Stake sagacity vs diligence systems – by ankit bhatia

Good evening, erudite strata of esteemed alumni & intrigued perusers of ‘The Column’ !

Well .. my ingrained scribbler endured a fiscal jolt – attributable to – perusal of the recent rebellious equity stake fiscal foray – comprising public capital deployment !

Have been vehemently deprecatory of – any dearth of paramount assiduousness & adherence to supreme diligence benchmarks – in context of fiscal or social sagacity of deployment of public capital – whether attributable to equity stake forays or in context of investments in commercial operations.

 

Onus of compliance – with paramount diligence and prudence benchmarks – in context of preserving valuation of public capital, its impairment, or social aspect of investment – including manifestation via provisions in the Companies Act – is upon the investing public entities as well as the incorporated regulatory diligent systems – alike of Comptroller Auditor General – under Companies Act – to ensure fiscal or social sagacity & social context of investments – entailing deployment of public capital.

 

Well .. on a lighter note .. lets be oblique in this context .. lets refrain from explicit addressing .. oblique narration .. aforesaid concern is the manifestation – as a consequence of a public Insurance corporation’s equity stake foray towards a predominant FMCG (tobacco product indulgence) manufacturer.

 

Aforesaid equity stake foray – has been contentious on financial diligence aspect as well as social aspect !!

Any prudent equity stake foray would have prudently abstained from deploying, especially of public capital, in a foray – whose predominant venture’s ‘going concern’ financial benchmark postulation – itself is speculative, or market valuations, perpetually, could be discerned as – anything but stable.

 

Even in context of global corporations – statutory auditors of corporations – stipulate towards due depletion & reflection in valuations & financial reporting – in context of existence of any legal / global / industry indications – which could reasonably testify towards culmination towards – impairing long term business valuations or cash flows or skepticism towards perpetual ‘Going Concern’ financial benchmark postulation.

IN contrast, corporation’s internal auditors would explore a step further – by being officially deprecatory of any investments made – sans display of stern benchmarks – in context of stern diligence – to incorporating into investment decisions – via – extrapolating industry / statutory / global environment – in context of returns or valuations or even ‘going concern’ postulations – in context of equity stake forays!

Any assiduous foray, even in context of a private equity stake foray by any corporation, as aforesaid, would have exhibited much more stern & superior benchmarks of diligence, then, ought not – the aforesaid minimum principles – be extrapolated – especially – in context of deployment of public capital?

 

Dismay attribution is especially towards – synonymous to acquiescence – conduct by even public diligence review systems – manifested via – omission of any public reservations or critique – in context of aforesaid equity foray !!