EaseMyTrip (Easy Trip Planners) IPO Review 2021

EaseMyTrip (Easy Trip Planners) IPO Review 2021 – IPO Price, Offer Dates & Details!

EaseMyTrip IPO Review 2021: The Easy Trip Planners IPO which opens on March 8th and closes on March 10, is one of the first digital company IPOs this year. In this article, we cover the EaseMyTrip (Easy Trip Planners) IPO Review and look into important IPO information and find out the possible prospects of the company. Let’s get started.  

EaseMyTrip (Easy Trip Planners) IPO – About Company

EaseMyTrip IPO Review 2021 March

Founded in 2008, Easy Trip Planners Ltd is an online travel agency which offers a range of travel-related products and services which includes flight tickets, train tickets, holiday packages, hotel booking, bus tickets, cab booking services, and other value-added services which include travel insurance, visa processing, etc.

The company has offices throughout the country including major cities like Noida, Bengaluru, Mumbai, and Hyderabad. The company has also expanded its presence globally and has offices located in Singapore, the UAE, and the UK.

History of EaseMyTrip

 Easy Trip Planners offer their services through their website (EaseMyTrip) and their android and iOS mobile app. In its early years, the company started off with a B2B2C (business-to-business-to-customer) distribution channel. Here they provided travel agents access to their website in order to book domestic travel airline tickets to cater to the offline travel market in India.

By 2011 the company entered the B2C segment where they would directly assist clients in booking flight tickets through their website. By doing so they addressed the needs of the middle-class population of India by providing an easy-to-use alternative instead of travel agents.

Easy Trip Planners Net Assets

In 2013 the company entered the B2E (business to enterprise) segment where they would provide their services to corporates. They also introduced hotel bookings and holiday packages to their customers. The following year Easy Trip Planners launched their Android application.

The company also has developed an in-house technology team that focuses on providing a secure, advanced, and scalable technological infrastructure.

EaseMyTrip IPO Review – Achievements

EaseMyTrip Achievement - Profit after tax

Over the years the company has grown in leaps and bounds. One of their biggest USPs has been the end-to-end service that they provide for all travel needs making their platform a one-stop destination for all travel needs. This has made Easy Trip Planners the second largest online travel agency in India in terms of gross revenue. In order to achieve this, they have entered into various agreements with third parties, including airlines, GDS and API service providers, channel managers, IRCTC, corporate customers, and IATA.

The company provides its clients access to 400 international and domestic flights along with 1.1 million hotels in India or abroad. As of March 2019, it had 49,494 registered travel agents across major cities of India.

The company has also achieved the feat of being the only profitable online travel agency among the key online travel agencies in fiscal years 2018, 2019, and 2020 in terms of net profit margin. The expansion of the internet and smartphones across the country will only increase the company’s growth potential.

EaseMyTrip in the midst of COVID-19

What is even more impressive is the company’s performance in the midst of the pandemic. They reported a revenue of Rs 50 crore in the nine months period ended in December 2020. They also managed to recover 70% booking volumes in the third quarter of Fiscal 2021, in terms of segments in comparison to the third quarter of Fiscal 2020. 

EaseMyTrip IPO Review – Risks in the Company

One of the major weaknesses of the company is the industry it operates in. The operations of the Travel-related products and services get severely impacted in the case of pandemics which we already saw this year. The effects of COVID-19 are said to have a lasting impact on the industry. 

Easy Trip Planners IPO Review - Revenue segments

The table above shows the breakup of the sources of the online ticketing segment. Here you can see that the industry is majorly dependent on Airline ticketing. Similarly, Easy Trip Planners too generates more than 90% of its revenue through air tickets booked on its website and mobile application. Any impact on the airline industry will be carried on to  Easy Trip Planners. 

The company is also dependent on its website and mobile application for operations. Failure to adapt to technological advances or glitches in the systems could disrupt their operations.

Key IPO Information for EaseMyTrip

ParticularDetails
IPO Size₹510 Cr
Fresh Issue---
Offer For Sale(OFS)₹510.00 Cr
Opening DateMar 8, 2021
Closing DateMar 10, 2021
Face Value₹2 per equity share
Price Band₹186 to ₹187 per equity share
Lot Size80 Shares
Minimum Lot Size1
Maximum Lot Size13
Listing DateMar 19, 2021

Mr. Nishant Pitti, Mr. Rikant Pittie, and Mr. Prashant Pitti are the company promoters. They have appointed Axis Capital and JM Financial as the leading book managers. KFin technologies Private Ltd. has been appointed as the registrar to the issue.

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EaseMyTrip IPO Review – Grey Market Premium

The IPO has received a positive response in the Grey Market. As of March 4, the shares of the company traded at a 96% premium over the issue price. This shows that the investors are bullish on the IPO.

Shareholding pattern -EaseMyTrip IPO Review 2021

EaseMyTrip IPO Review – Purpose of the Issue

The net proceeds from the issue will be used for

  • The company will not receive any proceeds from the issue. The IPO is entirely an offer for sale for founders Nishant Pitti and Rikant Pitti, who hold 49.81% and 49.68% stake, respectively. They will each sell holdings of ₹255 crores in the issue. 
  • They also aim to achieve the benefits of listing the equity shares of the company on stock exchanges.

EaseMyTrip Competitors in the Industry

Their competitors in the industry include:

  • ClearTrip
  • MakeMyTrip
  • Yatra Online
  • OYO
  • Paytm

Closing Thoughts 

Easy Trip Planners is one of the first digital company IPO this year which has shown to have great potential thanks to the reach of the internet. The company also has maintained a consistent financial track record.

Dinesh Gupta, Co-founder of UnlistedZone stated “ The IPO market is in high spirits. Every company is trying to tap the primary market with an initial public offering. The liquidity rush is allowing every issue to demand whimsical valuations,” It is important that investors do not jump along on the bullish trend but invest only after careful evaluation of the offer. Happy Investing! 

Groww APP Review 2021! cover

Groww App Review 2021 – How Good is Groww Stockbroking App?

Groww App Review and Charges 2021 (Stockbroking): Online investing and intraday trading have seen a rise in the number of users in the last year giving a much-needed push to several discount brokers. Many stockbrokers have emerged in the last few years offering amazing investment and trading facilities to their clients. One such platform is GROWW. 

Here is the Groww App review – an investing platform that has had significant growth amidst the pandemic.

Groww App – About the Company

Groww App Review 2021

Groww is one of the fastest-growing investment platforms in India. Groww is the brand name for Nextbillion Technology Private Limited – a SEBI registered stockbroker and a member of NSE and BSE. Initially, Groww a Bangalore-based startup was set up in 2016 as a platform to directly invest in mutual funds.

Keeping up with the increase in demand for equity trading in the midst of the pandemic the company also offered equity trading. The vision behind the Groww App was to set up was to create a powerful yet simplest to use App for trading from anywhere. With this, the app came up with the philosophy of making “Investing should be as simple as online shopping”. Today the company offers Mutual Funds, Demat Services, Trading Services, Intraday Services, IPO Services, and Trading Exposure. 

According to the business model set up Groww is a discount broker and has no physical presence. The company operates online and consumers can contact them through these means. Groww earns revenue through a subscription revenue model, where it offers premium features to its customers. The company has a team of over 100 members. Using technology the company has grown to provide quick, easy-to-use solutions for investing and trading from the comfort of our homes. The company is known for its offers and low expenses.

Groww App Review – Key Features

1. Mutual Funds Investment

Investing in Mutual Funds online can be done through the apps released by the individual asset management companies (AMCs). But these investments will be limited to the products offered by that particular AMC. The Groww app aggregates mutual fund products offered by various fund houses. This allows investors to find the best product in one place.

Investors can find small-cap, large-cap, mid-cap, multi-cap for the long term, and higher returns. The app also includes balanced funds, gold funds, sector funds, and international funds. Groww offers investors more than 5,000 MF schemes. Investors can sort through the various options depending on returns, tax-saving, and sector bets.

The app also provides ratings for mutual funds by Value Research Online. By offering a platform for direct investment in mutual funds investors can save up to 1.5% of their returns.

2. Simple Interface

As mentioned earlier the app is made as simple to use as possible. In addition, Groww also provides investors the option to trade both via the web and through their phones. Groww features a desktop browser platform, Mobile Site Platform, Android App, and an iOS app.

The app provides live price movements,  candlestick charts, online orders, information to explore stocks, and the ability to invest in IPO’s. Investors can also create a market watch to personally monitor their favorite stocks. One can also create customized market watch lists. The Charts in the app are simple and easy to understand with complete information for investing.  

In addition, Groww also provides resources for beginners like  Ebooks, and blogs, and video courses. The platform is convenient and fast.

3. Equity Investments

Apart from mutual funds, the App provides the perfect platform for both investing and trading stocks. Although the initial focus of the company lay in Mutual Funds the company released its trading platform in June 2020.

Currently, you can do delivery (long-term) investment and intraday and intraday trades using Groww platform.

The app also provides investment in US Stocks, Digital gold, and Corporate FD.

4. Payment Options

Groww app lets users pay through various options like UPI, Net Banking, NEFT, a one-time mandate for SIP installments for Autopay using OTP’s. The app also sends timely notifications of all existing transactions like monthly SIPs and unit allotment. This makes payment and transfer of funds easy and convenient.

5. Tracking Investments

Another unique feature provided by the app is the ability to track investments across all platforms. The app does this by scanning the  Consolidated Account Statement (CAS) from CAMS or Karvy. This can be done by providing the app access to Gmail or by manually forwarding the latest statement. 

Once this is done the app also gives the investor an analysis of his investments using pie charts. This chart depicts the percentage of his investments from mutual funds in equity, debt, etc.

6. Security

Groww app contains a high-level 128-bit encryption standard. This is maintained for each and every transaction. The encryption is similar to those in banking standards. 

The app also provides a unique and convenient fingerprint scanner to log in securely. This feature is the first of its kind for similar platforms. The app also saves the time a username and password was logged in. It also ensures that if the device is misplaced or stolen, no access takes place.

7. No minimum balance

The app does not require investors to maintain a minimum balance in the Groww balance account. This balance can be maintained as per investor preference.

Groww App Review – Opening & Brokerage Charges

One of the biggest perks of using Groww is its competitive charges. The following table sheds light on the rates applicable:

ParticularsGroww Charges
Account Opening ChargesFree
AMC ChargesFree
Equity Delivery TradingRs.20 per executed order or 0.05% of order value (whichever is lower)
Equity Intraday TradingRs.20 per executed order or 0.05% of order value (whichever is lower)

— Groww Delivery Brokerage Charges 


 

— Groww Intraday Brokerage Charges


Closing Thoughts

Groww is slowly becoming one of the top investing/trading platforms. But still, there are a few concerns raised regarding the quality of the app. For example, Groww doesn’t offer to trade in Derivatives i.e. futures and options as of current.

Further, based on the feedback provided on the play store users complained over the lack of customer service provided. But despite this, the app has a stellar rating of 4.4 stars on the play store with over 10 million downloads. Let us know what you think about Groww below. Happy Investing!

Reliance Vs Amazon

Future Group Dispute Explained: Reliance vs Amazon fight for Future!

Reliance vs Amazon fight for the Future Group: Two of the richest men ever have locked heads. Jeff Bezos led Amazon and Mukesh Ambani led Reliance has been in a dispute since October last year over the Future Group.

In this article, we cover what caused this Reliance vs Amazon feud and where it has escalated to currently.

Reliance vs Amazon: Future Groups’ Position 

Reliance vs Amazon

The Future Group was founded by Kishore Biyani in 2013. He is credited with setting up the first hypermarket-retail store in India which soon made him the country’s retail king.

The Group owns prominent brand chains like Big Bazaar, Food Bazaar, FBB, Brand Factory, Central, Nilgiris 1905, etc. But the group has been struggling in the last few years.

Its debt stood at Rs. 12,778 crore in 2019. The same year Future Retail suffered a 15% fall in profit for the quarter ending December 2019.

The lockdowns imposed due to COVID were the final nail in its coffin. Two months of its malls and retail outlets added immense pressure to the business. 

Future Group - Brands

Future Retails sales declined by 75% from normal levels. Rating agencies like CARE and Fitch reduced their ratings to ‘negative’ and ‘Substantial Risk’ respectively.

The period also saw the Biyani Family fortunes reduce from $1.8 billion to $400 million. Due to the poor cash flow Future began defaulting on its bank dues pushing it closer to a financial crisis. 

In August last year, Biyani finally found a way out for the group. The group announced that Reliance Retail would be buying the Future Group in an all-cash deal worth Rs. 24,713 crore. This was the largest retail acquisition in India.

The deal included the sale of its retail, wholesale, logistics, and warehousing to Reliance Retail. This move perfectly fit Ambani’s plans to dominate India’s offline retail segment.  

Then why are two of the richest men in the world feuding over a company which is facing a severe financial crisis?

Amazon and Future Deal

The Amazon group succeeded in acquiring a 49% stake in Future Coupons, an unlisted promoter entity of Future Retail. Future Coupons holds a 7.3% stake in Future Retail.

The acquisition meant that Amazon now owned a minority stake of 3.58% in Future Retail. This also gave Amazon a ‘call option which allowed it to buy into Future Retail within 3-10 years of the agreement.

The agreement also barred Future Coupons from selling its assets to 15 companies that could turn into Amazon’s potential competitors. The list included Walmart, Google, SoftBank, Alibaba, Naspers, eBay, Target, Paytm, Zomato, Swiggy among others, and also Reliance. 

As a result, Amazon accused its partner of breaching the terms of the agreement by selling its assets to Reliance.  

Reliance vs Amazon Dispute: Amazon’s Plan for Future

Future Group - Big Bazar

The Jeff Bezos led e-commerce giant has claimed that it has been putting in efforts to rescue its debt-laden partner.

Amazon claims they did this by helping Future repay mounting bank dues, avoid defaults and improve cash flows by selling its products on Amazon. This included a plan where they would work together to deliver products in select cities within 2 hours of customers ordering them.  

Amazon along with other partners had devised plans to invest a total of Rs. 6,000 crores into Future Retail. These plans engineered by Amazon are reflected in a presentation titled ‘Putting Future Retail Ltd (FRL) Back on Track’.

The presentation also stated that “FRL and Amazon have envisioned working together to make the most of this opportunity (the fast growth in the retail industry) ahead. While Covid has its adverse impact in the near term, it could be turned into a great opportunity. The potential for home delivery will be multifold through an integrated omnichannel play.”

Reliance vs Amazon dispute

Amazon also assembled a team of investors including PremjiInvest, TPG capital, SSG Capital, and Verlinvest. All of whom along with Amazon would have invested Rs. 750 crores. The remaining being raised from private equity investors and banks. These investments were to be made in tranches starting from May 2020.

Amazon had also reportedly created another revival plan. This included Future selling its retail business to cut debt and instead focus on other key businesses. It included the sale of small stores, its grocery and personal care business. 

Future breaking the non-compete clause

Amazon alleges that despite these plans being made to rescue Future, they still went ahead and sold its assets to Ambani-led Reliance. This broke the non-compete clause in the agreement they had entered into.

