Soaring Kitex Shares Reveal Kerala's Business Problem, Says Sabu Jacob
Skyrocketing stock prices reveal the 'crux of problem' that ails Kerala's business climate, Sabu Jacob said.
Ever since Kitex Group Managing Director Sabu M Jacob announced his decision to invest in states other than Kerala, the company's stock prices have soared 44.26 percent.
The skyrocketing stock prices reveal the 'crux of problem' that ails Kerala's business climate, Jacob told The Quint. Jacob made the announcement to exit the state on 10 July. On 11 July, the company, which had pulled out Rs 3,500 crore investment in Kerala, invested Rs 1,000 crore in Telangana.
Kitex Group is now considering its options in Andhra Pradesh, Karnataka, and Tamil Nadu. A total of nine states had reached out to the company following its announcement to leave Kerala.
Share Prices Indicate Bigger Problems, Says Jacob
Talking to The Quint, Jacob said, "When a company decides to move out of Kerala (Kitex in particular), its share prices go up 20 points in a day. That says that Kerala is not a good place to do business. It speaks volumes about the poor 'ease of doing business' in the state."
While Kitex's share prices soared by 20 percent on 10 July, it further rose by another 20 percent on 13 July. The first jump was triggered by Jacob's decision to take his investment to Telangana – and the second was led by his indication that he may invest in other states in south India.
The company's share prices rose from Rs 108.9 a piece to Rs185.50 on 13 July. On 14 July, it was at 204.05 a piece.
Jacob said, "If Kerala was a good place to do business, the share prices would have dipped when we announced that we are pulling out."
'Most Investors From Kerala'
Jacob said, "More than 50 percent of our investors are from Kerala." Meaning, the profits of Jacob's decision to leave Kerala will be shared by the investors who are from the state.
Jacob also hinted that his decision to move out of Kerala was supported by his investors, who could see the benefits of the move.
"The rising stock prices is an answer to everything," he said, adding he won't be investing any further in Kerala.
Kitex Group faced 11 surprise inspections in June, due to which Jacob accused the state government of 'hounding' him out of Kerala. The searches were 'politically motivated', Jacob had alleged.
The Left Democratic Front-led Kerala government, however, has refuted Jacob's claims.
Kerala Chief Minister Pinarayi Vijayan stated Kitex's withdrawal is an attempt to hamper the 'investment and entrepreneurship-friendly image of the state'.
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