Vakrangee books seems cooked. I have done calculations of their primary revenue sources based on their market share and revenue shown in books vs that of other companies doing similar business. it doensot add up even 1/10th of the revenues and profits are over stated by possible 100 times.
Instead of comparing it with Satyam , I think we should compare with Sahara case.
The primary source of revenue claimed is rural franchise centers lot of them not traceable just like depositors for Sahara case. It’s well known that their franchise do not make any profits.
I think scam will immediately come out if they release a list of revenues and profits listed with franchise name/address. surprisingly they don’t even release a phone number of franchise. Many addresses are un tracable just like Sahara case.
Now how they pay 30% tax and where does their profit come from. One possibility is that its money laundering like Sahara case. They may be taking cash and showing as revenue and profits of franchise. After deducting some expenses they pay 30% tax and convert cash to their own white income.
But they get a more then 30% boost in their market value due to these profits and even this tax is earned back as market value.
Now these cash investors thru their front end trading companies buy the Vakrangee shares in advance and after profits are declared and market value increase they sell off to get back their white investment + black investment + bonus.
As its visible there were 7-8 such companies of suspect nature who held large percent of stock and exited in 2017 and before.
I think now they want to play it again from start a new game or they have some issues with cash investors. so they want their share prices to suddenly fall a lot so that they can get these hidden investors to enter at low price again. And then give their balance investments by other modes that will be booked as franchise revenues and profits.
check in education the companies which went bust.some were debt laden n some debt free all were paying taxes. the intent n modulus operandi differs. some seems to ve been formed to convert black money to white through IT sez benefits and in the process pay some tax where some might ve used ipo money n loans to pay taxes. Fact is we are not enforcement directorate to ve such clarity on overall things as our scope of information is limited though it would be an interesting exercise to do the same. Key is to understand warning signals. There are some companies where tax department officials where brought on company board without relevant skill match ,so, one needs to read through all these hidden lines on a company to company basis
I have been thinking on these lines as well. There is something that definitely links Vakrangee with PC Jewellers and Demonetisation as well. One is a cash business (at least on paper) with a lot of franchisee outlets - Easy to wash money and other may have recently generated a lot of cash (because of demonetisation). I am unable to place exactly what it is and such things might be going too far out on a limb.
However, since we are just speculating here, what may have happened could be a classic case of prisoner’s dilemma. Someone rushed to the exit prematurely and caused panic. It could be the old holders (Bluepearl, Highpoint, Cyberbetix, Smeaton, Seahorse) that still held a substantial quantity during demonetisation who got a whiff that the same modus operandi was being used to wash a lot more cash. This may have prompted them to rush the exit before the cover was blown. Observing the shareholding pattern pre and post demonetisation on this scrip is quite interesting.
Could it be a barter system whereby demon money of jeweller is received ,adjusted as cash sales and then shares r bought by the same.In this case, there is likely to b substantial jump n revenue of vakrangee during and post demon.
PC Jewellers Share Buy.
I think there was not much wrong in buying PCJ shares as being presented and now accepted in market. Cash rich company that has no debt and already pay dividends will always have lot of cash that they will need to invest rightly. Buying bonds is ok for short term but if company expect to maintain cash position for long periods, investing some or even large part in equity/equity funds is justified.
Vakrangee was already exploring tieup and done trials with PCJ to sell jewellery via franchise. They might have observed some great advantages or understood that PCJ may hype it a lot leading to stock price rise. So they decided to acquire shares of PCJ in advance to profit after such announcements later. (At that time shares of small and midcaps were showing 5-10% jumps a day on small positive announcements). I do not think it comes under insider trading rules for Vakrangee to buy PCJ. Vakrangee would have profited well from it if it had gone smooth.
Why such issues happened ?
I think something went wrong on PCJ side. May be someone at PCJ had encouraged Vakrangee to buy shares to avoid falling in insider trading regulations.
Some brokers who actually do this business of insider information on behalf of promoters, were annoyed at such inter company deals taking away their business.
These brokers showed their strength by pushing some articles in media, added some old SEBI issues and even spread rumours to teach lesson to PCJ and Vakrangee promoters.
One of the SP Tulsian interview did mention about large number of inter company deals active in market and it appeared to me that a brokers lobby worked to jolt the market to restrain such deals that take away their bread and butter.
I think the episodes of PCJ and SEBI etc. are just confusing investors. The only thing we need to focus is that the promoters of these companies may be involved in many other schemes of making money that needs to be investigated.
Selling Jwellery may be far fetched but jewellers can run gold deposit schemes via such centers where consumer can deposit certain amount monthly and then after one year buy higher value gold ornaments by visiting jewellery store. Even Gold loans schemes can be run effectively from such centers to reach larger audience.
As order from PMO Aadhaar centers can only operate in Banks or Post office. All others are being discontinued including Vakrangee and CSC (a govt organization but appoints franchise like Vakrangee).
Vakrangee actually operate many centers on behalf of CSC.
Hence Aadhaar related revenues are completely gone.
Also note the corruption issue and violations… this gives you some idea as what happens at franchises or to get new franchises…
More I read about Vakrangee , more confused I get. Dont know if we can trust the management or not. But if KEN’s points about revenue and operations from Vanrangee Kendras are right than who knows it can become another tree house education where price dropped from 500 to 10 rs.
What could be the right value price and margin of safety to enter ?
Is this a value buy or value trap ? Currently trading at PE of 18 (70% down from highs).
Vakrangee can easily list all its Kendra’s, address and phone numbers (not a common number) to clear the cloud over the number of genuine Kendra’s they have.
