- Parekh Aluminex Ltd.
- DFM Foods Limited
- Philips Carbon Black Ltd
- Relaxo Footwear
- BLB Ltd
- Tyche Industries
- Noida Medicare Centre (NMC) Ltd.
- Mahindra Holidays & Resorts India Limited
- PAE Ltd
- Interlink Petroleum
1) Parekh Aluminex Ltd.:
Parekh Aluminex Limited is the largest manufacturer and exporter of Aluminium Foil Containers (AFC), and also one of the biggest manufacturers in Aluminium Foil Rolls (AFRs) and Aluminium Lids, in India.
2) DFM Foods Limited:
DFM Foods Ltd is an India-based company. The Company operates in two business segments: Wheat Trading and Snack Food. During the fiscal year ended March 31, 2009 (fiscal 2009), the Company produced 3,605 metric tons of snack foods. During fiscal 2009, the Company purchased 4,905 metric tons of wheat.
DFM FOODS LIMITED was incorporated in the state of Delhi on 17th March, 1993 as a Public Ltd. Company, and has been promoted by The Delhi Flour Mills Co.Ltd., Shri R.P. Jain and Shri Mohit Jain. The company was primarily involved in Flour Milling and manufacture of Snack food products. The two divisions of Flour milling and Snack food products were purchased from the promoter Company The Delhi Flour Mills Co.Ltd. as running concerns.
The Delhi Flour Mills is actually the pioneer in the introduction of Snack food products in India. Most of us still remember the brand names like CRAX, NATKAT, which we used to eat during childhood. The company has been doing quite well with its Extruded Snack Foods division. However, it was the Flour Milling/Wheat trading division of the company that was pulling down the profits.
A look at the income statement for past 4 years suggest that it has been growing at a good pace with top-line increasing from Rs 26 cr (FY2005-06) to Rs 78 cr in FY2008-09. Even the bottom-line improved from Rs 30 lakhs to Rs 2 cr for the same period. But, there was still something which was not allowing the company to record better margins. A net profit of Rs 2 cr on sales of Rs 78 cr is very low, making the business risky, no matter how much growth you record. A look at the segment results suggest that on sales of Rs 23 cr for wheat trading the company faced a loss of Rs 3 cr, while on the sales of Rs 53 cr under snacks division it recorded profits of Rs 5 cr. Thus the margins for Snacks division are good.
But, the company has finally understood the negative bearings the Wheat trading business was laying on the overall profitability of the company, and has thus suspended it completely. The management sensing the demand for its Extruded snack products embarked upon a capacity expansion plan of Rs 13 cr. The effects of suspension of wheat trading division and increase in capacity are clearly visible. For the half year ending the Sep'09 the company has already recorded a net profit of Rs 2.18 cr, higher than the net profit of Rs 2 cr for the entire Financial year 2008-09. The sales for snacks division are also higher by 20% at Rs 29 cr in comparison to Rs 25 cr.
Going forward I see a healthy growth of 20-22% for the company on account of further expansion of sales of existing products, introduction of new products, geographical expansion and upgrading technology in manufacturing. Since the consumers of snack products are largely children in the urban areas, the growing population of such a lot provides ample opportunity for the company to maintain the growth rate. Also, at an annualised EPS of Rs 4.38, and with the CMP being 50, I find the company a reasonable buy for the medium term perspective.
3) Philips Carbon Black Ltd :
Philips Carbon Black is an RPG group company; a dominant player in carbon black in India. Phillips Carbon Black Limited (PCBL) is India's largest and the world's 8th largest carbon black company. It is not only the largest exporter in Asia, but also commands a market share of 41% in the domestic market. The company develops, manufactures and markets various grades of carbon black. The major market for carbon black is the tyre industry.
