“India's first offline PMS” : The Millionaire Portfolio (TMP)

Interview with Nikhil Nanda, JHS Svendgaard

2011-02-10T18:15:00.000+05:30

Q: The sales are Rs 31 crore up about 90%, operating profit margin (OPM) improvement of 4% at this point, what has led to that?

A: Basically this has led to better efficiencies in terms of management of the capacities. We had put up huge capacities way back in 2008, they were not being fully utilised. We are getting better utilisation of the capacities in the current scenario. We expect the growth momentum to remain in there.

Even the new plants, which are coming up, are seeing a much faster ramp up than what we had initially planned or budgeted for. I think we have a very good going on the FMCG side, as far as the Indian market conditions are concerned.

Q: What was your average capacity utilisation in Q2 and what did it rise to in Q3?

A: We have been consistently moving up form somewhere like about 50% to 75% to 80% of the capacity utilisation over the year, when I say over the year meaning, starting last year to the current year.

Q: You last time told us that you have orders enough to reach 100% utilisation, by when do you think you will reach, will it be in FY12?

A: I think it will be safe to say that.

Q: Therefore, what kind of revenue growth you forecast for the current year, more importantly for FY12, when you will be utilising capacity?

A: In our case since the three units are getting merged and we will have the consolidated results at the end of the financial year. We have three plants primarily which makes toothbrushes, detergents and toothpaste and mouthwash, so we will have one of the units reaching or seeing close to 100% capacity utilisation. One of the units hitting a reasonable 70-80% capacity utilisation and the third one would also be starting up. So, we will see a substantial capacity utilisation of a reasonable percentage 30-40% at least to begin with in the next year. So, on a consolidated basis, the overall capacity utilisation for all across the plants on an average would be close to 65-70%.

Q: You have board approval to raise some money through GDR, ADR, what is the plan there, are you looking at some inorganic growth?

A: No, how it happens is that till last year, when the Sunset Clause for the tax units came in on March 31 in 2010, the units were not allowed for expansion. But in 2011 January, which is last month, the Ministry Of Finance has issued a clarification which says that the units which are already working in that area before March 31, 2010 can take up expansion in the products that they are manufacturing, which practically means from today we have nine years and two months of tax benefit available for any capacity increase we do.

On an average, it takes about a year to implement a project a one to one-and-a-half year. We still get eight years of clear time period for getting tax benefits even on the increased capacity. While most of our competitors including some of our principals to up their own plants, which have been set up way back in 2006, 2005 because the original Sunset Clause was not 2010 but 2007, so most of them came in 2005-06, they would finish their tax benefits by 2015.

So, even if they take up an expansion today, they will also take a one to one-and-a-half year. So, they will be left with only two-an-a-half years to recover the cost that they have incurred in terms of tax benefits which may not be substantial, while in our case it is eight years. So, we want to move ahead and grow capacities. Fortunately, the land we have bought currently is all on the main road. So the land behind us is land locked, so that is available for us to undertake any kind of expansions that we or our customers want us to do.

$Team TMP

Siva Group bets big on Usher Agro

2011-01-17T23:24:00.000+05:30

Ace investor and entrepreneur-backed group already has holdings in KS Oils and Ruchi Soya

Serial entrepreneur and ace investor C Sivasankaran Group firm has thrown more weight in the agro sector. After having picked minority stakes in top domestic edible oil companies, a group firm has acquired over 8% in cereals company Usher Agro.

Siva Ventures' wholly owned company Aiwo Ltd, that is into health food restaurant and spa business, almost doubled its holding in Usher Agro over the last three weeks through open market purchases.

Earlier, the serial investor's group firms had hiked holding in Baring Private Equity and New Silk Route-backed edible oil firm KS Oils to close to 9%, making it the second largest institutional investor in the company behind New Silk Route that held little over 10% in the company as of end September. His group firms had earlier also picked stake in another large edible oil firm Ruchi Soya.

Usher Agro, that raised Rs 100 crore through a qualified institutional placement in late November, was rumoured two years ago to have initiated discussions with private equity firms such as Blackstone among others to sell a large stake.

Serial investor Siva had been active in picking stake in listed companies in India in either sectors in which his group already has a presence or as sectoral play (as in case of oil). Most recently, his group firm acquired a small stake in Sujana Towers, a company that is engaged in manufacturing telecom and power towers. This gels with Siva Group’s privately-held entity Siva Projects Engineering and Enterprises Limited, engaged in developing passive infrastructure for mobile communication towers and related services including operations & maintenance for tower operators.

These investments are coming as the broader valuations in the stock market has corrected sharply by around 10% after matching the highest ever level, last seen in January 2008.

$Team TMP

REI Agro Q3 results - In line with expectations

2011-01-14T23:28:00.002+05:30

REI Agro had announced its Q3 results today. The company reported 960 crore in revenues and around 81 crore in net earnings for the Q3. While the numbers are significantly higher than the year ago period, the numbers show a gradual increase when compared with the Sep Qtr.

The interest expenses have once again increased from the previous quarter. The company has reported interest expense of around 73 Crore in Q3 compared to around 53 Crore in Q2. We expect that this spike is due to the increase in procurement that would happen at the peak season. The company has so far procured around 3.57 lac tons in the current peak season and aims to procure around 7 lac tons.

We expect the interest expense to moderate once the peak season procurement is over.

The company has also phased our of its leased capacities already and is completely moving towards operating only Own capacities. We expect the company to have Own capacities of 1.03 million tones by Apr 2011. The advantage of Own capacity against leased capacity is that the company will have absolute control over the Quality and the technology being used in the processing phase. As a result of this, the Head rice yield usually goes up.

