GTL Group needs regulators’ scrutiny
Moneylife Digital Team 02 July 2011

Manoj Tirodkar of GTL admits that his group needs de-leveraging, but shouldn’t regulators investigate the true extent of its borrowing and pledge of shares?

Manoj Tirodkar of the Global Group of companies is no stranger to controversy. In an interview to Business Standard recently, Tirodkar said that he had survived a "tsunami and is still recovering from it". Well, when it comes to Tirodkar, his investors and lenders probably have to learn to survive many tsunamis.

Tirodkar was once a close buddy of scamster Ketan Parekh and his flagship company—then called Global Tele-Systems—which was part of the 10 key stocks that were relentlessly ramped up by Ketan Parekh. In the aftermath of Ketan Parekh's financial collapse and the Joint Parliamentary Committee (JPC) investigation, the shares fell to a fraction of their pumped-up high.

Tirodkar then left India for a while and seems to have used the time well to come out nearly unscathed.
 
However, the steep drop of over Rs4,400 crore in the market-cap of his two companies—GTL Ltd and GTL Infrastructure on 20th June—has jolted investors as well as lenders into taking stock of his self-confessed need to 'de-leverage' his balance sheet by infusing more equity into his companies.

GTL has announced the appointment of SBI Capital Markets (SBI Caps) to assess its financials and suggest appropriate steps to protect lenders' interest. We at Moneylife think that the regulators—both the Reserve Bank of India (RBI) and SEBI (the Securities and Exchange Board of India) ought to be investigating GTL rather than its own financial intermediary.
 
SEBI needs to unravel and make public the mystery of the seven companies who dumped GTL stock on a single day. These seven—Green Ridge Properties, Cosmo Advisory Services, Reckon Trading, Aerolite Advisory Services, Cross Link Trading, Plasma Advisory Services and Savyasachin Estates—accounted for roughly 40% of shares delivered on that Monday, when its stock price dropped dramatically. So far, GTL has offered no convincing explanation and has denied that these are financiers getting rid of pledged shares.

From 16th June to the end of today's trading session, GTL is down by 76% to Rs97.20 and GTL Infrastructure by 51% to Rs15.85 on the BSE (Bombay Stock Exchange).
 
Meanwhile, the RBI ought to look into the borrowings by the entire group. Remember, Global Tele, along with Himachal Futuristic and the Zee Group, had colluded with Ketan Parekh to bring about the demise of Global Trust Bank in 2000.

Which are the banks that have been lending to the Global Group entities to the extent that it is over-leveraged again? Have they followed prudent lending norms? And what are the repayments due in the coming months?
 
According to bankers, GTL has been borrowing through all its entities—listed and unlisted—from Indian banks. While the listed entities are tracked by investors and analysts, very little is known about the loans to unlisted companies, which are also substantial.
 
For instance, it is reliably learnt that Corporation Bank had disbursed Rs170 crore to GTL as of January 2011. It has also sanctioned another Rs500 crore to Chennai Network Infrastructure Ltd, of which Rs300 crore has been disbursed. GTL Infrastructure amalgamated with Chennai Network to form a Special Purpose Vehicle (SPV) to acquire Aircel's tower assets.
 
Global Holding Corporation (GHC) has other subsidiaries such as Global Rural Netco Ltd and Global Projects and Aviation Pvt Ltd (GPAL), which have borrowed Rs102 crore and Rs150crore, respectively, from Corporation Bank alone. This is the borrowing from one bank alone—only the RBI has the power to seek and collate how much the Indian banking system has lent to Mr Tirodkar in his second innings of high-speed growth.
 
Interestingly, in November 2009, Forbes magazine listed Manoj Tirodkar at the 84th rank in its list of richest Indians. His net-worth was estimated at $570 million. Less than a year later, in September 2010, CNBC-TV18 had reported that "Rs 800 crore of alleged bogus billing has been detected by the I-T sleuths" along with Rs8 crore of cash in raids on GTL group entities. It also claimed "several priceless paintings by Pablo Picasso, Salvador Dali and Rabindranath Tagore have also been found by I-T officials at residential premises and godowns" which were being valued by the tax authorities. Nothing further has been heard on that front.

Comments
Aman
1 decade ago
I read the article and being one of the share holders feel that the article is completly one sided.
 
All said and done the group did create value by entering into telecom space and that reflected in the
original GTL share holders getting 1 share of GTL Infra free for every share of GTL held, also GTL Infra offered rights at par.
 
Before this crash GTL Share price was at Rs. 400+ and GTL Infra Rs 30 - 32.
 
As mentioned in the article, there is a steep drop of over Rs. 4,400/- crore in the market cap of GTL Infra + GTL, promoter being the single largest share holder, why would he like to see this kind of erosion, bringing himself and the company into trouble.
 
There definetly seems to be a bear cartel at job or rivals of the group behind such a devastation, this only gets substianted with the fact that on the day of the crash several rumours were spread like Aircel deal falling through, raid on the company etc. Infact the company came on record on CNBC and ET Now clarifying that no such things have happened.
 
I feel that the article is too harsh on GTL group and its promoter Manoj Tirodkar, who have ultimately lost the maximum in this beating. Ofcourse as a share holder i expect the company to soon come out of these tubulent times.
Nirupam
1 decade ago
GTL Infra in 4 years owns 32,000 towers. Its a fast coming up company, it acquired the Aircel towers reportedly at Rs. 8,400/- cr. thus stretching its balance sheet.

The interest rate in India has increased by 9-10 times in the last 18 months or so. some media reports put the loan value to around Rs. 10,000 cr, thus if the company had initial borrowing at 9% then it would be paying interests at somewhere between 12-13% ie. upto additional Rs. 300-440 cr / annum.

Even the telecom sector in which these companies operate has seen more than half of the operators stuck in thier spectrum issues,and not expanding as planned.

Therefore given the adverse macro enviornment GTL group has done the right thing to go for financial restructuring and write to SEBI

Tirodkar is a fighter, a first generation entrepreneur, he has seen his market cap erosion earlier too.

Lets see what he is able to do this time
Rajan Manchanda
1 decade ago
GTL down 76 % ?????????????????
Yet to see any action by any Govt agencies except news of SBI CAPS to suggest appropriate steps to protect lenders interest.

What about equity investors who have been ruined with 76 % erosion in their wealth ???? Is the lenders wealth more important than the equity investors wealth ??? Lenders have access to the books of GTL and are responsible if they have been negilent but why should an investor suffer for no fault of theirs. Was one SATYAM not sufficient to caution the authorities when investors lost over 90 %.

Should SEBI have not initiated an investigation on the same day of collapse when prices fell like a pack of cards ? Should the lenders not have stepped in and report what was happening.

Surprised Mr.Arnab Goswami at TIMES NOW did not take up on NEWS HOUR. He can get the ball rolling and aweken the authorities from slumber.

Today should we hope The Honourable SUPREME COURT will take suo moto action.

The retail investors desert the market every time such a collapse happens yet no action is taken.
citizenindia
1 decade ago
in this article lies the key to the real purpose of insistence of formation of JPC by bjp. the JPC IS THE JOINT PARDON COMMITTEE.
prakash d n
1 decade ago
God Vishnu had taken only Ten Avatars (Dasavatar). No one is sure how many avatars Tirodkar will appear and continue to defy RBI, SEBI, Govt. We will have one more Parliamentary Committee and forget it. By the time Tirodkar will be ready for his next avatar.

God Save Bharat.
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