Friday, April 29, 2011

HERITAGE FOODS (INDIA) Ltd - A Star in Making











Heritage Foods(India) Ltd - may be called as a unique listed company .This is because of the nature of its integrated operations in agri related sector. This company is promoted by Mr Chandra Babu Naidu - former chief minister of Andhra Pradesh.Company having four divisions- Dairy Business,Retail Business,Agri Business and Bakery Business.



DAIRY DIVISION






Heritages Dairy business having one of the largest network in India for collecting,processing  and supplying milk. It span Across Andhra Pradesh, Tamilnadu, Karnataka, Kerala and Maharastra and consists of a number of collection points 12 packing stations, 75 chilling centers/bulk coolers,4 ice plants ..etc.Company sells Milk and Milk Products including Ghee, Paneer, Ice Cream, Cooking butter, Lassi, Doodhpeda, Fresh Cream, Curd etc.It is very difficult for any company to set up such a large supply chain which is crucial for the success of any company in Dairy business.Company also exporting Heritage Pure Ghee and Heritage Butter in Bulk and Consumer Packs from two of its units located at Tirupati and Chittoor. Company also established about 1000 'Heritage Parlor's to sell its value added dairy products across south India.


RETAIL DIVISION





Under the retail division company is selling Groceries ,fresh fruits and vegetables. Under the brand "Farmers Pride”, company offers a full range of staples like rice, pulses, spices , dry fruits..etc Company operating retail stores in two formats - Flagship store (2500 Sqft) where it sells Fresh fruits and vegetables, grocery, processed food, cleaning aids, General merchandise, bakery, dairy, beverages, and frozen food and 'Daily'format stores(1000 sqft) where it sells foods and vegetable items.In total ,company owns about 80 retail stores.

AGRI BUSINESS DIVISION







Through Agri business division ,Company having strong presence in contract farming of vegetables and fruits. These items are selling through its own retail stores. Vegetables and seasonal fruits are produced through contract farmers and then it reaches at pack houses via collection centers strategically located in villages for washing, sorting, grading and packing and dispatch to the retail stores .This backward integration ensures the  freshness of vegetables and fruits sold through retail stores.Agri division activities are based at Chitoor (Andhra Pradesh), Kolar (Karnataka), Krishnagiri (Tamil Nadu) Medak and Nalgonda in Andhra Pradesh .Company having two pack houses one at Mattam and other at Mulugu. Heritage also having a Poly Green House facility for Production of Vegetable Seeds for supplying to farmers engaged in contract farming.

BAKERY DIVISION







Bakery Division  is relatively a new initiative of the company ,Currently this division operates at 14 company-owned stores in Andhra Paradesh and it is planning to expand it. This division also running Hyderabad’s first Premium Bistro as “ Heritage Bon Sante Bistro” in Jubilee Hills.

What is special with Heritage food ?


This company is growing as a one stop shop for daily needs through its various verticals. This integrated business model which includes farming,processing ,retailing ,baking and diary - Heritage is a company with no comparable listed players.It is very difficult to replicate a supply chain created by Heritage which connects the farmers from remote villages with the consumers of Metros.Only negative side of its operations is the poor performance of its Retail division which is eating a major portion of the profit generated by the dairy division .After the dismal performance of retail division last year ,now company took many cost cutting efforts and even closed down some shops which are unviable. As a result ,in the December quarter loss of this division has come down by 50%.For the nine month ended December ,Heritage posted a turnover of Rs.788 Cr and a net loss of Rs.46 lakhs.It is expected to back to black on a full year basis and post good performance going forward.Any chance of a turnaround in Retail division or a separation of this division from the main company will surely changes its fortune.Chances of such a move is very high in future. Stock price of Heritage foods moved up in recent times and it is trading around Rs.234/- .Any correction below Rs.200 should be consider as a buying opportunity with a four digit price target in five years.

Thursday, April 28, 2011

VESUVIUS INDIA

I have recommended a BUY on this company @ Rs.251/- on April 8 ,2010 .Currently it is quoting around Rs.371/- .Company is continuing its steady performance in its top line and bottom line and it is expected to show the same trend in the future.Recommending a HOLD at CMP

Old Report is re produced below
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VESUVIUS INDIA - A WORLD CLASS COMPANY

Vesuvius India is a part of U K based COOKSON group and one of the largest manufacturer of Refractories in India .In 2008 Cookson aquires foseco hence
two companies (Vesuvius India and Foseco India) are operating in India under the same parent. But the product line of these two companies are different and
are not competing each other. Vesuvius India makes high-end refractory products,flow control systems and services.These products are used by steel manufacturers using the continuous casting process for manufacturing steel.
Since most of the steel producers have switched to this technology company’s products are in good demand and the increase in steel production due to the revival in core sector will help the company a lot in future.Cement,glass,foundry and
petrochemical industries are also using company’s products. Company’s main plants are located in Kolkatta and visakapatanam. Strength of parent and its leadership position in refractory products with strong R&;D is expected to help the company
to add more products to its portfolio.Company has posted a turnover of Rs.364 crore and a net profit of 37 crore last year.company’s year ending is in December .Next financial year Vesuvius is expected to perform even better mainly because
of the improvement in steel production where its products are used.Vesuvius is an excellent MNC company available at a P/E of just 13 which is at the lower end for a
company like this.CMP is Rs.251/-