The Head rice yield is usually 46% for leased capacities and around 52% for Owned capacities. With the Owned capacities coming in and with the leased capacities moving out, we expect the Head rice yield to move up by 3% in the Fiscal year FY '12. A 1% increase in Head rice yield directly adds 5 million USD to the bottom line, since the procurement cost of the paddy would remain unchanged.

The company has already reported a diluted EPS of around 2.4 and is well on course to meet our expectations of Rs 3 for the full year.

While everything with respect to the company looks promising, the only cause of worry comes from the point that the Basmati production in India and Pakistan has taken a hit. However, we continue to be bullish on this counter.

$Team TMP

Usher Agro ends a successful QIP

2010-12-04T12:20:00.002+05:30

Usher Agro has successfully closed its QIP. The issue opened on Nov 24 and closed on Nov 29. It seems that the company had received several bids and the QIP response was adequate.

Finally the company has decided to allot 1.07 lac shares to the successful bidders who will be known in few more days from now.

The company has successfully raised 99.99 Crore from the share sale at a price of Rs. 92.62

$Team TMP

News on Edserv QIP and KP

2010-12-04T12:19:00.001+05:30

Several media outlets have carried articles on involvement of KP in companies including Edserv and the mismanagement of the QIP. The mismanagement of the QIP stems from the point that the Sparrow India fund which was one of the institutions to take a stake through the QIP, exited the counter in weeks.

It is being alleged that the company had roped in a third party to get Sparrow India fund to the board so that QIP can be closed. While this has been news on the company, there are also rumors that KP continues to rig the prices of several companies and Edserv could be one of them.

The market reaction on Friday, where the counter tanked close to a 10% was on the above happenings and developments. However, the above news is reaching the broader participants only recently and hence the counter may continue to witness negative impact.

We have always advised that the counter will be very volatile and one should not have more than 10% allocation for this company to the portfolio or precisely say one can have somewhere around 7% or less. We continue to have the same stance on the counter and no immediate Buy or Sell is advised. 176 to 180 has been one of the strongest support and in fact the base for the last 1 year for the counter. The counter though can take a hit should be able to bounce back.

$Team TMP

Edserv – Allotment of shares and warrants

2010-12-04T12:17:00.002+05:30

Edserv has informed that it has allotted Equity shares and Equity warrants to a clutch of investors. The company has allotted 3.36 lac equity shares to several entities. It has also allotted 11.68 Lac Equity warrants to BCCL and HT Media. BCCL has taken up 7 Lac warrants and HT Media has taken up 4.67 Lac shares in the company.

$Team TMP

Dainik Jagran Invests Rs 10 Cr In Edserve Softsystems

2010-11-22T21:51:00.001+05:30

Publication firm Dainik Jagran has picked up a small stake in education and placement services firm EdServ Softsystems by way of conversion of warrants of Rs.10 Cr.

This is in addition to HT Media and Bennett Colman & Company (BCCL), who had also picked up stake earlier, all through equity warrants.

Through this, Edserv has now completed fund raising of Rs.130 Cr for pan-India expansion.

The entire fund-raising exercise included issue of 3.3 million fresh shares diluting the equity base by 22% of the post-paid equity capital, which at present stands at Rs.15.5 Cr.

Commenting on the completion of the fund raising exercise, Founder and Chairman of Edserv , S Giridharan told that the company is now well funded and is confident of achieving revenues of Rs.150 Cr and PAT of over Rs.40 Cr for FY 2011 and that the company will not go ahead with any more equity dilution. The founder has also categorically dismissed anymore equity dilution going forward, which is very much a positive sign.

$Team TMP

Insider Buying in Autoline Industries

2010-11-20T13:25:00.002+05:30

Two of the promoter group entities – M Radhakrishnan and Shivaji t Akhade have been constantly buying into the counter of Autoline Industries in spite of the counter hitting 52 week highs.

M Radhakrishnan has increased his stake in the company from .53% at the end of June 2010 to .81% currently.

Shivaji T Akhade has increased his stake in the company from 4.6% at the end of Sep 2010 to 4.8% currently.

There are also few things that we have to share with you. One is that the company threw up a big party to RJ few weeks back to celebrate the success of the company. Two is that they are probably close to identify the developer for the land and that are said to be in advanced talks with Godrej Properties. And we are not sure if one and two are related in anyway.

$Team TMP

Arshiya announces Q2 results

2010-11-20T13:24:00.002+05:30

The company reported a consolidated revenues of around 195 Crore and net earnings of 18 Crore and this compares with 178 Crore in revenues and 16.4 Crore in earnings for the Q1. There has been a steady growth in revenues and earnings and the growth is visible in both the regular Logistics division and its new Rail division.

The rail division continues to push the number by impressive percentage points, however on a lower base. The revenues from the rail division improved by 25% from 32 Crore in Q1 to 40 Crore in Q2. The company has been running its rail division with profits since it started few quarters back and not many can do it. It needs a lot of planning and strategy and that is something which Arshiya has proved to have again and again.

The company has reported an EPS of close to 6 for the H1. Our initial target for the full year EPS stands at around 15 and we continue to stay put with our targets. But for that, we would expect substantial addition in revenues and considerable addition in earnings from its first FTWZ which is currently operational.

The counter is currently available at a valuation of 18.5 times current year expected earnings and at around 12 times expected earnings for FY 12. We believe that the counter can trade at substantially higher valuations based on current year earnings itself.

$Team TMP

Spice results disappoints, fundamentals has already taken the backseat

2010-11-13T19:17:00.005+05:30

On a standalone basis, the company has reported revenues of 204 Crore and net earnings of around 46 Crore. The company has booked 11.4 Crore in Other income and 20 Crore in exceptional items. This would essentially mean that the company had reported net earnings of around 15 Crore.

