Companies & Sectors
Sistema Shyam blames SEBI, BSE and NSE for not listing the company

The mobile operator, in which Russian government has a stake, was quick to invoke its right under BIT signed between India and Russia after its licence got cancelled by the apex court. However, for over 42 months it has sidelined a high court decision and is blaming the regulators for non-listing

Sistema Shyam TeleServices (SSTL), which operates under the MTS brand in India, has said that the failure of its listing is a consequence of differences in perception on part of the statutory agencies—the Securities and Exchange Board of India (SEBI), National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The company was asked by the Rajasthan High Court to initiate listing process within 18 months starting from 8 August 2008. It is now over 42 months and the company has yet to fulfil the condition.

Surprisingly, earlier this week, SSTL’s parent Sistema JSFC sent a formal notice to the Government of India for honouring the ‘Bilateral Investment Treaty’ (BIT) to protect its investments in the company. This follows a judgement by the Supreme Court to cancel 122 telecom licenses, including 21 licenses of SSTL.

Sistema is the majority shareholder with 56.68% stake while Shyam Group and the Russian government hold 23.98% and 17.14% stake, respectively, in SSTL. Minority shareholders, who have allegedly been sidelined and not given appropriate valuation for their investment as well as an exit option by SSTL have 2.2% stake in company.

In an email reply, SSTL said, “...the company had made every possible effort to get the shares of the company listed in terms of the scheme and the failure of listing was a consequence of differences in perception on part of the statutory agencies, namely, SEBI, NSE and BSE. On account of disinclination expressed by SEBI; for allowing listing via the automatic route despite the in-principle approval granted by BSE, listing became a virtual possibility and to that extent implementation of the said clause (i.e. Clause 3.7) became impossible.”

The company is now citing adverse market conditions, especially after the judgement from the apex court for keeping its decision on hold for listing on Indian bourses. “The company has faithfully and scrupulously initiated the process of listing with the active involvement of internal committees of highest levels and with the advice of the merchant banker of international repute. But everyone would agree that in the current situation after the judgment of SC on licenses, all such big strategic issues cannot be processed further and are bound to be kept on hold till attaining the matter legal and regulatory finality from the government,” it said.

According to the scheme of arrangement passed by the Rajasthan High Court in 2008, the shareholders of Shyam Telecom (STL), a listed company, were allotted shares of Shyam Telelinks (STLL). At that time Shyam Telelinks was valued at Rs455 crore with 85% stake hold by promoters and rest by minority shareholders. As per the high court ruling STLL was asked to initiate listing process within 18 months starting from August 2008.

In September 2007, Sistema bought 10% stake in STLL for about $11.4 million and said that it would increase the stake to 74% following an approval from the Foreign Investment Promotion Board (FIPB). Following the stake sale, STLL, which used to operate CDMA and wireline services only in Rajasthan circle at that time, changed its name to Sistema Shyam TeleServices (SSTL).

STLL applied for licenses in 21 circles on 25 September 2007 (the date on which the first cut off date for 2G licenses was announced and subsequently this date was announced as revised cut off date). On the very next day (26th September) Sistema announced that it bought a 10% stake in STLL. As per the requirement of getting the licenses, the applicant should have a net worth of Rs11,380 crore and paid-up capital of Rs1,138 crore. Shyam Telelinks, at that time, had a net worth of Rs1,156.58 crore only. However, following stake sale to Sistema, the company was able to include the Russian conglomerate’s net worth (about Rs158,856 crore) as well, to fulfil the license condition.

While the high court was approving the scheme of arrangement for STLL, the company become the first new mobile operator to get a pan-India start-up spectrum for starting its mobile services. In January 2008, Sistema provided guarantee of $520 million of total $630 million (82.5% of total amount) to be paid for obtaining the licences by STLL despite having a shareholding of 10%. Subsequently, on 18 January 2008, Sistema increased its shareholding in SSTL to 51% from 10% for which it had signed a share purchase agreement in October 2007.

When Sistema first bought 10% stake in STLL for $11.4 million, the mobile operator was valued at around Rs1,450 crore. In January 2008, SSTL paid Rs1,653 crore for 2G licenses in 21 circles. A week later, Sistema increased its stake in SSTL to 51% by paying $46.7 million that shows there was not much change in SSTL's valuation.

According to a petition filed in December 2011 by Prashant Bhushan in the Supreme Court in March 2011, Rosimushestvo, the Russian Federal Agency for State Property Management, paid Rs12,669 crore for a 17.14% stake in SSTL. This deal increased the valuation of SSTL to Rs73,914.8 crore, several times higher than its original valuation when Sistema first brought stake in the company. However, SSTL has been left out of the 2G investigation because of the government’s intervention, Mr Bhushan had said in his petition.

In all the hype around stake sale, purchase and valuation, minority shareholders, who held about 15% in STL were left high and dry. Following stake sale by STL and to Sistema, minority shareholders’ stake got reduced to a mere 2.5%. Sistema, in a filing to the London Stock Exchange, said that on 23 May 2008 it bought additional 21% stake at minimum of Rs156 per share from the Indian promoters with an option of upping this amount if the fair value in September in 2009 was even more. However, when the Russian Federal Agency bought the stake in SSTL, the company had said that it would issue fresh equity shares at Rs49.31 per share for an investment of about $676 million. Both the times, minority shareholders were not provided any exit option at that value.

“In view of the changed conditions after SC judgment, the management has begun its initiatives to meet the minority shareholders and discuss the company’s current status, significant and serious legal and financial challenges before the company and also any alternate to the listing including exit option. This process will continue simultaneously along with the company’s fight for licenses and at the appropriate time, the whole matter will be placed before the board for a reasonable decision/direction in the matter,” SSTL said in the email reply.