Tuesday, April 26, 2011

NEULAND LABORATORIES LTD - REPEAT

Earlier this scrip was recommended as a BUY @ Rs.119 and also requested for book profit @ Rs.156/- .Currently it is quoting around Rs.127 /- .I feels it is the time to re-look at this stock for buying for decent return in medium to long term

Old Report HERE

Sunday, April 24, 2011

NILE LTD - RESULT UPDATE

I have covered NILE Ltd in one of my old posting when it was @ Rs.115/- .( Read it  HERE) .Currently NILE is quoting around Rs.165/- .Company declared its full year numbers on Saturday.Backed by the surging prices of lead and lead alloys which is two of its major products,.company posted robust numbers this time .For the full year ended March 31.2011,NILE posted a turnover of Rs.300 Cr v/s 145 Cr and a net profit of Rs.7.17 Cr v/s Rs.3.24 Cr .Full year EPS is Rs.24/- .Company also declared a dividend of 20%

EASTER WISHES TO ALL


Saturday, April 23, 2011

SAH PETROLEUMS LTD -BUY





SAH Petroleums is relatively a new comer in the business of blending and marketing of automotive engine oils .Company already having presence in industrial lubricants,Transformer oil,White oil  and rubber process oils.
Company having two units ,one at Vasai and other at Daman.SAH marketing its products under the brand name 'IPOL'. Even if this industry is lead by multinational companies like Castrol and other PSU oil  companies  ,Sah could survive and grow steadily in past few years.Considering the potential of the industry and the prospects of the company ,in 2008 Sah Petro was taken over by NAVIS CAPITAL ,a private equity player based in Malaysia. Navis is one of the largest Private equity firm in South East Asia and it is currently  holding about 62% stake in this company .Out of the total equity of Rs.22 Cr only  10  % is held by general public.Now company is establishing a pan India marketing network to expend its operation where there was no presence earlier. Last year company posted a turnover of Rs.288 Cr and a net loss of Rs.6 Cr.With the effective initiatives including cost reduction  company back to black in the lasted nine months.For the nine month period ended December 2010 ,SAH posted a top line of Rs.250 Cr and a bottom line of Rs.11.5 Cr  and an EPS of Rs.2.9 on FV Rs.5 shares.Even if the cost of raw material is on a rise ,due to good demand company can pass on a portion of it to the end users. The most attractive part of this company is that it is owned by a P/E player with good track record.There is every possibility that  in future this company  may sold to some large national /international players from oil/lubricants industry at a premium to the current market price.Even we exclude this possibility , turnaround performance of SAH deserves a close look at CMP of Rs.27/-

Thursday, April 21, 2011

EPC INDUSTRIE - EVENT UPDATE

EPC Industrie announced the date for the declaration of  its fourth quarter result as 29th April 2011.Most probably ,this will the last working result under the old management .Open offer by M &M will be completed shortly and a change in management control is expected on completion of the open offer formalities. Fruits of fresh fund infusion ( at least the effect of debt repayment) is expected to positively affect its bottom line from the June quarter result onwards .Keep Holding.

Tuesday, April 19, 2011

TOKYO PLAST INTERNATIONAL - A PENNY STOCK TO BUY

 


Tokyo Plast International is the manufacturer of “PINNACLE ‘ brand Thermoware products. Company's main products are Thermo Containers,Insulated coolers,Beverages containers..etc. considering the increasing popularity of Pizza Consumption ,recently company introduced  single and double layered Pizza containers .Company having two manufacturing units – one located at Kandla and other at Daman. Company is concentrating in exports and earned an income of Rs.38 Crore (out of total sale of Rs.41 cr ) from exports last year  which is an improvement of almost 50 % from previous year. Its total income tripled in last five years where sales improved from Rs.14 Cr to Rs.41 Cr and bottom line from just Rs.7 lac to Rs.2.33 Cr in the said period. In last one year promoters also hiked their stake marginally. Even if the company’s  products are not strictly comparable with the products manufactured by other  houseware manufactures like TTK prestige , Gandhimathi appliances, Kanchan International ..etc  the trend in demand growth is moving almost in the same line based on the consumption story. Chances are also there for expanding the business into the manufacturing of other related housewares where there is large opportunity is available in a country with a population of 120 Crore . Company is expected to close this full year with an EPS of Rs.3/- . In the past two days its share price appreciated sharply but even thereafter it is currently trading with a P/E multiple of just  4 + on the expected full year EPS of FY 2010-11 . Considering the steady growth of topline  it shows in the past many years and recent efforts to introduce value added new products – which is expected to improve the margins-  Tokyo plast is a suitable low priced scrip for investors with patience . Currently trading both in NSE and BSE at a price around Rs.14/-

