MD as risk!

Any company that raises capital from the public has to give an exhaustive list of risk factors that an investor might encounter while investing in that company. Such disclosures, which have to be mentioned in the company’s red herring prospectus, normally talk about the company’s business model, debt, pending litigation and so on. Recently, P C Jeweller, which tapped the capital markets for equity, listed its first risk factor as the “remuneration of our MD”. It read that the salary of the managing director, Balram Garg, had been increased before the initial public offering, and that could “have an adverse effect on our profitability and results of operations”.