Had warned ppl here n on twitter multiple times along with data and rationale. Though anything is possible in market n I may be wrong, ensure take these things as learning and move on. We all have and keep paying some tuition fee. Personally, both qualitative and quantitative signs were imminant covefed in posts above. I have made many such losses friend during 2007-09 and hence try to highlight if i see some trouble signs.
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Hey Saurabh. I missed your posts. Can you please repost this or provide link? I’d like to see where I went wrong.
Thanks
Check between post no 218 to 240
Thanks I went through your posts and understand your views. Many points do raise concrete and well argued issues.
In your opinion, do you think the Organotin (which the company boasts of India’s only manufacturer) does not have any demand? Because while investing in the stock, I overlooked some of these issues and invested mainly on account of future demand of lead-free stabilizers. The fact that one of the buyer of the company’s product invested in the company instilled further confidence in the demand for the product.
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Few points
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If u look through most of the busted busineses of last 10-15 yeara in India or globally, there are lot of common patterns and nany of those patterns were visible here. Now ehwthwr, its fraud or poor business quality, no one will ever know amd no one can ever find written on a peace of paper. Its a 360 view which u make based on history, patterns n all info looking together. At the end its a probability
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If i cant trust the history, i cant trust future
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There tone used in annual report as per me clearly highlights not beibg true and trying to paint false picture.
I might be wrong but having seen few cycles of fraud, going through ARs/concalls of ethical vs dubious one n doing own bit of mistakes , one starts differentiating on the basis of qualitative probability. All i can suggest pick 50 comoanies of last 10 years which were projected as hot stories n ended up badly, read their 10 years of AR. Nothing better than going through it by own.
Why should we trust what mgmt says unless we have enough evidences to trust n why should not doubt when there are enough patterns. Where we draw the line is up to us and its a reflection of our own journey, risk reward ecpectation and philosophy
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The result is a shocker for me , i beileved this was my best find , but turns out to be a disaster.
First of all you can make money from any stock, but to hold a stock for long term we need to beileve the management.
My trust in management is down because if the Directorate of Revenue Intelligence inspected thier facilities they should have informed to the market and when did the CFO resigned they didnt mentione the exact date.
I am exiting this stock as i have bought at 18.5 and i am still in Profit.
Its much safe to invest in big companies then ! and get rich slowly 
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Let’s see how the market reacts to this. Even I’d like to get out (even I bought at lower levels, sub-20), but there’s a good chance that there would be 20% lower circuit.
In one of previous posts i had asked to read the book called financial shenigenians. One case study is how frauds r done through supply chain network. I go with numbers n what i read n analyze rather than believing in some 3rd person whom i dont even know. There are lot of ways corporate dirty games are played and thats a whole chapter or a book alltogether. Anyways, there is nothing called black or white in investment. We live on pribabilities. Even for this companies, this could vd have happened today or after 2 yrs or 5 or who knows
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I totally get your point, but its one of those times when many people believed on the future outlook than previous numbers. More than the disastrous numbers, I am shocked by the lack of corporate governance on part of the company. Its appalling that they did not disclose this to Shareholders earlier. This over anything else raises doubts over the integrity of the management and its sad that even today, corporate leaders take the retail investors for a ride.
None the less, Stock markets always teach you. Sometimes at someone else’s expense, sometimes your own.
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on a personal level, the results came as not only as a disappointment but a shocker to me. Now i hardly expected this to be a good quarter and was prepared for a flat/blend quarter but the numbers reflected the real carnage.
Company needs to be questioned on
- why they failed to inform investors about this ongoing DORI thing during the said period?
- what was the nature of such survey and investigation
- how could such a thing result in almost complete meltdown of reading operations?
