Compilation of recorded Red Flag instances

Appreciation of capital is good but protection of capital is equally important.

Young gullible investors who just learn about terms like p/e or other ratios will find lot of companies that seem to trade at cheap valuations and misunderstand them as value buys.

In my limited experience, Indian stock market is as much treasure hunt as surviving a minesweeper.

I am trying to make a list of fraud companies and the symptoms through which the fraud is identified. A new investor after one-two instances of fraud grows skepticism on the market and maintains the opinion through his life avoiding stock market which is not healthy. They stick to known forms of investment like bank fd, real estate land etc., This compilation is for them.

8K Miles

  • For beginners, this stock looks very attractive at a 1.73 PE.
  • You google for them and they look credible and time to time AWS keeps awarding them the “best partner” award
  • Red Flags
    – Company shows aggressive acquisition led growth
    – Forging a Auditor partner’s signature to transfer money to overseas

Manpasand Beverages


Byke Hospitality


  • Once touted as the poster boy of Indian IT after biggies like TCS, Infosys
  • Promoters had real estate investments which went into loss. To bridge the gap, promoter proposed merging the real estate company with
  • Promoter steadily started reducing the stake from 25.6% -> 8.79%
  • One day, promoter comes out and announced the whole fraud affair of over-stating the financials over several years
  • As they had a tangible business, eventually the company got merged with Mahindra and it is still a formidable player in Indian IT.

Pincon spirits

@fellow boarders: Please share feedback and add other instances for the benefit of young investors.


We can add few more names:

  • Gitanjali Gems - PNB fradulent loans.
  • PC Jewellers - ties with vakrangee.
  • Sun pharma - Moneylife whistle blower case of ₹5800 transaction and fresh US law suit against price hike conspiracy.



Shilpi is definitely one of them

Would like to catch the ones with red flags but still doing well


India bulls

  • Veritas has released a research report india bulls - bilking india.pdf (2.7 MB)
  • Subsequently, IB filed cases against them and one of the co-founders came out of veritas


  • Selling a part of the Lloyd ACs division sold to Havells and using up the proceeds

Prabhat Dairy

  • Sold their Dairy operations to Lactalis @ 1700 Cr and now want to become an animal feed maker
  • Market is fearing a LEEL type of scenario with them too.
  • While it is not proven yet that the promoters have a bad intent, the LEEL precursor is affecting them.

Nice thread. Will be nice to know of the early warning signals of the fraud companies. Are there signs in their financial statements that can be inferred as an early warning signal?

Some cos that we can study
1.Lasa supergenerics/omkar
2.Shankara build con
4.Adag group
5.Arrow green tech

Can make a separate list of value destroyers based on below red flags though here intention of promoter is not always fraud
-Business dynamics based value destruction (Eg jet airways)
-Over promising promoter in combination with overvaluation is also recipe for disaster (e.g. Kitex)
-Commodity products at peak of cycle treated as non cyclic by retail investor ( eg rain industries, Avanti feeds etc though in both examples promoters have been good in capital allocation, execution etc but sometimes thats argument itself act as a trap)


I was very lucky to exit Manpasand Beverages before it went downhill. Thanks to red flags I noticed while doing research. Here are some more red flags:

  1. In Sep 2016 Manpasand had come out with a press release saying “Manpasand Beverages ‘Mango Sip’ brand emerges as one of the fastest selling fruit drinks at SPAR’s retail outlets”. SPAR is a supermarket chain. I visited a SPAR Supermarket in Gurgaon in Feb 2017 and did not find a single Manpasand product on the shelves. The employees had never heard of their brands like Mango Sip. I posted about this experience on the Manapasand thread.
  2. Motilal Oswal, the largest MF shareholder in Manpasand Beverages, came out with a very bullish buy rating on their portfolio company. They mentioned no downside risks. I posted about this on the Manapasand thread. I am not accusing Motilal Oswal of wrongdoing, but merely pointed out that they had not presented a balanced view. It seemed investors, including institutional ones, were behaving irrationally.
  3. The AR showed that they were playing very low salaries to their employees. In some cases people were paid 1/3rd or 1/5th of the salaries that they would otherwise get.
  4. Advertisements in Economic Times. For a brand whose customers mostly came from tier 2/3 cities, it made no sense to advertise about Manapasand in Economic Times.

We already have a similar thread, if I’m not wrong:


@VP moderators: please help in merging this thread with the existing one

here are a few companies that have seen wealth erosion from their respective highs (approx);-

  1. HCC - 70%
  2. Archidply - 70%
  3. Ganesh Housing - 70%
  4. Bhagyanagar India - 50%
  5. Marksans Pharma - 60%
  6. Viaan Industries - definitely a garbage stock
  7. Kushal ltd. - definitely a garbage stock
    Can anyone point out any Red Flags related to these companies?
1 Like

Sun pharma had been doing domestic market business through promoter group company, since very long time. May be more than 20 years. Nothing seriously wrong in it, in my view.

Cipla had been doing their generics business through some agent since long time. Now they will do directly.

As far as price manipulation is concerned, it is an issue as it may attract some penalty. Which is a concern proportionate to the maximum applicable penalty.

There are multiple threads already on this topic. Please consider searching and adding to these instead of starting new ones.

I had compiled most prominent known cases a while back, and this was referenced in this VP thread Forensics and the art of triangulation


There is an existing thread on this topic. So all are requested to move their content. This thread will be locked and eventually deleted.