In your interest.
Online Personal Finance Magazine
No beating about the bush.
The animation and entertainment company claims to be getting huge orders and securing work on big projects. However, a closer inspection reveals that all is not well with the organisation
This is another company which seems to be shrouded in secrecy and working behind closed doors. The company recently announced a big-ticket deal worth $82 million (around Rs370 crore) with UK-based BBC Films, for working on an animation film on Adolf Hitler. Close on the heels of this news, came another announcement that the promoter had increased stake in the company.
In a filing to the Bombay Stock Exchange (BSE), the company announced that it will become the largest animation company in Asia, once this film is completed. Currently, it claims to be the largest in South Asia.
Compact Disc India (CDI) announced recently that Seengal Capital Advisors Pvt Ltd, New Delhi, a promoter group company, had purchased 4,50,000 equity shares of the company. With this, the promoters' shareholding has increased from 20.01% to 24.69%. It is incredulous how the promoters are trying to play the company’s stock price in the markets.
It appears to be another dubious attempt of the promoters to drive up the stock price of the company. The shareholding pattern of the company (for December 2009) shows 80% of the shares as being held by the public. Our guess is that a large chunk of these are ‘benami’ holdings of insiders who offload shares once the price takes off.
An aggrieved investor, Santosh Mhamunkar, said, “After seeing the chairman’s interview on moneycontrol.com, I thought to myself, nobody could lie in such a big manner. After seeing its market capitalisation of Rs70 crore and new order (book) of about Rs400 crore, I thought that I had found a great deal. But its price movement was honest. The stock did not show any attraction for the next few days. Then came the news that the promoter had increased holding to 24% by open market purchase. But volumes on that very day itself accounted for less than 4% of the equity.”
Apparently the company also has other big projects in the pipeline. However, there is a dearth of information about the same. In an interview with CNBC TV18, the company’s chairman, Suresh Kumar, claimed that his company had 400 animators working with it and that CDI was also in the process of setting up a new animation studio in Chandigarh. Last year’s annual report also claims that is planning to set up a pre-production animation studio facility at Los Angeles.
CDI’s two animated feature films, ‘Eternal Love’ and ‘Futebol’ (supposedly with legendary Brazilian football king, Pele) are said to be progressing well. The demo-reels of the two feature films are slated to be ready by May 2010. Once the promos are ready, the company will enter into distribution agreements for worldwide territories. These films are slated to be released in theatres during 2011.
The company, under the first generation of management, had faced a lot of difficulties in the 1990s. It floated several companies and announced various projects which never happened to see the light of day. These included an LPG-related business, a hotel company and at least three more ventures. However, everything was kept in the dark. It seems the second generation of management currently in charge is only carrying its legacy forward.
Astonishingly, the company only features two directors on its board, Suresh Kumar and Rashmee Seengal—and does not have a single independent director. We wonder how the company is getting by the SEBI listing norms with such ease.
Last year too, the company had apparently held an annual general meeting (AGM) regarding which the shareholders of the company still have no clue as to when and what happened. A forum on the Internet was abuzz with discussions between unaware shareholders regarding the nature and whereabouts of the meeting. The company also failed to release the annual report after the AGM. The document was released on the website much later.
One of the comments read, “The AGM was so secretive that not even the company's corporate office was able to disclose the venue and time of meeting. My repeated calls to the company were handled at (the) reception, transferred to (the) investor cell and hung up. (The) company was not able to provide (the) annual report in advance. I still was at the company's registered office around 12 PM to be told that the meeting was already over. They did not have any answer as to why I never received the annual report and neither were they able to provide one then and there. There were no visible signs at the venue that the meeting ever took place.”
The comment goes on: “I was finally able to see the 17th annual general report on the company website only on 4th October evening. Till the date of meeting no communication about AGM date time and venue was on the company website. The company had not mentioned the venue and time of meeting in its communication to the BSE.”
The National Stock Exchange has suffered three reverses in just one week: The Delhi HC verdict that it falls under the RTI Act; the verdict in the case filed by an ex-employee and finally, an order by the Competition Commission about its predatory practices
The National Stock Exchange (NSE), which projects the image of a government organisation, has been fighting multiple cases. In a sudden reversal of fate, it has suffered three blows in just one week. On Monday came the news that the Competition Commission of India has ordered an investigation into its predatory practices in the currency derivatives segment to kill the upstart competitor MCX Stock Exchange. Then, the Bombay High Court turned down its application to block a case in the lower courts, under which former employee A Sebastin has charged NSE of tarnishing his reputation (see here).
Finally, NSE’s effort to stay outside the public scrutiny under the Right to Information (RTI) Act has been thwarted. In a significant judgement, the Delhi High Court recently quashed NSE’s appeal against an earlier order by the Central Information Commission (CIC), rightly declaring the stock exchange as a public authority.
With this order, the stock exchange will now fall under the ambit of the RTI Act. As such, it will be forced to disclose information demanded by the public on various matters, subject to certain exceptions.
However, the embattled exchange may not take the order lying down and may soon appeal to the apex court, the Supreme Court of India. When Moneylife contacted an NSE official for their future plan of action, we were told that an immediate response would not be available.
