C Bhavnani who owns 38% stake in the Company is the wife of Mr Chandran. This is confirmed by the annual report of Ambika for FY15 - http://www.bseindia.com/bseplus/AnnualReport/531978/5319780315.pdf

Key points from AR

1. Management is bullish on growth prospects – as was disclosed in the results, Company plans to setup another spinning unit of 30,000 spindles with 100% compact facility consisting of imported and indigenous machinery, with total cost of 130 crores. This will be largely financed by internal accruals
2. AR says that specialty cotton yarn does not closely track economic growth, and is consistently growing. Company continues to have good demand for its products, and continues to strengthen its production base by modernization and adding balancing equipments
3. Management focus is to maximize per spindle EBITDA, which as we know is one of the highest in the industry
4. Export % of sales have been reduced from 65% in FY14 to 59% in FY15
5. Long term Debt has been reduced from 61 crores in FY14 to 16 crores in FY15, and Mr Chandran is focused on working with minimal or no debt

From Annual report:
1. Company has accepted deposit from relatives of Director& Associate Enterprise amounting to Rs. 487.00 Lacs in contravention with the provision of Section 73 to 76 of the Companies Act, 2013. The same has been fully repaid within the current year and the outstanding balance as on 31st March 2015 is Rs. NIL

Why would the company not be complying with requirements of Companies Act and RBI rules for accepting deposits?

2. The Company has appointed Company Secretary on 30th March 2015 and could not complete the formalities of her appointment as she left the services effective from 8th April 2015.

Does it mean the Company secretary left the job in 9 days?

Hello all,
I am new to this forum, to apologies for any amateur comments. Thank you all for making this forum to insightful and especially this thread. I have been studying Pokarna for the past few days and really think the intrinsic business of the company is extremely robust. This is further supported by me reading of all your posts. Inspite of the 2 year run up of the stock, the company appears to be trading at compelling valuations. Two things however are keeping me from investing into the stock as per my reading of the 2015 AR:

1. As soon as the company posted a decent set of results, the promoters have immediately raised their remuneration limits to the maximum possible. Remuneration to directors increased from 68 lakhs to 288 lakhs. I am not saying that the management does not deserve this (even though I don't understand the rationale of hiring Mr. Apurva Jain and directly making him a director)

2. There are dues worth > 60 crores to Pokarna Fashion, Pokarna Fabrics and Pokarna Marketing (all are associates of Pokarna). These are currently shown as currently liabilities but optically they appear to be cookie jar reserves kept in the company by the promoters. So whenever the company makes good cash flows these liabilities will be paid off.

All in all - my only concern about the company is whether the management is shareholder friendly and whether they will try to take a big slice before any returns trickle down to the shareholders

I do understand that Management owns ca. 56% in the company to my concerns are alleviated to some extent. But if anyone can offer some more insights into this it would be extremely helpful.

@hitesh2710

Hitesh Sir, this was an excellent pick by you. Worth holding even after the recent run-up?