The agreement also required Future Group to inform Amazon before entering into any sale agreement with third parties. 

Amazon and the Future Group also had entered into an agreement wherein the case of a dispute they would approach SIAC (Singapore International Arbitration Centre), which Amazon did. It is common for companies to appoint a foreign-seated arbitrator when disputes involve multiple parties.

The SIAC enjoys a good reputation in India for being an efficient and convenient forum in international commercial arbitrations.

Reliance vs Amazon: The trial at the SIAC 

Amazon approached the SIAC in October last year asking it to bar the Future Group from selling to ‘restricted’ persons which otherwise would be in violation of the contract entered into by them.

The SIAC which resolves arbitrations swiftly in 14 days ruled in favour of Amazon. SIAC stated in its ruling that the Amazon-FRL pact had the right of first refusal. This gave Amazon an advantage in the early days of the dispute.  

Futures version of the ‘Reliance vs Amazon’ Story

Future promoter Kishore Biyani

Future promoter Kishore Biyani has denied the accusation placed by Amazon.

He stated that “As part of the agreement, they could have provided us funds through affiliates or financial institutions by taking over loans from existing lenders but they never did despite the agreement clause and our request. We also connected them with four-five investors but they never showed any interest in salvaging us and were only doing lip-service… What is their intention?”.

He also accused Amazon of being the “dog in a manager” implying that the e-commerce giant had no serious interest in Future but was still preventing others from owning it.

The Indian retailer also told the SIAC that Amazon had sought $40 million from Future Retail in order to allow them to move ahead with the “disputed transaction”. This also meant that Amazon was well aware of the RIL-Future deal.

Kishore Biyani also stated at SIAC that “This event also received widespread media coverage (in reference to the RIL-Future merger) So, leaving aside the messages, calls, and emails, the claimant was aware of the disputed transaction for more than a month before it initiated the present arbitration proceedings,” it said.

He also stated that Future had reached out to Amazon for financial assistance at least 8 times before approaching Reliance. Despite all these attempts, the group received no support from the giant. 

A group’s spokesperson also denied any proposals coming from Amazon.

“Future Group has never received any proposal from any such consortium—in fact, you have named existing investors in various Future Group companies, who we understand, are committed to, and strongly support the ongoing Transaction. The entire storyline in your mail is a figment of the imagination and a mala fide attempt at misleading the public and stakeholders.” the spokesperson said. 

The future group has also made it clear that Future would collapse if the RIL-Future deal falls apart. 

Amazon Responds

Amazon has released an official statement in response to these claims, “ Amazon denies the false and misleading claims being made by the Future Group on a purported request for compensation to forego the right of first refusal. This is a questionable and ill-timed attempt to mislead the public at large more particularly when Amazon has filed a special leave petition in the Supreme Court. Amazon has consistently offered to assist FRL during the economic downturn caused by COVID and reiterated our openness for a dialogue even during the Delhi High Court hearings, which was declined by Future Group,” said the e-commerce giant spokesperson.

Reliance vs Amazon vs Future in Delhi

Reliance vs Amazon

Following its victory at SIAC, Amazon was quick to notify institutions like SEBI, CCI(Competition Commission of India), and stock exchanges against the Future Reliance deal. This was done in order to put a hold on the deal. It was waiting for a No Objection Certificate(NOC) from the exchanges in order for the transaction to be completed.

By the end of October Amazon also filed a case in the Delhi High Court seeking enforcement of the SIAC ruling.

Things took a turn when the Delhi court ruled in favour of the RIL-Future deal. The court directed the Future Group to maintain the status quo in its deal with reliance as the SIAC ruling did not nullify their deal.

Following this, the Future group appealed to which the bench ruled in Future’s favour stating that Future Retail was not a party to the arbitration agreement (the deal was entered into by Future Coupons.). After that, the deal also received approval from Sebi and stock exchanges 

In the meantime, Amazon has now moved to the Supreme court stating that the Division bench order is ‘illegal, and arbitrary, apart from being without jurisdiction’.

It also learned that Amazon stated that if the Indian authorities did allow the deal to go ahead then it would set an example of how orders by reputed tribunals such as the SIAC are not respected in India. Such a ruling could set a bad precedent for foreign investors looking to invest in India. 

Reliance vs Amazon Dispute: Distributors write letters to Amazon

Meanwhile, local distributors in business connection to Future Retail have written to Jeff Bezos and Amit Agarwal (Amazon’s India head) urging him not to block the Future-RIL deal.

The Future Group currently owes Rs. 6,000 crores to small vendors and suppliers. These dues have been pending since March 2020.

The All India Consumer Products Distributors Federation (AICPDF) stated in the mail,” While you continue with your great game of world domination, we have become what is called ‘collateral damage’ … Payments of our members are blocked. Our families are in great financial stress and suffering from mental and emotional distress.”

Closing Thoughts

It is clear that the battle is simply not for a debt-laden business. But instead for domination of India’s $1 trillion consumer retail market. Mukesh Ambani has already stated that their goal in the next 5 years is to be among the top 20 retailers in the world.

Reliance Retail currently has over 11,300 stores in India and the disputed deal would put him on the fast track to become India’s Retail King. This however would be a huge blow to e-commerce firms like Amazon and Walmart’s Flipkart. Ecommerce currently only forms 3% of all retail sales. Sadly it is the stakeholders of Future Group like their employees and debtors who are caught up in the middle.

What are your thoughts on how the Reliance vs Amazon case has unfolded so far? What do you think would be the most optimal outcome? Let us know in the comments below. Cheers! 

What is AMFI - Association of Mutual Funds in India

What is AMFI? And What are its Role, Objective & Importance?

Learn what is AMFI – Association of Mutual Funds in India: As an investor, there are many institutions set up in the market to ensure that you are informed and at the same time to also protect your rights.

One such institution is the Association of Mutual Funds in India (AMFI). So What is AMFI and what exactly does AMFI do? Moreover, why AMFI was set up? We answer these questions in this article.

What is AMFI – Association of Mutual Funds in India?

What is AMFI | Trade Brains

The mutual fund industry took birth in India with the formation of  Unit Trust India (UTI) in 1963. Other players entered the market only in 1987. But despite this, the industry suffered from preconceived norms of it being a risky and ambiguous investment due to lack of information.

In order to combat these myths, the Association of Mutual Funds in India (AMFI) was incorporated on 22nd August 1995

The AMFI is a non-profit government organization that acts as the primary regulator under the SEBI. One of its major functions is to keep the investors informed about the Mutual Fund market and protect the interest of investors.

Currently, it comprises 43 member Asset Management Companies (AMC) that are registered with SEBI.

We have seen many cases where investors’ money is misused. In the case where the AMC does not follow transparency norms or if the investor is facing trouble in dealing with his fund house the next step would be to inform the AMFI which has been set up for the protection of investors’ interest. 

The AMFI maintains high standards of operation and ensures that investors are well informed. One of the important means through which AMFI does this is by updating their website with important information pertaining to mutual funds. Even the advertisements put forth by AMFI ensure that the investors are informed about the risks associated with mutual funds.

Since its formation, it has set various regulations in order to ensure that ethics and transparency are maintained in the mutual fund industry.

What are the Objectives of the AMFI?

The Association of Mutual Funds in India (AMFI) has several objectives. Some of them are mentioned below:

  • Ensures that mutual funds operate under a uniform set of ethical and professional standards.
  • Once the standards are defined, AMFI also encourages and ensures that AMC’s and mutual funds follow and maintain them in the due course of business. 
  • They also assist all the parties involved like distributors, advisories, agents, asset management companies, and other bodies to comply with their guidelines. 
  • AMFI receives guidance from SEBI and works closely with them on matters concerning mutual funds.
  • They represent the government, Finance ministry, RBI, and SEBI on all matters that relate to the mutual fund industry.
  • It also distributes information on mutual funds as investments and also conducts research, workshops on different funds. They also conduct the nationwide investor awareness program.
  • It also takes disciplinary action in the case of a violation of the code of conduct.
  • They safeguard the interests of investors. AMFI has introduced a facility through which investors can put forth grievances or register complaints against fund managers or any fund houses.
  • They also safeguard the interests of AMCs.

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What is the ARN and Why is it important to investors?

There are many entities we may come in contact with before investing in mutual funds. These include agents, brokers, and other intermediaries. But how do we know which of these are credible? This is where the ARN comes into play. ARN stands for AMFI Registration Number.

AMFI only authorizes those who are qualified to sell the funds to prospective buyers. If any fund manager, broker agent, or any other company wants to deal with mutual funds they have to get a permit from AMFI to do so. This will be provided to them by AMFI in the form of ARN.

Fund houses and other intermediaries who acquire the ARN from AMFI are credible and have the professional knowledge required to invest in mutual funds. It is a legal offense if anyone sells or recommends mutual fund units to investors without the ARN license. 

It only issues the ARN on the clearance of the National Institute of Securities Market (NISM) certification which is valid for three years. The NISM is a training institute that offers certifications related to the securities market.

It is very important for investors to ensure that the third-party agents or intermediaries have an ARN before investing.

Closing Thoughts

The Indian mutual fund industry has grown in leaps and bounds. In the 90s a very small fraction of the population invested in mutual funds. The awareness of these investment schemes has grown significantly. Today even the youth take part in these investments thanks to the efforts of institutions like AMFI. Happy Investing!

Karvy Scam

Karvy Scam Explained: Money Heist by Karvy Stock Broking

A Closer Look on Karvy Stockbroking Scam: The Indian markets hit a new low during the Karvy Scam. Like Harshad Mehta, some brokers have used stock manipulation to make millions but rarely target their direct clients to make money. Talk about honor among thieves! In this article, we look at how Karvy almost succeeded in using their clients as bait. 

Who is Karvy?

Karvy Stock Broking | Trade Brains

Karvy is a financial services company that ventured into the stockbroking business in 1983. In India, retail investors cannot directly participate in the stock market. They do so through intermediaries like stockbrokers.

Brokers like Karvy provided a platform for retail investors to make the markets more accessible in exchange for a commission. The company grew to become one of India’s largest retail brokerage houses with more than a million customers. 

How did they pull off the ‘Karvy scam’?

Investors using the platform noticed that their payments were being delayed. According to the transaction cycle, an investor should receive the money due in his account by the third day. But in the case of Karvy, investors did not receive their money even after a week of executing their trades.

Karvy initially tried to cover this issue by stating that it was a minor technical issue. This, however, came to the notice of the NSE and SEBI, who started a preliminary probe against the incident. 

The probe revealed something that would shock the stock market and further hurt investor confidence. Karvy had been crediting funds generated by pledging client securities in their broker accounts. They had done so by misusing the Power of Attorney (PoA) given to them by their clients.

Whenever an individual creates an account with brokers, they give them the PoA. This PoA allows the brokerages to release shares from the Demat account when they are sold. Using PoA makes it convenient receipt and payment of shares/stock for everyone involved. An alternative would involve many hassles and be too time-consuming.

What Karvy did here is broke their clients’ trust in order to scam them. They used the POA to transfer shares to their personal accounts (Stock Broker-owned Account) instead of stock Broker-Client Account.

What was Karvy using clients securities for?

Karvy used the clients’ securities to pledge them as collateral to raise loans from several banks. These included HDFC Bank, ICICI Bank, Bajaj Finance, IndusInd Bank, Axis Bank Limited, and Kotak Mahindra Bank.

Investigations then began following the trail of money. It proved that Karvy had transferred the funds to its real estate arm – Karvy Realty. Money was transferred to its real estate arm to repay High Net-Worth Individuals (HNIs) whose money was used to finance real estate projects.

Karvy Personal Wealth would bait these HNIs by offering them high-interest rates. They would then transfer these funds to high-risk real estate ventures. Karvy found itself in trouble post demonetization. The investigation uncovered that Karvy had diverted around Rs. 2,300 crores worth of client shares for this purpose.

Karvy had been transferring money from its brokerage to its real estate firm from April 2016 to October 2018. Almost 95,000 retail investors had been affected by the scam.

SEBI vs Karvy Scam | Trade Brains

Even when this was revealed, it put everyone involved in a sticky situation. The banks now claimed that the securities belonged to them as they were pledged against the loans given out by them to Karvy.

The retail investors affected would have been caught in the middle fighting a case against teams of lawyers hired by these banking institutions had the SEBI not stood up for them. In the midst of all this, Karvy also began using its media influence and financial muscle to receive a tolerable SEBI sentence.

SEBI to the Rescue of Karvy Scam Clients

Rightfully so, the SEBI stood firm and, along with other institutions like BSE, NSE, and the MCX, suspended Karvy’s broking license. On the other hand, NSDL and CDSL transferred all of the scammed retail investors’ shares stuck in Karvy’s pool account to the retail investors’ depository accounts.

However, this move did cause some minor hiccups as retail investors using Karvy could no longer square off their derivative position. It, however, was meant for the greater good. 

SEBI took action in a swift manner. This gave immediate relief to 82,559 retail investors. It is Karvy that now owes the funds to the banks. For e.g., they owe ₹300 crores to Bajaj Finance for the loans taken.

Learnings from Karvy Scam – How can investors protect themselves?

What happened with Karvy is one of the rarest of rarest events. A broker would never try to break their clients’ trust unless they want to tarnish their own image and lose all business credibility.

The SEBI has standardized norms for drafting the power of attorney (PoA) agreements. This will reduce the misuse of client securities as depositories have already been given clear instructions. This, however, does not mean that investors must not remain vigilant.

Investors can register themselves on NSDL and CDSL portals to get information about their holdings directly from their depositories. They can then use this to reconcile the number of shares held by them. Also, it is best to contact SEBI first instead of reaching out to the brokers through Twitter and other social media in case of discrepancies.

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NSE 11 point advisory after the Karvy Scam

The NSE, to raise awareness, released an 11 point advisory to investors on how to keep their stocks safe. 

1) Ensure that pay-out of funds/securities is received in your account within 1 working day from the date of pay-out. 

2) Be careful while executing the PoA (Power of Attorney) – specify all the rights that the stockbroker can exercise and the timeframe for which PoA is valid. It may be noted that PoA is not a mandatory requirement as per SEBI / Exchanges. 

3) Register for online applications viz Speed-e and Easiest provided by Depositories for online delivery of securities as an alternative to PoA. 

4) Ensure that you receive Contract Notes within 24 hours of your trades and Statement of Account at least once in a quarter from your Stock Broker. 

5) Please note that securities provided by you towards margin are not permitted to be pledged by your Stock Broker for raising funds. 

6) If you have opted for a running account, please ensure that the stockbroker settles your account regularly and in any case not later than 90 days (or 30 days if you have opted for 30 days settlement). 

7) Do not keep funds and securities idle with the Stock Broker. 

8) Regularly login into your account to verify balances and verify the Demat statement received from depositories for correctness.

 9) Check messages sent by Exchanges on a monthly basis regarding funds and securities balances reported by the trading member and immediately raise a concern if you notice a discrepancy. 

