Vakrangee’s Chequered History
Vakrangee Limited has remained controversial for at least two decades, no matter the high profits it always reported. There is the zigzag trajectory of its stock. It is frequently under investigation for price manipulation and is a favourite of scamsters; so, questions about its credibility don’t stop. Throughout its one-way rise, from around Rs50 in April 2015 to a massive Rs500 in January 2018, there were whispers of brazen manipulation. But there has been no regulatory action. And, despite the fact that the stock has lost 80% of its value since January 2018, the regulator is still showing no signs of concern. 
 
On 27th January, The Mumbai Mirror (https://tinyurl.com/y9aqsm4x) carried a detailed report on how the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) had conducted a detailed investigation into possible price manipulation of the stock in 2016 and forwarded their findings to the Securities and Exchange Board of India (SEBI) asking the regulator to investigate further. The report said, SEBI concluded that “no adverse inference is drawn” and that its investigators “may not pursue this matter any further.”
 
Vakrangee immediately issued an aggressive clarification to the stock exchanges (https://tinyurl.com/y7ausrl8) and, on 4th February, Dinesh Nandwana, its CEO and managing director, wrote a letter to shareholders with the clarifications. He also borrowed from Rabindranath Tagore’s famous poem to end the letter saying: “When the head is held high, mind has no fear… Truth shall prevail.” Investors were clearly not convinced, even if SEBI chose not to draw any ‘adverse inference’. 
 
Until the report was published, the stock had been soaring and had traded at a high of Rs515 on 24 January 2018. After the report, the stock dipped sharply on 29th January, was highly volatile on 30th January and, on the Budget day, it simple collapsed. It was locked at the lower circuit till 8th February. Curiously, barring Edelweiss Mutual Fund, no mutual fund schemes had Vakrangee in its portfolio. A month later, big-ticket investors told us how they were openly approached and persuaded to buy the stock on the assurance that the issues with the regulator were settled. 
 
The claim appeared to ring true because the stock soared and was soon locked at the upper circuit, for days together. However, since 22nd March, the stock has been on a continuous downslide, barring a few days. The decline gathered further momentum after another report by The Ken, a digital publication. Its detailed, on-the-ground investigation reported the many inconsistencies in Vakrangee’s claimed IT-enabled businesses and the 40,000 kendras (centres) that it runs to service a tie-up with the retail giant Amazon. 
 
The Ken had contacted Vakrangee’s management for comments which were incorporated in the article. For instance, it responded to questions about missing kendras by saying that the audit company Grant Thornton had been appointed to perform a business quality analysis. After the article appeared, Vakrangee again published a weak 3,400-word response with large excerpts of the original article and its explanations (https://tinyurl.com/ycx7tusp). However, it cut no ice with investors and the stock continued to fall. Overall, Vakrangee’s share price has crashed from Rs515+ to just Rs95 on 2 May 2018, a fall of 81%.
 
Then, on 28th April, Price Waterhouse & Co. (PWC) abruptly resigned as Vakrangee’s statutory auditor. The company wrote to stock exchanges on 28th April saying, the “Audit committee has also reviewed the financial statements and has been fully satisfied with all the information and explanations provided by the company” after it had “taken into consideration the prevailing market rumours and current circumstances and has been fully satisfied by all the clarifications provided by the company.” This is interesting because Vakrangee’s eight-member board comprises five independent directors (one of them is a former executive director of SEBI) and one nominee director from an insurance company. But the markets are still unconvinced. 
 
A historical fact check is important. Vakrangee was Harshad Mehta’s favourite stock on his comeback attempt. Those days, Harshad Mehta had befriended Dilip Pendse (who committed suicide in July 2017, frustrated with 16 years of court battles), former managing director of Tata Finance who was once considered the group’s financial whiz kid. Mr Pendse got Tata Finance and its subsidiary to purchase a 6% stake in Vakrangee starting 2 October 1999, when its price was Rs258, through Nishkalp Investment and Trading Company, its controversial subsidiary. The Tata purchase gave respectability to Vakrangee, although the set of stocks purchased by Nishkalp eventually dented the Tata image and cost it big money. 
 
