Shahzad…this one’s for you…you had asked for it a few days ago……Temptation Foods (TFL)
PRESS EXPOSE OF TEMPTATION FOODS & IT’S PROMOTER VINIT KUMAR
TFL and it’s arrested Promoter Vinit Kumar was yet again the News yesterday morning in the Mumbai Mirror …. the Mumbai Morninger from the Times of India Group was following up from it’s story of November 30,2010 that exposed the link between Kumar and the Home Ministry Mole Ravi Inder Singh
Yesterday press coverage breaks an Intelligence Bureau Report that links the barred scamster Ketan Parekh and his cronies and front companies to Vinit Kumar and Temptation Foods and the intended modus operandi to rig the share price of the Company….
…..and that Vinit Kumar was the middleman in the Telecom Scam !
TFL’s SHARE PRICE AND VALUATION WILL SEDUCE YOU
TFL closed at Rs 22 yesterday…a FV of Rs 10….If you look at the Valuation metrics,you’ll be excited
EPS : Rs 25….P/E : 0.88…..Market Cap : Rs 89 crs….Sales : Rs 1277 crs…..Mkt Cap/Sales : 0.07 !…Book Value : Kissing Rs 100…P/BV : 0.22 !
JUST DON’T GET TEMPTED !
ANNUAL REPORT OF TFL FOR 2009/10….ATHERSTONE AMUSES WITH THEIR ‘TRUTH’ THEME !
I was intrigued….I usually am where Item Girls and Songs are involved !….so I took a bite of Annual Report of TFL to begin with !…. I actually laughed !….here’s why….
…..What a lovely designer Annual Report 2009/10…was completely seduced by it…have a look…you’ll be stunned too….the concept,content and design is by Atherstone who are Professional Consultants and Specialists in Investor Communications….title says 2007-08 but the Annual Report is for 2009/10 so go ahead and click
Atherstone surely must be trying to bury their heads in the sand!…their Annual Report Theme was ‘A TASTE FOR TRUTH’ !
Here are some marvellous gems from the Annual Report…even in the Report they are in Capital Letters and stated in big bold colours with each phrase hogging the whole Page !
A TASTE FOR TRUTH……TRUTH CAN BE HEARTBREAKING……TRUTH CAN BE UGLY….TRUTH CAN BE UNCOMFORTABLE…..TRUTH CAN BE BEAUTIFUL
THE JOURNEY FROM BLISSFULL IGNORANCE TO THE REALM OF TRUTH IS BOTH CHALLENGING AND ENLIGHTENING
Quotes Attributed to :
Socrates : ” ONCE YOU’VE TASTED THE TRUTH YOU WON’T EVER WANT TO GO BACK TO BEING IGNORANT”
Buddha : “Three things cannot be long hidden:the sun,the moon and the truth “
Michael Levy : ” YOU CAN BEND IT & TWIST IT….YOU CAN MISUSE & ABUSE IT….BUT EVEN GOD CANNOT CHANGE THE TRUTH “
Maybe Atherstone was trying to tell us something !
The Annual Report shows Ms Bhairavi Goswami to be an Independent and Non Executive Director….goes on to describe her as a reknowned expert in media,marketing and advertising….great…that perhaps also qualifies her to be on the Audit,Managerial Remuneration,Corporate Governance and Borrowings Committees !….Ms Goswami is a model turned actress…remember her in ‘Bheja Fry’ ?…I don’t…..she is reported to be Vinit Kumar’s companion and also cohabited with him….but the funny thing is that the press article quotes her as saying that she had no personal relationship with Kumar and that she is merely a salaried employee of Temptation Foods Ltd !….Whoah !…SEBI and BSE need to look into this…The Annual Report for 2009/10 was signed on May 28,2010…has she resigned as Director and become a paid employee since then?….if so, why has the BSE not been informed ?….travesty of Corporate Governance….She was Dependent on TFL and Vinit Kumar…How could she be an Independent and Non Executive Director !?…Media reports have positioned her and Vinit Kumar as jet set socialites…. owners of Porsche,Race Horses,Swank Sea Facing South Mumbai Worli Apartment…the Works really…..but where are the Monies coming from ! ?….The Annual Report shows that Kumar was paid Rs 37 lakhs in 2009/10 when he was entitled to over Rs 4 crs incentives based on adjusted profitability….was the Porsche owned by TFL…perhaps Tata Capital and Reliance Capital can confirm…they are the Vehicle Financiers for the outstanding of Rs 1.93 crs in the Books of TFL at March 31,2010…….Intriguing Tamasha
There have been regular Director and Top management Resignations….have the auditors,Sharp & Tannan bothered to inquire as to why ?
