There are a lot of Related Party transactions with Promoters and their relatives.
Below transactions are Suspicious to me
I think This is a major red flag
@srikanth2 I am curious, where did you get the related party transaction details?
I got this from EMS website
the latest concall got pretty heated related to the above issue.
(some good news after long time) lowest bidder for 183.81 Cr fatehpur sewerage construction offered by UP Jal Nigam https://www.bseindia.com/xml-data/corpfiling/AttachLive/3b79b309-0386-4047-a2dc-0eac5cdaeee2.pdf
The latest concall saw confrontation from one of the investor regarding this.
EMS has been suffering from several governance issue like the Brij Bihari Saga and poor order inflow also. Now it’s high time we evaluate the risks associated with this company:
| Issue | Details | Severity/Remarks |
|---|---|---|
| Promoter Conflict of Interest | Chairman Ramveer Singh held 25% personal stake in Brij Bihari before EMS acquired 60% stake. | High – Related party deal; possible misuse of IPO funds and corporate governance concern. |
| Mismatch in Acquisition Disclosures | EMS claims ₹7.75 Cr paid, but filings and trail show ₹27 Cr as ‘advance’ – serious inconsistency. | High – Raises concerns of financial opacity and IPO fund misutilization. |
| Asset Overvaluation | Book value of Brij Bihari land is ₹38–40 Cr; EMS claims market value >₹80 Cr without independent valuation. | Medium – No third-party report disclosed, suspicious justification. |
| Related-Party Debt in Acquired Entity | ₹50–60 Cr of related-party borrowings on Brij Bihari’s books – risk of future debt merging with EMS. | Medium – Debt may contaminate EMS’s clean balance sheet on consolidation. |
| IPO Fund Utilization Gaps | ₹27 Cr from IPO general funds were tagged for this acquisition, but purpose/use remains unclear. | High – Public capital might have been redirected with poor disclosure. |
| Contradictory Disclosure (ICRA vs CRISIL) | Mgmt gave conflicting data in investor interactions vs filings on advance/payment structure. | High – Unreliable communication, raises red flags on audit trail. |
| Intra-group Sales Not Eliminated | ₹32.27 Cr sale to subsidiary not eliminated in consolidated results; claimed as valid revenue. | High – Violates Ind AS 110; artificially inflates top line. |
| Unstable/Negative Cash Flow vs PAT | ₹508 Cr profit in 4 years vs ₹(-82) Cr CFO; disconnect questions earnings quality. | High – Risk of earnings manipulation or unsustainable accruals. |
| High Other Income Spike | Other income jumped 907% YoY; nature not clarified as operational or one-time. | Medium – Could be profit inflation from non-core activity. |
| Disputed Receivable of ₹34 Cr Unprovided | Debtors of ₹34 Cr under dispute; no provision created. | High – Violates prudence principle; may inflate asset quality. |
| Real Estate & Road EPC Diversification Plan | Company announced entry into non-core sectors; later rolled back due to feasibility concerns. | Medium – Strategy volatility; earlier communication proved premature. |
| Overdependence on Government Contracts | Over 90% of revenue tied to government projects, exposing it to policy/payment delays. | Medium – Sector risk inherent, needs diversification or risk management buffer. |
| No Operating Leverage Plan | Management failed to present a clear roadmap for maintaining margins during 30% topline growth. | Medium – Indicates reactive rather than strategic margin control. |
| KMP Salary Disproportionately High | ₹13.76 Cr paid to KMPs (out of ₹23.78 Cr total employee cost) – 58% of payroll. | Medium – Excessive payouts raise concerns on stakeholder fairness. |
My view on Acquisition of Brij Bihari Paper & Pulp Pvt Ltd by EMS:
Lets start from the beginning:
The company got listed on September 2023 via an IPO that raised ₹321.25 crore:
On August 10, 2024, EMS Ltd made an unusual announcement—it would acquire 75% stake in a barely 1.5 year old paper company, Brij Bihari Paper & Pulp Pvt Ltd . This move left many investors puzzled. Why would a water infrastructure EPC player buy a non-operational paper manufacturing company?
Brij Bihari Paper & Pulp Pvt Ltd was incorporated on January 10, 2023 . Its stated purpose: to manufacture duplex paper.
Promotors of Brij Bihari acquired some property (incl. Land, Building , Plant & Machineries) through the NCLT worth Rs ~50 cr and they expect the market value of Land & Building would be ~70-80 cr
A company incorporated 1.5 years back before the announcement by EMS ltd to acquire it
It appears that Mr. Ramveer Singh transferred part of his stake (25%) to family members before March 2024, possibly to avoid direct linkage between the EMS promoter and the company being acquired.
