I am wondering, is it possible that recession will begin from 2012? I have seen many articles on internet about this, and recently one from Gary Shilling (please see the link Paul Farrel: A Recession Is Coming In 2012 And Things Don )

Any thoughts from intellectual people ...

How will it impact on IT and RE sectors?
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  • Dear Wiseman,

    I have no interest in fighting with you. I just wants the facts to prevail. I am an investment banker by profession and a CFA by qualification and understands the Investment banking deals very well

    Summarizing again in the attached excel....

    Also if you are listening to the news its been stated multiple times that Unitech did not seel its shares to Telenoe telenor infused money in unitech wireless by buying fresh equity. Not a single rupee has gone from Telenor to Unitech or its promoters
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  • I take back my comment of "Self benefit". Kindly accept my appologies for that....

    But the comment made by you multiple places that Telenor gave Unitech 6500 crores and will ask it back is totally wrong. So I am just proving that point only.

    I have proven you what I am saying with proper numbers...

    What happens to Unitech price, I am not arguing at all on that, whether it goes to 5 or 10 or 100...

    I am just trying to put the facts forward my dear friend...

    Also now after seeing the numbers you have changed the words of your above mentioned post....

    No body is denying that Unitech is in problems but lets have the facts right...Sir
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  • This is the ONLY way they might NOT have given to Unitech

    Originally Posted by amit001
    Sir wiseman please read the whole deal structure

    Lets cross question each other to educate ourselves and see what is right and what is wrong



    Amit,

    You sheet does NOT detail the pre and post capital structure.

    Specifically, if the subscribed share capital was the same (or nearly the same) before and after, then Telenor could only have bought shares from the promoters - Sanjay Chandra. Since it was a closely held company I assume that they held most of the shares.

    If fresh equity was issued, then dilution would have happened and the premium money would have gone into Unitech Wireless reserves as share premium.

    Was Unitech Wireless renamed as Uninor? If not, is the JV between Unitech Wireless and Telenor OR Unitech and Telenor?

    Can you please give me those details. That would educate both of us as to exactly what transpired.

    Simply stating terms like "Infused" makes it very vague and obfuscatory! (There, I proved my English was not all that bad! :D)!

    There is one more way Unitech could have mademoney on the side!

    Start Unitech Wireless with say 50 Crores capital.

    Take loan (from Tata, Ambani, Birla, etc) to act as front company of Rs 1600 Crores. Buy licence with this money!

    Based on this, inflate valuation of shares from 50 crores to 5000 Crores. Don't believe this. It happens daily

    Sell part of this to Telenor (that 2600 crores) and issue fresh equity to telenor at sky-high valuation.

    Now here's the trick! Based on this sky-high valuation, the remaining 34% held by Unitech/Chndra is now worth much more!

    On secondary sale, sell the remaining for another 2000-3000 crores to give full ownership to Telenor.

    You will note how an initial capital of 50 Crores magically became anything from 5000 crores upwards. Pay back the loan originally taken and close case and retire to Bahamas.

    OR, rinse and repeat!!! :D

    Amit - I want Capital Structure BEFORE and AFTER.

    Don't keep on side-tracking the debate about my English, weaknesses, etc! Stay on the topic!

    If you didn't get some of the words I used, I could always help you out - despite my weak English!:D

    cheers
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  • This is the statement which Telenoe made on the 2G Scam

    When Telenor invested Rs. 6,120 crore for a 67.25 per cent ownership in Unitech Wireless, it was in a company that already had a genuine licence issued by the Indian government with all necessary approvals. These investments were cleared by the Government of India at each stage,” Telenor said in a statement. In 2008, Telenor joined hands with Unitech Wireless to provide telecom services under the brand name Uninor.