However, Association of Minority Shareholder of SSTL, in an email clarified that they have not recieved any offer/ initiative for exit option from the company.



chander shekhar

5 years ago

Dear sir,
I have 780 shares of sistema.
Please confirm date of coming in nse/bse on my e-mail Id or SMS
At Mobile no.9711824273.


5 years ago

We are the shareholder association of SSTL. We deny any move by the company to enagage with us post SC order in reference to the exit option that the Company has to mandatorily provide to the minority as per HC ruling of AUg 2008.

82% of engineers unemployable in the IT sector: Aspiring Minds survey

The findings reveal that out of the 5,00,000 students that graduate every year, a dismal 3.51% are appropriately trained to be directly deployed on projects

A recently released survey by Aspiring Minds, an employee assessment service provider, claims that almost 82% of India’s engineers are ‘unemployable in the IT sector.’

The survey, which was apparently conducted among 55,000 technical graduates who graduated in 2011 from various parts of the country, says that only 17.45% of the lot are employable. The analysis and findings of this report were based on the results of these students on AMCAT (Aspiring Minds Computer Adaptive Test), a standardised employability test.

The findings reveal that out of the 5,00,000 students that graduate every year, a dismal 3.51% are appropriately trained to be directly deployed on projects. Further, only 2.68 % are employable in IT product companies. The survey has concluded that the increase in the number of engineering colleges has adversely impacted the quality of engineers. It then goes on to say that 50% of employable candidates for IT services companies and 28% of employable candidates for IT product companies are not even from the top 750 colleges, and thus form invisible pool to most employers.

While interesting, the findings raise many questions. Are all engineers meant to be employable in the IT sector? What about civil, mechanical or chemical engineers?
Moreover, is an educational degree a guarantee for employment?

The survey does not answer the question as to how, despite all this, India remains a leading provider of IT and IT-related services—both domestically and globally.

The findings have some popular resonance, for e.g. the deteriorating quality of engineers with the mushrooming of engineering colleges and institutes—many of which do not have necessary accredition or qualified teachers.




5 years ago

The results of the survey are indeed very true and there is nothing to be surprised on this unless one is an outsider to this industry.

IT/ITES is able to show the robust growth only on 3 factors - Rupee - dollar divide, income disparity in US and India and unwillingness of Americans (And Europeans) to do boring task. As long as these are there IT/ITES will grow and reversely it will degrade the current generation by making them slaves to their American counterparts at the same time making a waste of our young brains.

I see this analogus to brain drain we had in 80s and 90s.

Don't we see a relation in the bulk hiring IT/ ITES do irrespective of the branch? Do we see such hiring happening from a core company of say mechanical / civil / electrical? Don't we see the same companies not hire when there is doom and gloom?

Don't we also see every other industrialist jumping into the IT / ITES sector just to take advantage as long as the dollar ruppe roller coaster is on? Each one of them have their own IT company? Isn't he taking that advantage at the cost of our young brains - by asking them to do paper work for some American's technical work or to do some low grade work left over by an American? Is this why they earned their degree?

A person worth mentioning here is the founder of one of the IT bluechip. His company is equally culprit of this bulk hiring phenomenon and then wasting this talent to do certain mundane task for an American just cause he is not feeling like to do so. The irony here is that that founder has asked us to learn from China. Didn't he learn from China when China didn't adopt to outsourcing? We Indians were laughing saying this was a language problem for them - they don't want to learn english. However today the Chinese have their own search engine and social network - this is despite the heavy censorship in china. Did our bluechip founder learn something? Ironically our government is giving out some of the key decision making posts to this founder. A sad state of affairs. Isn't that founder guilty of wasting a bunch of talent just to copy paste data? I would like to ask the same founder that can your company compete will Google? Can your company be the next Facebook? What growth do you boast about when google and other were founded after your company but are now far ahead than your's in terms of revenue and profits?

Unfortunately that bluechip is part of Sensex and part of portfolio of many mutual funds.

This is not to say that there is a dearth of talent. There is talent and there are people / companies which are going against the tide and doing some good work. But that work is mostly unnoticed - I would rather say not mainstream. Our parent (and neighbours) are happy if their child works for a big company or works in US of A irrespective of what he does there. Even the young generation is crazy about working for big companies instead of doing something innovative.

A few issues back, Mr Balakrishnan wrote an article where he was talking about how a banker should try his best especially a PSU banker. I would apply the same to our IT workforce.

Please see

Toyota Kirloskar Motor’s sales at 16,659 units in February 2012

“We have seen good sales last month across all our products. The Etios series continues to lead the sales:” Sandeep Singh, deputy managing director – marketing, Toyota Kirloskar Motor

Toyota Kirloskar Motor (TKM) registered a growth of 79% in the month of February 2012. The company sold 16,659 units as compared to 9,308 units in February last year.

The Etios series continued to lead the growth with 8027 units. The Etios sold 4,590 units as compared to 2,786 units in February last year, thereby registering a 65% growth.  The Etios Liva followed with 3,437 units sold last month.  The New Innova and New Fortuner sold 6,271 units and 1,346 units respectively. The New Innova registered a growth of 39% and the New Fortuner a 36% growth.  The Corolla Altis sold 996 units.

“We have seen good sales last month across all our products. The Etios series continues to lead the sales. New Innova and New Fortuner are registering good sales numbers. With the increased production capacity and our expanded dealer network, we are now able to reach much closer to our customers, which has helped us in increasing our sales.” said Mr. Sandeep Singh, deputy managing director- marketing, TKM.


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