Hi Ayushmit,
Appreciate your response!
- Salary – yes, it’s a bit high and I hope the management takes note of it and takes steps to stop increasing the same and reward themselves by way of dividends etc.
But this is not a deal breaker for me. Usually I have seen that in small/mid caps it happens as there are several family members involved (and some CAs advice to charge the max amount allowed) and it’s better that they take remuneration upfront rather than through wrong/hidden ways. In fact the other way I think is – if the margins are so good despite such salaries then it means that the core profitability is even higher and its good for longer term.
Agree with you, its not a major Corp Gov risk IMO but may paint a picture as a minority shareholder unfriendly company. I have written to the company asking them about this, let’s hope they respond.
- In almost all audit reports, one will see the same language for foreign subsidiaries. No Indian auditor will take responsibility as they don’t audit themselves. Regarding the steep increase – i think it might be due to the reason that they have appointed MSKA. MSKA is a very big and reputed firm…i think it is amongst top 10 or so. If so then charges will be higher and it’s good that the co is getting better auditors.
That makes sense and should be the explanation. Ajmera and MSKA were joint auditors this FY. Seems like they have split the compensation of 15 Lakhs half and half. Next year as MSKA takes over completely, they have hiked the rates to 22 Lakhs, most likely paying a premium for MSKA’s reputation.
Always good to hear the views of folks who have been invested in a stock for a long time and have interacted with the Management. Its re-assuring for newer shareholders.
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