    Defending its JV with Unitech, Telenor said: “The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now. It is Telenor Group's intention to fight for its rights and continue the operational progress that has been achieved in the Indian market.”
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  • Ok dont believe me read the official statement by Telenor Representative - Read in red below.....I am not saying it this is what Telenor is saying officially

    When Telenor invested Rs. 6,120 crore for a 67.25 per cent ownership in Unitech Wireless, it was in a company that already had a genuine licence issued by the Indian government with all necessary approvals. These investments were cleared by the Government of India at each stage,” Telenor said in a statement. In 2008, Telenor joined hands with Unitech Wireless to provide telecom services under the brand name Uninor.

    Defending its JV with Unitech, Telenor said: “The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now. It is Telenor Group's intention to fight for its rights and continue the operational progress that has been achieved in the Indian market.”


    Originally Posted by wiseman
    Amit,

    You sheet does NOT detail the pre and post capital structure.

    Specifically, if the subscribed share capital was the same (or nearly the same) before and after, then Telenor could only have bought shares from the promoters - Sanjay Chandra. Since it was a closely held company I assume that they held most of the shares.

    If fresh equity was issued, then dilution would have happened and the premium money would have gone into Unitech Wireless reserves as share premium.

    Was Unitech Wireless renamed as Uninor? If not, is the JV between Unitech Wireless and Telenor OR Unitech and Telenor?

    Can you please give me those details. That would educate both of us as to exactly what transpired.

    Simply stating terms like "Infused" makes it very vague and obfuscatory! (There, I proved my English was not all that bad! :D)!

    There is one more way Unitech could have mademoney on the side!

    Start Unitech Wireless with say 50 Crores capital.

    Take loan (from Tata, Ambani, Birla, etc) to act as front company of Rs 1600 Crores. Buy licence with this money!

    Based on this, inflate valuation of shares from 50 crores to 5000 Crores. Don't believe this. It happens daily

    ... continued
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  • Wiseman - Now what does the formal statement by Telenor says

    "The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now"

    What else you need just to prove your point....

    Still if people want to believe what you are saying - I am not here to teach corporate finance............
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  • Here is the official statement from the source directly....

    The Hindu : News / National : Joint venture investments in Unitech cleared by Centre: Telenor


    Now dont tell me you dont believe what Telenor representative is saying.....
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  • Nice and interesting

    Originally Posted by amit001
    Read of my friend Wiseman

    Joint venture investments in Unitech cleared by Centre: Telenor
    4 April 2011, Sandeep Joshi
    Telenor on Monday distanced itself from the 2G spectrum scam and the naming of its joint venture (JV) partner Sanjay Chandra, managing director of Unitech, in the CBI charge sheet. The Norwegian telecom major said the CBI investigations covered the period prior to the Telenor Group's entry into India and that its investments in the JV with Unitech Wireless were cleared by the Government of India at each stage.

    “When Telenor invested Rs. 6,120 crore for a 67.25 per cent ownership in Unitech Wireless, it was in a company that already had a genuine licence issued by the Indian government with all necessary approvals. These investments were cleared by the Government of India at each stage,” Telenor said in a statement. In 2008, Telenor joined hands with Unitech Wireless to provide telecom services under the brand name Uninor.

    Defending its JV with Unitech, Telenor said: “The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now. It is Telenor Group's intention to fight for its rights and continue the operational progress that has been achieved in the Indian market.”

    Telenor said the CBI charge sheet had named Mr. Chandra as managing director of Unitech, besides naming Unitech Wireless for actions when it was a fully owned Unitech Company. “This was a period prior to the Telenor Group entering India. Unitech Wireless will argue its case in court, and we expect Mr. Chandra to do the same. Telenor fully supports these proceedings. Telenor has zero tolerance for corruption. If any malpractice has indeed occurred, those responsible must be brought to book,” the company said.

    *************************************************************************

    As evident from this independent article....all 6120 crores did not go in the unitech pocket....the profit they made from this deal is 2340 crores, which ED has said it will recover from unitech if it is prove guilty

    Now let me explain the technicalities of this deal……………………………

    For the benefit of members not from finance background...

    Pre Money Valuation - valuation of a company or asset prior to an investment or financing.

    So before the investment of Telenor in Unitech Wireless...