Saturday, April 16, 2011

RAJVIR INDUSTRIES -BUY





Rajvir Industries is a good company in a boring business.This company is a maker of yarns but catching the attention because of  the aggressiveness of the management. This Andhra based company is making various types of yarns and also having a dyeing facility.Company is supplying is products to various industry majors like Grasim .Rajvir corrently operating five spinning units and one dyeing facility.What differentiate this company from many of the spinning units is the wide variety of yarns the company producing.This includes special varieties like organic cotton yarn ,flame Retardant yarn ..etc along with other varities like spun,silk,wool ..etc mixed with cotton .Company having a good R&D to develop new varities of yarns and aggressively expanding their business beyond India .It already exporting its products to USA ,Korea ,Taiwan..etc and doubled its exports earning in last year.In FY 2010 Company posted a turnover of Rs.203 Cr and a net profit of Rs.2.27 Cr. For the nine month ended December 2010,Rajvir increased its turnover and margins significantly .It posteda turnover of Rs.200 Cr and a net profit of Rs.12.15 Cr .On an equity base of Rs.3 Cr ,EPS is Rs.40/- .It is expected to post an EPS around Rs.55/ in this full year .At CMP of Rs.164/- ,Rajvir is currently trading at a P/E multiple of below 3.A riskless bet for decent gain in medium to long term ,low liquidy is a point to note. Listed both in NSE and BSE.

Tuesday, April 12, 2011

EPC INDUSTRIE - BE READY TO REAP





Nowadays I am receiving lot of queries regarding the strategy to be followed on EPC Industrie Ltd ( BSE Code - 523754) . I have recommended this company @ Rs.61/- in last August (Old posting  HERE ) which is currently quoting around Rs.140/- . In my old post ,I clearly mentioned that EPC is a potential takeover target by big players. As expected ,auto major Mahindra and Mahindra ( M & M) took over this company by subscribing 65,58,065 Equity Shares @ Rs.66.10/- . Mandatory open offer for another 20 % is currently going on . On the new equity base of 17 Cr .M&M will hold close to 38 % , two foreign P/E players will hold 32 % ,old promoters will hold 16 % and the general public  will hold 14 % .On completion of the open offer ( nothing is expected to get since market price is above open offer price) , share holding will be re classified so as M& M will be the new promoters and old promoters will be moved to public category. In many of the recent interviews Mahindra's indicated their decision to concentrate in futuristic industries other than Automobile.Takeover of EPC is a bold decision in this direction.The potential of Micro irrigation in India is huge and a major portion is still untapped .As on date there is only one major player in the listed space ,ie,Jain Irrigation.Due to lack of sufficient working capital EPC could not tap the opportunities available even if it an  approved supplier to the Micro irrigation projects initiated by Gujarat and Andhra Pradesh State governments .Last year central government upgraded its micro irrigation  scheme to a national mission with an outlay of Rs 8032.90 Crore .Recent fund infusion by M&M is really a game changer for EPC which currently having a debt burden of around 30 Cr.It is indicated  that the fund raised through preferential issue will be utilized for repayment of debt , working capital requirements, capacity expansion and implementation of new generation drip irrigation technology .Moreover,doing micro irrigation projects on a turnkey basis is the money spinner now and many private parties are demanding such models .Till now EPC lacks the money power and other facilities to execute such projects ,but the situation will change in future. As a coincident , M & M recently de-merged its agri related business division Mahindra Shubhlabh Services Limited.This de-merged entity is handling  M &M's Agri Inputs Business, produces and distributes seed, seed potato ,selling  crop care products and also handling contract farming in large area for  Basmati, Maize, Barley, Cotton, Moong, Soybeans, Durum, Hyola ..etc  and other oilseeds such as Sunflower and Mustard. At this stage there is no chance for a merger of both these companies ,but we can't ruled out an integration of all the agri related businesses under the fold of  the listed EPC Industries in future.


Another point is ,tracking the trading pattern and price movement of EPC Industrie in the past few months ,I strongly feels that huge accumulation is happening in this counter even at a level double to the open offer price by  M & M . In nut shell,In the hands of a management like M & M with large network of agriculture related business( Tractor) , good reputation with money power - EPC Ind having a chance to grow by leaps and bounds especially at a time the parent is seriously thinking beyond their conventional auto business.So one should hold the stock at current level and try to add in small lots if there is any correction below Rs.120/- due to the over all weakness of the market. If everything clicks well and you have patience , EPC Ind may go even beyond your imagination. CMP is Rs.140/-                                                                                                                                                                                                                                                               

Saturday, April 9, 2011

NITCO LTD - BUY








Company                     : NITCO LTD
BSE Code                   : 532722
Group/Index                  :B
CMP                             : Rs.62/-
FV                                 : 10
Recommendation      : BUY
  
