I am a shareholder in Macrofil Investments.
I forwarded the below article to Economic Times and was talking to one reporter (Sanam Mirchandani). However, as per discussions, she mentioned that they would publish only if there are multiple shareholders being affected vs just me. I did tell her there are many more minority shareholders but I havent been able to gather them together. Do you have access to more shareholders of the Company?
Email of Sanam Mirchandani (firstname.lastname@example.org ).
Below is the article I sent.
Strong-Arming of Minor Shareholders By Wadia Group
I write to you as a grieving shareholder of Macrofil Investments Limited (the Holding Company of Wadia Group of Companies – unlisted company). This Company is one of the rare Indian Companies to hold and it’s a top notch holding company of Wadia group and it has layers of assets and holdings (National Peroxide, Bombay Dyeing Mills). I have been a shareholder of the Company since 30+ years. The Promoters of the company hold 89.19% (Attachment Pg. 1) of the Company, thus enabling them to pass any resolution as they please (since they hold more than 75% shares).
The Company has 4,42,948 issued share equity shares (Attachment Pg. 2) and one of its valued investments is its holding of 19,18,109 shares in National Peroxide Limited (listed company with a share price of Rs. 4074 each (as of 11th Jan 2019) – Attachment Pg. 3. Even if we are to ignore all other assets and cash flows, this places the value of each share of Macrofil Investments at Rs 17,642 each (1918109 shares /442948 shares*Rs 4074).
In its 2018 annual report, the Company proposes to Consolidate its 4,99,000 equity shares (authorized share capital) of Rs 10 each to 1,000 equity shares of Rs 5,000 each, a ratio of 500:1 (Attachment Pg. 4). This would eliminate all shareholders which hold less than 500 shares as they would be concluded to hold fractional shares in the company; hence they would be paid off at the fair valuation as deemed fit by the management which could be any value as they deem fit or as able to justify to the courts. As per the Company’s ongoing case with the NCLT, the price at which the shareholders would be paid off would be Rs 3,400.
This is a clear tactic of eliminating all shareholders holding less than 500 shares from benefiting from the real valuation of the shares ensuring that the benefit only flows to the majority shareholders, ie, the Promoters in this case.
The loss of valuation to the small shareholders would approximately be Rs. 14,250 per share and the total loss to the small shareholders would be ~Rs 60 crores based on the below calculation (after considering valuation from only National Peroxide).
No. of shares % Holding
Total shares O/S 442,948 100.00%
Promoter Holding 395,076 89.19%
Public Shareholding 47,872 10.81%
Public Shareholders with 500+ shares 5,156 1.16%
Balance Public Shareholders Impacted 42,716 9.64%
Loss of valuation per share 14,250
Total Loss Rs 60,87,03,000
I would leave it upto you to determine if this quality as dishonesty, theft or duping long term investors. I would love for stakeholders to know the quality of management by the Wadia Group and understand that given the opportunity, they would not leave a chance to take advantage of small investors or even cut corners. Proud owners of luxurious apartments in Bombay Reality should beware of this management as well.
Please feel free to reach out in case of any questions. I will be more than happy to share the 2018 annual report of the company with you. I am attaching scans of some of the relevant pages for your reference.
In case you feel someone else could be more relevant for something like this, please let me know. I will forward this email to them.
Look forward and hope this is something you can bring out in the open for public to see.
Thanks Viraj ,
We have sent an email to Sanam Ma'am supporting your contentions
Copy of Email
We fully support Viraj Parekh 's Letter / Email to you regarding the compulsory extinguishment,. by Management of Macrofil Investments 's Non Promoter shareholders , including my self..
Macrofil holds one third of National Peroxide 's ( Listed ) equity. In the last one year share of National Peroxide has gone up by 4 times.
The rate Rs. 3400 for every Rs. 10 share is arbitrary and a mere fraction of true worth. We wrote to the Company for providing us with a Copy of Valuers' Report Also, talked to Mr. Datanwala ( Director ) but Report not sent.
Consolidation of Face Value from Rs. 10 to Rs. 5000 to oust small share holders is a cheap / devious method unbecoming of the Wadia group
There are many other affected shareholders of Macrofil with us.
Please highlight our case.
General Warning : Investment in Shares Can be Injurious to Your Wealth
Disclosure : We have family holdings in this Company , so please make suitable 'provisions ' for likely over optimism.
Disclaimer : All comments / facts stated purely in good faith to further the interests of fellow public investors. Please recheck every fact.
NO responsibility with this blog / writer