Som Distilleries and Breweries

Business Summary:

• Established in 1993, SDBL is a Bhopal based company engaged in manufacture of beer and IMFL.
• As of March 2017, it had total capacity of 59200 KL (kilo litres) of beer and 5400 KL of IMFL.
• Its product portfolio includes beer, whiskey, rum, brandy and vodka.
• 89% of topline is derived from beer. Company has three brands that sell more than 1 mn cases (~9000 KL) per annum – Hunter, Black Fort and Power Cool.

  • Sales as of Dec 2017: Hunter – 21.2 lakh cases, Black Fort – 15.6 lakh cases, Power – 17.1 lakh cases

• Hunter and Woodpecker brans are supplied as draught beet to major hotels in Madhya Pradesh and Chhatisgarh.
• A number of key expansion measures are currently underway (look at section below)


• 1994 – Incorporated and listed on BSE. Black Fort and Legend brands with depots in Delhi and Chandigarh
• 1996 – Commercial production started with 10000 KL of beer and 5400 KL of IMFL, expanded beer capacity to 18900 KL
• 2003 – Expanded capacity of beer from 18900 KL to 23800 KL
• 2007 – Expanded beer capacity to 29200 KL
• 2010 – Expanded beer capacity to 59200 KL
• 2012 – Launched Power Cool beer
• 2013 – Launched Whiskey Milestone 100 and Vodka White Fox
• 2016 – SOM allowed to supply rum and beet to Canteen Store Depot (CSD) pan India
• 2017 – Set-up brewery in Karnataka through subsidiary Woodpecker Distilleries and Breweries Pvt. Ltd.


 MD – JK Arora
 CEO – Deepak Arora
 DMD – AK Arora
 Nilojit Guha – President, Sales and Marketing


• Promoter shareholding – 23.17
o JK Arora – 6.61%
o Som Distilleries Pvt. Ltd. – 11.01% (JK Arora has 69.32% stake)
o Aalok Deep Finance Pvt. Ltd – 2% (JK Arora has 89.56% stake)
• Institutional holding - Nil

Industry Overview:

• Per capita consumption of alcohol in India is one of the lowest in the world – due to social stigma, high government interference and high taxes
• Beer industry is mainly concentrated in Southern states of India with market share of these states at 50%, mostly due to hot climate throughout the year. Some seasonality in sales of beer.
• Industry is strongly skewed towards IMFL. Among beers, strong beers are preferred -

  • Alcohol is taxed by total volume, and not by volume of alcohol. Thus in comparison, on basis of alcohol volume, beer is taxed higher than IMFL.
  • Thus IMFL has greater share (67%) in alcohols in India vs beers (26%). This is skewed compared to other countries. Beer market valued at Rs. 448 billion in 2016. Expected to grow at 8.6% for next 5 years. IMFL market valued at 2040 billion and expected to grow at 8.2% in next five years.
  • Strong beers are seen as more value for money by consumers. This is in contrast to other countries where light/premium beers are preferred.

• Ban on direct advertisements and promotion imply that for a brand to become successful it has to invest in surrogate advertising such as glasses, mineral water, music items etc.

Key Developments:

• Woodpecker beer (in Mar 2017) and other four IMFL brands (in Nov 2016) allowed supply to CSD in March 2017. Entered into bottling agreements with Jagajit Industries and Oakland Bottlers in Apr 2016 to cater to CSD and Northern market.
• Launched new flavours in RTD vodka White Fox.
• Invested 40 crores equity in subsidiary in Karnataka. Capacity expected to go online from end of March 2018.

  • Total outlay of 115 crores out of which 100 crores already incurred.
  • Already started supply of Black Fort and Hunter beers in June 2017 width of distribution (WOD) of 30% across the outlet universe.

• Signed MoU with White Owl Distilleries in August 2017 to brew and bottle their craft beers -
• Entered Maharashtra market in Nagpur in Feb 2018.
• Approved decision to raise capital of 150 crores in March 2018.

  • Also approved Employee stock option place to grant 5 lakh options convertible to one share each.

• Recruiting top management to strengthen sales

  • Shirish Pilankar appointed as head of sales West. His last assignment was with Bacardi as Cluster Head Western region.
  • Appointed Nilojit Guha as President Sales and Marketing. He was earlier Director Sales with SAB Miller. To focus on sales in Southern and Eastern markets.

• As of annual report 2017, in the process of implementing ERP across manufacturing sites and depots.
• Beer brands have been approved by USFDA for supplying beer to USA and trial orders sent.


