Case study
Opto Circuits: One more Fraud One more modus operandi to Siphon off
Opto has made investment of 139 Cr in a subsidiary and also given Advance of 130 Cr to same. It goes without saying that such nameplates are created overseas by many Indian promoters to siphon off funds to their personal accounts. Irony is that such companies keep local small time Auditors who work as rubber stamp of promoter. And Auditors never visit these overseas entities for audit for verification. Finally all such subsidiaries have negative networth
FUNDAMENTALS indicate Zero Fair Value
Opto Circuits Ltd
Fair Value INR 1
Opto has reported Loss of 1251 Cr on 1462 Cr Revenue ( 32 Cr Profit on 2069 Revenue) and 300 Cr equity for 9mFY20. LPS ( Loss per share) is Rs 42. Clearly bogus entries of previous year must be getting reversed
1) Years back 339 Cr loan became NPA. *SBI has already taken possession (symbolic) of its Electronic City plant*
2) Opto Circuits has already shut 3 overseas subsidiaries
3) As per 5(a) of Audit report, 228 Cr trade receivables are more than 3 year old and *there is no confirmation of these trade receivables* It clearly means that these are bogus fake Debtors which will be written off as bad debts in future
Will unfold many frauds gradually. If forensic audit is done, promoter's cheating of funds siphon off, bogus accounts will stand exposed
Stock was Rs 1.45 in March 2020 and still 1000% up
Such fraud promoters and operators bring bad name to Equity market