PCBL has three manufacturing units located in Durgapur in West Bengal, Cochin in Kerala and Baroda in Gujarat. A fourth unit at Mundra, in Gujarat, has been commissioned in October 2009. Total production capacity of the company is 360,000 MT per year. PCBL generates power using fuel gases released as a by-product of manufacturing process of carbon black. After meeting the internal demand, the surplus power is sold. The total power generation capacity of the company is currently 60.5 MW with the recent commissioning of 16 MW CPP at Mudra.
The company had registered good set of numbers for FY 2007-08 over FY 2006-07 with the substantial improvement in margins for the same period, however in FY 2008-09 carbon black companies were severely hit by cancellation of existing and future orders, particularly during October to December 2008 which created a panic situation and overseas carbon black manufacturers started dumping carbon black in India. Thus, ripple effect of global financial meltdown started impacting domestic carbon black prices and demand. Philips Carbon too had to bear the brunt and suffered a loss of Rs 64 crore during FY 2008-09.
Now, the economies world over are reviving and the way the domestic auto market registered growth, the demand for tyres too witnessed a surge and thus for Carbon black. As mentioned earlier the company commands a market share of around 40% in the domestic market, the effects of which are visible in the performance of the company for this fiscal. For the nine months ending Dec'09, the company has registered a net profit of Rs 86 crore on a turnover of Rs 912 crore. The company has been able to maintain margins to the tune of 8-9% which is rather good considering it's into commodity business. A large domestic share helps it command pricing power to a certain extent.
At an annualized earning of Rs 110-120 crore, the company is quoting at a multiple of 5-5.2. The company is in the process of further expanding the capacity by 50,000 tonnes, for which the QIP issue and preferential issue of warrants has been approved. The price has been fixed at Rs 196 and considering the valuations and current market price, the downside risk seems limited while there could be a 30-40% surge.
4) Relaxo Footwear:
Relaxo is the fastest and now the largest wholesale footwear company in India. The company caters to the middle segment of the market. The comapny is now venturing into Retail too and has about 78 stores in NCR and north India. The comapny is divided into two verticles and I am the business head of the Shoe Division. This divison is markets the leading brand of Sparx and Schoolmate.
Relaxo stepped into the footwear industry in 1976. It started off with the manufacture of Hawaii slippers and subsequently diversified into manufacturing casuals, joggers, school and leather shoes. It has experienced a record-breaking growth rate of 4800% within the last 10 years! From a modest sale of around Rs. 1 million in the year 77-78, it has today crossed the Rs. 4000 million+ figure.
Relaxo is a brand in itself, but it is one of those brands that caters to the need of masses. It has never tried to establish itself at the higher end of strata, but does high volume business with the lower-income group people.
5)BLB Ltd:
company engaged in providing stock-broking and allied services to investors, apart from specialized trading activities like jobbing and arbitrage. At BLB Limited, Equity Research is a passion;
A significant portion of the Company's income is from the trading operations in secondary market, which also reflects from the fact that the margins of the company hover in the range of 1-2%. The Company has already wound up its Retail and Institutional Broking divisions due to lack of opportunities during the Financial Year 2008-09 and was in the process of surrendering the depository participants of the National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). So, going forward effectively all the earnings shall be from trading operations.
6)Tyche Industries:
Tyche Industries is a premier manufacturer of Active Pharmaceutical Ingredients, Nutraceuticals, and Fine Chemicals. At Tyche, we consider no challenge to be insurmountable and are driven by a fierce commitment to find innovative ways to surmount them. It is this focused commitment that has helped us in developing several innovative Fine Chemicals and Intermediates.
Tyche Industries (SIRISSOF) was incorporated in 1998 as Siris Soft, which was promoted by Gokuraju Ganesh Kumar and B. Kasi Raju. It was established as a software company but later on was diversified into the manufacture of fine chemicals. The company got its present name with effect from December 2004. Its commercial production commenced from August 2005 and it dispatched its first export consignment of 5 tons of Glucosamine HCL in September 2005.
7) Noida Medicare Centre (NMC) Ltd.