The basic issue with the mobile segment of the company is that it is facing the fate of what our Telecom players used to face. They used to add millions and millions of subscribers every month with the ARPU s going down. In a similar fashion while Spice mobiles is actually selling more and more mobile handsets every quarter, the revenues continue to fall due to the fall in ASP s – Average Selling Price.

The ASPs have fallen from 2200 to around 1800 in the last 1 year.

While the counter has provided incredible returns in a short term, especially with the run up from 100 to 150 levels, we have always been cautious on the counter. We have expressed our strong concerns already through the last 2 Flashback reports.

The fundamentals of the company have clearly taken a back seat and it’s only buzz and hard selling that has been moving the counter. It was precisely for that reason that we continued to be invested in the counter.

While we expect a short term correction in the counter, listing of Micromax, listing of Spice Digital and fund raising plans for the company can provide some support to the counter.

$Team TMP

Usher agro spins out good Q1 numbers - (NOT A TMP COUNTER)

2010-11-13T19:17:00.002+05:30

Usher agro has reported total revenues of around 115 Crore, the highest ever quarterly number and net earnings of around 8 Crore. In comparison with a year ago period, the sales have risen by 63% and the net earnings is up by 47%. The growth in net earnings lagging behind the growth in sales is due to the additional interest expenses and depreciation. We expect this trend to reverse and the growth in net earnings will be better than the growth in sales going forward, with the expanded capacities coming into production.

Also, just as we noted in the report, the company’s revenues have been increasing basically on back of the improved utilization levels of the capacities it already has. And now, with the capacities expected to double either this month or next month, the company is expected to show gradual growth in numbers every quarter.

The company is June ending and the Q1 itself has been good for the company. Even with a run rate on net earnings, the company is expected to post 32 Crore in net earnings and the counter is currently trading at just above 6 times, which looks attractive.

$Team TMP

Globus Spirits provides stable earnings for H1

2010-11-13T19:16:00.002+05:30

Globus Spirits has recorded revenues of 105 Crore and net earnings of 6.24 Crore for the Q2. The impact of capacity expansion is not visible on the results yet. However, it should be noted that Q3 and Q4 or the H2 contributes for 60% of the revenues and the margins are also better.

The company has posted an EPS of 6.8 for H1. With the H2 expected to be better than H1, the company should be able to manage an EPS of around 18 for the current fiscal. If the expanded capacities have an impact on the numbers, it could be even closer to 20 for the current fiscal.

The company currently trades at less than 10 times the expected EPS for the current fiscal and the valuations continue to be attractive for Globus Spirits. The company currently trades at around 13 times TTM earnings and it should be noted that none of the profit making alcoholic beverage companies trade at less than 20 multiples.

$Team TMP

Edserv announces a strong Q2

2010-11-13T19:15:00.002+05:30

On a consolidated basis, the company has reported 27 crore in revenues and 9 Crore in earnings for the Q2 as against 20 Crore in revenues and 6.6 Crore in earnings. However, on a standalone basis the company has managed to post higher net earnings of 11 Crore. This is the first quarter where the company is reporting the consolidated number.

The management has quoted that it will stick to its target of 150 Crore revenues and 40 Crore in earnings for the current fiscal.

In spite of good numbers and our expectation that the company’s numbers will be good in the future as well, the counter has been under tremendous pressure. The counter can be having an overhang of the equity dilution that has taken place and that is being proposed.

Also, on the other hand, the high level of sundry debtors can be a cause of worry. Since the contracts with the Indian government for Vocational training makes up around half of the revenues, sundry debtors can be high. In this contract with the Labor department, the company is usually paid once the course is done and the student is certified as pass.

$Team TMP

Autoline announces stable Q2 results

2010-11-13T19:13:00.002+05:30

Autoline Industries, one of the recent entrants into TMP has come with a stable set of numbers. The company reported revenues of around 160 Crore as against 145 Crore in Q1 and net earnings of around 9 Crore as against 10.23 Crore in Q1.

The small drop in net earnings can be attributed to the way in which the tax expenses are being booked. The company preferred to book 2.56 Crore in tax expense for Q2 as against 24 lacs in Q1.

At an annualized rate, the net earnings would stand at around 38 Crore. However, we expect the company to post stronger numbers in Q3 and Q4 and we expect the company to end the current fiscal with net earnings of more than 45 crore.

The company has also made the following announcements –

TATA Motors, European Technical Center, United Kingdom has approved for supply of Foot Control System for Indica Vista Electric Version and received Business Nomination letter.

Lear Corporation, a 15 Billion $ USA based Company and leader in seats for various types of vehicles, has given first Purchase Order for seat frames modified Project and annual business.

The net worth of the SZ Design Srl has been eroded due to various write offs. The original promoter of SZ Design, Sri and ICON Developments, SA has initiated Arbitration Proceedings against Koderat Investments Ltd and 3 of its Directors and first Arbitration hearing is scheduled in Milan, Italy on November 19, 2010.

$Team TMP

JHS Svendgaard sees 30% of revs coming in from int’l ahead

2010-11-11T12:49:00.002+05:30

JHS Svendgaard has announced its second quarter results. The company has reported net profit at Rs 4.5 crore versus Rs 80 lakh, a growth of 462.5% on year-on-year basis.

Nikhil Nanda, MD, JHS Svendgaard Laboratories in an exclusive interview on CNBC-TV18 spoke about the company’s second quarter results and what the road ahead was.

Below is a verbatim transcript of his interview with CNBC-TV18’s Reema Tendulkar and Gautam Broker. Also watch the accompanying video.

Q: For the entire first half you have done about Rs 65 crore in terms of revenue. Would you like to up your FY11 revenue guidance of about Rs 80 crore now?

A: That is the guidance we have given at the beginning of the year. We feel we should continue with the growth momentum and we should be able to surpass that number.

Q: Do you think you will be able to stretch your revenues to maybe Rs 150 crore?

