Firstly, many thanks to @vigneshb
I’m never comfortable with related party dealings, especially ones such as their UK distribution business - whose only purpose in life seemed to be to act as middleman between MIL and the UK. “Why should it not be a 100% subsidiary”, was always a niggling question. Vignesh’s hypothesis gives a potential reason for this. Taking some debt off balance sheet could be a motivator. Frankly, I’d rather have this than other reasons for the existence of the UK entity (every other reason I can think of is worse than this one - and there well might be more than one reason for its existence).
For me, it’s a red flag - and the company clearly has got a set of flags flying in the corporate gov department.
Still, I’d disagree with @Multiplier777. Integrity is not digital. Neither is corp gov. Would you put a person who takes a printout of a (personal) holiday ticket from the office printer in the same bucket as someone who embezzles millions from his workplace? If you are an all or nothing person, then you would. Yet, I see a world of difference between the two.
A Satyam-like scenario where the even the balance sheet “cash” number was fake, is a very different beast.
In the end, it’s an individual call on how comfortable you are with light gray corporate governance, in the face of an otherwise attractive market opportunity. I’ve seen companies with gray corp gov doing quite well, and breaking many records. I doubt you can be 100% clean anyway - there are thorns in Infy and Tata…
This forum has been very helpful in calibrating where the company stands on the corporate governance spectrum.
Discl: Invested, from low levels