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Cognizant institutional investor Lacera wants directors to be elected annually, not three-year term

BANGALORE: A tug of war between minority shareholders and the board of directors is brewing at Cognizant Technology Solutions, India's third-largest software outsourcing company. In Cognizant's upcoming June 5 annual shareholder meeting, institutional investor Los Angeles County Employee Retirement Association, or Lacera, which manages $39 billion in assets, is putting to vote a proposal at the shareholder meeting on June 5 to make it mandatory for all board directors to be elected annually, as against a three-year term at present. Cognizant has recommended that all shareholders vote against the proposal. Another activist investor John Chevedden has forced Cognizant to introduce a...
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Investors push for better corporate governance

New Delhi: Minority shareholders and independent directors are starting to make themselves heard by management and force a reversal of key decisions in what analysts say are small, but significant steps towards improving corporate governance standards in India. A rebellion at Coal India Ltd (CIL) last week in which independent board members and a minority shareholder challenged a government attempt to dictate terms to the state-owned miner is a case in point. In February, the board of paint maker Akzo Nobel India Ltd was forced to cut the royalty payable to its Amsterdam-based parent in a victory for small shareholders, who...
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High Frequency Trading

This article has been written by Kabir Sharma. Financial markets over the course of time have changed significantly, both with the development of new financial instruments and advancement of technology being employed. In terms of technology the markets have moved from human outcry mechanism to the modern day’s electronic exchanges with ultra high frequency computers being deployed to execute trades, minimizing the human intervention for trade execution. One of the recent developments in financial markets is algorithmic trading which now forms a major chunk of the total trades being executed across the most developed financial markets of the world. Algorithmic trading...
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Hedge Funds Go on Attack In India

[ACTIVIST]NEW DELHI—After years of complaining about poor treatment as minority investors in India's publicly traded companies, some Western hedge funds are turning to activist tactics that have not often been tried here. The recent moves may mark the beginning of a more confrontational period between foreign investors and Indian companies, which tend to be owned by either their founders or the government. Last week, the U.K. hedge fund The Children's Investment Fund Management LLP, which has $9 billion in assets and is famous for its tussles with companies, initiated legal proceedings against the Indian government to protect its investment in India's...
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Coal India’s independent directors discover their spines

Faced with the threat of legal action from shareholder activists, independent directors on board public sector companies are beginning to show some spine. According to reports in Moneycontrol.com and The Times of India, independent directors on the board of Coal India have blocked a proposal to sign 20-year fuel supply agreements (FSA) with power producers – a move initiated by the Prime Minister’s Office (PMO) and which was claimed as a big breakthrough for the power sector. Experts had questioned the economic sense of the proposal and blamed the PMO for passing on the costs of rescuing private power producers to...
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Minority investors protest delisting price for India Securities

MUMBAI: Minority shareholders of Essar Capital-promoted India Securities have said the floor price of Rs 56 a share set for its delisting is low and does not reflect the company's valuation. The delisting offer for India Securities, an investment vehicle formed specifically to transact the Essar Group's telecom business sale, opened on March 26. The promoter seeks to buy out 219.15 million equity shares, or about 25.02% stake, from public shareholders. The offer closes on March 28. Retail shareholders, led by a Kolkata-based company, have also said that the floor price is lower than the value at which an inter-se transfer...
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IGate faces battle over Indian unit delisting plan

NEW YORK/BANGALORE, March 23 (Reuters) - IGate Corp's plan to delist its Indian subsidiary has set the stage for a battle next week with shareholders, who fear that the price being offered to sell their shares in Patni Computer Systems is too low. Among the investors is hedge fund Elliott Management Corp, an activist shareholder that owns an 11 percent stake in Patni. A representative for the fund declined to comment. IGate, a maker of outsourcing software, bought a controlling stake in Patni for 503 rupees ($9.83) per share last year. The Fremont, California-based company now plans to buy the 19...
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ACG Boston's DealMakers 2012 M&A Outlook Conference

 

ACG logo

The Association for Corporate Growth or ACG is the global community for middle market M&A dealmakers and corporate business community. The key takeaways from the DealMakers 2012 M&A Outlook Conference are summarized in this article.

 

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Mohandas Pai returns to shareholder activism

MUMBAI: Former Infosys director T V Mohandas Pai has returned to what he does best-promoting shareholder activism. Pai, now chairman of Manipal Universal Learning, has acquired a significant minority stake in InGovern Research Services, a proxy advisory services company, which helps institutional investors tackle corporate governance issues at listed companies. It was Pai's hard-hitting questions at Infosys shareholder meetings that drew the attention of the company's co-founders N R Narayana Murthy and Nandan Nilekani, who later invited him to join the management. Pai rose through the ranks becoming HR director before quitting the IT bellweather last year. His investment in...
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Protecting minority interests not an easy task in India

For a shareholder to initiate a direct action, rather than indirectly on behalf of the company, it needs to be supported by at least 100 shareholders or such number of shareholders holding 10% of the company. Instances of shareholder activism in India have been few and far between. Now, an activist London-based hedge fund has gone for the jugular, charging the board of a public sector company of a breach of fiduciary duties, by not acting independently of the Indian government on several matters including pricing. The Children’s Investment Fund Management (UK) LLP (TCI) has written to the board members of...
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Did LIC break any Sebi norms in its purchase of ONGC?