A: I would not like to give out any number at this stage but we will definitely be going beyond what we had target initially at the beginning of the year.

Q: What has the international growth been like? We understand that you have recently launched a subsidiary in the UAE to gain a larger presence in Asia and the Middle East. How much of that will start contributing to your revenues down the line and what percent do you expect international revenues to contribute to your topline?

A; Going forward for the next three years, we are confident that we should be getting close to 30% of our revenues from the international business alone. That is the next three year projection that we have. We have got some very good response in the international market.

We expect that there will be some movement of the Chinese yuan, so we will have even better competencies in the international arena as far as India and we in particular are concerned.

Q: Would this be primarily a contract manufacturing for other companies or would you be looking to launch some brands and have tie-ups with other companies?

A: We are concentrating on our core competency of doing contract manufacturing for the companies and retail stores. We have got a huge order book at present which includes a lot of enquiries as well.

Q: What does the order book stand at and potentially how might that increase?

A: As a business model, we are into contract manufacturing business. We are bound by certain confidentiality agreements so we are not able to give out the details till the products have been introduced in the market.

The only thing that we can say is that what we invested during recessionary times and building a huge manufacturing set up and it is actually beginning to pay off now. The decision in retrospect is we took a right decision and we have a fairly decent size of order book and a lot of enquiries which in times to come, would mature into real time orders.

Q: Because of this large capacity expansion that you had undertaken, currently the utilization is quite low. Where does it stand for the second quarter and maybe by the end of the year what would your utilization stand at?

A: Currently, we are trailing at around 55-60% of our capacity utilization and within a year’s time we should be doing about 80% of our capacity utilization. We still have a longer gestation period because the chemical products have a lot of stability issues and the stability tests.

Although the order books are there, the actual capacity utilization would take longer because of the product nature which requires accelerated stability test of a couple of months.

$Team TMP

Will achieve full-yr revenue guidance of Rs 150cr: EdServ

2010-11-11T12:47:00.003+05:30

EdServ Softsystems has declared its results for the quarter ended September 2010. It reported revenues of Rs 27 crore in Q2.

In an interview with CNBC-TV18, S Giridharan, Chairman & CEO, Edserv Softsystems gave his perspective on the quarter gone by and the road ahead.

Below is a verbatim transcript. Also watch the accompanying video.

Q: Can you explain this quantum jump that you have seen in your revenues and also in your profitability?

A: As itself we have been driving our business in our three principal business streams. One is the school expansion under the name Vidhyadhana and vocational training by the Government of India, Ministry of Labour relationship and on the online services including education placement by lampsglow.com

Now in terms of the Q2 numbers we have been steadily growing on a sequential basis ever since the last quarter of last year. So if you look at the jump from the previous year, yes it has been a large jump. But on a sequential basis it has been a steady rise thanks to the IPO that has been done last year. So there has been a good set of numbers.

In the last three quarters it has been steadily growing in all these three business streams. Wherein schools and government engagements have been stories in the last three quarters and there has been a huge jump as well as the last year is concerned. But on a sequential basis there has been a steady growth.

Q: If you can tell us what contributed to the revenues – this time you have posted revenues of Rs 27 crore versus Rs 11 crore. Vocational training is contributing a large chunk of your revenues. At what pace is that vertical growing for you?

A: In fact if you look at three business streams, as I just explained to you, vocational training continues to contribute better than this, and in this particular quarter it has been around 43%.

The other two business streams have been equally contributing around 27-28% each. If you look at and compared to the last year of the same quarter it has been because the Vidhyadhana school expansion has been entirely our new business compared to the last year.

However, the vocational training had been there and since the third quarter of last year there has been a steady jump. So, overall if you look at it, the two business streams are contributing significantly higher compared to last year and we are able to see that huge jump now.

Q: We understand that you have also lined up a board meeting very soon where you will be considering issue of securities. What is it that you are targeting by way of fund raising?

A: We had actually earmarked Rs 130 crore as part of our overall project expansion plan. There has been a small residual amount which we are trying to fill out with some issue of warrants. We have been on a very aggressive campaign mode this year.

So against that we would be looking for a small portion of warrant. The details I am unable to divulge at this stage because a committee has been established which would meet very soon to really discuss and finalise the exact numbers.

Q: Would you hold on to your full year revenue guidance of about Rs 150 crore?

A: Yes. Having got this type of numbers in the two quarters now in this year, our third and fourth quarter will register the planned kind of growth, having significant relationship with the government engagement including Gujarat order as well as our other online portal wherein we have made significant inroads in North and western India with a lot of dealer distribution network.

Vidhyadhana is going well with an estimated target capacity of over 8,000 private schools in Tamil Nadu alone and another equal number of schools in AP. Our own target has been little in excess of 150 schools.

So with all these things coming up as we plan we are very confident of achieving the guidance as we have quoted as Rs 150 crore on the topline and in excess of Rs 40 crore on the bottomline.

$Team TMP

Handset, retail, VAS biz under one company: Spice mobile

2010-11-05T18:26:00.002+05:30

Q: If you can take us through what the restructuring plans are for Spice Mobility?

A: Spice Mobility has three divisions - the mobile device division, the retail division and the value added service division. We have put all these three divisions through a reverse merger into one company and we have changed the name of Spice Mobile to Spice Mobility. We are getting the company ready for the mobile internet business in the future.

With the licenses of 3G, Wi-Max coming in, India will see the internet revolution by 2011. In India we are trying to ensure that Spice Mobility is at the helm of this new revolution.

Q: We were expecting a Spice Digital IPO, when is that slotted?

A: We are waiting for the reverse merger to be completed. All the legal part is finished but still the new shares have to be issued. We hope by November 15, the whole process will be completed. As soon as the process is completed, we are going to apply for the approval of Spice Digital’s shares. In the meantime we are trying to do some pre-IPO sale of Spice Digital and we are trying to put about 15-20% shares before the IPO into the market.

