Garware Technical Fibres: Netting a Good Catch
Garware Technical Fibres (GTF) makes nets and fabrics used in fisheries, aquaculture, shipping, sports, agriculture, coated fabrics and geo-synthetics segments. It provides application focus based solutions to these industries. These products come under two divisions: one, synthetic cordage which includes nettings, ropes and twines; and, two, fibre and industrial products which comprises...
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  • Ruchi Soya Turned Jackpot for an Investor, Banks Still Waiting for Loan Recovery
    While public sector banks (PSBs) are still waiting to recover the money lent to Ruchi Soya Industries Ltd, one investor appears to have got a inside track to hit a jackpot in the re-listed company after it was acquired by Patanjali Ayurveda, says an expose by Business Standard, this mystery investor who hit the jackpot is Delhi-based Ashav Advisory LLP, related with Minda Corporation, a leading manufacturer of auto components. This group’s investment of Rs13 crore in a preferential offer of Ruchi Soya in February, at Rs 7 is now worth Rs1,500 crore.
     
    Meanwhile, Indian banks who financed the previous management and wrote off large sums and also funded the new acquisition appear flat footed!
     
    Quoting regulatory filing by the company on 9th April, the report says, the (Ruchi Soya) board had agreed to issue 18.67 million shares to Ashav Advisory LLP on a preferential basis at mere Rs7 per share — a massive discount to the market price of Rs48.7 on that day. “Ashav Advisory bought the stake at Rs13 crore, which is now valued at about Rs1,500 crore.” 
     
    "On 27 January 2020, the shares were listed at Rs17 apiece. The stock price rallied to a 90x growth in just five months to Rs1,535 per share on 29th June 29. For a company that had been acquired in a bankruptcy sale just months ago, this was an incredible feat," the report says.
     
    More interestingly, after reaching a high of Rs1,535 per share, Ruchi Soya is hovering at around Rs740 on the BSE. This also raises question on possible stock manipulation in Ruchi Soya shares. Many investors are raising this question on social media, including Twitter.
     
    Moneylife has previously written how State Bank of India (SBI) wrote off Rs746 crore of non-performing assets (NPA) of Ruchi Soya and has not recovered a single rupee from the company. SBI also gave a fresh loan of Rs1,200 crore to Patanjali Ayurveda, to buy Ruchi Soya. (Read: State Bank Lends Rs1,200 Crore to Patanjali to buy Ruchi Soya, Despite Zero recovery and Rs746 Crore Write Off)
     
     
     
    Below is the price movement in Ruchi Soya shares…
     
     (Courtesy: Screener.in)
     
    As per the resolution plan approved by National Company Law Tribunal (NCLT), Mumbai Bench vide its Orders dated 24 July 2019 and 4 September, 2019 under section 31 of the Insolvency and Bankruptcy Code, 2016, Yoga guru Ramdev Baba led Patanjali Ayurveda Ltd took over debt-ridden Ruchi Soya from the Dinesh Shahra family. 
     
    A regulatory filing by Ruchi Soya shows as on end-June 2020, new promoter group holds 98.97% stake in the company. Patanjali Ayurveda owns majority 48.17% stake, followed by Divya Yog Mandir Trust at 20.28%, Patanjali Parivahan Pvt Ltd at 16.90%, and Patanjali Gramundhyog Ltd at 13.52% in Ruchi Soya. 
     
     
    However, as per regulatory requirement, and as part of the bankruptcy resolution, Patanjali Ayurved, the new promoter is allowed to increase free float in Ruchi Soya to at least 10% within 18 months of takeover. As per the SEBI norms, such companies need to increase public shareholding to prescribed limit of 25% within three years of re-listing. 
     
    At present, there are 91,528 public shareholders who own 1.03% stake in Ruchi Soya. This stake is the free float that may have given rise to the company's stock price. Quoting Abneesh Roy, executive vice-president (research), Edelweiss Securities, the BS report says, "The lower the number of shares held by members of the public, the higher the volatility in share price movements due to lack of liquidity.”
     
