SEBI needs to take Stern action with Promoters like Ghias of Futura Polyester who seem to be enriching themselves in Innovassynth Technologies at the expense of Shareholders of Innovassynth Investments

Where Monies are there there will be Stink !….and SEBI, as the Regulator, needs to wear a Gas Mask at all times !

The Stink is being seen in the Promoters Ghias of Innovassynth Technologies (IST) raising it’s Equity Capital from Rs 55 crs to Rs 74 crs at par of Rs 10….the Value of IST is much more….Moreover shareholders of Innovassynth Investments (ISI) should have also been offered these shares at Rs 10 too…the sad irony it appears is that ISI itself rejected the fresh Investment Proposal in IST at par to facilitate the allotment to others….ISI is awaiting SEBI Clearance for Listing without an IPO,while IST remains unlisted

Know the background first

Ghias were  the Promoters of Indian Organic Chemicals (IOC)….It was rechristened Futura Polyesters (FP) and the Chemicals Division was moved to a new company from August 1,2002 called Innovassynth Technologies (IST)…..FP held 23850070 shares of FV Rs 10 in IST…this was over 40% of the Equity Capital of Rs 55 crs of IST…the rest was held by Rajan Raheja Group,Rakesh Jhunjhunwala and Ghias…they were also on the Board of IST….Rajan Raheja is on the Board of Prism Cement,EIH Hotels (Oberoi Hotel Chain in which Reliance too has a major stake now),Exide,Supreme Petrochem and Sonata Sofware

FP initially decided to transfer their entire shareholding in IST to the shareholders of FP directly under a Scheme of Arrangement…an initial Ratio of 10:23 was recommended and the shareholders of FP would get the shares of IST directly and free in this ratio of their holdings in FP

However a revised Scheme was formulated…and the reasons for this are becoming more apparent now…Under this Scheme FP would first tranfer it’s entire Investment in IST to another Company ISI…In turn ISI would allot free the shareholders of FP the shares of ISI in the ratio of 5:11….Thus FP Shareholders would also own ISI shares which would get listed…and ISI in turn held the Investment of over 40% of the Equity in IST….FP would also follow this with a Rights Issue at par to bring back the Networth after adjusting the IST Investment against Equity Capital and then Specific Reserves   

ISI was to get listed in 2009….BSE apparently even cleared this listing in July 2009 with the condition that SEBI Approval was required as the listing would be without any IPO…ISI applied to SEBI for this permission….till date SEBI has not given it….Why !?…SEBI has been raising queries….ISI claims it has answered all of these and are pursuing this matter with SEBI quite feverishly…what was the nature of these queries is not known…neither the SEBI website has any clues,nor is ISI revealing what these queries were. read more

Sensex Beating Stock Select Portfolio Performance in under Three months

From our Stock Watch of over 300 Scrips these 16 are our Stock Select releases or re-releases on May 4,2009 for as Portfolio Ideas…These are based on Fundamentals and the idea of putting them on this Blog is to assert that even if you were anti-equity and ignored the March 2009 Lows and Sensex of 8000,you could yet have entered beginning May 2009 at Sensex levels of 11500 and made some good returns

No

Company

Opening Value

May 4,2009

in Rs

Current Price

July 21,2009

in Rs

Gain / Loss

in Rs

Gain / Loss

in %

1

Aftek Ltd

9.22

15.35

6.13

66.49

2

Ahmedabad Steelcraft Ltd

15.35

14.17

-1.18

-7.69

3

Allahabad Bank

52.50

84.95

32.45

61.81

4

Bharat Heavy Electricals ..

1651.75

2220.35

568.60

34.42

5

Dena Bank

37.10

52.50

15.40

41.51

6

Grasim Industries Ltd

1778.40

2772.00

993.60

55.87

7

GVK Power & Infrastructur..

38.50

43.15

4.65

12.08

8

IFCI Ltd

25.15

50.50

25.35

100.80

9

Infrastructure Developmen..

