I purchased arvind remedies limited after it slided down to Rs. 26 from 63 in a span of 40-45 days. The main reason for the downfall was funding issues; company was facing working capital issues and a lockout at its plant. Over the years company had shown consistent performance , hence I thought the strike and funds problem as a temporary issue and invested thinking the phase will pass and it will be again start performing.
What went wrong??
The problem was not that big enough and could have been solved easily had the management looked out for answers or funding partners. But instead there was no commentary from management over two quarters and thus investors started losing patience and started selling, bringing down the price to 10. Even at this point management didn’t care and it too started selling its own quota and promoter holding came down to 3% from 39%.
Why I sold??
Generally I keep patience and give full time to businesses(like I did with marksans pharma; yes I purchased it when it was hovering around Rs. 7), but in case of arvind;where plant was locked out and no production activity going, how could a business survive? The management finally said that it is bringing some partner from USA for funding, but even in that case also, management didn’t disclose any other details. I tried calling and contacting management by mails but to my bad luck, the phone and mails remained unanswered.
With no compliance system in place how could you trust on business?? Where management is keen to sell its quota at every price such businesses eventually has to go down.
As a famous investor quoted “In long run it’s the management and the business that give rewards, and not sentiments”
But it surely has given me a good learning experience.
Disclaimer: I sold ARL, and these are my own views. Please do your own research before investing.
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