IPO FRAUD : ONELIFE CAPITAL, PROMOTERS FINED RS 3.5 CR BY SEBI

SEBI has imposed a fine of Rs 3.50 crore on Onelife Capital Advisors Limited and its promoters for the fraud committed / manipulation of stock price on the exchanges.

We hereby reproduce an article that we wrote in Aug 2012, on Onelife Capital advisors.

 Friday, August 24, 2012

Price rigging, scam, manipulation, insider hand, broker-promoters collusion, fraud are all happening / brewing under the direct nose of the regulators. This is in respect of share price movement of Onelife Capital Advisors Ltd. (OCAL). The stock is up from Rs 114 a year ago to Rs 616. SEBI had barred the promoters of OCAL from participating in the market for diverting IPO funds for unspecified purposes. In a month, the share price of OCAL is up 27 per cent from a low of Rs 482. Look at the financials of the company. On equity of Rs 13.36cr, the company reported a loss of Rs 23 lacs for the June 2012 quarter. The company has no history of dividend or bonus.

ABOUT THE COMPANY:

OCAL is a SEBI registered Category I, Merchant Banker.

The company reported sales of Rs 1.56cr and net loss of Rs 1.99cr, on equity of Rs 13.36, for the year 2012. The EPS is negative.

One life capital came public a year ago at Rs 110. At the time of going public the company had indicated that they are in the process of securing license to do business in Equity Broking (BSE) and Portfolio Management Services from SEBI. The company’s latest website does not indicate anything about it.

At the time of IPO, the employee strength was eleven. It had no branches as on the IPO date.

The company started its operations in FY 2010; Income from operations consists principally of income from investment banking and related services, which includes fee-based income from merchant banking, corporate advisory (including research services), debt syndication services and professional fees. In FY10, the company earned a total income of Rs.61.7 lakh comprising professional fees and consultancy charges.

The share price appears to be manipulated; otherwise there is no reason why a loss making, financial advisory company should trade in excess of  1000PE. Highest PE for any shares any where in the world.

FirstChoice IPO's analysis and assessment has come true again.

(Search this blog for IPO analysis of Onelife Capital)

IPO ANALYSIS: MONTE CARLO FASHIONS - INVEST FOR LISTING GAINS

ISSUE OPENS / CLOSES ON	03-12 / 05-12-2014
ISSUE / OFS SIZE	SALE OF 54,33,016 EQUITY SHARES BY EXISTING SHARE HOLDERS
PROMOTERS	Jawahar Lal Oswal,  Kamal Oswal,  Dinesh Oswal, Ms. Monica Oswal, Ms. Ruchika Oswal, Sidhant and Mannat Company Limited and Simran and Shanaya Company Limited
BUSINESS	APPARELS – WOOLEN / COTTON BLENDED /  HOME FURNISHINGS
PRICE BAND	RS 630-645
FACE VALUE	RS 10
LISTING	BSE AND NSE
BRLM	SBI Capital Markets Limited Axis Capital Limited Edelweiss Financial Services Limited Religare Capital Markets Limited
REGISTRAR	LINK INTIME

     BUSINESS

                     Monte Carlo Fashions is in to manufacture and marketing of branded apparels for men, women and kids, offering a comprehensive line of woollen, cotton and cotton-blended knitted / woven apparels / home furnishings through the ‘Monte Carlo Exclusive Brand Outlets.

                     Launched in 1984 as an exclusive woollen brand by Oswal Woollen Mills Limited, one of the Group Companies, Monte Carlo is one of the leading Indian apparel brands based on revenue. ‘Monte Carlo’ has been recognized as a ‘Superbrand’ for woollen knitted apparel in each edition of consumer Superbrands India since its first edition in September 2004.

            

  

            FINANCIALS

                                              (As on 31st March)                              (Rs in Crores)

	2012	2013	2014	JUNE 2014
REVENUE	375	416	518	79
NP	49	48	55	09
EQUITY	21.73	21.73	21.73	21.73
EPS (Rs)	27.25	23.05	25.45	3.92

MATTERS OF CONCERN

a.  Dependent upon Group Companies for procurement of woollen yarn other raw materials. In the last fiscal more than 70% of the raw materials sourced from group companies.

b.  Conflicts of interest: Monte Carlo and many group companies share common business objects.

c.  Seasonality of business: The business is subject to seasonality, with a significant portion of revenue generated primarily during the third quarter of each fiscal year.

d.  Rely on third parties: The Company rely on third party suppliers to provide raw materials and to manufacture significant part of products and the company has limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.

e.  Operates in a highly competitive environment and may not be able to maintain the market position.

f.  Uninspiring past record of listed group companies: The equity shares of Kovalam Investment and Trading Company Limited and Oswal Leasing Limited, listed Group Companies, have ceased active trading since July 2013 and June 2001, respectively.