In 2009, Moneylife had published a detailed investigation titled “Vakrangee’s Games”. It looked into some murky business involving the acquisition of government contracts.  Soon afterwards, there was another investigation by the regulator into charges of insider trading. Here, again, in October 2012, the news agency PTI reported that SEBI, in two separate orders, had dropped all charges against Vakrangee and its eight executives (including independent directors), related to violations of insider trading norms. 
 
A common thread over the years is how Vakrangee has repeatedly courted controversy, but SEBI and the regulators (whichever the political dispensation or leadership at the regulator) have shown great alacrity in giving it a clean chit or closing investigations with an emphatic declaration of no adverse findings. On the other hand, far bigger cases (for example, the Reliance insider trading case that is being heard right now) or even smaller and inconsequential ones, such as self-trades, have often languished for a decade at SEBI. 
 
Such fondness is not limited to SEBI. On 29th April, investment guru and professor Sanjay Bakshi tweeted: “Fun fact: NSE has a Quality 30 Index (http://bit.ly/2HAweAH) consisting of 30 names. Check out #29 from http://bit.ly/2FqUXRY.” Stunning as it may seem, NSE had Vakrangee in its Quality 30 Index, a select club that includes Asian Paints, Wipro, Infosys, Titan and some State-owned giants with near monopoly businesses. 
 
I brought this to the attention of NSE’s top brass and was told that the ‘relevant folks’ have been asked to fix the issue. But that may not be so easy. NSE’s website says, “The Quality NIFTY Quality 30 Index aims to cover companies which have durable business model resulting in sustained growth. This index consists of 30 companies which are selected based on low gearing, high return on equity and profit growth. Stocks are selected based on quality score which is calculated on the basis of return on equity (RoE), debt:equity ratio (D/E) and average change in PAT.”
 
Vakrangee, which declares high profits and pays taxes every year, probably checks the right boxes and but here is where a mechanical index becomes a problem and requires more rigorous analysis or market intelligence. This is also the factor that mystifies many large investors, who are flummoxed by Vakrangee’s financial numbers which were religiously certified by its statutory auditors and audit committee. And that is why the already controversial PwC’s exit comes as a bombshell. 
 
What is clear is that investors are not in a mood to buy Vakrangee’s aggressive explanations any more. The fall this time is not limited to Vakrangee but also PC Jewellers (PCJ), a listed company. Vakrangee made a big investment to purchase 20 lakh shares of PC Jewellers from its treasury funds worth over Rs1,500 crore on 26 January 2018. Dinesh Nandwana had told Bloomberg Quint that “Vakrangee had added the jewellery company’s logo to its presentation as it had already soft launched some of their products in Vakrangee kendras” but the Jeweller had denied any business relationship with Vakrangee in a call with analysts, says the report. PCJ too has dropped in tandem with Vakrangee. Investment advisor, Ambareesh Baliga, tweeted this picture of the chart given above.
 
Given its past track record, will Vakrangee work its way out of this hole once again? We will be watching.
 
Further to our article, Vakrangee has sent a disclosure to the BSE
regarding resignation of existing auditor and appointment of a new auditor. "PWC has resigned from their position as the statutory auditor of the company with effect from 27 April 2018. PWC had satisfactorily done the limited review for the period till 31 December 2017. The Company has appointed AP Sanzgiri & Co as statutory auditors for FY2017-18 until the conclusion of its ensuing Annual General Meeting to fill in the casual vacancy caused due to resignation PWC," Vakrangee says in its regulatory filing.

Here are the links to its regulatory filing https://www.bseindia.com/xml-data/corpfiling/AttachHis/519406b9-3f60-4cb8-8ba1-265ff6bf1ae2.pdf
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COMMENTS

kartik sabne

1 year ago

As per as the company financial statement is considered at every quarter and also yoy they had an great performance. And company has given all clarification at each allegation. Buyback is also going to hit it. All trend positive only selling pressure is making down its market force buy at every low level little with a view of minimum 6 months.

saravanan ramamoorthy

1 year ago

Difficult to judge where the conspiracy lies. If Vakrangee's accounts are not fudged, but for the short term 'playing' in market to cheat small investors, then who are all in the game? As involvement of e-gov projects are confirmed in this conspiracy, and SEBI repeatedly declaring Vakrangee as a sacred cow, what has to be perceived except clever playing by a political bigwig through proxy ?