    As Moneylife reported, and documents shared by SBI to its shareholder shows in FY2019-20, the bank wrote off Rs746 crore of non-performing assets (NPA) of Ruchi Soya and has not recovered a single rupee from the company. The plan approved under the Insolvency & Bankruptcy Code (IBC) had indicated that SBI would recover Rs883 crore against its admitted claim of Rs1,816 crore. 
     
    The document provided by SBI to its shareholder Vivek Velaknar, who is also president of Pune-based Sajag Nagrik Manch, shows that there was no recovery of the written off debt from Ruchi Soya till March 2020. (Read: State Bank Lends Rs1,200 Crore to Patanjali to buy Ruchi Soya, Despite Zero recovery and Rs746 Crore Write Off)
     
    A statement issued by All India Bank Employees Association (AIBEA) reveals that Ruchi Soya is among the top 10 defaulters in the country. Ruchi Soya owes Rs1,618 crore to SBI and Rs289 crore to Bank of India, as on 30 September 2019 per AIBEA. (Read: Top Wilful Defaulters: Here is the List of 2,426 Who Together Owe Rs1.47 Lakh Crore to Public Sector Banks
     
    While SBI had told its shareholder that it did not recover a single penny from Ruchi Soya, during the same FY, it gave a fresh loan of Rs1,200 crore to Baba Ramdev-led Patanjali Ayurveda to help it acquire the same company as per the NCLT order. 
     
    Last week, we sent an email to SBI officials seeking response on the Ruchi Soya case. We had asked...
     
    1. What attempts SBI made to recover its written off loan of Rs700 crore from Ruchi Soya?
     
    2. What efforts SBI had taken to recover the loan amount from Ruchi Soya through the NCLT proceedings?
     
    3. Since Patanjali Ayurveda took over Ruchi Soya, who owns the responsibility of the Rs700 crore debt given by SBI to Ruchi Soya?
     
    4. How SBI plans to recover its written off debt of Rs700 crore and from whom the amount would be recovered?
     
    However, SBI declined to comment on any of these questions. In an email, a spokesperson from SBI says, "It is the policy of the bank not to comment upon individual account and its treatment".
     
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    User 

    COMMENTS

    arun.ssaraswat

    3 hours ago

    It is misleading. Why don’t also indicate which year the stock was bought?
    Why don’t indicate that the stock of Rs. 17 was after allotting shares at ratio of 1 for each 100 share held earlier, which implies it listed for 17 paise. With that perspective I guess 1500 crore may be only 15 crore. Can you please correct the facts and post full picture.

    qwanraj

    2 weeks ago

    Moneylife your reputation is at stake here. Do you source your news from ignorant tweets?
    How can you not know that there a reverse split in these shares.
    100:1
    So if you owned 100 shares it was combined into 1 share that is why at the value of 5 per share it jumped to 500.
    Yes this guy did make a profit but only 2 crores.
    1500 crores is actually only 15 crores
    As the number of shares were divided by 100.
    So his 13 crores became only 15 crores.

    REPLY

    MDT

    In Reply to qwanraj 2 weeks ago

    Thanks for your comment. Ruchi Soya Industries had last split the face value of its shares from Rs 10 to Rs 2 in 2007. The share has been quoting on an ex-split basis from October 29, 2007.

    What happened in December 2019 was equity capital of the company was reduced to Rs66.82 lakh from Rs 66.82 crore by adjusting equity of Rs66.33 crore against the debit balance with effect from 17th Dec.

    On 9 April 2020, Ruchi Soya board agreed to issue 18.67 million shares to Ashav Advisory LLP on a preferential basis at Rs7 per share. The same shares is now trading at Rs702 as on today.

    Hope this clears your bias.