10) Always keep your contact details viz Mobile Number / Email ID updated with the stockbroker. You may take up the matter with Stock Broker / Exchange if you are not receiving the messages from Exchange / Depositories regularly.

11) If you observe any discrepancies in your account or settlements, immediately take up the same with your stock broker and if the Stock Broker does not respond, with the Exchange/Depositories.

 

Money Heist by Karvy | Trade Brains

Closing Thoughts 

The steps taken by SEBI and other concerned authorities were praiseworthy as they put investors ahead of large banks. The investors would otherwise have received their securities only after fighting for them against hordes of lawyers hired by brokers and banks.

Unfortunately for the market watchdog, this wasn’t Karvy’s first rodeo. There have earlier been lapses in handling client accounts and IPO fraud. Stringent punishments would discourage brokerages from resorting to unethical means. This time however SEBI rescued the trust placed in the Indian financial markets, which still has only 5% of the population participating. Happy and Safe Investing!

MTAR Technologies IPO Review 2021 ipo details

MTAR Technologies IPO Review 2021 – IPO Price, Offer Dates & Details!

MTAR Technologies IPO Review 2021: The MTAR Technologies IPO opens on 3rd March and closes on 5th March 2021. In this article, we cover the MTAR Technologies IPO Review and look into important IPO information and find out the possible prospects of the company. Let’s get started. 

MTAR Technologies IPO – About Company

MTAR Technologies IPO Review 2021 - About the company

MTAR Technologies is the Indian leader in the precision engineering industry. The company manufactures mission-critical components with close tolerances (5-10 microns) in critical assemblies, to serve projects of high national importance. Precision engineering is a sub-discipline concerned with designing machines, fixtures, and other structures that have exceptionally low tolerances, are repeatable and are stable over time.

Its products are used in aviation, aerospace, space, defence, and nuclear power plants. The product’s applications in these sectors are critical as minute errors can lead to great damages. MTAR is able to specialize its products through its precision machining, assembly, specialized fabrication, testing, and quality control processes.

The company has precision engineering capabilities to build missile systems, aircraft components, nuclear and pressurized water reactors, aerospace engines, and many other vital components.

financials of MTAR Technologies IPO

History of MTAR Technologies

MTAR was founded in 1970 as a partnership firm. The same year they received their first order from Bharat Heavy Electricals Limited (BHEL).

The firm went onto manufacture products for companies like Hindustan Machine Tools (HMT), Indian Space Research Organization (ISRO), Defense Research and Development Organization (DRDO), Hindustan Aeronautics Limited (HAL), Gas Turbine Research Establishment (GTRE), and Aeronautical Development Agency (ADA). MTAR was incorporated into a company in 1999. 

history of MTAR Technologies

In 2008, the company began an export-oriented unit by manufacturing 500-watt megawatt reactors. The company also began substituting imports by developing import substitutes. Over the years, MTAR has developed a wide product portfolio catering to customers in diverse segments.

Currently, it has three kinds of products in the clean energy sector, 14 kinds of products in the nuclear sector, and six kinds of products in Space and Defense sectors. Its clients today include ISRO, NPCIL, DRDO, Rafael, Elbit, etc. In the Clean Energy sector, MTAR has supplied US-based Bloom Energy with hydrogen boxes and electrolyzers for over 9 years.

products of MTAR Technologies IPO Review 2021

Important projects of MTAR Technologies

Here are some important projects to which MTAR Technologies has contributed:

  • Supplied the first Vikas Engine( liquid-fuelled rocket engine in 1989)
  • Indian civilian nuclear power program
  • Indian space program
  • AGNI Program – MTAR manufactured base shroud, Fin assembly and pneumatic components. 
  • Liquid propulsion engines for GSLV Mark III. (A launch vehicle for crewed missions and dedicated science missions like Chandrayaan-2)
  • Actuators for LCA(Light Combat Aircraft) by HAL.

revenue profit of MTAR Technologies IPO Review 2021

MTAR operates through its 7 state-of-the-art manufacturing facilities in Hyderabad and Telangana. These facilities include end-to-end capabilities like precision machining, assembly, specialized fabrication, brazing and heat treatment, testing and quality control and other specialized processes.

The company also emphasizes on R&D of their manufacturing processes as it allows them to evolve their own process technologies thereby enabling them to achieve design specifications with accuracy irrespective of the size of the products. 

MTAR Technologies IPO Review: Risks in Company 

Although the company shows impressive financials investors must note that these revenues are sourced from a few clients in a niche industry. Clients like ISRO, DRDO, NPCIL, and Bloom Energy contribute major chunks to its revenue. From April to December 2020 Bloom Energy accounted for 49% of the company’s revenue to its fuel cell segment. NPCIL accounted for 27% of the revenue to its nuclear segment. ISRO and DRDO accounted for 21% of its revenue in the space and defence segment.

The company also operates in an industry where the margin for error is minute to nonexistent. Any errors could cause lots of damage and also lose the few clients the company has forever. Any changes in government policies towards the sectors the company functions in will have an adverse impact on the company’s earning potential.  The increased liberalization of the defence/space sector in favour of foreign and private companies could also have an adverse impact on the MTAR.     

MTAR Technologies IPO Review – Key Information

MTAR Technologies has appointed  IIFL Securities and JM Financial as the book-running lead managers to the IPO. KFintech Private Limited has been appointed as registrar to the IPO.

ParticularDetails
IPO Size₹596.41 Cr
Fresh Issue₹123.52 Cr
Offer For Sale(OFS)₹472.90 Cr
Opening DateMar 3, 2021
Closing DateMar 5, 2021
Face Value₹10 per equity share
Price Band₹574 to ₹575
Lot Size26 Shares
Minimum Lot Size1 Lot (26 Shares- ₹14,950)
Maximum Lot Size13 Lots ( 338 Shares - ₹194,350)
Listing Date:Mar 16, 2021

Their Promoters include Parvat Srinivas Reddy, P. Leelavathi, K. Shalini, D. Anitha Reddy, C. Usha Reddy, G. Kavitha Reddy, Anushman Reddy, P. Kalpana Reddy, Saranya Loka Reddy, A. Manogna, and M. Madhavi. 

shareholding pattern of MTAR Technologies IPO

The offer for sale by the company includes P Leelavathi selling 4,50,000 equity shares. Parvat Srinivas Reddy, Saranya Loka Reddy, G Kavitha Reddy and A Manogna each selling 3 lakh shares.  K Shalini selling 2.25 lakh shares, C Usha Reddy selling 2 lakh shares, Kalpana Reddy selling 1,49,970 shares, D Anitha Reddy selling 1.25 lakh shares. It also includes investor Fabmohur Advisors LLP and P Simhadri Reddy selling 57,84,300 equity shares and 90,000 shares, respectively.

ALSO READ

What is the Process of IPO Share Allotment to Retail Investors?

Grey Market Premium

As of 25th Feb, the shares of MTAR Technologies were trading at a price of Rs 820. This meant that its shares commanded a grey market premium of Rs 245 or 42.60% over the issue price.

MTAR Technologies IPO – Objects of the Issue

The net proceeds from the issue will be used for

  • Repayment of borrowings.
  • Financing working capital requirements
  • Other general corporate purposes

Closing Thoughts 

MTAR Technologies over the years has played a critical role in various projects of national importance. The company has several cons as seen above. It is also part of the Precision industry which is worth Rs. 4,098 Billion in India. The Auto sector forms a major component of this market followed by the Defense, Aerospace, and Aviation sectors.

The industry has grown at a CAGR of 7.1% between 2016 and 2020 and is expected to grow at a CAGR of 6-7% between 2020 and 2025. Investors must also take note of the several cons related to the niche segment the company operates in. 

That’s all for this post. Do let us know what you think of the MTAR Technologies IPO Review. Are you planning to apply for this IPO or not? Comment below. Happy Investing!

why the prices of fuel is rising in India cover

Petrol Prices Hiked Again – Why the prices of Fuel are Rising in India?

Understanding Why the prices of Fuel are Rising in India: The retail petrol prices touched triple digits for the first time in a few areas across the country after the prices were hiked earlier this month. You too might have already noticed your monthly expenditure on fuel is increased.

In this article, we take a look at why the prices of fuel are rising in India. Here, we’ll try to give the reasons why the petrol/diesel prices have increased. Keep Reading to find out.

Why have petrol and diesel prices increased?

When the Union Petroleum and Natural Gas and Steel Minister Dharmendra Pradhan was asked this question he blamed it on the oil-producing countries. When it comes to crude oil India imports over 80% of its crude oil requirement. So any changes in the global prices will directly impact the fuel prices in India.

Pradhan stated that ”There are two main reasons for the fuel price rise. The international market has reduced fuel production and manufacturing countries are producing less fuel to gain more profit. This is making the consumer countries suffer,”. The minister also added that the government has also requested OPEC and OPEC+ countries to increase output.

The oil prices have been on a rise ever since Saudi Arabia along with the rest of the Oil Producing and Exporting Countries (OPEC), its allies the OPEC+ countries and Russia agreed to cut their production by 1 million barrels per day. This caused the oil prices to rise to $63 per barrel – the highest in a year. 

But is this the only reason for the high prices in India? Oil prices in countries around the world have been reduced back to pre covid levels but quite the opposite has taken place in India. Prices in the US, China, and Brazil are 7.5%, 5.5%, and 20.6% lower than they were a year ago. A closer look at the price break up reveals some different answers.

Taxes on Petrol and Diesel

Both the central and the state governments have hiked the central excise duty and sales taxes to increase their revenues. In Delhi, the combined state and central taxes are 180% and 141% of the base price of petrol and diesel respectively. Over two-thirds of what we pay as fuel is tax to the government.

who earns from your fuel bill 

The main reasons for the increased taxes were the nationwide lockdown hurting the revenues of the government. In order to make up for this, fuel prices were taxed heavily. Last year the petrol prices were touched nil but this benefit was not passed on to the consumers in order to make up for the losses the government faced in other areas.

The last time any relief was provided was in 2018 when the excise duty was cut by Rs. 1.50 per litre. The crude oil priced however increased to $40 per barrel between June and October, and now have gone past $60.

When the lockdown was imposed the excise duty was increased by Rs 13 per litre on petrol and Rs 16 per litre on diesel. Between April 1 and December 10, petrol prices were revised upward 67 times. Despite the huge increase in prices the Centre has refused to budge and still maintains the same excise duty.  

Value Added Tax (VAT) too has been significantly increased to accommodate the needs of the state governments. After GST the only direct source of revenues that the state governments have is through liquor and fuel. Only a handful of state governments have taken action to control the prices.

Rajasthan reduced (VAT) from 38% to 36%, Assam withdrew the Rs.5 additional tax imposed during the COVID-19 crisis and West Bengal, cut VAT on petrol and diesel by Rs.1. Meghalaya gave the biggest relief by cutting  Rs 7.4 per litre on petrol and Rs 7.1 on diesel.

In Closing

Consumers that directly spend on travel have already been affected due to the high fuel prices. But the concern due to increased fuel prices now extends to other products and services as well. Food inflation has reduced in the last few months but with the transport costs increasing they too may catch the inflationary trend.

Is the government’s position justified in the current scenario? Let us what you think about the increasing fuel prices below. Cheers!  

The Gamestop and Reddit Saga Explained - Here's What You Need to Know cover

The Gamestop and Reddit Saga Explained – Here’s What You Need to Know!

Gamestop and Reddit Saga: We all had fun watching series like scam 1992. These shows make it inspiring to watch as an underdog finally sticks it up to the rich guy( aka bears in the show) and at the same time sets a warning for greed. But can this be done in real life, that too in today’s day and age? Better yet, use the same investing strategies used by the ultra-rich in order to create a transfer of power and wealth.

Something similar has happened in the US but 1000 times more inspiring. As it includes lakhs of retail investors grouping and standing up to the Wall Street. In this article, we take a closer look at the Gamestop saga, the Redditors who inspired it, who won, and obviously who lost.

What is r/WallStreetBets?

r/WallStreetBets is a community on the social media platform Reddit. The community was created in 2012 by the then 30-year-old Jamie Rogozinski. The participants in this subreddit platform would discuss stock and options trading. Although the community only had a few thousand users for several years it grew to over 1 million during the crash of 2020.

This sudden growth can be attributed to job loss during the pandemic and the majority of the population stuck at home looking for an alternative source of income.

The revolution that is talked about today started off as a simple opinion posted by one user who went by the name of DeepF#@kingValue. DeepF#@kingValue aka Keith Gills (aka dada by his 2 y.o daughter) worked as a “financial-wellness education director” for Massachusetts Mutual Life Insurance Co. He began analyzing a company called Gamestock.

Gamestock had a business model where they would sell video games through their various physical store locations. But during recent times the business had taken a hit as fewer people would visit gaming stores as most games could be downloaded. In addition to this online stores like Amazon had taken away a significant portion of their business. The pandemic on the other hand had hit them hard as they dealt only through their physical stores.

Gamestop a Good stock?

But Gill had a different opinion. His analysis brought him to the conclusion that the company was undervalued. He arrived at this after going through their financial statements observing that the company had a lot of cash and could easily pay off their debts and with some better management he believed that they could even recover.

In addition to this, he also believed that technological advances threatening Gamestop were overstated. He further backed his analysis by pulling up articles showing that the move to digital was slower. In addition to this, he also noticed that new gaming consoles were soon to be released by Sony/ Xbox could bring Gamestop back on track. He released all his analysis on Youtube under the username ‘Roaring Kitty’. Many users disagreed with him but a few Redditors saw that he did have a point. In December Gill invested $53,566 into the stock.

Surprisingly Micheal Burry, an investor on whom the movie ‘The Big Short’ is based, also believed in Gamestock and invested in the company. These two however were unrelated. But what neither of them would have predicted is that the stock would increase 26 times from its lows in December.

Bankrupting Institutional Investors for Dummies


During the same period last year, r/WallStreetBets also noticed that over 84% of the Gamestock shares were held as short positions. This is very unusual for a stock. This meant that several hedge funds had colluded to bet that the share price would fall. Sadly for Gamestock, their shares fell further when they announced that they had failed to meet their estimates.

This in turn made these hedge funds millions. They could have sold after making their initial gains but they stayed put. The stock now had a 138% max short position. This was the single most shorted name in the U.S. stock market, according to FactSet. This showed that despite the stock having such high short interest the hedge funds were still greedy and awaited the shares of the company to hit the bottom. Sadly for them and luckily for armchair investors, some Redditors caught this.

In 2019 another investor had posted a 7 point document on Reddit Titled “Bankrupting Institutional Investors for dummies, ft. Gamestop.”. Redditors pointed out that this could now be used in the stock. If they all worked together they could create something called “Short Squeeze”.

What is a Short Squeeze?

A short squeeze occurs when the price of stock rapidly increases. The Redditors planned to do so by increasing the demand for the shares by purchasing available shares. This would force those who had bet against the stock i.e., in this case, the hedge funds to abandon their short positions. In addition to this, the hedge funds in order to cover their losses would be forced to buy the shares in the market further increasing the demand and hence the price too.

