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Vedanta promoters tried many tricks to keep expectations of shareholders muted: SES

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Vedanta promoters tried many tricks to keep expectations of shareholders muted: SES. (Photo: www.vedantaresources.com)
Vedanta promoters tried many tricks to keep expectations of shareholders muted: SES. (Photo: www.vedantaresources.com)

The promoters of Vedanta have tried many tricks to keep expectation of public shareholders muted, proxy advisory firm, Stakeholders Empowerment Services (SES) said as the company initiates the final step of delisting.

Vedanta Resources Ltd (VRL) has given a public announcement to kick start the Reverse Book Building (RBB) process in order to delist Vedanta Ltd (Vedanta) from stock exchanges. The bidding commences on October 5 and closes on October 9.

SES has said, “Investors must ignore floor price, book value and 52-week low price as the same does not reflect true value of Vedanta shares”.

“While, SES has given guidance as to what is a fair bidding price. However, it is up to the shareholders to do proper analysis and not succumb to negative news floating around. Promoters of the Company are experienced businessmen and would love to minimize cost of acquisition. It is well within their rights to do so,” it said in its advisory to shareholders.

“And shareholders also have their right to seek a fair price, it is on this point there is a conflict between promoter and public shareholders. Shareholders must protect their value,” SES said.

SES in its report titled ‘Vedanta Delisting Offer’ dated May 13 has termed the delisting proposal of VRL as being opportunistic and unfair as the offered price at Rs 87.50/- per share is well below the fair value of Vedanta.

SES advice of SES to shareholders is that, do not be guided by what is floor price, what is book value given, what is market price or what is their purchase price.

“Just remember one thing that, you must offer shares at a price which you feel is fair. Please also do not be afraid that if you offer a higher price and delisting happens at a price lower than what you offered, you may be left out. No, not at all, as SEBI Delisting Regulations guarantees that the acquirer must offer to buy shares from all remaining shareholders at discovered price in case delisting offer is successful,” SES said.

SES said the promoters have tried many tricks to keep expectation of public shareholders muted. This includes indicative price at Rs 87.50, floor price at Rs 87.25, write off of Rs 17,400 crore resulting in consolidated book value less than Rs 90. SES adds it did not pass HZL dividend to shareholders, although promised in Dividend Distribution Policy (DDP).

SES said it is age old technique that if you want to buy something, first undervalue and then create negative environment so that seller is convinced that the thing is not valuable, here shareholders are motivated to tender their share at throw away price.

SES asks if the write-offs amounting to Rs 17,400 crore were genuine or an accounting gimmick? While, the Investors Presentation and conference calls transcripts and Annual Report presented a very rosy picture of the state of affairs of the Company, the company wrote off almost Rs 17,400 crore (Rs 15,900 crore owing to Oil & Gas alone) which was more than 40 per cent of the then market capitalization of Vedanta of Rs 39,000 crore. The write-off was announced on June 6 and market reaction was absolutely unperturbed to say the least.

SES is of the opinion that a huge write off generally results in share price to plunge almost immediately, however, the market realized that write off is not a cash loss, but a mere book loss. And does not impact going concern assumption of business, it is mere revaluation.

The question is what was the need to write off? The Company in its own presentation has stated that in Oil Business at Brent Oil Price of $40 per barrel will give IRR of 35 per cent. Therefore, long term effect of write off is not there. Further, the global oil prices have recovered from its decade lows in March 2020, and are trading at approximately $40 per barrel currently, will the Company write back the impairment? “To SES, write off was aimed to cause negative sentiment,” it said.

One of the jewels in the crown that needs to be given more attention is the cash rich Hindustan Zinc Ltd (HZL). The present market capitalization of HZL is more than Rs 85,000 crore. Based on the market cap of HZL, the value of HZL embedded in Vedanta is approximately Rs 55,000 crore, translating into? 148 per equity share, almost 70 per cent higher to Floor price and 65 per cent higher to book value.

SES said that Vedanta shares have unpaid HZL dividend of Rs 12.18/share, which promoters have not paid to its shareholders In May, HZL paid dividend amounting to close to Rs 7,000 crore to its shareholders, out of which approximately Rs 4,500 crore was received by Vedanta. According to the Dividend Distribution Policy of the Company, entire dividend received by Vedanta from HZL (other than special dividend) is to be passed on to its own shareholders as it is.

HZL has recently issued Non-Convertible Debentures (NCDs) and raised money to the tune of Rs 3,250 crore.

“HZL being a cash surplus Company which pays hefty dividends to its shareholders, SES is unable to understand that why suddenly such significant amount of money is being raised through borrowings,” the report said.

To give perspective, only 4 months back, HZL had paid an interim dividend to its shareholders amounting to close to Rs 7,000 crore. “Therefore, SES is unable to comprehend that if the Company did require funds, then why did it declare Rs 7,000 crore of dividend in May. Either it is a case of absolute absurdity in financial management or is there a plan which shareholders are unaware?” it said.