Since they initially announced plans to acquire a 75% stake, it is possible that this 75% comprises 12.5% from Mrs. Sakshi Tomar Parihar, 12.5% from Mr. Gajendra Parihar (his son-in-law), and 50% from Brij Bihari Concast Pvt Ltd.
I have downloaded the Brij Bihari Paper & Pulp Pvt Ltd FY24 Financials from the MCA portal to check their financial health:
Liabilities :
• Share capital: ₹1 lakh
• Related party borrowings: ₹59 crore
P&L Statement of Brij Bihari Pulp & Paper - FY24:
The company had no operations in FY24. Its P&L is blank, meaning no revenues, no expenses. Surprisingly, it didn’t even book depreciation, despite holding ₹60 crore worth of assets on its balance sheet.
Essentially, it’s a highly leveraged company with ₹59 crore debt from the related parties (Mr. Ramveer Singh & Mr. Rajiv Agarwal of Brij Bihari Concast Pvt Ltd) with no revenue in FY24
That’s a ₹19 crore unexplained gap . No disclosure has been made to clarify this difference.
Let’s piece together how this acquisition came about:
While the company claims it’s purely for collateral purposes, the structure, timing, and stake transfers to family members raise eyebrows from a governance perspective. Investors should watch closely how:
EMS has paid 7.75 cr for this deal with remaining 19 cr remains unexplained.
My view is even if EMS Ltd acquired Brij Bihari Paper & Pulp Pvt Ltd at free of cost, the deal still brings along nearly ₹59 crore of borrowings. In exchange, EMS gets land and building valued at ₹40 crore—essentially paying ₹60 crore in debt for a ₹40 crore asset. The rest of the assets (₹20 crore) are likely impaired or non-functional.
There’s no operational business being acquired. In fact, EMS has explicitly stated it doesn’t intend to operate Brij Bihari’s core business.
At best, this appears to be a move to acquire a real estate asset, possibly for use as collateral which means blocking capital for a single-purpose asset (collateral), while inheriting a leveraged company
But the key question remains— Is this capital efficiency or a potential misuse of shareholder funds?
Disclaimer: All the insights shared here are based on facts I’ve gathered from public records and company announcements. I’ve tried to stay neutral and objective, but this post is purely for informational purposes—not a stock tip or investment call. Always do your own research!
Not invested
Statutory auditors resigned. Another huge red flag
Plus this -
"On a consolidated basis, EMS Limited has achieved a 15.81% increase in revenue
during the quarter under review; however, profit has risen by only 2.42%. This
variance is attributable to the manufacturing segment i.e the newly acquired
Subsidiary, EMS Industries Private Limited (Formerly known as Brij Bihari Pulp and
Papers Private Limited) which is currently in its initial stage of operations and will
generate a margin of approximately 10% in future. Given this lower margin in the Qtr
ended June 30,2025 in manufacturing segment, consolidated profit growth appears
modest despite the strong revenue performance. It is important to note that the
increase in revenue reflects growing sales volumes and market penetration, and as
manufacturing operations mature, margins are expected to improve in the following "
They’re now going to operate the paper plants!?
The shenanigans of this management… It’s quite amusing actually (Unless you’re a shareholder)
DISCLOSURE - NOT INVESTED. Was studying but seeing all the tricks management were doing, stayed away from it.
*AND THE SAGA OF FINANCIAL SHENANIGANS CONTINUES:*
Red flag/Risk analysis from Q1FY26 Concall transcript:
Misleading justification: Asset acquired for “business purpose” but only 20% actually used.
Accounting manipulation: 80% shown as CWIP to avoid depreciation, artificially boosting profits.
| Situation | Correct Accounting (Ind AS) | EMS’s Treatment | Issue |
|---|---|---|---|
| Assets that are ready for use but idle (e.g., building, machinery that could be used but isn’t fully utilized) | Must be classified as PPE and depreciation must be charged, even if idle (Ind AS 16, Para 55–56). | Classified as CWIP, no depreciation charged. | Incorrect – artificially avoids expense, inflates profits. |
| Assets that are still under construction or not ready for intended use | Can be classified as CWIP; no depreciation until ready. | EMS lumps all “not currently used” into CWIP. | Misleading – “not used” ≠ “not ready”. Usage is a business decision, not an accounting criterion. |
One investor Pankaj Motwani raised this issue of not charging depreciation on the full amount of asset and violation of Ind AS16. In response Management said that only 2 out of 5 machines are operational.
** Verdict**
Theoretically incorrect under Ind AS 16.
Assets that are ready and available for use but temporarily idle must be classified as PPE and depreciated, not parked under CWIP.
EMS’s approach = aggressive accounting / earnings manipulation.
Contradiction: Earlier rationale (collateral for banks) vs current usage (mostly idle).
Selective disclosure: Ignores related-party loans, only emphasizes “no bank loans.”
Capital efficiency concern: Money tied up in non-productive assets, hurting return ratios.
