Thanks lot Kartik. I had the same concerns when i thought of investing here.
But, look at the performance of the company over years. I think no company can do all the 5 things together -
1). Pay dividends.
2). Pay Taxes.
3). Generate decent ROE.
4). Generate enough cash flows.
5). Make Fraud.

I have met the management, and am pretty sure that the action of bringing polus global was merely a marketing activity. They have hired an investor relations officer, changed the composition of Board of directors - brought some real knowledgeable independent directors. Till all these years they concentrated only on business. Now they are concentrating on market cap as well as business. They felt their shares to be very undervalued and not much discovered. I donot see any reason to worry on pledged shares issue if the company is earning enough. Also read the AR FY 15 - they have clearly written that the pledging was done for corporate loan they had taken. I assume they shall be removing the pledge sooner.
Also, with due respect, would like to put here - we are investors who sit with a laptop and a broadband connection and apply our skills - search for gems in the oceans..Compare this with a businessmen who invests money, works hard, understands the market, goes through tough times, incurs losses, competes with the industry forces, finally creates a brand and name and finally money. I feel our work much easy than that of those businessmen. My 2 cents - we get the diversification benefit - investing in 6-10 companies, where as when starting a business - you start with only one and eventually scale up by diversifying the brand name into different businesses. We can easily switch over our investments if it falls 20%-50%, which for a businessmen is quite tough.
All what I want to say is, its tough doing business, and I discount some small frauds which management does for their own benefit. We cannot get everything perfect. Take any businessmen, they have been involved/alleged of having done some wrong/odds. Even Dhirubhai Ambani was one of them. You cannot imagine a company booking all the profits in white. Some of them definitely goes to the promoters - think of the real estate markets. Chiripal had a past like every promoter has. The crux is not to hold and drag that past into present - the crux is to see if they have actually tried to change their past - and yes in case of Nandan. Mr. Deepak Chiripal is a young and dynamic person, has real good values and understands the business very well - this is what i have heard from market - not ofcourse the people working there.
I inquired this from a white collar employee working at Arvind.

I might be biased, and please do your own diligence. I see Nandan doing a good business over years, giving good ROE, dividend, good mgmt (now), good opportunity out there( aggressive expansion done), etc. I discount other issues like pledged shares, diluting shareholding (in this case only), aggressive marketing of the company, etc. According to me the company is truly undervalued, it should command value of more than 200 (at least 240-260 today) and much more over years to come.

See the cotton based textile industry - its growing - China has lost its competency.
See the denim market - 15-18% CAGR growth.
See the company expansion plans - at real cheap capital from banks.
See the change in mgmt.

My quote for this investment -
Heads i win, tails i don't lose much !!

Disc: I am invested, and my views might be biased. I appreciate your views and deep thinking on the red flags. They are justifiable. I put my views on the table. Let me know further on this. Thanks.