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Sunday, February 01, 2015

Galada Power and Telecommunications Ltd
~~ Hemant K Gupta
Hyderabad based co (CMP: Rs. 22.00; BSE Code: 504697) has equity of 7.49 crores. Although Bse site shows promoter stake at less than 20% but ACTUAL stake is nearly 50%. Co is engaged in production of Aluminium conductors for power sector. However, co has been in big trouble since last several years. Co is operating at low capacity and that too job work for companies like Sterlite, Apar Ind. Galada has accumulated losses with negative networth. 

Now company has finalised ONE TIME SETTLEMENT with bankers for Rs.26 crores. Galada is likely to write back 70 crores in Q3 or in Q4 which will make it networth positive. Galada has 2 parcels of land (surplus) and owns 3 floors in Galada Tower Hyderabad. Total fair market value of these 3 surplus assets is around 50 crores. Company is planning to sell any 2 assets which will enable it to raise nearly 30 crores. This amount will be used to pay OTS amount of 26 crores. Thereafter, company will have very good working.

Several years back, Galada had imported rod-making plant. Co started facing trouble and did not had money to pay custom duty. At that time, this plant cost 13 crores. This plant is still lying at Bombay customers, incurring huge huge demurrage. once co concludes OTS, starts full fledged production at its factory, company will try (that will be around 18 months from now) to clear this plant from customs (may not have to pay demurrage as co will seek/request BIFR to issue directive for waiver of demurrage). If co succeeds in clearing this plant (which can be operational by installing fresh software), its production capacity can double. Current market cap of Galada is aroun 14 crores.

WORST IS OVER FOR GALADA (Really?)

You are advised to buy DECENT/BIG quantity and hold for 2-3 years. We expect share price of Galada to double by May 2015. It can cross 50 mark in 15 months and can be even Rs 100 in 3 years from now. Downside is very unlikely.

Editor: This writer has been after this scrip since a last few years, peddling the OTS story to the gullible investors. But unfortunately OTS never comes and when the scrip fell to around Rs.3.20 on 09/04/2014, he was seen nowhere to give solace to the battered investors. He even half quotes the name of the company, as Galada Power (leaving the Telecom part) in a Gujarat Based weekly, perhaps because the Indian Telecom sector is still, in blues. He writes: 
Although Bse site shows promoter stake at less than 20% but ACTUAL stake is nearly 50%.
Now, the point is that that the BSE website shows the promoters' holding as 15.71% while the public hold as 84.29%. The clause "Less than 20%'", could be tricky as even 1% is less than 20%, isn't it? These jargons are deliberately used, to create an effect of 20% on the minds of traders--a psychological play. 
2ndly if the promoters are really holding nearly 50% then why is the BSE website constantly mentioning the erroneous data? 

Moreover, if anyone wants to buy LAND STORY, then why not go after Prajay Engineers Syndicate Ltd (Rs.8.30) or PVP Ventures Ltd (Rs.7.50) instead of running after NTC Industries ltd (another of his recommendation). Also, while recommending Deepak Spinners Ltd in June 2014 at Rs.40, this is what he wrote: 
 "Investment highly recommended as scrip can easily cross 60 (sic)  mark in coming months". 
The scrip is now trading at Rs.33.55, down more than 15% from his recommended price in around one year. Besides this, take one of his recent recommendations (December, 2014): CHAMANLAL SETIA EXPORTS LTD at Rs.64.60. The stock shot up to Rs.86.85 (as of 13/01/2015), after his research report figured in various Financial Publications. But since then it has been falling and falling, with the CMP being Rs.77.85--the same PUMP and DUMP FORMULA. Isn't it?

Incidentally Hemant K Gupta, talks more about operators moving the scrips in Indian Bourses routinely, in his columns, but look, at some of his recommendations during the past 10 years, unfortunately it all been the same PUMP and DUMP story (Agro Dutch Industries at Rs.26; Twilight Litaka Pharmaceuticals Ltd at Rs.52.20; Electrotherm Ltd at Rs.487.70 and so on) in case of many scrips. 

Let us look at a couple of past cases, now: 
(i) On February, 2009, Victory Projects Ltd announced that the Board of Directors of the Company at its meeting held on February 16, 2009, inter alia, has resolved to issue 10,00,000 equity shares on preferential allotment basis in accordance with SEBI - DIP Guidelines 2000 to Mr. Hemant Gupta, a non-promoter investor for funding the proposed "Payment Gateway, VAS and Voice-Hosting Projects" of the Company. The Investor has already released around 60% of the above investment money to the Company.
(ii) In May, 2009, TeleCanor Global Ltd announced that the Board of Directors of the Company at its meeting held on May 22, 2009, inter alia, has resolved to issue 7,84,000 Equity Shares on preferential allotment basis in accordance with SEBI - DIP Guidelines 2000 to Mr. Hemant Kumar Gupta an Independent non-promoter investor and other non-promoter investors for funding the proposed "Payment Gateway, VAS and Voice-hosting Projects" of the Company.
Now kindly check the prices of these companies as of  now....Therefore, be careful while taking entry in such rosy stories circulated by vested interests. This scrip (Galada Power and Telecommunications Ltd) is already near its 52-week high price and anytime downturn could start. 

But as long as the operators continue to be in charge of the affairs, I believe the shares would could continue to tread new levels, like MIC Electronis Ltd did before nosediving to Rs.8.03 from Rs.10.99. 
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