Not long ago, after creating the Vedanta umbrella in the UK, Anil Agarwal of Sterlite-fame tried to emit the Indian investing public from his domestic companies by uncommon and questionable means. But, now, quite contrary to his earlier stand, his group company, Sterlite Power Transmission Ltd (SPTL), is vying public funds to the tune of Rs 1250 cr.
The Draft Red Herring Prospectus (DRHP) of SPTL has some interesting readings. It claims that, as on the date of the DRHP, the promoters of the company were Twin Star Overseas Ltd and Anil Agarwal.
The 2006-Mauritius-registered corporate promoter (Twin Star) has, in turn, been promoted by Volcan Investments Ltd based in another tax haven, Bahamas. As per the DRHP (page No.284), the 1992-incorporated Volcan’s directors are: Isaac Collie and “Elco (Secretary) Limited”!
The individual promoter of SPTL, Anil Agarwal, is presented as a citizen of India though he resides in London. Interestingly, this Indian citizen, who currently serves on the boards of domestic companies Sterlite Technologies Ltd, Sterlite Metal Rolling Mills P Ltd, Conclave PTC Ltd, Vedanta Ltd, etc., has a PAN but does not have an Aadhaar card. Also, strangely, the so called` ultimate beneficiary-promoter’ holds directorship neither in Sterlite Power Transmission, nor in Twin Star Overseas, or Volcan Investments!
As regards promoters’ experience, SPTL’s DRHP reads: “The corporate promoter is a holding company. The individual promoter, Anil Agarwal, has over four decades of experience in the metals and mining industry. This is similar to the business activities of our Company”. How metals and mining business is similar to power cables-conductors and power transmission? This is the level of understanding of the investment bankers who drafted the offer document!
Incidentally, 33 years ago (in 1988), when Anil Agarwal’s erstwhile flagship Sterlite Industries went public, the same power cables and conductors were also the main business of that company! Sterlite Industries used the power cables performance to fund its jelly filled telecommunication cables diversification. SPTL is attempting to raise huge share premium majorly on the basis of the performance of power cables and conductors.
SPTL is having a relatively small equity capital base of Rs 12.23 cr. But, it has hiked its authorized equity capital to a mammoth Rs 1276 cr. Considering the likely huge premium portion of the proposed public issue of Rs 1250 cr, the size of authorized capital gives a feeling that the devious promoters, who have made umpteen scheme of arrangements, amalgamations, mergers, demergers, takeovers, spin-offs and created 119 entities under their fold, have already drawn yet another `scheme of arrangement’ which could be executed sooner than later.
The timing of the present issue is what takes the cake. Marketmen are amused that while Agarwals’ flagship, Vedanta Ltd, sought to buy out public shareholders and delist from the bourses in May 2020 at dirt cheap valuation in the midst of corona-induced market meltdown, group company SPTL is seeking capital from the public when the stock market is at an all-time high! The term ‘Timing the market’ gets a new definition from market savvy Agarwals!
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