Further, equity shares of Sankeshwar Holding Company Limited and Nahar Financial and Investment Limited, the other listed Group Companies, have ceased active trading and they have made applications recently to the Delhi Stock Exchange for voluntary de-listing.

VALUATION

The offer / IPO is made to obtain the listing benefits. The company will not receive any funds. The offer in the price band of Rs 630-645 is made at 25 PE on its previous year’s EPS, which is on the high side. There is no directly comparable listed peer, specialised players such as Lovable Lingerie, Kewal Kiran Clothing, Indian Terrain, and Zodiac Clothing trade at trailing earnings multiples of  around 30 times.  The plus point  for the company is its brand image / brand power.  The promoters will be still holding 75% post IPO.  This and brand equity may help the stock to gain on listings.

    

      RECOMMENDATIONS

                                                     

LISTING GAIN ASPIRANTS / SHORT TERM TRADERS	INVEST
LONG TERM INVESTORS	AVOID

GOVT TO REDUCE STAKE IN PSU BANKS

Govt plans to reduce stake in PSU banks and raise about Rs.89,000 crore. PSU bank shares rose between 3 to 7% on this news in yesterday's trading.  We expect PSU bank stocks to come down between 10-12% from the current level, once the government announces the date for disinvestment for stake sale. 

Stake sale will create more liquidity in the market and  government as in the past will offer 5% discount to retail investors on the floor price. 

BSE REVISES CIRCUIT FILTER FOR 12 STOCKS

BSE has revised circuit filter for the following 12 stocks WEF 1st Dec, 2014.

Sr. No.	Scrip Code	Scrip Name	Circuit Filter % Revised to
1	530627	Vipul Dye Chem Ltd	10
2	509499	Centron Industrial Alliance Ltd	10
3	535602	Sharda Motor Industries Ltd	10
4	536170	Kushal Tradelink Ltd	10
5	523011	Weizmann Ltd	5
6	524576	Vivid Global Industries Ltd	5
7	531310	Available Finance Ltd	5
8	533068	Arrow Textiles Ltd	5
9	533333	Fineotex Chemical Ltd	5
10	531295	Sunlake Resorts and Hotels Ltd	2
11	531289	National Fittings Ltd	2
12	513422	Bloom Industries Ltd	2

CARE IPO IRREGULARITY - 6 BRLMs FINED RS 1 CR

SEBI has fined BRLMs of CARE IPO of Rs 1 crore for non disclosure and suppression of facts. 

SEBI after taking into consideration all the facts and circumstances of the case and having regard to the nature and gravity of the charges established, has imposed the penalty Rs. 1,00,00,000/‐ (Rupees  One Crore Only), on the BRLMs viz. M/s. Kotak Mahindra Capital Company Limited, DSP Merrill Lynch Limited, M/s. Edelweiss Financial Services Limited, M/s. ICICI Securities Limited, M/s. IDBI Capital Market Services Limited and M/s. SBI Capital Market Services Limited, for the violation ICDR Regulations and Regulation of  Merchant Bankers Regulations. 

FIIs NET BUY FOR RS 936 CR

FIIs have net bought for Rs 936 cr in cash market where as DIIs have net sold for Rs 439 cr. NIFTY gained 94 points. Today's rally is led by rate sensitive stocks like bank and auto.

NIFTY : TOP GAINERS

Gainers
Symbol	LTP	% chng	Volume
PNB BANKBARODA ASIANPAINT SBIN INDUSINDBK	1,077.10 1,092.00 745.40 321.95 749.00	7.89 7.56 5.63 5.26 3.94	33,11,588 26,99,047 33,57,331 2,73,85,773 16,35,615

BSE MARKET CAP CROSSES RS 100 LAC CRORE

BSE market cap for the first time has crossed Rs 100 lac crores. Sensex as of now is up 342 points.