Was the dividend by HZL paid only shore up cash in Vedanta, SES has asked. This assumes importance since Vedanta did not pass on the dividend received from HZL to its shareholders, which is contrary to what is stated in the Dividend Distribution Policy of Vedanta. SES said assuming that Vedanta gets delisted this year, the entire dividend of Rs 4,500 crore will be taken by the Promoters, when approximately Rs 2,250 crore was to be passed on to the public shareholders of Vedanta.

There is no sign of any sudden slump in the business of HZL. SES is of the opinion that the shareholders must seek answer from the Company regarding the sudden issuance of NCDs.

Therefore, SES recommends that shareholders must offer their shares in keeping the range Rs 236 – Rs 310 in mind. Even if one offers a discount to highest price for uncertainties, depressed economic environment, etc and gives a discount of 20-30 per cent the fair range comes to be anywhere between Rs 200 – Rs 250 at least considering the value that is seen in the business.

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Business

Eicher Motors now offers customised Royal Enfield motorcycles

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Eicher logo
Eicher logo

Chennai, Oct 15 (IANS) Two-wheeler maker Eicher Motors Ltd on Thursday said customers can now choose to personalise and accessorise their Royal Enfield motorcycles at the time of purchase.

In a statement issued here, the company said it has rolled out the first of its kind motorcycle personalisation service – The Royal Enfield Make-It-Yours – MiY.

The Royal Enfield is the two-wheeler division of Eicher Motors rolling out bikes like Bullet, Interceptor 650, Continental GT 650 and others.

According to the company, the MiY is enabled via an app based 3-D configurator will allow buyers to access to various possible combinations in personalistion options at the time of booking the motorcycle.

Once the order is placed through the app, the buyers will also know the probable delivery time.

According to Vinod K. Dasari, CEO, Royal Enfield, with MiY, customers will have a “little bit of them” built into the motorcycle, and depending on the level of personalisation, motorcycles will be custom-made as per consumer specifications, within 24 to 48 hours, at the Chennai plant.

“We will be rolling out MiY for all our motorcycles, across all our stores in the country in a phased manner. All new motorcycle models from Royal Enfield, from here on, will come with the MiY feature,” he said.

Initially the MiY will be available for models like Interceptor 650 and Continental GT 650.

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Construction picks up in unlock, cement prices rise

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Cement city Nimbhahera emerges as new hotspot in Rajasthan
Cement city Nimbhahera emerges as new hotspot in Rajasthan

New Delhi, Oct 15 (IANS) Fading monsoons, easing of lockdown restrictions and recovery in non-trade demand have revived the construction activities in the country resulting in pan-India 2 per cent month-on-month increase in cement prices in October after four consecutive months correction.

The rising demand and prices for construction materials is a good barometer to gauge revival of economic activities in the country.

The cement price rise in October is also an aberration to historic trends when price normally corrects 2-3 per cent due to seasonality.

“A strong demand recovery in September 2020 (10-12 per cent yoy) and continued demand tailwinds in early October 2020 underpin the price strength. Cost headwinds should hit from end of 3QFY21 and price hikes, if sustained, would offset the impact on margins and drive earnings upgrades,” Kotak Institutional Equities said in a report.

The distribution of rise in cement prices indicates that consumers revival has happened across the country. Prices in North and Central markets increased 5 per cent m-o-m on a sharp uptick in demand led by easing of lockdown restrictions and return of migrant labour to metro cities supporting non-trade demand.

Prices remained stable m-o-m in East and West India while prices in South increased 2 pet cent mom after strong demand recovery in September 2020.

Historically, cement prices correct by 2-3 per cent qoq in 3Q due to seasonality. However, in 3QFY21E prices are up 1 per cent qoq led by higher prices in North and Central markets, the brokerage report said.

While government estimate suggests that demand declined 15 per cent yoy in August 2020 in the country and declined by 29 per cent yoy YTD FY2021. However, channel checks by the brokerage suggests that strong demand in September 2020 (+10-12 per cent yoy) more than offset the weakness in early 2QFY21.

South, where demand was worst-hit in April-August 2020, too witnessed 3-5 per cent yoy demand growth in September 2020 led by Andhra-Telangana.

Initial feedback suggests that demand tailwinds have continued in October 2020. We expect industry volumes to decline by 12.5 per cent yoy in FY2021E. We see grinding and clinker capacity addition at 4 per cent/3 per cent CAGR over FY2020-23E versus demand at 3 per cent CAGR.

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Business

CMS launches AI-automated ATM security software ‘Algo’

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SBI ATM. (File Photo IANS)
SBI ATM. (File Photo IANS)

Mumbai, Oct 14 (IANS) CMS Info Systems (CMS) has announced the launch of fully automated, Artificial Intelligence-powered ATM security software application ‘Algo’.

CMS Algo is an end-to-end security encrypted a fool-proof solution to prevent ATM frauds at the time of cash replenishment or maintenance, the company said in a statement.

The application is machine-agnostic and can operate on any ATM manufactured by any OEM.

