Geodesic: decline in share price of more than 90% in the last five years.
Admin: Not sure whether its a case of fraud too. As there is confirmed newspaper report, I am posting in under this thread. But possibility of fraud cannot be ruled out completely.
Please find below some of the points I noted from various blogs and on cursory look of financials:
Case of diworsification, initial hype, products with no business model. http://forcesofindia.blogspot.in/2012/10/geodesic-scam.html [ This blog also claims that promoter pledged their shareholding with an intent to encash before the crash. They also claims that company produced results from thin air and they announce buy backs, MoUs, joint ventures that would never reach the logical conclusion]
Some extracts from TED [ http://www.theequitydesk.com/forum/forum_posts.asp?TID=502&PN=1]
Entire hype was based on their enterprise product aMundua. But many people raised questions on the business model [infact many people could not understand business model itself] and some people from the same field questioned whether itas really possible to make money and why anyone will pay to use this product.
One of the best internet minds in the VC industry is invested into this one with about 1% holding valued at Rs 10 crores. a
Some additional data points:
Consistent decline in promoter stake. From 55% in 2001 to 30% in 2004 to 20% by end of 2009. [I also noticed frequent trading activity in companies shares by insiders]
Till Sept 2011, there was no pledge of shares by promoters. In Dec-2011, they pledged 30% of their holding [by this time share price had already declined by 50% over last one year], which increased to 60% by June-2012.
As Prof Sanjay Bakshi says itas the aBusiness, People and pricea in that order. In this case people have bet more on management and high profile investors rather than on business fundamentals.
Donat be greedy on something we don’t understandand would not understand- The speed and replacement of technological innovations]
Be away from companies with low promoter stake and more so when they are eager to dilute their holding at first opportunity rather than increasing their stake.
Understanding of the business model, industry dynamics and how the company make money is must.
Don’t invest merely looking at ROE and ROCE. Company has consistently reported ROE of 25%+ during 2004 to 2011 [reported ROE of 30%+ during 2005 to 2009]
Contrary opinion [blogger is quite bullish on Geodesic, I do not agree with the post] : http://alphaideas.in/2013/01/25/is-geodesic-ltd-the-multibagger-you-have-been-waiting-for/