COMPACT DISC / TOTAL EXPORTS - AVOID

It is very rare to see a company trading at a P/E below just 1. Yes , it is Compact Disc which posted an EPS of Rs.50/- last year and currently trading around Rs.39/- . No need to get exited and punch order to BUY this stock because of  its throw away  valuation. There is lot of questionable practices going on here . This multimedia - animation company is announcing the beginning of many projects but then there is nothing about its completion or releasing and cash flow from such projects. Instead of that ,company is announcing the beginning of another projects and so on. To keep the faith of the investors and shore up the share prices ,promoters are playing various tricks like dividend,de-listing ..etc. After declaring dividends company deferred it and again announced a date for reconsidering the same .But even after 6 months of the date of EGM for re considering the dividend ,there is no announcement about it. In the case of de- listing ,company announced an EGM after three months to take final decision .If past is any indication they will cancel the de listing decision in that EGM .  It is really funny to see that Forbes Asia Editors have selected Compact Disc India Ltd. as one of the 'Best Under A Billion' Company.I don't know ,what is the meaning of ' BEST'  the Forbes means .If they are selecting this types of companies it will only  help to destroy the reputation of even the well known 'Forbes' . Since we - the investors - have limited  options to check the validity of claims made by companies and no chance to check their  bank accounts ,we can see these type of results and claims even after the story of Satyam Computer. But the shocking part is ,even the police authorities informed the activities of the promoters of  Compact Disc  about a decade back ,the watchdog of Capital market did not take any action or inquiry about these people .You can read that story HERE

TOTAL EXPORTS is another company from the same management and its suspension revoked recently and now trading around its 52 week high .

So ,it is better to study the history of promoters before started buying stocks only on the basis of published financial results.

FRAUD - NO STOPPAGE

Helios & Matheson fined Rs50 lakh by SEBI for financial irregularities; vMoksha co-founder also penalised
 
Courtesy  :Moneylife


H&M was investigated for making false announcements to influence the stock price and hiding information about acquisition of vMoksha

The Securities and Exchange Board (SEBI) of India has finally imposed a Rs50 lakh penalty on controversial Helios and Matheson (H&M) Information Technology, which has long been under the scrutiny of regulators for alleged financial irregularities.

The SEBI order was issued on 31 January 2011 and the company reported the matter of the fine to the Bombay Stock Exchange (BSE) on Friday. The issue mainly concerns some fake and favourable announcements that the company made to the stock exchange in order to influence the movement of the stock price.

SEBI had said in a show-cause notice to the company that "H&M had made various favourable corporate announcements during the investigation period, that is about the issue of bonus shares, dividend, and declared favourable unaudited quarterly results, etc., besides the announcement of acquiring three entities of vMoksha Technologies Pvt Ltd." SEBI also charged the company with not disclosing the status of the profitability of vMoksha companies that it allegedly acquired.

Incidentally, Rajeev Sawhney, a co-founder of vMoksha Technologies, has been fighting a relentless battle, even knocking on the doors of various regulators, including SEBI and the Reserve Bank of India (RBI), as well as the Ministry of Corporate Affairs, to expose dubious issues over the acquisition of vMoksha.

The company levelled counter charges of 'insider trading' against Mr Sawhney and this was also investigated by SEBI. Interestingly, on the same day that SEBI issued orders against H&M, it also passed orders against Mr Sawhney and fined him Rs 25 lakh.

H&M has filed winding up proceedings against vMoksha in Bengaluru and there is a separate arbitration proceeding pending between H&M and vMoksha which has been delayed due to the death of the arbitrator and the lawyer.

SEBI's order says that H&M "failed to make announcements/ disclosures with regard to price-sensitive information" and "had not informed the stock exchange about the interim developments such as (the fact that) its attempt to acquire three vMoksha companies had not materialised in the stipulated time period, i.e. within 120 days as specified in the SPA (share purchase agreement) and the judicial/arbitration proceedings which started in relation to the same".

H&M was under the scanner of the Enforcement Directorate (ED) in March 2008 and raids were conducted at the company's headquarters in Chennai. Moneylife learned that the raids were based on investigations by the RBI which revealed foreign exchange violations in the vMoksha deal and the reports were given to the ED in November 2007.

Moneylife has also reported about financial irregularities in the acquisition of vMoksha by H&M. The battle started in 2005, when H&M announced a $19 million buyout of vMoksha, co-founded by Mr Sawhney and Pawan Kumar (former CEO of the controversial DSQ Software). Mr Sawhney put in the money and Mr Kumar managed the operations.

Mr Sawhney realised that he had been kept in the dark about many aspects of the deal. For instance, he found that instead of receiving $19 million, a bank account had been 'fraudulently' opened with the State Bank of Mauritius in the name of vMoksha that was used to borrow US$13.5 million with the help of a fake board sanction and some false entries. That money was remitted to H&M ostensibly for subscription of redeemable preference shares on 28 June 2005.  (Read: Helios & Matheson under the scanner)

H&M has also informed the BSE that it plans to appeal to the Securities Appellate Tribunal (SAT) against the SEBI order. Mr Sawhney has also said that he will appeal against the SEBI order against him.

ACCENTIA TECHNOLOGIES LTD -Is Every thing OK ???

Sometimes we wonder how some companies are showing mind boggling financial performance when all others from the same sector are struggling and there is bad times even for the peers in the same industry. There is more and more mystery when we study such companies in detail. Common features of such companies are the difficulty of getting touch with the management ,no information about the customers of such companies ,having a wonderful website where there is lot of sensational and exaggerated news about the industry in which company supposed to be operating but nothing about the activities of the company, a posh office in an area with high repute,frequent announcements of take overs of tiny companies with no business and very huge percentage stake of unknown institutions in more than 1% public category..etc. But past experience shows that ,it is better to book profits in such companies in bull markets especially at a time when promoters itself are exiting from it. Otherwise you can hold ,if you are a believer of operator play and not a believer in fundamentals.CMP of Accentia is Rs.307.60 /-