Q: If you can take us through the rationale of why you have done this reverse merger? Are you looking to unlock some value or some potential fund raising in this company for your expansion plans?

A: This reverse merger is basically to bring these three divisions together which are device, retail and VAS. In the mobile internet field it is a device lead strategy where the applications and services are provided through the device so you need to have VAS.

Apple for example has services which are in the device itself. If you look at the new iPad it does not even have a SIM card and it works through Wi-Fi. Retail is going to be organized retail where people can go and experience what the device can do and how they can connect with mobile internet.

Q: Will these synergies be able to help you improve your margins in the first quarter? They have declined quite significantly, we understand to about just 3% versus 7% on the year-on-year quarter?

A: yes, it will help not only our margins but it will also help our revenue. This year we are hoping to be a million dollar company in terms of revenue.

Q: Have you done any valuation in exercise of Spice Digital? Can you share some numbers with us?

A: We cannot share numbers but the last report we received from an investment banker put Spice Digital at Rs 1,600 crore.

Q: Of the three units that you have - value added services, digital as well as retail where will the thrust be? Is there a relative emphasis that you will be placing on any of them?

A: No, that is the beauty of it. They are all interconnected. You can’t say the device is selling because of the application only and retail is important to let the customer know how the device will work. So the customer has to be taught how the device has to be worked.

Q: We understand there is an acquisition hunt also on at your company. What kind of companies are you looking at? Do you have a short list or is there an area in which you are looking for acquisitions?

A: Yes we are acquiring companies both in India and overseas. For Spice Global we had acquired a company in Singapore, then Malaysia, we have now signed an agreement to acquire a company in Thailand, Cambodia, Vietnam, Myanmar and Indonesia. In India, we have acquired two retail companies, we are in the process of acquiring a VAS company and on devices we have a strategic tie-up with two more companies.

Q: You said you are planning to be a billion dollar company by the end of this fiscal. We understand you had revenues of Rs 250 crore in the first quarter. Do you think that’s going to be the ramp up that you are going to see in revenues?

A: That revenue which you saw in the first quarter is based only on Spice Mobile services. It does not take into account the total company availability.

Q: What's the consolidated revenue profile for the second quarter?

A: I can’t give you the second quarter figures. We are going to release that on November 13.

$Team TMP

Ak Capital announces Q2 results

2010-11-02T20:22:00.005+05:30

We added this little known counter into TMP just 3 months back and today it has more than doubled. We also carried on article pondering upon the idea if any PE re rating is actually happening in the counter. The article can be accessed HERE. And believe it or not, that’s what seems to be happening in this counter.

The company recently announced its Q2 numbers. The company clocked revenues of around 47 Crore and net earnings of around 16 Crore. While the revenue number has been more or less varying in a 10% band, the net earnings have clearly improved. The company has also been reducing its debt and that has been helping the net numbers.

We expect the company to post around 60 Crore in net earnings for the current fiscal and the company is currently available at less than 10 times the valuation. There is a chance that the counter can manage to go up still and cross the 1000 mark, especially with the planned QIP.

$Team TMP

Edserv board meeting on Nov 10

2010-11-02T20:22:00.002+05:30

Edserv Softsystems Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on November 10, 2010, inter alia, to consider, approve and take on record :

1. The Unaudited Financial Results of the company for the Quarter ended September 30, 2010.

2. To take record on statement of utilisation funds of Public Issue, Preferential issue and QIP issue.

$Team TMP

Globus Spirits board meeting on Nov 12

2010-11-02T19:51:00.003+05:30

Globus Spirits Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on November 12, 2010, inter-alia, to consider and take on record the Un-audited financial results of the Company for the 2nd Quarter and half year ended on September 30, 2010 and to discuss and approve the scheme of arrangement providing for demerger of demerged undertaking of M/s. Associated Distilleries Ltd. with the Company.

$Team TMP

Kavveri announces Q2 results

2010-11-02T19:02:00.005+05:30

Kavveri Telecom has report standalone revenues of 63.4 Crore and earnings of 9.43 Crore for the Sep qtr. While the revenues have witnessed a growth of around 6% from the year ago period, the net earnings have come down by around 7%. This can largely be attributed to increase in raw material cost.

If looked at a sequential point of view, the company’s numbers are impressive. However, that may not be the right perspective to look at Kavveri, due to the seasonality (order inflow) attached with its business.

If looked at a half yearly point of view, the company has not still reported any impressive positive growth. We believe that the valuations of the company can improve from the current levels, only with the growth coming in.

But one good thing to note is that the company has received 46 Crore from the promoters towards the issue of equity shares and warrants.

$Team TMP

AK Capital board meeting on Nov 1

2010-11-02T19:02:00.002+05:30

AK Capital Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on November 01, 2010, inter alia, to transact the following business:

1. To Consider and approve the un-audited financial results for the second quarter ended September 30, 2010.

2. Consider enhancement of investment / inter corporate loan limits to Rs. 500 crore in subsidiary Company(s) / associate Company(s) subject to approval of shareholders through postal ballot.

3. Consider and approve delisting of equity shares or the Company from Delhi Stock Exchange Association Ltd (DSE).

$Team TMP

Fedders Lloyd announces Sep qtr results

2010-11-02T19:01:00.002+05:30

Fedders Lloyd has reported total revenues of 188 Crore and net earnings of 11.4 Crore for the Sep qtr. This compares with 161 Crore and 8.46 Crore in the year ago period. While there is considerable growth from the year ago period, sequentially both the revenues and the earnings are down by around 20%.

However, this has to do with the seasonality of the HVAC business where the demand is usually sluggish in the Sep and Dec qtr. We currently expect that the company can post net earnings of around 50 Crore for the fiscal year FY 11 and is available on a valuation of 6.4, which looks cheap.