In another similar case, the Bombay Stock Exchange (BSE) has moved the Bombay High Court.
The NSE has been vehemently fighting against any attempt at putting itself in the public eye, despite claiming to be a company run by ‘professionals’. Its contention is that, being an autonomous body with no government control over it, it cannot be forced to disclose information under the transparency law.
The exchange’s apprehension over disclosing company information has baffled many RTI activists and lawmakers alike. It is being viewed as desperate attempts on part of the exchange to cover up its various misdeeds.
The lack of transparency surrounding stock exchanges in the country is not surprising given that none of the exchanges are listed. This itself is highly detrimental to the interests of investors, shareholders and the society at large. Institutions which are at the core of stock-trading activities should be the first in line to bear the consequences of reckless trading and subterfuge of certain market participants.
The CIC had announced in June 2007 that all registered stock exchanges are public authorities under the RTI Act and therefore these organisations are obliged to give information to any requisitioner under the Act. The CIC had given its decision in response to two appeals filed by the NSE and the Jaipur Stock Exchange.
The CIC had made it perfectly clear that functioning of all recognised stock exchanges are under the ‘deep and all-pervasive close control’ of the Central government and hence they fall within the definition of ‘public authority’ under the RTI Act. The CIC in its ruling had elaborately enumerated various provisions of the Securities Contract Regulation Act (SCRA) to underscore the control that the government exercises over stock exchanges.
Yet, the NSE remained adamant and approached the higher judiciary challenging the interpretation pronounced by the CIC and obtained a stay order.
However, with the Delhi HC upholding the CIC order, the NSE has very few cards left to play. It will no doubt bring out every last trick in its bag to ensure that transparency and disclosures continue to remain outside its domain of ‘professional’ activities.
Markets reeled under selling pressure on fears that the RBI might increase borrowing costs in its forthcoming policy meeting, to check inflation. The trend is still down
The market was down today after a volatile trading session. The Sensex closed at 17,591, lower by 48 points (0.27%) and the Nifty closed at 5,262, down by 11 points (0.21%). The market rebounded in early morning trade after touching the intraday low. However, trading remained range-bound till mid-afternoon when the bourse touched the intraday high. It slid from there soon and traded in a narrow range for the rest of the session.
Asian stocks retreated from 22-month highs on Friday as fresh doubts about the US economic recovery and the Greece rescue package prompted profit-booking. Key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan fell by 0.24% to 1.52%. Property and banking stocks led the decline in China after Beijing tightened policies on residential property markets on Thursday. US stocks posted their sixth straight day of gains on Thursday as an encouraging profit forecast from United Parcel Service lifted transportation shares, though concerns over a rise in weekly jobless claims limited the market’s advance. The Dow rose 21.46 points (0.19%) to 11,144. The Nasdaq rose 11 points (0.43%) to 2,515 and the S&P 500 rose 1 point (0.08%) to 1,211. European finance ministers discussed the Greek debt crisis today. While an emergency loan facility has been arranged, Greece said that the nation is imposing a painful austerity plan and any external help will be taken only after due consideration, based on the nation’s interest.
Closer home, a pre-monetary policy meeting is scheduled today between the finance ministry and the RBI governor. It is expected that balancing growth while keeping inflation under control will be the major subject of the discussions. The government expects private companies to invest half of the projected $1-trillion investment in infrastructure between 2012 and 2017. Difficulties in acquisition of land, and underdeveloped bond markets have been coming in the way of long-term infrastructure projects.
A new regulation from the Securities and Exchange Board of India (SEBI) has tightened disclosure norms for foreign institutional investors. Foreign investors now have to disclose to the regulator whether investments are in the form of multi-class vehicles (MCVs), segregated portfolio companies (SPCs) or protected cell companies (PCCs).
Foreign institutional investors were net buyers yesterday of Rs99 crore. Domestic institutional buyers were net sellers of Rs76 crore. The rupee recovered from yesterday’s low on dollar inflows.
JSW Energy (up 3.8%), through its wholly-owned overseas subsidiary, acquired 49.8% stake in Royal Bafokeng Capital from Strider Holdings with an option to acquire the balance stake. Ramco Systems (up 6.9%) has entered into an agreement to provide its repair, procurement and invoicing functions to ESIS. The partnership will leverage all versions of Ramco System’s aviation software, maintenance repair & overhaul systems and enterprise resource planning. Aurobindo Pharma (down 0.3%) has received approval for its Abbreviated New Drug Submission for Cefprozil tablets in strengths of 250mg and 500mg and Cefprozil powder for oral suspension (PFOS) in strengths of 125mg/5ml and 250mg/5ml from Health Canada. Reliance Industries (down 0.6%) has invested around 26% in Deccan 360. This investment will be used to increase the air and surface coverage of the logistics company. Goenka Diamond & Jewels (down 5.3%) listed on the market today. The company had priced its initial public offer at the lower end of the Rs135 to Rs145 per share price band following a muted investor response to the issue. The issue was subscribed 1.07 times. Larsen & Toubro (down 0.1%) is in discussions with Mitsubishi Heavy Industries to form a joint venture for manufacturing a wide range of heavy industrial tyres. Pipavav Shipyard (up 0.2%) is in talks to buy an oil rig and shipping company in Europe.