NITCO is a  Mumbai based Tile and Marble manufacturer started its operations way back in 1953. Company's brand ' NITCO' is famous for its superior quality products.Company manufacturing Wall tiles, Floor Tiles and Marble which include Ceramic Tiles,Vitrified Tiles,Natural Marble,Engineered Marble.etc .Company having four manufacturing facilities and the main two  are located at Alibaug and Kanjur Marg both near Mumbai ,where the company having state of the art manufacturing facilities.Company  having a wide marketing network pan India consists of  18 depots, 750 direct dealers and over 5000 sub dealers.About 25% of company's income is coming from exports to various countries includes United States, Canada, Europe, Africa, Oman, and UAE .Nitco also have some presence in real estate development.Close to  50 % of company's income is coming from Vitrified tiles 25 % from ceramic tiles 20 % from Marbles and 5 % from other activities .Company was in  perfect shape till 2009 ,but its operations derailed in 2009 due to two reasons.The first reason was the sluggishness in construction/real estate development  industry which affected the entire companies in this sector.Another important factor was the arrest of its top officials by the Directorate of Revenue Intelligence for alleged customs duty evasion of Rs 1.47 crore.Both these incidents adversely affected the company and it turned to a loss of Rs.9 Cr in 2009 - 2010. Now situation is improving in the industry and particularly for the company. Management is now paying much attention in the business and taking various steps to revive the company.It recently started a 5.5   MW gas based power plant to save power cost which is a major component of total cost of production.It also planning to increase the number of exclusive selling points named 'Le Studio' from 50 to 200 nos.Nitco already developed 2 lakhs Sqft commercial property at thane and also having 7 properties to be developed around Mumbai.Company is planning to develop these properties ( about 15 lakhs sqft salable area) in various steps.For the nine months ended Dec 2010 NITCO posted a turnover of Rs.450 Cr and a net profit of Rs.15 Cr.It is expected to turnaround in this FY and improve its performance in next year onwards. The brand NITCO having a good brand recall in the industry and company can effectively utilize it when there is a revival in the industry. Investors with patience can BUY at current level with  long term view.NITCO is currently trading around Rs.62/-

Thursday, April 7, 2011

WORTH READING


 Courtesy : Economic Times



Henry Ford , Bill Gates , Walt Disney , Soichiro Honda, Akio Morita...they have all been there, done that. No, we are not talking about their much-celebrated successes. Rather, this feature is about what hit them before they became rich and famous, the sledgehammer called failure. Gates gave up on Harvard, Disney and Ford stumbled into bankruptcy, Honda failed a job interview at Toyota and Sony founder Morita's first product, an electric rice cooker, had few takers. 

                                                                              

That said, the timeworn truism of failure being a stepping-stone to success is not always true. It only works if you are willing to learn from failure. And that's where gut-wrenching misadventures from the past can be more meaningful and effective than blasts of previous big hits.

Past achievement is no guarantee of riding the gravy train in future. One entrepreneur who might agree with this is Sabeer Bhatia, co-founder of the wildly successful Hotmail. Bhatia, who sold the email system to Microsoft for some $400 million in 1997, has tried his hand with various ventures subsequently but none has come close to Hotmail in popularity and success.

Previous victories may encourage you to tread the beaten path. The value of learning from previous mistakes, on the other hand, lies in not repeating them, and finding new ways of making things work. This could result in the road ahead being littered with more failures. And that brings us to another time-tested adage of trying and trying till you succeed.

Says Deccan Aviation founder Captain GR Gopinath: "You are not a failure as long as you keep trying." Indeed, success cannot be always measured with dollops of wealth and cheers from the gallery. As corporate head honcho-turned-ad man Sandeep Goyal puts it: "Success is not an end in itself." Goyal put together a winning joint venture with Dentsu after leaving broadcaster Zee TV and spending many months in the corporate, and social, wilderness.

Not all who fail become case studies of grit and triumph in management books. For every entrepreneur who bounces back, there are many who either burned out or faded away. Failure cannot always be romanticised and transformed into heroic tales of turnarounds. But it does serve a purpose, of telling budding start-up artistes that botch-ups are par for the course; and that one must learn to deal with them to move ahead.

It is therefore vital to chronicle the tales of those who embraced risk wholeheartedly and, in the process, flopped spectacularly. Failure is an inevitable companion on the path to success. And whilst you may eventually succeed in leaving that friend behind, make sure you don't forget the lessons she taught you. The entrepreneurs, politicians and one sportsperson we have profiled have not
1) Captain GR Gopinath, Founder, Deccan 360

When I failed:

It was 2008. Air Deccan had become a Rs 2,000-crore company with 3,500 employees and a market capitalisation of $1.1 billion. With Air Deccan big and stable, I began incubating Deccan Express Logistics, a door-to-door multimodal air and ground logistics company. I decided to bring in a strategic investor and raise some capital. Investors and bankers lined up. I was on cloud nine.

Two of my earlier investors gave me a few million dollars. I returned the money, partly out of arrogance, partly out of my optimism and stupidity. I thought they were not recognising my contribution and being unfair to me. Then global markets crashed. The radiant cloud I was sailing on evaporated and I realised I had no parachute. Investors, credit lines dried up. With 150 staff and advance payments made for aircraft, cash was being burned. Call it hubris but we kept chasing more private equity players.

What I learnt:

When you are successful you become arrogant and complacency sets in. When you are knocked down you realise that humility is important. I also learnt that you are not a failure until you quit. I learnt to be optimistic through difficult times. You have to push yourself to act and not despair. It is difficult to take decisions but indecision is worse. You need to listen to people and hear their views but there is a time when you go with your intuition and take the tough decisions.

How it helped me succeed:

I realised if I did not act with speed, we would come to grief. I took drastic decisions. I re-jigged the entire business plan, switched from doing everything to a franchise model and cut pay. Things started falling into place. The economy started looking up. Doors started opening banks like the State Bank of India gave credit. The response from franchisees was overwhelming, 2,800 joined up. What would have taken us 20 years with our own funds was done in under six months. We launched in November 2009 from Nagpur.  

