Hi Varun,

Since you have entered in Atul Auto and looking at tata Motors Could I request you to look at Force Motors and provide your Views.

I owned this stock for brief period in the recent run up and than sold it on its way down for small profit only.

The Reason of selling was

Just came across an old news article about their management purchasing an aircraft for their plant visits in Indore from Pune.

In their AR they themselves did not sound to optimistic except their Force Traveller

In their AR they had no mention of the Engine manufacturing for BMW and Merc.

The reason for taking a position was

Their Force Traveller is present all over Gurgaon
Now even Force Trax is being visible in various parts of Gurgaon
The News that they would be producing engines for Merc and BMW.(They also produces axles for
these luxury cars)
Promoter have increased their stake in last one year.

At one point of time I was invested in both Atul Auto and Force Motors but to me 3 wheeler Market over all is slowing down however the trend of Using Force traveller as shuttle and Cabs in IT and other Service industries is growing so I was biased towards this.

Regards,
Kapil

Here's another alleged swindler - R Subramanian of Subhiksha fame - arrested in a different capacity.

His namesake - Sundaresha Subramanian has a nice report here - Viswapriya case. R Subramanian had luminaries on the Board - R Narayanan, former chairman of Life Insurance Corporation; Raghavan, Retd chairman, Indian Bank, Rajaratnam, Retd Commissioner, Appellate Tribunal, High Court of Madras.This was the case in Satyam (prior to fraud disclosure) as well - the Board among other great greats was one Mr Krishna Palepu - a Professor at Harvard.

Mr Palepu's CV on his Harvard wall then read as follows:

"Professor Palepu's work focuses on how to make corporate boards more effective, and on improving corporate disclosure. Professor Palepu teaches these topics in several HBS executive educationprograms aimed at members of corporate boards: "Making Corporate Boards More Effective," "Audit Committees in a New Era of Governance," and "Compensation Committees: New Challenges, New Solutions." He also co-led Harvard Business School's Corporate Governance, Leadership, and Values initiative, launched in response to the recent wave of corporate scandals and governance failures." (Italics mine)

I wrote an email to him but quite expectedly got no response! It was sheer irony of the highest order that a Professor of Corporate Governance be sitting on the Board of the largest fraud firm, and in the Audit Committee

Warm regards,

Arun - Tata Motors has a great history. JLR is a recent addition to their business. It has a wealth creating chart and has made several investors who are holding it for decades quite wealthy. Even with Zero sales in China the stock is a clear buy. The big structural change and disruption acc to me is not wrt China now but shift in future to driver less cars for all premium car makers. That's a bigger threat than a small issue like China.

Hi,

I also pondered on this stock considering its valuation and market share. There is a huge margin of safety as far as valuations are concerned.

Sales have been consistently growing, crossing 5800 Cr in FY 15. This I guess is top most by a private player in dairy sector after cooperatives such as Amul (20K Cr), Mother Dairy etc.

EBIDTA - close to 10% - better than peers ranging in 5 to 6 %.

Historically company has been in B2B sector processing milk for Amul and later foraying into supplying milk products to organized retailers.

The present business mix is 70% B2B and 30% B2C along with 61% non-branded sales and 39% branded sales (Dairy Best).

The focus of the company according to recent presentation seems to be on
- Direct Procurement (presently only 15% is direct and target 50%).
- Focus on retail business - transforming from commoditised player to branded one - drivers are value added products, brand development, retail network strengthening

Debt levels are high but as voiced, considering growth these are justified.

The important aspect is that company tried raising funds by diluting stake twice
- Jan 2014 - Rabo Equity Advisors - Funds 500Cr @ Valuations 3500 Cr approx
- Sep 2011 - Funds 500Cr to 1000Cr - Either debt or equity
It would be worthy to find reasons for inability to do so since many other dairy companies raise funds at much better valuations except those were already in retail market chase.

http://www.vccircle.com/news/others/2014/01/21/news-roundup-kumar-birla-plans-sell-minacs-rs-1600cr

Also, there have been issues like operator scam etc in script where 50+ entities were barred from operating. The chart shows this with majestic fall of Nov '2011. Though the promoters seems to have come out clean, market still has given them clean-chit i guess considering valuations.

Heritage Dairy - trading at 29X
Prabhat Dairy listing tomorrow - 40X

Many other including Tirumala, Parag raised PE money at very good valuations in the past. It's been golden period as far as fund raising is considered for dairy companies. Though Kwality raised debt, it failed to raise equity.

http://www.moneycontrol.com/stocks/reports/kwality-presentation-upto-march-31-2015-1729161.html

Looking forward to inputs.

Disclosure - Invested.