• Focus on CSD and increase CSD sales share from 5-6% to 15-20%. Increase from 16 to 36 outlets.
• Diversify geographically into growth markets such as Karnataka, Kerala, Andhra Pradesh and increase sales in legacy markets such as Delhi and MP-Chhatisgrah
• Decrease seasonality in revenue from beer by increasing sales of IMFL and RTD drinks.

Financial statements:

Balance sheet


Profit & Loss Statement


Investment rationale:

  1. Overall consumption theme of beer in India remains good. Per capita consumption of beer in India is low. While this is not expected to increase dramatically in the short term, the growth of premium brands in cities is a good growth opportunity.
  2. Only listed player having both beer and IMFL products. These may complement each other and reduce seasonality going forward.
  3. Diversifying into key markets in South India (TN, AP, Kerala) where beer is widely consumed. Karnataka has 10% market share of beer in India.
  4. Ventured into craft beer with White Owl. I see this as a potential market with opportunity to give competition to Bira. I have personally had these beers in Goa and found them to be very good, will post pics in next post.
  5. Ability to sell to CSD is a positive. Company expects 15-20% of topline from this. I believe that is already reflecting with improved sales in last three quarters. Out of 36 CSD outlets, Som is catering to 16. Margins projected to be better.
  6. Few home grown brands that have successfully scaled up to become national players in beer. This is due to regulatory setup. Ability to manufacture and cross-sell in different states is a major advantage.
  7. Good financials - maintained EBITDA margins of 15% (except drop to 9% immediately after highway ban) and maintained a healthy balance sheet with gross debt to equity at end of Dec 2017 at 0.48. Dividend paying company with dividend payout ratio > 25%. RoCE at 14-16% for last 3 years.

Risk factors:

  1. Industry wide risks
    • Highly taxed consumption item makes in unaffordable for a number of consumers.
    • High regulatory interference including bans that may disrupt operations suddenly. For example, in 2017 there was scare that alcohol would be prohibited in MP, but company came out with statement what Finance Minister of MP has clarified that Excise policy of 2017-18 does not have any fix plan for prohibition.
    • Unfavourable judgements such as the ban on alcohol near highways. Also the Constitution of India has Directive Principle (article 47) that states “…the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health".
    • State wise differences in regulations make it difficult to market and sell across states.
    • Difficulty in building a brand that catches the attention of the youth. Significant advertising and marketing costs might mar margins in the future.
  2. Low promoter holding. Some sources say that some public shareholding is with distributors and other related parties, but this needs to be confirmed.
  3. Promoter was super bullish in 2013 when they said they will double sales. Has only now started improving topline. I believe projections given by promoter have to be taken with a pinch of salt. Delay could have also been to legal matters as noted in point 7.
  4. Working capital cycle has fluctuated in the past couple of years and was as high as 125 days in 2016. Also led to negative cash flows in previous years. In 2017 however, drop in receivables led to increased CFO.
  5. Disputed statutory dues with respect to income tax stands at 6.38 crores.
  6. While auditor noted that company had adequate finance control system, it suggested some steps to codify the system, document operations and segregate duties in AR 2017.
  7. Company has struggled with legal issues in the past. Need to check whether any cases are pending. Legal guidance in this regard will be helpful. Some legal issues found online -
    • Copyright, design infringement filed by Carlsbeg and SAB Miller - Carlsberg Breweries A/S vs Som Distilleries And Breweries ... on 2 May, 2017, Formerly Skol Breweries Ltd. vs Som Distilleries & Breweries Ltd on 8 February, 2013
    • Dispute over dues with MP State Industrial Development Corporation – Carlsberg Breweries A/S vs Som Distilleries And Breweries ... on 2 May, 2017. It came to a point where court asked for Som to be liquidated and then Som settled outside court. As I understand after settling issue, Som further appealed the decision as unjust – and most recent order is here - Som Distilleries And Breweries ... vs The State Of Madhya Pradesh on 1 September, 2017

Other inconsistencies:

  1. Annual report 2017 says that interest due but not paid was to tune of 1.21 crores. Don’t understand why.


  1. As per annual report, CEO/MD salary is Nil. However senior management takes salary up to total 2.56 crores. This must be out of total 7.14 crores listed as employee cost. Total employees on rolls is 106.

Disc: Not holding presently.