2) Phaneesh Murthy, President and CEO iGate, and former director, Infosys

"Glory is in rising every time we fall"

When I failed:

It [a lawsuit filed against him and Infosys, alleging wrongful termination and sexual harassment of a female employee in the US] was a big setback, nothing short of being to the hell and back. Imagine people judging you before knowing, pronouncing you guilty. What more can happen to you? For about two months I considered myself a victim. I slipped into a deep whining syndrome. Lots of people told me that I should retire. One moment that shook me out of this state was the visit of a close friend who told me: "Phaneesh, what are you doing? You are a tiger, go out there and prove it to the world."

What I learnt:

His words taught me: It's only when we fall that we come to know who we really are and if we are strong enough to rise again. I am glad I had what it took to recover and rise. I wouldn't have been able to pull this through but for my wife's support. In her, my anchor was always there. She knows me the best and there was no wavering in her support.

How it helped me succeed:

I had done no wrong. I was confident of setting up a business and found immediate support for it. People had seen me build Infosys. They were confident of my capabilities, but the fund-raising got stuck on one point, my reluctance for an out-of-court settlement. People willing to fund my venture wanted the case closed at the earliest. I understood their demand. When you are starting something, even 100% attention does not guarantee success. With the case on, funders thought I wouldn't be able to give my 100% attention. So I accepted their advice. After the incident, every year I do one extreme thing, like bungee jumping. My confidence level is higher now. What you go through changes your conduct. For instance, my HR department is very protective of me. I rarely close the door of my cabin and all our office cabins are made of see-through glass.


3 ) Ramesh Chauhan, Founder and chairman, Bisleri International

"More than qualification, it's attitude that makes a winner"

When I failed:

After selling my brands such as Thums Up, Limca and Gold Spot to Coca-Cola in 1993, I made the mistake of retaining employees who were a part of the company. I ought to have offered voluntary retirement to these employees who were associated with the brands for a long time. And I should have recruited another set of people to work on the new product I had launched Bisleri bottled water.

These employees were used to dealing with the earlier fast-moving brands and were clueless on how to move Bisleri. Those were really painful 4-5 years and I lost a lot of money during that time because I had employees who did not know how to market Bisleri. During those days we also launched Bisca cup noodles based on a board member's suggestion. Apparently he had the cup noodles when he travelled abroad and sold us the plan to launch it in India. Not only was the product ahead of its time for India, the distribution system required for noodles was completely different from what we were used to. Also, the fact that we had just no domain knowledge of the product made it a complete disaster.

What I learnt:

I learnt that it is very difficult to change people's mindsets. Our earlier set of employees were habituated to listening to the distributor and accepted what they said as the gospel truth. There was no attempt to listen to the consumer. And all attempts to get them to be open to new ideas and strategies failed completely. I also learnt, with the Bisca fiasco, that one should not meddle with plans in areas where one has no core competence or understanding.

How it helped me succeed:

Since then every time we launched a new idea or product we made sure that the people handling the product had the right mindset to make it a success. The Bisleri experience also helped me while hiring new recruits: more than qualifications it is the attitude and mindset that make a winner.

 
4) Sandeep Goyal, Founder chairman, Dentsu India, and former CEO, Zee

"Success never comes, you have to seek it"

When I failed:

At 35, I became president of Rediffusion DY&R , one of India's largest advertising agencies. At 38, I was Group CEO of Zee Telefilms , India's largest broadcaster. A few weeks before I turned 40, I resigned from Zee. One day, I was one of India's highest-paid professional executives. The next day, it was all gone, my Merc, memberships of the Chambers, the Belvedere, Bombay Gym and Willingdon, secretaries, retinue of hangers-on and myriad 'friends'. Reality took a while to sink in. My mobile stopped ringing. 'Friends' started avoiding me. I started avoiding parties. I was hurting. More importantly, I was alone. My wife, Tanya, was my only support. It took her a while to coax me to open up, introspect and do a reality check. Think ahead, rather than think about the past. I brooded. I wallowed in self-pity. I got angry at myself, and at the world. I hated not being in the limelight. I hated myself.

What I learnt:

It took me three months to piece myself together again. Looking back, my Zee debacle was the best thing to happen to me. I matured and learnt to introspect. I learnt self-restraint. I became discerning about 'friends'. I learnt to keep my head down and my mind focused. Success is not a one-way street. Nor is it an end in itself. I understood that success never comes to you: you have to seek it.

How it helped me succeed:

The first thing I told myself: the less a life depends on another, the better it is. At the peak of my high-flying career, I couldn't send an email on my own. My secretaries and assistants did it. So I quickly taught myself the basics. The hiatus had shown me who my real friends were. In my earlier successes I had showered favours indiscriminately. Going forward, I shed a lot of 'friends'. One morning, I walked into the hallowed portals of Dentsu Inc , the world's largest advertising agency to seek a joint venture (JV) with them. I did not have a company of my own: no office, employees, clients or credentials to woo them. I just had self-belief. No one gave me half-a-chance. Except, God and Tanya. Nine months after I left Zee, I saw success again: Dentsu and I signed a JV. It was a coup. A month ago, after seven years of building Dentsu India into a Rs 1,200-crore entity, I exited the JV. I exited on top. I exited young. I exited decently rich. 

5 ) Nitish Kumar, Chief minister, Bihar

"Be close to ground realities"

When I failed:

One of my biggest failures was my inability to gauge the mood of the people of Bihar correctly when we contested elections in 2004. We were under the impression that the good work done by the National Democratic Alliance would bring us back to power. But the ground reality was different.

