FiberWeb India - Bouncer (growth) or yorker (trap)?

(Left this forum) #69

Market is a cauldron of wizardry and witchery, the problem is difficult to spot out. And there is no permanent wizard or witch unlike technocrats or medico. Witch turns to wizard and wizard turns to witch.

I will suggest two books The Scam of Debasish Basu/Sucheta Dalal,The Bulls Bears and Beasts by Santosh Nair. I can mention with few others, but lets stick to 2 Indian author.

As we speak another 5 lacs plus shares handed to public. I glanced the Annual Report submitted to stock exchange, hardly any update on announcements update except couple of line over the top statements.

(aditya modi) #70

i also booked 20% loss and vowed to be alert on such promoters.
Bahama trips are meant for share holders not promoters.!!!

(Left this forum) #71


Giving few more hints (not specific to this company but many others), watch out for them:

  1. Preferential allotment to shareholders under the name of strategic investment. You won’t find these strategic investors invested anywhere else. You know the reason why then
  2. Equity warrants issued as there is no obligation in future, just walk of transaction. By the time picture is end no one would have remember about these warrants.
  3. Paid stories via research agencies, watch out if it’s done through non financial services agencies. And more importantly lesser known names. Disclaimer anyway will help them, do you think SEBI is going spend time on this size of country?
  4. Stock price will show strong resistance at a level otherwise called dump point irrespective of market direction. So if one is smart he still can make money from operator driven stocks. But that defies basic nature of value investing.
  5. Cash becomes a perennial problem for these type of companies. Huge cash balance on balance sheet, no dividend and no tax payment is common feature. One has to minimise third party cash payment; excuses will be many to build.
  6. The easier account to play is working capital and intangible assets, not tangible assets. If you find inconsistent pattern between inventories, sales and debtors better sit tight. Low cash conversion cycle with a big difference between net profit and cash flow is completely contradictory. Isn’t it?

Meanwhile I am chasing Santosh Nair to clean up MMB board. It’s time we help ourselves than complaining certain people are taking us for a ride. Please reach out to Santosh with your proposal, no serious person wants his reputation jeopardised. Either he is not aware or we are over board. In either case there would a solution than a killing silence.

Stay safe folks, extended bull run will produce more trickeries. Make sure you prepare an exit plan even it requires partial profit booking or forced loss.



It is very surprising to find this in CNBC TV 18 Diwali picks.

(mightymedico) #73

Also listed by Moneycontrol research as one of their top 12 picks for Diwali.

(Left this forum) #74

Finally, it has come. Thanks Debasishda!

Number of issues raised by Moneylife; you will find valuepickr guys holed out already. Great job guys!

( #75

Unable to read the content sir, don’t have a subscription to MoneyLife. Any other way to read without paying.


(Left this forum) #76

The user id creation should be free. I think once you have user id you should able to read these contents unlike Moneylife magazine. If not working, I can share the gist later. It’s pretty much same what is being discussed here, bit less actually (space constraints). Copying entire article will lead to right infringement. Of course this is one magazine highly useful.

(Sravan) #77

after a long time, was busy in work.
thanks for the article @The_Confused_Consult, I couldn’t find anything new in the article. they have copied the same discussion points, even copied the initial witeup, and doesn’t bother to get any sort of clarifications from management.

AFAIK, warrants are convertible after 1yr. correct me if I’m wrong.

in total they have sold about 20 lacs share in last qtr. not all the shares are distributed to public
brokerage firms like AVR INVESTMENT ADVISORS LLP, PANTOMATH STOCK BROKERS along with NRI investors.
FPIs have entered, but not in big way, position may be for tracking (don’t want to speculate). can check SHP of this qtr

(Left this forum) #78

How did you know Moneylife did not bother to get any sort of clarifications from management?

Convertible is not the question, but obligation. I hope you understand difference!

I wont talk about copy paste by Moneylife, they are the one who blew off Harshad Mehta to Ketan Parekh to SEBI. They don’t need my support either!

(Left this forum) #79

How many companies are there who has distributed promoter holding to brokerage firms? Do you know history where shares are given to brokerage firms? No rocket science to understand reason behind the distribution.

By the way there are so many negatives pointed out, selective outrage over media house or argument on behalf of management won’t do any justice to Fiberweb if at all a company of good corporate governance. Rather this reiterates a point, hitting nerves somewhere of someone.

Now I need to ask this question to moderator before these discussions become noise again with same old questions repeating.

@Administrator; @Donald; @manish962;

  1. Insider information such as creeping acquisition getting notified here.
  2. Identifications who become active on this thread only.
  3. Selective reply to few questions, even if correct to their understanding. We may not agree.

I am bit perplexed who’s uncomfortable with media publishes in this forum? Even if my stock goes down for bad corporate governance I will sell and protect my capital. Few positive words about company is appreciated due to disposition effect. But addiction, beyond me to understand!

(Sravan) #80

I’m not that experienced to comment on that.

in markets there are negative and positive people, why people get offended when positives are pointed, is also beyond me, because i dont have much experience.

again i’m not against media, but simply copy pasting from other forums won’t call it media publishing. I have also copied from other websites like moneycontrol, reuters. that doesn’t make me journalist :slight_smile:
I was not even born when Moneylife broke Harshad Mehta scam.
hey, again I don’t have much experience to say what makes some one a journalist.

