29.03.2020
*AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 38 :*
Related Party Transactions - Watch them Carefully

Related Party Transactions :

Related party transactions section is one of the essential parts of the annual report that every investor should analyze in detail as this can give a lot of information about real intentions of the management.This section discloses a summary of all the transaction done between the company and their joint ventures or sister companies where the promoters or their relatives or friends have a great influence.This information helps investors to conclude whether promoters are directly or indirectly benefitting from the company at the cost of the minority shareholder.

In related party transactions, many times, investors will find cases where the company has given certain amount of loan to a counter party and takes it back within the year. It might be that the company wants to help the third party with money but wants to avoid showing it as a loan in the balance sheet. If you observe such similar patterns in previous years' annual reports than such transactions need to be scrutinized as they can serve as red flags, raising doubts on management's intentions.

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