Zen Technologies bought the 10% stake of Rakesh Jhunjhunwala @ Rs70, under its ongoing buyback offer. This left hardly any buyback from retail investors which boils down to one rule for the big investor, another for the small guys
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Please do your own analysis before writing an article, atmost you can quote from a shareholder but not put in verbatim everything the person says.
Let me present a few facts before the author on this company.
First, Zen Technologies sold 9 lakh shares to RJ at Rs 125 each in 2008 and bought back the same shares at Rs 70 each after 6 years. That is a pure profit of Rs 5 Crore plus with no dilution to shareholding. Best Return on Capital Employed. In these six years the Net worth of the company doubled. If you are a shareholder you will applaud the management for this.
Second, Rakesh Jhunjhunwala sold his shares in buyback almost one month after the buyback stared. During this one month if you look at the shares traded, hardly any shares were offered for buyback because everybody expected to sell around Rs 90 which is the upper limit the company had offered in the buyback.
I am assuming RJ might have called up the registrar and informed that he is willing to put up his shares as block and would the company buy the block at Rs 70.
If I am the management, I would have taken a decision to take that offer immediately because buying the same 9 lakh shares in open market would have taken the share price to 130 - 140 as there was no liquidity. This is a business decision, agreed RJ if he had wanted to sell his shares in the open market the stock would have tanked, but his zen stake is less than 1% of his total portfolio, being a shrewd investor he is, he would never sold in this bad market. So, it is ZEN which got the better deal by buying RJ's share.
Third, now that RJ has sold his stake, everybody wants to sell their shares too...again If I am the management, I have already bought 9 lakhs shares and I have the mandate to buy 16 lakh shares and the total amount I have for buyback is 10 crores out of which I have already spent 6.3 crore to buy RJ's share. At what price should I buy to buy a total of 16 lakh shares i.e at Rs 53 per share. ( Do the Math )
when there was no supply from open market it does not make sense to buy shares at high price and RJ offers you take it.
RJ made a good decision and Zen Management made an excellent decision.
Now there is a huge supply of zen shares and I as a management want to make the best bang out of my buck, I will wait for the right price i.e 53
If you are an existing shareholder which I am for a long time, it is time for me and you to jump in joy. Your company is making the biggest bang out of its buck. Your share is more valuable today than it was before RJ sold and it will be much more valuable when the company buys the rest 7 lakh shares at Rs 53.
If you are RJ follower, then you will cry and go to other people who will feel pity for you. If you do not have the sense to do your analysis, you will suffer for other's follies.
I am not saying it was a mistake by RJ to buy Zen, no one is super god when it comes to buying shares, even warren buffet has his share of duds and RJ is not an exception to this rule.
But, following a herd mentality will only lead to tears and suffering which the comments section in this article is showing.
If you are that lucky shareholder who still has shares in this company, then I suggest that you go ahead and buy more shares, any management which has made profit from even RJ is a management you should stick with.
I am sick of Bosco Menzes and others who cry for their losses and blame others for their actions.
Be a man and own your mistakes.
And to the author, you are in a financial magazine, not a social magazine, if you feel sorry for the ex-shareholders write about it in your life section but if you want a career in the business section, think like a businessman and write like one.
My name is Srinivas M and I am a shareholder since 9 years. If you want a open debate on this you can come to the AGM this year.
Please get one fact correct first right at the begining - I am NOT a shareholder of Zen Technologies. I was indeed a shareholder in the past, which is why i still track the company.
If you have read the comments section, you would have seen that i have already mentioned in one of my posts that i do not hold shares in the company. But maybe you have indeed read that, as you refer to "ex-shareholders" later in your post.
Your point is that the company has made money (got a bang for it's buck).
My point is exactly what i have said before - If you are helping a big shareholder (in this case RJ) to exit at one rate, do please allow the small shareholder the same courtesy.
And precisely because the big shareholder exiting happed to be RJ, who has a huge fan following, management of Zen Tech should have been extra vigilant in the next few days to make sure that follow-up selling from retailers was picked up at around the same level.
I absolutely reject your contention that management should try to buy the remaining shares at Rs 53, i.e. 24% discount to RJ's exit price.
I think that that would be extremely unfair to those shareholders who may want to exit in the buyback offer (whether influenced by RJ's exit or not). We can have a difference in opinion on this, but i am clear in MY mind that it would not be the ethical thing to do.
Regds,
Bosco
I fail to see why the company cannot keep a buy order at Rs 70 which shareholders can fill in ?
PS : Just for the record, i do not hold the stock, nor does my family. If any will benefit by my suggestion, it will be those shareholders who might want to exit.
The company has recently got orders after a lean period, so exit might not even be the wise thing to do. But this does not relieve the company of what i feel is it's DUTY to allow shareholders the same option to exit (if they wish) at Rs 70/-as RJ.
So called big investors ... actually are insiders,price manipulators and cartel members..there is no WB in India
SEBI's main function is to help stock brokers and big corporates by passing consent orders.. for investors they are just working like post office ..sending their complaint to promoters and promoters' reply to investors
MY POINT IS ACTUALLY THIS - that the company should be in the market daily buying quantities on offer around Rs 70/- bucks. So shareholders will get a chance to exit at a similar rate. It is not fair that shareholders had to sell at Rs 58-59 yesterday & Rs 62 today (weighted avg).