Opportunities in Holding Companies

Instead of distributing cash what if they restructure and distribute the underlying securities? Won’t distributing cash be considered dividend if yes then wont the company have to pay dividend distribution tax and if the investor gets over 10 lakhs then he has to pay an additional 10%. So distributing cash might not be a great idea even if they decide to amalgamate a holding company. If they decide to allocate the underlying securities it will be considered at zero cost so 10% LTCG /STCG will be considered on the entire investment and not just the gains.

In theory everything is possible

I am not invested in holding companies stock
You need to take control of the full holding company to do what you feel is correct

You can’t expect the existing board to do the right thing

I don’t have anywhere that much capital or expertise

I am just trying to see how a layman would interpret their interest in the holding company if they have a small shareholding

As a shareholder we don’t usually buy on expectation that management will do the most
Proper thing. We usually buy based on what management has already done and how those actions will play out in the future

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I understand what you are saying. My point was the discount has very little to do with tax implications of potential amalgamation. PPFAS in one of the interviews has mentioned in other markets the discounts are only about 10% but in India the higher discount is because the promoters of holding companies in the past have acted against the interests of minority shareholders.

Worth revisiting Kirloskar Industries. Key underlying is 51% stake in Kirloskar Ferrous. Value along with other holdings is 3500crs… 2x approx of its own mcap.

Add the catalyst could be a new vertical (100% subsidiary) for real estate development. First project of ITES park development started. Will develop more parcels owned by it/ group cos. So basically a new vertical with big land parcels… perhaps more than 2x its own mcap again.

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