Eros international

Disclosure: Not invested

I found an outstanding and instrucutive analysis on Eros group that concludes with compelling evidence that:

a) The accounting is extremely aggressive in an industry with intangible and volatile assets (films and rights) with ill qualified auditors. Free cash flow is lagging profits which are flattered by aggressive revenue booking (in some subsidiaries receivables increases are higher than sales for the year!) and capitalisation of costs to lower reported expenses

b) Complicated corporate structures and high related party transactions including surprisingly bank guarantee provided by the listed entity to the related entity! Imagine I own a listed firm which does business with my privately owned entity and I ask the listed entity to provide Bank Guarantee to it! Shows my own confidence in the listed entity.

Here’s the link – Eros