State govt’s fresh capital infusion in J&K Bank devalued by Rs 200 cr

Bank’s share price falls to Rs 42.60 from Rs 85 a year ago, net worth down by Rs 1400 cr

GK BUSINESS DESK
Srinagar, Publish Date: Oct 24 2018 3:31AM | Updated Date: Oct 24 2018 3:31AM
State govt’s fresh capital infusion in J&K Bank devalued by Rs 200 crRepresentational Pic

State government has lost over Rs 200 crore of its fresh capital investment in J&K Bank. The falling share price of the bank is giving jitters to the state government, the bank’s majority stake holders. 

Some time back, the state government had made fresh capital investment of Rs 532 crore at Rs 79 per share taking its shareholding to almost 60 percent. The value of the capital investment has depreciated as is apparent from its share price, which closed on Tuesday at Rs 42.65 at BSE and Rs 42.95 at NSE. 

The price of a share has gone down to half of the value it has a year ago, at about Rs 85.

A top government official requesting anonymity said the bank is hit by failure of corporate governance in the past few years. The net worth of the bank has drastically eroded by over Rs 1400 crore, which, he said, will be approximately 10 years future net profits of the bank. 

A banking analysts pointed out that the market capitalisation of the bank has almost reduced by over Rs 850 crore. 

"Further it is the unique situation, where the share price is less than book value or market capitalisation is less than net worth. Generally market capitalisation is very high compared to the net worth of a company,” the analyst said. “In case of HDFC Bank, against net worth of Rs 1 lakh crore, the market capitalisation is more than Rs 5 lakh crore. This kind of situation arises in organisations, where investors don not have confidence on the company and its management and depicts weak corporate governance. This indicates, that, the investors have low confidence on the bank," he said.

Another expert was quick to point out that the bank has also reported excess net worth of Rs 650 crores in the annual report of 2016-17 by including revaluation reserve in the net worth, which is a mistake in the annual report, for which SEBI will punish the bank any time. The revaluation reserve does not form part of the net-worth as per generally accepted accounting policies and as per RBI master circular. 

Some investor relations experts have called huge contingent liabilities being carried in the books of the bank as "a demon sword". They have predicted fall of the bank share to the level of Rs 20.

A contingent liability is a potential liability that may occur depending on the outcome of an uncertain future event.

Latest News

  1. Governor dissolves Jammu and Kashmir legislative assembly after Mehbooba, Lone stake claim
  2. Governor dissolves Jammu and Kashmir legislative assembly after Mehbooba, Lone stake claim
  1. Sajad Lone also stakes claim for govt formation in Jammu and Kashmir
  2. Sajad Lone also stakes claim for govt formation in Jammu and Kashmir
  1. 'Unable' to reach him on fax and phone, Mehbooba emails governor, stakes claim to form govt
  2. 'Unable' to reach him on fax and phone, Mehbooba emails governor, stakes claim to form govt
  1. Setting aside our differences to protect Article 35A, prevent horse-trading: Mehbooba on alliance with NC, Congress
  2. Setting aside our differences to protect Article 35A, prevent horse-trading: Mehbooba on alliance with NC, Congress
  1. Army commander visits troops at Siachen Glacier
  2. Army commander visits troops at Siachen Glacier
  1. GK Exclusive | Have decided to join hands, ‘good news’ soon: Altaf Bukhari on NC-PDP-Congress alliance
  2. GK Exclusive | Have decided to join hands, ‘good news’ soon: Altaf Bukhari on NC-PDP-Congress alliance
  1. Jammu police arrests two gangsters with arms, foils gang-war
  2. Jammu police arrests two gangsters with arms, foils gang-war
  1. Two cops arrested for smuggling heroin in Jammu
  2. Two cops arrested for smuggling heroin in Jammu
  1. Punjab Police arrest one over Amritsar grenade attack
  2. Punjab Police arrest one over Amritsar grenade attack
  1. Muslims across Kashmir observe Eid-e-Milad-un-Nabi (SAW)
  2. Muslims across Kashmir observe Eid-e-Milad-un-Nabi (SAW)
  1. American tourist allegedly killed by isolated tribe in Andaman and Nicobar Islands
  2. American tourist allegedly killed by isolated tribe in Andaman and Nicobar Islands
  1. IUST Awantipora postpones exams scheduled tomorrow
  2. IUST Awantipora postpones exams scheduled tomorrow
  1. NC, PDP, Congress coming together on Pakistan’s directions: BJP leader
  2. NC, PDP, Congress coming together on Pakistan’s directions: BJP leader
  1. JK govt formation: Formal meeting among NC-PDP-Congress soon, says GA Mir
  2. JK govt formation: Formal meeting among NC-PDP-Congress soon, says GA Mir
  1. NC-Congress-PDP likely to form govt in Jammu and Kashmir: Reports
  2. NC-Congress-PDP likely to form govt in Jammu and Kashmir: Reports
  1. Nearly 400 paramilitary personnel killed in action in 2015-17: MHA
  2. Nearly 400 paramilitary personnel killed in action in 2015-17: MHA
  1. People have been armed to wipe out Jama’at, Tehreek-e-Hurriyat: Sehrai at residence of Mir Hafizullah
  2. People have been armed to wipe out Jama’at, Tehreek-e-Hurriyat: Sehrai at residence of Mir Hafizullah
  1. Army soldier injured in landmine explosion near LoC in Poonch
  2. Army soldier injured in landmine explosion near LoC in Poonch
  1. Shopian in south Kashmir shuts against militant killings
  2. Shopian in south Kashmir shuts against militant killings
  1. Pakistan condemns killing of Hafizullah Mir in south Kashmir
  2. Pakistan condemns killing of Hafizullah Mir in south Kashmir
  1. Kovind, Modi greet people on Milad-un-Nabi
  2. Kovind, Modi greet people on Milad-un-Nabi
  1. Mortar shell explosion kills two children in Pakistan
  2. Mortar shell explosion kills two children in Pakistan
  1. Leh coldest in Jammu and Kashmir
  2. Leh coldest in Jammu and Kashmir
  1. OIC chief reiterates support to Kashmir movement at 'Black Day' event in Jeddah
  2. OIC chief reiterates support to Kashmir movement at 'Black Day' event in Jeddah
  1. Suicide bomb attack in Kabul kills at least 50
  2. Suicide bomb attack in Kabul kills at least 50
  1. USD 1.66 bn in security aid to Pakistan suspended: Pentagon
  2. USD 1.66 bn in security aid to Pakistan suspended: Pentagon
  1. Won't abandon Saudi Arabia over Khashoggi killing: Trump
  2. Won't abandon Saudi Arabia over Khashoggi killing: Trump
  1. 85,000 Yemeni kids dead from malnutrition: Charity
  2. 85,000 Yemeni kids dead from malnutrition: Charity
  1. Jammu and Kashmir police chief greets people on Eid Milad-un-Nabi
  2. Jammu and Kashmir police chief greets people on Eid Milad-un-Nabi
  1. North Kashmir: Forces launch searches in Hajin locality
  2. North Kashmir: Forces launch searches in Hajin locality
x
This site uses cookies to deliver our services and to show you relevant news and ads. By using our site, you acknowledge that you have read and understand our Cookie Policy, Privacy Policy, and our Terms of Service.That's Fine