Vedanta de-listing offer price Rs 87.50~Come on Mr Anil Agarwal !

Vedanta de-listing offer price Rs 87.50~Come on Mr Anil Agarwal !

Promoter Group of  Vedanta Ltd has proposed a voluntary de-listing at an indicative offer price of Rs 87.50~are the over 7.3 lakh minority shareholders from Alibag !? …apologies to the people of Alibag

Some would term this as De-listing Duplicity ~ but I would not go that far for you’re a Promoter taking advantage of this Covid-19 crisis caused plunge in Share Prices to de-list at a low price while complying with the SEBI Pricing Formula

Promoter Group Company Vedanta Resources Ltd,London has conveyed to listed Vedanta Ltd that the Promoters  want to buy out minority shareholders of Vedanta Ltd at an indicative price of Rs 87.50 !

Even the Book Value of Vedanta Ltd was Rs 167 at March 31,2019 on a consolidated networth of Rs 62297 crs and Equity of Rs 372 crs of Face Value Rs 1  and rose to Rs 188 on a networth of @ Rs 70000 crs as on December 31,2019

But’s there’s more to this as you move through this blogpost to sense that this is not the first time that the Promoter Family of Brothers Anil & Navin Agarwal  have short changed the minority shareholders in their group companies or for that matter even have other Industrial Groups in their listed companies at the time of de-merger or de-listing

Look at the speed !

  • Tuesday May 12,2020 ~ Vedanta Ltd notifies the BSE & NSE that the Board of Vedanta Ltd has scheduled a Meeting on Monday,May 18,2020 to consider a voluntary de-listing Proposal as they have received a letter from Vedanta Resources Ltd,London offering that the Promoter Group will buy out all the Public Shareholders who hold 169,10,90,351 Equity Shares aggregating to 48.94% of the paid-up equity share capital of the Company. This includes Equity Shares held by the Employee Trust but excludes 6,54,45,052 American Depository Shares against 26,17,80,208 number of underlying Equity Shares. Other than 2,48,23,177 ADS representing 9,92,92,708 equity shares which are held by one of the members of the Promoter Group, the remaining ADS are held by persons who would be considered to be Public Shareholders in the event they chose to convert the ADS into Equity Shares American Depository Shares  issued by the Company. Indicative Price given by them is Rs 87.50 per share.. Should all the outstanding ADS be converted into Equity Shares, the shareholding of the the Promoter Group will be 186,36,18,788 Equity Shares aggregating to 50.14% of the paid-up equity share capital of the Company Public Shareholders will be 185,35,77,851 Equity Shares aggregating to 49.86% of the paid-up equity share capital of the Company. The Meeting will take on record and review the due diligence report of the Merchant Banker in terms of Regulations 8(1A)(ii) and 8(1E) of the Delisting Regulations to approve/ reject the Delisting Proposal after taking into account various factors and the
    Merchant Banker’s due diligence report
  • Wednesday,May 13,2020 ~ Vedanta Ltd notifies the BSE & NSE of the appointment of SBI Capital Markets as the  Merchant Banker to do the due Diligence for the voluntary de-listing proposal    
  • Monday,May 18,2020 ~ Vedanta Ltd’s Board of Directors Meeting to take on record and review SBI Capital Markets due diligence report and accept or reject the voluntary de-listing proposal

What Haste ! ~ stinks of a foregone favourable conclusion in favor of promoters ! ~ this would mean SBI Capital Markets will have to submit it’s due diligence report inside just  five days for the Board to consider on Monday,May 18,2020 !~ Ridiculous ! ~given the constraints of the Covid-19 crisis lockdown how will they accomplish this given the restrictions ~ due diligence goes beyond reviewing just the documentation handed  by the company to them or whats’s available in the public domain ~ reminds me of the time the Deputy Director of the Company Law Board (CLB) had scathingly remarked at a CLB Hearing  in the Satyam & Maytas Properties  Scandal of a decade ago as to how could the leading audit firm E & Y could have done the Property Valuation of Rs 6523 crs in just one day !  You can read this amusing 2009 blogpost of mine here

Why is Rs 87.50 a ridiculously low indicative price to de-list

There are numerous arguments for this but what is most compelling and which amounts to significantly short changing the minority shareholders is the value of  Vedanta Ltd’s holding in listed Hindustan Zinc :