The Redditors realized that the hedge funds were exposed. In addition, most of the hedge funds had borrowed money to place these bets. There could be no telling to what extent of losses that the hedge funds could incur. On the other hand, the maximum losses the individual Redditors would face is to the extent of the fall in the share price. This had the potential to severely hurt wall street.

Gamestock price increase

On Jan 11, Gamestop appointed 3 new board members. The new directors all had extensive experience in e-commerce, online marketing, finance, and strategic planning. This news gave an opening to the Reddit army. By Jan 13 the shares of Gamestop surged by as much as 94%(intraday), its highest in 5 years. The price of the shares kept increasing.

On Jan 22nd the shares once again soared by nearly 70%. The prices touched $72.88( the price was at a low of $12.72 in Dec). Most media outlets associated this unprecedented increase in the price of new members joining the company’s board.

The hedge funds however stayed put and kept denouncing the stock on platforms like Twitter. By Jan 23rd it was clear that there was an angry mob rooted in Reddit that had driven the prices of Gamestop to new heights. The criticism posted by institutional investors was not taken lightly on Twitter. Andrew Left of Citron Research was forced to end his bearish commentary on the stock after he and his family were harassed by an angry online mob. He also stated that there were attempts to hack his Twitter account.

“What Citron has experienced in the past 48 hours is nothing short of shameful and a sad commentary on the state of the investment community,” Left opened up his letter which he posted on Twitter. Left posted his letter to a new Twitter account, @CitronResearch2, because “Twitter is working through multiple hack attempts,” Left said. He also clarified that he is stopping his commentary not because his views on the company had changed but because an “angry mob who owns this stock has spent the past 48 hours committing multiple crimes,”.

Prices Skyrocket

The shares of Gamestop had increased 400% to $93. By now it was clear that the rally was fueled by individual investors, encouraging each other on social media to buy GameStop shares and options. The short squeeze that the armchair investors had fought for had arrived and hedge funds were looking for an exit strategy.

Hedge Funds were now forced to buy back the shares they had sold short which further drove the prices even higher. Gamestop buy orders outnumbered sell orders by more than four-to-one. It was now the single most traded stock in the US – its volume matched that of the five biggest tech giants combined. The shares of the company were briefly worth more than $490 on the 28th of Jan. The company had gone from being worth $200 million to more than $28 billion.

Meme Stocks

It wouldn’t be fair to say that the shares were driven by r/WallStreetBets alone. Several investor celebrities like Elon Musk, C. Palihapitiya, Cathie Wood. tweeted in favor of the stock once they realized what was happening. Their motivations could vary.

Take Elon Musk for example who tweeted only one-word Gamestonk!” — with a link to Wallstreetbets. Elon has always maintained a hate relationship with hedge funds as they have targeted Tesla stocks in the past. Conveniently for Elon, the same hedge funds are caught up in the fight against WallStreetBets.

Blockbuster

Soon other stocks too were targeted by armchair investors. These stocks soon came to be known as Meme stocks as they simply were agreed on online. This led to the bankrupt video-rental company called Blockbuster stocks to surge by 774% on 26 Jan and 302% on 27 Jan.

The company had filed for bankruptcy as early as 2010 and was subsequently destroyed by Netflix and Prime. There currently only exists one Blockbuster store today.

BlackBerry and AMC

Shares of BlackBerry Ltd. became meme stocks as they too began to rally. This was followed by shares of AMC Entertainment – a struggling movie theater chain quadrupled at the opening bell on Jan 27th. It was now clear that the WallStreetBets army was targeting Wall Street’s most shorted stocks in order to hurt the hedge funds.

The trading of these shares was halted multiple times a day due to their volatility. Shares of BlackBerry had posted gains for the seventh consecutive session. The management of the company was questioned over the sudden price increase but they told regulators they had no clue why its stock was surging. The stock of the once-popular smartphone maker has surged about 172% year-to-date.

Macerich

Another company Macerich, a real estate investment trust based in Santa Monica, was heavily hit with losses during the pandemic. The company owns 52 shopping centers across the U.S. The stock had lost 84% of its value over a three-year period ending Dec. 31, 2020, due to the shift towards online shopping. Macerich shares jumped 68% in four trading sessions thanks to r/WallStreetBets.

Cannabis Stocks

The Reddit army also targeted a series of cannabis stocks. Shares of cannabis stocks like Tilray soared 50%, Aurora Cannabis rose 20% and Aphria rose 10% on Feb 10. This however was short-lived as the shares tanked the next day as the retail investors lost momentum.

Wolfe Research began advising their institutional investor clients to avoid fighting the band of newbie day traders altogether and the stocks favored by them altogether. Yin Luo who headed the research wrote “Given the highly speculative nature of the Reddit buzz signal and retail investor behavior in general, we recommend using retail participation as a risk factor instead of an alpha signal.”

Losses suffered by hedge funds

On Jan 28th Melvin Capital and Citron finally gave up the fight against the armchair investors. Citron Research’s Andrew Left was vocal against GameStop. He predicted that GameStop shares would fall below $20. Citron Research covered its short with GameStop in the $90 range taking a 100% loss.

Melvin Capital too suffered the most losses. The company had begun the year with $12.5 billion but currently is valued at $8 billion. This recent valuation includes the emergency investment of $2.75 billion received from Citadel LLC, its partners, and Mr. Cohen’s Point72 Asset Management on Feb 1st. The company’s asset position had reached its lowest since the company’s start in 2014.

What were the profits?

DeepF#@kingValue aka Keith Gills who started the revolution had invested $53,566 in GameStop call options. He was able to turn this into $48 million. Most Redditors would say that it was well deserved as he was able to direct everyone’s attention towards Gamestop which eventually led to the shift of power in Wall Street. Keith Gill however stated that “This story is so much bigger than me … I support these retail investors, their ability to make a statement.”.

Many investors too have testified stating that it was Gill’s advocacy that helped turn them into a force powerful enough to cause big losses for established hedge funds. Reddit user reality_czech commented, “Your steady hand convinced many of us to not only buy but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny,”.

Several small investors who profited were able to pay off their student loans. Some even have decided to give back to the community by donating their earrings from the trades to charities. An inventor as young as 10 years old converted his/her investment to $3000.

Wall Street always wins!

However retail investors were not the only ones who had benefitted from Gamestop. Private Equity firm Silver lake cashed in AMC shares on Jan 31st for a $113 million gain during this week’s trading. California-based private equity firm Menlo Park sold its positions through several open-market transactions on Wednesday, raising $713 million.

AMC themselves too raised $304.8 million by selling their shares during the week. AMC Cheif Executive Adam Aron said in a statement “ …any talk of an imminent bankruptcy for AMC is completely off the table,”. AMC’s largest investor Ontario Teachers’ Pension Plan, sold its entire stake of 24.56 million Macerich shares at $20.25 each after shares soared more than 100%. Gamestop’s biggest shareholders became billionaires overnight.

Hedge funds like Senvest Management LLC, Messrs. Mashaal’s, and Gonick’s firm also made money from Gamestock shares. Investment firm Blackrock made a combined profit of $2.4 billion.

The downfall

The shift of power to the retail investors was short-lived. This was because soon various institutions began doing everything they could to limit these retail investors. Discord(social media platform) soon banned the WallStreetBets community. Facebook too banned the community group on its platform which had 157,000 members.

This however did little to stop their advance as the Reddit community grew from 5 million to 8 million in a few days.

The worst however was yet to come. Robinhood then banned the purchase of the stock. This further solidified doubts that the trading app was siding with the large hedge funds. This was ironic as the trading platform was named after a legendary outlaw who stole from the rich to give to the poor. Robinhood placed restrictions and halted the purchase of certain stocks.

The total stocks restricted amounted to 50. These included stocks like Gamestop, Nokia, Blackberry, Express, Koss, etc. Basically every stock that the WallStreetBets army had increased the price of. The restrictions include the ability to only buy one share of GameStop Corp. But the investors were still allowed to sell. This created a shift in the demand and supply of the stocks resulting in falling prices.

Investors believed that this was a means used by Wall Street cronies to cripple the individual investor. After all, Robinhood did receive funding from hedge funds like Citadel. In addition to this Robinhood also includes hedge funds in their business model. They relay information on trades made by individual investors to hedge funds. Robinhood has made $700 million by selling user data to hedge funds.

What was so far a profit motive would soon turn political? This was because it now seemed that the rich would do anything to ensure that the retail investors never win.

Papa Elon vs. Vlad the Impaler

In the midst of the turmoil, Elon Musk aka Papa Elon on Reddit made an appearance on Clubhouse along with Robinhood Co-founder and CEO Vladimir Tenev. Musk went on to grill Tenev over the restrictions put in place over retail investors by his company. Tenev went on to clarify that meme stocks had led to the app experiencing “unprecedented volume” and “load on the system.” as the net buys increased exponentially.

This led to the National Securities Clearing Corporation demanding $3 billion from the company during wee hours. This was due to the surge in trading volumes. The clearinghouses that help process and settle trades asked them for more cash to cover the transactions. Clearing firms, such as the Depository Trust & Clearing Corp., require brokerages to post more of their own money in riskier times to insure against losses. Tenev later clarified that this amount was later reduced to around $1 billion. The sequence of events also involved meme stocks being restricted.

In order to meet these cash demands, Robinhood was forced to raise more than $1 billion from its existing investors.

The Hate towards Robinhood

These restrictions placed by Robinhood affected their popularity immensely. The top free app in App stores in the US received 275,000 one-star ratings. Out of these Google removed nearly 100,000 in order to put the app back at a four-star rating. In addition, Robinhood was charged with multiple class-action by retail investors for market manipulation.

Sadly there was nothing much that these lawsuits can do as Robinhood is protected by its user agreements from potential lawsuits. The user agreement states that Robinhood “may at any time, in its sole discretion and without prior notice” prohibit or restrict users’ trades.

Billboards began to appear around the US encouraging investors to keep buying Gamestop and Redditors encouraged each other to not sell. Small protests were held in the streets and before you know it the news had reached the White House and Capitol Hill.

DeepF#@kingValue loses $13 million

DeepF#@kingValue came out and stated that he had lost $13 million but would still keep holding the shares. Gill stated that he had been holding 50,000 shares of GameStop as well as 500 call options. In the midst of all this, there were still some short-sellers who were not surrendering despite nearly $20 billion in one month. They could finally breathe a sigh of relief as the prices were made sure to fall. He also would be facing federal regulatory scrutiny for his involvement.

The employees trading app Robinhood too began expressing their unease with the events that transpired. This was expected as the app was created to support retail investors. Employees felt it went against Robinhood’s stated mission to “democratize finance” for individual investors.

Elon Musk once again came out in support of retail investors this time to back Rep. Alexandria Ocasio-Cortez spoke up against the trading restrictions placed.

AOC tweeted in part, “We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services Cmte, I’d support a hearing if necessary.”

Musk replied: “Absolutely, u can’t sell houses u don’t own, u can’t sell cars u don’t own, but u *can* sell stock u don’t own!? this is bs – shorting is a scam legal only for vestigial reasons.

The Saga during Superbowl

Meanwhile, Robinhood CEO was called to testify on Capitol Hill over allegations put forward against the company. Friday last week the restrictions placed on Gamestop were removed. During the Superbowl, viewers were subject to cringy adverts placed by Robinhood celebrating amateur investors.

A similar advert placed by Reddit was more than welcomed. The restrictions were eventually lifted which led to an initial increase in the price of Gamestop before once again falling to $51 by Feb 11.

The Trial

Reddit celebrity Keith Gill appeared at a Congressional hearing along with the CEOs of Robinhood, Citadel, and Melvin Capital on 14 Feb. In the hearing, Gill made his investment motives clear. When asked about his investments in Gamestop he replied “I do find that it’s an attractive investment at this price point,”. Gamestop was trading at $42.88 at the time.

He also went on to say that his investment in Gamestop was based on fundamentals. He also stated that “… my particular approach to investing is rather aggressive and may not be suitable for anyone else. For me personally? Yes,”.

Vlad Tenev testified prior to Gill. In his prepared testimony, he stated that “any allegation” that Robinhood was helping hedge funds by limiting trades on certain volatile stocks was “ absolutely false.” He also went on to clarify why his company was forced to limit trading on securities due to clearing house requirements and also highlighted the steps taken to ensure that this does not happen again. 

Melvin Capital founder Gabe Plotkin said that his firm was targeted by WallStreetBets in part due to anti-Semitism. 

Later that week Keith Gill posted a screenshot on Reddit showing that he had increased his Gamestop holdings. The screenshot of his brokerage account showed that he bought an additional 50,000 shares of the stock.

The Movie

Despite the ugly outcomes for all sides, the movement has inspired a movie in the making. MGM has acquired the book proposal to be titled “The Antisocial Network” from author Ben Mezrich. This book will look to tell the story of “a ragtag group of amateur investors, gamers, and internet trolls who brought Wall Street to its knees.” In addition to this MGM also has acquired the rights to a film adaptation.

Closing Thoughts

The Gamestop Saga shows how a simple quest to make profits has now turned into a political statement. One thing that is sure to happen is hedge funds will henceforth take precautions before directly engaging against meme stocks. Robinhood however has been forced to postpone its IPO in the wake of a retail investor backlash.

This grudge poses a massive risk to Robinhood as retail investors could short the stocks in an attempt to exact revenge. The biggest winner through the Gamestop saga has been Reddit whose valuation has risen to $6 billion. But when it comes to our individual investments it is always best to rely on financial metrics over online memes in the future. Happy investing!

Top Liquor Industry Stocks in India - Best liquor stocks india

Top Liquor Industry Stocks in India – Major Alcohol Companies in 2021!

List of Top Liquor Industry Stocks in India: India doesn’t rank too high on the list of countries with the highest per capita alcohol. But it is also true that Indians consume almost half of the whiskey produced in the world. This is mainly thanks to India’s huge population. India’s alcohol intake however has increased by 38% in the last 7 years.

Looking at the industry from a business perspective, we have prepared a list of the Top Liquor Industry Stocks in India. Here, we’ll discuss the top 8 alcohol players in the industry.

Top Liquor Industry Stocks in India 

1. United Spirits

United Spirits

United Spirits Limited, is the world’s second-largest spirits company by volume. The company was originally founded by Scotsman Angus McDowell in Chennai. Currently, United Spirits are headquartered in Bangalore. The company has been around for almost 2 centuries and is currently the biggest in the country with a market cap of  Rs. 40,332.08 cr. 

United Spirits produces several famous brands like Antiquity, Bagpiper, McDowell’s Royal Challenge, Signature, Black Dog, Romanov, etc. They export their products to over 37 countries. In 2013 global players began acquiring a stake in the company and currently holds a 54.8% majority stake in United Spirits.

2. United Breweries

UB Group is another alcoholic beverage giant in India. The company was founded in 1857 by Vittal Mallya. It has a 40% market share in the Indian Brewing market. They are is headquartered in  UB City, Bangalore. Although they come second in terms of size with a market cap of Rs. 32,168.85 cr they are India’s largest beer producers.

