There were rumours that Vasan Eye Care was a front, and so were rumours of another firm for which the Veritas analyst got arrested - Negative stock report lands analyst in jail

I once met the MD of a claimed 100 cr Hyderabad based software firm to sell my software product. He asked me to come over to his office. These were the days of STPI and 100% tax exemption on software exports. I went up a shady building in Ameerpet and lo and behold, I found a 5000 sq ft large room dimly lit, arranged like a classroom, with about 100 people. The MD's room was the only cubicle; and even to my naive self something just did not add up. He told me he generates 100 crores with just that room. You either had to think he had some terrific business or that he was looking for a sucker.

Later a friend told me that many 'software' firms generate fake export invoices to bring back unaccounted money sent abroad, legitimately and free from tax . These offices are just 'show baazi'.

I also recall going to Satyam's accounts department on business through someone close to Ramalinga Raju in early 2002. The department looked like a very small Govt office with files stacked up the ceiling. I was of course in awe of the firm and Ramalinga Raju and just thought this is how business is done

In any case I think the SEBI order on Satyam dated July 15 2014 is very useful for forensic buffs (Sebi orders are generally useful) to learn the inner workings. I am attaching the same here.

Satyam order by sebi.pdf (1.1 MB)

@Sambath
I find your work outstanding and detailed. And unlike a lot, you do not seem to have a lot of endowment bias and make a balance case for it.

the key will be to find out details of this arrangement with chettinad group for quartz mines. And for the record, chettinad group is very close to AIADMK in tamil nadu. infact, her foster son's marriage took place in theri schools and offices bringing the entire city to a stand still.

http://www.telegraphindia.com/1150527/jsp/nation/story_22396.jsp#.VfqUQd-qqko

and recently there was a mega raid in their offices

why would someone like that would sell to pokarna at what seems like prima facie, lower than market price is not something I have an answer to.

@PP1

The management is highly ethical. My whole bet is that whenever there is a CEO change things do get shaken up a little and the new CEO wants to prove his/her mettle, especially if working under the guidance of the founder. In this case, theres a change that's happened and for what's worth, tail winds do exist and the only variable you need to track in this business is growth - since it's a sticky, high margin, high EBITDA, recurring cash flows business.

I prefer to take those kind of bets - where there's very little to lose and all to gain,, even if wait takes a little longer. I had the same thesis on infy when vishal sikka took over and so far it's been proven right.

Hi Gaurav,

I agree with you that the volume of shares traded for a small cap company will always be less (atleast in the beginning). However that also increases the doubt that whether the price is operator driven or not. I think one way to check is that % of deliverable quantity(see link below) should be atleast >75% in such small companies. For MM Forgings it seems a bit low.

http://www.bseindia.com/markets/equity/EQReports/StockPrcHistori.aspx?expandable=7&scripcode=522241&flag=sp&Submit=G