Just to update all of you, I had call with CS of KRBL today and he sounded very confident to getting out clean from these mess and assure me that whenever concall happen they will record as they have forgot to record last legal update call as it was scheduled in hurry.
It is a bit of relief to me but in India, culprit never say they have done something wrong at first instance.
I also learned today that both cases are linked to Gutam Khaitan so I can justify why company was dragged to similar type case or scam.
This time KRBL removed the below statements from their update. i doubt whether it still holds true:)
“We would again like to reiterate that KRBL Limited or Mr. Gupta has nothing to do with the
Augusta Westland case. KRBL Limited or Mr. Gupta was neither named in the chargesheet/complaints nor has he been arrayed as an accused in the Augusta Westland Case.”
Nice observation Remi. Wouldnt mind getting a resolution, even if superficially it appears quite bad. Even a penalty of 500cr would actually be a positive for the company.
Basmati eaters will eat basmati. Loss of 1 years worth of profits would be a pain, nothing more.
After burning my fingers in companies like Talwalkars, Sintex, REI Agro, Innoventive, Manpasand Beverages, Wockhardt etc, I have come to conclusion (after paying Lakhs of Rupees as learning fees ) that investing is less about brands, market share, revenue growth, PE ratio etc (as all can be managed and can go down the drain quickly) and more about people/promoters who are running the businesses. So I would request all investors of KRBL to get out of the “denial” mode and assess your investment thesis in this company in a truly objective fashion.
Disclosure - invested last year but got out quickly when I smell rat… not interested now
I think you have answered your own question here. These hangovers will not be over in a matter of weeks or months, it will be there for years. If there is another opportunity in the market where the growth visibility is as long as KRBL and available at a reasonable valuation then you will pay for the opportunity cost - which BTW is not visible if you just look at KRBL in isolation.
I was in the market during the Nestle - Maggi issue and also the Volkswagen-emission scandal. Call me old, but I don’t get the same comfort level in buying KRBL like in a Nestle or a Mothersumi (a proxy for Volkswagen). Unlike Nestle, there could be deeper political undertones to the KRBL crisis than just financial.
This is summed up in quote from Warren Buffett " “You can’t make a good deal with a bad person."
Having said that I have no idea about promoters involvement. This ED episode has been going on for few years and it is likely to go on for some time (I am extrapolating based on history).
I too agree that numbers posted by KRBL should be real or at least almost real.
We cannot compare KRBL with Manpasand. Manpasand posted around 950 crores as their topline sales but their brand was not present in many parts of India.
KRBL has long history in Indian business and market and most of the Indians are familiar with their brands which justifies the sales. They repaid almost 1200 crores of loan in last 2 years and adding investments now. Balance sheet justifies the profits.
Disc: Invested
You are correct, it’s not a new development.
However, the filling on 31st Jan reads that
“We would like to reiterate that KRBL Limited or Mr. Gupta has nothing to do with the Augusta Westland case. KRBL Limited or Mr. Gupta was neither named in the charge-sheet complaints nor has he been arrayed as an Accused in the Augusta Westland Case.”
Actually one thing we need to watch carefully here is, There should not be any other(new) issue in KRBL management and accounting apart from this reported Agusta Westland issue and its relation to old subsidiary RAKGT.
If something else comes up, we may need to rethink our KRBL investment thesis with whatever pops up.
We have been so caught up with KRBL’s legal struggles with ED but what’s incredibly surprising is, LT Foods (daawat) spent 28cr on Legal and professional charges. KRBL on the other hand spent 7cr (numbers for FY20)
Would have expected it to be the other way round. What’s going on
I think that was for Embraer deal(8-9th December filling). If you see recent filling by company, they removed this paragraph so this might be case… Getting included in supplementary chargesheet though I am not sure if that was the only reason. I am trying to find details online but no luck till now.
There were also court proceeding in Italy as Augstawestland’s home country - it is also interesting read as there were courts proceedings back and forth b/w Supreme Court and Appeal court and in 2019 all accused were acquitted due to lack of evidence or proof. Can this also happen in India as this investigation is going on for 6 and half year and yet not even reached at trial? - only time will tell.
) that investing is less about brands, market share, revenue growth, PE ratio etc (as all can be managed and can go down the drain quickly) and more about people/promoters who are running the businesses. So I would request all investors of KRBL to get out of the “denial” mode and assess your investment thesis in this company in a truly objective fashion.