Forensics and the art of triangulation

PFA, a presentation I had done in Goa. I think forensics is about understanding the underlying brics of the bs/pl and triangulating it with real numbers that often form a verifiable trail (like the hansel and gretel story) often makes for a well rounded view of the numbers and hence the management’s intentions.

The presentation is only for educational purposes and there no stock specific recommendations in it. I have no interest in discussing any specific companies for obvious reasons. Basics of forensic.pdf (1.1 MB)



veteran members of this forum are sharing valuable tools to sharpen our weapons. In this moment of carnage in the market we should hone our skill and then start buying very selectively to built a life time portfolio.

the beauty of this forum is that even if you do not earn in the market you tend to learn a lot from the valuable postings in this forum.

Thanks Vardharajan and all those who are voluntarily sharing their knowledge and insights in this forum for the benefit of all…

SEBI’s order “in the matter of Fortis Healthcare Limited” is very instructive of how corporates use cash from a listed company and move it to Promoter entities while skirting rules on related party transactions.

Fortis moved Rs 400 crores as Inter Corporate Deposits to seemingly arm’s length entities, who then through a series of transactions gave it to promoter entities for purchase of land etc. SEBI has done well to hire a forensic agency to unearth how these things work, and the order is for us to learn, spot and avoid.

The full order can be found here SEBI order on Fortis and the Singhs.pdf (619.4 KB)

Apparently, “These loans were given in the beginning of each quarter and returned by the companies by the end of the quarter and thereby never reported in the balance sheet as the
outstanding amount at the end of the quarter was NIL. This has been happening from
the FY 2013-14 onwards.

Some interesting transaction are extracted and depicted below:

Loans taken from Fortis shown as repaid by taking another loan in a rotational manner:


A sample loan transaction (page 7) that indirectly gives loan to RHC (a promoter company) via some intermediary company (likely filled with proxies/benamis). FHsL is Fortis Hospitals


But what took the cake was how ICDs were shown as repaid when actually the same amount was presented 5 times and cleared 5 times to the same Axis Bank!!!




And, finally, how the ultimate promoters, the Singhs are all linked:


I feel such a chart should be provided for all listed family owned firms :)))

Hats off to SEBI!!!


Why Mr. G N Bajpai resigned from the newly constituted board of IL&FS? and the video of my presentation.


Just read good articles on various wrong doing by company. So shared a link


Andy Mukherjee of Bloomberg does a bit of digging up and he found that Yes Bank Promoters have effectively borrowed against their shares legally circumventing the pledge rule disclosure.

Morgan Credits Pvt Ltd, a Yes Bank Promoter is raising / has raised Zero Coupon NCDs worth up to Rs 1160 crores, by promising that it will keep its shares at a 50% margin to market cap and its Yes Bank shares unencumbered. CARE report says _"… while the debt cap (i.e. ratio of total borrowings of MCPL to market value of Yes Bank Ltd (YBL) shares held by MCPL) shall not exceed 0.5x at all times"_ In substance it is loan against shares though not in form. The report does not say if there is a recourse to Yes Bank shares in case Morgan Credits defaults on its NCDs.

Andy’s tongue in cheek style makes it interesting reading.

The more important point Andy makes is that the lenders are Mutual Funds and says that they do not seem to have learnt from the IL&FS bustup. In fact as Yes Bank shares went below 50% of its peak price, Rana Kapoor’s personal stake came into play!


Digging-up such a thing must require amazing amount of work. The amount of financial engineering here is mind-boggling.

That a mutual funded has lend the money without collateral based on some if-else conditions in my opinion is quite risky. Lending money in this way has made mutual funds equivalent to banks/nbfc except they are not regulated by RBI.

I imagine it would also be important to know for what purpose the money has been used.


Dear Sir

Please provide link of your other presentation or similar presentations by other.


Can someone explain in detail what’s happening with Sun Pharma - the multiple whistleblowers and all? Have they fudged their books or is it something else?

The core issue is the use of related party transactions for various personal reasons. The total transactions are about 8,000 cr with one of the related parties. Besides that this party is related was disclosed only in AR 2018.

When pressed for more details in the conference calls, Mr Sunil Shanghvi was evasive in the early Dec conference call. Just to highlight an instance of “deprival super reaction syndrome” one of the analyst asked Mr Shanghvi to file a defamation suit against Moneylife.

These transactions were exposed by a whistleblower who has given a 150 page and a 172 page document to SEBI, and shared it with Moneylife. Moneylife read through it and reported the summary.

Sun Pharma was caught unawares the second time around when the 172 page document was published.

The recent precipitous fall is on account of Moneylife articles:

The are however available only for paying members.

I hope this helps.

1 Like

What was the reason for hiding that it was a related party transaction? Did their balance sheet or P&L or cash flow look better because of it - I mean were they parking stock with the related party or to inflate figures or something like that?

According to Mr Shanghvi, there was no hiding, some events transpired in 2017 that made this entity to be disclosed as a related party.

The entity AML is the sole distributor according to the whistleblower with turnover of ₹8,000 crore in FY 18.

Just increasing the commission by 50bps provides a increased flow to promoters of ₹40 crore per year from Sun shareholders.

On Fri there was 2.39 cr shares taken delivery, it didnt totally go for LC, seems there was block deal at 370 for 8 Cr at market open.
almost every long term portfolio’s have Sun Pharma as top pick, now with such owning of stock , i cant think should be affected by some 8k cr, very old past transactions for a market cap of 93k cr company.

There are two ways to look at it
Breach of trust , error of judgement in accessing promotors
Impact on P&L in absolute terms.

Depending on who looks at what makes all the difference.

Just sharing a perspective…

Disc - not Invested

Small investors will have to decide whether its worth add/hold at this stage or exit out of the stock in view of the corporate governance. I am confident whatever happens, financial integrity in our Country will get enhanced due to such actions by the whistle blowers and money life. I am as of now in Hold mode just for the reason to see more clarity. Time will tell us Who is right??

Moneylife has said that the contents are open to viewing by Institutional investors.

The article you shared also discloses with blinding clarity the sorry state of investigative journalism of the print media.

Sun Pharma is a Nifty stock, which means that every Nifty ETF holds it, institutional investors hold close to one third of the company (SHP - Dec 2018), LIC holds close to 6%. So obviously they should be very very concerned.

But the paper which has access to every business house, fund house, public institutions and holds gala business events, and thus will have some sources in each of these places, cannot produce any statement from any of them.

Instead they get it from two firms, which I bet is mostly unheard by most members of even this forum, called Target Investing and Systematix Shares.

On the other hand a small magazine with limited resources risks sharing the report whatever the consequences. They had exposed NSE in the recent past which slapped a Rs 50 cr defamation suit that was thrown out with penalty.

Kudos to them and their grit! Sucheta Dalal’s courage from the days she exposed the Harshad Mehta scam is to be really admired.


I could not possibly understand their logic/thinking behind sharing the report to only select investors. I have no doubt in mind that their actions have distorted the market.

Why retail investors do not have access to the report? Institutional investors should read the report and make-up their mind whereas retails investors should walk in blind.

I do not for second call this good journalist. I think they have shaken the very foundation of market by creating information imbalance and should atleast be reprimanded for that.

They should have published the complain/report on internet for all to see and take a call.