What A Shame!~LIC bails out Government with US $ 1.2 b in IOC Disinvestment

Just a few days ago I had blogged that the IOC Disnvestment on Monday will be just a formality….But Monday’s Global Stocks Chinese Contagion Capitulation saw a very very poor response to the IOC  Disinvestment

It’s a real shame that the Government yet again  had to direct/order LIC to bail it out yet again…it would have been a wise idea to defer the issue rather than order LIC to invest in 86% of  Issue of Rs 9379 crs  bat Floor Price of Rs 387 !…. shoots up  LIC holding in IOC by a whopping 8.59% from 2.52% to 11.11%….it’s another issue that IOC is past Rs 400 today on signing a refinery deal with Nepal

This then sadly was not a real disnvestment just as it was not for a similar 10% last year too when Oil India & ONGC were ordered to pick up 5% each at Rs 220 .,,,just another continuing story of government selling from one PSU to another !

Its no wonder LIC does not want to go public ! and neither is the Government inclined to make it public !

Raises Huge Corporate Governance Issues on Investment Decision Making,Accountability and Tranparency

It’s happening for decades now….UTI was first the Big Market Daddy in the 1970’s to 1990’s before India opened out to FIIs and Other Mutual Funds that saw UTI losing it’s war of words with SEBI to be brought under it’s regulations….in the late 1980’s the UTI Chairman then had opened out to me in a candid interview on UTI’s Investment & Disinvestment Decisions Process,sometimes buying a company’s shares through one broker and selling the same company’s share on the same day through another !, and Competition emerging from other Mutual Funds sponsored by PSU Banks that were allowed to be set up .It was to be carried in a leading Magazine…it was explosive and so I send him the transcript to confirm he was not being misquoted….Phew! he panicked and  asked me not to carry the Interview….had told him it would be the Editor’s call….it was not carried finally !

LIC  yet stays out of SEBI regulation though its the Biggest Shareholder in Indian Equities and functions like a Government Proxy

Who’s to Question LIC !…or for that matter the Government ?…and the Disinvestment Secretary boasts of how with this Disinvestment it’s a been the best first half of the year in the last many years for Disinvestment Proceeds !

It’s the Cash Cow for the Government to lead and order the flow wherever it conveniently wants Investments ! read more

At Rs 387 Floor Price the IndianOil Disinvestment should be an easy formality

Government is now really reducing it’s stake in IndianOil Corporation on Monday,August 24,2015 in a Divestment Exercise.

Why do I say  “now really” !

….because last year in March 2014 it held 78.92% of the IOC Equity of Rs 2427.95 crs (FV Rs 10) and because it felt the market price at the time of @ Rs 240 did not reflect the real valuation, instead of an Open OFS ,it decided to offload 10 % stake of 242795248 shares divided equally to two other  listed GOVT PSUs Oil India & ONGC  at 10% below market price=>@ Rs 220 to collect Rs 5341.49 crs at the time.

The Returns have been @ 80% in 17 months for ONGC & Oil India on this.

In April 2015 the Govt transferred  20267 shares in an off market transaction without it being a sale to the Central Public Sector Enterprise Exchange Traded Fund as loyalty shares

Now IOC is quoted higher at Rs 394 with a 52 Week High of Rs 465 registered just last month and a low of Rs 307 earlier….at the 52 Week High the Gains to Oil India & ONGC on their purchase of IOC last year would have exceeded 110% in 16 months

The Floor Price of Rs 387 has been set for Monday’s Disinvestment of  a similar quantity of 242795248 as divested last year .The Market Cap is Rs 95770 crs .Govt Stake will now drop from 68.57 % to  58.57% and the Proceeds to them would exceed Rs 9350 crs (assuming floor price of Rs 387)

Question is whether IOC can replicate at least some of the super gains made in 2014/15 going forward

Nevertheless this Divestment should be an Easy Formality

 

Essar Oil kissing Rs 200 ! ~ Exposes Delisting Duplicity !

