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Adani Group Demerging and the Australian Mine Controversy continues

An interesting and absorbing and explosive article on the Adani Group by Lisa Cox has appeared  on February 7,2015 in  The Sydney Morning Herald    

Tax Havens,Criminal Investigation,Secret Ownership,Murky Money Trails…..the article does state that the Indian Media has reported that Company Officials counter these allegations as being “politically motivated” and a bid to resurrect old cases

Wonder if any Indian Media will have the courage to follow up on this SMH post and whether the BSE & NSE will, at least for the record because they simply accept any clarification and post it on their websites and file it and think their job is done for investor awareness and protection!, seek clarification from the Adani Group for all of this …..the article covers quotes from Australian relevant experts of  deliberate Non Disclosures and Dubious Accounting in Annual Reports of AEL and the role and pedigree and emergence of Gautam Adani’s brother,Vinod Shantilal Adani as the pivotal shareholder and sole director in newly created Singapore & Cayman Island Companies that control the Australian Coal Developments  of the Adani Group

The AEL Auditor,Ahmedabad based Dharmesh Parikh & Co has given a clean Limited Review Report of the latest standalone AEL Results 

Just over a week ago  on January 30,2015 the flagship Adani Enterprises Ltd (AEL) announced that the Board has approved the demerger of diversified businesses of the Company  and the merger of one unlisted mining company into AEL 

AEL has been recording 52 Week Highs and closed the week at Rs 627 (FV Rs 1)

Adani Ports & Special Economic Zone Ltd (APSEZL) closed at Rs 300(FV Rs 2)

Adani Power Ltd(APL) closed at Rs 47 (FV Rs 10)

You can observe that the Face Value of  the Equity Share of each listed Adani Company is different which sure comes in handy to obscure valuations efforts by many !

Scheme of Arrangement  to be effective April 1,2015 and process completed by December 31,2015 and approved by all the relevant Adani Group Companies Boards is as below :

  1. Demergers ~ There will be three of them 
  • AEL transferring Belekeri Port Operations and it’s Investment in APSEZL to APSEZL and the latter issuing 14123 Shares to AEL Shareholders for every 10000 shares owned by them and the shares allotted to AEL for it’s 74.99% holding in APSEZL be subsequently cancelled
  • AEL transferring 40MW Solar Power Project at Bitta Village in the Kutch District of Gujarat and it’s Investment in APL to APL and the latter issuing 18596 shares to AEL  Shareholders for every 10000 shares owned by them and the shares allotted to AEL for it’s 68.99% holding in APL be subsequently cancelled
  • AEL transferring Mundra-Zedra transmission line and the investment of AEL in  wholly owned subsidiary Adani Transmissions Ltd(ATL) to ATL with the latter issuing 1 share to Equity Shareholders of AEL for every 1 shares held by them in AEL.The Equity shares held by AEL in ATL will be cancelled.ATL will be listed on BSE & NSE 
        2. Merger ~ AEL’s Wholly Owned  Subsidiary Adani Mining Private Ltd (AMPL) will be merged into it

As far as Coal Mine Operations the viability of  developing the Carmichael Coal Mine in the Galilee Basin in Queensland is being questioned as Coal prices have dropped and there are Environmental & Real Employment Issues being raised.State Bank of India has controversially announced that it would lend support of US $ One Billion to the Adani Group to develop the Australian Mine

Also with India now reallocating Coal Mines in a transparent manner  after the Scandal on the allocation under the UPA Government had set back Coal Mine Development in India for several years there would not be a scenario of India having to import Coal in the years ahead 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

 

 

Typical ~ Equity Investors are piling on at these Highs ~ they need to be cautious

Sensex has crossed a record 26000 & Nifty is now ahead of 7700

Typical ~ Equity Investors are piling on at these Highs  ~ they need to be cautious ~ especially those who are returning or initiating fresh exposure now not having done so in 2013 or earlier in 2014 ~ advisable to await the post budget scenario as there is a high probability that once euphoria abates the Sensex and Bellwether Scrips may correct 10% or more…the real danger though are the small caps and midcaps that have run up crazy,some over 100% in months…they may correct 25% to 50%…yes that high !  

At June 30,2014 ,Equity mutual funds saw record absolute rise in average AUM in the quarter, up by Rs 33000 crore or 16% to Rs 2,36,000 crore led by mark to market gains and inflows. The equity funds’ contribution to the gains in the industry assets was the highest among all categories

While this is to be expected on the back of the resounding BJP Victory and Narendra Modi assuming Prime Ministership there needs to some caution that should be exercised especially by those seeking instant profits and gratification as Sensex has crossed 26000 levels and seems to be running a little ahead of fundamentals for the near term on the back of  BJP & Narendra Modi sweeping the elections,FII Net Inflows exceeding US $ 8 Billion in 2014 till date and Great Expectations from the Budget in particular and the Government in general going forward

Great Expectations from the Union Budget this Thursday are countered by great challenges that continue to confront us on the economic and geo political front…Iraq & Ukraine Tension can escalate further causing Oil Price to surge even further past US 120/barrel and putting pressure on the Rupee…though a lot of the pressure has been taken off by record FII Net Inflows into India this year into both Debt & Equity

The Budget Backdrop is :

High ~ Inflation,Deficits & Debts

Low ~ Economic Growth with Manufacturing sector that needs urgent revival

45% + of the Projected FY 15 Fiscal Deficit has been reached in the first two months April & May  of FY 14 itself 

There is little room to lower Interest Rates immediately….so manufacturing thrust can be provided through diluting the Land Acquisition Act and opening out or increasing FDI cap in many sectors

It is commonly expected that the Budget will be kind to the Infrastructure,Housing Finance,Power & Banking Sector….a major beneficiary of this should also be the Cement Sector read more

L & T Chairman A M Naik expresses anguish and prescribes action for the Indian Economy

This is an informative and impressive interview given by A M Naik,Chairman of Larsen & Toubro in today’s edition of Economic Times expressing his anguish on the mistakes made and how to address challenges to bring India’s Economy back to a sustainable 9% to 10% GDP Growth Rate with financial inclusion

Some thought provoking bytes…..

