Articles of the week-1

Article-1

Wizards of Dalal Street

“If you are not confused about what’s going on when you really don’t understand what’s going on” said Charles T Munger.

This is going now unpredictable because all the factors other man, farmlands, etc nothing is destroyed .so, this is like a war fundamentally may have vaccination of COVID-19. After that, we can be back to work but till that time period all the balance sheets have been demolished. The government Cooperative Ltd Industries all of them are suffering that we determine now that we will come out in the future.

When market fall is normal we get the first big fall in that cycle we fall typically by 3 Rises by 20% then maybe again fall by 3 times and after that the fundamentally getting cheap and then we can look for a new cycle. It is too early to call the bottom of the market or a new cycle over the new Bull market has started. Because we know that there will be locked down for some more period it will open an again lockdown. So it will take a lot of time to recover the market

Pushing more and more money into the system that can also lead to the bankruptcy we roughly look back it’s 88 or 90 Billion Dollars GDP. Global that is 260 trillion dollars is an exercise that more than 3 times debt to GDP. US, Europe, Japan the theory which they are using they might even get bankrupt. They are putting so much money into the market by that they are thinking they are giving liquid to the market and they don’t know they are depressing the money by doing this.

By saying this India should play Proper card they should not do like other countries. Show the growth potential train in this market then we will have the ability to play with the strong currency

1. To allow the consumer to get purchasing power

2. If we work with the government complaining things with India can improve.

Stability, taxation, etc has to be together like we did in 1991 when the period of crisis was there then also we made the glorious bull market and the glorious economy of India at that time. We should take Rapid response from RBI and the government to take the responsibility now from sometime company might cut the salary of people have gone to capex frozen fixed cost gone down that all show the complete depression and the deflection in India.

World is playing the economic game from classic brand marketing to approach because the perception is a great military power perception of unlimited financial and the technology process

The things that every crash innovative companies who think and do differently there are the companies who think differently, branding, merging, scale and they maintain the balance sheet properly by that they at the end of this crisis also they will maintain like D-mart, Titan

He divided into four categories:

1. All the leaders whether it is in financial service or Media automobiles consumer durables which strong cash flow balance sheet come out ahead in this

2. The global supply chain inevitable has shifted to India already happening with pharmaceuticals, specialty chemicals, and expect that continue in the automobile chain, engineering chain, and who can build scale in export.

https://www.youtube.com/watch?v=USPVHkNB4_M

Article-2

It’s time to build

Every Western Institute was unprepared for the Coronavirus. This failure of institutional effectiveness will be for the rest of the decade.

The biggest problem is in the western countries state or cities they had worked hard but many people suffered from this institution they did not talk urgent action on that they don’t even have enough test ventilators, ICU surgical, surgical mask, eye shield, medical gowns.

They don’t even have therapies or a vaccination they even don’t have manufacturing factories required to scale the production. It took scientist fire to get regular testing approval for a new Ebola vaccine after the scourge of 2014 outbreak at the cost of many lives

The US Federal Reserve do not have so much money to give to the people for a business menu of the worker’s families and a million of business are in trouble. Government that collects money from all its citizens and business. Medical equipment and the financial condition involves no rocket science. There is least therapy and the vaccination but the mask and the transformation money are not hard. They can’t even build enough housing in cities

Their increasing price of houses in the place like San Francisco if they get a job also they can’t refer to purchase the house. They can’t build themself anymore producer of HBO doesn’t want to fill in American cities like Seattle, Los Angeles or Austin go to Singapore for the film.

In education, they have top-end Universities but the capacity to teach only a microscope percentage of the 4 billion new 18 years old in the USA each year. The latest major invocation in k-12 education was Montessori which was traced back in 1960 they had been doing education research there and have reached development for 50 years. They know the enormous number of higher-paying jobs they could create to design and build the operate those factories. They know and they are experiencing

It’s hard to believe when they have the money to wage endless war in the Middle East and repeatedly bail out incumbent Bank airlines and carmakers.

The Federal government just passed 2 trillion dollar coronavirus rescue packages in 2 weeks. They don’t know how to take care. They need new companies to build this. They want to keep separate interactive to build ideology and political both.

The right starts out in a more natural, albeit compromised, place. They often corrected by a force that holds back market-based competition and the building of things. The right must fight hard against Crony capitalism, regulatory capture, oligopolies risk inducing, offshoring, and investor-friendly buyback.

The left starts out with a strong bias towards the public sector in many of this area. They demonstrated the public sector can build better hospitals, better schools, better transportation, better cities, better housing. Stop trying to protect the old and the entrenched, the irrelevant public sector fully to the future. Things building is how they robot the America team they think they build in futures quantity like computer, TV, drops rapidly in price. America dream is to have a home of your own a family you can provide for.

