RIP S T Gerela ex GM BSE ~ gave me the best compliment till date

 

Rest in Peace now Gerela Saab  !

Mr S T Gerela ex GM of BSE passed away peacefully this morning

We had not met in years but he always remained at the top of my mind when it came to testimonials for this is what he had said to me over a decade ago,when urging me for Stock Recommendations, at one of our brainstorming sessions at our Annual BSE Training Institute Faculty Weekend Retreats , this one at The Retreat at Madh Island ,and that too in front of forty leading names of our Equity Markets like Ramesh Damani & Nilesh Shah

Mandir  may aakar Prasad na miley yeh toh ho hi nahi sakta ! 

This has got to count as one of the best compliments I have ever received till date !

Fondly called ‘Gorilla’ instead of ‘Gerela’ by some broker members of the BSE,I distinctly remember Mr Gerela quietly coming in to sit for a while at few of  my BSE Fundamental Equity Valuation Sessions on the 18th and 19th BTI Training Floors of the Jeejeebhoy Towers that houses BSE to see if he could catch an idea or two that I would showcase as a case study ~ he ,like so many others,had latched on to Matrix Labs Valuation in my sessions early on at Rs 25 in July 2001 and which became my second 100 Bagger ,after Wipro,by soaring 12000 % or 120 x in five years of 2001 to 2006.It since was taken over by Mylan and delisted ~ Oh ! yes even Rakesh Jhunjhunwala later entered Matrix Labs at Rs 200 picking up a million shares ,200k for wife Rekha and 800k for himself

Will always remember you Mr Gerela ~ thanks for the compliment

Strength to your grieving family to bear this loss

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

    Covid-19 Crisis-Your Well Being is more important than Stock Market Well Being

    Wealth is negotiable, Health is not

    Your Personal Well Being is more important that the Stock Market Well Being ~ Always & more so in this unfathomable ongoing Covid-19 Reality

    Above’s a three minute reach out by me last night to all connected with me to reinforce this .It’s also posted on Facebook , YouTube ,Twitter  and Instagram too

    Let’s not have misplaced priorities ~Government & us should be more worried for Food Stocks rather than Stock Markets~ should be more concerned for the front-liners like healthcare professionals and delivery personnel and those marginalised rather than be concerned for Stock Margins

    Stay Safe~Stay Home~Save Lives

    Keep the Cheer & Spirit

    🙂 Keep Smiling

    Yes Bank ~ Has the RBI & MOF lost it !?

    Yes Bank ~ Has the RBI & MOF lost it !? SEBI really is a bystander here

    Controversial Lock In Clause 3 Sub Clause 8 (a) in the Scheme of Reconstruction 

    No wonder the Finance Minister Mrs Nirmala Sitharaman, while highlighting only selected points, even when asked for details of the Scheme,did not want to say it at Friday,March 13,2020 evening press meet to announce cabinet decisions,one of which was the approval of RBI’s Scheme of Reconstruction for Yes Bank and that a notification would follow. A gazetted notification did follow  late same evening by the Department of Financial Services,Ministry of Finance and it’s available  on Yes Bank’s  website here and on egazette website  here 

    While I commend the Government on it’s promise to protect all depositors monies what caught my eye in it was this absolutely ridiculous clause 3, sub clause 8(a)  that essentially puts 75% of the shares held by existing investors in quarantine or lock in for three years too along with 75% of  the new shares to be allotted to State Bank of India and other Investors at Rs 10 which too will enjoy a capital tax gains exemption.Only small shareholders holding less than 100 shares will be exempted from this restriction.Here’s it verbatim :

    (8) There shall be a lock-in period of three years from the commencement of this Scheme to
    the extent of seventy-five per cent in respect of-
    (a) shares held by existing shareholders on the date of such commencement;
    (b) shares allotted to the investors under this Scheme:
    Provided that the said lock-in period shall not apply to any shareholder holding less
    than one hundred shares.

    Is this a joke !? but then it’s not April 1 yet !