Sharing some photos of White Owl - a craft beer brewed and bottled by Som in agreement with White Owl Brewery Pvt. Ltd. You may read more about it on their website


1 Like

Any specific reason for this? Sorry, I didn’t actually go through their ARs. I noticed this right away from Screener data. Thank you.

1 Like

Yes, as noted in point 4 in my post above, the working capital cycle of Som is suspicious. Annual report 2017 reads -

There was a significant turnaround in the balance sheet with improved parameters like reduction in debtor days and reduction in loans and advances, resulting in positive cash flow from operations. During the year, the Company generated cash flow from operations of Rs. 873 million and incurred capex/ and investments in subsidiary of Rs. 491.3 million leading to a free cash flow of 294.5 million.

We have to see whether the working capital stabilizes going forward. Attaching some graphs here for why CFO declined between 2013 - 2017.


Another concern and something that affected CFO a lot was sudden increase of short term loans & advances mostly due to trade advance to related parties and advance to retailers.


I haven’t studied any other alcohol manufacturers, so if members can throw light on this matter, it would be helpful. Or we can compare SOM’s working capital to some other efficient player.

Need to keep in mind that Som went through some trouble between 2013-2017. As noted in post earlier, they were charged with design infringement by Carlsberg and SAB Miller. In one such case, I think they were asked to not sell their inventory. I will dig up the legal issues next and see if there are any pending matters that may hurt Som’s operations going forward.

Annual report in 2014, 2015 had talked about increasing beer capacity to 90000 KL, but this never happened. One has to investigate why this was the case and why the company has struggled for last 5 years to improve sales. All said and done, the list of developments in the last one year are very intriguing. Need to do more digging.


Excellent analysis, thank you.

Isn’t the relatively low promoter shareholding a cause for discomfiture?
Also, over the past 5-6 years their sales have increased but margins have consistently worsened.
Shouldn’t a company’s margins be improving if its brand is doing well? They’re possibly adopting the strategy of sacrificing margins for sales?
Also, I’ve a question pertaining to the shareholders holding shares in excess of 1 percent.
Most shareholders in the list seem to be holding just 1 share- Som Distilleries. It’s baffling to me that all large shareholders hold shares of just one company. Or are they employees or business partners?

1 Like

Long back, April 2010, I studied this stock and wrote a blog too. I had the same concern, the low promoters holding. It was 21 Rs at that time. Bought and got out at Rs 81. However, this went up all the way to Rs 300 in 2013.
The company does look strong but the PE is really high.

1 Like

Analyzed the company recently and the company looked interesting :

Positives :

  1. Significant growth in Revenue and Profits achieved in 2018
  2. Very bullish forecast for 2019 as well with expected growth of more than 50% ( need to take this with a pinch of salt considering that company was struggling between 2013 - 2017) but the numbers did pick up in 2018. Also company started their new Karnataka facility in March 2018 with capacity of 3.5 Mcs of Beer (28% New capacity from earlier base of 12.5 Mcs) and 2.8 Mcs of IMFL (165% New capacity from earlier base of 1.7 Mcs)
  3. Expected EPS Growth in 2019 can be even higher due to Financial and Operating leverege
  4. ROE and ROCE should improve to 20% very soon
  5. Conservative Financial Mgmt : Low debt to equity Ratio and interest cost is coming down 16% over Q3 , another positive sign . Also D/E has come down over the last couple of years inspite of Capacity expansion another good sign
  6. ROA should also move to double digit
  7. No Equity Dilution over last several years
  8. Tax Paying and also Dividend paying company which gives comfort on cashflow generation
  9. Debtor days has come down from 87 to 70 which should improve their WC cycle
  10. Received Army Canteen Store Department approval and has achieved 40% wallet share in Beer
  11. Entry in US recently - Beer brands have been approved by F.D.A for supplying beer to the USA (Nov 2017) . This could be a big positive considering the huge NRI population.
  12. Molasses which consist of 40% of their Raw Material costs have come down by around 45% which should support Margin Expansions
  13. Regulatory Moat - High entry barriers due to stringent regulations and investments required to set up distribution network have prevented the entry of smaller players
  14. Upcoming elections in 2018 and 2019 should help further
  15. No Mutual Fund holding and very little availability of research material


  1. Industry wide risks like Highway Ban
  2. Low promoter holding
  3. Working capital cycle has fluctuated in the past couple of years
  4. Company has struggled with legal issues in the past.

