I was quite excited to read up on this business and the future prospects till last week, however looking at the corporate governance issues highlighted by @aga.ayush11, the spate of negative news has sobered me completely.
Remuneration and Fund Diversion Allegation - 2012
I dug a little deep into this and now sharing a summary of the promoter compensation (90%+ is fixed pay with very little commissions) over the past 7 years and this honestly raises a STINK in terms of corporate governance! I don’t think I’ve ever seen promoters get such a high % of PAT as compensation, it is very obvious what the promoters are trying to convey through their salaries, they don’t give a damn about business performance / PAT or minority shareholders.
Similar issues highlighted in 2019 - This was shared earlier on this thread as well, just sharing a couple of paras from the article
"As per the petition, ‘excessive’ remuneration is being paid to the promoter-directors. It showed that the CMD SB Garware was paid Rs 4.12 crore during the FY2017-18, while other members of his family, including Monika Garware, Sarita Garware and Sonia S Garware received Rs2.60 crore, Rs2.37 crore and Rs2.75 crore, respectively.
“The act of paying such exorbitant and excessive remuneration is harsh and burdensome, unfair and prejudicial to the minority shareholders and hence oppressive,” said the petition."
“It further said that the reason for high remuneration is not due to any extraordinary effort by them or the value derived by the business due to them but for the reason that they belong to the promoter family.”
This is also extremely serious. Quoting from the same article above
“GIL is an entity formed by the Garware family to divert profits from Garware Polyester, which is a listed company with about 20,000 shareholders, to GIL, whose 100 per cent shares are held in a private trust formed solely for the benefit of the member of the Garware family.”
And earlier this year, fine imposed for disclosure lapses few years back
Sebi imposes Rs 76 lakh fine on Garware Polyester, 5 officials for disclosure lapses
Read more at:
This management doesn’t get anywhere close to passing the management quality filter which most investors should have and is a complete AVOID in my view till the management is superseded. Rest in a bull market, anything can happen.