Have done deep dive in this company, studied ARs since 2015, last 2 available concalls & did some scuttle butt.
Key points from scuttle butt:
1. Domestic market : Good upcoming Brand, participating aggressively in all exhibitions. Have edge with CE certifications of key items.
2. Exports : 70% market is still with China, minor shift shall also help Indian players. Market is largely unorganized number of small players.
3. Safety shoes: Market shifting from traditional safety shoes to Lifestyle Safety shoes. Large organised players also eyeing this space. R&D shall be crucial. Bata Industrials loosing market share due to poor R&D.
My study of ARs raised 2 red flags, namely : Employees remuneration & concentrated holding with one investor (Jay Kumar Daga). Have written to management 5 days ago, sent reminders & called compliance officer as well, awaiting their reply.
Reproducing my queries, hereunder for mutual learning:
Dear Team Mallcom,
Let me introduce myself, i am an individual investor, recently learned about your company. Having taken a tracking position, i would like to invest more. Before i commit considerable capital, seek your response to following 3 main queries:
1. Employee Remuneration :
Basic data from Annual Report 2021-22 :
a) Total expenses on Salaries, Wages & Bonus : 1323.43 Lakhs INR (src page 78)
b) Remuneration paid to KMPs : 87.71 Lakhs INR (src page 81)
c) Means remuneration paid to non KMP employees : 1235.71 (a-b)
d) Total employees (permanent + contractual) : 2890 (src page 22) - 4 KMPs = 2886
f) Employees under Gratuity : 328 v/s 372 last FY (src page 80)
g) Average basic salary for employees in gratuity : 8844
Concerns:
1. Company is paying too low salaries to its employees. Based on the above data annual payout per employee is Rs. 42,817 (c/d).
2. Number of employees under the gratuity scheme is too low compared to total employees.
3. Number of employees under the gratuity scheme has reduced by 12% in 1 year , which is too high for a growing company.
4. Average salary of employees under Gratuity is close to minimum wages.
5. Data of employees under Gratuity is same under Consolidated & Standalone report, indicating lack of experience & expertise in subsidiaries.
Questions:
1. Is the company ensuring compliance to minimum wages to its employees as defined by Office of Labor commissioner, Govt of West Bengal wide Memo No. 108/Stat /2RW /9/2022 /LCS /JLC
2. Is the company verifying compliance of its labor provider to its contractual employees w.r.t. above referred requirements ?
3. What is the break up of Permanent & Contractual employees out of 2890 ?
4. What is the average monthly salary of a permanent blue collar employee ?
5. Have you booked workmen compensation under some other head as well under expense statements ?
6. Why has experience & expertise been consolidated in a Standalone entity, with no employee >5 years experience in subsidies ?
2. Largest Individual Investor:
Basic data (src. available annual reports)
- One individual NRI investor Mr. Jay Kumar Daga is holding 18.42% equity under public shareholding.
- Mr. Daga has done gradual dilution in his ownership from 22.44 % in 2015
Questions:
1. Is Mr Daga related to Mallcom's Promoter family ? please cover both friends & family part here.
2. Is Mallcom's management aware about any relationship of Mr. Daga with M/S AB Holdings ?
3. Availability of Annual reports : Since the company was listed on Calcutta & Delhi stock exchanges prior to 2016, earlier annual reports are not available on public forum. Hence request you to please share annual reports from 2006-07 to 2013-14.
Thanks for your patience in going through the queries & looking forward to your response. Am available in case of any clarity required on above referred queries.
Wishing you all the best for the growth of the company.
Kind Regards
Charanjeev Singh
Subscribe To Our Free Newsletter |