The possibility of solid growth and not so expensive valuation is a big plus for me and need inputs from seniors on anything that I should consider or might have missed

Disclaimer : Picked up a tracking position and views may be biased


@sukhlani1 Here are some of the risk factors I noticed

Auditors have some comments in FY17 annual report.
Source - FY17 Annual Report

There is a new auditor for FY18 and there are no comments and qualifications for FY18 results.

Any idea about short term advances on the balance sheet?

There is a significant amount advanced to a related party
Source - FY16 Annual Report

but there are no details in the notes

Source - FY16 Annual Report

Som distilleries Pvt Ltd again became a related party in FY2017.

Source - FY17 Annual Report

Short term advances continue to be a large part of balance sheet in FY18.

Source - FY18 Results

Advances to retailers is also another area of concern. These have come down to 22 Cr from 40 Cr in FY17 but still a sizable amount. Why would a company pay advances to retailers? Already receivables are high.

New unit in Karnataka was suppose to start in Q3. It was then rescheduled to Q4 but it is still not started.

Source - FY18 Results


There is an item in cashflow statement that states 39.3 Cr raised by issuing equity capital.

Source - FY17 Annual Report

But there is no increase in share capital or reserves

Source - FY17 Annual Report

when compared to share capital and reserves for FY 2016 which is available in standalone results.

Source - FY17 Annual Report

In standalone results, same amount is shown as investment in subsidiary

  1. As per the announcement given to exchange on April 9th, commercial operations started. As the financial statements are for March 31st, this investment is still shown as Capital work in Progress
  2. Equity capital in consolidated cash flow statement must be the investment in subsidiary company, same amount has been shown in Standalone statements as Non Current Investment on balance sheet.

Results for year ending 31.03.2018:

Thank you for scuttlebutt on this co. We have been reading & learning about this space. Will be great if someone can help us on this co further

Some queries from our side which we are trying to understand more:

  1. Volume performance of Beer & IMFL in new geographies like Karnataka, Kerala
  2. Som Distilleries Pvt Ltd (JK Arora is MD of this company and holds 69.32% stake in this entity; also SDPL holds 11% stake in SD) – we hear that this private co has huge revenues compared to the listed entity?? Anyone has financial performance details of this unlisted entity? And any upcoming developments between 2 entities where promoter stake can increase?
    a. Also there has also been related party transactions with the listed entiry & Som Distilleries Pvt Ltd (private co) - which has been mentioned above
  3. EOW case status update - In Sep 2016, EOW filed a charge sheet in the special court of MP SIDC, Bhopal against certain people including Jagdish Arora in relation to a conspiracy

Thanks in advance

1 Like

I quickly checked for the financials of this company. They are behind a paywall but the paidup capital seems to be 27.46Cr and outstanding loans of ₹206.36 Cr. Here are some links for more information.

1 Like

Results for Jun 2018 quarter - BSEINDIA


Points to note -

  1. Excise duty as % of revenue increased from 15% to 25%. Is this is new normal as the company has now gone into states other than its home ground MP?
  2. Cost of materials increased only 20% compared to revenue increase of 41%
  3. Combined effect EBITDA margin is stable ~ 13% - this might take a hit if lower cost of materials is on-off.
1 Like

I was researching on legal cases against Som and found some interesting links. SABMiller, Carlsberg and recently United Breweries have all appealed on design infringement and passing off. - Bombay High Court finds Som guilty for violation of trade mark - interim order of 18 Dec 2012 upheld
Summarised here - Not sure what was implication for Som in the long run. - declined to give Carlsberg injunction against Som in composite suite for design infringement and passing off.
Firstly noted that design infringement and passing off cannot be done in a composite suite and as for novelty, just having the same shape as such does not mean that there is infringement

United Breweries case is ongoing now, so need to follow that.

Need to figure out how much of this is actually hurtful to Som’s prospects in the future. Insight from some IP lawyer may be helpful here.


Notes from AR 2017-18


  • JK Arora - Chairman and MD
  • Surjeet Lal - Director
  • Nakul Kam Sethi - Whole-time Director - elevated to Board from Head (Finance & Strategy)
    • Appointed in company in 2011 - total experience of 6.5 years in company. Used to look at finance, account and strategy previously

Board -

  • 2 executive directors, 1 non-executive non independent director and 3 independent directors
    • Woman director is Ms. Nishi Arora, considered independent but don’t know if shes’s related in some way to promoter
    • Overall Board looks weak and composition may not in line with best practices
  • Board met 17 times in this financial year - sign of increased activity?

