Value investor- India mid & small caps

Bhaskar Chakraborty

Equity Bottom-Up

<p>A brief analysis of <a href="https://www.smartkarma.com/entities/15471" target="_blank" data-smartkarma-citation="entities:15471:1">Vakrangee Ltd (VKI IN)</a>’s shareholding history and annual reports throws up a number of red flags-</p><ul><li>Non-descript stock brokers, some of whom are connected to each other, held 14.05% of Vakrangee stock as of Dec-16</li><li>In a stark similarity to the Satyam saga, almost entire cash is held in current account, no investments purchased or sold during the fiscal</li><li>Again, similar to Satyam, all the cash was left in current accounts all year round giving it miniscule interest income</li><li>Purchase of goods and services are too high given its franchisee business model</li><li>It employs 1 employee for every ~25 Kendras, too thin to ensure meaningful oversight in our view. Employee costs are only 0.8-1% of revenues.</li></ul>

A brief analysis of Vakrangee Ltd (VKI IN)’s shareholding history and annual reports throws up a number of red flags-Non-descript stock brokers, some of whom are connected to each other, held 14.05% of Vakrangee stock as of Dec-16In a stark similarity to the Satyam saga, almost entire cash is held in current account, no investments purchased or sold during the fiscalAgain, similar to Satyam, all the cash was left in current accounts all year round giving it miniscule interest incomePurchase of goods and services are too high given its franchisee business modelIt employs 1 employee for every ~25 Kendras, too thin to ensure meaningful oversight in our view. Employee costs are only 0.8-1% of revenues.

Vakrangee Ltd: Too Many Red Flags, Tread with Caution