Stripping or Stealing the Listed Company of Assets ! ~ How Promoters are suspected to do it and Auditors suspected to allow it !
You’ve heard of Naked Speculation ! but have you heard of Naked Companies that have been rendered so because they were stripped off their Assets by their Own Promoters !!!?
Have always known how Indian Corporates ,even some of the well known names, indulge in siphoning off funds and stripping and stealing assets of the companies they have promoted or taken over !
In fact this reality is well captured in the tagline for my blog ” In India,Companies may fall sick but Promoters rarely do !”
But this one takes the Cake ! ~ the Kolkata based Listed Company Vikash Metal & Power ~ Business Standard highlighted this in it’s edition yesterday ~The great Indian listed firm robbery
Vikash Metal & Power says on April 12,2012, it lost a building and other stuff worth Rs 90 cr to an “incident of robbery” and auditors have simply remarked that the Fixed Asset Registers were not shown to them rather than raising deeper questions on this ! ~ the thieves also took away the registers where the company had recorded the details of its fixed assets ! ~ Wow ! ~ and I checked it was a Thursday ! when this ‘Immovable Property’ was ‘Moved ‘!
The Company has been promoted by the Patni Family ~Father Vimal Kumar Patni and sons Vikash Patni and Akash Patni.Their stake has dropped from 59% to just 15.06% as at December 31,2012 ~ all pledged.
The Share Price of the FV Rs 10 shares is just 54 paisa !
The Patni family was also the Promoter of another listed firm, Impex Ferro Tech. In fact Vikash Metal & Power was shown as part of the Impex Group.Till December 31,2011 the Promoters Group shows these Patnis ~ but no longer so from then ~ The Share Price of Impex is Rs Rs 3.54 for a FV Rs 10 share
Clearly this has the making of a massive Fraud here ! ~ Stealing with a Legal Tag !? ~ that’s the Substance over Form !
Some other ways of suspected siphoning of Funds or Assets from the Company are as below with links to Company illustrations which I had extensively blogged on recently
- Writing off Fixed Assets as Impaired and Value not Recoverable ~ Goldstone Infratech May 22nd, 2013
- Writing off Inventories stating it was a correction in erroneous valuation earlier and reducing Debtors outstandings as being overstated as found out in a reconciliation and not found to be realisable ! ~Bhoruka Aluminium June 8th, 2013
- Using the Free Cash for Investments in Group Companies or extending Loans & Advances to Them ~Geodesic March 27,2013
- Inflating Project Costs & Expenses ~Reliance Industries October 3rd, 2012
Shortly I shall also reveal, with clear financial evidence how the Promoter & Top Management lied and mislead, what I strongly suspect how the Vedanta Sterlite Group took the Minority Shareholders of Sesa Goa for a ride by Investing over Rs 12000 crs of Sesa Goa’s Free Cash in Cairn India stating it would be immediately EPS accretive ! ~ it has just received Madras High Court Approval to merge Sterlite into Sesa Goa now to make it Sesa Sterlite !