Translucence II - Complete - Page 16

Chapter 32:

"Did you get a chance to talk to your father?" Emily asked Maan walking next to him in the corridors of Khurana Capital.

"I went to talk to him but I found out more than I bargained for as you must already know now," Maan replied. Emily hummed in response.

"What did Deshmukh want with you now?"

"His plans now don't involve Khurana Capital directly; at least not at the moment."

"But he has eyes on this one, yes?" Maan nodded.

"Right now, his proposition doesn't go outside the purview of the contract he has with Khurana Heavy Transport. He wants to have an alliance of sorts," said Maan opening the door to his cabin where Satya was already seated.

"If he wants an alliance with Khurana Transport then why come here? He should be talking to Varun." Emily said as a matter of fact. By looking at Maan's face she realized that that wasn't all of it. "He wants you to be a part of it, doesn't he?" She asked looking at Maan smugly.

"He wants to invest in Khurana Capital." Maan said gauging Emily's reaction.

"Why?" Emily asked immediately. Maan and Satya looked at each other. "Well, you did ask him why he was interested in investing in Khurana Capital, didn't you."

"I did. He said he believed in my abilities to turn this who thing around," Maan said, smug. Emily rolled her eyes.

"I don't believe it. Not for a single minute."

"Why don't you?" Satya asked.

"This is not 1980s Satya where people invested based on the person and the moral grounds of a company. In this age every company is rotten and every businessman is morally corrupt. In your case," she said point to Maan, "You are smart and intelligent and Deshmukh to an extent knows that you are going to try your best to fix this mess even though it's going to be futile. He also knows that being with Khurana Capital at this juncture would give him leverage that he can use it later. He is after something else," Emily said.

"Wait Emily. Back up. Our efforts are going to be futile?" Maan asked staring down at her. Emily sighed.

"Take a seat Maan. I will tell you the real story – the ones balance sheets have told me," Emily said.

"How bad is it?" Satya asked slowly.

"We can save our grace if we file for bankruptcy in another one month," she replied with mild sorrow.

"Is it really that bad?" Maan asked surprised. "I was under the impression that we will have at least another quarter on our hands," he added.

"Well, Vikram lied to you. And I don't think Mitalee is even aware of the filth Vikram has managed to spread in this company," she said.

"What do you mean?" Satya asked.

"Hedging has gone out of hands Maan. To cover up losses, Vikram translated 'losses' to 'advance' in books which kept the operation risk free."

"As per books Vikram was taking out an advance but in reality they were already losses." Satya said.

"Correct. By doing this he didn't have to even touch balance sheet because in balance sheet it would appear as loan against the dividend. To earn back his losses through hedging operations, he sold assets to forward markets and earned profits on such hedges which eventually came to balance sheet."

"So he put in the profits in books thus them being reflected in balance sheet. What's the problem in this one Emily? Everyone does it," Satya asked.

"I thought the same thing first. But I went back and checked the asset values during the months of hedging transaction. What Vikram put in his books doesn't match what happened in market," Emily said.

"Wait. He pulled cash out of thin air and called it profit? Vikram might not be very intelligent but he definitely wouldn't have morals high enough to cover up his loss," Satya said.

"Are you suggesting capital injection Emily?" Maan asked.

"No. If chairman did some capital injection then it would be in books because chairman would make sure that it reflected in balance sheets. It was something else," Emily said.

"How did the cash come in then?" Maan asked, surprised.

"It never did, actually."

"How is that even possible?" Maan asked not able to understand.

When entries of profits made it to the books and balance sheet, it meant that the capital had flown in to the company. Technically the banks would certify the transaction and thus it becomes sort of obvious that the profits, or even losses for that matter, indeed came in to the company.

Beating around that would mean exactly what Harshad Mehta did. But Vikram didn't have the guts to pull off something like that. Vikram was too smart for that.

"He gambled on those profits, didn't he?" Maan asked. Emily nodded.

"How can you gamble on the profit made on hedging which in itself is a loan?" Satya asked. "Technically it isn't impossible but there are dozens of RBI regulations and internal company policy which doesn't authorize for something dumb like this one," he huffed.

"In no way it was dumb Satya. He wasn't alone in this gambling thing. He, along with at least three other investors played in Dalal using a bio tech company as their frontier. Once the stocks of the company soared rest of the populace also took interest in it." Emily said.

"But someone sniffed it before they could sell their shares, correct?" Satya asked. Emily nodded.

"Varun backstabbed Vikram," said Satya.

"It was Varun?" Emily asked, surprised. Satya nodded.

"Varun came to know about it almost after a fortnight. Vikram came to Varun asking for capital but Varun turned him down. Khurana Transport was in much better shape back then and it was the first time Vikram had openly interfered in its operations. He was desperate and he bullied Varun to hand him enough cash."

"And Varun gave in?" Maan asked.

"He gave in alright but he badgered Vikram to know the reason for it. When Vikram didn't budge, he had people follow Vikram and used his own people against him. It took him few days to realize what Vikram was up to," Satya said.

"Stock rock bottomed few days later after a brash statement from a senior employee of the bio tech company which was before Vikram could sell his shares. Since there is a regulatory on the quantity of sell he couldn't wash his hands off of the entire stack. He had started losing on the third day of the price fall and the trend never improved."

"How did Vikram book losses as?" Maan asked.

"Under the very broad umbrella of risk failure," she said shaking her head.

"It's irredeemable Maan, the way this company has lost money. No wonder investors are weary of Khurana Capital in recent years."

"There are several root causes for the issue – lack of management objectives, planned vision to secure good future and basic decency." Satya said wryly.

"None of which are objective goals," Emily said sullenly.

"Sorry kiddo," Satya simply shrugged.

"What if we hear out Deshmukh's proposal with respect to Khurana Transport and Khurana Capital?" Maan asked a moment later. "His chief counsel has agreed to meet you both whenever we have finished our internal assessment," he added.

"What about Varun? This involves Khurana Transport too sir," Satya asked.

"Don't worry about Varun. He will consent this whether he likes it or not," Maan said, grinning.

"What are you going to do?" Satya asked slowly already dreading the answer.

"I am going to blackmail him," Maan said happily.

Satya and Emily collectively groaned at him.

To be continued.

Music companion for the day: Maybe by Sick Puppies