    The pre value money of unitech wireless was 2480 crores, as calculated above...Unitech has acquired the license only for 138 crores, so unitech made a profit of 2340 crores by getting the licenses cheap....

    As per the deal structuring between Unitech and Telenor, the post money valuation of equity was decided to be 9100 crores..

    Post money valuation - Post-money valuation is the value of a company after an investment has been made. This value is equal to the sum of the pre-money valuation and the amount of new equity

    Post money valuation = pre money valuation + investment made

    9100 crores = 2480+ 6620 crores

    Of this total amount Telenor brought 67.25%, so 67.25% of 9900 crores = 6120. This amount was put in the venture and not paid to Unitech

    out of this 9100 crores

    Telenor share = 67.25% = 6120 crores, it brought 6120 crores in the venture.

    Unitech share = 32.75%= 2580 crores, it already had the premoney valuation of 2480 crores, so it infused equity of close to 500 crores in Uninor...

    So as you saw how unitech benefited out of the deal, its pre money valuation was overvalued by 2340 crores, and tht what Unitech gained by getting the licenses cheap (If this is proved in the court, mind you it is not been proved)

    The only benefit Unitech got was over valuation of its pre money valuation of Unitech Wireless



    Where did they claim that the remaining 32.75% was sold at the same valuation?

    I just googled and got a Feb 2011 story that stated the following ...

    In the first phase, Telenor invested Rs 1,250 crore in Unitech Wireless for a 33.5 per cent stake, followed by Rs 1,130 crore for a 15.5 per cent and another Rs 1,493 crore for a further 11.1 per cent.

    So, as per this, the final round of stake sale went for 1493 crores for 11.1%.

    As far as I know Unitech's remaining 32.75% stake should then be worth Rs.4405 Crores and NOT the 2580 Crores you arrive at on the basis of average valuation across many rounds of sale!

    We can go on arguing about this forever!

    Are we not wasting time on all this?:o

    What do others think?

    Amit, do you have any thing to do with Unitech, etc that there is so much Khundhak about this trivial issue that is so OLD!?

    cheers
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  • Finally!

    Originally Posted by amit001
    Wiseman - Now what does the formal statement by Telenor says

    "The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now"

    What else you need just to prove your point....

    Still if people want to believe what you are saying - I am not here to teach corporate finance............


    Dude,

    Thats what I have been saying as well ALL ALONG!

    Telenor was taken to the cleaners by Sanjay Chandra!!! They have my sympathies!:D

    Unitech will come down lower! I will buy at firesale prices! I will make money on Unitech shares!

    Thats the ONLY benefit for me from Unitech!

    I never claimed to be an expert on Corporate Finance! You don't have to be one for the simple logic stated above.

    Subject closed!

    cheers
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  • In corporate finance/investment/equity deals - there is difference between "cash out" and equity infusion. When the promoters cash out they sell their stake and the money received go in their pocket but in case of equity infusion money goes in the venture and not in the hands of the promoters.

    All I am saying is that in this deal. Unitech did not cash out, Telenor infused equity in the venture. As evident by the press articles and the spreadsheets.


    Wiseman no hard feeling. I admire your knowledge and respect you for that and I also do not want to waste more time on this topic. lets move over it.
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  • Keynes vs Hayek econstories

    Fight of the Century | EconStories.tv

    many more such interesting topics in rap !
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  • media



    Media, espcially TOI group always likes to give sensational news without much evidence and study. Mentioned IT companies don't take American jobs, the work is outsourced to them because of cost factor.From American political point of view, its poltically correct to blame Indian IT companies. Outsorcing or offshoring issue is sometimes blown out of proportion.
    One reality is offshoring to India is becoming costly day by day as every IT professional wants 20% hike/year, high inflation,absurd office rent.
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  • This is fine, but going by this logic, the jobs in India would have been lost few months back, as the unemployment rate is high in US since long time now.
    There are indications of a recession coming, but this one mentioned in the link above do not justify the reason.
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