When Cupid went into tourism finance and back

On Saturday, contraceptive maker Cupid told the stock exchange that it had withdrawn plans to invest in Tourism Finance Corp., which provides loans to hotels and tour operators. Halwasiya is the largest shareholder of both companies. Interestingly, when the Tourism Finance Corporation put the financing plan to a vote, one of its three promoters, Oriental Insurance Company, which holds a 0.97% stake, rejected the plan in an unusual objection. Nevertheless, the resolution was approved by more than 95% of shareholders, according to voting disclosure information reviewed by the company. mint.

The story begins in September 2023, when Aditya Halwasiya and Halwasiya's group company Columbia Petro-Chem acquired Cupid and bought 42% of the promoter's shares. INRHolds $160 million and becomes the largest shareholder. On February 20, Aditya Halwasiya acquired 13.06% stake in Tourism Finance Corporation. INRHolds $250 million, making it the single largest shareholder. Tourism Finance announced that it plans to raise funds within a week. INR$200 million from three companies. Cupid's largest shareholder is Halwasiya. Columbia Petrochem Ltd. and Halwasiya himself – by issuing a writ.

Halwasiya agrees to invest. INR$50 billion, Columbia Petrochem Private. Ltd and Cupid will bring INR100 and INR50 billion each. After conversion of the stock acquisition rights, Halwasiya, Columbia Petrochem, and Cupid will own 14.13%, 4.48%, and 2.24%, respectively. Briefly, the company, of which Halwasiya and his family are the majority shareholders, will own 20.85% of the shares of Tourism Finance Corporation after the completion of the subscription rights.

Cupid's market capitalization is INRAs of Friday, the Tourism Finance Corporation was valued at $2.867 billion. INR156.3 billion.

Columbia Petro-Chem is the flagship company of Universal Halwasiya Group, a 60-year-old Kolkata-based business group founded by Madan Mohan Halwasiya. Ajay Halwasiya, grandson of Madan Mohan Halwasiya, is one of the shareholders of Three Musketeers Hospitality, a Dubai-based hospitality company. His other two co-founders are Hari Tibrewala and Surendra Bagri. The companies Zenith Multi Trading DMCC and JE Impex DMCC were among 13 companies whose assets were seized by the Enforcement Directorate earlier this month.

It sent emails and messages to Sethrasnam Ravi, chairman of the Tourism Finance Corporation and who also served as chairman of the BSE from November 2017 to February 2019, on why the promoter body had objected. INRThe question of the 200 million preferred stock issue and the way forward remained unanswered considering Cupid's departure.

“Cupid's exit is unrelated to our issuance of preferred stock and will continue going forward,” a Tourism Finance executive said on condition of anonymity, adding that the company's equity ratio of over 60% is very healthy. . .

When asked why Oriental Insurance rejected the Tourism Finance Corporation's decision to issue preferred shares, the executive said, “All shareholders have the right to vote as they see fit, and we respect the shareholder's decision.'' Ta.

Aditya Halwasiya denied that Cupid plans to invest the money raised from Tourism Finance Corporation's recent promotional issue.

” INR385 million priority allocation (excess) in Cupid Ltd. INRThe $96 billion was provided as the first tranche from Cupid's allocators) has nothing to do with the priority allocation of. INR50 billion for TFCIL,” Aditya Halwasiya responded via email. INRThe $385 million will be used to develop and expand Cupid Ltd's core business. INR500 Crores allocated to TFCIL was already available as cash/investment by Cupid. ”

Mr. Halwasiya added, “This change in thinking is a well-considered and strategic decision to ensure that capital is deployed where it will create the most value for Cupid.”

But some market experts remain unconvinced.

“One of the reasons why Cupid decided to withdraw from the issuance of preferred shares by the Tourism Finance Corporation, which was not a good decision as they were investing in unrelated businesses, was due to the relationship between the promoter and the Tourism Finance Corporation. They may be in the spotlight,'' said Shriram Subramanian, founder and managing director of proxy advisory firm Ingovan Research.

Subramanian added that the entire SME market seems to be in turmoil as the sources of funds for some investors are unclear.

“It is not good corporate governance for a promoter like Aditya Halwasiya to invest money along with funds from his company Cupid to buy shares in a company in an unrelated business (Tourism Finance Corporation). It's not enough, especially when Cupid himself has raised money from investors,'' said Nitin Mangal, a Sebi-registered independent analyst based in Mumbai.

Aditya Halwasiya, 29, became Cupid's managing director last year, and his brother Ajay Halwasiya joined as an additional director in February. Ajay Halwasiya is also the Managing Director of Three Musketeers Hospitality.

Responding to a questionnaire, Ajay Halwasiya said, “Me, Aditya, my family and business entities have not received any communication from any statutory or investigative agency regarding the investigation into Hari Tibwala.''

“I believe in the business potential of TFCIL and want to see the business reach the next level. We consider holistically what is best for all stakeholders. , we will take decisions intensively on this front as well,” Aditya said. “Like Cupid Inc., I think it will be a great starting point for TFCIL.”