  • Vedanta Ltd   holds 64.92 %  or 274.31 cr shares of the Equity in the listed Hindustan Zinc in which the Government of India holds 29.58% stake
  • Hindustan Zinc closed at @ Rs 193 on BSE today at which Price the Market Capitalisation is @ Rs 81500 crs
  • Thus Vedanta Ltd’s share of this Market Cap is @ Rs 53000 crs which works out to Rs 142 per share of Vedanta Ltd’s Equity of Rs 372 crs of FV Rs 1
  • The Promoter Group holds around half of Vedanta Ltd and thus minority shareholders are entitled to half of Rs 53000 crs that’s Rs 26500  crs
  • By delisting at Rs 87.50  the Promoter Group would be expending just @ Rs 16500 crs for buying out the public shareholding that holds half of Vedanta Ltd
  • Imagine this scenario where they buy out shareholders of Vedanta at Rs 16500 crs and thus own 100% of Vedanta Ltd and thus are full ‘malik’ of the 64.92 % stake held by Vedanta Ltd in Hindustan Zinc that’s worth Rs 53000 Crs of which Rs 26500 crs would have actually belonged to the minority shareholders of Vedanta Ltd ! ~ this is thus a squeeze of Rs 10000  crs
  • Don’t give me this hogwash of holding company haircuts now  because when Promoter is planning to de-list they you need to give the full benefit as per market value too to the minority shareholders.This Rs 53000 crs share of Market Share in Hindustan Zinc works out to Rs 142 per share of Vedanta Ltd  
  • Hindustan Zinc has also just announced an interim dividend of Rs 16.50 per share for FY 20 that’s gone by which would mean Rs 4526 crs will be received by Vedanta Ltd for the 64.92 % stake or 274.31 cr shares it holds in Hindustan Zinc

Segment Performance of Vedanta Ltd for the nine months at December 31,2019 read more

Riskless Reliance Industries Rights Investment Strategy

This is a Riskless Reliance Industries Rights Investment Strategy for those over 2.3 Million Shareholders already holding RIL shares.

It is not a recommendation to buy RIL cum rights 

It’s a no brainer yet I’m just penning a brief note because some have told me they hold Reliance but are skipping the Rights !

Don’t !

I’ll keep this short without going into the fundamentals of RIL Operations and future which in itself is quite another story

Adopt this simple Riskless Rights Investment Strategy as below if you’re concerned about what the future holds for Reliance and don’t wish to increase exposure by increasing your holdings through the Rights Issue ….well,if you’re deeply concerned you should not have been holding Reliance in the first place

This Strategy will reduce your Holding Cost of existing RIL shares by replacing 1:15 of your holding with the Rights entitled shares at a much lower Rs 1257/share to currently traded prices(see below)

Chronology

  • April 27,2020 ~ RIL Board to consider Rights Issue  in their Meeting on April 30,2020 along with adoption of FY 20 Accounts and deciding on Dividend
  • April 30,2020 ~ RIL Board approves Rights Issue
  • May 9,2020 ~ RIL receives in principle approval from BSE & NSE for the Rights Issue and announces May 14,2020 as the Record Date for the Issue
  • Wednesday,May 13,2020 ~ RIL will trade ex-rights on the Exchanges
  • Thursday,May 14,2020 ~ Record Date to establish eligible shareholders for the Rights Issue
  • read more

    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 !

    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

    HCL Info up 12% to @ Rs 51 with super volumes~Will BSE & NSE ask Why again?

    HCL Infosystems Ltd up 12% to @ Rs 51 with super volumes ~ Will BSE & NSE ask Why again?

    Just under a fortnight ago on September 22,2016 HCL Info opened at @ Rs 42 & surged to Rs 48 before settling at Rs 47 on huge above average volumes with BSE clocking over 42 lakh shares and NSE  trading near 1.63 cr shares

    BSE & NSE had asked the Company to Clarify on whether there was any reason for this surge in Volumes & Share Price

    Interestingly the Company replied instantly that “The increase in volume seems speculative in nature”   

    The Delivery % was just under 20

    The Share Price then slid last week back to Rs under 43

    Today  BSE  & NSE clocked even more super volumes exceeding 45+ lakh & 1.84+ cr  shares respectively with Share Price shooting up 12% to close just under Rs 51

    What’s Happening? Will the Exchanges in 13 days yet again ask the Company for clarification for today’s surge too & will the company reply the same that it’s seems to be speculative & will thus the share price slide back ?

