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Its good to see people debating and asking some very good questions regarding various issues/unknowns. There are a lot of unanswered queries around what auditors and prompters did or didn’t do. I don’t think anyone on this forum has a verifiable/fact-based answer. So these queries must be raised in the AGM.
I wish to know from the experts: Lets us assume the fraud did happen and the auditor reported it.
- What is the exact procedure that is followed by the auditor?
- Does the auditor only sends an registered post and it is free from all responsibilities?
- Who uploads these documents to MCA website or how does the resignation letter reach MCA?
- Is the company liable to reply within any specific time to MCA or some authorities?
- Being a pvt unlisted company, when sending money from an indian entity to US entity, is an auditor approval required?
@Nasirul - The last one with 16.5 lakh shares transferred to another depository account is interesting. This is not part of the disclosures on BSE. If it is not part of Promoter category, then it certainly doesn’t reflect in the percentages. Only shares sold and disclosed by Ramani and Bhaskar add up to the reduction in promoter holding of about 6% in the last year or so. So the disclosed Promoter holding is probably less than actual? This could be another 130 Cr or so worth of stake which was sold if that’s the case. If the benefit of late disclosure + fine + an apology of “inadvertence” is greater than profits made by selling at higher valuation, then I will not give the Promoters the benefit of doubt here.
As someone who loved working back from the solution in science and math, be it in lab experiments or in proving theorems and later on in reverse engineering, there is a natural love for me in understanding what makes certain things work and more importantly what are the things that don’t work. This is important vicarious learning and we cannot let go of these precious opportunities because they enhance thinking and refine our mental models when we look to analyse other companies in the future. It increases the skepticism quotient. If anything, we should be doing more of these so that our ability to invert comes as naturally as our ability to see causation.
This I believe is Sandeep Tandons 6% holding which was missing from the march shareholding pattern, but can be seen again in the June shareholding pattern. The quantity and percentage are matching.
Can you expand on that? In March Sandeep Tandon is showing 2.4% again in June he is holding 6.4%.
I could not get your point.
My observation too, but I think mods curate before offering a user-id.
There is a high likelihood this thread is monitored by 8K Miles as a way to pre-empt / prepare what may come in the AGM.
Since no one replied to my queries, I assume we do not have any expert on this in this forum. So I tried doing some google search and found this: https://taxguru.in/company-law/reporting-fraud-auditors-companies-act-2013.html
- Fraud, which involves or is expected to involve individually an amount of Rs. 1 Crore or above – To be reported to Central Government
- Auditor shall forward his report to the Board or the Audit Committee, as the case may be, immediately but not later than 2 days of his knowledge of the fraud, seeking their reply or observations within 45 days.
More rules/actions from auditor in the link above.
Since its more than 45 days since the fraud was reported, I assume there must be a detailed report on the fraud with MCA from the auditor. Can someone please access it to bring clarification on all our doubts/queries.
Assuming the auditor has reported the fraud, the should have been transferred to the SFIO for investigation. Had the SFIO taken any action it would have come out in media by now
All of this is in hindsight:
Almost all the stats turn out to be excellent; hardly anything stands out as troubling.
Fig 1 - Source Screener.in - Errors, if any, are mine.
In Fig 2 - the RoIC is excellent. However the last 3 graphs show signs of caution/danger.
Declining FCF but a strong CFO. Amber flag.
Rising Sales, Rising Debt, Rising Receivables. Red Flag.
Extremely diverging RoIC vs CRoIC. Red Flag.
Read a quote today - ‘Top-line is vanity, Bottom-line is sanity, Cash in Bank is reality’
I checked the MCA website for prosecution for the following companies and couldnt find anything. Im also trying to find out if sfio is investigating…
If the auditor really did its job properly on this fraud, it must have provided a report to MCA irrespective of the board reply:
- In case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of 45 days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he has not received any reply or observations within the stipulated time.
- The report shall be on the letter-head of the auditor containing his postal address, e-mail address and contact telephone or mobile number and be signed by the auditor with his seal and shall indicate his Membership Number and be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed post followed by an e-mail in confirmation of the same.
- The report shall be in the form of a statement as specified in Form ADT-4.
Other minor observations:
The auditor resignation letter to 8k was dated 30 April. But was reported to MCA on 4th May. It should have been done within 2 days.
I checked the IndiaPost tracking for the registered post, it shows the status as “item booked” but it should have been “Delivered”.
People attending the AGM should ask the management regarding action taken by the MCA/SFIO, if any.
But it’s unlikely that the management will reply as they have already distanced themselves from 8K Miles Media.
I also checked on www.watchoutinvestors.com but could not find anything related to 8K Miles Media.
There is no ADT-4 on the MCA website, unless Ive skipped a document. I think someone this board had downloaded all documents. Can you please check if you can find the ADT-4?
Uday, if you have paid to download these forms from MCA website, then it is for your use and not for public sharing. This is a private company and MCA gets paid for such services.
How you created this charts ? This is wonderfully represented. Is there any template present ? Could you please share with us ?
I’m not aware of any restrictions on redistribution of the downloaded documents.
Is anyone else attending the AGM. Please PM me if you want to coordinate before the meeting begins.
Below is the excel template. It had already been shared - unfortunately I am not able to edit the old link to update the excel.
T - 8K Miles consolidated.xlsx (545.1 KB)
5 mins is all thats needed to analyze a business!
Absolutely! Observe a phenomenon, develop a theory, and apply it to predict such future phenomena as they develop. And improve.
If you are presuming that an alleged or actual wrong doing will be caught by authorities, please change that presumption.
Auditor may have complained, but it is really in no one’s interest to take action. Enforcement authorities in India act almost only on approval from higher ups (or incentives to themselves, which can be easily managed), higher ups usually will act if there is lot of noise, or serious systemic risk, or on political orders. Resources are very thin and expertise poor.
A case in point is Satyam, where even after a full blown confession, it took years for authorities to act, and the only shareholders compensated were the ADR holders, under SEC! Sad but true. I followed closely the Geodesic case of a $ 125 million default on FCCB and some bank loans. (BTW, they also had amazing talent and were paying salaries on time). It took 5-6 cases, with date after date, filed by Citibank, the FCCB Trustee, HDFC Bank, some guy from Nashik, some civil, some criminal, to ultimately lead after 5 years to arrest. The company was ordered by the Bombay HC to be liquidated, but what would come of it? Nothing.
In this case, the Promoters will say 8K Miles Software Services shareholders have nothing to do with 8K Miles Media, so these questions are not relevant and won’t be taken at the AGM.
It will take an iron will and a relentless pursuit to even ‘prove’ wrongdoing, even when everyone knows who did it. And if there are distributed shareholders each with a loss that is bearable in face of contemplating a legal course, the wrong doers will get away. Think about NSEL, they are still fighting, and those guys are real fighters. The entire process of seeking justice in India is a travesty and a tragedy. And the counterparties know it