Thank you so much for the update. Invested in CP since ~200 levels and it is great to hear from someone who has interacted with the management.

Hi all, this is my first post here. I hope I am compliant with all the rules for posting.

Has anyone been following Indian Terrain lately? The company has done very well in recent quarters. However, while going through their Annual Report for 2014-15, I noticed that accounts receivables have been piling up humongously in the last three financial years. In fact, the Accounts Receivable for FY 2014-15, at 95 crore, is now almost 30% of the total annual revenue of the company, which stands at 290 crore!

That means a full 1/3 of the revenue is not even coming in as cash but is 'expected' to come in. That naturally means that the profit figure of ~18 crore for the last year does not even fully exist, as it presupposes that these accounts receivables would translate into cash sometime down the line. Normally, I am not too worried about this, but the issue is that while FY 13-14 to FY 14-15 saw an increase in sales by 58 crore, the accounts receivables went up by 18 crore. Again, a full 30% of the increased sales have not been received in cash.

I thought this was extremely strange as people going to Indian Terrain stores would obviously be paying upfront for the product. If at all, the only explanation I can think of is that franchisee stores are not paying the company. I don't see why this would happen, as the company would surely have some arrangement to not give their franchisees inventory without any payment or why they would continue having these franchisees when they're not giving their due to the company. Now the question remains, a lot of franchisees would have to be screwing up in order for 90 crores of receivables to pile up.

So, keeping this in mind, I wrote to the CFO / Company Secretary J Manikandan. I received no response to my email, therefore I sent a physical hard copy of the email to his office address. It was delivered and received but I received no response again. The portion of my email dealing with this aspect is detailed below (for hard numbers):

Under the “Assets” head of the Company’s latest Balance Sheet, Item No. 2 pertains to “Current Assets”. Thereunder, it is stated that “Trade Receivables” have increased from INR 77.11 crore on 31 March 2014 to 95.62 crore on 31 March 2015. A further look a Note 16 which specifies details of Current Assets shows that “Others” has increased from INR 71.23 crore on 31 March 2014 to INR 91.04 crore on 31 March 2015.

A perusal of previous Annual Reports evidences that this is a trend that has been accelerating over the last three years. The AR 2013-14 shows that trade receivables of the “Other” category have increased from INR 61.80 crore on 31 March 2013 to INR 71.23 crore on 31 March 2014. The AR 2012-13 shows that the same has increased from INR 56.26 crore on 31 March 2013 to INR 61.03 crore on 31 March 2013.

Therefore, the increase in trade receivables of the “Other” category increased by 8.4% in FY 2012-13, 15.20% in FY 2013-14 and 27.80% in FY 2014-15. Further, this increase of INR 19.81 crore in FY 2014-15 is more than the entire net profit after tax of the Company, which stands at INR 17.98 crore.

In this regard, please clarify what this “Others” category represents? Whether the Company is having issues with recovering dues from its customers? If it is assumed that the Company only operates self-owned stores and sales are made on cash basis to customers, why has Accounts Receivables been increasing at such an accelerated rate?

Anyone as any thoughts on this? Is this normal for garment retailing companies?

Someone has written that it's next auropharma.. Just want to know what makes people say this

What are the next plans co has. Has anyone interacted with mgt?

Snapshot from AGM in Mumbai On Sep 25 2015.