Don’t tell me all have been naive…the other Non Executive Directors like Dr (Mrs) Kala Pant,the Banking Expert and on the Board of Several banks, the auditors Sharp & Tannan,the Bankers,ICICI Bank,Bank of Baroda,HDFC Bank,Punjab National Bank who provides the Working Capital Loan,United Bank of India which gives the Cash Credit facility,Yes Bank that provides an Overdraft and SBI Global Factors that is the factor funder…even Atherstone who have designed the Annual Report with ‘TRUTH’ as the Theme…and ofcourse sadly all the shareholders who flocked to buy TFL
Incidentally Vinit Kumar was earlier serving with Reliance Industries before setting up his Indigo Group
ON THE WRONG SIDE OF THE LAW
Temptation Foods Ltd,it’s Promoter Vinit Kumar and his Promoter company,Venture Business Advisors Pvt Ltd (VBAPL) are not new to courting trouble from Government Agencies….In January 2009 SEBI gave a gag order in the matter of acquiring shares of Kohinoor Foods Ltd…In Feb 2009,the order was removed…However on June 4, 2009 SEBI passed an ex parte ad-interim order restraining VBAPL from accessing the Securities markets and further prohibiting them from selling or dealing in the markets directly or indirectly…VBAPL filed a consent application on December 4,2009 against the SEBI order…SEBI rejected this application on June 4,2010 citing pending investigations….in 2009/10,TFL sold off all their shares held in Kohinoor Foods,suffering a loss of Rs 11.96 crs which was shown as an extraordinary loss in the Accounts of 2009/10
Then in September 2009 there was a Search & Seizure Operation by the Investigation Department of the Income Tax Authorities…this resulted in revising the returns and paying MAT of Rs 6.89 crs
Even Karen Anand had to go to court in 2009 as her monthly cheques of Rs 5 lakhs stopped coming….TFL had acquired Karen Anand’s Business in 2007….the matter was settled amicably only in mid 2010
….and now these stunning charges and arrest of Vinit Kumar by the Delhi Police…linking him to already unmasked scamsters and spies and moles
QUESTIONS AND MORE QUESTIONS !
As you wade through TFL more and more questions come to mind
- TFL earned an EPS of Rs 25 in 2009/10…yet the Dividend declared was just Rs 0.75 !…just 3% payout from profits !….funny…..Profits were Rs 62.50 crs,but Dividend to shareholders was just Rs 1.89 crs !……TFL’s boasts of taking care of stakeholders interests is laughable……ofcourse all other stakeholders,other than shareholders ,have been taken care off !….Taxes to Government were Rs 19.4 crs….Interest to Bankers and Other Lenders was Rs 21 crs……Playing in Stocks too was to the tune of over Rs 10 crs…Jindal Saw,Orchid Chemicals,LKP,Shree Renuka Sugars and ofcourse the controversial Kohinoor Foods being a few….but dividend to shareholders was a pittance at Rs 1.89 crs !
- What is the reason for investing Rs 5 Crs in 500000 Equity Shares of FV Rs 10 of unlisted Monnet Securities Pvt Ltd ?
- TFL boasts of 70000 tpa processing capacity at it’s plants in Jejuri and Sonepat….It actually produced 199580 tonnes and had some Opening Stock and sold 200156 tonnes to notch sales of Rs 1277 crs !…It says it outsources Production to other units…so how much has it produced in it’s own plants ?…it has only 165 employees on it’s rolls at March 31,2010
- TFL boasts of Exports to USA,Europe,Middle East…..In 2009/10 Sales outside India were merely Rs 45.64 lakhs of the total sales shown at Rs 1276 crs !…0.03% !…Wow !
REVEALING SHAREHOLDING TRENDS
This is interesting….Promoter Company,VBAPL holds just 10.85% of the Equity of Rs 40.46 crs (FV Rs 10)…4387780 shares to be precise…..of these 2350000 shares are pledged with SBI Global Factors Ltd…I suppose either the SEBI restraining order does not apply to pledging the shares or the June 2009 order came post the pledge….This Factoring Funding was Rs 37.66 crs at March 31,2010…..The Equity was Rs 25.14 crs at March 31,2010 ….remained at this level on June 30,2010 spread over 12540 shareholders…Then on August 24,2010,TFL allotted 15315000 shares at Rs 36 to Non Promoters as a preferential allotment…September 30,2010 shows 15358 shareholders holding equity of Rs 40.45 crs…..There are some interesting names among the shareholders with significant holding over 1% of the Equity….these have been recently on SEBI’s investigative radar….while the preferential allotment has been made to a handful of bodies corporates and individuals,many who now appear in the list of shareholders holding over 1% of the equity,the sad statistic is that approx 2800 are the incremental individual shareholders holding less than 1% of the Equity from June 30,2010 to September 30,2010
At September 30,2010,589 Bodies Corporates held 16247370 shares or 40% of the Equity..158 Individuals held over 1% each of the Equity ..aggregate of 11333691 or 28% of the Equity….Thus 68% of the Equity was held by these two ostensibly Non Promoter Groups….while Promoter company VBAPL held just 10.85 % !…seems the control of TFL lies elsewhere and not with VBAPL or Vinit Kumar
