The promoters and top executives of India Infoline have surrendered their convertible warrants which were issued to them last year. Besides the promoters, the others who were allotted the warrants include Bharat Parajia, H Nemkumar, Aniruddha Dange and Vasudev Jagannath, the quartet who were roped in from CLSA with a cumulative sign-on bonus of Rs 44 crore.

This is interesting as these warrants were to be allotted in lieu of the phenomenal sign-on bonus that these executives were paid to bring them on board.

According to a disclosure to the stock market the firm has "accepted the surrender of 55 million equity warrants issued under preferential allotment to identified persons including promoters on July 4, 2007 and cancellation of the warrants."

On July 4, 2007 the company had announced allotment of around 1.1 crore (11 million) warrants. Out of this, the promoters Nirmal Jain and R Venkataraman, were to be issued 13.1 lakh and 3.7 lakh warrants respectively.

Bharat Parajia (ex-director of sales at CLSA in Singapore) and H Nemkumar (former country head for CLSA India) were to receive 25 lakh warrants each while Aniruddha Dange (former head of research at CLSA India) and Vasudev Jagannath (ex-head of sales for CLSA India) were to get 20 lakh warrants each.

In addition another 3.2 lakh warrants were to be issued to Singapore-based investment firm Khattar Holdings. These warrants were priced at Rs 440. Since regulatory norms for warrants mandate that atleast 10% of the total amount of the transaction be paid at the time of allotment of warrants, the ex-CLSA quartet were in effect being given a sign-on bonus to pay the initial amount for subscribing to the convertible warrants.

They had to bring in a total of Rs 396 crore for the warrants out of which around Rs 40 crore was to be paid upfront as against their Rs 44 crore sign-on bonus.

They had to bring in the remaining Rs 350 crore or so within the next 18 months as a part of the transaction. It was not clear how these executives would have brought in that much cash to pay for the conversion of remaining warrants.

India Infoline stock went through a stock split early this year and this has converted the 11 million warrants into 55 million warrants, which have now been cancelled. This is not surprising, given that the price of the scrip has now fallen to Rs 46.8 which after adjusting for stock split is Rs 234, almost 47% below the price of allotment.

At the same time India Infoline also announced that the firm will issue new employee stock options comprising a huge quantum of 50 million options. Though it is not clear, it is probable that a sizeable chunk of this may go out to the four top executives.

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