Hello @manishinlucknow : Forgot to mention about promoter issues-------I said it is not so good that does not mean they are bad/very bad. Actually the books are clean(as the biggest IT dept officers did not get any issues in the books during the inspection in the latest IT raids----so actually the raid has indirectly helped retails/small investors to know that the books are okay , otherwise IT dept could have lodged case in High Court if they have got any major issue in company's books)------so the promoters are not fraud for sure and no major/proved crime/money laundering etc....but then also I said not so good as I did not get reply of my email which I sent to them(however this is not the only company from where I did not get reply, some good management also did not reply of emails) and they do not share their future growth plan(we are getting to know the 45% CAGR growth from result, but good companies give future earning estimate way before and shares the rough estimates, plans etc....which itself gives strength to the stock even before reporting the actual results----that's how market works, market discounts the future growth potential way before that happens actually)---but as Neo managements are not doing that, the stock does not get strength and investors are not clear about the future growth potentials----------------and also I don't like their process of paying dividend via cheques in today NEFT era---these the reasons why I did say they are not good--------not sure if promoters are doing it deliberately to keep price low and buying time to save money to buy the shares at low price------seeing the growth and books clean, every promoter will try to add more----------actually the Trivedi family has increased the stake in the company by about 3 % but then that they have bought from other small promoter group entity that's why no change in total promoter holding-------so this is also a positive that the founder Trivedi family has increased the stake and Son of MD Sunil Trivedi is also a director in the board , so successor plan is there and their son will takeover from father sometime in future------------so the bottom line is lets keep tracking this company and if debt are reduced, profitability improves, growth continues, promoter increases stake then we will get more confidence in the company------waiting for the SHP of Q2, hopefully we will see some positives(if not promoters then VLS finance must be increasing their holding)-----

Hello @manishinlucknow : Yes current debt level is high, current long term debt is around 190cr....actually company had reduced the debt in 2nd Q of FY2014-2014 but they have recently acquired Bangalore based IPC packaging Pvt. Limited and that is why taken additional debt again--------

Regarding : "the rise in debt is more than the rise in sales which is a clear negative for me."------as u know that the company's sales are growing at more than 35%(its 45% on consolidated level) whereas the long term debt has risen by 18% last year(from 160cr. to 190 cr). But yes, I agree that increasing debt is not good in all situation.....

Regarding issue of warrants: the main fact to see here is what will be the floor price of warrants---as per the shareholder approval , last time it was (INR 65, although it got postponed later due to technical reason)-----so for a stock trading at 40, why some big institution will buy the warrants at almost doubled price than market price(at that time the stock price was around 33-35)------two positives from here---

1)This premium says that company's intrinsic value is more than the CMP which will give confidence to the shareholders.
2)With 70L warrants at 65 , it will be around 45 cr., if company reduces the debt with that, then profitability will increase heavily.

Regarding "My question is - if the business is doing well and the profits are real then the debt is increasing."--------This is mainly happening due to the growth aspirations of the company, company is growing at brisk pace and recently entered to the South America and made a good base there-----so constant capital expenditure for new expansion, recent acquisition and delay in getting the payment from customers etc.

So what we can do is that, keep tracking this company and if they reduce the debt(which I expect if no more acquisition) and Promoters increases the holding and releases the shares(if the reduce debt and stock price goes up, % pledge will come down automatically) , then we can that the company is improving---------

Actually I am also monitoring the company closely, I have invested in this company does not mean I will have to hold the share if the company does not improve its business operations, financials.

Thanks all for the views.

Yeah agreed to your points with regard to debt. But I am not basing my decision only on PE investors. Not even a single PE investor going out says something which we as a retail investor may not know. If I were in their place and if there is no growth, I would use this opportunity to exit.

I feel, it might take atleast 5 years for the competition to catch up though not completely grab the market share, before which I suppose it might turn profitable.

Again in all depends on the valuations for the offer price!!!

has the big calcutta based investor in gruh exited ( as per market grape vine )

also see trailing stoploss..use it with GTD order..
this is best combination for any value investor...but if u r looking fr holding fr long term(basically to avoid capital gain tax of 15%) then it may nt b a good option as it will some day either achieve the target mentioned or stop loss wud b trigerred..
best fr investors who want to sell on a crash situation nd buy back after prices hav stabalised nd at lower levels..