Rose Investments is an investment holding company based in Mumbai with no operating business. It held cash of about 60 lacs as at 31 st March, 2011 and investments with a market value of approximately 1 crore (based on 31 st March, 2010 information). Net profit for the last twelve months approximates 8 lacs. The investments are subject to risks of overvaluation and impairment over the course of time. Further, the investments and cash are subject to misappropriation (e.g. through excessive management compensation etc. and unsound future investments). Management has, however, distributed 5-10% of profits as dividends and this would count in their favour since the business doesn’t appear to have any profitable reinvestment opportunities the shareholders don’t have. Nevertheless, hoarding up of investments and cash that belong to shareholders, which could profitably be deployed themselves doesn’t appear to be in the shareholders’ interests.
An Individual Investor's Perspectives On The Indian Financial Markets