Manpasand Beverages Ltd :- High growth potential stock

(fabregas) #105

According to the company and its largest institutional investor SAIF Partners,

What I am able to confirm from both the sides is that the auditors had been asking for information which is not unusual, which the company had been providing the information from time to time. However, because they don’t have Enterprise Resource Planning, they took longer than maybe another company - Vishal Sood, MD SAIF Partners

SAIF Partners backs firm even as Manpasand continues to fall for third day

Delay in providing data due to system upgrades, says Manpasand Beverages after Deloitte quits as auditor

(Chandragupta) #106

Certainly it is quite laughable to sign the letter simply as “Deloitte Haskins and Sells”, that too such an important one. In fact, is such a letter even legally valid? Whatever the merits of the case, a reputed firm should not do this.

(Disc: No exposure)

(fabregas) #107

Interview with Abhishek Singh, Director, Manpasand Beverages - Surprised by the resignation of Deloitte, says Manpasand Beverages. He suggests the information which was not shared with Deloitte was minor in nature. He seems evasive about his answers. The interviewer also mentions that there are rumous that Deloitte has wrote to the ministry of coporate affairs accusing Manpasand of misreporting revenue.

Some time back I had taken a small tracking position in Manpasand beverages. I exited my position and stopped studying this stock due to 4 reasons -

  1. Very small annual salaries for key management personnel
  2. Noticed negligible footprint of Manpasand during my travels across Rajasthan (mainly Jaisalmer & Jodhpur) and also in Gurgaon/Delhi
  3. They announced a tie up with SPAR supermarkets. I visited a SPAR supermarket in Gurgaon some time later. Found no Manpasand products in the aisles, the store employees had never heard of this brand.
  4. Advertisement in economic times. The management claims they cater to tier 2/3 cities and small towns. Not sure if placing advertisements in ET is a good way to spend your marketing budget.

We don’t know yet if Manpasand is actually guilty of any wrongdoing. We could be completely wrong about this. If not, we can say that the warning signs were always there.

(hrfacebuk) #108

Do these key management personnel have esops (good number of esops) alloted to them? If yes then maybe this small annual salary should be looked in conjunction with it.

Never tracked Manpasand. #JustAsking #JustSaying

(shreys) #109

If indeed the auditor has shared concerns with the ministry of corporate affairs on authenticity of revenues being reported, did realisation not dawn on them earlier? Per the interview, the company has been associated with the auditing firm for 30 quarters now.
There could be more than meets the eye.

(babajimyguru) #110

What is the specific information that has not been provided for this quarter and all went right for all these preceding quarters?
Simply resigning three days before the finalisation and auditor and company giving explanations saving each other while the shareholders bleed profusely.
The information not made available to the present auditor is not provided by the company and how come the incoming new auditor is going to get it? The information is to be mined?
It is time the regulator and relevant authorities to relook the qualification of the explanations given by the auditor and the company and there should be a time frame before which the auditor should inform the SEBI/Exchanges its in inability to sign off the accounts.

(Pramod) #111

Motilal Oswal recent note on Manpasand beverages.

(Vshah198510) #112

When deloitte resigns this is how they issue their resignation as the company resigns and is not partner dependant.
Approvals get signed off by partners as in case of Infosys.
So this resignation seems true and fairly legal.

(Growth_without Debt) #113

(Chandragupta) #114

Every letter needs to be signed by a biological person, whether it is on behalf of a company or a firm. It can then mention the name and designation / capacity in which the person is signing. Deloitte is no exception to this. The above cannot even be considered as a valid signature. Anyway, I leave it at that since that is not the main issue here.

(Dr Manoj) #115

All these points are valid.I was tracking this stock for a year,and every time I stopped myself from buying it because I could not see on the retail stores’ shelves.Mostly in FMCG products,I try to consume the products whenever possible (it worked in many cases well like Britannia) or interact with a few consumers. Although,the stock had lot of recommendations and it was the part of many mutual fund holdings.The observations made by Amit Mantri of 2Point2Capital made in the last quarter of 2016 were quite valid.
This entire episode strengthens my belief that our investment decisions should not be made only on the basis of what we see in annual reports,brokerage reports and recommendations.We should try to gather information from other sources through observation,mystery shopping,talking to people in industry at different levels,consumers etc. Our approach should as if we are going to buy the company.

(Dr Manoj) #116

One clarification: In the first sentence my reference is to comments made by the fellow member “fabregas” one day ago.

