What do you guys make of Unnati Sahakarya Laghubitta (USLB)’s Balance Sheet? Equity figures are jacked to the tits from 34.9 Cr (unaudited) / 29.8 Cr (audited) to 46.8 Cr (unaudited) while making only 0.76 Cr (unaudited) in net profits this year.
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SWMF:
SWMF’s financial report for Q2 reveals a surge of around 86 crore in goodwill and intangible assets, likely stemming from a merger or acquisition. It’s improbable that the institution created software or other intangibles worth this amount. When a company buys another, any excess in the purchase price over the identifiable assets’ fair value usually shows up as goodwill. The reserves’ parallel increase might reflect the capital utilized for acquiring these intangible assets. A similar instance can be found when Kotak Mahindra Bank bought ING Vysya Bank in India, resulting in an increase in goodwill on their balance sheet. They may have concurrently boosted reserves by an equivalent sum.
USLB:
In USLB’s case, the Q1 report shows an additional 17 crore in other assets. The exact nature of this increase remains uncertain. It might be a reclassification of assets, causing a corresponding rise in reserves, or perhaps due to regulatory requirements (for NBA; restricted deposits with NRB; or interest receivable portion). The specific details behind this amount may only become clear with the annual report or through direct inquiry with the company’s management.