What I learnt:

Be close to ground realities; ground-level issues and social issues are far more important. For the next one year I worked at the ground level.

How it helped me succeed:

The results were there to see in the Bihar assembly elections in 2005. I worked with the people of Bihar and attacked Lalu Prasad Yadav's strategy of winning votes by misery mongering. I worked with only one goal of development and nothing has distracted me from that goal in the past five years. The 2010 elections, where we managed to beat Lalu's strategy, shows how I have used my learnings.

6) Priyanka Chopra, Bollywood actor

"Failure makes place for something better"

When I failed:

I was a 17-year-old girl, put out of her school uniform straight into the Miss India pageant. Unlike all the models around me, I had no experience. I did not even know how to stand in heels! I didn't win a single of the six or seven sub-events, not even the singing, which I am really good at and which all the rest were sure I would. That really broke me.

I cried that whole night and felt stupid that I was even there. That's when my mom sat me down and told me not to take the winning seriously, to give it my best, so that there were no regrets later. I did that and had a great time. I was also very focused but all through I knew it was not a do or die situation. Thank God I failed, or I would never have been Miss India or an actress today...

What I learnt:

That nothing is a do or die situation. In whatever you do, be it beauty pageants or films. That nothing is worth compromising my values for. It taught me a great balance as well as a very important thing, failure is not an option or God is making place to give you something better. What is most important is that be it any task from tying shoelaces to acting, everything should be done with perfection. There must be a pride to do it better than anyone else. And if its not good enough then I have no regrets because I have given my best to whatever task is on hand, small or big.

How it helped me succeed:

By giving me this drive. In fact, it's always happened with me that failures have made place for something better or taken me to a better place. Success lies in having the right attitude, to start looking at the failure as positives, for example, I never dissect a film. I stand by all my films. I know when I took it on, I believed in it. So if there are mistakes they are fine and I always have the courage of conviction of what I do and move on. In fact, never take on something if you do not have the courage of conviction.


7 ) Deep Kalra, Founder & CEO, MakeMyTrip

"I learnt to read the market right"

When I failed:

Academically, opting out of engineering in favour of economics was a big mistake. Computer science would have helped me immensely at MakeMyTrip. Career-wise, I think I laboured on for too long, an extra year or two, at AMF Bowling in the hope that the market would pick up. I should have read the writing on the wall. Way back in the 1995 to 1999 period, development of malls and the like was not taking take place in a big way. That was a limiting factor for large bowling centres to come up. These failures were courtesy of an inherent trait of stubbornness to prove to myself and to others, that a business/venture undertaken has to be successful. But then there's a fine line between stubbornness and perseverance.

What I learnt:

The failure at AMF Bowling helped me a great deal at MakeMyTrip in reading the market right in 2000. The Indian market was still not ready for online travel, which is why we focused on the market for non-resident Indians. This, frankly, kept MakeMyTrip alive at a time when other online travel ventures that focused on the domestic market perished.

How it helped me succeed:

Whenever confronted with a new market scenario, it's become first nature to deep-dive into the market potential and customer-buying habits. This has helped me a great deal when getting into new business lines, ventures and markets as well as when evaluating new businesses.

8 ) Glenn Saldanha, MD & CEO, Glenmark Pharmaceuticals

"Plan for the bad when the going is good"

When I failed:

Between 2000 and 2008, our revenue grew from $40 million to $450 million. We also concluded several out-licensing deals of our novel molecules. But 2008 was different. We were hit by a storm we didn't anticipate. The recession impacted sales and receivables across the globe.

Alongside, our out-licensed molecules did not meet their primary end point in human trials. Moreover, our fixed costs remained high because we had invested in infrastructure across countries. Our growth plans had hit a major roadblock.

What I learnt:

Uncertainty is a given. So one needs to factor it in while charting growth plans. It is important to prioritise keeping in mind the vision of the organisation. During the recession, we had to conserve cash and manage debt. So we put fresh capital expenditure and acquisitions on hold but continued to invest in drug discovery. This was contrary to the worldwide trend of slashing R&D spends. The decision paid off. Not only did more molecules progress to clinical trials, we also concluded one more outlicensing deal in 2010. In these tough years, we also got a sense of the commitment of our employees to the organisation.

How it helped me succeed:

When I took over as the CEO, we had only witnessed phenomenal growth year after year. At the age of 38, for the first time, I witnessed a crisis of this magnitude. It was a learning of a lifetime. Glenmark is definitely a stronger organisation than before. I realised that for every few exceptional years there will come a bad year. So plan for that year when the going is good. The bad years are the ones that mould an organisation and make it stronger.

9) Sourav Ganguly, Former captain, Indian cricket team

"I used a setback as a stepping stone"

When I failed:

"The most glaring failure would be during the Greg Chapell era when I was dropped from the Indian team. That was in December 2005. I had been playing for 11 years and had always been part of the Indian squad. For me that period of six months when I was left out of the team was the most challenging.

What I learnt:

Failure or an apparent setback is not important in itself. It depends on how we handle the situation. I tried to see it positively and do things to improve.

