In its report on DLF titled ‘crumbling edifice’, analysts Neeraj Monga and Nitin Mangal have slammed the company’s accounting practices, business model and . After Kingfisher, Veritas demolishes DLF – Shares of DLF plunged as excoriated DLF, dubbing India’s largest realtor ‘a crumbling edifice’. Meanwhile, in a report titled A Crumbling Edifice, analysts Neeraj Monga and Nitin Mangalof Veritas Investment Research Corp. said DLF was.

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Canada-based research firm Veritas has gotten under the skin of India Inc and the investing community in the last veirtas year as it dared to touch upon issues that most brokerages would otherwise choose to ignore in order to preserve their relationship with India’s corporate houses. Stock research in India generally focuses on q short-term prospects for price movements rather than bigger and more critical issues of corporate governance and accounting practices.

But this Canadian equity research firm has just done that- it has written a number of scathing reports about India’s largest companies, questioning their corporate governance and making a slew of enemies on its way. The latest is Indiabulls Group, a Mumbai-based company which began in broking but branched out to real estate and other businesses.

Veritas has accused the real estate group of poor corporate governance and irregularities in its accounting and financial practices. It said the sole purpose of Indiabulls Real Estate is to benefit select investors.

Why DLF Should Be Valued Half Its Current Market Cap: Veritas | VCCircle

According to Veritas, “Investors seeking reliable and credible information on Indiabulls Crumbllng Estate Ltd and Indiabulls Power Ltd cannot depend on the reported financials of the two companies. Indiabulls responded on Thursday by filing a police complaint against Veritas. Hindustan Times reported that Indiabulls accused the research of “malafide intentions” and “intentional profiteering. Neeraj Monga,executive vice-president and head of research at Veritas, in an interview with CNBC-TV18 reiterated that their reports are based on publicly available data, such as the company’s regulatory filings.

The firm has not contacted Indiabulls before or after the research was published.

We are regulated and licensed by the relevant financial service authorities to do so,” Monga told Economic Times. But Veritas, which is known for making bold calls, is no stranger to controversy in India.

Canada Firm Shakes Up Indian Stock Research

Earlier it had taken a dig at India’s richest businessman and alleged that Mukesh Ambani’s Reliance Industries RIL cgumbling caused loss of 25, crore to its shareholders by demerging its communications business and subsequently transferring it through a series of transactions to younger brother Anil five years ago.


Flushed with cash, RIL was not impacted much by the report, but Veritas’ second allegation against brother Anil Ambani’s Reliance Communication did hit investors and the management hard.

It recommended a “Sell” on Reliance Communications, expecting a significant additional downside in the stock and values it at Rs 15 per share.

In a report titled, “A house of cards,” Veritas said RCom’s accounting policies are “whimsical” and don’t provide a clear picture of the underlying operating and business trends, and added that the firm’s governance practices were “sub-optimal. Edificf question of how the Ambani family shareholding had gone from 38 percent to 63 percent in the change of Reliance Communications ownership defied logic, Monga told Outlook earlier this year.

But Monga didn’t stop short at the Ambani brothers. His next target was easy – aviation- and debt-ridden Kingfisher was the obvious choice. One look at the airline’s accounts and Monga termed it as an insolvent entity whose value was zero.

He even said that the company should be delisted from the BSE for flouting Indian accounting standards. We all know how that story has played out so far. Mallya’s airline today is essentially owned by banks, while he frets around looking for an investor to save the airline rather than put in more of his own money.

After ripping apart the Ambanis and Mallya, Veritas also trained its guns on the murky real estate sector and decided to make DLF its next target. In March, it said DLF is a crumbling edifice and valued its share at not more that Rs apiece, adding that claims made by the management crumblihg its ability to execute projects were fanciful. In his defence, Monga says ” “Anybody who has any experience of India knows the Indian real estate market is rife with underhand dealings In India, dealings with ‘related parties’ are the norm, and most ‘related party’ dealings are a means to x funds from the publicly traded entity for the benefit of majority owners.

DLF inflated asset base via dealings with DAL: Veritas –

Currently, Veritas markets its research only in in Hong Kong and Singapore, both being places where a lot of India’s foreign capital comes from. Whatever be the intention, Veritas’ aggressive approach underlies the importance of improving the standards of reporting and corporate governance in India.

If more research houses do follow Veritas’ lead and turn the spotlight on corporate governancemore transparency will become the order of the day. However, while Veritas-like boldness may prove to be a catalyst, transparency can only be assured when the nexus between politicians and businessmen is broken since all regulators and laws are made subservient to political whims and fancies. And secondly, as Firstpost said earlierthe inability of promoters to segregate their personal interests from corporate interests leads to the shortchanging of minority shareholders.


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DLF inflated asset base via dealings with DAL: Veritas

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