Thanks Mahesh - one of my contacts who is a CXO at one of the above three said that the industry grows only at 3-4 % and one has to work extra hard to deliver a double digit revenue growth and its' not easy trading margins to growth.
Given that, it will be interesting to see what MPS has lined up. I am starting to worry if there will be a de-rating in multiples if this type of growth persists for a year - sort of like what happened to infy between 2001 and 2014.
FY15 Peer data of MPS have started coming in :
SPS :
On a volume growth of +6.2 %, company has delivered a negative value growth of -(2.17) %. Revenues stand at INR 203.85 cr. (FY14 = 208.38 cr.), EBITDA margin at 53.07 % (FY14 = 54.86 %).
Amnet :
Company has delivered a negative value growth of -(7.11) %. Revenues stand at INR 69.69 cr. (FY14 = 75.03 cr.), EBITDA margin at 37.27 % (FY14 = 35.86 %).
Hurix :
Company has delivered a positive double digit value growth of +14.82 %. Revenues stand at INR 69.02 cr. (FY14 = 60.11 cr.), EBITDA margin at 24.90 % (FY14 = 24.18 %).
@thestocklady, Thanks for your response.
many companies borrow between the year and return it before 31st March. Its a common enough practice.
Thus, you will see interest income but no debt when the accounts are finalized.
Company business
KLRF Ltd is a diversified company having interest in food, textile (Now closed as it was making losses) and engineering.
Its food division sells wheat, maida, sooji and aata under the brand ‘Kuthuvilakku’, ‘Kera’, and ‘Alaraman’. These products are packed in 5 kg to 90 kg bags (recently introduced 1 kg packs).
KLRF’s also has engineering operations that has interest in sheet metal fabrication like main door speed frame and cover printing machine. This division is also engaged in the business of iron castings. It exports iron castings to France and Germany.
It has nine wind mills with an aggregate power generation capacity of 6.25 MW. The company uses this for captive consumption for its engineering and wheat divisions.
Food division is located in Gangaikondan, Tirunelveli District, Tamil Nadu
Engineering division is located in Coimbatore, Tamil Nadu
Key Strengths
Established infrastructure from storage to warehousing of finished goods: KLRF’s food division has infrastructure from warehousing to storage of finished goods. Its warehouses can store upto 3,000 MT of wheat (raw materials) and has modern handling equipment. Its screen room, used for wheat cleaning and blending, has equipment to temper and blend 700 tonnes of wheat. Its roller flour mill has indigenous and imported equipment with capacity of 200 tonnes. It also has warehouses to store 2,000 tonnes of finished products.
Iron ore prices have decreased.
Key concerns
Engineering division
Availability of iron ore fines and scrap is the key requirement for foundries. Iron ore fines are the key inputs used to produce iron casting. Availability of fines at reasonable price is a key requirement for foundries.
The uncertain supply of iron ore to the industry and volatility in its prices impacts the operations of the industry.
Food division: Increase in the prices of wheat could impact the operating profit of the company
Other key strengths:
Equipped with modern technology for quality assurance:
To ensure the supply of high quality food products, KLRF has equipped its laboratory with equipment like rapid moisture testers, muffle furnaces, etc. and dough rheology testing including expamograph, photo calorimeter, sedimentation and maltose value estimation apparatus.
The textile division manufactured 100% cotton yarn in its two units. This division also had the latest machinery from Lakshmi Machine Tools, Reiter, Schlafhorst and Savio Orion. It also has a quality control and monitoring systems.
Trading income from the sale of coffee roasting and grinding machinery
Its sheet metal fabrication business has clients including Lakshmi Machine Works. Apart from having facility for sheet metal fabrication under one roof, this division trades in range of coffee roasting machinery of Probat Werke, Germany and range of coffee grinding machines of Mahlkonig, Germany.
Though this unit now appears to have been shut down.
Foundry has capacity to produce iron castings of 10,800 MT/annum. The company has an iron foundry that can produce iron castings upto 10,800 MT per annum. These castings are sold in domestic and export market.
Captive power (windmills) KLRF’s has 6.25 MW power generation facilities through its nine windmills. The entire production is used for captive consumption.
Increasing promoter holding Y-o-Y
Year Promoters
Mar-15 50.73
Mar-14 49.27
Mar-13 49.13
Mar-12 46.30
Mar-11 43.74
Mar-10 39.02
Mar-09 38.69
Mar-08 33.70
TTM eps is near about 10-11rs
Stock is trading at 57-58 rs
Book value is 55
ROCE stands at 12.5%
ROE is 13.88%
ICR is low at 2.05
D/E stands at 2.1
Debt at 48 cr as on March 2015
The management has been able to reduce the debt in last 4 years.
Food products from the company are available on some online sites
Due to the closure of textile division we might see the company making a turn around
Disclosure: Holding tracking quantity near 50 level. Will increase the holding as the conviction becomes stronger.
Please do your own research as the company is still at a nascent stage of a probable turnaround.
P.S.: Views invited
Recent management interview on Stake increase decision:
Suven has been granted a patent each by Eurasia, Europe, Israel and Macau for neuro-degenerative drug.
http://www.thehindubusinessline.com/companies/suven-life-gets-patents-for-neurodegenerative-drug/article7976497.ece
Let's not jump to conclusions.. Promoters are too smart to "force" a sale. The non reported part of the buy would likely have been distributed to Institutional investors and Hni's as well. Salil Singhal is In his 7th decade and would have his own motivations, which the market will doubtless query. This thread has sufficient discussion on the quality of Pi's business which I do not want to regurgitate. The question to ask yourself is this. Would I buy this business at the cmp of 600 plus minus 10 pc; would I be willing to hold it for the next 5 years if the markets were shut. Will this business compound at 20 or plus pc at superior capital return ratios; will the cash generated be deployed keeping in mind the interests of all shareholders; what superior alternatives do I have to grow my invested capital? In case you are unconvinced sell now and sleep well. I'm happy to hold on take decisions based on Business performance.
On an unrelated note, Cartica who came in this June have 3 other investments in India, Page, Eicher and Supreme Ind. As far as I know they are in for the future that they feel this Business has.
this perfect setup any kind of such sale...they might have contacted operator to do the sale...There are lot of examples of this kind(in the book Reminiscences of Stock Operator..must read)