It is this valuation gap that we were expecting to get a fill up and which can make the counter reach 140 or 150 kind of levels. However, technically the counter has never been strong for several months now. Our expectations and our targets continue to remain the same, while we are not really sure of the movement of the counter.

$Team TMP

SAST disclosures pound REI Agro

2010-10-23T12:04:00.002+05:30

The SAST or the Substantial Acquisitions of Shares and Takeover disclosures has pounded REI Agro on the BSE Website. The promoters have been involved in heavy buying all throughout the month of Oct. They have involved in close to 15 transactions on several days.

The promoters have in all amassed 93 Lac shares from the open market in the month of October alone. Two of the promoter group entities – Aspective and Shree Krishna Mills were used for these transactions. As a result of this buying, the promoters stake has increased in the company by 1%.

$Team TMP

Kavveri Telecom in tie up with Vascom group of Canada

2010-10-23T12:03:00.001+05:30

Kavveri telecom said on Friday it has tied up with Valcom Manufacturing group of Canada to provide high-technology products to the defence industry.

Financial details of the agreement were not disclosed in the statement to stock exchanges. Kavveri Telecom produces radio frequency products and antennas, while Valcom Manufacturing makes defence products for the wireless industry. This tie-up will enable Kavveri to provide the high technology products to the Indian defence industry.

$Team TMP

Regulating MFIs will bring transparency: SE Investment

2010-10-21T00:09:00.000+05:30

Trouble is brewing in the microfinance space, not just with the SKS Microfinance controversy, where the CEO was sacked, but off late from Andhra Pradesh and other parts of the country, who are talking of capping interest rates for microfinance companies. Sunil Agarwal of SE Investments in an exclusive interview with CNBC-TV18’s managing editor Udayan Mukherjee says that it has capped its lending rate at 26% and does not give out loans to customers over that limit.

He also added that because of a few smalltime players, the industry at large was getting a bad reputation. “I would think any transparency coming into this sector is a welcome move as it will strengthen this sector. It is for the long-term development of any sector that there are certain transparencies and if there are any doubts which the general public has in its perception, it should be rectified immediately."

Below is a verbatim transcript. Also watch the accompanying video.

Q: Are you troubled at the kind of newsflow which is coming in? Do you think it’s a matter of time before rates get capped off for your sector?

A: Even if the rates get capped off, all the organized players are playing within a bandwidth of maximum, 24% to 26%. For SE Investments, we have a max-cap of around 26%. We don’t do any funding over 26% to any of our customers in any of our schemes. So really, it doesn’t matter to us. All the organized and good quality players are working within this interest rate bandwidth. The problem is for a few very small players which are trying to spoil the reputation of the sector.

Q: The industry leader SKS is already talking about reducing rates by a couple of percentage points. Do you think most of you will have to do that?

A: Even if we do that, there are enough volumes and margins to sustain the profit figures. I don’t think it would really matter as far as the shareholders wealth is concerned. If we talk in terms of listed space entities, it will not matter majorly because in spite of the volume growth, it is more than sufficient to cover up all the shareholders expectations.

Q: The Andhra Pradesh (AP) government is talking about a new ordinance that regulates MFIs. Is that disturbing news that the entire rule structure or regulation structure within which you operate might actually be laid down for you now?

A: My company doesn’t operate in AP at all. From whatever little I have been able to understand, it is more of a disclosure method, that we need to display what are our working procedures, what are our interest rates etc. I would think any transparency coming into this sector is a welcome move as it will strengthen this sector. It is for the long-term development of any sector that there are certain transparencies and if there are any doubts which the general public has in its perception, it should be rectified immediately. So I would rather welcome any such move to bring about transparency.

Q: There has been some talk that maybe the government will say - if you are access bank finance then the rate should not exceed 20-22%. Do you think that could be some kind of a workable formula or is it too extreme?

A: I would not like to mention anybody specific but I am in touch with a number of people from the sector. The priority sector lending is where companies are coming at 13-14% which is not a priority sector rate, but a commercial rate being charged by the banks.

Something which should be done is - they can say if your cost of funds from institutional borrowing is ‘X’ amount, you are allowed to charge at max this kind of a spread over and above that.

Q: And what could that spread be in your eyes, which is doable for microfinance companies?

A: Any proper microfinance company has a huge operational cost given the kind of small loans, kind of small installments which has to be collected. All those operational costs are inbuilt into the interest rate. We cannot say Rs 10 is our installment collection charges. The kind of customer we deal with would not understand this. They need a simple product where they have taken Rs 10,000 loan, they need to repay Rs 200 per week for ‘X’ period of weeks, and this is what they understand in most simple terms.

I think going by the industry standard anything around 6-7% is what the operation cost is, maybe 1% plus-minus depending upon the size and area of operation where company is entering in. The government will have to understand the need of microfinance institutions in this country.

It is 60 years that we have been independent and our banks in spite of their most sincere efforts, out of three lakh villages, only 6% are served by banks. As microfinance institutions we are trying to fill in the bridge. We need strong encouragement from the government which has always been coming over the last few years. These small controversies, which have crept up on the sector in the last few weeks will definitely settle in a few weeks to come.

Q: Is there a process of dialogue that you have started with the government in the last weeks-10 days as microfinance companies as a body?

A: I am not aware about it but I am sure the government is in touch and lots of big leaders have gone and met RBI. Otherwise also we have been regulated by RBI. RBI has its own robust system of supervision in controlling any NBFC for that reason, why only microfinance non-banking financial companies (NBFCs).