There were three FIIs holding 536109 shares on June 30,2010….this dropped to just One holding only 40000 shares at September 30,2010….Bulk Deals were quite regular in 2009….Merrill Lynch Espana and Copthall Mauritius were two names that stand out here
On August 11,2008,TFL had issued 73 lakh warrants on a preferential basis…300000 of these were to Directors and Business Associates…Each warrant held a right to convert into an equity share at Rs 200 within 18 months….Obviously the conversion did not take place as the Share Price of TFL dived…the Rs 14.60 crs paid as the 10% upfront was forfeited by TFL…Amusingly The Annual Report has spelled it as ‘Covertible’ Warrants instead of’ Convertible’ Warrants in Schedule 3….must have been a ‘covert’ operation
Some Strategic Investments made by TFL
- Rs 1.2 crs for a 46% stake in Jangipur Mega Food Park Ltd in West Bengal
- Just Over Rs 10 lakh for a 51 % in Temptation Foods FZE in the Sharjah Airport Free Trade Zone…the balance 49% held by Vinit Kumar in his individual capacity
- Temptation Foods International in British Virgin Islands….TFL feels that the purpose for which this Company was set up will not now materialise….so Annual Fees were not paid and thus this Company was struck of the BVI Companies Register….it can be revived inside 10 years paying a prescribed fee….however it ceases now to be a subsidiary of TFL
Revaluation of Plant & Machinery
On March 31,2007 TFL had revalued the Jejuri Assets by Rs 8.11 crs….It had just acquired Karen Anand’s Conserves,Dressings and Sauces Business and Jejuri was where Karen processed her Fruits and Vegetables….what prompted this revaluation so soon after this acquisition ?….Then again on July 22,2009,TFL yet again revalued the Plan & Machinery at Jejuri and Sonepat by Rs 12.69 crs
TFL is also carrying Intangibles of Brands and Trademarks at Rs 13.79 crs in it’s Books at March 31,2010….Gross Value was Rs 18 crores and it’s being written off over Ten years as prescribed by Accounting Standard 26….It has three Brands….’Ever fresh’ that it purchased from the K K Birla Group Company, Chambal Fertilisers….’Delika’ for the International market….and ‘Karen Anand’ that it acquired from Karen Anand
METEORIC RISE IN SALES….ARE THESE GENUINE ?
Sales have been unbelievably meteoric….From Rs 38 crs in 2006/7 to Rs 328 crs in 2007/8 to Rs 870 crs in 2008/9 and Rs 1276 crs in 2009/10….where are they producing and where are they selling ?….Exports have been insignificant….Domestic Sales averaged Rs 3.49 crs a day in 2009/10 !…..something disconnects here !…hope it’s not circular selling and buying !…if circular trading of a company’s shares on the exchange can create false volumes and pricing,so can circular sales and purchases by the Company create false sales
Networth is currently over Rs 350 crs…..Sales are on target to cross Rs 1500 crs in 2010/11…yet market cap is just Rs 89 crs……Profits should cross Rs 75 crs…..yet TFL has chosen not to renew the LIC Group Gratuity Scheme Policy
Net Profit and Market Cap are near each other !…Rs 75 crs to Rs 90 crs range !….How can this be ! ?….in such a situation should not the Share Price rise ?…but it’s not !
Something clearly disconnects…..TFL does not seem to own what it says it does…it does not sell what it shows it does…and it does not earn what it says it does !….The Promoter and his Company has scarce credibility…and it’s worsening by the day…..Serious Due Diligence on Sales,Receivables & Payables and Inventories…the entire Supply and Demand Chain in fact…. will reveal the correct and genuine picture on real networth ,liquidity and sales and earnings
A BOLLYWOOD THRILLER ….HEY ! HOPE A TOP PRODUCER RETAINS ME TO WRITE THE SCRIPT !
Gosh !….could write a lovely hit Bollywood script for this TFL Scrip !…The Hero turns out to be a Villain….has a pretty damsel with him at all times….Fast Cars…Fast Girls…Fast Horses….Fast Growing and Fascinating Food Processing Industry…… Five Star Glitter and Glamour….Designer Annual Reports….AGMs at Five Star Hotels till a few years ago….Espionage and Stock Scamster Links ….Overseas connections and FIIs….High Rollers….Cat and Mouse Games with Regulatory Authorities that include SEBI,The Ministry of Home Affairs,the Intelligence Bureau,the Income Tax Authorities,the Registrar of Companies and the Delhi Poilce Special Cell…High Stakes Telephone Tapping
Wonder who can I cast in this Movie to play pivotal roles !….maybe one of the ‘Khans’…all in their 40s !…and the Damsel ?….I’m spoilt for Choice here !…maybe reallife will be willing to play reellife !
Can Money buy one Respectability ! ?….How one makes Monies is Important too…is it not !?
Temptation Foods at Rs 22….BSE needs to introspect here to allow such a Listing…because only when such a scrip is traded on an Exchange can it lure and seduce naive investors to buy into it !….know the Risks before you marry TFL on BSE…the divorce could be very costly
Enjoy TFL as the Christmas Thriller….read it…research it….but resist the temptation to taste it on BSE and expect a Christmas Miracle…there is no Santa Claus here that will come bearing you gains !