How it helped me succeed:

I did come back into the team and into the game after six months but it was not something I did to prove to the world. I have never believed in having to prove anything. I have never played the game that way. Each time I scored, I only knew I was good enough to play the sport at that level. That's how I have always seen the game and that's how I saw it then. In hindsight, I think I used that phase as a stepping stone to come back into the game.


10) Kiran Mazumdar-Shaw, Chairperson & managing director, Biocon Ltd

"I was told I was taking too many risks"

When I failed:

I have faced many failures but I have dealt with them unflinchingly. Back in India as a young graduate from the University of Ballarat in Australia, I found that there was no job for a woman in the male-dominated brewing industry. I was perceived as a failure when I started a company in my family garage to make industrial enzymes.

Bankers were reluctant to lend and asked me to drop ambitious plans to build in-house technology. Nobody would lend money to Biocon until N Vaghul, who promoted India's first venture capital company, invested in it. In 2003, bankers were sceptical about my plans to develop novel drugs for diabetes care; they sold out their stake to AIG. I was told I was taking too many risks. Why couldn't I be like other pharma companies?

What I learnt:

There is no slam-dunk in business; in developing oral insulin we might have failed in the initial clinical trials but we will take the learning and refine subsequent trials... Investors look for commoditisation; they don't appreciate measured risk taking. It is always about managing risk.

How it helped me succeed:

I have never betted the bank on anything. I take positions that mitigate risk; that is my strength. I convert my failures into success. Nobody believed me when I went after development of insulin molecule. Investors want to see deal flows and regular returns while I wanted to always challenge myself to see what more I could do.

11) Jaithirth 'Jerry' Rao, Chairman, Value and Budget Housing Corporation

"Invest in advanced systems and processes"

When I failed:

It was 2003. Our company [MphasiS] was growing rapidly. But we never seemed to have all our engines firing at the same time. If one division was doing well another was failing. And we always seemed to get the bad news when it was too late to do anything about it! One of our directors, Jose de la Torre, told us that he had seen this with many growth companies. We were so keen to do business that we under-invested in our internal systems. Our systems were always good enough for the previous year. They invariably lagged our requirements.

What I learnt:

If we have plans to scale up, we have to invest in advance in our internal capabilities, not try piecemeal investments after the deluge hits us. The idea that when we grow, we can somehow "wing it" is a fallacy.

How it helped me succeed:

In my new venture, I have made it a point to invest in systems and processes upfront even when our business levels may not justify them. We have purchased a good enterprise resource planning (ERP) application and are making changes to it to ensure that it is a world-class support system for a large organisation even though we are a small one. We have chosen to appoint a senior person as our HR head rather than managing this function tactically. We are developing systems across all aspects of our company on the assumption that we will have 50 times as many customers as we do right now. This is going to pay off in terms of customer delight, early detection of problems and company-wide optimisation.

12 ) Manish Sabharwal, Chairman, TeamLease

"Everything takes more time and money than you think"

When I failed:

It happened in 1998 when I took venture capital money for my earlier venture, India Life, which was a piece of paper. It was too early to put the meter down and that kind of money always has an expiry date. This happened because there was a mismatch between how much time the opportunity needed and how much time the investors had.

What I learnt:

I now understand the investing business and that funds have finite lives and fiduciary responsibilities. This does not make them a bad fit for every venture; just for some ventures; or at particular stages of some ventures. I learnt that you have to take your venture as far as you can without raising money from somebody whose money has an expiry date. Everything takes more time and money than you think and your investors need to understand that; or you are better off without them. Good judgement comes from experience and experience comes from bad judgement.

How it helped me succeed:

We did not raise any external equity in TeamLease for the first five years. TeamLease has been able to scale faster and engage with public policy much more aggressively than we could have if we had taken external money from Day 1.


13) Arun Shourie, Former minister and journalist

"Put your difficulties to work"

When I failed:

I am the only editor to be dismissed not once but twice from The Indian Express. The first time, Mrs Gandhi put such pressure on [Indian Express owner] Ramnath Goenka that even a tiger like him made a goodwill gesture out of me.

But he did call me back and I was delighted to go back. But then he had a series of strokes. Those who were trying to swallow the company thought that S Gurumurthy and I would be the obstacles. And therefore, they first removed me, and then Gurumurthy.

What I learnt:

My first learning is never look back. Or else you will suffer the fate of Lot's wife [in the Book of Genesis, Lot's wife ignores the advice of the angels not to turn back when fleeing the city of Sodom, and turns into a pillar of salt]. My second learning: put your difficulties to work. There are very few difficulties that cannot be put to work. This is easier if our goal is inner growth. Third: always have three careers going at the same time. And carry each one lightly.

How it helped me succeed:

I have never looked back in my life. On the personal front, I have had to face several challenges: my 35-year-old son has multiple handicaps and my wife has had Parkinson's for the last 22 years. I have worked towards putting these things to work. I have followed at least three careers at the same time. I have written books, I have written columns and I have been a minister. I have carried each one of them lightly so that if I am thrown out I don't get disappointed. [Former prime minister] Vajpayeeji asked me a few years back: "Where are you living these days?" I said: "In my parents' house that they left behind for me. He asked me why I had not taken government accommodation. I said: "[If I do not take it] there is one less thing to give up."

