Good governance and Companies are mutually exclusive events (with a very few exceptions).
All companies promoters only look at what they can take out of the company at the cost of the investor or the lender - which is normally the banks or investors too greedy for their own good who chase junk bonds.
But the real free money is in equity and this is where reputation plays a very important role. Just as in most crime thrillers, its one who has earned ones trust who betrays it and the entire story of how the wrong is righted is scripted, unfortunately in the murky world of corporate finance there is no retribution as long as the regulators, be it the MCA or the SEBI does not do its homework.
For the TATA companies if one were to create an index of their company shares alone, the returns would have fared worse than gold if you exclude TCS and with TCS it just about beats gold - and thats not something to crow about! The systematic way in which TATA companies were used to buy shares in group companies and then these shares were sold to TATASONS when the markets were down ad nauseum till SEBI finally made inter promoter share transfers public is revolting to say the least! now these shares just sit on the group company balance sheets with huge borrowings at the cost of the public shareholder and the voting rights on these shares are exercised by TATASONS. I say why not me? Just as say, TATASONS being a shareholder can vote on the shares held by TATAMOTORS in TATASTEEL, why cant i do it as a shareholder?
That SEBI/ MCA have not forced these shares to be voted upon by a group of Institutions like LIC/any shareholder other than promoter group members picked in random etc is beyond me.
What SEBI/ MCA can do?
get all cross holding investments sold at current market prices in all group companies of single promoters. the monies so realised to be only used to repay debt in the companies books - no dividend is to be paid out.
all royaties for brand/name use are to be stopped - if the holding company wants they can always delink the name and do business - the business will do just as well or as badly!!
Also all investment companies or holding companies need to offer a buyout of minority shareholders once every 2 years. the price can be used as a counter offer by any minority shareholder to buyout the promoters at the price quoted by them as long as he can offer a better price to the remaining shareholders. This will eliminate the obsecene 30-50% discounts on holding/ investment companies and at the same time work as a stick for promoters to decide which companies they need to keep in their group and the ones they need to let go, as they work overtime to make their holding/ investment companies private to avoid this policy.
My investment philosophy has always been guided on how much the management of a company to willing to kill the hen(company) that lays the golden egg(profits). the lesser the inclination the higher the investment quotient. also as the underlying theme is of stealing from the public when there is a fight in Genx the shareholders can benefit as in the case of reliance when the brothers fought and the resulting split gave a 250% return to the shareholders of RIL. neither RIL nor the other group companies are anywhere near their lifetime highs when the market is threatening to make new highs.
Solution to the TATASONS-Mistry spat.
Transfer all group holding shares held from group companies to the Balance sheet of TATASONS along with an equivalent amount of debt from these companies and after that the TATA's and the PALLONJI's can split the pie depending on the fresh capital they can introduce into TATASONS to pay off the huge debt that would have been transferred in. In the event of tussle over any particular company - the more the merrier for the minority shareholders - the one who can bid more will get the same!! this is a win win for the long suffering shareholders though i dont know who amongst the TATA's and PALLONJI's is the winner. That would be the Mistry in all this!!
All companies promoters only look at what they can take out of the company at the cost of the investor or the lender - which is normally the banks or investors too greedy for their own good who chase junk bonds.
But the real free money is in equity and this is where reputation plays a very important role. Just as in most crime thrillers, its one who has earned ones trust who betrays it and the entire story of how the wrong is righted is scripted, unfortunately in the murky world of corporate finance there is no retribution as long as the regulators, be it the MCA or the SEBI does not do its homework.
For the TATA companies if one were to create an index of their company shares alone, the returns would have fared worse than gold if you exclude TCS and with TCS it just about beats gold - and thats not something to crow about! The systematic way in which TATA companies were used to buy shares in group companies and then these shares were sold to TATASONS when the markets were down ad nauseum till SEBI finally made inter promoter share transfers public is revolting to say the least! now these shares just sit on the group company balance sheets with huge borrowings at the cost of the public shareholder and the voting rights on these shares are exercised by TATASONS. I say why not me? Just as say, TATASONS being a shareholder can vote on the shares held by TATAMOTORS in TATASTEEL, why cant i do it as a shareholder?
That SEBI/ MCA have not forced these shares to be voted upon by a group of Institutions like LIC/any shareholder other than promoter group members picked in random etc is beyond me.
What SEBI/ MCA can do?
get all cross holding investments sold at current market prices in all group companies of single promoters. the monies so realised to be only used to repay debt in the companies books - no dividend is to be paid out.
all royaties for brand/name use are to be stopped - if the holding company wants they can always delink the name and do business - the business will do just as well or as badly!!
Also all investment companies or holding companies need to offer a buyout of minority shareholders once every 2 years. the price can be used as a counter offer by any minority shareholder to buyout the promoters at the price quoted by them as long as he can offer a better price to the remaining shareholders. This will eliminate the obsecene 30-50% discounts on holding/ investment companies and at the same time work as a stick for promoters to decide which companies they need to keep in their group and the ones they need to let go, as they work overtime to make their holding/ investment companies private to avoid this policy.
My investment philosophy has always been guided on how much the management of a company to willing to kill the hen(company) that lays the golden egg(profits). the lesser the inclination the higher the investment quotient. also as the underlying theme is of stealing from the public when there is a fight in Genx the shareholders can benefit as in the case of reliance when the brothers fought and the resulting split gave a 250% return to the shareholders of RIL. neither RIL nor the other group companies are anywhere near their lifetime highs when the market is threatening to make new highs.
Solution to the TATASONS-Mistry spat.
Transfer all group holding shares held from group companies to the Balance sheet of TATASONS along with an equivalent amount of debt from these companies and after that the TATA's and the PALLONJI's can split the pie depending on the fresh capital they can introduce into TATASONS to pay off the huge debt that would have been transferred in. In the event of tussle over any particular company - the more the merrier for the minority shareholders - the one who can bid more will get the same!! this is a win win for the long suffering shareholders though i dont know who amongst the TATA's and PALLONJI's is the winner. That would be the Mistry in all this!!
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