India’s tycoon Singh brothers took at least Rs 5 billion ($78 million) out of the publicly-traded hospital company they control without board approval about a year ago, people with knowledge of the matter said.
The funds were reported on the balance sheet of Fortis Healthcare Ltd as cash and cash equivalents, but the money was routed and placed under the control of the Singhs at the time, according to the people. Fortis’s auditor, Deloitte Haskins & Sells LLP, refused to sign off on the company’s second-quarter results until the funds were accounted for or returned, the people said, asking not to be identified as the information is private.
It wasn’t immediately clear what the Singhs may have used the funds for. Fortis founders Malvinder Singh and his brother, Shivinder, have been working to pay back the money so the company can release its results, the people said.
A spokesman for Fortis said the company loaned Rs 4.73 billion to “certain corporate bodies in normal course of treasury operations” as of July 2017, and in the third quarter of the current financial year those companies subsequently became part of the Singhs’ corporate group.
The loans have since been recognised as related party transactions and repayment has commenced, the spokesman said in an emailed statement.
–from Business Standard
We do not take cash call.
We remain fully invested across our funds and yes, the flows have been very strong and market near all time high level, so it’s a difficult task.
For 24 years of my career I used to pray that foreign institutional investors (FIIs) should buy so that my investors can make money.
Today my prayer is that FIIs should sell so that I can buy stocks cheap for my investors and get them money.
–from a 2017 interview by Nilesh Shah,MD,Kotak Mahindra AMC
Source: IDFC Securities Research
Sood said expectations of earnings growth is high but many of the small-cap stocks are at the upper end of the valuation band.
“Even if earnings deliver as it is expected in the next couple of years, small stocks may not perform because of the rich valuations,” he said.
The small-cap index comprising 848 stock is trading at a trailing price to earnings ratio of 111 times — its highest ever.
Sood said the crash in the stock market in 2008 had left investors mainly in several small-cap stocks high and dry. “Smallcap stocks are cyclical in nature. For example, it rallied between 2003 and 2007 and then they saw a significant correction. It took almost 10 years for investors to recoup the losses“
We want our investors to be shielded as much as possible. After 2-3 years, we may realise that exiting small caps is a good decision.