(narender) #117

This is a generic coment and not on manpasand… how many have actually worked with big4 auditors auditing a book, u may get away with most of the things with plausible explaination…

Remember that’s how they earn money, if every nitty gritty is questioned they will lose all their clients… so, it’s more about getting right in face of law. Usually auditor resigning is a big sign of mess that even explainations from company doesn’t add-up…

That’s also the tragedy of deal making, each institution entrusted to do their job is more engrossed in satisfying usual legal requirement, pushing through a deal and collecting money…

Watch China hustle on how things can go bad for best demanding stock exchange; and if u dont understand the requirements read 10-k of novelis and read the annual report of hindalco, its parent company… Edit- just to be clear, I meant the requirement of the stock exchange in this case and you will notice the stark depth in terms of information provided in sec-10k filing by novelis compared to hindalco… abgroup companies in India are very well respected in terms of how they conduct business with partners…

Separately, do you think that credit guys in psus were dumb enough to approve 10% of npas… not even a drunk guy, without basic finance knowledge (think of kacha lending by lenders/ marwadis) will get this bad an npa in unsecured lending… , it’s the way institutions and practices are designed…

Manpasand if I remember was being questioned for long… makes sense if u r investing cheap and playing a basket; not when u want to overlosd on growth stock- walk with the likes of hdfc in that case, if willing to pay growth premium…


Management is still very strong on saying that there has been no wrong doing of any kind and is rather asking others to give proper proof.

(Abhishek Basumallick) #119

Since the market is made of human emotions, the burden of proof is always on the accused. Since, in this case Manpasand is presumed guilty, they need to come out and establish that there is no wrong doing on their part. Mere chest thumping is unlikely to soothe investor nerves.

(Susindar) #120

I have a very bad feeling about the way the management have worded the press release. Looks like they have lots to hide as they have not given an answer to any of the questions asked. Rather they have mentioned some vague comments which means nothing. An easy question to clarify would have been their relationship with hansraj and why they did not previously disclose this. But they never mentioned even this in their reply. In my mind the management Totally lost its credibility. It gave retail shareholder second chance to exit today. Hopefully everyone used the opportunity and exited. For some-inexplicable reason I had a brain fade and did not use the first opportunity. But fully exited today.

(phreak) #121

In investing, often absence of evidence is good enough when trying to prove something that should be evident - i.e presence of beverages in stores or in case of Vakrangee, presence of stores at addresses provided. Evidence of absence is impossible to provide as you cannot prove a negative i.e inductive reasoning will fail to find evidence.

When it comes to science or mathematics or medicine or philosophy, things work differently as absence of evidence doesn’t prove evidence of absence which is where pyrrhonian skepticism comes in, while trying to infer the general from the specific. In investing as well this skepticism is useful when trying to invert. Sorry, I think I digressed bit much.

(shreys) #122

Regardless of the truth value of the charges levelled, the valuations it was trading at were absurd, to say the least.
Even the beverage behemoth, The Coca Cola company, with its apparent omnipresence in retail chains, couldn’t sustain the stratospheric valuations accorded in 1998. Even today, the share trades cheaper than the peak it attained 2 decades ago.

(akxft) #125

(Metrans09) #132

Yesterday I took at train to Ahmedabad on a Shatabdi. Along with many other things, the Indian railways provided us with a 200ml pack of Mango Sip. I started working the maths, one train is worth about approx Rs2cr (1500 passengers * 2 trips * 2 break journeys * 330* 10) of annual sales and there are 26 Shatabdi trains. Now I haven’t been on any other Shatabdi trains, but if its there on others, it works out to Rs50cr pa of sales.

However, on the trains stalls the availability wasn’t really spectacular. There at some places, but not there at many other places. Can’t really make any judgement.

Also, saw several such advertisements:

Honestly, I think there is v limited capability to judge how much they sell by trying to figure out visually.

They reported sales of Rs148cr in 3QFY18. That amounts Rs1.6cr sales per day or about 8.2l units per day (Rs20/avg price). Now in this vast country of ours we have 712 districts with an average population of 17l. So it means that if they sell 11,000 units per day in each of the districts per day penetrating about 0.5% of the population, they can show such numbers. But honestly, this is all number juggling. And on paper, hence the potential is phenomenal.

However, if the new auditor sign off without an qualification, does it mean its fully clean? Who knows? The plants surely are on ground. They have almost Rs1200-1300cr book, they can doubles sales in 2-3yrs… Investing is never easy.