 Essar Oil kissing Rs 200 ! ~ Exposes Delisting Duplicity !

For a year now and after Essar Oil announced intention to delist last year,I’ve been maintaining how the Promoters,Ruias are bent on short circuiting Minority Shareholders by delisting at a low price…here are some of my earlier blogposts in the matter

Essar Oil on Fire at Rs 167 after delisting natak last year at Rs 108

Monday, July 6th, 2015

LIC will never go Public & Essar Oil wants to go Private ! ~ What is the Connection !?

Saturday, June 21st, 2014So many Corporate Governance Questions flood instantly through my mind  on how could Essar Oil and it’s Promoters can be so brazen ?

  1. In June 2014  Essar Energy Holdings Ltd conveyed to Essar Oil a Floor Price to delist of just Rs 108.18! ~ thankfully SEBI put the delisting on hold
  2. Essar Oil has recently announced that the Russian Oil Giant Rosneft will be acquiring a 49% stake in Essar Oil subject to due diligence and determination of the transaction price !…and the shares that will go to Rosneft will be from the 65.64% stake in Essar Oil through Global Depositary Shares owned by Essar Oil & Gas Ltd and Essar Energy 
  3. Essar Oil promoters hold 90.54  % of the Equity of Rs 1449.52 crs (FV Rs 10) through straight holding of  24.90 % and 65.64%  through Global Depository Shares held by Bank of New York Mellon…..However both BSE & NSE continue to mislead by showing only 24.90% under Promoters
  4. Just Imagine if Essar Oil would have been allowed to delist last year with a floor price of just Rs 108.18,the promoters would have required just Rs 1530 crs to buy out the 9.46% shares they did not hold! 
  5. Just Imagine what Price they will be selling to Rosneft !?….I’m sure it would be over Rs 108.18 ! which would effectively have implied buying cheap from us minority shareholders only to pawn it much higher to Rosneft !
Need Monies !? Public are Suckers !….Minority Shareholders after all are a Minority !…..Make Monies ! Take it Private !…seems to be the Mantra here ! I refuse to believe that the Ruias & Rosneft were not already in parlays in June 2014 last year when the delisting endeavour with Rs 108.18 Floor price was announced ! .Delisting & Rosneft coming  in stinks of a premeditated plan being executed  Now with Essar Oil kissing Rs 200 and with BSE giving the permission to delist after NSE & SEBI had cleared it too,what will be the new floor price ? Obviously it will not be Rs 108.18! What will take place earlier in the short term ? ~ Delisting or  Rosneft acquiring 49% from Promoters ? It has to be delisting or else Rosneft coming in will trigger an Open Offer by them and take their shareholding past 49%

And the Ruias will be crucified if they delist at a lower price than the price they will sell to Rosneft ! read more

Essar Oil on Fire at Rs 167 after delisting natak last year at Rs 108

Essar Oil is on fire today at Rs 167 !.There are strong indicators that the Russian Oil Giant is acquiring a major stake but Company keeps repeatedly denying this

Today’s extremely high abnormal volumes on BSE & NSE give a strong signal

In Mid 2014 I had raised strong views on Essar Oil trying to short minority shareholders by wanting to delisting at a low price.Later in the year it announced a floor price of Rs 108 but the effort was rightly thwarted as the price was simply too low !

I had blogged on this and was also covered by Outlook Business…here are the two posts

 Covered by Outlook Business for frowning on Essar Oil Delisting Wednesday, July 23rd, 2014LIC will never go Public & Essar Oil wants to go Private ! ~ What is the Connection !? Saturday, June 21st, 2014

Reliance Industries remains @ Rs 885 ! ~ Gone Nowhere last Six Years !

In October 2012,I had blogged on Reliance Industries @ Rs 850 then wondering aloud if at all it could double in 3 years by 2015 to give a 30% CAGR Gain given all the Controversies plaguing it.The link’s below

Alright! ~ Will it double from Rs 850 in three years time !?