 

 


 

 

Tuesday, April 5, 2011

SML ISUZU - DOUBLE IMPACT





SML ISUZU catching the attention not only because of its improving financials but on account of the possible change in its patronage too. SML ISUZU (Formerly Swaraj Mazda )manufactures and sells light commercial vehicles for goods and passenger applications . Its products include ambulances,buses, dual cabs, and trucks.Currently majority of the stake is held by Japanese  giant Sumitomo corporation (54.9% ) .Isuzu own ( 4% ) and P/E player Actis holds 5.6% . For Sumitomo, auto sector is not their  core competency so they are willing to sell their stake if they fetch good value for the investment .Actis is also ready to exit and they already made some discussions but could not conclude the deal mainly due to differences over valuation.On the other side Isuzu is very much interested to increase their current stake and take the control of the company.Isuzu is  the world's largest manufacturer of medium to heavy duty trucks and Swaraj Mazda is a perfect fit for their Indian dreams.Various reports indicating that Isuzu is ready to pay Rs.400/- share to Actis to buy out their 5.6 % stake in the company .Since the last open offer by Actis was at Rs.400/-and performance of the company improved thereafter a deal at Rs.400/- is only a distant possibility.Some other reports saying that Isuzu is ready to pay Rs.600/-per share to Sumitomo for a controlling stake. Interest of Tata motors is also a possibility even if they deny it earlier.Isuzu's entry into the driving seat may bring many new models to SML 's table.Any way ,some changes in the share holding pattern is expected in this financial year itself and most probably at a price substantially higher than the current market value.On the other side ,company is improving its financials.For the December qtr Sales rose 17.83% to Rs 220.70 crore as against Rs 187.30 crore and Net profit zoomed 64.41% to Rs 9.70 crore  as against Rs 5.90 crore.Company really deserves a serious look which is currently trading around Rs.335/- 
                                                                                             

Monday, April 4, 2011

ALBRIGHT & WILSON CHEMICALS INDIA LTD - EVENT UPDATE

I have recommended Albright and Wilson Chemicals @ Rs.185 (Click HERE to read the old posting) which is currently trading around Rs.280/- .In an important development ,  the Belgian chemical giant  Solvay launched a 3,4 billion euro takeover bid for French Chemical company Rhodia . Rhodia UK (Part of Rhodia France) is the parent company of Albright and Wilson Chemicals India Ltd .Earlier the BSE listed Solvay Pharma was taken over by Abbot group and this listed entity is going to merge with Abbot India . So, Solvay is expected to work in India through AWCIL( the only fully owned company of Rhodia in India) going forward.An open offer by SOLVAY for AWCIL is also a possibility . (Indirectly the ultimate parent is changing) .Even if the open offer is excluded in any case Solvay's strength  will surely help  AWCIL to perform better in the future, by all means.

Enjoy the Investment

Saturday, April 2, 2011

KANCHAN INTERNATIONAL - ONLY FOR BRAVE HEARTS

 
























Kanchan International is not a valuepick and not a stock for all.This is only for brave hearts ready to loose the entire investment for a possible multibagger.This high risk is mainly due to the hyperactivity of operators in this counter and the erratic price movements due to this factor.In 52 weeks ,Kanchan touched a low of Rs.7.25 and a high of Rs.219 with a series of upper and lower circuits and now trading around Rs.68/-.Kanchan is a well known brand in household appliances especially for their Mixer Grinders.They are also producing Pressure Cookers,Juicers,Food processor,LPG Stove,Electric iron,Microwaves,table fans..etc.Other than 'KANCHAN' ,company also owns another brand 'MARLEX'.Even if this company is in existence for the past 20 years ,it could generate a turnover of Rs.30-35 Cr per year even with a negative cash flow .I strongly feels that this is mainly because of the existence of more than one private companies in the same group and the sales are channelized through these closely held companies. Yes,all these are negatives .But what catching the attention at this point is the recent initiatives taken by the management. Recently promoters took 25 lac warrants and it is expected to convert into shares to hike their stake.Company also in a recruitment drive
to expand its operations mainly in marketing and servicing. Kanchan is targeting a turnover of Rs.150 Cr in two years which seems aggressive but the possibility of the merger of group companies with itself may save a lot of efforts in this direction.In the financial front too ,company is showing some improvement after a long gap. In the last FY ,company posted a turnover of Rs.35 Cr and a loss of Rs.1.37 .For the nine month ended December qtr of this FY ,Kanchan posted  a turnover of Rs.34 Cr and a net profit of Rs.1.53 Cr.On a equity base of just 3.21 cr it is expected to close the full year with an EPS of Rs.7/-.In the past ,company paid dividends whenever there is even minimum profit in any year.So all together there is lot of negatives like the integrity of management,lack of clarity of future course of action,negative cash flow...etc ,but the other side is  equally strong like the potential of the industry, re-rating of the sector,new initiatives of management  ..etc.TTK prestige and Gandhimahi Appliances are the  two listed players from this sector which re-rated substantially in recent past.Governments initiatives like National Rural Employment Guarantee scheme ..etc are keeping the flow of money to the rural sector which is expected to significantly influence the demand of products manufactured by companies like Kanchan. Future of Kanchan depends of many 'IF's but if everything clicks well this may turn as a multibagger.Since it is a  high risk high profit situation,suggesting to keep it in your radar and take own call after due diligence.Kanchan is currently trading around Rs.68/-

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