| . | When SEBI was formed investors were given a hope that SEBI would protect their interests. But subsequent events showed that every action that SEBI took resulted in the decline of Investor wealth and ultimately the thriving Capital Markets in the country were systematically destroyed by various moves of SEBI. It was not only through unwarranted over regulation and knee-jerk reactions that SEBI stifled the markets but also through the leniency showed to FIIs. SEBI s policies in promoting the FIIs have placed the Indian Capital Markets totally in control of FIIs and driven out genuine investors from the market. SEBI was also responsible for destroying the NBFC markets through improper norms for Merchant Banker registration. It also had a hand in denigrating UTI the largest Savings institution in the country. The handling of all these cases have clearly established that SEBI has a hidden agenda of its own which unfortunately appears to go against the general investors interests. One of the hidden agenda which SEBI seems to be pursuing seems to be to hunt for any bullish trend that may emerge in the market and nip it in the bud. For example some time back, Harshad Mehta posted an equity research report on BPL in the Internet. SEBI was quick to pounce on him and through threat persuaded him to close his site. Unfortunately this curbing of the freedom of expression on the Internet which SEBI infringed without proper authority went un questioned. Now SEBI seems to have identified BPL shares as a Harshad supported scrip and trying to curb any indication of bullish trade in the scrip. Recently SEBI has debarred 18 brokers for their alleged role in transactions involving BPL, Videocon and Sterlite scrips dubbing them as connected with Harshad Mehta. The moves of SEBI has put a brake on the share price movement of BPL for the time being and was last quoted at Rs 137. This represents a P/E of around 4.4 on the last year’s EPS of Rs 31. For a company which is a market leader or a near market leader in most of the products it is dealing in, such as Colour Televisions , Audio products, Domestic Refrigerators, the present discounting can be considered low. In the mean time, BPL has come out with its half yearly results which has reported a decent increase in its turnover and profits. During the half year, the turn over of the company has moved to Rs 914.01 crores (last full year Rs 1746.11 crores) .The net profit for the half year at Rs 41.12 crores which was about 23 % higher than the profit for corresponding period last year. The company has announced an interim dividend of 25 % (as against last years’ interim of 20 % and full dividend of 50 %) indicating confidence that the year end results could be better than the previous year. On the marketing front, the company has shown a higher growth in each of its major products than the market itself, consolidating its leadership position. The approximate growth rates of individual products against the estimated market growth are given in the adjoining table.
Considering the general recession in the economy and the onslaught of international Consumer electronic brands that have threatened the existence of the erstwhile Indian market leaders, the performance of BPL is noteworthy. The 52 week high/low of Rs 446 /18 indicates that the prices have moved up substantially from the lower end but is still far from the high level. Under the circumstances it appears that BPL shares are invetment worthy even at the current prices. The buying interest shown if any in the scrip in the last few months by brokers or investors can therefore be considered more as anticipation of better performance than market manipulation as SEBI would like us to believe. The approach of SEBI towards curbing investment interest in such Scripps indicate a possible collusion of bear operators and SEBI in keeping the markets depressed. If the government is serious in reviving the capital markets as it seems to be, one of the first steps it should take is therefore to conduct a thorough enquiry on the functioning of SEBI since its formation and to restructure the organisation completely. It must be purged of the elements who are only interested in "control" as against "development" and "FII" as against "Retail Indian investor". Na.Vijayashankar October 31, 1998 | . |