Noida Medicare Centre (NMC) Ltd. was established on 27 April 1990 with the setting up of a 68 bedded first multi-specialty Corporate Hospital in U. P., having the only whole body CT Scan in NOIDA at that time. The hospital has now grown to be a 120 bedded centrally air-conditioned multi-superspeciality Hospital.
NMC is the first hospital in the State of U.P. to have the distinction of being granted official recognition in 1998, by Government of Uttar Pradesh to carry out kidney transplantation. It was also the first corporate hospital in Noida at that time, however with the passage of time, and with increasing population, many such hospitals have come up in the region. To name a few Max Hospitals. Metro etc.
The NMC group has many other centres to its credit, however as they all are localized in the NCR (National Capital Region) region, thus it is not yet recognized as a national player. The few other centres established by it are as below :
8) Mahindra Holidays & Resorts India Limited:
Mahindra Holidays is one of the leading leisure hospitality providers in India & Is a part of the USD 6.7 billion Mahindra Group, which is one of the leading and one of the largest business groups in India. Mahindra & Mahindra has a successful track record to be the Market Leader in each segment. Apart from Mahindra Holiday's, Country club (CCIL) is the only other major and established player listed on bse, as we have already covered CCIL in our previous post & the same can be access on site. The sector is still in its nascent age, but is surely gaining grounds slowly and steadily specially after the economic revival. This sector basically caters to the needs of HNI's (High Net worth Individuals), Corporate, NRI's etc but now many mid-class specially working couples from software’s industry are getting attracted to the lucrative offers made by these companies, many free gifts like laptops are given on subscribing to their offers. But this sector has immense potential going forward because the number of people in the high income bracket will increase and consequently the demand for such recreational facilities. Their membership usually is for 25 years and once the customer pays a onetime upfront fees subscribing to their membership then the relation lasts long, with the subscriber just having to pay an annual membership fee, which does not cost much but can generate a lot of revenue for the company when the number of members are more. Adding to that another source of income will be from new customers which are regularly added every year.
9)PAE Ltd :
PAE Ltd. is not into Solar Panels manufacturing on its own. On standalone basis, it is in the business of marketing and distribution of Lead Acid Storage Batteries to provide power storage in power back up systems. In addition to batteries, PAE also buys and/or builds power back-up systems from manufacturers and sells to OE, dealers and end users. It also provides total power solutions to end customers by doing installations, commissioning and service of large power back-up systems.
So, basically it is into power related business, but most of it is in the form of distribution and marketing. This is also evident from its low margin results. On a net sale of Rs 250 crore for FY 2008-09, it could only make a net profit of Rs 5.36 crore. Now, the most important thing is that the company has forayed into Solar Panels manufacturing, but not on its own, rather by taking a controlling interest (51%) in Shurjo Energy Private Limited, which was in need of funds to expand its capacity to 10MW from 2MW. In terms of the agreement, the company has totally invested Rs 5.06 crore in Shurjo Energy for acquiring 51% stake in the company.
10) Interlink Petroleum
Interlink Petroleum is a Gujarat based company which was a moreover like a closed chapter till 2008. Interlink Petroleum ltd (IPL) came into limelight when Singapore based Jit Sun Investment took over this company from its earlier promoters. But before discussing further on takeover of management lets first dig into company operational areas.
In mid-90s IPL was allotted two-fields. These are Modhera Oil Field and Baola Gas Field. Both these fields are located in the Cambay Basin and both are proven fields.
Modhera Oil Field: Last seismic survey was done on this field was in 1971 by ONGC, in those days surveys were very primitive so its findings are not worth anything. However, other companies having fields in the vicinity of Modhera, HOEL have done 3D seismic surveys & found extractable reserves of oil in that area.
Baola Gas Field: In this field ONGC had dug 6 wells out of which 2 wells, Baola-1 & Baola-5 were operational till 3 years ago. Thereafter some water channels have interfered with the gas flow & so production had to be stopped.
But because of paucity of funds with the promoters, the old promoters were never able to exploit these fields commercially.
