Renu going down and down

ipoguru · 1 Renu going down and down Fri Jan 27, 2012 10:49 am

ipoguru

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Why is this going down day by day? Are there any news related?

Antonym · 2 Re: Renu going down and down Fri Jan 27, 2012 11:20 am

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Once upon a time, RENU used to be my favorite share because the company was worth the price. However, I am disappointed with the manner in which they have been utilizing their substantial cash reserves. It appears that they have been siphoning off surplus funds to a related company in Australia - instead of distributing it to shareholders or investing in another hotel.

Company has granted a loan amounting Rs. 325,551,194 (that's Rs 46.5 per RENU share) during last year to REN Pty Limited which is incorporated in Australia. Interest rate on this loan is 5% to 7% per annum. This loan is totally repayable by 30th March 2019. A first ranking fixed and floating debenture charge over all of the undertakings of the borrower is the security to this loan.

If not for this suspicious transaction and lack of clarity on what their plans are, RENU offers good value for money.

gamaya · 3 Re: Renu going down and down Fri Jan 27, 2012 2:26 pm

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If that is the case aren't they supposed to make a disclosure? Thanks.

Gaja · 4 Re: Renu going down and down Fri Jan 27, 2012 2:43 pm

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gamaya wrote:If that is the case aren't they supposed to make a disclosure? Thanks.

"Company has granted a loan amounting Rs. 325,551,194 (that's Rs 46.5 per RENU share) during last year to REN Pty Limited which is incorporated in Australia. Interest rate on this loan is 5% to 7% per annum. This loan is totally repayable by 30th March 2019. A first ranking fixed and floating debenture charge over all of the undertakings of the borrower is the security to this loan."

This was there in the annual report, but i think as Antonym said they should have clearly disclosed the relationship they have with the Australian Company, there business, shareholders and common shareholders if any, also they should have explain as to how giving at 5 to 7% is more beneficial than using that money for Sri Lankan operation!

ipoguru · 5 Re: Renu going down and down Fri Jan 27, 2012 2:46 pm

ipoguru

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Gaja wrote:

gamaya wrote:If that is the case aren't they supposed to make a disclosure? Thanks.

"Company has granted a loan amounting Rs. 325,551,194 (that's Rs 46.5 per RENU share) during last year to REN Pty Limited which is incorporated in Australia. Interest rate on this loan is 5% to 7% per annum. This loan is totally repayable by 30th March 2019. A first ranking fixed and floating debenture charge over all of the undertakings of the borrower is the security to this loan."

This was there in the annual report, but i think as Antonym said they should have clearly disclosed the relationship they have with the Australian Company, there business, shareholders and common shareholders if any, also they should have explain as to how giving at 5 to 7% is more beneficial than using that money for Sri Lankan operation!

Say major Share holders in REN and RENU are same. Are there any laws to prevent minor shareholders of RENU then?

Antonym · 6 Re: Renu going down and down Fri Jan 27, 2012 3:36 pm

Antonym

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ipoguru wrote:
Say major Share holders in REN and RENU are same. Are there any laws to prevent minor shareholders of RENU then?

I don't think so.
Minority shareholders have very little say in the running of the business. The only recourse is to raise the issue at the AGM - ask the relevant questions and make your opinion known to the directors.