The company sells beer under the Kingfisher brand. Unfortunately, the company has faced difficulty in the recent past when its Chairman Vijay Mallya was accused of money laundering, misappropriation, and being a willful defaulter.

3. Radico Khaitan

Radico Khaitan

Radico Khaitan Ltd. (RKL) manufactures industrial alcohol, Indian Made Foreign Liquor (IMFL), and country liquor. The company has a market cap of Rs.7,409.70 cr., making it the third-largest in the Indian industry.

It was founded in 1943 by Dr. Lalit Khaitan and is headquartered in Rampur, Uttar Pradesh. Their brands include Magic Moment, 8 PM whiskey, Contessa Rum, and Old Admiral Brandy. The company sells its brands in more than 85 countries.

4. Globus Spirits

Globus Spirits

Globus Spirits Ltd. was founded in 1992 and since then has come a long way in a short period of time. The company caters to four segments i.e.  Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), IMFL Bottling, and Bulk Alcohol. It currently has a market cap of Rs.1,054.92 cr.

The company is famous in the segment of country liquor better known locally as ‘desi daru’. According to Globus, the Indian country liquor is about 242 million cases with a growth rate of about 7% per annum. Its famous brands include Officer’s Choice, White Lace, Samurai Rana Rajasthan No 1 Ghoomar Samalkha No 1, etc.

ALSO READ

10 Indian Companies with Monopoly in Their Industry!

5. GM Breweries

GM Breweries

G.M.Breweries Limited (GMBL) was set up in 1981 by Shri Jimmy William Almeida. He created the company with the aim of providing the finest quality country liquor to the common man at the lowest possible price. It is headquartered in the state of Maharashtra. GM Breweries Ltd. currently has a market cap of Rs.752.67 cr.

The company manufactures Country Liquor (CL) and Indian-made Foreign Liquor (IMFL). Its top brands include Pioneer Doctor Brandy, Pioneer Special Doctor Brandy, Hot Shot Rum, and Reporter Choice Whisky. 

6. Assoc Alcohol

Assoc Alcohol

Assoc Alcohol was set up in Calcutta in the year 1989. The company was promoted by B. P. Kedia and A. K. Kedia scions of the Kedia family. They began by producing IMIL (Indian Made Indian Liquor) and has grown over the years to also produce international brands. 

It currently has a market cap of Rs.635 cr. Since its initial stages, the company has been a leading producer to the Government of Madhya Pradesh. Its leading brands include Royal Falcon Gold Seal Jamaican Magic (rum) Karapov Vodka etc.

7. Tilaknagar Ind

Tilaknagar Ind

Tilaknagar Industries was  Founded in 1933 by Shri Mahadev L. Dahanukar. It was initially incorporated as Maharashtra Sugar Mills. It was then engaged in the manufacture of sugar and allied products. They were forced to move out of the sugar business after the 1987  Indian legislation was introduced compelling all sugar production to be managed by co-operative schemes.

The group was then called Tilaknagar in honor of Dahanukar’s friend, the independence activist Bal Gangadhar Tilak. They then entered the liquor segment.  The company today has a market cap of Rs. 373.17 cr. Its current portfolio of liquor includes brandy, whisky, vodka, gin, and rum. Its most popular brands are Madira Rum and Mansion House brandy, which are among the biggest-selling spirits in their respective categories. The company also produces Scotch whisky, ‘Seven Islands’ in collaboration with BenRiach distillery.

8. Som Distillerie

Som Distillerie

Som Distillerie was incorporated as a public limited company in 1993 by J K Arora and A K Arora. The company is currently located in Bhopal, Madhya Pradesh.  Its current portfolio of liquor includes rum, vodka, beer, gin, scotch whiskey, and other distilled and blended liquor. The company currently has a Mcap of Rs. 373.17 cr.

Its popular brands include Hunter and Woodpecker in beers, Pentagon Gold Edition Whisky, Milestone Blue and Legend Premium Whisky, White Fox Vodka, Milestone Brandy, Pentagon Rum, and Black fort Rum.

Closing Thoughts

In this article, we discussed the top Liquor Industry Stocks in India. The Indian liquor industry has kept growing in leaps and bounds. Could this be an opportunity to try these companies … at least as investments.  Let us know what you think of liquor stocks as an investment opportunity below. Cheers! 

BSE and NSE - Why are there two Stock Exchanges in India cover

BSE and NSE – Why are there two Stock Exchanges in India?

Why are there two Stock Exchanges in India Explained: Before all experienced investors pounce in stating that there are more than two exchanges let’s clarify that we are only discussing the prominent national exchanges.

Ever wondered if the BSE was already existent what was the need for NSE? In this article, we answer the question of Why are there two Stock Exchanges in India i.e. BSE and NSE. Keep Reading! 

Why are there two Stock Exchanges in India?

Why are there two Stock Exchanges in India? bse and nse

In order to understand this, it is first important to understand what the basic purpose of a stock exchange is. A common misconception is that a stock exchange is a government entity existing for the common good. Hence the question “How can there be more than one?”. The stock exchange is privately owned.

For a basic understanding of the stock exchange, we can look at them as one of our local agreed market places, where consumers find local vendors and vice versa. Similarly, a stock exchange also provides a platform where investors meet companies and other investors as well. At the end of the day, stock exchanges earn a profit too by levying charges for their services.

The Bombay Stock Exchange (BSE) too was formed with a similar purpose. It was founded by India’s first Big Bull – Premchand Roychand aka the Cotton King or the Bullion King. Roychand was one of the most influential businessmen in the 19th-century and made a fortune through stockbroking.

The story of BSE goes back to 1855 when 22 stockbrokers would meet under a banyan tree in front of Mumbai’s town hall. They would do so simply to buy and sell their securities. This made the BSE the oldest exchange in Asia. Hopefully, this makes it easier to understand why they existed in the first place. Similarly, there were other regional exchanges set up across the country. 

bse bombay stock

The group called itself “The Native Share and Stock Brokers Association”. As the numbers of brokers grew their locations changed. Finally, they moved themselves to Dalal Street in 1874. The BSE grew and eventually was recognized by the government in 1957. The BSE however stood as the sole National exchange.

Why there was a need for a New Stock Exchange?

Now when we already have a good exchange in BSE what was the need for another one?

The answer to this can be seen in any sector which is dominated for too long by one company. Imagine if there was only one bank in the world. They would eventually begin charging their consumers with exorbitant rates. The consumers too would not have any option left.

On top of that as the only bank knows that it is the only player its services provided would only deteriorate and never keep up with technological advances. Dr. Ramachandra H Patil played a very important role in setting up the NSE in his words  “Indian capital market around the early 1990s was akin to the Stone Age.”

stock exchange scam 1992

On top of that, the BSE was controlled by a group of influential and powerful brokers. One could even say that the powerful broker lobby ruled the country’s largest bourse. The exchanges were riddled with bad delivery, fake certificates, and price manipulations. This was done to benefit the powerful at the expense of small investors. On top of all this, there were several barriers for one to join the brokerage community.

To become a broker one would have to be connected, related(nephew, son, etc) to existing brokers. Or pay a membership fee that would cost up to Rs. 1 crore in the BSE way back in the 90s. In the 1980s millions of households throughout the country began investing in the equity markets. But following are some of the crises that these small investors had to suffer in the 90s.

What Nudged the Government?

Harshad Mehta Scam. This was the first Indian stock market scam and involved banks and both the stock and bond markets. The fraud was said to amount to 4000 crores. The exchange also had several other crises caused by brokers like  M. S. Shoes-1994, (share price manipulation) where the BSE had to be shut down for 3 days.

Other manipulation instances included shares of Sesa Goa, Rupangi Impex, and Magan Industries Ltd through 1994 and 1995. Out of all these the Harshad Mehta Scam however was just too big to ignore. The government finally began looking into this problem and approached several institutions like the IDBI to set-up a stock exchange.

ALSO READ

Harshad Mehta Scam- How one man deceived entire Dalal Street?

But Why did the government take so long?

According to a lecture given by Seth Shantaram Mangesh Kulkarni delivered in Mumbai and reported in the Economic and Political Weekly the Indian markets were regarded as one of the worst as it figured almost at the bottom of the league. Kulkarni too played an important role in setting up the NSE and served as its managing director and the CEO for the first seven-year.

He stated that “As we are all accustomed to finding India figuring in the bottom league in regard to so many other indicators of development such as per capita income, nutritional standards, health amenities to its citizens, literacy levels, etc, we did not seem worried that the capital market was also ranked at the bottom of the global ranking sheet.”

It did make sense for a government still battling so many issues in the country, the stock market which affected a minute percentage of the population would even be taken into consideration. Thankfully we have moved ahead in other parameters as well. And when it comes to the stock market 1992 was the final nudge that the government needed to do something.

Opposition towards a New Exchange

Opposition towards a New Exchange

(Floor Trading – BSE)

As stated earlier the government gave its support to various institutions in order to set up a modern stock exchange. This move however was met with a lot of resistance according to Kulkarni. The powerful broker community immediately opposed this move as the oppression of their fundamental right to operate a stock exchange. This move  opposed their right “to do business as they thought fit, although that may not always have been in the interests of the markets and the investor community.”

 Unfortunately for the NSE, this idea could be easily sold to commoners as historically every exchange around the world is broker-owned and managed. The move to set up another exchange was not met with enthusiasm in several influential official circles. How could a newly set up institution stand up to BSE which has been around for over a century and at the same time take on its brokers? Other exchanges throughout India opposed this move too.

why NSE was set up?

How did the NSE move ahead?

Once the NSE was set up and officially recognized in 1993 the views of the brokers shifted. They began worrying about the competitive threat posed by the NSE. Unlike the BSE where the trading took place on the floor on Dalal street, investors could now trade in real-time trading facilities from the nooks and corners of the country. When computerized trading was first implemented by the NSE the brokers looked at it with skepticism. It was assumed that as computer literacy was poor in India the idea would never take off. They however were proved wrong!

In addition to this, the NSE started picking on other limitations of BSE. They removed entry barriers that were present in order to become a broker. There was no 1 crore entrance fee. Interested parties now just had to maintain a non-interest bearing deposit. The NSE also gave importance to the settlement process. The BSE trading cycle would require 15 days for settlement. The NSE reduced this to a week. The management also played a role in the creation of National Securities and Depositories and the Clearing Corporation of India. 

Initially, the trading turnover was quite modest, often less than Rs. 10 crore a day according to Kulkarni. But this was only because their new members were testing their systems. Once they noticed that the settlements were being completed on time they began building trust. Within a year the NSE became the first exchange to cross the turnover of an already set up exchange in its own country, i.e. BSE. This forced other exchanges to update themselves and put investor demands at the forefront. They were forced to do this if they wanted to survive. 

Today the Indian markets are ranked as one of the most efficient in the world. Thanks to having two national exchanges. 

Closing Thoughts

In this article, we tried to cover Why are there two Stock Exchanges in India i.e. BSE and NSE. Hopefully, this not only explains what caused us to have multiple stock exchanges and also why they were necessary. Over time it was important for the exchanges to also reduce the possibility of scams as this would also reduce people’s trust in them. By strengthening themselves, the NSE also forced others to adopt clean business practices eventually also strengthening the authorities.

What do you think of the ploy of competition used by the government in indirectly setting up another exchange to counter the BSE and the powerful brokers? What do you think the markets would have been like if the NSE was never formed? If you have any experiences trading in the early 1990s let us know below.

Heranba Industries IPO Review 2021 cover

Heranba Industries IPO Review 2021 – IPO Price, Offer Dates & Details!

Heranba Industries IPO Review 2021: The Heranba Ind. Ltd. IPO opens on 23rd Feb and closes on 25th Feb 2021. In this article, we cover the Heranba Industries IPO Review and look into important IPO information and find out the possible prospects of the company. Let’s get started. 

Heranba Industries Review – About the Company

Heranba Industries Review - company logo

Heranba Industries Limited incorporated in 1996 is Gujarat based business engaged in the manufacturing and marketing of a range of crop protection chemicals, public health, and Animal Health solutions.

Heranba Industries Products

. Their product line also includes different types of pesticides, insecticides, fungicides, herbicides, and other pest control products. The company initially began by producing intermediate product cypermethrin acid chloride. Today the company is one of the leading domestic producers of synthetic pyrethroids like cypermethrin, deltamethrin, lambda-cyhalothrin, etc.

Their business verticals include

(a) Domestic Institutional sales of Technicals: manufacturing and selling of Technicals in bulk to domestic companies;

(b) Technicals Exports: Exports of Technicals in bulk to customers outside India;

(c) Branded Formulations: Manufacturing and selling of Formulations under their own brands through their own distribution network in India;

(d) Formulations Exports: Export of Formulations in bulk and customer-specified packaging outside India; and

(e) Public Health: Manufacturing and selling of general insect control chemicals by participating in public health tenders issued by governmental authorities and selling to pest management companies.

Heranba Industries financials

Heranba Industries Research & Development Unit

The mission of the company is to improve crop productivity and public health. They aim to provide innovative products to farmers that enhance farm efficiency and offer better crop solutions. This is achieved by its research and product development divisions. The company is well equipped with 3 of its own in-house R&D Unit for this purpose. Two of the units are recognized by the Department of Scientific and Industrial Research (DSIR).

They also have a fully equipped in-house laboratory with all the types of laboratory equipment such as HPLC, GC’s, Polarimeters, Particle size Analysers, Spectrophotometers, and other conventional lab equipment. The company’s products; Deltamethrin and Alphacypermethrin are now recommended and included in the WHO/FAO specifications. 

Heranba Industries Manufacturing Unit

This company has 3 well-equipped manufacturing units in and around Vapi, Gujarat with an aggregate manufacturing capacity of 14,024 MTPA. Heranba is a manufacturer of Synthetic Pyrethroids and its intermediates in India.

Their products are created through advanced agro-chemical solutions based on specially developed technology. The company also has a well-balanced treatment system for the solid, liquid, and gaseous effluents and emissions generated by them.

Heranba Industries revenue

Heranba Industries Domestic and Global Markets

It has a wide network of businesses in India. Domestically it caters to customers all over India with its extensive dealership, stockist network, and skilled field sales force. It has established registrations for 18 Technicals for manufacture and sale in India, 93 Technicals & Formulations for manufacture and sale in the export markets, and 167 Formulations registered for manufacturing and sale in India. The company has more than 8,600 dealers having access to 21 depots across 16 states and one union territory in India. Their products are supplied to both Government Tenders and to Pest control companies. 

The company also has performed well in the global markets. The company exports its products to more than 60 countries through international distribution partners. The countries are spread across Latin America, CIS, Middle East, Africa, Asia, and southeast Asia. For this purpose, the company also has set up a separate registration department with qualified personnel and data support to meet each country’s regulatory requirements. This has helped its products to obtain registration in many countries.

Heranba Industries eps

Heranba Industries IPO Review – Key IPO Information

Sadashiv K. Shetty and Raghuram K. Shetty are the promoters of the company. The company has appointed Emkay Global Financial Services and Batlivala & Karani Securities India are appointed as book-running lead managers. 

