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PVP Ventures


PVP Ventures is in the business of real estate development.

It has one residential project at Perambur, Chennai  - which appears to be completed but where the company is yet to start receiving rental income although management assert that it will receive substantial cash flows from this project over the next five to seven years.  The company also owns a plot of land in Hyderabad.

The financial statements, however, reveal the imprints of mismanagement.

It generates no revenue, reported continuous losses over the last five years, and carries a debt load that doesn’t appear to be backed by asset values.

The audit report is a scathing read of the company’s prospects and finances – and a good starting point in this case for someone unfamiliar with the company. 

First and most importantly, the auditors do not believe the company will continue operating beyond the next twelve months and the state several reasons including: lack of business activity, dependence on other group companies, disposal of all revenue-generating assets, transfer of employees to group companies, waiver of interest it owes on debentures (to a group company), etc.

The report also points to impaired investments, impaired loans and advances to related parties, recording of losses on assets directly in equity reserves instead of the income statement (indicating an attempt to minimise reported losses), lack of provisioning for income tax demands, etc.

The balance sheet also reveals substantial goodwill on acquisition of subsidiary - indicating overpayment for assets, substantial accumulated losses, awarding of options to promoters – leading to dilution of minority shareholder interests, lack of transparency in related party transactions, etc.

Overall, these accounts smell as bad as any you may find on the landscape – it would be fascinating to read reasoning to the contrary.

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