On reviving GDP Growth Rate….“has to retrace itself to 9-10% and be sustainable for many years without stoking inflationWhen we grow at 10% the rich get wealthier,and therefore,it is important that it should be inclusive growth “

On Freebies….“I am not in favour of Freebies as it takes away the Dignity of Labour”

On Narendra Modi as PM…..” He is going to make a difference,that too a big difference”

On Driving Growth….” Look at our Trade Imbalance with other countries.It has grown in the last 15 years.If you import raw materials,it adds value to the nation.But if you bring ready-made TV,ready-made cars,then what jobs are you creating here?”

On Free Trade Agreements….“….thing that has damaged India is the indiscreet signing of free-trade agreements (FTAs)…the very word is free trade but where the trade traffic is one way you are exporting jobs and not creating jobs within the country.The Prime Minister in the BRIC Summit ais India has to create 10-15 million jobs.Yes we did.But we created them in foreign lands….We export iron ore to China which means we take it out from Mother Earth and the Chinese add value by making steel and export.That’s why manufacturing which was 22% of the Indian GDP went down to 17% and from a growth of 12% at one time it is registering negative growth.It was directly created by government policies…take a relook at all FTAs….We (Indians) are not bonded labour for life.”

On what should be the three Priorities of the Government…First,and foremost create jobs…restore the manufacturing’s contribution to GDP from 17% to 22%.China has 46%,Malaysia 40%,Indonesia 46%….Do you expect India’s population to daily wake up every morning and worry from where they get their lunch?”…Second,a country can be said to be powerful not just by it’s economic wealth but if it has it’s own independent and powerful defence sector …The government is willing to import and become the largest importer.But you are not willing to give the indian private sector it’s rightful opportunity…India’s defence is in a real bad shape…..We should agree to 49%,subject to genuine transfer of technology.But nowhere in the world,even in the most advanced nations like the US,which has a high-tech defence sector,do they allow foreign companies to hold a majority stake….Forget about sharing technology,it’s not going to happen…..create a strong defence equipment manufacturing base….third is to attract large FDI in Infrastructure….We are talking about a trillion-dollar investment in India and we haven’t even spend one-third of it in infrastructure…The Indian private sector  no longer has the appetite for public-private partnership(PPP).The previous government used to talk that half the amount would come from PPP-$100 billion a year.Today,through PPP even $ 5 billion cannot be raised….The private sector has no moneyThe route to invest in PPP does not exist anymore…Even the Centre’s own ability to spend so much money is limited because of the fiscal deficit,freebies and waiver of loans.The government has a plan to set up 100 cities and high-speed express rail…the quadrilateral is 6000 kms…Rs 100 crore/km…That is about Rs 6 lakh Crores…when you put your hand in the tijori,the money doesn’t exist….The only answer is large foreign direct investment” read more

TAP GAP Poser End 2013 ~Which Indian Company Will Be A Big Share Price Winner In 2014?

Response Momentum is gathering some speedSo far we have had these interesting  Eleven Stock Recommendations for 2014 from Six People…Thanks Guys

Interestingly No Tata or both the Ambani Brothers Group Companies so far….nor Real Estate really…or Pharma or Export Oriented or Banking PSUs or Oil & Gas !

Come on all of you out there ! ~ need some more acceleration to this TAP POSER that was posted on December 19,2013

TAP GAP Poser end 2013 ~Which Indian Company will be a Big Share Price Winner in 2014?

Thursday, December 19th, 2013

You can respond on the above post of December 19,2013 like the ones below have done  or even on this one

Request that Response carry the  Current Market Price Recommended at and also Target if you can give one for 2014…..or else I have to do some homework and take the weighted BSE average for the day as the Recommended Price on the day you have recommended or an earlier date if the Response came in on a Holiday like December 25,2013 ~ and this can be quite volatile like Delta Corp…opened at Rs 101 on December 23,2013,hit a high of Rs 108 before closing at Rs 107 with a weighted average of Rs 105

So far we have had these interesting  Eleven Recommendations from Six People…Thanks Guys

Sr

From

Scrip Recommended

On

Investment Price in Rs

Target Price in 2014

1

Sumit Khanna

United Spirits

19/12/2013

2658

Stated

3400

Stated

2

Rohit

Delta Corp

23/12/2013

105

BSE Weighted Average Assumed

Not Stated

3

Sameer

Yes Bank

24/12/2013

378

BSE Weighted Average Assumed

Not Stated

4

Sameer

Bajaj Corp

24/12/2013

221

BSE Weighted Average Assumed

Not Stated

5

Sameer

Adani Port

24/12/2013

161

BSE Weighted Average Assumed

Not Stated

6

Sameer

Adani Power

24/12/2013

39

BSE Weighted Average Assumed

Not Stated

7

Anand

YBrant Digital

24/12/2013

7

BSE Weighted Average Assumed

Not Stated

8

Prasad

GMR Infrastructure

25/12/2013

24

BSE Weighted Average Assumed

Not Stated

Prasad

IFCI

25/12/2013

25

BSE Weighted Average Assumed

Not Stated

 10

Prasad

IDFC

25/12/2013

107

BSE Weighted Average Assumed

Not Stated

11

NSri

Deccan Gold Mine

25/12/2013

22

BSE Weighted Average Assumed

Not Stated

 

 

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

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