Important Heranba Industries IPO details

ParticularDetails
IPO Size₹625.24 Cr
Fresh Issue₹60.00 Cr
Offer For Sale(OFS)9,015,000 Eq Shares of ₹10
Opening DateFeb 23, 2021
Closing DateFeb 25, 2021
Face Value ₹10 per equity share
Price Band₹626 to ₹627
Minimum Lot Size1 (23 Shares)
Maximum Lot Size13 (299 Shares)
Listing Date:Mar 5, 2021

Equity shares of the company will be listed on the BSE and the NSE.

Heranba Industries Review – Purpose of the IPO

The IPO proceeds will be utilized for the following purposes:

  • To meet business working capital requirements. (Rs 50 crore )
  • To meet general corporate purposes.
  • To meet public issue expenses.

Closing Thoughts

The IPO opens on 23rd Feb and closes on 25th Feb 2021. For retail investors, it can be a good opportunity to look into the company’s future prospects and apply for the IPO if they believe in the products and growth prospects of  Heranba Ind. Ltd.

That’s all for this post. Do let us know what you think of Heranba Ind. Ltd. IPO Review. Are you planning to apply for this IPO or not? Comment below. Cheers!

List of Highest Paid CEOs in India

Who are the Highest Paid CEOs in India? Find out here!

List of Highest Paid CEOs in India: Leaders play a very important role in every organization. Sometimes they also manage to inspire millions around the world too. But how important are they their organization and how much are these organizations willing to pay them.

In this article, we take a look at the Highest Paid CEOs in India. You’ll be surprised as they beat Mukesh Ambani (15cr.) by crores when it comes to remunerations.

The Highest Paid CEOs in India

1. C.P. Gurnani – Rs 146.19 crores

CP Gurnani Highest Paid CEOs in India

C.P. Gurnani is the CEO of Tech Mahindra an Indian multinational technology company, providing IT and BPO services. He took home compensation of  Rs. 146.19 crore (inc. benefits and bonuses) for the year 2018. This makes him the highest-paid CEO in India.

Gurnani, a Chemical Engineer has had a career spanning 32 years during which he held leading positions in HCL Hewlett Packard Limited, Perot Systems (India) Limited, and HCL Corporation Ltd.

2. Kalanithi Maran and Kavery Kalanithi- Rs 87.50 crore each

Kalanithi Maran and Kavery Kalanithi

Also known as the “King of South India TV”, Kalanithi Maran is the President and CEO of Sun Group, Syriac and Red FM, Sun Cable Vision, and Sun Pictures. The group is headed by Maran and his wife Kavery, who holds the post of executive director in the company.

 They both took home a compensation of ₹87.50 crore which includes ex-gratia/bonus.  This makes Maran the 2nd highest paid CEO and his Kavery the highest-paid woman executive in India. 

Maran the grandson of former Tamil Nadu Chief Minister, M. Karunanidhi started the business in 1993. Their leadership has expanded the TV network to have over 32 channels that reach over 95 million households in India.

3. Pawan Munjal – Rs 80.41 crores

Pawan Munjal - Rs 80.41 crores

Pawan Munjal is the Chairman, Managing Director, and CEO of Hero Motocorp. He took home a compensation of Rs. 80.41 crores in the financial year 2019. This made him one of the highest-paid CEOs in India. Son of Brigman Lal Mangal joined Hero Honda Motors in the early 1980s as director and took over as MD in 2001. He has been key for the growth, strategic planning, and transition of the group from Hero Honda to Hero Motocorp in 2011.

Pawan Munjal also heads several Committees of CCI, he’s part of the board of IIM, Lucknow, and also a member of the  World Economic Forum.

4. N. Chandrasekaran – Rs. 65.52 crores

N. Chandrasekaran - Rs. 65.52 crores

Natarajan Chandrasekaran is the chairman of Tata Sons. He was appointed as the CEO of Tata Consultancy Services (TCS) in 2009.  He took home a salary of Rs. 65.52 crores in the Financial Year 2019.

Before serving as the chairman Chandrasekaran was also appointed as COO of TCS, chairman of Tata Motors, and Tata Global Beverages. He also was one of Tata’s youngest and the first non-Parsi CEO to take office in 2009. 

5. S N Subrahmanyan – Rs. 48.45 crores

S N Subrahmanyan - Rs. 48.45 crores

Sekharipuram Narayanan Subrahmanyan is the CEO & Managing Director of Larsen & Toubro. He had a pay package of Rs. 48.45 crores for the year 2019.

He received a bachelor’s in Civil Engineering and also has an MBA from Symbiosis and was part of an Executive Management Programme from the London Business School. He joined the company in 1984 after completing his education and has worked with them for 33 years before he was appointed CEO in 2017.

6. Salil Parekh – Rs 34.27 cores

Salil Parekh - Rs 34.27 cores

Salil Parekh is the CEO of India’s second-largest  IT company. He took home compensation of  Rs. 34.27 crore (inc. benefits and bonuses) for the fiscal year 2019-20.

Before joining Infosys Parekh also worked for E&Y and served on the board for Capgemini. He was appointed CEO of Infosys in 2015 and was responsible for overseeing a business cluster comprising Application Services and Cloud Infrastructure Services among others.

7. Rajiv Bajaj – Rs. 32.31 crores

Rajiv Bajaj - Rs. 32.31 crores

Rajiv Bajaj has been the managing director of Bajaj Auto since 2005. He took home a remuneration of Rs. 32.31 crores in 2019. He joined his family business after completing his studies as an engineer. 

Vivek Bajaj is credited with reviving the ailing business. He also was responsible for introducing the Pulsar range of motorcycles into the Indian markets.

8. Sunil Mittal – Rs. 31 crores

Sunil Mittal - Rs. 31 crores

Sunil Mittal is the founder and chairperson of Bharti Enterprises. He had a pay package of Rs. 31 crores for the financial year 2019. He was the son of MP Sat Paul Mittal. He founded his first company at the age of 18 with an investment of RS. 20,000.

Today he owns Bharti enterprise which has diversified interests in telecom, insurance, real estate, education, malls, hospitality, Agri, and food among other ventures.

9. Guenter Betschek – Rs 26.29 crores

Guenter Betschek - Rs 26.29 crores

Guenter Butschek is the CEO and Managing Director of Tata Motors worldwide till Jan 2021. He took home a package of Rs. 26.29 crores for the year 2019. This made him one of the highest-paid employees in India. The German worked with Daimler AG for 25 years and served as the COO of Airbus before being appointed as CEO for Tata motors.  

10. Venu Srinivasan – Rs. 23.77 crores

Venu Srinivasan - Rs. 23.77 crores

Venu Srinivasan is the Chairman of TVS Group. He took home a package of Rs. 23.77 crores for the financial year 2019. He has come a long way as he started his career as a mechanic in his own garage during vacations. He completed his education as an engineer and also received an MBA from Purdue University (USA). 

Closing Thoughts 

In this article, we looked into the profiles of Highest Paid CEOs in India. This list clears those huge responsibilities also come huge paychecks.  An average salaried employee would have to work for months for what they make in an hour. This makes the post all the more lucrative.

Let us know what you think about the list and also about your aspirations to be on it!

Sensex at 52,000 - Here's How it Grew from 100 to 52k Points cover

Sensex at 52,000 – Here’s How it Grew from 100 to 52k Points!

Sensex Growth Timeline From 100 to 52000 Points: Today in the opening session of Indian stock market, Sensex opened at 52,455.82 points. In fact it’s only under 15 days since it crossed the 50k mark. The Indian stock market benchmark BSE Sensex index made a glorious history on 3rd February when it ended up over the 50,000 points mark for the first time.

In this article, we try to relive the 41-year journey of the Index which has handsomely rewarded investors who remained for the long term. Let us see if you can keep up with the number of times the Sensex has rebounded.

sensex 52k

The Sensex Timeline to 52,000 points

1986: Sensex launched

The Sensex was launched in 1986, making it the oldest stock index in India. It was launched at a base value of 100 with the base year set at 1978-79. The term ‘Sensex’ was coined by Deepak Mohoni. It was derived from the words sensitivity and index. On launch, the Sensex was calculated using the market-capitalization-weighted methodology. It consisted of the 30 largest and most actively traded stocks on the BSE. Some of the stocks which were on the Sensex in 1986 and still remain are Hindalco Industries Ltd, ITC LTD, Mahindra and Mahindra Ltd, Reliance Industries Ltd, Tata Steel Ltd, Nestle India Ltd. 

It also included other stocks like ACC Ltd, Crompton Greaves Consumer Electricals Ltd, GlaxoSmithKline Pharma Ltd, Grasim Industries Ltd, and Bombay Dyeing and Manufacturing Co. in 1986.

bse launches sensex

1990: Sensex crosses 1,000 points

The Sensex reached its first milestone of 1000 points on July 25, 1990. It took the Sensex  2,289 sessions to achieve this feat. 

1991, May: Rajiv Gandhi assassinated and BOP crisis

May- Rajiv Gandhi assassinated and BOP crisis

Unfortunately despite touching the milestone the Sensex stood at 999 on January 1, 1991. What followed was one of the darkest periods in Indian history when our Prime Minister Rajiv Gandhi was assassinated. This coupled with the balance of payments (BoP) crisis India was facing further hindered the benchmark’s growth in 1991.

1991, July: Liberalisation of the Indian Economy

1991, July: Liberalisation of the Indian Economy

On 24 July 1991, FM Manmohan Singh presented the budget and along with that introduced a set of reforms that opened up the Indian economy to the rest of the world. These bold moves were taken in the wake of the balance of payments crisis and double-digit inflation. It is from here onwards that the Sensex rally began. Within 2 months the Sensex had rallied by 29% from 1,488 to 1,916 pts. 

1992: Harshad Mehta Bull run and Scam

1992: Harshad Mehta Bull run and Scam

 Not even a year since liberalization the Indian markets would be shocked by one of India’s first financial frauds. Stock trader Harshad Mehta had managed to manipulate the markets into a bull run which touched a record high of 4,467 points by April 1992. This scam was worth Rs. 24,000 crores today. Once the fraud was exposed the markets crashed 43%. The Sensex reached 2595 points by August.

ALSO READ:

Harshad Mehta Scam- How one man deceived entire Dalal Street?

1993: Mumbai Blasts – BSE targeted

Mumbai Blasts - BSE targeted

The city of Mumbai was targeted in a series of multiple blasts on  March 12, 1993. One of the targets was the BSE building on Dalal Street. The attack affected the routine trading of the market. The Sensex loomed in between  2,300-2,400 points this year.

1999 July: Kargil War and the Dotcom bull run

1999 July: Kargil War and the Dotcom bull run

India fought the Kargil War against Pakistan for 3 months. This reduced the foreign investment into Indian markets which further resulted in a dip in the Indian markets. Thanks to the Indian armed forces we defended the region successfully. 

1999 Oct: Sensex crosses 5,000 points

1999 Oct: Sensex crosses 5000 points

Sensex touched 5,000 for the first time. This was fuelled by the National Democratic Alliance winning the election and Atal Bihari Vajpayee continuing as the Prime Minister signaling a stable government.

It was followed by the dot-com bull run. This was driven by internet-related companies and technology (IT) stocks.

2001: Ketan Parekh Scam, Natural Disasters and 9/11

Ketan Parekh Scam, Natural Disasters and 9/11

2001 was yet another bad year for the stock markets. The Ketan Parekh scam has been uncovered. Ketan Parekh was a student of Harshad Mehta.  In addition to the scam, India suffered from the Gujarat earthquake and was further hurt as US markets were affected by the 9/11 terrorist attacks. The benchmark fell below 5000 points and ended the year at 3,262.33.

ALSO READ

Ketan Parekh Scam – The Infamous Stock Market Fraud!

2003: Change in the Index calculation method

The Sensex originally calculated using the market-capitalization-weighted methodology. From this year the Sensex began calculating based on the free-float capitalization method.

2004: NDA govt. falls

The NDA government unexpectedly lost the election. The UPA government won the  Lok Sabha elections and appointed Manmohan Singh as the new prime minister. The Senex declined nearly 16% post the result but rebounded and ended the year at 6,602.69 points.

2006: Sensex Crosses 10,000 

The Sensex crossed 10,000 points in 2006 due to a boom in commodity prices in the global markets.

2007: Sensex crosses 20,000 points

The Sensex crossed 20,000 points due to the increased liquidity in the global market.

2008: Recession

Global markets around the world crashed during the financial crisis of 2008. The Indian markets fell as foreign investors pulled out due to the crisis in their domestic markets. This was followed by the 2008 Mumbai terror attacks (26/11)  This caused the Sensex to crash by over 50% from 21,000 points to 9,000 by the end of the year. This was the benchmark’s biggest fall since 1992. 

2009: Satyam Scam

The Indian markets were once again hit by another scam. The Satyam scam came out in 2009 when CEO B Ramalinga Raju confessed to manipulating a company’s accounts to the tune of nearly Rs 7,100 crore. This came at the worst time as the markets were still struggling to recover from the 2008 Financial crisis.

2009, May: UPA wins 2nd term

The UPA winning the second time signaled stability in the Indian markets. The Sensex saw its biggest inter-day gain on May 18, 2009. For the first time trading was halted due to the markets hitting the upper circuit limit. 

2010-12: Commonwealth and 2G Scam

The Indian markets don’t seem to be getting a break from scams. Late 2010 and 2011, scams were uncovered in the 2G spectrum sales and commonwealth games hosted in India. This further hurt the Indian market’s recovery from the financial crisis. Sensex fell 10.5% to 17404.20 in 2012 from 19,445.22 in 2011.

 2014: NDA Wins Elections

 2014: NDA Wins Elections

The Sensex touched 25,000 following the NDA government winning the Lok Sabha elections. Narendra Modi was elected as the new Prime Minister.

2016: Demonetization

In a surprising move, the NDA government announced the demonetization of all ₹500 and ₹1,000 banknotes. This resulted in the Sensex falling  4.57% month-on-month and ended at 26,652.81 points.

2017: GST Implemented

FM Arun Jaitley announced the implementation of the goods and services tax (GST). Its introduction replaced indirect taxes with a unified tax structure. The Sensex gained by over 10% by the end of the year above 34,000 points.

2018: PNB and IL&FS crisis

Indias on and off relationship with scams continued as it was hit by 2 financial scams. The Punjab National Bank scam was uncovered in  February and the Infrastructure Leasing & Financial Services (IL&FS) scam was uncovered in September. Despite the scams, the  Sensex grew by 5.91%  and ended 2018 at 36,068.33.

2019: NDA wins the 2nd term.

The NDA won the second time in a row continuing with Narendra Modi as Prime Minister. The positive sentiment that followed pushed the Sensex to touch 40,000.

2020: COVID-19

The Sensex fell to 25,638.90 after PM Narendra Modi announced a nationwide lockdown to curb the spread of coronavirus on March 24. The Sensex lost around 40% from its peak in mid-January. As the cases rose the Sensex kept getting further punished. 

