Investors of Trinetra Cement cry foul over M&A moves by India Cement

New Delhi: – From managing the affairs of cricket to making sharp corporate moves Business tycoon N.Srinivasan Chairman India Cement and Ex Boss of BCCI is no stranger to controversies. After having lost a high voltage legal battle in the Supreme Court for control of BCCI, He and his India Cement is once again in News for being accused by non promoter Investors of Trinetra Cement Ltd.,a group company of India Cement of committing alleged ‘Forgery’ & ‘Fraud’ in the matter of Merger and amalgamation scheme of Trinetra cement Ltd. with India Cement. While the process of Amalgamation is underway before the Madras High Court, a group of Investors led by Bharat Gupta, Girish Gupta & Arvind Aggrawal have raised the matter through their complaints to various authorities accusing the company of gross undervaluation of shares and ridiculously low valuation for acquisition of the company Trinetra by India Cement Ltd resulting in potentially huge losses to the investors as well as the State Exchequer. They have also written to the Madras High Court & chairman of court convened meeting K R Tamizhmani on 12^th march requesting them to take appropriate legal steps for ensuring fairness and equity to helpless shareholders of Trinetra cement ltd.

             Earlier the Investors such as Bharat Gupta had knocked at the doors of Security & Exchange Board of India (SEBI) on 8^th May 2014 and again on 10^th Oct.2014. In his second correspondence Gupta had raised the issue of manipulation in parameters of valuation of the company and its shares and had opposed the amalgamation approval in the proposed ratio.Interestingly, instead of looking into gupta’s grievances thoroughly, SEBI sent a copy of the reply received from trinetra cement citing the potential benefits of impending amalgamation.

As told by Mr Gupta, the matter has already been brought to the notice of Investor Cell-Ministry of Corporate Affairs: Investor Cell-Bombay stock Exchange, Regional Director-Chennai, Ministry of Corporate Affairs; Official Liquidator-Madras High Court; Director of Inspection and Investigation-Delhi, Ministry of Corporate Affairs. But surprisingly, none of these investigating agencies have taken a serious note of the same till the date.

After being disappointed with the market  Regulator and having run from Pillar to Post making several unsuccessful request for plant Visit, the investors led by Arvind Agarwal have once again made fresh moves to expose the ‘wrongdoings’   and ‘Frauds ‘ being committed in this process of merger &  Acquisition. While planning to move to the Serious Fraud Investigation office (SFIO) on this issue, they have also written to Directors of the Company and also to the Madras High Court.

Speaking to this correspondent, Aggrawal said their complaints and calculations on the basis of documentary evidences reveal that India cement is acquiring Trinetra Cements @ Rs. 22/- per share approx. by valuing company at approximately Rs.11 Crores only. It is done by undervaluing the price of share by suppressing facts and values to the tune of Rs. 1000/- crores to 2300/- crores (app),which when taken in to account will make the valuation per share @ Rs.5100/- per share. According to them this is made possible by:-

1. Not considering /reporting of capital advances of 500 crores as per books
2. By undervaluing the reported installed capacity by Rs. 220 crores(app.).
3. Not considering/reporting of value of power plant & land holdings to the tune of 200 crores (app.).
4. Not considering/reporting of capacity expansion by 20,00,000 tones (2mn tones) of value of approx Rs. 1800 crores , as against the capital advances being shown in the annual accounts for the last four years.

Share value comes out to be Rs. 5100/- (approx.) per share if valued after considering  the points b+c+d together as mentioned above and total value of the company comes out to be app.Rs.2300 crores (net of debts) .

Share value comes out to be Rs.2200/-(approx.) per share if valued after considering all the points a+b+c mentioned above as the total value of the company comes out to be app. Rs. 1000 crores (net of debts)

While thousands of small investors of Trinetra cement feel slighted and at a loss. They have resolved to intensify their efforts for a fair and just settlement. Besides, they are also looking forward for a show of strength at a potentially stormy EGM to be held in Chennai on March 23^rd to vote on scheme of amalgamation & arrangement. They also feel that in an improved business environment and corporate governance of today such opaque moves by business giants should be taken note of by concerned authorities.