I erred in recommending HOV Services just a few months ago.
Check out my Blog of July 9,2008 on this Company when it was Rs 105.You can quickly access this earlier blog by choosing July 9,2008 on the Calender on the right or by typing HOV in the Search Facility.
They had disclosed that they had received a Buyout Offer in June 2008 from a group that included their own promoters too,for their US and China Operations for US 202 Million and that if accepted by the Board (who were the Promoters themselves !) ,US 91 Million would be distributed to all shareholders(That worked out to Rs 170) plus they would retain their shares in HOV Services ….This was a clear win win Deal with HOV Services quoting at Rs 90 and shooting to Rs 135 on this announcment..It was a clear 100% gain scrip with this Proposal.
Now …read some excerpts of some startling and shocking statements of the Directors in their Report as part of the Annual Report on this ‘Material Transaction Proposal’
“…….offer can be withdrawn prior to receiving the advise and satisfactory resolution”
“…….Company may decide not to proceed due to variety of reasons”
“….macro economkic climate has led to uncertainty in regards to satisfactory completion of the transaction”
The Board of Director’s in their meeting held on August 26,2008 ……..”
“….the Board is not in position to recommend the transaction at this time…..”
The Share Price of HOV has slipped back to Rs 60-65 range
The strange fact is that the Annual Report shows that it was on June 5,2008 that the Accounts were signed,the Auditors Report was signed and even the Directors Report was signed by Chairman,Mr Surinder Rametra,on behalf of the Board of Directors….However the Directors Report mentions what was covered in the subsequent Board Meeting of August 26,2008 !…How ,can this be Mr Rametra, unless all you,including your auditors,Lodha & Co,Chartered Accountants, have colluded to backdate the Annual Report to June 5,2008 !…Methinks even the Institute of Chartered Accountants of India need to look at this !
HOV Services Standalone Results are not much to speak off…but the consolidated results show a Profit before Tax of Rs 85.14 crores….Investigation shows that Rs 37.77 crores in Other Income represents Gains on sale of Equity of Two Subsidiaries.
HOV Services has chosen not to declare any Dividend…Even Current Taxes paid are a mere Rs 2.78 crs…When a High Profit Showing Company does not pay Dividend or Taxes in Proprtion to their Performance there is a hugh question mark on the credibility and integrity of the Promoters and the Performance