Now i had been talking to few investors yesterday after results, people who have been in the markets for very long and play in huge quantities. They sounded not disappointed much to me and I wanted to understand their rationale… they said that now company will almost hit LC and they are gonna wait for that and accumulate again, their reason being
- Company’s entry into US markets
- Company having genuine clients as had been verified by them
- Demerger getting clearance from the creditors
- Sales figures of 55 crores in April, May, showing that operations are almost back from disruptions
- Stock already bottoming out, prices factored in
- Mass hysteria would give them low buying rates
They had been quite right for today as I saw stock almost hitting LC which was expected, they purchased huge chunks at around 22 something price and were happy to do it. Somehow to my surprise, stock did manage to recover
Everybody has their own rationale in the markets, point is, for the time being, which one’s turns out to be correct for the said time-frame…
I am heavily disappointed and faith in the management has gone down by multiple folds by what has happened, though I am not sold out yet as the stock is already bottomed out at these levels…
Company should hold con-call. Investors need to seek clarity and equity culture in India has to improve, noone should be allowed to get away like this.
When the trust in the management is down, there is no point in holding the stock. Promoter behaviour never change, if they had good intention they would have mentioned to the stock and i dont buy your theory of promoter purchasing the stock at LC today, if that was thier intention then it again downgrades the promoter resputation !
Promoter and Growth both are important. Also please google search what is Directorate of Revenue Intelligence , they search for smulgging !
If you see thier revenue, thier trading revenue was impacted. But Orgatin revenue was stable.
So something is cooking in trading revenue.
Once the Demerge happens and if the price valuation is good, then i may think of buying if i get confident on management.
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There is no mentioning of promoter buying at LC. I don’t understand from where you got that.
It’s clear case of malicious intention from promoters. First they did not disclose the raid(DRI is actually narcotic and anti economic crime agency. Their parent agency is income tax dept. It is important to note this company did not pay tax last Q) I like the way they say “survey” when it is actually raid. I was lucky to book profit earlier and hold only tiny part which I have to sell in loss now. I was swayed away by the genuine “lead ban” story story(which may be still valid) but no way I can hold such company with malpractices.
Are there any other players which can sill take forward the “lead ban” story, now with Vikas Ecotech ruled out
For my learning purpose, I was going thru annual report of this company and SHP. This is what I found.
Promoter share unchanged from past 1 year. I was thinking fraud promoters will “gift” or plege or outright sell shares in open market in bull market.
Salary and wages of the company are well under check. In fact I read somewhere that this is less paying company(sign of dummy employees?)
Apart from Innova car that was purchased from company money, didn’t find anything suspicious. Also, they seem to have given personal property(apartment) as security for loan of company.
They seem to have put lot of money into capex, resulting in net cash flow negetive. They raised money from loan or other means of finance(cash flow from fin activities positive).
Didn’t find company property as security for personal gain or finance.
However, from hindsight , what i can conclude is that, promoters always knew that they are following malpractices in trading part of the business and that’s why they wanted to demerge that part away from organotin manufacturing side of business. What I understand, this business is doing well.
However, I am unable to see what other way they could have siphoned money from company(if at all they did). My annual report reading skills and accounting skills are limited. I would appreciate someone knowledgeable throw some light for learning purposes.
My conclusion is, this is a case of incapable management who doesn’t know how to do business than a fraudulent company. Any contra views are welcome.
there were quite a few vehicles purchased, luxury ones i guess… i could see in vehicle loan section… 70 around lakhs cost
20% of asset was spent on vehicles instead of speciality chemicals which amounts to approx 88 lakhs if I remember and 1.8 lakhs per annum on an average on R&D.
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Vikas Ecotech ratings reaffirmed but comes with a caveat
so DRI indeed was investigating across various industries and market to catch defaulters… they’ve zeroed down on 28 companies for which they have initiated action as per this article and had sent notices to them on 28th May. Now vikas ecotech didn’t mention about notice in its 1st June press release and only mentioned about DRI investigation at its premises… now quoting directly from this report - “They include a New York Stock Exchange-listed pharma company focussing on livestock and pets that has an R&D centre in India, an IT product company and a few five-star hotels.”
The list of those 28 companies is not made available, point is, is there anyway to know if vikas ecotech is a part of those 28 companies which were zeroed down upon?