(Left this forum) #81

No I don’t feel offended, hardly anything at stake. Been fighting on corporate governance issues whether its employment or it was Concurrent, a stock guru.

I am afraid subjective answers like I am not experienced, selective answers does not help a debate even if they are positive. I won’t repeat my answers on selective questions again and again. Hundreds of questions raised here, few answers defeat the purpose of debate here.

Even I was not born when Mahatma Gandhi ran revolution, this doesn’t mean I can not know about Gandhi.

How did you know Moneylife did not bother to get any sort of clarifications from management?

I am yet to get an answer from you.

(Sravan) #82

when I started reading that webpage, it was the same thing which I wrote in initial writeup and points raised by phreak and you. and we hardly ever talk about getting clarifications. what’s there to read the samethings on multiple platforms. one more thing that moneylife raised is non payment of taxes, if moneylife has such good analysts to burst the scams, they should have know that FIL enjoys tax benefits being out of BIFR and 100% export oriented business. FIL will have to start paying taxes from next financial year. this itself shows that it’s nothing but a desktop journalism.
and no, I’m not addicted to the stock, I’m addicted to my capital and gains only.

(aditya modi) #83

and Fibreweb tanked 11% today.
was out after reading post of suvendu sir. saved!. some posts need to be tattoed in brain as a wake up call.

(Left this forum) #84

I am not trying to defend Moneylife here. But the point you have raised regarding income tax exemption is not blanket.
If you are saying 100% EOU should get income tax exemption, then Section 10B has been repealed long since (I guess AY 2009-10).
Yes, BIFR (by the way SICA is repealed now as well, with BIFR dissolved) had sweeping powers to over ride Income tax act which provided certain reliefs. Later on High Court struck down the arbitrary power asking companies to seek specific permission from income tax authorities.
Lastly once you come out of BIFR rehabilitation scheme you are a normal tax payer, none of reliefs are applicable.

(Sravan) #85

yes, once it’s out of BIFR, no special treatment. it has to pay regular taxes. AFAIK company will be our of BIFR from next FY, read it somewhere don’t remember the source

(Left this forum) #86

Company in a filing dated 14 Jul 2016 to BSE states 'the company has come out of BIFR from October 2015 successfully and implemented BIFR order. If this is true the profit earned for the year 2016-17 (AY 2017-18) should be taxable. Here is the link:

Also MAT (115JB) is dicey, it doesn’t exempt Sick Companies. ASSOCHAM is fighting for it without success. MAT allows exemption profits earned DURING SICK PERIOD as deduction. But till the networth become positive, Fiberweb reported positive networth right from FY 2015-16. Of course any further amendment for MAT comes, will come via Bankruptcy Code, 2016. It won’t have any impact for previous BIFR orders.

Still a profitable company can have Nil taxable income status if R&D heavy company claimed expenses against income etc. But again MAT will catch them.

It’s not straight forward, there has to be razor sharp information to build a case of zero tax claim.

By the way I am not running a tirade against this company. I did a detailed triangulation some time back, if there is an answer available I am providing.

(Sravan) #87

I can see that you are spending lot of time getting the information, that in-turn helping me learn a lot how to analyze a company. it’s becoming bilateral discussion in this thread with occasional booked loss messages. :slight_smile:
coming to the BIFR thing, if company is out of BIFR from Oct 2015, how long it can enjoy tax benefits? is there any source of information, where we can find out actual terms of tax benefit provided?

(Left this forum) #88

BIFR was a financial reconstruction board set up under finance ministry earlier. The board was empowered to reconstruct a package for sick company in agreement with key stake holders such as creditors/banks. A reconstruction package included relief from taxes, delay to debt payment or easy structure etc. Every BIFR order is unique as the case requires. So what was BIFR order passed for Fiberweb we can only know by seeing the copy of BIFR order. Despite of BIFR order Income Tax circular 5/2009 empowers IT to seek for specific permissions as I said in earlier post. Infact Income Tax has a record of rejecting relief claims, you can find number of issues if you search IT website.

BIFR can only grant concessions or reliefs till the time net worth become positive. To my interpretation and from Andrew Yule case there shouldn’t be any relief extension post BIFR order.

There is another catch, Income tax calculation is done separately for the purpose of income tax return. of course if you are covered (most listed companies are) under 44AB then you need to have a tax audit report. You can arrive tax amount either by a. maintaining tax books (these days rare, double cost) b. passing adjustment entries to statutory financials and create a tax accounting entity (widely followed). The tax audit report, entries passed for adjustment, tax computation and return is a document not available for public inspection.

This is also called popularly as differential disclosures where one thing is disclosed by company in financials and another in tax return. Institutions put a clause to have access before putting money, hence a lot of time when institution starts selling it may be due to something they have seen in tax report which we may not have access.

Not an easy thing to know tax statement of company, not only this one but all companies. What you can check is tax paid from cash flow and tax provision from PL. But if there is no provision or payment you can triangulate to certain extent by comparing accounting policies for expenses, income, differential depreciation etc. But it’s a lot of work, tried once; result were never encouraging the effort.