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Linkfest: July 18,2016

Some stuff I am reading today morning:

Are markets overheated in midcap/smallcap space? (Gaurav)

How buying a flat became a nightmare in NCR (Mint)

The Infosys Turnaround:Hype or Reality (Prabal Roy)

How much longer can India’s IT sector hide? (Bloomberg)

Telecom firms gird up for data price war (BL)

Watching Macro-Is it a fool’s errand? (Aveek Mitra)

Max India demerger saga finishes (TankRich)

Active Vs Passive Investing (A VC)

Case Study:Valuing Tesla (Aswath Damodaran)

Why land may not be the smartest place to invest (NYTimes)

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Links

Weekend Mega Linkfest: July 15,2016

Some off beat reads for the weekend:

Idea of Europe Vs India’s (David Frawley)

Hate Wave in the Kashmir Valley (Open)

Chinese are behind Kashmiri militancy (Markandey Katju)

RK Pachauri’s reign at TERI (Caravan)

Why a cap on GST is a good idea (Scroll)

Sheila Dikshit as a scapegoat (DailyO)

Entrepreneurship lessons from the road (Charles)

Zakir Naik and free speech (Great Bong)

Baba Ramdev’s much talked magazine cover (Quint)

Sexual violence at the Pamplona bull run (Guardian)

Driven:Jaguar F-Pace (Team BHP)

IIT invention can make blind move freely and even run (BI)

A letter to my wife…who won’t get a job (Guardian)

My Photos from Rashtrapati Bhavan (Amitava Ghosh)

How does it feel to earn 3.5L pa after completing Engineering from one of the best colleges of India? (Nithin Sebastian)

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Bubble just Burst

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Excerpts

Integrated aerospace offering from Tata

(Disclosure:I am market making in the shares of Tata Technologies)

Tata Technologies, Tata Advanced Materials and TAL Manufacturing Solutions Ltd have announced a new collaboration at the Farnborough International Air Show.

The three Tata group companies have agreed to come together to offer an end to end Design, Manufacturing and Assembly capability to the aerospace manufacturing industry. 

It will include a strong focus on outsourced manufacturing for both metallic and composites and a strong capability in the design and engineering domains supported with a holistic capability in product lifecycle management integration.  

“The industry is looking for quality, cost and capability as it strives to meet the unprecedented demand for higher productivity across the supply chain,” said Warren Harris, Tata Technologies managing director and CEO.

He continued: “Tata’s strength lies in a decade of significant investment in cutting edge next generation manufacturing facilities in India and a strong leadership position at Tata Technologies in advanced design and manufacturing engineering capabilities.”-from Engineering Capacity

 

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Excerpts

Kitex Garments:Super Efficient or Fraud?

Over the last four years, Kitex has been the first listed company in India to report its audited financial results (Reporting dates: FY16 – 4th April, FY15 – 6th April, FY14 – 3rd April, FY13 – 4th April). Normally, this would be viewed positively as it is reflective of strong financial controls inside the company.

In order to ratify the accounts, the auditor needs to gather substantive audit evidence which includes – physical inspection of assets (machinery, inventory), obtaining confirmations from third parties (banks, suppliers, customers), examining transaction records, checking assumptions and calculations. Completing all these activities within 3-4 days of the end of the financial year while theoretically possible has several practical challenges (for eg. In FY16, April 1st was a bank holiday followed by a weekend which limits ability to get third party confirmations). Even large audit firms with extensive resources are unable to complete the annual audit in such a short period of time.

Kitex’s auditor is the Cochin-based Kolath & Co which does not audit any listed entity other than Kitex. Given Kolath’s limited experience in auditing large businesses, its ultra-quick completion of Kitex’s audit raises concerns about the comprehensiveness of the audit. While Kitex’s audited results demonstrate a high level of efficiency, its secretarial compliance reports show delays in its filings (P&L, Balance Sheet, Modification of Charge, Changes in Directors) with the Registrar of Companies. Kitex’s selective efficiency in financial reporting is quite puzzling.-from 2Point2Capital