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kulman
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Joined: 02/Sep/2006
Location: India
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Posts: 9319
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   Posted: 03/Jan/2007 at 7:03am |
Very interesting...... pro-active indepth study can really help in raising alarm bells.
Having said that, before jumping to conclusions, I would prefer following what is written on engineering drawings: "If in doubt, ask"
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Life can only be understood backwards—but it must be lived forwards
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smartcat
Senior Member
Joined: 29/Mar/2007
Location: India
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Posts: 4243
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Posted: 12/Jun/2007 at 12:26pm |
| I am also told that Educomp writes off its fixed assets (computers, printers, UPS, monitors etc) at 18%. Earlier they used to write them off at 23% |
Basant - My CA takes 60% depreciation for computers and laptops, but only 10% for furniture, fax machine, printers and UPS. Doesn't ICAI have any rules on how to depreciate office assets?
Am I right in assuming that Educomp earns most of its revenues in USD and only a small part in Indian Rupees? If Educomp is asked to re-state its previous years results because of depreciation errors, even then I'm assuming there would not be much difference in the PAT.
Educomp is probably not paying tax on USD revenues, so depreciation does not really matter much. The depreciation re-statement would effect only its Indian income.
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basant
Admin Group
Joined: 01/Jan/2006
Location: India
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Posts: 18403
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Posted: 12/Jun/2007 at 12:47pm |
Edecomp earns a significant part of its income from indian operations but 60% is what it should be. Also ICAI rules are very different for example if you do not charge depreciation as per their rules you can get away from just a note in the balance sheet.
Also I can classify a plasma Tv as a furniture and also as a computer accessory. I do not know what these people are classifying it as.
60% is the norm and good companies would do that but companies that come out to charge lower depreciation do make one time adjustments after 3-4 years and by then the party is over.
You know when you want to invest in a company you always look from the point of view whether this company could take 100% of your portfolio and leave you calm!
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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smartcat
Senior Member
Joined: 29/Mar/2007
Location: India
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Posts: 4243
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Posted: 12/Jun/2007 at 1:12pm |
| do make one time adjustments after 3-4 years and by then the party is over. |
When this happens, will they get a big cheque from the income tax department? All these years, they have been showing lower depreciation, lower expenses and hence paying higher tax. So will tax authorities refund some of the money with interest?
I think I am missing something here - I was never good at accounting!
| The company dramatically underperformed. We felt the entrepreneur or promoter wasn't someone we could work with professionally. The toughest job for a VC is where to spend your time. For ones in the loser category, we liquidate. We took a haircut [by selling the stake back to the company]. You need to make sure they want your oversight on corporate governance |
While Carlyle is a well respected professionally managed VC, we shouldn't side with them all the time. I am not sure what Wayne means when he says 'the company dramatically underperformed'.
f the promoter and VC have different styles of running a business, there will obviously be friction between the two.
In such cases, if VC holding is larger, they kick out the promoter. In the case of Educomp, since the promoter holding was larger, they probably asked Carlyle to get out.
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deveshkayal
Senior Member
Joined: 04/Sep/2006
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Posts: 3903
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Posted: 14/Jun/2007 at 9:34pm |
Shantanu has its eyes on his company's stock price...
Meanwhile,Reliance Growth Fund does not hold Educomp anymore...Alarm bells are ringing..
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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett
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basant
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Posted: 14/Jun/2007 at 12:07pm |
Is he playing hide nd seek with the stock I hope investors do not get lost with this one.
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'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in
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MuKeShHaRlAlKa
Groupie
Joined: 09/Nov/2007
Location: India
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Posts: 47
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Posted: 06/Apr/2008 at 10:45pm |
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i would like to have a thread called "Accounting Gimmicks - How to spot them" but i m not able to do it. we can share our opinions in this thread on how to spot if someone is cooking the books so that we dont end up buying an Enron or Worldcom. i dont think there is any other thread like this right now. if there is any plz tell me. i have read a few good articles on it which i can post.
Edited by MuKeShHaRlAlKa - 06/Apr/2008 at 10:49pm
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In Cricket & Stock Markets, everyone seems to be an expert but only a few really are.
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shivkumar
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Joined: 02/Oct/2007
Location: India
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Posted: 20/Jan/2009 at 10:04am |
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A questionnaire on these lines should be prepared for other corporates as well. I can think of one - Punj Lloyd since I have exposure to this stock.
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