Thread by @amitmantri

We wrote about Manpasand in Dec 2016 and haven’t written another “Curious Case” piece since then. That’s not because there weren’t enough candidates but just that the way some big guys in the ecosystem responded, scared us a bit.

This is a thread about one such Big Guy.

We published the Manpasand note in the evening and thought maybe a 1000 people would read it (which had been the case for our earlier Kitex and JD note). However, for some reason the note went viral and our site crashed.

We got the site up and went to sleep as our job was done.

The next morning the stock opened 12% down. We were quite happy as we felt investors had taken note of our findings. But then the Big Guy hit us with a nasty rebuttal. Read the entire note below.

While the Big Guy’s promoters are reputed for their insight and investing acumen, the rebuttal mostly seemed like an attempt to take a dig at us rather than actually respond to our concerns.

We had not responded to the rebuttal at that time to avoid a backlash from the Big Guy. But its worth discussing the note now.

Big Guy burnt the midnight oil coz of us. Max apologies. But I guess if they had spent their nights doing some basic research, the shareholders wouldn’t now have sleepless nights. And yes the 4th estate is alive and kicking. On social media and elsewhere.

Big Guy’s research process – check who the auditor is and trust every word of the management. All points here are just mgmt provided info. Did Big Guy do any independent checks before believing mgmt claims?

MB didn’t even have the approval to sell in all railway zones and yet was claiming super high market share. Big Guy was probably also not interested in the fact that neither Nielsen or Euromonitor registered any market share of MB products. Not now or before.

Again, Big Guy shows his love for MB by blindly believing their 200,000 outlet claims. Did Big Guy not see that they were reporting vastly different outlet numbers on diff forums (annual report, media, twitter). Our sample set was small but at least we didn’t blindly trust mgmt

Few pts here. Most of the senior mgmt was not actually getting any ESOPs. The guy who was getting a big chunk is quasi-promoter. Even incl ESOPs the compensation was abysmal (lower than fresher salaries at Infosys).

How absurd it is that someone with 20+ years of experience and part of senior mgmt. at a hugely profitable company was only getting paid 3 lakhs per annum!!

And why is a large capital markets player who is minting QIP fees mocking us for being capitalists!!!

Big Guy claims you couldn’t have found related party info. Except company was formed in 2014 (a year b4 MB IPO). A ROC search would have clearly shown the details even in 2014. Moreover, the QIP was in 2016. So basically Big Guy didn’t even do a basic check (again trusted mgmt)

Big Guy kept the best for last. This is them essentially mocking us for being small and only 5 months old. The rebuttal right from the start seemed less focused on addressing concerns and more on shooting the messenger.

We also got to know that senior mgmt employee(s) of Big Guy had reached out to several of our ex-colleagues and bosses to find background information on us. The goal it seemed was to dig dirt which they could use on us. Unfortunately for them, there wasn’t any.

We had been surprised by the strong defense being mounted by Big Guy for MB. Our note was entirely focussed on the company and not on their bankers/investors. We still don’t understand why Big Guy would need to take the MB note as an affront to their organization.

In fact, what might have been extremely beneficial for Big Guy or anyone else is to independently verify our claims (don’t trust us or the mgmt). Few investors did reach out to us and ended up reducing their exposure. Big Guy increased his exposure.

One and half years back, Big Guy “burnt the midnight oil” to come out with a rebuttal which just trusted and repeated management’s claims. Today, Big Guy quietly placed their coverage “Under Review” because management’s claims no longer seem trustworthy.

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