Tch ! Tch! Sterlite merges into Sesa to create Sesa Sterlite...and then Vedanta Aluminiuma nd Madras Aluminium merge into Sesa Sterlite !…This was Vedanta’s Anil Agarwal’s Plan all along !
On August 17,2010 I had voiced serious concern when Vedanta involved cash rich Sesa Goa to invest in the takeover of Cairn
At that time too Anil Agarwal said this Investment would be EPS Accretive !….Now on merging Sterlite into Sesa to create Sesa Sterlite,and then later merging his two Aluminium Companies into Sesa Sterlite he repeats this Line….How ! May I ask ?
I’m not even bothering to go into the Merger Ratio etc etc etc because Anil Agarwal’s gameplan is now quite clear….
Merge unlisted Sesa Industries into Sesa Goa
Then rip Sesa Goa of it’s FULL Cash by getting it to invest into a 20% stake in Cairn
And now merge Sterlite into it so that the heavy capex,borrowings in Aluminium and other Commodity Business gets subsidised by Sesa Goa’s Balance Sheet
Citigroup Global Markets and DSP Merill Lynch have even provided an opinion of fairness from the financial point of view regarding the share merger ratios to the Boards of Sesa Goa and Sterlite respectively…..Really !
Recall the late 1980s and early 1990s when the late Manu Chhabria acquired Shaw Wallace,Dunlop and Hindustan Dorr Oliver and then serious issues of Corporate Governance surfaced ~ his battles with his brother Kishore who was perceived to side with the Mallyas ….all his companies were stripped of Cash
Anil Agarwal has been pursuing the Path of Non Ferrous Commodities with great zeal and vigour~Zinc,Copper and Aluminium…. till then it was alright ,though question mark was raised on the low valuation of the PSU,Balco when he acquired a stake in it
Problem began when his Vedanta Group then acquired the cash rich Iron Ore major Sesa Goa……I had voiced concerns immediately that there was a great fear that Sesa Goa’s Cash will be drained into the Vedanta group…..Shareholders were traumatised when he created Debt in Zero Debt Sesa Goa and then depleted and committed all cash ,present and future, for Sesa Goa to take a 20% stake in Cairns when diversifying into this Oil major
His Vision for Vedanta is to be a Global Giant in Commodities and Mineral Resources ~ Shareholders of Sesa Goa who were basking in the rich company with the share price hovering at Rs 350 + levels are now seeing Sesa Goa slip below Rs 200 !….Pray tell me ,Mr Agarwal,how do you expect them to believe you !….you have betrayed them ,time and again !…Did Anil Agarwal really care for the Sesa Goa Shareholder ?…..Don’t Fool Yourself ! He Never did !
In the Past I’ve made several strong calls to immediately exit when significant Issues surface and I interpret them unfavourably like I had the Maytas and Satyam fiasco on December 17,2008 even before Ramalinga confessed in January 2009…The relevant blog is below and those seriously interested in several follow up blogs tracing chronologically what happened till I stopped blogging about this check out the Category on this Blog ,Satyam: The Sordid Astayam Saga
Wednesday, December 17th, 2008
I will not give even a single A Rating to AA,aka Anil Agarwal…he is entitled to his Long Vision but not by shorting shareholders of Sesa Goa,even if he argues it’s only for the Short Term !
Where Serious Corporate Governance Issues Exist, I prefer to Exit…I do not Own,my long time favourite Sesa Goa any Longer…some of my clients may have been left with small holdings though
I’m not aware what the Vedas say,but Vedanta’s Vision is not carrying along with any degree of conviction,all it’s shareholders,especially the Minority Shareholders of Sesa Goa…Vedanta has forcibly taken away their Lollipop !….”Believe or Leave !…we don’t really care !” seems to be Vedanta’s face to them