Concerned to see why JP group sold stake post QIP: Ican

Q: United Spirits is the biggest loser today. What did you make of the earnings, bullish investors tell us the cleanup has happened but bearish investors are worried about the huge Rs 4,000 crore write off. In which camp are you?

A: I don’t buy this whole situation when investors say, because right now it is married with the environment, which is very bullish, so I don’t want to take any bad news. If there is a bad news, it is a cleanup. Suppose the same thing had happened six months back in February 2014, even the diehard investor or believer of USL would have said that it is a very bad thing.

One has to look at it with regards to the current mood and environment, but leave aside that as a person who has understood the Indian investors and more on the small investors it is a very bad news, it is not a cleanup. It is something rightly so.

Small shareholders believe in what audit practices the auditors have done and the audit committee and more importantly what role the job audit committee is functioning in a company like USL.

This brings us to a major point in India that really the audit committee and the chairman of audit committee are doing their job, are the auditors really doing their job and giving a true and fair; true and correct is just not possible but even true and fair is becoming difficult in this country.

Q: Are some more write-offs possible in future?

A: One has to really go through all that. I don’t want to comment without having all the facts and figures before me. But I don’t think all these companies, and when I look at very questionable practices which were also present in Kingfisher Airlines, and are present in many other companies in the group.

There is a certain amount of contempt that one can get away with these kinds of things with both not being very functional especially the independent directors and auditors. I will not be surprised without having full details before me and will not be surprised if few more such skeletons come out of the group.

Q: Are you surprised that the promoters of JP group have actually sold stake in JP Associates at such low price? Could there be any possibility of cash crunch for the promoters?

A: I was surprised to know that the promoters sold the shares due to some social cause. I personally don’t agree on that even if that be the case that you have to really sell so much of your holding for a social objective or a cause.

This is very concerning at any point in time and particularly now when the company is really selling off its assets to reduce debt. It is very concerning that such a large portion of promoter holding is being sold and especially after the QIP which was done very recently. After that if you sell it will unnerve investors a hell of lot.

And I still do not know the right reason. According to me, they should come out. Even if you have sold off the shares, which is now a public domain and knowledge, you must come out very clearly about the reason for doing so. To restore the confidence, because you still continue to be the largest shareholder, who loses the most in terms of market cap and reputation, it is much better that you come out very clearly to eliminate all the gossip and rumour mongering.

Q: It is pretty huge price they have paid. They have managed to raise just Rs 170 crore and for that the collateral damage on the JP group has been more than Rs 10,000 crore?

A: Precisely the point which I am raising here that who loses whenever a market cap or share prices come crashing down like this, who loses the most, it is the promoter because they are the largest shareholder. So they should communicate. It is all communication. Today, if the stock prices are still going down it is only on account of not getting the proper communication from the promoters and why they have sold such large quantity of shares.