The company got award from Business Today in SME less than 100 Cr category. It share enclosed article which provide information about industry size, growth and other players.
http://www.businesstoday.in/exclusive/best-smes-in-india-2015/india-best-smes-winners-2015-control-print-basant-kabra/story/223923.html
(Unfortunately, I lost my pad which has all points and the enclosed note are based on memory and has substanstial scope of errors on Figures. Please note that while reading the notes).
The following were other discussion points:
1) The company has increased market share from 7-8% in 4-5 years back to 17% in FY15. The growth in industry is linked to industrial production. Typically, industry growth 2-2.25X GDP/IIP growth. The company has advantage against other competitor as it being able to indigenous the production. However, other players have manufacturing facility in China which has very large scale advantage. Control Print aim sales growth around 15-20%.
2) The company make profit from selling consumable (mainly ink). The raw material for ink are mainly petrochemicals. Like in normal toner, it is difficult for the user to switch from printing machine supplier to other players, same applies to this industry as well. A typical printinng machine currently price at around Rs 2-2.5 with life of 15 years (some well maintained machine are running even after 20 years of operations). During the year, consumable used by a machine are around 30-40,000; so over life of machine, the company make revenue from AMC/Spare/Ink of around 3.5-4 Lakhs over period of 10 years. In industry like Cement and Chemical, life of printing machine is around 6-7 years while in other sectors life is longer.
3) The key factor driving demand in industry is Identity (or tracability), regulatory requirement and industrial growth. Tata Steel and HLL are the largest client to the company. Top 10 client contribute around 25% sale of the company. The company serves Lafarge/ACC in Cement, HLL/P&G/Emami/Godrej Consumer in FMCG (ITC and Nestle are serviced by other competitor Markem and Domino respectively), Finolex/Astral in Pipe sector. Current population of machine serviced by Control print is around 5,000 units with every year sales of around 1,400.
4) Realisation per printing machine is a hybrid figure and not much can be infered from same. Like in case of Maruti, average car Realisation without product mix does not make sense, same applies to the company.
5) Current market size is around Rs 650-700 Cr. The company intends to increase market share and also plans to move in exports market like Bangla desh, Pakistan, Myanmar and Some African countries. The German partner is more concerned about developed market. Further, the customer decision to purchase has more to do with service company provides.In Export market, the company market product through dealer expect in Sri Lanka where it has own subsidiary. It spent around Rs 2 Cr and expect Rs 5 Cr (not sure on these numbers) sales in first year of operation (FY16). However, due to teething problem, the sales may be lower than Rs 5 Cr. Current exports is around Rs 5 Cr which also company is attempting to increase.
In India company has 100+ Engineers and 70+ Sales manager. The engineer training in initial years took great efforts. However, with experience the engineer resolve problem with very limited support from central office. In particular region/segment, a good Engineer support may be a key decision for buyer.
6) The company currently have three plants. With Guwahati plant operational, it has closed production in Vasai Plant. Vasai plant would remain back up for printing consumable (ink/spare) manufacturing in case some issue with Guwahati plant. Guwahari plant capacity is sufficient to meet next 3-4 years requirement for inks. Guwahati plant would have 10 years of exemption from IT till 2015.
In HP plant, the company manufacture printing machine. Current capacity in single shift is around 2,000 machine. So with marginal capex and double shift the company can easily meet requirement for 3-4 years. HP plant tax exemption is expiring in 2017. In HP, there are restriction on storing inflammable chemical quantity (which are used from ink) and hence company decided to manufacture ink at Guwahati
The company does not envisage major capex in next 3-4 years. In Guwahati plant, it spent Rs 19 Crore as capex. Guwahati facility is capable to manufacture printing machine but company intend to keep same at HP as of now.
7) The company has no long term debt. all the debt are working capital debt
8) The legal and professional increased due to usage of service of a reputed solicitor for Arbitration with Videojet. That was one time and expected to resume to normal level.
9) The CFO cum CS resignation was due to going beyond board delegated authority. Also, the adverse Secretarial Audit report was a consideration in discussion. The company is presently looking for professional independent CFO and CS. There was no financial issue with CS/CFO.
10) The working capital for company is streched as it need to service at various location of client's plant as well sales depot sufficient spare of all products. That result in increase inventory and would continue to remain so. However, the product categories were increased from 3 to 9 during last 3-4 years. At initial stage, the company has to maintain sufficient inventory to meet customer requirement. As business grow, the inventory holding period may decline marginally. In any case, no increase in inventory holding shall be expected. FY15 being the largest level. On obsolesce, the company had asked Haribhakti to independently assess fixed assets and inventory valuation in FY15. Haribhakti conducted audit with 100% location for value of 90% of inventory and found inventories valuation being proper.
11) On receivable write off, there were couple of old customer whose due company written off. Although company has taken legal step, as a prudent accounting, it decided to provide for same during FY15. We shall expect normal bad debt going forward.
12) There were question about promoter issuing share at lower price and shareholder did not given opportunity to participate. While company management did not commented much on same, it did said that pricing was in line with SEBI formula.
13) The company fulfill criteria to be listed in NSE. They already have given reply to NSE queries. But for some minor issues, the company expect NSE listing in FY16.
14) The margin in printing machine are relatively lower. However, margin are better in consumable. As company's share of consumable increased, that has driven margin in last 3-4 years. The company expect Machine to contribute around 30% of sales and Consumable at around 70% of sales and see no major change in margin (expect for scale and efficiency in manufacturing)
15) There was demand for bonus/spilt in silver jubilee year. Management said would consider and revert.
16) Three to four member asked about why warrant were given the management when already sufficient amount was with the company. Management did got the message and hopefully would not see further dilution in future. There was also enquiry about Cairn India share held by company and mark to market loss.
17) While generally shareholder appreciated Rs 4 dividend payment, sought higher amount in context of EPS of Rs 20 per share.
18) All finance related question were answered by Mr. Jangid, while operational question were answered by Shiva Kabra. Shiva is a young competent/confident Director. I got confidence after talking to him. In fact post meeting, he spent almost more than 60 minutes with interested shareholder explaining their question on business.
19) Company did not address issue about Real estate development although there was question about same,
Personally got comfort from discussion in AGM and more after discussion with Mr. Shiva.

There's no specific pattern to torrent pharma. In short term the stock seems weak but there seems to be buying support nearer to 1380-1400 levels.

The main thing with stocks where newsflow is likely to be strong and forthcoming is that any news of an ANDA approval can bump up the stock price in no time.

The current scenario is the time when one must study the story more closely and try to make a case for or against the investment in the company.

disc: invested and adding more recently in the correction.