Managerial remuneration

  • CEO draws no salary
  • Total salary of key managerial personnel ~ 11.52 lakhs ~ 0.4% PAT - very low!!

Statutory Auditors - RN Gupta & Associates

Shareholding (as of March 2018)

  • Promoter holding - increased from 22.97% in Mar 2017 to 23.23% in March 2018
  • Interesting to note that HNI (shareholders with share capital > 2 lakhs) decreased from 69.69% to 51.11% while retail shareholding increased from 6.45% to 15.86%
    • All top ten shareholders decreased stake in the company
  • Corporate bodies increased stake from 0.68% to 4.54%, but their identity unknown

Key Management Team -

  • Nilojit Guha - ex Director, Sales at SAB Miller India appointed President, Sales and Marketing in Nov 2017.

From Chariman’s Desk

  • Revenue grew by 43%, EBITDA up by 57%, EBITDA margins increased by 159 bps to 17.2%
    • Beer volumes increased 39%, IMFL increased 10%
  • Combination of increased acceptance and expansion in states of Karnataka, Kerala, Delhi and Chhatisgargh
  • Karnataka subsidiary commenced operations in Apr 2018
  • White Fox RTD vodka drink launched in Karnataka, Kerala and West Bengal
  • Acquired brewery in Orissa in July 2018 - capacity of 42 lakh cases per annum - for focus in eastern states
  • Completed preferential allotment of Rs. 100 crores
    • Allotment to Karst Peak Asia Master Fund - 67 crores and Vermillion Peak Master Fund - 33 crores at price of 271.55
  • Beer was FDA approved in Oct 17 for supply to US - trial and subsequent orders sent, expect exports to grow
  • Company at inflection point of growth - plan to become a PAN India alcobev player

Alcobev Industry

  • India is 3rd largest consumer of alcoholic beverages but has one of the lowest per capita alcohol consumption in the world
  • States of AP, TN, Karnataka, Kerala account for over 50% of total consumption
  • Market is dominated by IMFL which contributes to 80% of industry value
  • IMFL industry
    • In value terms share of whisky 61%, brandy 11%, rum 10%
    • Increasing preference towards premiumisation is evident from higher contribution by whiskey and vodka in value terms compared to volume consumption.
  • Beer industry
    • Despite smaller size, beer is preferred by youngsters
    • 85% of beer sold in India is strong beer
    • Beer value expected to grow at 7.4% CAGR over FY17-22.
  • Demand drivers - disposable income, young population, social acceptance, nuclear family structure, alcohol availability
  • Threats and concerns - restriction on direct promotion, stringent regulations, low penetration, limited pricing power, alcohol ban, irregular and high taxation, barriers to scale, volatility in raw material prices, competition

Plants and subsidiaries

  • Bhopal plant
    • Capacity of 7.6 mn cases of beer and 0.6 mn cases of IMFL
  • Woodpecker Distilleries (subsidiary)
    • Company acquired shares in March 2018 to tune of 11.69 crores in Woodpecker Distilleries - with total paid up capital of 11.69 crores. Total investment of 129 crores made in this
    • Commenced operations in Apr 2018
    • Capacity of 3.4 mn cases of beer and 2.7 mn cases of IMFL
    • Plan to start IMFL manufacturing during H1FY19
  • Orissa acquisition
    • Announced in July 2018 through proposed subsidiary SOM distilleries & breweries Odisha Pvt. Ltd for total consideration of 46 crores
    • Capacity of 0.42 mn beer cases per annum
    • Plan to invest additional 25-30 crores.
    • Expects to be operational by Q4FY19 and expects significant contribution from FY20.
  • Other operational developments
    • Started sales operations in other states - Maharashtra (Feb 18), Kerala (May 18)
    • MoU with White Owl Brewery
      • When I spoke to some executives from White Owl they said they’ve only leased some space from Som and there’s no revenue sharing model as such. Mostly done because there’s idle capacity in Bhopal plant. Business agreement due to family connections between two companies.


  • Premiumisation of portfolio
  • New launches and strengthening core brands
  • Pan India expansion - vision to become one of top brewing companies in India, strong balance sheet provides ample scope for inorganic growth

Disc.: Invested, 3% of portfolio


I have checked in the annual report. Orissa brewery capacity mentioned is 42 lakh cases, i.e 4.2 mn cases.

