Despite the BSE clearing the listing of the stock in July last year, SEBI has not yet given its nod and has not shed any light on the matter to the worried investors
It has been a long ordeal for investors in Raheja group promoted Innovassynth Investments Limited (IIL), a company that is still awaiting approval for listing from the Securities and Exchange Board of India (SEBI) more than a year after filing necessary documents with the regulator. Even after an RTI application, SEBI continues to sit on the fence, refusing to give any clarity on the matter to concerned investors.
The company was to get listed in 2009. The Bombay Stock Exchange (BSE) apparently even cleared this listing in July 2009 with the condition that SEBI approval be taken as the listing would be without an initial public offering (IPO). IIL applied for permission from SEBI on 22 July 2009, but has not yet received the go-ahead from the regulator. It remains a mystery as to why SEBI has delayed action on this matter. Moneylife understands that SEBI has been raising queries with the company on certain issues. The company in turn claims that all of these have been answered and is pursuing the matter with the regulator. However, there is no mention as to the nature of these queries either on the SEBI website or on the company's portal.
It is not clear why SEBI is not moving fast enough to get the stock listed on the stock exchange. Meanwhile, investors are crying foul over the issue of equity capital by unlisted associate company Innovassynth Technologies (India) Limited (ITIL). The main purpose for forming IIL was to take over or acquire the equity shares of ITIL from Futura Polyesters Limited (FPL) under a Scheme of Arrangement to be entered into by FPL and IIL with its shareholders. Initially, FP was to transfer its entire shareholding in ITIL to the shareholders of FP at a ratio of 10:23, where shareholders of FP would get shares in ITIL in the ratio of their holdings.
However, under the revised Scheme of Arrangement, which received approval of shareholders of both FPL and IIL and was sanctioned by the High Court on 4 July 2008, FP would first transfer its entire investment in ITIL to IIL. In consideration of the above transfer, IIL would allot its equity shares of the face value of Rs10 each to the shareholders of FPL in the proportion of 5 equity shares in IIL against every 11 equity shares held in FPL. The Scheme also envisaged that IIL will, after allotment of its equity shares, approach the BSE for listing its shares along with its existing shares, subject to applicable regulations and approvals.
With SEBI refusing to budge over the listing of IIL's stock, investors are now stuck with a company that is possibly being subjected to manipulation behind the scenes.
Even as equity markets and gold have enjoyed a similar rally since March this year, investors have shown much more appetite for the allure of gold ETFs than equity mutual funds
It is a tale of two asset classes that have evinced contrasting interest from investors. Both equities and gold have enjoyed a remarkable run since March this year, recording around a 20% jump each till now. But while the rally in stock markets has failed to enthuse equity mutual fund investors, gold ETFs have enjoyed phenomenal patronage from the investor community.
Clearly, the equity market is no longer the preferred destination for investors here. Since March this year, the Sensex has surged almost 19% from 17,528 to 21,000 now and is now hovering around a new all-time high. Meanwhile, equity mutual funds have witnessed a torrid time. The number of equity folios has gone down an alarming 4% from 402 lakh to 386 lakh. Equity MFs have witnessed outflows to the tune of Rs21,200 crore over this period.
In sharp contrast, gold exchange traded funds (ETFs) have been attracting investor money by the buckets, on the back of a phenomenal surge in the price of the yellow metal. Since March this year, gold prices have risen by around 21% from Rs16,232 to Rs19,970 now. The popularity of gold ETFs has soared as a result, with retail folios in gold ETFs jumping by a massive 65% from 142,270 to 235,218 over this period. Inflows into gold ETFs have surged 80% over the same period.
Heads of various asset management companies (AMCs) have attributed the waning interest in equity mutual funds to the stretched valuations in equity markets. Investors are booking profits and getting out of the market, they argue. However, as Moneylife has been pointing out regularly, this is not entirely true as equity MFs have witnessed a steady leakage of cash for more than a year now - which has little to do with the stock markets. The ban on entry load in August 2009 has had far-reaching consequences on the industry, which has found it difficult to cope up with many of the whirlwind changes introduced by the regulator, the Securities and Exchange Board of India (SEBI).
At the same time, gold ETFs have emerged as the favoured investment avenue for the retail population, seduced by the relentless rise in gold prices. Many investors have accepted the continuing rally in gold as a foregone conclusion and put their savings in this asset, cheered on by AMCs and their distributors.
It expects to generate Rs40 billion from its planned follow-on public offer; admits that a few of its urban projects have been held up due to resistance from locals
Power Grid Corporation of India Ltd, the government-run entity which controls nearly 95% of India's inter-state and inter-regional electrical transmission systems, plans a follow-on public offering (FPO) of 841,768,246 shares at a price band Rs85 (lower)-Rs90 (higher) per share. However, the scrip fell 3.85% to touch Rs98.35 on the Bombay Stock Exchange, and is now at the point that it was three years back.
Retail investors and eligible employees will get 5% discount on the issue price on allotment. The bid period will close for qualified institutional buyers on 11th November, while for the other bidders the closure will be on 12th November. The minimum bid lot has been fixed at 65 equity shares, said the company.
The company is expecting to raise Rs40 billion from the FPO which it plans to use to fund nine transmission corridors. The total project cost for these corridors is pegged at Rs586 billion.
The company also has capex plans of Rs1.2 lakh crore under the XII Five Year Plan (ending March 2017), according to SK Chaturvedi, chairman and managing director, Power Grid.
However, a few of the company's projects in urban areas have been delayed due to local resistance against setting up electrical transmission towers.
"Power Grid is facing some problems in setting up towers in urban areas from local people," admitted Mr Chaturvedi. "But the central and state governments are tackling the issue amicably."
On the delays in projects along the western corridor, Mr Chaturvedi said, "In the western corridor, the projects were delayed due to two reasons- construction of sub-stations and construction of lines. However, our part of construction of the sub-stations was going smoothly, while (the) clients were behind schedule, so the projects got delayed."
For the XI Five Year Plan, the company's capex was Rs550 billion, of which Power Grid has spent Rs250 billion so far and Rs300 billion will be spent over the next two years, said Mr Chaturvedi.
Divestment secretary Sumit Bose, who was also present at the Mumbai conference for declaring Power Grid's FPO details, chalked out the Centre's divestment programmes for various public sector undertakings (PSUs).
"For the calendar year, we will bring (out) FPOs of Shipping Corporation of India and Hindustan Copper Limited and an IPO for Manganese Ore India Ltd-while for the next calendar year, Indian Oil Corporation Limited and SAIL will be on the cards," said Mr Bose.
The company is looking at boosting its profits by leasing its electricity transmission towers to telecom companies for setting up their networks.
"We have invited bids from telecom companies for setting up their networks on our towers and 15th November is the last date for the bidding," said IS Jha, director (Projects), Power Grid. However, he declined to comment on the amount that the company plans to generate from these bids.
In September 2007, the company's initial public offering raised Rs29.8 billion.