Only possible if there is no remuneration to directors/KMPs and no transactions with its subsidiaries & JVs (it has 1 associate, 1 subsidiary, 1 step down subsidiary as on 30th Sept 22)
Only annual report can give ans why there was no transactions
Its pertinent to note that co don't pay remuneration to its non executive and independent directors
RPT Disclosure is required only for two executive directors - Let's see what Annual Report says
This might not be redflag if nothing comes in AR
AOC -1 is incomplete - Part B - which requires details of JVs and Associate is not available even though co has associates
Related Party Disclosures required under SEBI regulations are not matching with RPT disclosures in Annual Report
In AR, there is no reporting of Dividend, transactions with common director entity - 200 crore equity investment
Moreover its interesting why company gave zero interest rate loan of 75 crore and made 200 crore equity investment into Elest Pvt Ltd, a common director entity
Its pertinent to note that co has negative operating cash flows
Cash flow statements (FY22 & FY23) are submitted without giving comparative figures of previous year even though their is requirement to give comparative figures
Financial statements of FY22 not matches with Financial Statement in Annual Report of 2022
Total Exp 24,212,973 vs 24,212,986
PBT 103,846 vs 103,832
PAT 100,856 vs 100,918
TCI 100,875 vs 100,937
EPS 34.16 vs 34.19
NSE has sought clarification on 14th June-23. But still company did not reply even though the company replied to the clarification sought on 16th June-23.
In ET report company spokesperson, said they will file the audit report if asked...!
Interesting case study..
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Fundamental Problem - Why it's a Ponzi Scheme for VEDL Shareholders
To service its own debt burden, VRL is systematically draining VEDL, forcing the operating company to take on ever-increasing leverage and deplete its cash reserves. This looting erodes the fundamental value of VEDL, which constitutes the primary collateral for VRL's own creditors.
VRL forces VEDL to declare disproportionately large dividends, which are funded not by free cash flow but by taking on more debt and draining its balance sheet
VEDL has incurred a $5.6b free cash flow shortfall against dividends paid in the last 3 years..
This arrangement has pushed the entire group to the brink of insolvency, propped up only by a continuous cycle of new debt, accounting tricks, and the deferral of massive, undisclosed liabilities.
Major allegations/red flags:
Bait and Switch Funding Model - Raise fresh capital to service debt in the name of new projects like Semiconductor
Irreconcilable Interest Expenses
Inflated asset values of non-operating subsidiaries exceed the value of debt
CAPEX Fraud - Expenses across operating subsidiaries are systematically capitalized, artificially inflating profits and asset values. This is a material misrepresentation.
Off-Balance Sheet Items – Billions of dollars of disputed expenses are kept off-balance sheet and undisclosed in financial reports.
Governance failures across management and auditors, including inappropriate auditor choices
Listed at ₹3000, now trading at a deep discount,
yet no buying interest.
A Thread 🧵
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#CorporateGovernance #redflag
Learning: "Not every special situation is worth looking."
I request you to read all tweets to understand the full story of value destruction and how we can learn from the same.
The story began with big restructuring at Raymond Ltd. In FY23, they sold their FMCG business to Godrej Consumer for ₹2825 Crs, mainly to cut debt. Net debt significantly reduced.
This sale was supposed to leave a net surplus of ~₹1500 Crs on the balance sheet for growth capital after clearing debt.
Let's start with what SEBI found : Gensol actually submitted false documents about debt servicing to Credit Rating agencies concerning two lenders (IREDA and PFC).
Interesting charts, data points and investing perspective
A data-backed thread 🧵
Favourite: There is always a reason to sell
Whenever such events occur, we feel it is a time to invest through mutual funds (Why not equity? Because you don't need to worry about ab konsa stock/ sector chalega)
Despite several intermittent crises, Indian Equities have gone up over the long run mirroring earnings growth