This thread is starting to remind me of Jyoti Resin thread. Jyoti thread is full of negatives, most of them fair and to the point too. But stock is now roughly 30-40x from those levels since 2019. Just as a learning, I made a summary of the major negatives & positives that most of our boarders had posted in Jyoti thread. The negatives outweighed the positives easily by 2:1 or more. This post is not meant to offend anyone, but rather just highlight the perils of investing in small/midcaps.
Jyoti Resins. Concern around 2019…
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Not much business specific info from company. Same copy paste content in AR’s
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Huge receivable days (300)
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Promoters taking disproportionate salary, 1.07 cr on a profit of 1.05 cr in FY19.
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46 cr unpaid expense on liability on a revenue base of 50 odd cr.
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Sales promotion & target incentive stopped from 2018
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Last 7 to 9 yrs have negative OCF. 2016 had positive OCF but no explanation for the reason on sudden change.
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Random investment in other companies
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Multiple times Stock manipulation (SEBI).
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question on land reevaluation bloating the fixed assets and no real capex.
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Took loan for Audi & Merc from company accounts in FY20
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Cash taken out of company in FY21
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Company imports raw material, but “value of imports calculated on CIF basis” is NIL (FY21)
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Company claimed to have 1000 TPM capacity while EC was just received for 600 to 900 TPM capacity around same time
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Very high asset turn, similar to some trading firm.
Positives Ignored
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Promoter increasing stake consistently
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Product seeing improved distribution, as per scuttlebutt
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First IP, Q4’21 : company claimed to be the second largest wood adhesive. Quite a claim, since Fevicol is a household name.
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App developed for sales team. process improvement for order/collection etc around April’21.
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Fixed assets went up 4-5x between Mar’19 and Sep’20, whiles sales are up only 23%
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Receivable days downtrend from 300 days in 2018 to 129 in 2022
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Scuttlebutt : less amount of Euro7000 needed vs Fevicol for same work.
Someone recently told, in India we often try to match all 36 guna for matchmaking. But am sure, if we see all the happy and successful marriages which have lasted the test of time, not many will have the 36 guna’s matching. So it’s now upto us, we want to match 36 guna’s or look for a happy marriage.
Happy Investing !!
Learning for me ? Even if you invest in companies where there are lot of questionable facts, but there is something that appeals to you, take care of your allocation and exit decisions when proven wrong.
Disclosure : Invested in this, but missed Jyoti 
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