    Is the Government protecting the minority shareholders or actually safeguarding the incoming Bank and other High Networth Investors who have committed to participate at just Rs 10 per share with capital gains tax exemption too in this Yes Bank Scheme of Reconstruction,2020 ? 

    Yes Bank too has notified the exchanges yesterday of the Scheme of Reconstruction highlighting the above lock in

    Yes Bank covered extensively in my Equity Workshops past two years

    For the past two Years most of the fundamental ‘Value vs Price’ equity workshops that I conducted showcased Yes Bank Case Study in detail and why though quite a few participants thought it looked great in 2019 at Rs 115 and then later even at Rs 80, why one should not be foolishly courageous as the true stress in Advances was clearly not visible and Networth could be wiped out on true provisioning . read more

    Looooooooong Full House Saturday Equity Mumbai Workshop Sept 14 2019

    It was a looooooooong,should have held it over two days,  Full House Equity Workshop in Mumbai on Saturday,September 14,2019 with a whole spectrum of smart participants that made for really invigorating interaction ~they came from Mumbai,Gurgaon & Pune ~ from young upwardly mobile grads & post grads from top ranked Management Institutes in India,UK (London) & USA(Harvard) to ‘ well tuned in’ professionals from the IT ,Consultancy,Broking,Corporate & Banking Sectors to veteran high networth investors . We commenced at 9.30 am & concluded well beyond 7.30 pm ~ 🙂 should have arranged dinner too

    Thank you Guys !

    Here are a few candid clicks from the Workshop :

    The Coverage was expansive & the Interaction from Participants very intelligent & which opened out many threads that we examined with anecdotal support . When analysing a company ,they asked what is “Non Negotiable” &  “How to have Foresight as on Hindsight we are always right”

    Really a lot was covered ,some of which is below  :