The subsequent re-opening post the lockdown, coupled with stimulus and potential of a vaccine saw the markets rebound and end at 47,751 points. Surprisingly still making positive gains despite covid-19.

2021, Feb: Sensex Crosses 50,000

The markets were volatile prior to the Budget presentation. But continued the winning streak post the budget and touched 50,000 points for the first time. A great comeback since its March lows of 25,638 points. 

“Sensex touching 50,000 in 2021 is like an Indian cricket team winning a Test series in Australia against all odds. While economic data is about the past which is improving month on month, Sensex is reflecting the positivity about the future.”“Nilesh Shah, Group President- MD, Kotak Mahindra AMC. 

Sensex journey to 50000 by trade brains

Closing Thoughts

Since recovering from the COVID-19 scare the markets keep scaling new heights. The Sensex ended at 52,154 points as of Feb 15 and shows no sign of slowing down. These bearish markets also helped the market capitalization (m-cap) of BSE listed companies to cross the Rs 200 lakh crore mark. 

Happy Investing! See you at the 60,000 mark.

what is Cigar Butt Investing cover

What is Cigar Butt Investing? And How Does it Work?

An overview to Cigar Butt Investing: Warren Edward Buffett goes down in history as one of the greatest investors. He can also be credited for popularising value investing which also turned him into a billionaire and also an investment guru. But did the same strategy make him a millionnaire as well? The answer is ‘No’.

Today we look at the approach Warren Buffett adopted in his early years popularly known as the Cigar Butt Investing.

What is the Cigar Butt Investing approach?

A person who does not have any money would go around picking discarded cigars on the street to enjoy a few puffs which would cost him nothing. Cigar butt investing too runs along the same lines. In Warren Buffetts’ words “Cigar Butt approach to investing is where you try and find a really kind of pathetic company but it sells so cheap that you think there is one good puff left in it”.” Though the stub might be ugly and soggy”, the bargain purchase would make “ the puff all free”. 

Warren Buffett, however, adopted the approach from his mentor Benjamin Grahan, “ The father of value investing”. Graham, however, gave it a more respectable name i.e. the Net-Net approach or Deep Value investing.

In this approach the companies picked are those that are in their final stages. But a final surge in the prices occurs which is the free puff which allows you to take a puff i.e profit and discard the Cigar Butt i.e. sell the stock.

[Our net stocks strategy] gave such good results for us over a forty-year period of decision making that we eventually renounced all other common-stock choices based on the regular common stock procedures, and concentrated on these ‘sub-asset stocks.’ ” – Benjamin Graham

Benjamin Graham started out with the Cigar Butt approach during the onset of the great depression. During this time the shares of companies would trade at very low prices. At this point, the fact that the companies were making no profit did not matter as you could buy the companies for less than their net liquidating value. One would get both the Goodwill and factory for nothing like the discarded cigar. 

Benjamin Graham unlike Warren Buffett believed that the past and the present were more important than the future. He also did not believe in giving the management of a company added weightage over the company’s value and hence came the Cigar Butt approach.

How to know if the discarded Cigar has a puff left?

Differentiating a Cigar Butt with the last puff from waste can be done by calculating the Net Current Asset Value (NCAV).

NCAV Formula

Benjamin Graham criterion for a Cigar Butt approach was to buy stocks that traded at below 2/3rd of the company’s NCAV. Hence even if the stock price returns to the NCAV, it would result in at least a 50% gain.

But what if the shares do not rise at all?

In a situation where the prices do not increase, the next step would be to keep buying the shares at the reduced value. This is done in order to increase ownership and finally liquidate the company. Here, after the debts are paid off the remaining amount would be paid off to shareholders which as calculated in NCAV would result in a profit as the shares were bought below NCAV. 

The downside to this approach

It is important to note that even though Warren Buffett started off with this approach unlike his guru he gave it up. In “ Mistake of the first 25 years” in the annual letters he said that although the Cigar Butt strategy was rewarding, buying businesses with such kind of approach was foolish (unless you were a liquidator). Let’s go through the reason why this may be so.

1. Never is there just one cockroach in the kitchen

Often there is not just one but a couple of reasons due to which a company is on the verge of winding of up. And even though when we think the problem is solved another one surfaces. 

2. Time is the friend of a good business and the enemy of the mediocre

The Cigar Butt approach is dependant on a temporary spike in the price or liquidation that may never occur. Say you purchase shares at Rs.60 and later are able to recover Rs. 100 from the sale or through liquidation. But if it takes you 10 years till you are able to get this return the investment would be poor. Also, there is a good possibility that during the course the company does everything to ensure business continuity. This may include the spending of its current assets or increasing the debt. Both would result in deteriorated NCAV. And also a waste of time as the shares even though bought below NCAV would reap higher returns elsewhere. 

“ It is not much fun to buy a business where you really hope this sucker liquidates before it goes broke.” – Charlie Munger

Closing Thoughts

It is noteworthy that even though Warren Buffett stopped using the Cigarette Butt investment strategy he considers his purchase of Berkshire Hathaway a Cigar Butt. Warren Buffett regardless did not continue with this approach.

Unlike Benjamin Graham, Warren Buffett also gave importance to future prospects, growth potential, and management. As per the approach later adopted instead of us looking around for Cigar Butts it is better to look for unsmoked discarded cigars i.e. companies with high quality (good management and good prospect) that trade at below their intrinsic value. And then enjoy the next two hours patiently smoking through the cigar. I.e. holding the shares for a long period of time and reaping huge rewards.

Nureca IPO Review 2021 - IPO Price, Offer Dates & Details!

Nureca IPO Review 2021 – IPO Price, Offer Dates & Details!

Nureca IPO Review 2021: The Nureca IPO opens on 15th Feb and closes on 17th Feb 2021. In this article, we cover the Nureca IPO Review and look into important IPO information and find out the possible prospects of the company. Let’s get started. 

Nureca IPO Review – About the Company 

Nureca IPO Review - About the Company 

Founded in 2016, Nureca Ltd. is engaged in the distribution of healthcare and wellness products. Nureca which sells its products through the brand – Dr. Trust, Trumom, and Dr. Physio, was the first company to sell such products online through its website dr.trust.in.

The company aims to offer the best Premium quality healthcare and wellness products. It also believes in innovation and catering new products to the ever-growing Indian healthcare needs.

Nureca IPO Review - About the Company 

Nureca has a diverse product line that includes:

  • Chronic Device Products – blood pressure monitors, pulse oximeters, thermometers, nebulizers, self-monitoring glucose devices, humidifiers, and steamers.
  • Orthopedic Products – wheelchairs, walkers, lumbar and tailbone supports, and physiotherapy electric massagers.
  • Mother and Child Products – breast pumps, bottle sterilizers, bottle warmers, car seats, and baby carrycots.
  • Nutrition Supplements – fish oil, multivitamins, probiotics, biotin, apple cider, and vinegar.
  • Lifestyle Products – smart scales, aroma diffusers, and fitness tracker.

Dr trust Nureca

Over the years the company has built a strong online presence and uses this channel to sell its products to retailers, and other distributor and retail players. The company also sells its products directly to consumers through its website.

In 2019, Nureca partnered with Tata Group’s Croma to become the first company to sell healthcare and wellness products in their retail stores. Its current market includes India and its neighboring countries.

Nureca IPO Review financials

Abhay Doshi, the founder of UnlistedArena.com associated the impressive growth in sales in the first six months of FY21 to the fear of the COVID-19 pandemic and patients avoiding visiting hospitals and clinics which led to an increase in sales. He also stated that as the situation normalizes the growth trajectory will return to its previous growth trajectory.

The health market in India and its neighboring countries stood at Rs.20,757 crore in 2019 and is expected to grow to Rs.38,920 crore by 2025 at a CAGR of 11.0%.  This growth will be driven by rising awareness of Health and wellness, increasing spending power, the growing burden of chronic diseases, and the need for Healthcare stakeholders to reduce healthcare costs.

Nureca IPO Review financials

Nureca IPO Review – Key IPO Information

Saurabh Goyal is the promoter of the company. It has appointed ITI Capital as the sole book-running lead manager to the issue. 

Important Nureca Ltd. IPO details

ParticularDetails
IPO Size₹100.00 Cr
Offer For Sale(OFS)-
Opening DateFeb 15, 2021
Closing DateFeb 17, 2021
Face Value₹10 per equity share
Price Band₹396 to ₹400 per equity share
Lot Size35 Shares
Minimum Lot Size1(35 shares - ₹14,000)
Maximum Lot Size14 (490 shares- ₹196,000)

Nureca Ltd IPO Review – Purpose of the IPO

The IPO proceeds will be utilized for the following purposes:

  • To meet the working capital requirements of the business.
  • To meet general corporate purposes.

The company also expects to enhance its visibility and brand image among existing and potential customers through the IPO

Closing Thoughts

Nureca Ltd that sells its products through the brand – Dr. Trust, Trumom, and Dr. Physio, aims to offer the best Premium quality healthcare and wellness products. The IPO opens on 15th Feb and closes on 17th Feb 2021. For retail investors, it can be a good opportunity to look into the company’s future prospects and apply for the IPO if they believe in the products and services offered by Nureca.

That’s all for this post. Do let us know what do you think of Nureca Ltd IPO Review. Are you planning to apply for this IPO or not? Comment below. Cheers!

neo banks - What are Neo banks And what is its future in India!!

What are Neo banks? And What is its Future in India!!

Everything to Know About What are Neo banks And what is its future: Technology is taking over! Every company today faces one of the biggest threats of keeping up with technology or being branded as outdated. The same goes for traditional banks.

In this article, we discuss the new tech-savvy type of banks called Neobanks and their possible role in our banking environment. Here, we’ll cover exactly what are Neo banks and how are they changing the financial systems. Let’s get started.

What are Neo banks?

A Neo bank is a 100% digital bank that operates only through online platforms and apps without having any physical branches like traditional banks. These banks attract customers who are tech-savvy and prefer managing their money through apps.

Neo banks are more flexible, inclusive, and accessible in comparison to traditional banks. Neo Bank services are usually limited compared to traditional banks to

  • Saving and checking account,
  • Payment and transfer of money and
  • Financial educational products

What are Neo banks?

How does Neo Banks function?

Neo banks function differently than a traditional bank. These banks are customer-oriented with technology playing a major role in helping them achieve this. But this also means that several traditional means of revenue are no longer available to these banks. One of the revenue means through which Neo Banks maintain profitability is its subscriptions.

The business model allows Neo banks to provide customer-tailored requirements. This allows them to charge a subscription fee or a premium for various additional and advanced services. 

Another means through which Neo banks could boost their profits in the future is if they increase their lending to customers. This however involves increased risk and could involve several challenges. Currently one of the most attractive models for Neo banks is offering their service to established financial institutions.

Partnering with traditional banks allows them a way around the restrictions placed by the RBI. Neo banks here provide back-end digital services to traditional banks. The near future could also see several acquisitions made by traditional banks of Neo banks.

How do Neo Banks operate in India?

As a customer, a Neo bank may only seem like an app that stores and facilitates the transfer of funds. But these offerings are limited in India in comparison to traditional banks. In India, Neo banks are not allowed to hold customer deposits as the RBI still requires a physical presence as per its 2014 guidelines. This forces Neo banks to partner with traditional banks. 

Despite this, in the last year, we have seen several Neo banks thriving in the country. This can be attributed to a major shift due to the pandemic forcing digitization of services. Neobanks are further attractive in these aspects as they incur lower overheads further encouraging traditional banks to keep up. They are cost-effective as their operations do not require any costs related to a bank’s physical presence. This allows them to cut fees and expand services.

Different Neo Banks in India

  • Walrus Club

Walrus logo

  • Niyo

Niyo Logo

  • InstantPay

InstantPay logo

  • RazorPayX

RazorPayX logo

Advantages of Neo Banks

Following are some of the advantages over traditional banks:

1. Low Cost

Functioning as a Neo bank removes any costs associated with branches and staff associated with running these branches. These also allow these banks to offer other benefits to customers like higher interest rates and fewer fees. In addition, these banks around the world do not even offer credit facilities which reduce the risk with which these banks function and further drives down their costs.

2. Convenient

Neo Banks allows us to access the banking services without having to go through the hassle of visiting a physical branch. These banks also at times provide debit cards in order to suit the preference and make it more convenient for their customers. 

3. Reduced Processing time

Neo banks processing time

Neo banks allow users to skip the various time-consuming processes. In an episode of Fintech Podcast Founder of Built for Mars, Peter Ramsey experimented with opening bank accounts with different banks in the UK. The results are shown above in the number of working days taken to open a bank account.

Unsurprisingly the list includes several NeoBanks outperforming traditional banks.

Disadvantages of Neo banks

This new style of banking won’t be attractive to all mainly due to the following reasons: 

1. No Physical Branches

This is one of the biggest challenges which these banks would face in India if regulators approved their independent presence. The majority of Indians prefer speaking to someone from the bank for their transactions face to face. This allows them to build trust with the respective bank. This is completely absent in the Neo bank model.

2. Only Tech Savvy customers

Since Neo banks mainly operate through online platforms and apps, they reduce their customer base to only those who are tech-savvy. This wipes out a major portion of the market who aren’t comfortable using banking services through apps and online platforms.

3. Less Regulated

These digital are less regulated and are not even considered fully functional banks in India. This also means they are allowed to offer fewer services. This further reduces a potential customer’s trust in them.

Neo banks and Budget 2021

Although a significant focus of the budget was placed on restructuring the ailing banking sector, the FM has also created room for Fintech growth in the near future. The FM announced the allocation of RS.1500 to boost digital payments. This recognizes the growth of fintech firms which also includes Neo banks in the last 5 years and also their potential.

This will further lead to increased adoption of digital payments. In addition to this, the FM also announced the move to set up GIFT City (Gujarat International Finance Tec-City). This further recognizes the importance of fintech like these digital Banks in the banking sector and the need for Fintech hubs throughout the country.

Closing Thoughts – Future of Neo banks

The future of a fully-fledged Neo bank seems steep. This is because it would involve several changes made to the regulation put in place by the RBI in order to recognize them with a banking license.

The next challenge would be gaining trust in an environment where clients find it hard to trust traditional banks as they too have been increasingly failing in the recent past. But their introduction would eradicate several barriers. The first being the physical and geographical challenges. The Indian population still remains severely under banked. These digital banks would lead to a rise in inclusion throughout the country to all areas with internet connectivity.

It is already evident that traditional big banks have realized the importance of Neo banks. This is primarily because Neo banks have exploited the cracks in a traditional banking system. This has forced them to develop partnerships with Neo banks as customers demand faster and better services online.

This demand from customers has only intensified during the Covid-19 era which promotes lesser contact. Further, the online segment offers huge growth prospects to a traditional-Neo partnership. So one can expect to see a greater role played by Neo banks in the near future. 

MRP Agro IPO Review - IPO Price, Offer Dates & Details! cover

MRP Agro IPO Review – IPO Price, Offer Dates & Details!

MRP Agro IPO Review 2021: With the Indian markets at an all-time high with the BSE crossing a market capitalization of Rs. 200 lakh crore we review another IPO set to be launched next week.