Building isn’t easy or we already have to do this. we need to demand more for political leaders, our CEOs, entrepreneur investor. We need to demand more for the culture of a society, demand for one another. we can all contribute to building. There are always outstanding people in even the most broken system. We need to get all the Talent we can on the biggest problems we have, and on building the answer to those problems.

https://a16z.com/2020/04/18/its-time-to-build/

Article-3

Corporate Governance Issues at KRBL

ED cancels Mohnish Pabrai’s transaction to buy a 2.7% stake in KRBL. ED alleged that Balsharaf purchased the KRBL stake using a crime money ill-gotten from VVIP Chopper scam. First ED stop the transaction to BSE and he is a state where the effort had objected to read blocking the sales of KRBL. High Court clear rule that ED order block sales of KRBL. High Court observed that the Balsharaf was in Saudi past 20 years and he had acquired a stake in 2003. The high court is saying that the officer who issued a letter to BSE block the deal was simply lying. KRBL tanks by 20% after the former director arrested in an Augusta Westland VVIP Chopper scam.

In the chargesheet filed by ED is alleged that Gautam Khaitan has been beneficiary of Rs 850cr of slush fund in various defense deal. Gautam was an independent director of KRBL between July 2007 till April 2013. The management was not aware of another dealing and KRBL is not associated with the allocated operation in VVIP Chopper scam full stop as the name came in VVIP Chopper scam April-13 he was made to resign from KRBL board.

There are no formal charges against KRBL management in a case that is ongoing at least since 2013 for a crime which was allegedly committed around 2008/09. ED alleged the routing of money as explained in the below flowchart


The crime money has allegedly been routed through a company called RAKGT which is linked to KRBL. In the same High Court order, the judge noted that RAKGT is no longer directly connected to KRBL in India. RAKGT said the company is stated to have incorporated the year in 2007 by promoters and directors of KRBL DMCC  (100% subsidiary of KRBL Pvt Ltd incorporated in UAE). It is stated that promoters & directors of KRBL had transfer shareholders in the name of a nephew of the promoter of KRBL Ltd. This doesn’t prove or disprove anything, the KRBL management claims that they have nothing to do with RAKGT and it is being run by its nephew. We note that at best KRBL is alleged to have only provided a way to route the crime money. The ED alleged KRBL complicity in the Embraer defense scam case and attached land property worth Rs 15 Cr situated adjacent to the rice mill in Dhuri, Punjab.

Gross Fixed Assets of KRBL = Rs 1537 Cr
PAT (2019) = Rs 503 Cr
Income Tax paid in 2019 = Rs 230 Cr

Case against IT in the 1990s

Case against ITC in 1990 was the allegation of Rs 800 Cr evasion of excise duty between 1990 and 1995. Violation of the FERA. Money was illegally routed by the international division of ITC through Singapore-based subsidiaries.

Who got arrested?

Two former chairmen of ITC – then India’s largest “professionally managed” public limited company – Chug and Sapru were arrested and put in jail. The total number of ITC executives arrested was 15. Even serving ITC Chairman – Y C Deveshwar was questioned several times by the Enforcement Directorate.

How the case did have resolved

After that in 1999 FERA was converted into FEMA. The last date for filing formal charges under the now extant FERA was 31st May-2002. Formal charges were also pressed against the then serving ITC Chairman – Y C Deveshwar by the Enforcement Directorate in its chargesheet. In the last 25 years, the ITC stock has gone up 33 times

IT Tax Demand Notice

KRBL board declared that the Income Tax (IT) department had raised a tax demand of Rs 1270 Cr. The IT department disallowed expenses of Rs 2221 Cr. Rs 1996 Cr of these expenses was for paddy purchases made from farmers between the years 2010 and 2017. KRBL said that paddy purchase was different from every states. Punjab, Haryana they had go through mandi broker when buying paddy from framers. Money could be paid through the banking channels to the arthiya. In Utter Pradesh they purchase paddy directly from farmer. And money would be paid directly to farmers only.

13th Mar-2020
Resolution of the IT Case

The tax demand notice of Rs 1270 Cr was reduced to Rs 101 Cr. However nothing has been proved. But 7 years into the investigations no chargesheet has been filed against KRBL or any of its directors. Rs 1200Cr IT case against KRBL was fictitious ED clearly lied and acted outside the law to block the Pabrai-Balsharaf transaction.

https://candorinvesting.com/2020/04/30/krbl-governance/amp/?__twitter_impression=truehttps://candorinvesting.com/2020/04/30/krbl-governance/amp/?__twitter_impression=truehttps://candorinvesting.com/2020/04/30/krbl-governance/amp/?__twitter_impression=true

Written by- Aditi Kapadia

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