$Team TMP

SEIL announces record date for Share Split – Nov 1

2010-10-21T00:08:00.000+05:30

S.E. Investments Ltd has informed BSE that the Board of Directors of the Company at its meeting held on October 18, 2010, inter alia, has considered and approved the record date as November 01, 2010 for sub-division (stock split) of the Equity Shares of Rs. 2/- each into 2 (Two) Equity Shares of Re. 1/- each as considered and approved by the Board of Directors in its meeting held on July 05, 2010 and subsequently approved by the shareholders in the annual general meeting held on September 13, 2010.

$Team TMP

SEIL announces Q2 results

2010-10-21T00:07:00.001+05:30

* S.E. Investments posts 217.87% hike in H1FY11 PAT

* Half yearly PAT crosses full last year’s PAT

S. E. Investments Ltd., a leading financial services company that emphasizes on micro credit, announced its financial results for the quarter and half year ended September 30 2010. SE registered an enormous 217.87 % hike in its PAT in the H1 FY 2011, which stands at Rs. 3489.52 lacs as against Rs. 1097.76 lacs in the same period in the previous fiscal.

The company’s Net Income from Operations in the H1 FY 11 of the current fiscal stands at Rs. 8553.62 lacs, a massive hop of 133.94 % from Rs. 3656.26 lacs in the previous fiscal. Announcing the results, Mr. Sunil Agarwal, Managing Director of S. E. Investments Ltd. said, “We are extremely pleased with the result and going forward we are looking to step up the pace of our operations”

Some important highlights during the year

1. United Bank of India has sanctioned and disbursed financial facilities of Rs. 500 Million to the Company

2. SE announced that Punjab National Bank, one of the company’s major credit loan providers, has enhanced the Fund Based Limit from Rs. 300 million to Rs. 450 million and sanctioned Term Loan of Rs. 600 Million.

3. SE Investment's board confirms to change the name of the Company from S. E. Investments Limited to SEIL MICROFIN LIMITED or SEIL MICRO FINANCE INDIA LIMITED, subject to the approval of the authorities.

4. SE Investment's board confirms the interim dividend declared and paid by the Company in January, 2010 as the final dividend for the year ended 31st March, 2010.

5. SE Investment's board confirm the interim dividend declared and paid by the Company in January, 2010 as the final dividend for the year ended 31st March, 2010.

6. To increase borrowing limits of the company upto a sum of Rs. 3,000 Crore.

$Team TMP

Capacity utillization to improve dramatically going forward.

2010-10-14T22:07:00.002+05:30

JHS Svendgaard is one of our recent entrant into TMP. We continue to be bullish on the long term prospects of the company and the business in which it is in.

We believe that in the Sep quarterly results, we will be able to see the impact of "Tide" order on the company's books. This was something that was probably not present in the previous quarter results. There are very good chances that the company will declare its highest quarterly earnings this quarter.

Q: Take us through the recent expansion, we understand that you have got a fairly big order from P&G, what is the order size and therefore what kind of revenue growth can you look at in this year?

A: We are working very closely with a lot of brands and I would not ideally like to pick and choose on one of the companies and say this is what we are doing because with all of them we are bound by NDAs which is non-disclosure agreements.

But yes, the company is doing very well, we have invested a lot of money in the last one year and continue to do that, build up capacities which are probably one of the largest in their category in the tax-free zone and fortunately because the tax benefits have been eliminated from March 31, 2010 for all new units. So we are already there, so we get that benefit for next ten years, so there is nobody who could probably come up and compete with us in that space in the next ten years.

Q: What is the percentage gain you have because of the tax advantage?

A: The tax is about 70% of the MRP. There is a tax rate of 10%. So 7% on the MRP which is a huge amount because most of the brands if you go by the basic calculation, their costs are divided into four parts. One is the basic cost of the product, second is the margins across contribution for the company or the brand owner, third is the trade and distribution margins and fourth is the sales and marketing cost which includes ad budgets and things like those - the product cost of 25-30% of the MRP, so considering that 7% on MRP would mean close to about 21% of the cost of the product which is very high.

Q: You do a lot of contract manufacturing for the bigger FMCG players, what are your plans for the company taking your own brands forward, are you looking at entering that space and perhaps try and market your own brands?

A: As far as the company is concerned, we are very clear that we will be not competing with our own brands, with any of the product categories we currently operate in which is oral care and laundry but yes, we have tied up with a US brand which is called Infectiguard which is a hand sanitizer brand and is number three in the US as per ACNielsen data so we have introduced that brand in India in a very small way and we are trying our hand into product categories which do not conflict or compete with our existing customers.

Q: Your Q1 results showed a huge jump in sales and profits, was that the result of the new expanded facility and what kind of revenues are you targeting in FY11?

A: Giving out forward looking statements would not be very conducive at this stage. But I can say we will continue to grow well and the reason is you will have to go a little back into history when we were setting up the facility in 2008, the markets were everywhere in recession and we were investing heavily into building up capacities and we did at the right time looking.

In retrospect I would say because now that could not have been done and it is only when the market came out of recession in late 2009 that people or the brands we were talking to who were planning to launch their products way back in 2008, revived their plans to relaunch them some time in 2009 end or 2010 early.

In the case of contract manufacturing there is a gestation period because we need to do the trials, stabilize the product and then introduce it in the market as per the requirements of our customer, so that probably takes 3-6 months time before a new product comes into the market and it shows on our books.

Q: What did you do, you doubled your capacity, if you cannot give us an idea of how much your revenues might increase, can we assume that Q1 would be prorata?

A: We were running at about very low capacity utilization in 2008 and 2009. We had put up a huge capacity to do 300 million brushes but we were not even utilizing 25% of that and it is now that we have a order book which would probably take us to about 100% capacity utilization in next two years.

Q: Your margins would be pretty stable, most of the raw material price hikes would be passed through to your clients?

A: Yes. We have a monthly reconciliation with all our customers. So our margins remain the same, the RM and the PM which is the raw material and the packaging material cost changes as per the market trends.