REPLY

saravanan ramamoorthy

In Reply to saravanan ramamoorthy 1 year ago

.....There is every chance for germination of another Sathyam scam sooner ?

SAMUEL WARBAH

1 year ago

Very interesting reading.

anand makharia

1 year ago

Bogus man!! DINESH NANDAWANA is fraud, i myself personally investigated 5 vakarange kendra in NAshik, None was existing on ground, even addresses were fudged. He is Cheated, he should be arrested. He is generating revenuee by selling computer, laptop,& accessory at high price to potential franchize. No real work he is doing in Maharastra. It is against ethics of corporate governance by giving false 44000 address.

REPLY

subharaman

In Reply to anand makharia 1 year ago

is it?

anand makharia

In Reply to subharaman 1 year ago

Yes Subha sir, i was invested in vakrange and purchased 2000 share when it reached 500 i became suspect and started lnvestigating the ground reality which was totally FRAUD!!

anand makharia

In Reply to anand makharia 1 year ago

thanks i was able to sell at 330/- average price with minimum loss and profit but many small investor who were not knowing the fact , are still trapped

subharaman

In Reply to anand makharia 1 year ago

Very lucky

subharaman

1 year ago

A P Sanzgiri and Company are good Auditors. Vakrangee is a tax paying debt free company and there are 22000 shareholders in this Company. Before Vakrangee bashing one should know that it erodes the wealth of so many small shareholders who have bought shares in this company. Repeatedly news was appearing that the Company is under SEBI and Ministry of Corporate affairs scanner etc. Mere filing of form consequent to resignation of Auditors is being twisted and turned as big banner news and proclaimed that the Company is under Ministry's radar/SEBI radar etc etc.
So much bad blood has been washed about the Company which really has some novel and out of the box ideas in bringing services to the rural masses. The stock was beaten hollow for number of days needlessly due to some baseless allegations and news. How many companies have 1000 crores as taxes in the last 5 years without borrowing from banks? very few.

subharaman

1 year ago

It appears that Vakrangee bashing is motivated. The same news is being repeatedly being broadcasted in one forum or other to bring down the prices of the shares. It appears that the author who has great sympathy for Reliance insider trading matter languishing with SEBI for years could be also hand in glove with the biggy for bringing down the prices of Vakrangee. As far as PWC as auditor is concerned, one knows very well the Satyam case. Lesser said the better as they are already banned from doing Audits. I do not know why a debt free company showing good results year after year and paying taxes year after year is shown in poor light despite proving its credentials repeatedly whereas debt ladden companies which has cheated banks and the country thousands of crores are held in high esteem. Strange are the ways people analyse things.

REPLY

Sucheta Dalal

In Reply to subharaman 1 year ago

Do you have a problem with understanding facts ?? Also, what is the basis on which your imagination has concluded that the author has "great sympathy for Reliance insider trading matter languishing with SEBI for years" ? Also, you do realise that your statement that goes "could be also hand in glove with the biggy for bringing down the prices of Vakrangee" is defamatory or at the least raises questions about your intention and background?? Won't be difficult to check, I am sure.

Jay Rathore

In Reply to Sucheta Dalal 1 year ago

One more fun fact Harshad Mehta...seriously..The company was Veerangana Software. Below is the list from first name to last.
Vakrangee Investment and Consultancy Private Limited May 28, 1990
Vakrangee Investment Limited April 3, 1992
Vakrangee Limited March 31, 1995
Vakrangee Softwares Limited August, 24 1999
Vakrangee Limited October 1, 2013

subharaman

In Reply to Sucheta Dalal 1 year ago

Sorry Sucheta, I withdraw my words. As for me, I am only a small shareholder of vakrangee who lost lot of money in the downturn. You are welcome to check my background, should you feel necessary.

Ganesan Gopalan

In Reply to subharaman 1 year ago

why no responses from SEBI, NSE AND BSE where platforms provided for trading, will they compensate the small investors from their funds??

