Re: {LONGTERMINVESTORS} Granules-This note is doing the Rounds...Can anyone throw light?

I have not done any analysis.

But a couple of people in other groups say that this cannot be Granules since the profit & net worth etc do not match by a wide margin.

If this was the case the share price would have crashed long ago.

Once again I have done no analysis and am holding shares of Granules.

On Thu, Sep 1, 2016 at 2:52 PM, Rajiv Handa <rhapositive@gmail.com> wrote:

http://forum.valuepickr.com/t/granules-india-ltd/940/431

A leading Asian value investing firm has analyzed Granules India, and they suspect some accounting fraud there. While they have accused(without naming the company but it is obvious from the description-100x bagger, business model and certain numbers tying up)..Page 9 below
http://www.8iholdings.com/m…/ref_investmentupdate2016.pdf105

I am not able to tie up certain numbers but the overall story seems to add up. Those with a position in the stock, please take care
We also avoided a listed pharmaceutical company with
business prospects that looked promising on the capex rampup.
However, our accounting fraud detection system alerted
us to the inconsistency in a larger divergence between Gross
PPE (Plant, Property, and Equipment) addition reported in the
balance sheet and the capex figure reported in the cashflow
statement. During FY13-15, the Indian pharma firm added
US$41m in gross PPE but reported US$89.6m in cash outflow
from capex addition. Between FY12-15, new additional sales
created were US$78.7m, which eerily matches the following
cash outflow: total cash outflow in capex; related party loans
(US$15m); other payables (US$4.4m); intangibles (US$17.8m). Based on tunnelling analysis, the cash outflows from relatedparty
loans or related-party investments/capex are re-routed
back to the listed company to artificially inflate sales. This
corresponding match of increase in sales and cash outflow in
unusual items should not happen since revenue is recorded
when there is a sale of products, not when money is lent to one
another or when a new plant or production line is set up.
Furthermore, it made a corporate guarantee to related parties
that was perhaps improperly reported as an off-balance
contingent liability under Indian GAAP instead of reporting it
as financial liabilities under FRS 39. As a result, this entity's net
worth would have to be reduced downwards from Lakhs 3,610
(S$7.3m) by Lakhs 12,096 (S$24.5m) to become negative.
We all know the risk implications when loan guarantees turn
sour, with the prominent case of banks seeking out repayment
of loans taken out by colourful Kingfisher beer tycoon Vijay
Mallya, chairman of United Breweries. Mallya allegedly
personally guaranteed US$900m in loans to Kingfisher Airlines,
which stopped operating in 2012.

Granules India Ltd

A leading Asian value investing firm has analyzed Granules India, and they suspect some accounting fraud there. While they have accused(without naming the company but it is obvious from the description-100x bagger, business model and certain…

FORUM.VALUEPICKR.COM

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