[T.S.R:15855] koutons

Dear All,

Now we are seeing Koutons stock falling and hitting lower circuit,
this case has got some learning for us.

1. We should be tracking Research views and analyze balance
sheets of all the companies where we are funding. Any company that
does not publish balance sheet any time is a cause of concern.

2. Research fundamentals also catch up with the company price
sooner or later, in Koutons high debt to equity ratio as well as
inventory problems was an issue. Similarly, lending against promoter
stocks with low market caps (less than Rs1000 crs.), low floating
stocks and high % of promoter shares pledged (>40%) should be avoided
or have a solid reasoning and management comfort.

3. Our research or credit analysis team should be continuously
meeting the management, analyzing balance sheets, seeing change in
quarterly numbers and also evaluate debt to equity ratio.

4. End use of the funds need to be identified and communicated in the
proposal. Further repayment capacity and sources needs to be clarified
with the borrower. Wherever margin shortfall does not come within
prescribed time, risk team should escalate and take corrective action
by liquidating stocks.

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