Some digging regd. concerns raised earlier -

1. Litigation - I’ve raised concerns about ongoing legal disputes earlier. AR only says -

The Group’s pending litigations pertain to claims and cases occurring in the normal course of business. The Group has reviewed its pending litigations and expects that the outcome of the proceedings will not have any material effect on its financial position.

We can’t read too much into this - better to get a sense of how much IP law poses a threat to Som’s business

2. Working capital

On a consolidated basis, Som continues to have a WC cycle of 72 days


3. Short-term loans and advances

This item on the balance sheet has been abnormally high in the last couple of years. Good to see a sharp drop of ~ 57 crores.

  • Advances to retailers ~ 22 crores have been eliminated
  • Trade advances to related parties has seen drop of ~ 30 crores
  • Decrease in overall capital advances of ~ 7 crores
  • Addition of ~ 20 crores on BS of subsidiary

Note: There was an error in similar chart posted earlier where I had mistakenly taken numbers for standalone entity for FY17

Good to see that due to this consolidated CFO is up to 81 crores against PAT of 25 crores

For classification between loans (under financial assets) and other current assets, there is discrepancy between numbers disclosed specifically under these two headers in the results declared for Q4FY18 and AR, although sum of the two items is the same (not attaching snapshots - but can verify independently on PM if required). Should this be matter of concern? But this does not reflect well on auditors and management.

4. Internal financial control

Yes, that’s true but in AR18 they have made similar comments (in Annexure A to Independent Auditor’s report) as done previously in AR17.

Good thing to see was introduction of ERP system -

Would have wished for them to highlight this in their commentary or made a corporate disclosure. Oh well, let’s at least hope this will lead to more effective financial control in the future :slight_smile:

5. Investment in subsidiary

As noted earlier total investment made in Woodpecker (Karnataka subsidiary) is 129 crores. To break this up, I’ve compared standalone and consolidated statements

  • Equity: 51 crores paid up equity - with infusion of 11.7 crores this year
  • Borrowings (~ 50 crores):
    • Term loan of 25 crores taken from SBI - guarantees given on assets and personal guarantee by 3 directors of the company_
    • Unsecured borrowings of 19 crores from other entities
    • Vehicle loans ~ 5.4 crores
  • Related party transaction: Some money to tune of 34 crores shows under related party transactions discussed below

6. Related party transactions
These are corroborated with current loans in standalone BS

  • Advance to Woodpecker to tune of 34 crores (shows under current loans also) - I believe this might be some sort of WC finance
  • Som_public made purchases from Som_private to tune of 14.5 crores as against 2.36 crores last year + some other transactions. Closing balance of 4.25 crores current loans on Som_public’s books

Need to figure the nature of transactions with Som_private. Waiting for it to upload documents for FY18 to MCA so as to figure it out. Also CEO is not paid, so does he draw huge salary from Som_private?

7. Other serious concern related to cash flow statement

There is consolidated BS, P&L for FY17, but no consolidated CF statement for FY17 in AR18! Auditor has also changed so this is a red flag.

For reference, I used the consolidated cash flow statement of FY17 given in AR17 and found some interesting things. @Yogesh_s alluded to this when he showed that there is item called ‘proceeds from equity share capital’ under CFF but no corresponding item under equity capital in BS. But also note that there is also item called ‘proceeds from sale/maturity of current investment’ under CFI in the same statement, so net cash effect is zero.


So this is for the equity infusion of 39.3 crores done in FY17 into Woodpecker. This year they infused another 11.7 crores, but this time around in consolidared CF, no such entries made under CFF and CFI.

In standalone CF statement of course, it shows both 11.7 crores and 39.3 crores investment under CFI.


This might be a moot point because net cash effect in consolidated CF statement is zero, but will be better to get clarity on accounting rules. Unlike legal systems, I like to follow the exact opposite (even if I’m already invested) with respect to investment decisions and consider companies as guilty until proven innocent. :slight_smile: Welcome more investigative efforts into the company.


Another concern that I have noticed is the presence of ‘Preoperative Expenses’ under Current Assets in the Consolidated Accounts, amounting to INR ~6.95 Crores (up from the previous year figure of 0.90 Crores).

From my understanding, the company should ideally expend the preoperative expenses, which would essentially decrease the profits to the extent. However, the company has shown them as Current Assets, much like how it was done in earlier times for Misc./Advertisement expenses. However, I think this is no longer allowed under the new standards.

Anyone who is aware of this treatment or perhaps could highlight if I am missing something?

1 Like