** Key Facts**
Target: EMS Realtech Pvt Ltd, incorporated 2013, engaged in Real Estate business.
Financials: Zero turnover for the last 3 years (FY22–FY24) — effectively a dormant shell.
Transaction: 100% stake acquisition (10,000 shares). Consideration to be in cash (exact price yet to be decided by takeover committee).
Related Party: Promoter & Chairman Ramveer Singh and MD & CFO Ashish Tomar are already directors and members of EMS Realtech. Transaction falls under Related Party Transaction (RPT).
Timeline: Completion expected in 90–120 days post-committee report.
Material Update: Still in drawing phase, Construction likely to start in November. Although management claims the land parcel to be at Rs 200 to 250 cr, they said it was taken at face value, not at market price.
Risks & Red Flags
| Issue | Why It’s a Concern |
|---|---|
| Dormant company with NIL turnover | Buying an entity with no operations or revenue track record raises doubts on business rationale. |
| Unrelated diversification | Target operates in real estate, which is completely outside EMS’s core water & sewage EPC business. Risk of capital misallocation. |
| Related Party angle | Promoters Ramveer Singh & Ashish Tomar are directors/members in the target company. High conflict of interest risk — potential promoter enrichment. |
| Opaque valuation | Consideration not disclosed upfront; left to a committee. Without independent valuation, risk of overpayment or misuse of shareholder funds. |
| No strategic clarity | Management has not explained how this acquisition supports EMS’s long-term strategy (water infra focus). Looks opportunistic and possibly promoter-driven. |
| Governance overhang | Combined with earlier Brij Bihari saga, this raises pattern concerns about questionable acquisitions linked to promoters. |
promoter Ramveer Singh’s dual role in both EMS Ltd and Realtech, coupled with face-value transfer of a “₹200–250 cr land bank” with no revenue, strongly suggests promoter self-dealing and diversion from EMS’s core EPC business.
Navi mutual fund is still holding EMS as per August month portfolio..maybe either they dont care because its a somewhat small portion in their nav, or maybe they feel things are still alright despite the valid concerns
one reason can be due to the points being discussed above in this thread
Adopted from the Q2 FY26 concall
Q2 and H1 FY26 Performance and Operational Challenges
• Q2 Revenue Decline: The company experienced a decline of about 26-27% in its figures for Q2 FY26.
• Reason for Decline: The primary cause was unexpected high pan-India monsoon rains . The company operates in six states, and heavy rain hindered underground execution work across several projects.
• Operational Impact: Digging work necessary for laying sewers had to be stopped entirely because continuous rain causes the arc to collapse, posing a safety risk to nearby civil structures like buildings and electrical systems.
• Work Continued: Only over-the-ground works, such as the construction of Sewage Treatment Plant buildings or Water Treatment Plant buildings, could be performed.
FY26 Guidance and Growth Strategy
• Annual Growth Projection: The company is still committed to achieving 18-20% annual growth for FY26 compared to FY25.
• H2 Ramp-up: While traditionally H1 provides 40% of the revenue, the weak Q2 means H1 FY26 yielded only about 33% of the annual target. The company plans to deliver 66% of the annual revenue in H2 , with a significant ramp-up of progress expected to be visible in Q3 (December quarter) and maximized in Q4 (March quarter).
Order Book and Bidding
• Unexecuted Order Book: The current unexecuted order book is precisely ₹2380 crore . This represents 2.5 times the FY25 unexecuted order book.
• Pipeline and Expectations: Tenders worth about ₹4000 crore are in the pipeline, and the company expects to add a minimum of ₹500-600 crore in further orders during the current financial year.
• Execution Period: The usual completion period for projects is two years, allowing the company to easily execute 45% to 50% of the order book annually.
• Winning Rate: The typical winning rate (strike rate) when bidding for contracts is usually around 15% (sometimes 17-18%).
The partnership “EMS Concrete” is with Mr. Gajendra Parihar , who is explicitly stated to be the Son-in-Law of Mr. Ramveer Singh (Director & Chairman of EMS Limited). This is a classic related party transaction (RPT) .
The rationale for choosing a family member as a partner, rather than an established industry player, is unclear.
The total initial capital for both partnerships is shockingly low.
This capital is symbolic and inadequate for any meaningful construction or manufacturing business.
a. The real funding will come later via loans or advances from EMS Limited, which may not require the same level of disclosure or shareholder approval.
b. 1. The partnerships are likely structured as “shells” or Special Purpose Vehicles (SPVs) to execute specific contracts, isolating risk but also creating opacity. The listed company’s funds will flow into these vehicles.
Disc: Holding
Promotor moving money from their own company to purchase real estate does not go well with market. Disc invested and 60% plus loss at cmp
I am caught up at same loss %. Only positive is orderbook