    Take care

    pristinewriting

    2 weeks ago

    Fudged numbers, crooked chartered accountants and corrupt bank officials = mountains of NPA. Talk to any of these banks for a Rs.10 lakhs loan with 200% tangible security, you will run from pillar to post for at least a month before getting a big 'sorry'. But, it seems with a corporate tag anyone can swindle the very same banks in crores. Our banking system needs 100% overhauling and corrupt personnel should receive exemplary punishment.

    umeshs62

    2 weeks ago

    Checks & balances does not seem to be working. Banks are struggling to recover their dues. Stock price seems to be manipulated. Stake holders fate is clear. Dhotiwala baba will bring every one down to a dhoti. Patanjali will be talked about as ‘the corporate scam’ of our time.

    kpushkar

    2 weeks ago

    It seems an inverse case of Rcom types.. Rcom came dowm from 400 to less than rs 5!!
    Ordinary investir and govt banks are screwd anyway

    Newme

    2 weeks ago

    This is a highly manipulated stock and bulk of the shareholders were left dry. SEBI cannot act because the fake guru is favourite of right wing ruling party.

    Nifty, Sensex still on a rising trend – Wednesday closing report
    We had mentioned in Tuesday’s closing report that Nifty, Sensex were on course for more gains. On Tuesday, the major indices faced a correction but managed to close with minor losses. On the NSE, there were 802 advances, 1,032 declines and 322 unchanged. The trends of the major indices in the course of Wednesday’s trading are given in the table below:
     
     
    Axis Bank reported an 18.8% year-on-year decline in standalone profit for the June quarter to Rs 1,112.17 crore compared to Rs 1,370.08 crore in the corresponding period last year. Net interest income (NII) grew by 19.5% year-on-year to Rs 6,985.3 crore in the quarter.
    Reliance Industries stock hit new record high. The market-cap of the company stood at Rs 12,70,480.06 crore as of close on July 22.
     
    Indiamart Intermesh reported a more than two-fold jump in its June quarter consolidated profit at Rs 74.1 crore. Revenues grew 3.9% to Rs 153.1 crore, primarily driven by marginal improvement in realisation of existing customers.
     
    Mahindra & Mahindra Financial Services stock went ex-rights today. The board had approved 1:1 rights issue at Rs 50 per share. The record date for the same is July 23, 2020. The rights issue will open on July 28 and close on August 11, 2020. The full amount of the issue price will be payable on application.
     
    Hindustan Unilever reported 7.2% YoY increase in standalone profit at Rs 1,881 crore for the quarter ended June 2020. Standalone revenue from operations during the quarter stood at Rs 10,560 crore, increasing 4.4% compared to Rs 10,114 crore in the corresponding period last year.
     
    Newgen Software Technologies reported consolidated net profit rose of Rs 9.1 crore versus Rs 3.1 crore in the previous year. Revenue went down to Rs 132.1 crore, compared to Rs 131 crore.
     
    Jindal Steel & Power reported consolidated net profit of Rs 268 crore in June quarter, as against a net loss of Rs 87 crore during the same quarter previous year, on the back of increased volumes and lower raw material prices.
     
    Jet Airways finally got bids, thirteen months after it was admitted to the insolvency courts. The two bids were submitted on July 21, when the deadline lapsed. The bidders, who were among the four suitors shortlisted earlier, are two separate consortiums.
     
    L&T reported a steep fall in net profits of 75.53% YoY for the June quarter at Rs.306.58 crore. Revenues slumped 48% YoY to Rs.8,848 crore.
     
    ICICI Securities posted 70% YoY rise in net profits for the June quarter at Rs.193 crore. Revenues increased 36% YoY to Rs.546 crore.
     
    The top gainers and top losers of the major indices are given in the table below:
     
     
    The closing values of the major Asian indices are given in the table below:
     
  • User 

    COMMENTS

    umeshs62

    2 weeks ago

    I would have expected Governments to go on an overdrive in developing infrastructure to create job opportunities and sustaining economy. This would have helped infrastructure companies like L&T.

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