    • Macros through :
    1. Examining the Equity Table’s four legs of Valuation,Liquidity,Momentum & Sentiment & the Impact of FPI Flows ~ when Valuation,which should be the strongest leg,sometimes takes a back seat as Liquidity or even a lack of it drives the momentum & sentiment
    2.  Not getting Seduced by any Bounce at  Friday closing Sensex 37385 & Nifty 11076 Levels as Caution is strongly indicated by domestic & overseas economy & geo-political headwinds
    3. Negative Interest Rates Era vs the Magic of Compounding in such meltdowns
    4. Sensex & Earnings & Market Cap & low GDP growth Dynamics on Levels & Valuations ~ Past,Present & Forward & why downside risk remains wide open while the upside appears capped for now ~ we referred to 1991/92 abnormally high Sensex PE pre Harshad Mehta Scam exposure & the High PE in 2000 with Ketan Parekh was in action & where the markets were clearing running ahead of fundamentals by huge margins~ we referred to the Sensex PE of just 6 in the late 1980s when VP Singh was the PM 1988~ we covered Mkt Cap/GDP Highs pre Lehman collapse in 2007/8 & the levels now
    5. Fx Reserves  & Exchange Rate Risk &  the Risk of increasing Sovereign Debt as planned by Government ~ How our Rupee has always had a South trajectory,except when it soared from Rs 49 to the US $ to Rs 39 to the US $ creating havoc especially in the Diamond Sector
    6. Why Inversely co-related Gold & US $ are moving up together instead
    7. Turm-Oil & Impact on Fiscal Deficit & Rupee  like last happened in 2007/8( On Saturday at the workshop we were not yet clued in to the Drone Attack on the Oil Refinery in Saudi Arabia that saw Oil Prices dangerously soar 20% in spot) ~ India is hugely dependent on Oil Imports
    8. Interest & Inflation rates
    9. Trump ~ Not sure if he’s a macro or micro factor !
    • Micros through many companies  & sector dynamics covering :
    1. Checklist on how to Smartly & Effectively & thus Quickly Read a voluminous Annual Report
    2. Our Five Steps for Evaluating a Company for Investment
    3. Impact on the Financial Statements in Scenarios like Buy Back,Rights Issues,Fictitious Sales,RBI issuing a divergence on Provisioning for NPAs,non linear jump in Sales Realisations,5 G Spectrum Fees,Permanent Diminution in Investments,Monetising Assets & Depreciation of the Rupee
    4. Quick Brief on Absolute & Relative Valuation & how to prepare a quick Valuation Grid from the Annual Report, Market Price Trends & Shareholding
    5. Why Liquidity more than Profitability is the ‘Circle of Life’  for a Company as viewed through the lens of the Cash Flow Statement dervived from the Balance Sheet & Profit & Loss Ac & that distinguishes operating,financing & investing flows
    6. Corporate Governance Issues on inadequate Disclosure or Non Disclosure, Incorrect & questionable Accounting Treatment & Lack of Transparency &  irresponsible (deliberate?)  Management utterances  that give a leg to Insider Trading & huge Profits through  Derivatives Play
    7. Courage & Conviction Promoter or Institutional recent Buying in Vodafone,Yes Bank,I B Real Estate & Tata Motors & seeing more wealth destruction since in these   
    8. Basis for Disclaimer of Opinion by the Auditor of Reliance Infrastructure & what holds out some hope
    9. Intangibles,Investments & Impairments
    10. Reliance Industries’s Enterprise Value,Revenue Segments Potential,Spin offs of the Jio Telecom Infra into two trusts, Aramco’s 20% stake being negotiated in the Refining,Petroleum Retailing & Petrochemicals Business that should lead to further demerger & reviving & scaling the Gas Exploration Operations
    11. How Defaults & Corporate Governance Issues decimated into or near oblivion Eros,Cox & Kings,ManPasand,Tree House Education,Satyam,Jet Airways,Kingfisher & Talwalkars & is there any hope of operational & share price recovery with Asset values holding out some hope in a few ~ How Clearly the Statutory Auditors & Credit Rating Agencies were negligent or intentionally turned a blind eye in many cases
    12. Huge Potential Outlay of the ‘Nal sey Jal’ Scheme of the Government & the new Jal Shakti Ministry focus that should benefit many companies if the implementation & execution is as noteworthy as the intent
    13. How IndAs 115 continues to affect Bombay Dyeing
    14. How Exchanges continue to accept outright untrue or tepid clarifications from Companies
    15. Reference to Investment Gurus & Living Legends Warren Buffett & Peter Lynch Approaches & Success
    16.  Coverage of a few sectors like Defence, Hydrocarbons,Broking,Telecom,Real Estate,NBFCs,Banks & Automobiles & Disruption that’s in play in many
    17. Consolidation & Capitalisation of PSU Banks & the controversial Acquisition of Laxmi Vilas Bank by I B Housing Finance pending RBI approval
    18. Common Investor Mistakes

    The next Equity Workshop is scheduled  pre-Diwali for Saturday ,October 19,2019 & will be announced soon on www.jsalphaa.com & social media

    Touched by some warm & constructive feedback from participants :

    • thanks for a lovely interactive session…”
    • “enjoyed your session yday”
    • “it was great to meet again & reskill to be better prepared for opportunities which would arise”
    • “Thanks for being the Enabler,the last few days have been very encouraging”
    • “Cover the Scenarios Exercise more with Investor focus than just on Accounting Impact & take in a few Annual Reports before Lunch”  

    😆 & I swear I did not pay for these ones !

  • ” You are very good at what you do,comes naturally to you,with a vastness of the subject to cover you did justice to cover the best you could with your insights and experience of all the treasures of knowledge,you are an encyclopedia of the subject with case studies,which is the best way of teaching, sharing & learning according to me,the various industries that you know of,the processes & the products,the promoters & the pitfalls,the auditors & the audited,you can understand in the readings the stated & the unstated,intention & intended,you truly personify_the integration of intellect with instinct_”   
  • “Whoever missed this one, missed learning a radical way to look at balance sheets. Very practically in a few minutes you can strip away the padding and bullshit that promoters hide their sins behind. If the stock market’s motto or rather rider has always been caveat emptor or buyer beware, Gaurav’s lessons in Analysis would ensure that a “fool and his money are not soon parted” for when emotions like fear and greed coupled with ignorance seize us even the wisest are prone to behave like fools. Especially the wisest!”
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