    52 Week H/L is Rs 66.75/30 & Market Cap is Rs 1135 crs

    The Company is part of the Shiv Nadar HCL Tech Group & has undergone a Scheme of Arrangement effective January 1,2013.It has 14 unlisted subsidiaries including eight step down & one jv associate and has suffered losses in the past three financial periods which even witnessed declining topline with the last dividend being paid for FY 12.Consolidated Networth on March 31,2016 declined to Rs 1008 crs with Equity (FV Rs 2) at Rs 44.58 crs  of which Rs 596 crs in reflected in Goodwill on Consolidation.There are no Non Current Investments in Consolidated Accounts.Standalone shows these at Rs 972 crs in six unquoted subsidiaries after providing for diminution (Original Investments Cost was Rs 1568 crs).Short Term & Long Term Borrowings,about evenly split at March 31,2016 aggregated 996 crs.Book Value at year end March 31,2016 was Rs 45

    The Business Model is of Four Market Driven Business Units housing nine Lines of Business over Distribution,Services,Learning & Hardware Products & Solutions & the Company states in it’s FY 16 Annual Report that it will be their Core Enterprises Business of Distribution & Services that will be the engine for the next level of growth.Do remember that the Company has been contracted for UIDAI & the milestone of over 100 crs Aadhaars has been crossed.India has a population of over 125 crs.Their System Integration Business has seen many of the defence projects move towards commercial conclusion read more

    Indiabulls Ventures Ltd at Rs 33~ Up 100% in a month ~ More in Store?

    Indiabulls Ventures Ltd at Rs 33~ Up 100% in a month ~ More in Store? ~ 52 Week high was Rs 39+ a year ago in July 2015 & 52 Week Low was Rs 13 this April 2016

    The Market Cap from @ Rs 500 crs a month ago is now kissing Rs 1000 crs

    It was earlier called Indiabulls Securities Ltd

    The uptick has been brilliant in quick time & the writing has been on the wall..read that as Company Notifications on the BSE & NSE in the past few months

    May 13,2016 ~ Granting of 9.5 Million Stock Options at an exercise price of Rs 16(current price at the time) under the ESOS 2009

    June 15,2016 ~ Board Approval of a Preferential Issue of  58.3 m Convertible Warrants to Promoters & CEO at exercise price of Rs 19.75

    June 20,2016 ~ EGM Notice for July 15,2016 to pass the Preferential Issue as above & SALE OF INVESTMENT 

    July 2,2016 ~ Granting of 19.7 M Stock Options at an exercise price of Rs 24.15(price a few days ago) under ESOSs 2008 & 2009

    So what’s the Big Deal ?

    Big Deal is being planned to happen & that’s disclosed in the June 20,2016 Notification of SALE OF INVESTMENT for improving liquidity & reduction of debt purpose which is Item No 2 and relevant part extracted as below

    “….to sell upto 100% of shares held by Indiabulls Distribution Services Limited, a wholly owned subsidiary of the Company (“IDSL”), in India Land and Properties Limited, a wholly owned subsidiary of IDSL, on the terms and conditions, including the consideration, which shall be more than the amount invested by IDSL, in such shares, as the Board may finalize” 

    This actually is the Sale of One Indiabulls Park,Ambattur,Chennai which was bought in November 2014 at @ Rs 600 crs from Madrid Based NRI Investor Harish Fabiani (he’s also invested in Edelweiss & Indiabulls Group Companies + others)

    FY 15 Consolidated Accounts as on March 31,2015

    Consolidated FY 15 Accounts of Indiabulls Ventures Ltd shows Net Fixed Tangible Assets at Rs 550 crs  of which 77% is this Property reflected  with a aggregate value of Rs 426 crs ~ Rs 320 crs for the Building + Rs 15 crs for Furniture + Rs 91 crs for Plant & Machinery

    Long Term Debt at March 31,2015 was Rs 331 crs ,all of which relating to the One Indiabull Park Property ~ 150 crs 10 year (monthly EMI) Lease Rental Discounting Facility + Rs 185 crs 5 year Loan Against Property

    FY 15 also shows Goodwill on Consolidation of Rs 109 crs,most of which is related to this property acquisition by subsidiaries

    FY 16 Consolidated Accounts as on March 31,2016 reveal : read more