Let’s say you are one of India’s biggest business promoters. You know your company is planning to make an additional offering of shares a few weeks down the line, but the market is tepid. In order to get a good price, you ask a group company to start bidding up your shares in the market so that the IPO will fetch a better price. Which rogue promoter is that? But this is exactly what the Life Insurance Corporation (LIC) has done before the government’s offer for sale of ONGC shares (a.k.a. auction) which ended in a controversy last week. According to...
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DLF inflated asset base via dealings with DAL: Veritas

A report from investment bank Veritas Investment Research on DLF saw the stock tanking 5.17% in trade yesterday. The report alleges that the debt-laden property developer has been cooking its books for the last four years with large amounts of financial misreporting. In an interview to CNBC-TV18, Neeraj Monga, the author of the report hammers DLF saying he doesn't buy the realtor's accounts. In his report titled 'A Crumbling Edifice', he raises doubts about the company's disclosed book equity and asset base. You may read: Veritas aims gun at DLF; says co may have to recast loans The Veritas report alleges DLF inflated sales...
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Are preferential issues abused by promoters? Experts debate

Institutional Investor Advisory Services' (IIAS) advice to shareholders of Hindalco to vote against its preferential issue of warrants has sparked off a debate about the viability of preferential allotments. According to Amit Tandon, managing director of IIAS, shareholders should vote against preferential issue of warrants by any company because it is an instrument which is abused by promoters. "We have looked at about 20-25 companies and we find that whenever the warrant conversion price is higher than the market price of the share, the warrants don't get converted and vice-versa," he said. Therefore, he recommends a rights issue over any preferential allotment. Tandon...
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Minority shareholders oppose Akzo Nobel merger move

KOLKATA, FEB. 8:      Shareholders of Akzo Nobel India Ltd have approved a proposal for merger of three unlisted group entities with it, the company said on Wednesday. However, 23.15 per cent of the valid votes of 28.99 million, polled on Tuesday at a court-convened shareholder meeting here, were against the resolution. A large chunk of minority shareholders opposed the move on the premise that the proposed merger did not protect their interest. Mr Shriram Subramanian, MD of Bangalore-based InGovern Research Services, a proxy advisory firm assisting institutional investors, told Business Line that as a consequence of the amalgamation, promoters will increase...
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Sebi lens on Patni delisting sans iGate reducing stake below 75%

MUMBAI: The capital market regulator is inquiring if technology outsourcer Patni Computer Systems can delist without lowering promoter stake to 75% as mandated by law.The move follows complaints by some shareholders in Patni alleging that US-based software maker iGate has violated norms by announcing delisting of the Indian company without first paring its stake from 83% to 75%."The regulator is looking into it after some shareholders complained," said a person familiar with the matter.In a public announcement on January 11, 2011, iGate had said it will delist Patni shares, after completion of the open offer, under the Sebi (Delisting of Equity Shares) Regulations 2009. But Sebi objected to...
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Shareholder group wants Vaswani Industries promoters out

MUMBAI: A battle is brewing between promoters of Raipur-based Vaswani Industries and its public shareholders. A bunch of Vaswani's shareholders, owning around 11% stake in the company, have called for an extraordinary general meeting on January 23 to remove the founders from its board. Promoters own roughly 52% in the company. The shareholders include MGF Growth Research & Investment, Decent Financial Services, Meenaben Shah, Padmaben Shah and Rajendra Jain, who have sought the removal of Ravi Vaswani, the managing director and the founder of the company, and appointment of their representative Jayshree Gangurde in his place. They will also demand the replacement of Pramod Vaswani, whole-time director...
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AkzoNobel's shareholders oppose move to hike foreign promoter stake

MUMBAI: A group of minority shareholders of AkzoNobel, including Asian Paints, have objected to a proposal under which the listed firm will absorb three unlisted group companies at a higher valuation, thereby increasing foreign promoter's share holding. In a concerted move, the institutional investors such as ICICI Prudential, LIC, SBI Mutual Fund, Bajaj Allianz, among others, have informed AkzoNobel, (formerly ICI) about their discomfort over the valuation given to the three companies controlled by Akzo's foreign parent, though the listed firm has a market cap of over 2,000 crore and cash in hand of about 1,000 crore. Asian Paints, whose founders fought...
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Sharp rise and fall in share price of Kwality Dairy India; Brokers see foul play

MUMBAI: A penny stock that gained 132 times in less than 18 months is back in news, but for the wrong reasons. The sharp rise and the subsequent fall in the share price of dairy and food processing company Kwality Dairy India (KDIL) has raised eyebrows, with market participants suspecting foul play in the counter. Even though there were no corporate announcements that could have adversely impacted the stock, the share price fell almost continuously, after touching a high of Rs 189 in October. From around Rs 1.50 (after adjustments to corporate actions) in October 2008, the stock rose to over Rs...
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Prominent Indian entrepreneur in the financial services industry shares his journey to the top

Ramdeo Agarwal
Mr. Ramdeo Agarwal is the Managing Director of Motilal Oswal Financial Services. He is a reputed stock picker and is one of the most successful Indian entrepreneurs in the financial services industry.
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Satyam: Rs 7,000 cr fraud, and Rs 5 lakh fine for auditors?

Can the penalty for aiding and abetting a Rs 7,000-and-odd crore fraud be just Rs 5 lakh and a debarment? That, incidentally, is what the Institute of Chartered Accountants of India – ICAI, the audit profession’s self-regulatory body  â€“ has fined C Ravindranath and P Sivaprasad, employees of Lovelock & Lewes, an affiliate of Price Waterhouse India, for their role in the Satyam Computer Services fraud perpetrated in cahoots with the promoter, B.Ramalinga Raju. ICAI has debarred them from practising as chartered accountants by removing their names from the institute’s register. A BusinessLine report quotes ICAI President G Ramaswamy as saying: “We are proactive in taking action...
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