Forensics and the art of triangulation

Why would someone buy debt-ridden loss making business?

Brookfield to acquire Mukesh Ambani’s loss-making pipeline for Rs 13,000 crore

According to news sources -

  1. Pipeline infra owned by East West Pipelines Limited will be transferred to Pipeline Infrastructure Private Limited (Pipl).

  2. InvIT sponsor by Brookfield will own 100% equity interest in Pipl.

  3. Revenue and profit/loss of pipeline asset are 885cr and -306cr respectively.

  4. Axis & ICICI bank are providing financing.

Company details -

East West Pipeline Limited
Pipeline Infrastructure Private Limited

Disclaimer - All information based on news reports.

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Most interesting the alleged role of Andhra Bank and how could future of PSB pan out.

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Kotak AMC may not fully repay investors in redeemed FMP.

Quite amazing, what’s going on here?

Edit - 1

Very good discussion on FMP problem

https://twitter.com/CNBCTV18News/status/1115948693939605504

Edit - 2

Statement/Interview of Nilesh Shah Manager of Kotak AMC on default to FMP holders

https://twitter.com/BloombergQuint/status/1115958637225283585

Edit - 3

Some FMPs of Kotak may not pay full amount on maturity

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Truly amazing! Thanks for reporting.

A 3 year closed ended scheme where the AMC invested in what has now turned out bad…the total damage is not known.

Just posting extracts below:

… Amongst other investments, the scheme also invested in Non-Convertible Debentures (NCDs) issued by Edisons Utility Works Pvt Ltd and Konti Infrapower & Multiventures Pvt Ltd (both are Essel Group companies – secured by equity shares of Zee Entertainment Enterprises Limited) and IL&FS Transportation Networks Limited (Credit Enhancement by Parent Support Agreement of IL&FS). The three firms are facing headwinds due to company and sectoral-specific issues. We are working closely with the Essel Group for optimal recovery from Konti & Edisons for the benefit of our unit holders and believe that such recovery will take place albeit with some delay. For IL&FS Transportation Networks, Kotak Mutual Fund has made a 100% provision for this investment as the company has been classified in the Red category where recovery is uncertain and will be dependent on the resolution plan achieved by the new board/NCLT.

Meanwhile, the FMP has matured. Rao of Kotak Mahindra AMC told us that the scheme has sold off all its other securities and paid off its investors already.

The AMC will pay its ex-Unit holders as and when it recovers - “Any amount realised later gets distributed to investors as and the monies come.

But what incentive with the Manager have! In any case the effects of IL&FS are slowly yet surely unravelling.

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So what was the expected maturity value and how much has been paid? What was the corpus?
Anyone can share these if you know.

Whistleblower alleges how Deloitte helped IL&FS fudge books over many years in lieu of payoffs.
The season of frauds is here.

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Have not done any end to end analysis as initial view led to low rank in priority bucket list but would like to do sometime. However, the fundamental difference in these 2 scenarios is the price fall analysis is more an outcome of past where the party selling knows the bad and hence want to get rid which is a reality but in case of the above entities buying, they are anticipating a good future once the pain period ends and hence accumulating which is a prediction. Now, sometimes even the CEOs could go wrong and the waiting period could be longer. So, the certainty factor ideally should be lower. Also, it would depend on who is acquiring - promoter, mutual fund, FIIs. Many stocks I have seen mutual funds taking stake going wrong and selling their position (but yes, i dont ve data to justify success or failure rate). Also, there have been times where a promoter buying is a mirage where there is a back end hanky panky system in place. So, both are two different streets with difference in causality, intent and structure. Still, would like to do it someday to check hypothesis outcome

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Not at all causation. Due to multiple causes like fraud, manipulation etc etc promoters offloads, the easiest prey turns gullible with a hope of making it big. Infact, there are better 30-40 set of metric to identify probability of fraud. This is more of after effect. Irony is that still many hold with hope. Also, what I ve seen is key message getting missed. At the end, these r probabilities which high or low chances with respective risk reward ratio , not to do with I m right or you r wrong.
To my limited knowledge, any kind of causation hypothesis would need a controlled experiment which is not possible and that is why unless confessions come , life is not white or black but grey and we need to live on probabilities to find shades of grey.

Good interview on how the pharma giants manipulated the price hikes.


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One of the things people ask to check if company is reporting profits but not correct percentage of taxes. How exactly can we check this.

For e.g. Take this
https://www.screener.in/company/MAITHANALL/consolidated/#profit-loss

Over 12 years tax paid is all over the place - 29%, 34%, 88%, 31%, 25%, 25%, 19%, 9%, 21%, 18%, 26%, 22%

How to make any sense out of this?

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This is true for Vakrangee from 2009 to 2015. But from then on, they have positive cash flows

2016: 253.9 crores FCF
2017: 657.6 crores FCF
2018: 458.7 crores FCF

So how did this change? Have they actually become successful? or are they manipulating something else - just curious!

One way to check would be to tally up all the profits and all the taxes and then see if they near match the tax rate; ofcourse due to many reasons the tax rate would be less at starting point.

Government gives leeway when you’re starting, and also after that you need to set off your prior losses. Only when the business matures does the tax rate stabilises.

There are some parts of this checklist which I couldn’t understand. I think OP is no longer active here but if some else has any answers please let me know

What exactly does high earning quality mean?

What exactly is large difference? Is there a %age which raises a Red flag?

What does this mean - “throwing good FCF to Wallet”? (Point 38 seems unrelated - doesn’t provide any explanation!)

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Dont know if the choice of this thread is correct.

I came across a Refex Inds, where there were developments. It’s an old company engaged into bottling of refrigerant gases which they import.

  1. Part of Promoters classified themselves as non promoter group. Despite holding 35 %
  2. Company declares super results
  3. Low price scrip when I came across this one. It was around 80. Now 125 in a weeks time.
  4. Their website and promoter background do not instil any confidence.
  5. Nothing is mentioned about their customers.
  6. On searching the net, I could only find some employee reviews which are mixed and do not throw much light on company. It delays salaries and is functional is all one can guess.

Can anyone tell why a promoter will become part of public. What are the benefits, except that they can dump the shares in market without having to make disclosure? And doing this despite such super performance.

Disclose: bought in anticipation of fake Rally. Sold of yesterday. Now have only tracking position.

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What exactly does this mean - “tracking position”?

Insignificant less than 1 % of pf