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    Auditor wouldn't have signed off if anything was wrong: Rohan Suryavanshi, Dilip Buildcon

    Synopsis

    Dilip Buildon showed exceptional losses is due to IndAS rules, says Rohan Suryavanshi

    ET Now
    Losses will reverse this year as the deal with Shrem Group gets over in FY19, says Rohan Suryavanshi, Head, Strategy and Planning, Dilip Buildcon. He was talking to ET Now.

    Edited excerpts:

    Can you talk about the auditors’ position? There are a lot of rumours regarding quitting, Can you clarify?

    These rumours that have been going on, I do not really know how they started but they are completely unfounded, completely baseless, completely false. They are vicious in nature. What we have done is as soon as we even heard the first rumour, we immediately came out with clarification. We sent this to the exchanges and not just us, even the auditors came out with the statement that they are very much with us and they are going to be with us even this year.

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    Let me also tell you a bit about our auditors. Our auditor, Mr Chitale, sits on the board of Larsen & Toubro and headed their audit committee. He is a past President of the Institute of Chartered Accountants of India and he does audits for banks. He is a very well respected name on the Street. Something like this is absolutely shocking to us but I guess in today’s day and time with markets being jittery, anything and everything takes off without any base to it.

    You are saying that the auditors are very much on the rolls of the company and they are to serve their due term?

    Absolutely and I would suggest you should even reach out to them and speak to them because all this is completely unfounded and baseless. They have come up with the clarification. The audit has been fantastic, the company has not done as good as this. We have had a fantastic set of numbers, the P&L has been the best. The balance sheet has improved, our debts have come down and there has been absolutely no difference of opinion between us and the auditors.

    The second rumour which is a burning question relates to the numbers. Despite selling overall role portfolio to Shrem Group above book, why has Dilip Buildcon book an exceptional loss in the standalone Q4 numbers?

    This is because of new IndAS rules state that should. Not only have do we have some loss, but we also have some profit. We have sold 24 projects to the Shrem Group and it has been sold at 1.05 times the book value. Now individual assets of some may be above book value and some may be below. There are a couple of assets which were below book value and others were above book value. There was a timing issue. These different assets were built at different times and we can transfer them only after a certain amount of time. Overall, when we sell the whole portfolio, there will be a profit but right now some of the projects which have gone out first, are the projects where we had to take a hit. This charge will be reversed later when the whole deal finishes.

    Hypothetically, if you have to approach your auditors will they be happy to issue a note that there is nothing wrong with the financial reporting? I am asking you a direct question but it is of immense curiosity. If we approach your auditors, will they be happy to issue just some kind of endorsement of faith?

    Hypothetically, I do not think there should be a problem in that. If the auditor felt there was something wrong, then he would not have signed off on it. I am sure he will be very happy to do that.

    Which is why a word from your auditors would also have helped the air just on that second point of reversing the losses that you have accounted for in your Q4 numbers. Is there a time line by which you would see these losses get reversed?

    Yes, it will all happen this year because the whole transaction will get completed by the end of this financial year.

    Altogether 24 assets will keep going out of our books. That is why there is a consolidation. As we secure all the clearances from the regulatory authorities and the banks, the assets will go out of our books. This was the largest road transaction deal that had happened and Shrem is giving us equity for all these assets and they are taking over all the debt that is on these assets. Once the deal is through, we would not have any debt on the consolidated basis.

    On that debt angle, the companies made Rs 520 crore of cash flow from operations and got Rs 570 crore from the Shrem Group in FY18. Can you explain why the debt levels have still gone up?

    The company has overall grown its top line from Rs 5,000 crore to Rs 7,700 crore. It is a Rs 2,700-crore jump in our top line We have invested in equipment but even then, the only debt that went up was only by Rs 250 odd crore which is nothing compared to when you look at the Rs 2700 crore jump in top line.

    You cannot do the jump in top line without buying new equipment. When you are doing road construction, you need the equipment to do it and our model is that we buy all the equipment that we use. If you look at it proportionately, it has only kept on reducing and if you look at some of our debt in the last four years, it is only gone up by 25%.

    If you look the numbers on a standalone basis, the overall top line has gone up more than 300% in the same time. We are only getting more and more efficient every year. Our debtors’ days are down, our overall working capital cycle has fallen by almost 40 days.

    Are you aware of any large institutional investors who have sold this stock down or is this pure market adjustment?

    No, it is just a market phenomenon. I do not think there are any large investors who are selling out because I have also spoken to our largest holders and all of them are also perplexed as to why these rumours have been coming out as they have looked at the numbers. We delivered 52% growth on top line. If you look at all the analysts who covers the stock, all of them have also come out and saying the same thing. The company has been doing the best it could do. Our credit rating has also been upgraded. We are now AA minus.





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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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