Tuesday, February 22, 2011

Lupin - Time to Exercise Restraint for Investors

Extrordinary performances by companies have always cheered investors, and investors hardly care to understand why and how, when things go in their favor. There is something that worries me as an investor in Lupin. If you have looked at the performance of its swiss subsidiary, it is more than what you would call "amazing and excellent". The company in its quarterly calls have shown considerable restraint in dealing with the details. The subsidiary is a non-integral trading subsidiary of Lupin. In the first year of inception, it has almost genrated 25% of the consolidated profits of Lupin. The return on networth is around 60%.  I would not say, it is entirely impossible, but I  would appreciate more transparency, especially when companies grow in size and the amount of investor/public money that is at stake is considerable.

Look at their annual report -March 2010 and look at its subsidiary numbers.. The numbers are simply unbelievable.. Being a non integral subsidiary, even the foreign exchange losses/profits are not reflected in the consolidated statements. Again being non-integral, the subsidiary is not relying on the parent finances. It has its own means of financing.
I would recommend caution and more transparency at company level. The subsidiary contibution to profit and turnover is much more than meaningful and hence investors should get details on the business there.