Hi Aniket,
Thanks for appreciating the effort.

1) Margins have improved for 2 reasons -
a) Proportion of conversion sales have increased, if you observe sales have come down while EBIDTA has increased.
For eg FY 13 had sales of Rs 46cr & EBIDTA at Rs 3cr while, FY15 had sales of Rs 24cr and EBIDTA of Rs 5cr.
b) Increase in lactose capacity exclusively for Kerry (from 3500tons to 11000tons).

As of now Lactose India numbers include lactose exclusively done for Kerry and small work for sanofi (pls refer Mitin's reply above). Bigger kicker will be higher utlisation of kerry capacity and Lactulose (which will happen over next 2 years). Many companies outsource smaller ingredient or component work to specialists take for Eg AIA engineering...what AIA does (grinding balls) constitutes small ( in terms of cost) for mining and cement companies but AIA enjoys very good margins with almost monopoly. AIA cost is small and sticky for mining & cement companies. Lactose India with high market share and long history could have been chosen by kerry for similar reasons. Rs 10cr for Kerry would be too small, while they get supplies from Lactose India (Pls refer to Kerry transaction to understand)

2) Yes you are right contracts into these companies would require significant sales effort and track record. Lactose does have a track record and Kerry approached them for capacity expansion. According to management many of their clients insisted Lactose India to manufacture Lactulose (Lactulose is 3rd derivation from Lactose after processing...pls google further to understand the same). Thus Lactulose capacity has been put up after such requests/demand from clients.
Pls go through their site www.lactoseindialimited.com....it contains good info.
Hope that helps.
Thanks.

And very curiously , Kerry had announced in an notice to Ireland exchange in 2011, that they have acquired Lactose India

http://www.kerrygroup.com/docs/interim-management-statements/IMS/Q3_2011_IMS.pdf

and same was also reported in an Irish newspaper http://www.irishexaminer.com/business/kfqlojsncwau/

And again same was reported in 2011 AR of Kerry,
http://www.kerrygroup.com/docs/reports/2011/Kerry_Group_2011_Annual_Report.pdf

but Lactose India finds no mention in 2012 AR of Kerry http://www.kerrygroup.com/docs/reports/2012/Kerry_Group_2012_Annual_Report.pdf .

So officially it's part of Kerry group now

The business prospects appears good, but given this kind of mis-information, I doubt if promoter can be trusted ?

Thanks Anil for your kindness. Very obliged

Since there is a lot riding on the Uplands project, I decided to call the project marketing/sales department to get some information in addition to what is already available on their site.

• Out of land area of 135 acre, the FSI is only 0.25, that is
  construction will be only on 25% of the area, leaving 75% as open
  spaces.
• Environmental clearance has been obtained. No other
  approvals are pending. Construction of the villas will start this
  month
• The Golf course is ready. Landscaping is ready
• Power and water connections are available.
• All permissions related to the land are available. The land is owned by another party (independent, not Arvind Ltd) which has 25% stake in the project, with 75% being with Arvind Infra. Arvind Infra is responsible for construction, sales and marketing. While master plan has been approved by the civic authorities , approval is awaited for some amendment that they made later.
• Total project is for construction of 800 villas, with 1st phase being 280 villas, whose construction will begin shortly. Possession will be within 36-42 months. The 2nd phase will be
  launched later (timeline not decided yet). The entire project will be completed by 2020.
• No debt is being taken by Arvind Infra (I am not sure how much to rely on this as the info came from the marketing department)
• 4, 5 and 6 bhk villas are available (no apartments). Plot area and construction area options are as follows (see attached file also)

o 4bhk
 (1) plot area 640 sq yard / construction area 325 sq yard – total cost Rs. 1.56 cr (excluding government costs such as stamp duty, registration etc., but including maintenance, club house etc charges)
 (2) 850/430 – 2.06 crores
 (3) 1128/430 – 2.4 crores
o 5bhk – 1500/550 – 3.13 cr
o 6bhk – plot area 2000-2700 sq. yard and construction area 675 sq. yard. Starting from 4.5 crores.

• No cash payment – all white (I checked this specifically). In all their projects it seems.

Rough back of the envelop calculations:
o Average constructed area per villa is appx. 616 sq yard which is 5544 sq ft.
o Average cost per sq. ft. works out to 4200 Rs.
o Average villa cost is Rs 2.25 cr. For 800 villas it is 1800 crores. 75% of which works out to 1350cr. Sort of gells with management presentation which gives their share of revenue as Rs 1200 cr.

This all sounds very posh and upmarket, however chats with a few friends in Ahmedabad indicate that such aspirational projects have a fair bit of demand in that area. If some board members are from Ahd, then their views are solicited.

Cant attach their presentation and floor plans as the file sizes exceed permitted limit.

Current Price List & Payment Schedule-Uplands.pdf (35.3 KB)

I think before you say that P/cash at 14 isn't cheap, I would really like to know what is cheap. That way, for all companies which have net debt, their market price is astronomical, as per your contention. There is the odd case where a company may have high cash relative to its marketcap (smartlink, Hindustan Zinc, NMDC), but that is hardly ever the case. Indeed, what is the point of holding large amounts of cash @8%, rather than returning it to shareholders.

I really don't think you should use such a metric.