ALKA VORA

1 year ago

zolamzal

Dayananda Kamath

1 year ago

In India all manipulations are regulator driven. And ably supported by Judiciary by misinterpreting rather abusing the judicial maxims to help the wrong persons, otherwise Indian systems would not have failed like this.

REPLY

Dayananda Kamath

In Reply to Dayananda Kamath 1 year ago

Even PCJ is being protected by RBI in gold gate scam.

Ramesh Poapt

1 year ago

hope it is not 'satyam' again! downfall in PCJ will shave off aprx
800cr+ for vakrangee...is it off loading PCJ? what cooked between
both the co.? thill/chill ahead...?








Kunal Singh

1 year ago

The fall this time is not limited to Vakrangee but also PC Jewellers (PCJ), a listed company. Vakrangee made a big investment of Rs1,500 crore to purchase 20 lakh shares of PC Jewellers from its treasury funds on 26 January 2018.

@moneylife - was it Rs1500 crore or Rs150 crore?

REPLY

Sucheta Dalal

In Reply to Kunal Singh 1 year ago

A simple reading of the sentence clearly shows that the investment was made OUT OF ITS Treasury funds of Rs1500 crore. It does that say that was the worth of the shares purchased.

Jay Rathore

In Reply to Sucheta Dalal 1 year ago

Hi, I read your article..thanks for giving the history. Are you sure the share prices of Vakrangee was 258/- in 1998.

Sucheta Dalal

In Reply to Jay Rathore 1 year ago

You can do your own investigation, if in doubt

Pavan Laddad

In Reply to Kunal Singh 1 year ago

I can't believe how can @moneylife err on this particular number!!! It's too big to be reported without double check :)

Sucheta Dalal

In Reply to Pavan Laddad 1 year ago

huh??

Shankara Prasad

In Reply to Sucheta Dalal 1 year ago

I was a victim of unprofessional (bordering on fraudulant) act by Vakrangee. Vakrangee had signed an MoU to buy our company for 20 crores in 2008 and even after finishing Due Diligence by PwC, the company defaulted on the agreement. I am not sure, how Vakrangee has been able to garner huge e-governance projects and also survived for so long without scrutiny from statutory bodies. If Ms. Sucheta Dalal can not solve this mystery, I am not sure, who can?!

GAUTAM PATEL

1 year ago

I am sticked with the shares.!!

Following several delays, Goa's upcoming second Airport expected to be largest after Mumbai
To keep up with the fast-paced growth of India's aviation market, the infrastructure of the country's airports and services will also have to be upgraded. The Ministry of Civil Aviation has now taken up one such initiative to build a new airport at Mopa in Goa. This new airport at Mopa is expected to be the second largest in India after Mumbai's Chhatrapati Shivaji International Airport in terms of operations.
 
Goa's current International airport at Dabolim is a civil enclave operated by the Airports Authority of India (AAI) at a military airfield owned by the Indian Navy. At present civilian and military flights share a common runway resulting in severe congestion in air traffic. This has deterred long-term growth of civilian traffic in Goa. 
 
The Central Government had given its in-principal approval for a second airport in Goa as early as March 2000, however the project was delayed due to land acquisition issues and local litigation. The development of this airport has had a long and coloured history.
 
In October 2014, the Goa Government had issued a request for qualification (RFQ) for the project. At that time, five bidders – GMR Group, GVK Group, AAI, Essel Infra and Voluptas Developers had expressed interest for the contract to build the new airport. A year later in 2015, the Ministry of Environment, Forest and Climate Change granted environment clearance to the project and a Request for Proposal (RFP) was issued in 2016. After that, the bids were opened in August 2016, in which GMR Airports Ltd (GAL), a subsidiary of GMR Infrastructure Ltd emerged as winner to develop and operate the Mopa airport. GAL will be developing a 'Greenfiled Airport' at Mopa in North Goa. The Rs3,000 crore airport will be built in four phases, with the first phase expected to be completed by FY2019-20. It is expected to cater around five million passengers in the first phase and will be a full service airport catering to domestic and international passengers as well as freight services. Depending on the progress of construction, the airport could also start operations earlier with a single runway to begin with.
 
