Kaveri seeds company limited -- kscl


(AMN) #1015

What is the significance of this?

http://www.bseindia.com/corporates/anndet_new.aspx?newsid=c21bcb15-c9f9-4be9-a757-ea94d6ed5aba

averi Seed Company Ltd has informed BSE that the following :

"With reference to the mail dated December 24, 2015 received from M/ s. Sarath & Associates, Chartered Accountants, Hyderabad, informed the Company that SEBI vide letter dated December 15, 2015 appointed their Firm to conduct Forensic Audit of Kaveri Seeds and requested the Company to keep all the records and information available to them.

However, the Company has not received any communication/letter from SEBI.

In this regard, the Company would like to submit to the Stock Exchanges/Shareholders that the Company would co-operate and arrange all the required data to the Audit Firm and it has the confidence in its business and financial systems and processes including internal and statutory audits."


(bomi karkaria) #1016

SEBI has the right to order an investigation of a co. when it suspects some fraud or window dressing of accounts. They have appointed this CA firm to do the investigation.


(Vivek Mashrani, CFA) #1017

Anyone has idea what will happen to shareholders if any wrongdoing is found…I mean is there any legal provision where SEBI/stock exchange can enforce any penalty on company/promoters/auditors to be paid to minority shareholders for the wrongdoing??


(Varadharajan Ragunathan) #1018

Looks ominous - let’s see what happens - that means someone must have complained to SEBI on this.Given the long time to get any redressal, its as good as a write off.

Discl: Holding - 8 % of pf and watching


(Vijayk) #1019

Hi Varadha,
You seem to be good at discovering financial shenanigans
Wondering what made you allocate 8% PF to Kaveri?
What is your rationale of such a large allocation?
Thanks


(Varadharajan Ragunathan) #1020

@Vijayk

I am not sure - one makes both kinds of errors - alpha and beta - I did a fair number of checks myself

  1. spoke to a competitor - got very good feedback on kaveri - also got a view about their products being not upto scratch this year on a few technical issues - all of which can be ironed out

  2. I checked the AR - cash being present across mutual funds across good fund houses gave me confidence that it can’t be bogus

  3. Of course, this thread gave me confidence too.

Let’s see - a forensic audit initiation is something to be worried about but if the company passes it in good stead, it will get re-rated given the over hang on

  • lack of a reputed auditor
  • lack of trust on the cash on books

anyway, that said, I got my risk equation all wrong here - lesson learnt. Lots of lessons learnt - that regulation can wreak havoc in a high margin industry, huge black swan industry risks exist in agri sector, like mobile phones market shares can swing wildly based on product success (distribution is lesser of a moat than in FMCG) and of course, trusting the numbers.

On the last, have not figured out still.


(Vijayk) #1021

Well, you are still holding the stock with 8% allocation means even now you are very bullish!

While I agree that these things may not be foreseen, I could not fathom the reason of your bullishness still!


(Varadharajan Ragunathan) #1022

I never said I am bullish - I am weighing options including selling out on a rally. I am ok with business negatives as they are cyclical and can rebound but not ok with governance issues - am not sure if this scare is genuine or not. focussing on trying to get around it


(Govindarajan) #1023

I tried checking CFO/NP ratio for each year for the last 10 years. Only 3 out 10 times the ratio was above 1. This indicates CFO was less than profit reported.

Please let me know if this metric can be used to check if management is not manipulating the numbers.


(bomi karkaria) #1024

No, this ratio will not tell you whether the numbers are manipulated.

Typically, CFO should be close to NP (after tax) + Interest + Depreciation. (Interest is added back because it is not considered an operating expense - debatable, but thats the rule) If it is less, then the most common reason is increasing inventory and debtors, both of which point to an unhealthy situation.


(Anupam) #1025

In India many times multibagger stocks and so called compounders have fallen from grace to rock bottom levels. Early investors have made wealth with value picks and late ones are searching where is the value !!

Sad to see poor management, non transparent accounting, sebi bans and audits…sometimes it makes a mockery of value creation.

In spite of all science , all ratios, dcf, Graham’s numbers and statistics look great in bull run and suddenly it turns red when price comes crashing.

Disc: not invested in Kaveri. Thought to enter but seems very risky.


(Kunal Patel) #1026

Company has disclosed investments in a separate filing in bse.

http://www.bseindia.com/corporates/anndet_new.aspx?newsid=4632ea39-4b31-422b-95e0-52ed7732658a


(Whipsaw) #1027

We had big red alert warning early this year, when promoters wanted to sell their holdings and wanted to start some food processing company. At that time,they couldn’t do any block deals as no big investor was ready to buy. May be they sensed the accounting issues which SEBI is trying to get at now.

Disclosure: Exited all my holdings in Feb 2015.


(Rajesh Kumar) #1028

Kaveri is zero debt company, and giving handsome dividends every year. Dividend has increased from 3.5 crore to 51 crores in 5 years. In the period there was no equity dilution nor any debt taken. These facts give some confidence in the accounts, nevertheless some window dressing etc. cannot be ruled out.
The company is really facing a negative Lollapalooza Effect- 2 consecutive year of bad monsoon, price regulations by some governments, royalty disputes with Monsanto and doubt on corporate accounts. These factors couples with weak equity market has really shattered the stock.
Nevertheless I didnt find anything alarming in Kaveri accounts, and started a small position of around 1% of the portfolio. Going forward I shall be adding more with fall in share price.


(Marathondreams) #1029

Promotor group company Ashoka PTE Ltd. purchased 322,334 shares from secondary market on 28th Dec. It seems that provided necessary relief to the market about promotor’s confidence in the company. Stock up today by 10%

http://www.bseindia.com/corporates/ann.aspx?scrip=532899&dur=A&expandable=0


(Ishank) #1030

ashoka pte is not a promoter group co.


(Marathondreams) #1031

But it is reported as disclosures under Reg. 29(1) of SEBI (SAST) Regulations, 2011. So it is insider trading reporting, I guess…


(Mukesh Tolani) #1032

I feel a bit worried about the overall scenario.

Already, there were a few issues plaguing Kaveri, that brought the stock down to 1/3rd of its traded value in a year.

I have been tracking Kaveri since a few months & thought this would be an opportune moment to enter, as the management has the capacity to rise above the temporary problems.

Then, all of a sudden, SEBI orders an forensic audit of the accounts which further sends the stock down reeling.

and finally, a company Ashoka Pte Limited, buys an huge amount of stock ( “when every sane investor would want to wait for the result of the audit outcome” ).


(Marathondreams) #1033

I am sorry. Ashoka PTE is reported under “public” shareholding category as on 30 Sept 2015

So this means one of public shareholder decided to use opportunity to increase its holding in Kaveri Seeds. Not sure if it means they know something which we don’t…


(Marathondreams) #1034

I have checked past few shareholding statements and this is what has emerged. Ashoka PTE Ltd. a Singapore based entity is on buying spree in this stock as you can see from below -

Status as on 31.06.2015 -

Status as on 31.03.2015 -

Status as on 31.12.2014 - No name of this company in the list. So looks like they may have shareholding below 1% at that time.