Some of the week pick’s

Loan scam hints at shady mid-

cap deals
 A 160-FOLD rise in a stocks price in four
years without analysts tracking it and few
funds owning it should have triggered
alarm bells at the surveillance
departments of stock exchanges and the
market regulator.It did not.That was
Money Matters Financial Services,the
company in the thick of the bribes-for-
loans scandal that has led to the arrest of
eight executives,including its chief.
 Many local fund managers were of the
view that the issue was hugely
overpriced,compared to competitors with
similar business models,and so avoided
investing in it.
 Some of those who are associated with
the market for private placement talk in
private of kickbacks being paid in share
placements of some small- and mid-sized
companies,and how some of the overseas
investors participating in the placements
merely act as fronts for promoters to
plough back unaccounted funds
abroad,into their companies.
 MOIL IPO retail subscription 28
times, total 56.29 times
 The initial public offering (IPO) of
manganese miner MOIL was bid 55 times
the offer, the highest for an IPO since May
2009.
 The Rs 1,238-crore share sale drew
investors from the institutions and
individual investors alike
 The 3.36 crore equity share issue was
subscribed more than 49 times in the
portion reserved for institutions , data from
stock exchanges show.
 The portion reserved for wealthy, or high
net worth individuals , was bid 143 times,
while the retail portion, where limit was
doubled to Rs 2 lakh per application was
subscribed more than 28 times.
 Most of the bids were at the top end of the
Rs 340-375 a share price band.

 The government sold the MOIL shares in a

price band of Rs 340-375 and promised a
5% discount to retail investors and the
company staff of 6,734.

The government has raised over Rs 21,000

crore this fiscal selling shares including in
companies such as Power Grid Corp.
 PNs- PNs are contracts issued by foreign
institutional investors,or FIIs,registered with
Sebi,to their offshore clients wanting to invest in
Indian shares.
 These offshore clients either cannot meet the
eligibility norms to invest in India,or do not want
to register with Sebi for some reason.Such PNs
enable the overseas investors to buy Indian
equities through the FII without their identity
being revealed.
 2007- Sebi chairman M Damodaran had put restrictions
on PN issuances by FIIs and eased norms to encourage
overseas investors to register with the Sebi director.But
those restrictions were reversed the following year amid
the global financial crisis,when FIIs sold Indian shares in
a big way.While investments through PNs as a
proportion of overall foreign portfolio investments are
now less than 15%,compared with over 50% in
2007,brokers and fund managers say it is mostly the
illegal funds of resident Indians that come in through this
route.
 QIPs and even FCCBs (foreign currency
convertible bonds) are routinely used by
promoters to bring back illegal money parked
abroad.
 This practice is widely prevalent in global
depository receipts,or GDRs,where many
unknown companies choose to list on illiquid
markets,and where the anonymous investors are
affiliates of the promoter group.
 Fifty-four companies have raised over $5.5
billion through QIPs till October,according
to Prime Database.Given the buoyant
sentiment,which prevailed in the stock
market for much of this year,almost every
single placement was heavily subscribed.
 Court rejects bail to loan-scam
accused
 REJECTING bail applications from all the eight accused
in the bribe-for-loans case
 The persons arrested by the Central Bureau of
Investigation (CBI) include former CEO of LIC Housing
Finance Ramachandran Nair,Naresh K Chopra
(secretary,investment,LIC),RN Tayal (general
manager,Bank of India),Maninder Singh Johar
(director,Central Bank of India),Venkoba Gujjal (deputy
general manager,Punjab National Bank),besides Rajesh
Sharma,chairman of Mumbai-based firm Money Matters
and two of its employees Suresh Gattani and Sanjay
Sharma.
 RR Nair,former CEO of LIC Housing Finance,

 Nair,according to CBI,took bribes to clear loans

worth 470 crore for the three realtors.Nair and
senior officials from three state-run banks were
arrested by the CBI last week for taking bribes
from Money Matters Financial Services
 CBI lawyer Eijaz Khan said that Nair took bribes
for sanctioning a loan worth 200 crore to DB
Realty.He said Nair also accepted bribes for
clearing another loans worth 200 crore to Mantri
and 70 crore to Entertainment World.
 VK Sharma,who took charge as the CEO of LIC Housing Finance

 According to news agencies,LIC Housing

Finance said on Monday that loans worth 389
crore issued by it were under probe by CBI.It
also said the outstanding loans under scrutiny by
CBI were performing and the value of securities
against the loans was over 1,000 crore.
 Senior officials of Central Bank of India,Punjab
National Bank and Bank of India for allegedly
accepting bribes for sanctioning loans.
 Gainers
%
Grou Prev Close Current Price
Company Chan
p (Rs) (Rs)
ge
BGR Energy
A 577.55 746.75 + 29.30
Systems

Shree Renuka
A 76.15 91.15 + 19.70
Sugars

Adani Enterprises Lt A 584.70 672.20 + 14.96

Suzlon Energy Ltd. A 45.35 51.70 + 14.00

HDIL A 178.45 203.25 + 13.90

 Losers
%
Grou Prev Close Current Price
Company Chang
p (Rs) (Rs)
e

Welspun Corp A 209.20 160.30 -23.37

Hero Honda Motor A 1,936.40 1,832.45 -5.37

Coromandel
A 586.35 556.05 -5.17
Internati

Reliance Infrastruct A 871.55 836.70 -4.00

Marico Ltd. A 131.65 127.25 -3.34