PNB, BOB, SBI AND INDUSIND BANK HIT NEW 52 WEEK HIGH

Banking stocks are on a roll. PNB (Rs 1068), BOB (Rs 1099), SBI (Rs 319) and Indusind Bank (Rs 757) shares have hit new 52 week high. NIFTY is up 114 points and trading above 8600 level.

Maruti Suzuki’s Wagon R crosses 15 lakh sales mark

Maruti's  Wagon R launched in 2000, has been amongst India’s top 5 best-selling brands. With its space, features and comfort, Wagon R has been the choice of the “Smart customer” and consistently remained among India’s most loved car brands.

The Company sold around 156,300 units of Wagon R in 2013-14. In the current year, Wagon R sales have already exceeded 93,000 units. Cumulatively Maruti has sold 15 lacs Wagon R.

Maruti's shares are up Rs 60, as of now and trading around Rs 3323.

TODAY'S PICK FOR TRADING

              

                 BUY CALL           

                                                                       (AMOUNT IN RUPEES)

COMPANY	BUY AT	STOP LOSS	TARGET
BAJAJ AUTO	2645	2631	2694
GAIL	486	481	504
ICICI BANK	1721	1707	1757
SUN PHARMA	840	831	866
HERO MOTOCORP	3094	3077	3154

JET AIRWAYS GETS STABLE RATINGS FROM ICRA

Rating agency ICRA has upgraded Jet Airways BB or stable rating. The earlier rating was  'C' which meant that the company was under the risk of defaulting on its loan payments. 

RBI GUIDELINES FOR LICENSING OF PAYMENTS BANKS

The Reserve Bank of India (RBI) released on its website today, the Guidelines for Licensing of Payments Banks.

Key features of the Payments Banks guidelines are:

i) Objectives:

The objectives of setting up of payments banks will be to further financial inclusion by providing (i) small savings accounts and (ii) payments/remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.

ii) Eligible promoters :

1. Existing non-bank Pre-paid Payment Instrument (PPI) issuers; and other entities such as individuals / professionals; Non-Banking Finance Companies (NBFCs), corporate Business Correspondents(BCs), mobile telephone companies, super-market chains, companies, real sector cooperatives; that are owned and controlled by residents; and public sector entities may apply to set up payments banks.
2. A promoter/promoter group can have a joint venture with an existing scheduled commercial bank to set up a payments bank. However, scheduled commercial bank can take equity stake in a payments bank to the extent permitted under Section 19 (2) of the Banking Regulation Act, 1949.
3. Promoter/promoter groups should be ‘fit and proper’ with a sound track record of professional experience or running their businesses for at least a period of five years in order to be eligible to promote payments banks.

iii) Scope of activities :

1. Acceptance of demand deposits. Payments bank will initially be restricted to holding a maximum balance of Rs. 100,000 per individual customer.
2. Issuance of ATM/debit cards. Payments banks, however, cannot issue credit cards.
3. Payments and remittance services through various channels.
4. BC of another bank, subject to the Reserve Bank guidelines on BCs.
5. Distribution of non-risk sharing simple financial products like mutual fund units and insurance products, etc.

iv) Deployment of funds :

1. The payments bank cannot undertake lending activities.
2. Apart from amounts maintained as Cash Reserve Ratio (CRR) with the Reserve Bank on its outside demand and time liabilities, it will be required to invest minimum 75 per cent of its "demand deposit balances" in Statutory Liquidity Ratio(SLR) eligible Government securities/treasury bills with maturity up to one year and hold maximum 25 per cent in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.

v) Capital requirement :

The minimum paid-up equity capital for payments banks shall be Rs. 100 crore.

1. The payments bank should have a leverage ratio of not less than 3 per cent, i.e., its outside liabilities should not exceed 33.33 times its net worth (paid-up capital and reserves).

vi) Promoter's contribution: 

The promoter's minimum initial contribution to the paid-up equity capital of such payments bank shall at least be 40 per cent for the first five years from the commencement of its business.

vii) Foreign shareholding: 

The foreign shareholding in the payments bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.

viii) Other conditions :

1. The operations of the bank should be fully networked and technology driven from the beginning, conforming to generally accepted standards and norms.
2. The bank should have a high powered Customer Grievances Cell to handle customer complaints.