76.45

140.60

64.15

83.91

10

Jaiprakash Associates Ltd

138.80

222.25

83.45

60.12

11

Lanco Infratech Ltd

334.05

381.15

47.10

14.10

12

Larsen & Toubro Ltd

879.55

1456.70

577.15

65.62

13

NIIT Ltd

32.00

60.65

28.65

89.53

14

Reliance Industries Ltd

1802.70

2029.60

226.90

12.59

15

S.Kumars Nationwide Ltd

25.15

39.30

14.15

56.26

16

Shree Rama Multi-Tech Ltd

3.79

5.14

1.35

35.62

 Some Observations and Comments

  • In less than three months,the performance of most have been very good…Nine of the Sixteen have surged over 50%…The seven  that have not ,have also seen a surge from March 2009 lows and their northwards movements have decelerated from May
  • GVK and Lanco were recommended on May 21,2009 and NIIT on May 19,2009…all the others were May 4,2009…Opening Prices are as on the date of Reco  
  •  It do not include Sesa Goa,which has been our front runner for a long time now.It currently trades at Rs 230+ ,up near 300 % from March 2009 Low of Rs 60…Last year we had again recommended it at cum bonus and split price levels of over Rs 3000,translating to ex split and ex bonus price level range of  Rs 150 to Rs 165…we reiterated the recommendation several times at every significant decline 
  • It also does not include Firstsource Solutions recommended at Rs 9 and then at Rs 14 in Feb 2009…It now is Rs 22,after seeing a high of Rs 30 recently
  • It does not include Punj Loyd too as this was pursued vigorously in March 2009 at levels close to Rs 100…It’s doubled since them
  • IFCI has doubled and IDFC and NIIT have been near doublers
  • Even the Four Core Scrips,Grasim,BHEL,Larsen & Toubro and Reliance Industries,which have a high Percentage of Portfolio Weightage have performed very well….Of these BHEL,Larsen and Reliance have been re-recommended several times in the past two years…All have been doublers from early March 2009 
  • Only one scrip,Ahmedabad Steelcraft has yet to perform…It had gone upto Rs 20 though a while ago  and has seen a high of Rs 27 last year 

Don’t ask me why I have recommended these or could you yet enter them at these current levels if they have not reached target prices ! My Clients would kill me if I blog free what they pay me for !..But you could try and read between the lines and research these yourselves ! I did cover some of them in my Workshops

And a word of caution…..You must Invest as per your Profile….Many of the above scrips may not suit your Profile…for instance a Conservative Investor in Equities would concentrate only on the Core Scrips and would never Invest in Aftek or Shree Rama Multi-Tech !,no matter how insignificant the exposure would be !…On the other hand, an Aggressive Investor would seize even an event based opportunity even if it was contingent in nature , and therefore more riskier ! 

However I can say this…..any Portfolio created or expanded on May 4, 2009, with Scrip Selection and Weightage based on Investor profile,  from the above  would have registered a strong performance in under three months…in all probability,over 50% as Nine of the above scrips have surged 50% + inside three months….In the same period the Sensex has notched 30% , moving from 11600 levels to current levels of 15100

So a stock selection based portfolio,rather than an Index Fund or Sensex weighted Portfolio  would have nearly doubled your returns over those of the Sensex…..The Magic is to demonstrate consisitency in beating the Sensex over longer Periods….Many,like John Bogle of Vanguard believe in Index Investing only,while Warren Buffett’s Berkshire Hathaway has shown that over 44 years their Portfolio returns are simply mindboggling over those of the S & P 500….Even the CAGR is more than double…S& P is less than 9%,while Berkshire Hathaway is over 20% !…In absolute terms there is absolutely no comparison ! S & P is a shade over 4000 % while BH is over 300000 %  over 44 years from 1965 !

So best of Luck in searching for those Stocks that will  catapult you into stardom ! Rakesh Jhunjhunwala had the conviction in Crisil and Praj and Titan !…Matrix and Mercator have made Millions for many of My Clients a few years ago…a few even retired in their 30s and 40s,but have since returned to work as their Wives simply cannot tolerate them being at home all day !…Oh ! we do suck Lemon too…in the late 1990s it was the Damania Group that let us down…..In 2006/7 Silverline was one such Lemon..lucky we got out in time…a decision I took after an unconvincing meeting with the Promoter after we had believed in the restructuring story…I’ll leave a few others Lemons for some other Day ! read more