@ashish620 - pls find answers inline
- They conveniently do write off for one subsidiary and write back for another, in the same year; not sure what to make of it.
- Of course, they keep Cash Flow Statement unaffected by the above and hence if we focus on CFO etc it looks better than it really is i guess.
There was 2 write off related to STS jewels due to substantial erosion of net worth (151cr) and STS creations thai due to liquidation(1.5 cr) and write back off of loses for 13L—are you referring this one? this one doesn't looks like a manipulation
3 Not sure what different they r doing. I guess anyone who manufactures jewellery can buy/invest in some channel and start selling thru it, naaptol etc are doing the same so what different they r doing?
copied from above post by Sambath
On a high-level,if we think,the competition in the jewlry space in quite intimidating.On the whole we have jewelry specialized brick mortar stores like Kay jewellers,Tiffany,Zale, home shopping players like QVC, and HSN and ecommerce players like amazon,ebay etc.Where does the competitive edge lies for VGL:
Customers that VGL targets,the medium it operates predominantly, the average selling price(non-branded items) at which it sells,if combine all of these,there is not much competition in this space here.It addresses the discount jewelry space where there is negligible competition.If that is the case,can someone copies it model and replicate it? That is where VGL's low cst producer model along with end-to-end vertical integration comes into play which acts an entry barrier for a new player.
4 There is a gap of 300 crore in balance sheet of FY14; as per auditor some subsidiaries have -ve net worth and write off should have been higher by above amount.
STS Gems Thai Ltd. and Genoa Jewellers Ltd. (parent company of the USA and UK based retail companies) were having negative net worth and VGL on a standalone basis had an aggregate exposure of Rs.418.92 crore as on March 31, 2014 to these subsidiaries which declined from Rs.548.10 crore as on March 31, 2013. However, these subsidiaries have been reporting profits for some time. Aggregate provision of 111 cr has been made -- The management of the company does notforesee any further requirement of provision in respect of these subsidiaries. Since the investment in these subsidiaries are long term in nature and all of the subsidiaries are having substantial carrying business value.
Also, on a consolidated basis, VGL’s networth stood positive at Rs.204.27 crore as on March 31, 2014 (Rs.86.29 crore as on March 31, 2013).