Rajiv Kaul, Executive Vice Chairman, Chief Executive Officer and Whole-time Director of CMS Info Systems, said: “This application can run on any ATM across the world and helps in fraud prevention. The solution is cost-effective in the back-end and low cost in the front-end.”

“The biggest saving is the reduction of fraud, no requirement of a call centre, and restricted access to data and premises,” he said.

He noted that the company has deployed Algo on 52,000 ATMs in India.

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CCI okays Tube Investments’ stake buy in CG Power

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Competition Commission of India
Competition Commission of India

New Delhi, Oct 14 (IANS) The Competition Commission of India (CCI) has approved the acquisition of shares in CG Power and Industrial Solutions Ltd by Tube Investments of India Ltd.

The proposed combination envisages acquisition of more than 50 per cent of the equity share capital of CG Power and Industrial Solutions Ltd (CG Power) by Tube Investments of India Ltd (TIIL).

TIIL is a listed entity and is part of Murugappa group. It has three business verticals including engineering, metal formed products and bicycles. It is engaged in the manufacture of a wide range of products for automotive, railway, construction, mining and agriculture industries.

Also a listed entity, CG Power has two major business units — power systems and industrial systems.

The power systems business unit focuses on power transmission, distribution, power solutions, setting up of integrated power systems among others.

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Uber hires Amazon veteran to lead mobility teams in Bengaluru

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Manikandan Thangarathnam
Manikandan Thangarathnam

Uber on Thursday announced it hired Amazon veteran Manikandan Thangarathnam as senior director to lead all rider and platform engineering teams in Bengaluru.

Uber said it is also hiring 85 more engineers in the country. This is in addition to hiring 140 engineers the ride-hailing service announced last month.

“As the world steps into a new normal, adaptability is going to be a key aspect to usher in growth. I look forward to leading the bright minds at Uber and innovating together for the world, one ride at a time,” said Mani.

At Amazon, Mani helped build several core platforms and products.

He led engineering efforts for the Amazon Appstore and was instrumental in bootstrapping the tech major’s Chennai office and building a vast team of engineers.

The Rider mobility team works on the challenge of enabling the next billion trips by building new services including high capacity vehicles (Uber bus), and car rentals, among others.

The company said the Marketplace team is building a highly-available and scalable self-serve gateway to configure, manage, and monitor Application Programming Interfaces (API) of every business domain at Uber.

Uber recently hired another Amazon veteran Jayaram Valliyur as senior director to lead its global finance technology team, spread across multiple geographies.

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OnePlus investing Rs 100 crore to boost retail footprint in India

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OnePlus to launch 2 Nord smartphones on Oct 26
OnePlus to launch 2 Nord smartphones on Oct 26

Smartphone maker OnePlus is committed to invest Rs 100 crore towards deeper market penetration by taking premium offline experience beyond metro cities and expanding its reach through new online and offline retail partnerships, a top company executive said on Thursday.

With over 5,000 offline stores including partnered stores across the country, the smartphone maker is planning to scale up to more than 8,000 stores in the coming quarters, Navnit Nakra, VP and Chief Strategy OnePlus India told IANS.

“At present, we have over 30 OnePlus experience stores across India and will be opening 14 new experience stores in the next six months.

“We’ll launch our biggest experience store globally, the OnePlus Nizam Palace in Hyderabad later this year. We are also working towards covering 100 cities through our service centre network in the next year,” Nakra informed.

The smartphone maker launched its India R&D centre in 2019 and is committed to achieve long-term growth in the country.

Currently, the company has 300 employees in the R&D team and hope to double that number in the coming months.

Nakra said that India continues to be a key market for OnePlus since the brand’s entry in 2014.

“We began our commitment to Make in India initiative in February 2018 and since then, we have been manufacturing our devices in the country. We have also commenced the manufacturing of the OnePlus TVs and OnePlus Nord in India,” Nakra told IANS.

By 2021, all OnePlus TVs will be manufactured locally in India.

“On our smart TV portfolio, we commenced the manufacturing of the Y series in India and by 2021, all OnePlus TVs will also be manufactured locally including the Q and the U series,” Nakra informed.

He said that 100 per cent of OnePlus smartphones are being manufactured in India including OnePlus 8 series, OnePlus Nord and the recently launched OnePlus 8T.

OnePlus has launched its new flagship 5G smartphone the ‘OnePlus 8T’ with 120Hz Fluid AMOLED display and quad-camera set up, in India.

The OnePlus 8T will be available in two colours, aquamarine green and lunar silver at Rs 45,999 (12GB RAM+ 256GB internal storage) and Rs 42,999 (8GB RAM+128GB internal storage).

“OnePlus is consistently exploring opportunities to fuel its growth and meet the needs of more users, by starting to strategically diversify into new product categories and new price points but, at the same time, not compromising on our OnePlus promise,” Nakra told IANS.

OnePlus Nord series is also likely to get new entrants this month, according to multiple reports.

The rumoured OnePlus Nord N10 5G and OnePlus Nord N100 are said to be launching as soon as the end of October, first in the US market.

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