NASTY INDIAN CAPITALISM

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Recently news came in which says that MR Gautam Adani hostilely bought 29.18% stake in NDTV while the promoters had no idea about the transaction. The takeover was against the will of  Pranay Roy and Radhika Roy, promoters of NDTV. How did MR Adani manage this act of uncanny business move? Let's dive in.
 Adani bought a company named VCPL which had a 29.18% stake in NDTV. One of the largest shareholders of NDTV is RRPR holdings ltd. RRPR Holdings had borrowed a loan of Rs 403 Cr from VCPL. Instead of asking RRPR holding to pay interest on their loan, VCPL asked them for 29.18% stake in NDTV in terms of convertible Warrants. Now a warrant is a type of instrument which allows the holder to either sell or buy shares of the underlying company before expiry at a certain price. And convertible warrants are once's that can be converted into shares. So, for example, if I have warrants of say Reliance at Rs 2000 and currently if the share is trading at around Rs 1800, I can convert my warrants at Rs 2000/share and sell them to the company for a profit of Rs 200/share. 

Interestingly, the money which VCPL gave to RRPR as a loan was borrowed from none other than "mota Bhai', MR Mukesh Ambani's Reliance Industries. Also, when Adani bought VCPL, he merely paid an amount of Rs103 Cr. This was something which confused me as well. How can you buy a company for Rs103 Cr when they have given away loans worth Rs 403 Cr? 
Now the scenario is that MR Adani holds 29.18% stake in NDTV and promoters hold 32% stake followed by public holdings at 26%. If Adani wants to completely take over NDTV, he will have to be a majority shareholder for which he has given an open offer for the public to sell their shares at Rs 296 while currently, as of 26-08-2022, the share is trading at Rs 427.95, a whopping 45% higher than his offer. As mentioned above, around 14% of NDTV is owned by FIIs. Out of that 14%, 9.75% is held by LTS Capital, one of the largest foreign investors in Adani group companies. If they sell their positions to Adani then he would be the largest shareholder in the company with 43.18%. What the promoters can do is that they can buyback shares from the public at a rate higher than Rs 427.95. 

MR Adani plays a lot of dirty business games. For example, back in May-June of 2022, when India "supposedly" was going through electricity crisis and our media houses were shouting that India's coal reserve are emptying, MR Pralhad Joshi, our coal minister came forward and said that India has a lot of coal reserve and there is no need to worry. The next day our Power Ministry ordered our states to buy at least 10% of imported coal. Coal India was mandated to buy at least 8MT of imported coal. Now, Indian coal costs around Rs 2000-3000/tons while imported coal costs around Rs 17000-18000/tons. Under this pressure, NTPC imported 20MT of coal out of which, 17.3MT of coal importing project was handed over to Adani Enterprises. No doubt our electricity bills are skyrocketing. Consumption of electricity can contribute around 40% to the inflated bill but the remaining 60% is because of these business games. Just because this guy employs over 23000 people, gives him no right to play such games. Adani group has been heavily favored by our current government. More than Rs 72000 Cr worth of loans given to Adani groups has been waived off according to CPM Politburo. Even Subramanyam Swamy, a member of the current government has stated that more than Rs 2.02 lakh Cr worth of bad loans had been written off by our public sector banks. This is our hard earned money in terms of GST, Income tax and many more. Most of this write off was after 2014. As a taxpayer as well as a resident of this country, it hurts to see these malicious activities. 

Regarding NDTV, this news channel was one of a kind as it never involved insignificant debates over Hindu-Muslims and never broadcasted news criticizing the opponents. The channel worked on facts and asked the right questions. They used to talk about subjects like inflation, unemployment and many useless government schemes. Well, now we all have learned a lesson to never talk against the government if you love your business. Also, stay away from parking your hard earned money in PSU banks. I remember a quote by Bernie Sanders which I guess was tailor made for this situation which goes as, "A nation will not serve morally or economically when so few have so much, while so many have so little". 

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