Hi Kautuk
I read your write-up on Deep Industries and it was great work. I reached out to you through DM also. I understand your work was not as appreciated.
Unfortunately, we can just be red signal not barricades.
I tried doing this on Ugro but did not work much. I also warned one of my close friend on stallion fluoro company but when share prices goes up no-one listens.
I reach out here to collab on Time Techno. Couple of years back I had researched the company. I had declined this as fishy. However, stock did fine. Later few MFs, some popular fund managers and respected/popular investors entered or talked about it.
Few days back again I looked at it to understand. Here were my findings couple of years back:
- Auditor seem to be not renowned – audited Allied Digital, Mukka Protein
- 50% of revenues and profits not audited by main auditor
Inspired by your Deep work on Deep Industries I tried again. I would call upon you or anyone else who can help in uncovering in more pin pointed structured way of finding issues.
I found more, not sure if these are good findings to stay away, Your help on structuring it further would be helpful
- MD & CFO are same for several years
- Eerily auditors re-appointed have similar/overlapping names (Khandelwal)
- One of the independent auditor was reclassified to non-independent
- 50% of revenue and profits continues to be not audited by main auditors
- There are several subsidiaries and related party transactions (loans etc.)
- Large write-off of 44 crores (50% of revenues) at battery subsidiary, worth noting that the annual report disclosure is in image format for this subsidiary
- For a Rs 5,500 Cr revenue company with several-entity international structure, not renowned auditor
- USD14 million loan to related parties at Ikon investments and some write-off on interest receivables and some expected credit losses. Some write-offs of amount due from subsidiaries
- Time Techno is providing pledge on its stake held in these subsidiaries for some loans taken. So we account for subsidiaries’ revenues and profits but they may be taken over by lenders if any difficulties in paying back. Most of the subs I checked are in losses.
- Going concenr issues at couple of subs: GNXT
and Ikon
Please not this is not buy or sell recon. This is just a learning exercises to asses companies better.