Tuesday, December 8, 2009

Mismanagement of money?

I was looking at the list of companies trading at a market cap below the money they raised during their IPOs in the last five years provided in previous two articles, and found one of them, named Precision Pipes and Profiles, interesting. The company till March 2007 had investments of only INR 0.72 Crore, on their balance sheet which subsequently increased to INR 56.86 Crore at the end of March 2008 and declined to 21.24 Crore in March 2009. This made me curious and led me to read their annual reports of FY2008 and FY2009. I found that the company heavily invested in equity mutual fund schemes during April 2007 - March 2008. Some of the schemes were liquid, FMP schemes and were sold off during April 2008 - March 2009 but equity schemes still remained in the investments and that too at a very steep decline in NAVs.

SchemeUnits 2008Value 2008Units 2009Value 2009Value Today
Birla Special Situation Fund93887538041373193887534831452386977407
Birla Sunlife Industries Fund9011331739759011316472712706093
Fidelity Equity Fund2671542982226715289834784111
HDFC Infrastructure Fund20000001870800020000001036400021782000
JM Basic Fund53860107160319832012385063572139
Kotak 30612851918655
LICMF Equity Fund44540393953445402539271092031
LICMF Infrastructure Fund54000005007960054000003049380049680000
Reliance Growth Fund7373037359106945720417553661495
Reliance Natural Resources Fund296296228511111
Tata Infrastructure Fund203307458631415116319350364875006
AIG World Gold Fund19559901754523224404887

The value today for the investments mentioned in the annual report of 2009 stands at
INR 199535169 which is still below the actual invested amount of INR 205188460. The company clearly mismanaged money. At the end of March 2009 itself, the market value of schemes was 45% lower than the invested amount. Thanks to rise in stock market over the last 10 months, the market value of this schemes today is just 2.8% lower than the invested amount. But we don't know if the company has already sold them or not. Let's wait for the next annual report.
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1 comment:

Safe ePayments Motivator said...

A Good Blog, with a an very attractive title
Keep it up

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