A joint team of AAI and Commerce Logistics Department is expected to visit Goa next week to facilitate development of cargo hubs at the new airport. The Team is planning to meet at the Goa Chamber of Commerce and Industries to discuss the advantages Goa offers in terms of connectivity to the coastal belt of Western India. The new airport is expected to provide immense benefits to the four western coastal states – Maharashtra, Karnataka, Kerala and Goa. Besides being second airport in the state, the Mopa airport can be made a logistics hub of India after it becomes operational in 2020.
 
Union Civil Aviation Minister Suresh Prabhu has said that the airport will have a capacity to handle 30 million passengers annually as well as cargo. He claims that a soon to be announced Cargo Policy from the Government will help to contribute 40% of India's GDP from global trading. It is expected that the existing 'Goa International Airport' at Dabolim will also be upgraded with a projected investment of about Rs600 crore. 
 
During his recent visit to Goa to review the progress of the work on the new airport, Mr Prabhu said that due to the exponential growth in India's aviation sector, the country could very well become the largest aviation market in the world. He added that tourists coming to the airport would mean the creation of several new jobs. According to the Minister, the new Mopa Airport has the potential to be an international aviation hub in South India as the entire west coast of the country will be serviced from there.
 
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Indian Digital Ad Market to Reach Rs12,046 crore By December 2018: Report
The growth in spends on digital advertising is expected to continue at a compound annual growth rate (CAGR) of 30% to touch Rs12,046 crore by December 2018. This is about 16% of the total ad-spends in the country, which is estimated to be Rs59,000 crore, says a report.
 
According to the report titled, ‘Digital Advertising in India 2017’ published by Internet and Mobile Association of India (IAMAI) and Kantar IMRB, at the end of 2017, digital advertising spends in India was estimated to be around Rs9,266 crore, a growth of 27% over 2016. 
 
 
The report also discovered that search takes the lion’s share of digital ad spending. Around 27% of total digital ad spends Rs2,502 crore on search. This is followed by spends on video and mobile, which is around 19% with ad spend being Rs1,779 crore and Rs1,761 crore, respectively.
 
 
Spends on social media stand at 18% with ad spend around Rs1,668 crore and least being display ads with only 16% with total ad spend being only Rs1,483 crore. Spend on mobile advertising (SMS/In-app ads) also recorded high year-on-year (YoY) growth of 34% from Rs1,314 crore in 2016 to around Rs1,761 crore in 2017. 
 
“This is because advertising on mobile is considered to be innovative and conveys the message clearly. Also in-app advertising avenue is currently being explored and used across various industry sectors since it is believed to fetch better monetisation,” the report says.
 
Talking about total spend, the report says banking, financial services and insurance (BFSI) leads the digital ad-spend with spends around Rs2,022 crore, followed by e-commerce. It says, “A comparison of these verticals in terms of share of spends on traditional versus digital shows that BFSI brands incurred the highest share of advertising on digital media with 46% of their overall advertising spends are digital, followed by e-commerce, telecom and travel.”
 
 
The report also found an interesting trend in growth of ‘native ads’, which is a popular option. “These ads acts as an operator between the advertisers and publishers and solves a problem for them  by providing consumers with content that does not disrupt their online experience and is more likely to be seen by them,” states the report.
 
From a consumer’s perspective, the report says, the proportion of Internet users who believe that online ads are informative and that they help them in finding the right product or service they were searching for is greater than 2016. More important, there has been an increase in the number of consumers who felt that relevance of digital advertising has increased, it concludes.
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COMMENTS

Mandar

9 months ago

Need on clarification. What does Mobile include if search, video, display, email and social are separately classified?

kartik sabne

1 year ago

They have already appointed auditor for the same kindly check on bse exchange for the same. As far as company financial statements is concerned they has given great performance and apart from that debt to equity ratio is 0% which is debt free. Apart from that they are in process of buyback plan. Company is fundamentally strong no doubt of it. Apart from that there are director who were sebi retired officer. Just market speculation is hitting down baseless. Company has given clarification recently that they didn't received any notice from exchange nor from sebi.

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