Stock Market Operators - An Example

I accidentally stumbled upon the below mentioned article. Though I could not verify the authenticity of the information given in the article, it was indeed spine chilling. It is an open secret that in many occasions share price sky rocket due to 'planned' operations. No one could forget the names of Harshad Mehta or Ketan Parekh. Below mentioned is one more addition to the list.

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Ashok Kumar Parmar has surfaced yet again to make an unsolicited hostile Bid for Bhilwara Spinners.He is making the Mandatory Public Offer to acquire atleast 20% of the Equity of the  Company at Rs 15,having already accumulated 15% of the equity stake…Bhilwara is locked up by 5% on Upper Circuit at Rs 11.99 today on the BSE 

Does this name,Ashok Kumar Parmar, ring a Bell ,other than his efforts to buy into the Videocon Group ?

Is it the same Parmar who made a killing in SUZLON ? If so, all else is Petty Cash for Parmar except for 

Suzlon.

Let me stir all of you up:

• The Suzlon IPO was at Rs 510 for a Face value of Rs 10.The Issue opened on September 23,2005 and closed on September 29,2005 and was oversubscribed nearly 46 times
• The Pre IPO Shareholding in Suzlon reveals some really interesting facts…While all of India craved to be allotted shares in Suzlon,those who controlled the whole IPO Process,Citigroup and ChrysCapital, were the largest beneficiaries
• Citigroup initially invested just Rs 50 crores for an allotment on April 19,2004 of 2577320 shares at Rs 194.It is this lot that it offered for sale at Rs 510 in the IPO.However the Pre IPO Holding swelled to 23195880 shares through the largesse of two liberal 2:1 Bonus issues on September 25,2004 and June 24,2005 reducing the holding cost per share to just Rs 21.56…The Company clearly had a premeditated gameplan in issuing such liberal Bonus and were probably influenced by Ajay Relan and Ashish Dhawan,who came on the Board of Directors,representing Citicorp and ChrysCapital respectively. 
• ChrysCapital too made a fortune…investing on August 10,2008 ,Rs 50 crores for 2049180 shares at Rs 244 and with the subsequent bonus issues taking their holding to 18442620 shares reducing average holding cost to just Rs 27.11 per share.It then sold a total of  3041000 shares at average Rs 365.18/share to entities of the Government of Singapore Investment Corporation Pte Ltd on July 6 and July 11,2005.It was left with a holding of 11252620 shares
• On March 28,2005,just before year closing,a Suzlon Group entity,Suzlon Capital sold 1245000  shares to 13 entities of the Parmar group for Rs 100/share aggregating an Investment of  Rs 12.45 crs.With the Bonus of 2:1 on June 24,2005 the Holdings shot up to 3735000 shares reducing the holding cost to Rs 33.33/share
• SEBI has just directed a Suzlon IPO allottee,Himani Patel, to pay Rs 33.52 lakhs plus 10% Interest from October 19,2005 (Date of Listing) to actual date of Payment, for unlawful gains made in the Suzlon IPO 

I want to ask SEBI ….What about this obscene cornering of Suzlon Shares Pre IPO by Citigroup,ChrysCapital,Government of Singapore and the Parmar group !? aided by the unwarranted two liberal bonus issues before the IPO !

The IPO was at Rs 510 and in January this year Suzlon was quoted at an all time high of Rs 2300…since then the share split to Rs 2 Face value and has seen a high of Rs 344 and a low of Rs 40…Today it is Rs 48 

Citigroup invested Rs 50 crores only and would have made gains of over Rs 4800 crores in quick time,assuming they sold their initial lot at the IPO and the rest at peak price in Jan this year of Rs 2300

ChrysCapital Invested Rs 50 Crores and would have made over Rs 2800 crores in quick time on similar assumptions

The Parmar Group invested Rs 12.45 crores and would have made nearly Rs 850 crores in quicktime,again on similar assumptions

Government of Singapore Investment Corporation invested Rs 111 Crores and would have raked in gains of Rs 588 crs if they had exited at peak price of Rs 2300

If one assumes that the sales were made even at an average price of Rs 1150, the gains would go down by half from the above and yet remain obscene !

Something just does not smell right here !…you allow Pre-IPO cornering of shares largely by Foreign Shareholders at the cost of Indian Shareholders…you let the Pre IPO Big Fry get away with hundreds and thousands of crores of gains without questioning and penalise the small fry who made a crore or two by cornering IPO allotments !

The Pre IPO Gameplan stinks and has,to put it mildly,unethical and unfair undertones….It was wrong to do what they did to corner Pre IPO shares..I don’t buy the argument that it was legal and within the guidelines…Substance over Form,it was clearly wrong  

When I addressed the youngish Citigroup Asia Pacific and Indian Research Teams…would you believe it !…they were completely unaware of how Citigroup controlled the Suzlon IPO and possibly made a billion dollars of it  under the guise of Long Term Private Equity !…I can understand and even salute Warburg making a billion dollars from it’s investment in Bharti Airtel…it had invested in Bharti when no one was willing to expose and commit to this Mobile Service Provider…but a sure winner like Suzlon ?…we Indian Investors were clearly deprived of Suzlon Shares in 2005

Life is a full circle…Suzlon now at Rs 48 (FV Rs 2) has slipped to below 50 % of it’s IPO price of Rs 510 (FV Rs 10) and is one tenth of the peak price of Rs 2300(FV Rs10) it had reached in January 2008…it is facing Property Tax issues for hundreds of locations where it has installed it’s windmills…Promoters, the Tantis, are surely facing their most challenging times in India and even overseas where Suzlon has committed to buy out more of RePower by early 2009.