Amara Raja Batteries Ltd is a listed company, making and selling automotive batteries. It is an Andhra Pradesh based company (home to Satyam) and the Indian promoters, over time have diluted their holdings to around 20 % and there is a ‘foreign’ promoter who holds 30 %. And the FIIs hold around 17%. The general public seem to hold under 12%. So who holds the balance is anyone’s guess. In the foreign shareholding, there is “Johnson Controls” and American battery manufacturer and who is perhaps a strategic investor.
Now, the Indian promoter is doing what every other promoter does.
As per this press report (http://www.business-standard.com/article/markets/amara-raja-wants-to-pay-promoter-entity-upfront-for-99-yr-lease-114091800925_1.html ) the promoter seems to first have bought some land adjacent to the factory at some point in time in the past ( visionary ) and is now palming it off to the company for a chunk of cash, with a one sided agreement. No one seems to care a damn. The share price has barely reacted and life goes on.
This stock has been in more than one scandal in the past. I recall something during Ketan Parekh scam days also (http://www.thehindubusinessline.com/iw/2002/07/21/stories/2002072100010800.htm ).
A company with so much of issues still finds investors. It certainly speaks volumes for the importance an institutional investor gives to governance. They talk about it. Beyond that, they actually seem to love companies that live dangerously. And no one of course gives a damn.
This company, even after being named in a scandal as early as 2001, is finding favour with analysts, investors and the media!. Tells you on your face what they think about corporate governance or integrity.
Amara Raja Batteries Ltd is one of the examples. Some fund managers I talked to said that if we use such ‘strict’ yardsticks, there will be no stock left to invest in India! So this forms the excuse to put the criteria of ‘corporate governance’ in to the dust bin.
In my career, I have seen more talks and writings on corporate governance than instances of a fund manager rejecting an investment on this ground.
It is really surprising that the stock of this company has barely moved after publication of this news!
(p.s. I have no long or short or any other interest in this stock. This stock is amongst my ‘not to invest’ bucket list based on its geography)