In this article, we cover the MRP Agro Ltd. Review and look into important IPO information and find out the possible prospects of the company. The IPO opens on 8th Feb 2021 and closes on Feb 10, 2021. Let’s get started. 

MRP Agro IPO Review – About the Company

The Company was incorporated on April 13, 2018, as MRP Agro Private Limited. The name was later changed to “MRP Agro Limited” through a special resolution passed by the Shareholders in an Extra-Ordinary General Meeting held on August 27, 2020. The company is primarily engaged in trading and import/export of food grains, fly-ash, and coal products.

The business follows B2B (Business to Business) Model, in which it purchases products from the domestic market in bulk through auctions and sells it to wholesalers. Over the last few years, the company has built a strong market for the purchase of such products domestically and an extensive distribution network for supply to its consumers.

MRP Agro IPO Review - About the Company

The company has a local mandi license to purchase food grains from the local market of Tikamgarh, Madhya Pradesh. The company is also a registered dealer with the Department of Mines & Geology, Government of Jharkhand to buy coal. Sales and marketing play a key role in ensuring that the corporate and product brands communicate and reach out to the customers in the proper way.

Due to this, the company ensures compliance with quality standards. The company also regularly communicates with the consumer on various platforms to increase awareness of our products.

 

 

MRP Agro IPO Review - About the Company financials

( Total Assets – in lakhs)

Financials: The company has produced great profits in the first half of FY21 in comparison to F19 and FY20. 

The company also issued rights shares at a price of Rs. 25 and Rs. 26.64 between October 2019 and May 2020. It has also issued bonus shares in the ratio of 4 for 10 in September 2020.

MRP Agro IPO Review – Key IPO Information

Beeline Broking Ltd. is the lead manager of the issue.  Skyline Financial Services Pvt. Ltd. is the registrar of the issue and Nikunj Stock Brokers Ltd. is acting as a Market Maker.

MRP Agro IPO Review - About the Company shareholding

Mr. Manish Kumar Jain, Mrs. Raksha Jain, and Manish Kumar Jain HUF are the company promoters. They bring with them extensive industry experience.  Mr. Manish Kumar Jain the  Chairman and Managing Director of the company has 10 years of experience in the trading industry. Together they have been instrumental towards the company.

ParticularDetails
IPO Size₹3.24 Cr
Fresh Issue₹3.24 Cr
Offer For Sale(OFS)-
Opening DateFeb 8, 2021
Closing DateFeb 10, 2021
Face Value ₹10 per equity share
Price Band₹40 per equity share
Minimum Lot Size1 Lot (3000 shares - Rs. 120,000)
Maximum Lot Size1 Lot (3000 shares - Rs. 120,000)

Post issue, MAL’s current paid-up equity capital of Rs. 2.17 cr. will stand enhanced to Rs. 2.98 cr. With this IPO, the company is looking for a market cap of Rs. 11.92 cr.

MRP Agro IPO Review – Purpose of the IPO

The key objects of the MRP Agro IPO are as follows:

  • To meet working capital requirements (Rs. 2.50 cr.).
  • To meet general corporate purposes  (Rs. 0.53 cr.).
  • To meet the issue expenditure. (Rs. 0.21cr.).

Closing Thoughts 

The MRP Agro IPO is a rare SME IPO in recent times. Despite SMEs’ having great growth prospects and the ability to scale investors must keep in mind that the market includes big players and is extremely competitive with the company still being in its nascent stages.

That’s all for this post. Do let us know what do you think of MRP Agro IPO Review. Are you planning to apply for this IPO or not? Comment below. Cheers!!

Frequently Asked Questions (FAQs) about IPOs

Frequently Asked Questions (FAQs) about IPOs

IPOs have always been popular and bring a lot of excitement to the markets. We have a number of IPOs lined up for the Indian markets this year. It almost seems as if we’re making up for all the lost time. In order to help investors in their understanding of IPOs, we have compiled a list of Frequently Asked Questions (FAQs) about IPOS’s:

1. What is an IPO?

An Initial Public Offer refers to the process where a company offers its shares to the public. In an IPO, the company offers shares to investors in exchange for capital. This is one of the means through which the company raises funds. Any company that fulfills the requirements of the SEBI can go public.

2. Do Companies list on stock exchanges without an IPO?

Yes. Companies can get listed on an exchange without an IPO as long as they meet the conditions set by SEBI.

3. What are the opening and closing dates?

It is between these dates that investors are allowed to apply for the IPO.

4. What is the price band?

This refers to the lower and upper limit of the share price within which the company will offer its shares to the public. The investors are allowed to bid equal to or in between these lower and upper limits.

5. What is ‘Market Lot Size’ (Minimum and Maximum)?

In an IPO the total shares offered to the public is divided into lots. In an IPO the investors are not allowed to purchase shares of any quantity. They have to do it in lots. In addition, a minimum and maximum lot size is set beforehand. For eg. say Company A going public sets a lot size of 10 shares for each lot with a minimum and maximum lot purchase set at 1 and 10 respectively. This basically means that the minimum number of shares an investor can purchase is 10 and the maximum a 100. If an investor wants 65 shares he will not be able to do so. But he can purchase 6 lots which is the closest denomination. This is one of most Frequently Asked Questions (FAQs) about IPOs

6. Does applying for an IPO guarantee investors a certain amount of shares?

  No. Applying for shares does not guarantee allotment. Applying for shares means that you are bidding for the shares. The allotment depends on the number of bids received and the price at which these bids are made. 

7. What is the life cycle of IPO?

The IPO process includes the following steps

  1. The company approaches and appoints investment banks to act as the lead managers and registrar to the IPO issue. They then register with the SEC
  2. The lead managers prepare a draft prospectus for the IPO and file the prospectus with the SEBI.
  3. The SEBI reviews and approves the prospectus. If any changes are required they revert back to the company for the changes to be made.
  4. The lead managers bring attention to the IPO.
  5. The company along with the lead managers price the IPO and release dates for the issue.
  6. The IPO is opened for public bidding.
  7. Registrar processes IPO applications allocated them to respective DEMAT accounts and processes refunds.
  8. Shares are listed on the stock exchange.

8. What are the primary & secondary markets?

The primary market is the part of the capital market where securities are first created and sold to investors. This market deals with IPO’s. 

Secondary markets refer to the part of the capital market where they buy and sell securities which they already own. Shares can only be sold and bought here-after the listing of the company opting for IPO takes place.

9. What is Follow on public offering (FPO)?

A Follow on Public Offering(FPO) refers to when the company opts to offer shares to the public when it has already issued shares in an IPO in the past. 

10. Who decides the date of the issue?

The most appropriate offering dates are decided by the company after their prospectus is approved by SEBI.

11. How many days will an IPO remain open for the public?

An IPO remains open for at least 3 working days, but not more than 10 working days.

12. What is the listing date?

IPO listing refers to the date when the shares will begin trading at the stock exchanges.

13. What is the role of the registrar of an IPO?

The registrar is appointed by the company. They are responsible for processing IPO applications and allocating the shares to the applicants. They also process refunds or transfer of shares to Demat accounts of IPO applicants. All this is done in accordance with SEBI guidelines.

14. What is the role of Lead Managers in an IPO?

These lead managers or underwriters are independent financial institutions appointed by the company. They are responsible for coordinating all the activities surrounding the issue. The activities include getting attention towards the IPO, creating draft documents, getting the draft approved by the SEBI, etc.

15. What is the difference between the Book Building Issue and the Fixed Price Issue?

These are methods through which the issue price is set in an IPO

In the Fixed Price Issue, the company fixes a price at which the shares are offered to the investors. 

In the Book Building issue, the price band is set by the company. The investors then place their bids equal to or above the floor of the price. These bids are then sent to the lead manager who enters the bids in the book. This method helps in efficiently setting the price.

16. What is the difference between Floor Price and Cut-Off Price?

The floor price is the minimum price at which bids can be made.

The cut-off price is the offer price that is finalized by the company and the lead manager after receiving the bids. This can be any price in between the price band.

17. What is the difference between RII, NII, QIB, and Anchor Investor?

RII: Retail Institutional Investor refers to investors who apply for stocks below the value of Rs.200,000.

NII: Non-Institutional Investors refer to Investors who apply for more than Rs 2 lakhs worth of IPO shares.

QIB: SEBI has defined a Qualified Institutional Buyer as Institutional investors who are generally perceived to possess the expertise and the financial muscle to evaluate and invest in the capital markets. These include Public financial institutions, commercial banks, mutual funds, and Foreign Portfolio Investors, etc.

Anchor Investors: They are QIB’s who are the first investors in an IPO and can attract investors to the IPO. They invest an amount of Rs. 10 crores or more.

18. Is it mandatory to have a PAN number to apply in an IPO?

Yes. SEBI has made it mandatory since 2006.

19. What information should I keep after I submit the IPO application form?

-Application Number

-Copy of Payment

-Copy of Application form.

20. IPO’s are less riskier than directly investing in the stock market?

IPO’s come with their own set of risks:

– There is limited data available from the company for individual investors.

– IPO’s generally take place during bullish markets where investors are optimistic.

– It is hard to predict the price movement for listing gains. Flipping IPO’s is common if the shares make a profit on a listing day.

– Retail investors may not even be allotted shares if the IPO is oversubscribed.

21. Can I apply in an IPO through multiple applications of the same name?

No. Applying multiple times does not increase the chances of allocation. In fact, if the IPO receives multiple applications with the same PAN number then all your applications will be rejected. 

22. What is the Basis of Allocation or Basis of Allotment?

In the case where bids do not exceed the offering, the investors will be allotted shares as long as they have provided accurate and appropriate applications. If the IPO is oversubscribed then the shares may be allotted on a pro-rata basis or through a draw of lots. 

23. Can I revise or cancel my IPO application?

Yes. An investor can cancel his IPO application. 

An investor may also change his bid using. This can be done using the form for changing /revising bids that comes along with the application form. 

This however must be done before the IPO issue is closed.

24. Where do I get an IPO application form?

An investor can download the online ASBA form provided by the advisories or they can download it from the BSE/NSE website. These forms are made available 2 days before the IPO.

25. Can investors sell the stock allotted to them in an IPO before the stock gets listed?

No. An investor can place a sell order during the pre-opening time and sell when the IPO trading starts at 10 am on listing day.

26. What are the tax implications of selling IPO allocated shares on listing day?

If an investor sells his shares on listing day or within one year of listing he will be subject to pay ordinary income tax on the gains. Beneficial capital gains tax rates are applicable only in case the shares are sold after one year in the case of IPO. This is the most common concern amongst traders and investors when we talk about Frequently Asked Questions (FAQs) about IPOs

27. How many days issue takes to list in the market?

It takes 6 days for a stock to get listed on an exchange after the IPO is closed. This period is expected to be reduced to 3 days by market regulators in the coming future.

28. How is the listing price calculated?

The listing price is calculated based on the market forces of demand and supply for the company shares.

To Conclude…

We hope that the list above answers most of the questions which most of the investors have. That’s it from us in this write up about Frequently Asked Questions (FAQs) about IPOs. We will see you in our next meeting.

Brookfield REIT IPO Review – IPO Price, Offer Dates & Details!

Brookfield REIT IPO Review

It almost looks like we are already making up for all the lost time from 2020. It at least seems that way in the primary markets with IPO’s every other week. In this article, we cover the Brookfield REIT IPO Review and look into important IPO information and find out the possible prospects of the company.

About the Company – Brookfield REIT IPO Review

Brookfield  Real Estate Investment Trust India is the Indian REIT wing of the Canadian asset manager Brookefield Group. The company is looking to raise Rs. 3,800 crore this week during its IPO from 3-5 Feb 2021. REITs are listed entities that invest in income-generating properties and distribute at least 90 percent of their income proceeds to unit-holders through dividends. The company has 4 large campus-format office parks strategically located in Mumbai, Noida, Gurugram, and Kolkata. They have a Committed Occupancy of 92% and leased to marquee tenants with 75% of Gross Contracted Rentals. Their clients include MNC’s like Barclays, Bank of America Continuum, RBS, Accenture, Tata Consultancy Services, and Cognizant. The company currently owns 1.4 crore square feet of its commercial properties across the country. The company is also looking to add another 1.5 crore square feet of space in the next few years.

Brookefield REIT owns $17 billion across real estate, infrastructure, renewable power, and private equity in India. The company also owns seven toll roads totaling more than 600 km of roadway, solar and wind assets,  construction business, and real estate management services.

So far there have been only two other Reit IPO’s in the Indian markets. Those being the Embassy REIT IPO launched in April 2019, the Mindspace REIT IPO which was launched in July 2020 in the midst of the pandemic. However, Brookfield REIT is the only institutionally managed public commercial real estate vehicle in India.

(Rs. in millions)

WFH and Office Parks

Investors may be concerned when it comes to responses given by companies during the pandemic. Most of the companies shifted their activities to the Work From Home(WFH) mode of functioning. This could have been a challenge to the office parks like those provided by Brookefield. But the company has stated that there is no data to suggest that the WFH concept is the new normal and exuded confidence that benefits like closely working together for productivity purposes will eventually get teams to work from offices. Brookefield REIT also stated that they have over 90% occupancy at present. All the properties have been working through the lockdown. Their collections have been over 98% and 5 lakh square feet of space has been re-leased during the pandemic.

 Experts have also stated that the IPO could not have come at a better time as the real estate markets in India have matured and there could be a correction within 3 months when the loan moratorium period ends. 

Brookefield REIT going public would also encourage more real estate owners to go for REIT listing and being a global company can also further increase the inflow of capital into the domestic real estate. 

Key IPO Information – Brookfield REIT IPO Review

BSREP India Office Holdings V Pte. Ltd is the promoter of the company. Morgan Stanley India Co., DSP Merrill Lynch Ltd, Citigroup Global Markets India Pvt, and HSBC Securities and Capital Markets (India) Pvt. have been appointed as the global coordinators and book-running managers to the issue.

Following are the key details for the IRFC IPO:

ParticularDetails
IPO Size₹3,800.00 Cr
Fresh Issue₹3,800.00 Cr
Offer For Sale(OFS)Nil
Opening DateFeb 3, 2021
Closing DateFeb 5, 2021
Face Value ₹10 per equity share
Price Band₹274 to ₹275 per equity share
Minimum Lot Size200 Shares
Maximum Lot Size-
Listing Date:Feb 17, 2021

Purpose of the IPO

The net IPO proceeds are proposed to be utilized for the following objectives:

  • To make partial or full payment of existing indebtedness of the Asset SPVs.
  • To meet general corporate purposes.

Closing Thoughts – Brookfield REIT IPO Review

 Looking back at other REIT IPOs, both Embassy Office Parks REIT and Mindspace Business Park REIT are currently trading at a premium to their issue price. These companies are worthwhile investments for long term investors who look for steady incomes. REITs receive stable rental income and this is transferred to the unitholders in the form of dividends. Let us know what you think about the Brookefield REIT IPO.

Happy Investing!