Evasion or Exemption of Open Offers after violation of SEBI (SAST)

Evasion or Exemption of Open Offers after violation of Sec 10(1)(a) of SEBI (SAST)

 

Further to my post on Nippo Batteries, where i held the view that there has to be an open offer from promoters as there were violations of of Sec 10(1)(a) of SEBI (SAST) in case of Inter -se - transfer among promoters.

Today, One more deal took place on Exchange of Piramal Life at Rs 36/- between promoters. As per declaration by Sri Krishna Trust, (See here)Wherein they propose to acquire 33.08% of equity from Piramal Holdings P Ltd. As per their declaration they undertake to trade at the highest price of Rs 30.15. The trade has taken place on stock exchange at Rs 36/- and since the terms of Sec 10(1)(a) of SEBI (SAST) is not adhered, the promoters will have to make an open offer.

I hope again that SEBI takes initiatives in these blatant violation of their guidelines and compel the promoters of Piramal Life and Nippo Batteries, in the interest of minority shareholders. 

I hold on to view that there has to be an open offer, but that may not be the view shared by the company or the promoters as they have mentioned in the filings with the stock Exchange that it does not come in the ambit of open offer.

I am sure that SEBI should take side of Minority Shareholders and compel the company to make an open offer as the companies has not complied with the guidelines on SEBI takeover code required for exemption from making an open offer.

This is not a recommendation to anybody whatsoever to buy OR sell this share, but it is my thought process and views on this topic.

I welcome your critical comments and suggestions.

Life after unsucesful Delisting : Ricoh India

Ricoh India came out with delisting offer, Which closed on 20th November 2012. The required shares in delisting offer was at least 65 lakhs shares, whereas they were able to garner only 40 lakhs shares out of almost 105 lakhs shares.

http://www.bseindia.com/markets/publicIssues/DispIPOIssues.aspx?id=535&type=REV&idtype=2&status=H&startdt=11%2f5%2f2012

The delisting in this stock was unsuccessful due to lower participation by retail public in delisting offer. What is to be noted that the floor price of Ricoh India was Rs 53.79 /- and as per media reports they wanted to increase the offer price to minimum Rs 95 /- , which was declined by exchange authorities because the request to revise the offer price was given on the eve of opening of offer.

The price at which, it  was quoting was in the range of Rs 75/- - Rs 85/- during the period after the announcement of delisting, it is now quoting at Rs 53/-.

Is there anything in store for us ?

a) The Delisting offer was voluntary as they hold 73.60% in the company , below the 75% mark for compulsory delisting.

b) Ricoh India is subsidiary of Ricoh of Japan, It has almost 1 lakh employees and it has reach in all geography.

http://www.ricoh.com/about/company/data/index.html

c) The company is in proving Office automation solution (Multifunction , Copiers, Printer, Facsimile, Printers, Projectors) along with digital cameras and Managed Document Service.

http://www.ricoh.com/

d) Company is also engaged in huge advertising of Digital cameras and they have captured a good share in market.

e) The company has recently taken over a small company InfoPrint Solutions P Ltd, which gives printing solutions to corporates.

http://www.infoprint.in/internet/ipww.nsf/vwwebpublished/home_en

f) The Company is making losses since 2 quarters which happens for most delisting candidates also 

g) Q3 FY12 sales have gone up by almost 63 % (Partially because of merger of Infoprint solution P Ltd).

h) The company has small long term debt, Current liabilities and Current assets have mismatch, in fact they have negative working capital ? Need to look at it minutely.

The company seems to have multiple growth triggers and we can also bet on commitment of the company as they were ready to delist the stock.

Also the company has low floating stock and there are probabilities that they may try to delist again in future, The returns on stock will be more for investors, if it remains listed in long run.

This is not the recommendation to anybody whatsoever to buy or sell this share, but it is my thought process and views on this topic.

I welcome your critical comments and suggestions.

Implied Volatility of Nifty at Low

Implied Volatility of Nifty has hit a new low of almost 13%, which is also much lower than the actual volatility of Nifty.

Does that mean, we are expecting a lower volatility in future ?

To answer this question, we will look at some facts

a) Implied Volatility is lesser than realized volatility.

b) IV of far Month Nifty and Leaps is higher than near month ? Mostly it is the reverse.

c) IV of Underlying stocks have not fallen to same extent.

d) Intra-day volatility of Nifty has fallen recently.

e) Volumes in Nifty options have gone up

Also 

f) Volatility in Mid Cap Speculative Stocks have gone up.

g) There are movements in Nifty Underlying, but Volatility in nifty is in tight band.

h) There is a holiday season ahead

i) Liquidity is also coming from SGX nifty

I feel that fall in IV is more to do with traders moving away from trading in Nifty. There is excess cost associated in Nifty trading compared to its intra-day volatility. (As bunch of Nifty volumes are generated by intra-day trades).  Traders seems to have migrated to Mid Caps.Also FII seems to be more comfortable trading on SGX Nifty (Volumes have moved up over there)

But There seems to be opportunity to trade in Nifty :

a) If you just want to bet on Direction, Calls or Puts are comparatively cheaper than realized volatility.

b) Taking a long bet on Nifty straddle (Buy Call and Put simultaneously of same strike) is also good idea , As there are 35 day for next expiration, wherein we can expect nifty to move in either ways in these time.

c) If you are a delta trader, Long gamma will be helpful as impact of Theta will be less compared to money earned in managing Nifty.(But take care of STT)

This is not the recommendation to anybody whatsoever to buy or sell this share, but it is my thought process and views on this topic.

I welcome your critical comments and suggestions.