Could you elaborate your comments because that may help investors
Matter is subjudice & hearing is expected at the end of July. Shares are currently being held in the name of Indian Clearing Corporation. May be thats the reason why Pabrai didn’t disclose, however, morally he should have disclosed this fact. Company is not involved anywhere and issue is more related to other parties. Lets see what’s the view court take in Saraf vs ED matter.
What I believed is that the company changed its auditors due to auditor rotation but I didn’t know the auditors changed the company’s name. I got to know about that here. (Too frequent auditor rotation is bad though).
We, retail investors, rely on auditors to signal if there’s a red flag in company financials and when the auditors are changing their company’s name, it signals a red flag and confuses retail investors as they might think it is just due to sector rotation.
Please correct if I am wrong.
Iran could retaliate by reducing the imports of Basmati rice. This may not augur well for companies having substantial commercial exposure to Iran.
Pls refer this for the clarity on Iran factor:
Agreed. Controls may not be introduced on rice imports. However, as a response to India’s decision to curtail oil imports, Iran may reduce imports of Indian Basmati rice and and switch to rice produced by other countries like Pakistan.
Thanks for this article ! Like the part how the author digged similar cases with ITC, Dabur.
Good write up - who is the author of this blog? Some pseudo name seems to be given as author name.
One thing I noticed while going through the 2016-2017 AR of KRBL was donations to Congress and AAP by KRBL (totaling Rs 30 lacs).
Hope this storm blows over.
Ok the stock is tanking day by day. Now, what is the worst case scenario, what if the ED does charge the distributor who did fraud. What are the charges that will be slapped on the company. And if the company or Balsharaf get a judgment that indicts them, what will be the consequences? Will they appeal the decision and do they get the opportunity to do that. What am trying to sense is how long this case can be in doldrums. It definitely affects the management bandwidth to focus on business.
Meanwhile the auditor change of name is really dubious thing.
Discl: Invested, wait and watch approach up til now
KRBL Company 2018 profit is 430cr agasta fraud is 110cr then 110/430+25% loss. if ED file a suit against KRBL then KRBL pay 25% of his profit (if it is materialized).
but the share of KRBL fall 50% plus from the peak, so the damage is already reflected in share price 2 times the fraud rate.
maybe the downside risk is limited.
Sorry to poke in, I think reputation is gone so is the valuation, it will never get higher multiple
Well, if we see, when the faith is lost, the premium a company commands will go away.
The doubt itself is sufficient to kill the liquidity in flow. What more is left to be unearthed? Who knows.
Secondly KRBL has commanded far higher premium(P/E) for a few years almost in line of a FMCG minor.
Now even after the fall one can see it is available above it’s historic average P/E.
So, one who conparing the stock with it’s ATH stock price could be proved wrong.
However, if the business shows a good growth in future, sentiments can change so would the price.
Hence instead of seeing a price comfort, one would look at business and or earning growth comfort, which doesnot looks very forseeable.
It’s about weighing pros and cons, and keeping an investment logic very simple.
More so on facts than hope.
Can anyone help me to understand how this MSP hike by the govt going to affect this rice processing sector ?
FY18 versus Fy17 - bulk supply of 100k reduced in domestic market ( No idea why) - GST Impact
My views at current state, for whatever it is worth.
From middle of last year till about Pabrai purchase it went to stratospheric levels. There must have been some amount of stock price manipulation pushing it up, for somebody to get out at the top.
But, current price to me seems fair valued, ignoring all the ‘stories’.
Lets try to see from here on.
Is there any drastic movement of RM prices? No.
Assuming the AW accusations and money laundering to be true, will it impact their sales? Don’t think so.
Will any average buyer think of the accusations before buying their product? No.
Is the average buyer aware of these accusations? Don’t think so.
Will these accusations make KRBL to reduce their product pricing or cause margin reductions? No.
Will any loyalist change their brand after hearing the stories? Poor chance.
Is the stock fair valued? Seems so.
Their could be many other questions scenarios that we can analyse.
But what I feel is their brand and pricing remains intact. So we may be in a sweet spot to move in. Of course it may not be galloping multibagger, But steady returns can be safely expected.
Disc: Not invested, watching it.
While doing some basic search of the auditors of KRBL M/s. Vinod Kumar Bindal and Co. CHartered Accountants.
I found a very disturbing news article on them.
Here’s a link:
A quote from the article reads - " Brothers Sanjeev Kumar Bindal and Vinod Kumar Bindal are chartered accountants and have been in CBI’s UCM (undesirable contact men) for years"
They are currently under investigation of ICAI.
And I understand they have been auditors of KRBL also for a long time. Did the management not know about these investigations?
Please forgive me if this has been covered earlier in this forum as I have not had a chance to go through all the posts.
Disclosure: Not invested, tracking.
great point … These are the reasons why KRBL used to trade dirt cheap before MODI won the elections then on Fancy of bull markets people ignored all these risks.
KRBL PE Comes around EV/EBITDA