Wednesday, October 3rd, 2012

We are well into 2015,infact in the 30th month since the above blogpost and Reliance Industries  has gone nowhere & continues to struggle at Rs 885 ! while Sensex has gone up 58% from 18675 to 29445 ….The Controversies continue,daresay even more pronounced

While it was in some Clients Equity Portfolios as a Core Selection ,I advised to exit in 2013 itself and stopped covering it on serious Corporate Governance & Controversial Issues that remained unresolved…yet do  

The Market Cap currently is Rs 286149 crs=> @ US $ 46 billion….It was around the same three and six years ago but then was at No 1 Ranking….Now it’s at No 2 Ranking way below TCS’s US $ 85 billion and it’s got ITC, ONGC and HDFC Bank all at it’s heels  at @ US $ 44 billion each

Of Course Mukesh Ambani,with his controlled 45.25% Equity Stake in Reliance Industries, continues to be the richest Indian with a networth of US $ 20 b +,only just eclipsed by Dilip Shanghvi of Sun Pharma ~ but he’s not made his Shareholders rich now for the last six years….The Price was the same even in 2010

From April 2013 he gets Z Category Security which media reports that he pays for at Rs 15 lakhs a month 

Can he redeem this ‘No Gains’ situation in the coming years ?

2.8 million Reliance Shareholders obviously have faith that he will but they have been exposed with this hope and faith for many years now without the comfort of any A to Z type of Security or protection ! 

Are you one of  these 2.8 million Shareholders ?

 

They dont make Upright & Content & Humble like you anymore Dad !

Dad,Aroon, would have been 85 today ~ An Epitome of Always being Upright & Content & Humble ~  and ‘A’ in  both Name & Spirit

Proud of my Middle Name ‘A’ ~ always flaunt it on my Visiting Card and  Email & Other Communications

Dad’s Life was IndianOil who he served loyally for @ 30 years having helped set it up ~ Earlier in the 1950’s he was with Standard Vaccuum that was renamed Esso and which we finally know as HPCL today ~ A Decade into Post Independence,India set up IndianOil and Dad sacrificed his multi perked MNC Job to patriotically join the fledgling IndianOil  and was initially responsible for setting up West Zone,travelling three weeks in the month….he rose through the ranks donning various roles in Marketing,Supply ,Distribution & Commercial

He was incorruptible in a Sector where Corruption was easily induced and even became a norm where Hundreds of Millions of Dollars of Oil & Gas Trade &  Supply & Distribution Contracts &  Petrol Station Licensing was involved !

He was the Icon of  Integrity in IndianOil and all looked up and revered him ~ one clerk recalled how Dad had reached his humble ‘basti’ abode in the early 1970’s unannounced one evening to congratulate him on his upcoming wedding which he would not have been able to attend as he would be travelling on office work…there was no chair to sit and dad simply sat down on a metal trunk and  had some ‘chai’ offered and considerably eased the air

There were several instances,some really high profile,which I can easily recall, where he has shunned millions offered to show bias and favouritism despite great pressure ~ I used to joke with him “Dad if you had ,we’d be staying in Switzerland!” 🙂 …and he would just smile contently

I mention this in context and light of the unprecedented corruption in the Oil & Gas Sector that our Country has been plagued with especially after Privatisation in this Segment

….However all the pressures indeed had taken a toll on his health…after three strokes at Age 38,48 and 58 he passed away on the fourth at Age 68 in 1998,ten years after retiring from IndianOil in 1988 and refusing to take lucrative Consultancy and representative Offers from Foreign and Indian Private Oil & Gas Majors like many of his colleagues did

….he was the happiest when IndianOil gifted him a HMT Watch for 25 years of service and he could never understand how post modern reforms in early 1990s young finance professionals were getting salaries of lakhs in months and years when he received just two lakhs or so as pension on retirement…though he never grudged this read more