39 quarters of their audited results should not be relied on ! ~ this went all the way back from 2009 to 2001 !

FTIL’s EPS for FY 13 was Rs 70 ~ It’s June Q 1 FY 14 shows Rs 17 ~ but Deloitte now tells us not to rely on their report !

FTIL owns nearly 100% of the troubled National Spot Exchange Ltd (NSEL) which is embroiled in a Rs 5600 crs payment crisis ~ there is more than meets the eye in NSEL ~ FTIL has already lend Rs 173 crs to NSEL to fund payouts to smaller investors ~How in Hell did this hole in NSEL go undetected for so long !? ~ the answer is suspected to lie in that there was hardly any internal control and deliberately so ~ there was no eternal regulation worth mentioning~ the Operators or Borrowers,the Exchange Administration,the Directors and FTIL as the near 100% Owner  were all seemingly colluding parties ~thousands of crores of borrowed monies were created for the benefit of just a chosen few ,and some were director related parties,through scheming financial structured products,supposedly backed by physical comfort of commodities in warehouses ~ these products were aggressively hawked to high networth investors by a network of brokers,including leading names like Motilal Oswal,Anand Rathi and India Infoline, for a few additional interest points and rolling commission or brokerage ! ~ Most of these funds  are suspected to be diverted away from the exchange read more

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