$Team TMP

REI Agro – What to expect going ahead?

2010-10-11T19:43:00.002+05:30

REI Agro, this is one business and one company that we liked so much. When the entire world was writing this story down pointing towards huge equity dilution, we asked so what? And only days back along with the result update, we reiterated our targets of 50 and 60 in 12 to 18 months.

Just HOLD on and we will be there a lot sooner.

Q: Your sales were down about 14% can you take us through why?

A: As part of our expansion project, where we are modernizing-cum-expanding our existing unit, we had shutdown our first plants in the early part of the second quarter as a result of that production has also come down and thereby sales.

Q: What were average realizations like and how did they compare with the same quarter last year?

A: Average realization in the domestic market has gone up by about 10 to 12% in the export market in the same region. I think we have been able to pass on the price increase in paddy as well as rice to our buyers.

Q: Are prices going to be firmer in the third quarter given the way trends have been in the international market?

A: Early trend show that Pakistan has been quite adversely affected with the floods which should be beneficial to the country. Our survey shows that there is not a huge increase in Basmati paddy production this year. We believe that it is stable to a little down from last year. That would result in prices going up further in international market.

Q: Your margins have improved partly because interest costs have come down—your interest cost still remain though at Rs 53 crore. Would they come down substantial after the recent equity raising that you did for the rest of the year?

A: Interest cost was about Rs 90 crore in the first quarter, which has come down to about Rs 53 crore in this quarter. The repayment of debt has helped in reduction in interest cost. What we must consider that this reduction is there only for two-months wherein we had raised our rights issue in July. The effect of reduction in debt is only two-months but our borrowing are down and our debt equity is close to 1.1% which is 1.1 times, which is probably one of the lowest in the history of the company.

Going forward, we feel that there will be increase in borrowings little bit because of increased purchases for the ensuing procurement season.

Q: You did about Rs 157 crore in PAT in fiscal year 2010. In the first half of this year already done Rs 133 crore do you think you can beat last years numbers by substantial margin by the time fiscal year 2011 is out?

A: We have already done 90% of last years PAT. We are quite bullish that we should be able to maintain this sort or margins as well as growth momentum.

Q: So you think FY11 PAT will top Rs 250 crore?

A: I do not want to give any numbers but you have already seen the performance of first half and I think this strength should continue.

Q: Your profits will be much higher but your equity base has also gone up. On an EPS basis do you think the earnings growth will take care of the dilution that you had post the rights issue?

A: Definitely because we had done the dilution keeping in mind that this will result in increase in equity but correspondingly our profit will also grow quite substantially from hereon.

$Team TMP

Arshiya Intl eyes raising funds from mkt by Apr 2011

2010-10-11T19:42:00.002+05:30

We just wrote 2 or 3 days back that a technical move is pending in Arshiya International which can take it to 350 rupees. And the one that we are seeing currently is the technical move and it could well take Arshiya to 350 and closer to 380 rupees.

We had also expected to book profits in Arshiya when the technical move completes. However, with the recent developments that you will find below, we will continue to HOLD this counter.

Below is a verbatim transcript. Also watch the accompanying video.

Q: Could you provide us with an update with the Mumbai SEZ and how many warehouses are currently operational and what is the gameplan going forward?

A: We just launched in the middle of August our first Free Trade Zone. This is the first of five that we plan. So four warehouses are what we are operating currently and we have got customer cargoes flowing in.

This is actually sub-section 7A of the SEZ Act called the Free Trade and Warehousing Act, what Singapore and Dubai and all these countries have. We have just started and we are servicing 400-500 customers from across the globe. That could redefine the way they can bring in products and now leverage in India as their trading and distribution hub for value addition which was not possible until the launch of this first zone of ours. So this is India's first Free Trade Zone that we have launched.

Q: By when do you expect the other phases to get commissioned in this Mumbai SEZ?

A: The whole park is about 165 acres which will have about 20 warehouses and we have just launched the four in phase I and over the next 20-25 months we will complete the whole zone.

Our second Free Trade Zone we will be launching in Khurja which is a 300-acre integrated facility that will have a Free Trade Zone and also a domestic distripark connected with a 55 acre rail terminal. We are also a pan-India rail service provider and we are operating 15 trains currently.

But the totality of the infrastructure services that we will bring to India will include the Free Trade Zone, domestic ditriparks at five locations in India. The west being Mumbai, the north being Khurja, Central India in Nagpur and then Chennai and one more in the East which we haven't decided yet and that will all be connected to our rail.

We are a 10-year old logistics company providing supply chain services, freight forwarding and IT services that will all connect into this infrastructure. So Khurja will go live for us in the North in April 2011 timeframe when we will launch the first phase, similar to what we have done in Mumbai.

Q: So what kind of revenues are we looking at in FY12 in the next fiscal?

A: Last year we closed the year at about Rs 505 crore of topline with Rs 65 crore of PAT. But that was without any infrastructure services that we launched over the last 16 months, we have added 15 trains.

So we are looking at a very healthy growth as all of these infrastructure have come into play. I am not at liberty to forward speculate the numbers. But we registered about 40% of compounded annual growth rate over the last six years before FY10 and we only think that we would beat that number going into the future.

Q: So would you need to tap the capital markets for any fund raising for all these initiatives?

A: The phase I for Arshiya which includes the rail and these three Free Trade Zones and also one domestic distripark, is a Rs 2600 odd crore project which we have already infused the kind of equity that we need and we are running at 2:1 debt equity ratio.

So we are fully funded for that first phase. However Chennai is on the anvil and also the expansion considering the phenomenal success we are seeing with the Free Trade Zone being operational in Mumbai, we might be out looking in the market some time in the March-April timeframe in 2011.

$Team TMP