Fund managers wary after governance lapses in Prabhat Dairy and Ashapura

Besides the core business going away, investors are concerned on how the sale proceeds will be distributed among the shareholders

The mid- and small-cap funds have started recovering in recent weeks, but fund managers have been taking a hard look at their portfolios. 

The move follows recent cases of corporate governance lapses in firms such as Prabhat Dairy and Ashapura Intimates, which led to heavy erosion in investor wealth. 

Fund managers say they have raised their guard when it comes to investing in small firms or those where there is little research coverage.

“Cases related to Prabhat Dairy and Ashapura Intimates have called for more caution. While bloated numbers such as capex and receivables, and high instances of related-party transactions