Insider Trading is quite rampant in India particularly in mid cap and small cap companies where promoters frequently collude with market operators in rigging up stock prices.Most of the small IPOs that come are blatantly rigged in pump and dump schemes without the market regulator SEBI doing anything.There have been cases where some individuals and […]
The Liberalization of India in the 1990s ushered in a new era of not only high growth as its industries and enterpreneurs were unshackled from the chains of License Raj but also an era of Crony Capitalism.The erstwhile business barons who maintained their fiefdoms through manipulation of licenses,now shifted their focus elsewhere.With new sectors of the opening up and growing exponentially unscrupulous promoters had the chance to mint billions.The bursting of the 2G Telecom Scam has bust the cozy Crony Capitalism Relationship.India’s Supreme Court reposing lack of faith in the investigative powers of the government has personally taken charge of the prosecution.With powerful ministers,bureaucrats and billionaire businessmen involved,only India’s Supreme Court has the chance to bring the guilty to justice.
Moser Bear,the Indian Solar Company was one of the first customers for the now extinct Applied Materials a-Si SunFab Technology.The company had invested in a number of solar technologies quite early on,but has not managed to succeed in a single one much like the Abu Dhabi promoted Masdar.The Jack of all Trades strategy has come undone for both of these companies.While Chinese and some US companies have prospered despite stiff competition,most of the others have sunk.While most of AMAT customers have written off their investment in thin film equipment and factories,Moser Baer has not done so.But from its current action it seems to have given up at least in its thin film ambitions.Moser Bear has contracted for 25 MW of First Solar thin film modules.Note First Solar is the biggest thin film producer of solar panels and a direct competitor to Moser Baer.So it seems that Moser Baer has pretty much abandoned its thin film panels since if it itself does not use its own panels,don’t think a 3rd party would do so.
This time India’s Space Research Agency ISRO has come under the scanner for giving a sweetheart deal to a private company without bidding and tenders.This has resulted in another huge loss for the public treasury just like the Telecom Scam.The Space Agency comes under the direct authority of the Prime Minister and has further muddied the waters for the ruling coalition.With scam per day performance,the government is under tremendous pressure and losing its way in reforming the economy.Corruption in India is literally taking on Galactic Proportions and showing no signs of stopping.The Devas-Antrix Deal has also foreign investors which makes scrapping the contract for giving spectrum to Devas difficult.With India’s Supreme Court breathing down its neck over prosecuting the guilty in the Telecom Scam,the government finds itself besieged.It can hardly afford opening another corruption frontier when it already finds its hands full with the existing scams.
Fineotex Chemicals (FCL) is a Maharashtra based small chemicals company which is coming out with an IPO for 4.2 million shares at Rs 60-72 to raise Rs 25-30 crores with a total market cap of around Rs 42-50 crores.The company has a 5000 tons plant and is expanding by 13000 tons.The company has little resources by way of cash and it seems strange that a Rs 15 crore company would raise money from the capital markets rather than raising more debt which seems low at around Rs 80 lakhs.Can’t find much to say anything positive except that there are no lawsuits pending against the promoters.Here are the negatives.
Omkar Specialty Chemicals was a major disaster for all the investors who decided to gamble on small cap IPO junk.Gambling on FCL in this environment does not make any sense,would make more sense to gamble your money in a casino.In this market you would have a much better chance of returns.
India’s Infrastructure Sector which was considered the ideal play on India’s fast growing GDP and its huge infrastructure requirements long commanded nosebleed valuations.While realty stocks which are closely related to the infra ones had long collapsed after the GFC in 2008 ,the infrastructure stocks had retained their preeminence in the stock market rally.However end 2010 and 2011 has seen a vicious change in their fortunes.Stocks like IVRCL,IRB,Punj Lloyd,L&T,Gammon etc have seen their stock prices nosedive.The stocks have corrected far more than the broader market which has itself fallen more than 15% in 2011. The problems related to the infrastructure stocks are varied and they have converged for investors to totally lose confidence in this sector something akin to the realty sector.The list of the problems are