India Cements and its 'connections' saga

There are some companies which become losers when their promoters get embroiled in scandals and scams. Political connections too, as long as the going is good, pays off well but the moment the political patronage gets into trouble, the company stops enjoy fancy on the bourses and traders get wary. This is true for DLF and India Cements.

We know the UPA connection of DLF and in Indian Cements, the ongoing investigations against Jagmohan Reddy seems to be catching up. India Cements has invested Rs.40 crore in Reddy’s media empire and put in another Rs.100 crore in Raghuram Cement which was later taken over by Reddy’s company, Bharathi Cements Corp. And in lieu of this, the Andhra Pradesh Govt passed orders permitting India Cements to draw additional water from the Krishna river for its cement making unit in Nalgonda and Rangareddy. That’s not all, India Cements also got an extension of 25 years for a mining lease.

Repercussion of all this is that every time Reddy or Srinivasan get into trouble, the stock price tanks. And that is precisely what has happened today – news is that the ED attached a few more assets worth Rs.232 crore belonging to Reddy and India Cements and the probe is on with matters related to money laundering through Reddy’s businesses. Little wonder then that India Cements is today amongst the top losers on the BSE.