Saturday, April 11, 2015

PIONEER EMBROIDERIES LTD - REVIVAL TIME ....



   
Pioneer Embroideries is a stock need no introduction to veteran investors .It was a hot one till 2007-08 which recorded its lifetime high @ Rs.345 during January 2008. Company is in the business of manufacturing embroidered fabrics, laces and dope dyed yarn and its brand “Hakoba” is still the undisputed leader in embroidered clothing category.In the ‘Laces’ segment company is the second largest producer in the world
                                                                             Company operating six manufacturing facilities across India with facilities to produce Embroidery (4248 million stitches), Bobbin Lace (25,200,000 mtrs), spun yarn (1,788 MT) and dope dyed yarn (10,500 MT). Due to leveraged and untimely expansion ( mainly in retail segment)  and  unexpected downturn in overseas markets due to recession ..etc  company went into big trouble .From a net profit of Rs.15 Cr reported in 2007 , its bottom line crashed to a loss of Rs.33 Cr in 2013 ( Out of this Rs.33 Cr , more than Rs.15 Cr were interest payment) . Sensing the big trouble, management initiated efforts to revive the company . Efforts to settle bank loans through CDR mechanism failed due to disagreement of few banks in the lender consortium . Because of this reason company initiated talks with each banks separately for one time settlement ( OTS) .Through this route company already settled its due to ICICI Bank and it is expected to complete the payment  to  State Bank of Patiala which already negotiated and reached amicable agreement .Meanwhile during last  year , company re-paid its entire FCCB obligation on a modified repayment terms .Now  its efforts to reach settlement with other banks are at various stages and management expressing their confidence to reach an amicable settlement with remaining lenders within not so distant future. In a recent development, Edelweiss ARC Limited ( EARC) , an asset reconstruction company sponsored by  Mr. Rashesh Shah led  Edelweiss Group took over the debt of Pioneer with EXIM Bank. I believe , Compared with banks ,Private asset management companies are more flexible and time and formalities needed to deal with them is less compared with PSU banks . Now EARC agreed to accept re-payment of interest outstanding on this loan in the  form of equity . As part of this agreement company now allotting  Eight Lakhs Fifty Thousand shares to EARC at a price of Rs.35 each. I don’t think ,any private ARC will convert  even a part of their assignment to equity if they feel the underlying business is not viable . 


 
 
Company’s retail venture – Hakoba Lifestyle-  is running through its subsidiary ( Currently four stores are operational ) and it also selling products like ready to stitch salwar kameez and dupatta sets, sarees ..etc through e-commerce sites like Flipkart..etc. Amid its not so good financial situation and working capital crunch , for the last five years pioneer reported substantial and steady improvement in its top line ( See below Table)  .





This clearly indicating,demand of product is  not the major issue of the company but mainly  the debt related issues eating its bottom line. Major fabric manufacturers in India and overseas are company's customers and the increase in export income was robust in last years which jumped from Rs.17 Cr to Rs.41 Cr. Its operating cash flow turned positive  in 2011  and it is about Rs.61 Cr in last FY. Now promoters are trying their level best to find a solution for debt related issues  and considering the recent developments ,I believe the possibility for a success in this effort is quite high. If the success of of their efforts continue in this same tempo , Pioneer may emerge as a dark horse in the years to come . Due to cash crunch company could not modernize some of its machineries in recent times. Once they are in a position to do that it will surely improve their efficiency and margins.   After the news of allotting shares to EARC @ Rs.35 , stock price appreciated in past few days . Average risk takers can wait for a correction ( if any )  for an entry and high risk takers may buy part now and add further in any dip ( if it happens) . This is not a stock suitable for those looking for quick bucks by investing only for one or two quarters. Earlier also I   indicated my positive stand on this company around Rs 20-25 level ( through replies to reader queries) which was before the arrangement with  EARC .  Stock listed in both exchanges and currently trading around Rs. 30 .





Link to Company Website HERE

Disc: It is safe to assume that I have vested interest in this stock.

89 comments :

  1. Hi sir,

    Can you give your comments on Venus remedies, nandan denim and dai ichi karkaria

    ReplyDelete
  2. Sir,thanks for this value pick.pl share your views on kokoyu camlin trading at around 100.

    ReplyDelete
  3. Dear sir,

    what is your view about 'Milton Plastics' and 'Intellect Design Arena'?

    appreciate your valuable inputs.

    ReplyDelete
    Replies
    1. Milton already returned 200% from suggested rate .Nothing to add at this point

      Not tracking Intellect

      Delete
  4. dear sir,

    what is your view on sharada chrop chem for longterm?

    ReplyDelete
  5. Sir, what about VRL Logistics IPO?

    ReplyDelete
  6. Respected sir, plz give your opinion on Lokesh machines ltd and infinite computer solutions. waiting for the reply.

    ReplyDelete
  7. Sir your views on gateway distriparks
    Lloyd electric - can it be a future multibagger. It is also a sector leader
    Gujarat themis biosyn
    Thanking you jash

    ReplyDelete
  8. And thanking you soo much for finding a company like skm and always keeping us updated about it
    Thanks

    ReplyDelete
    Replies
    1. Own conviction is more important than anything :)

      Delete
  9. Thank u sir, already started picking pioneer around 21 when u reffered as a turn around. .

    ReplyDelete
  10. Hi, the opm is sub-par.. And seems vulnerable.. Can you please throw some light on this.?

    ReplyDelete
    Replies
    1. Dear

      There may be lot of negatives for stocks available at cheap valuation . What matter for me is - whether there is chance for improvement or not . Off course there is lot of risks in such cases but I prefer to take that risk if the risk reward ratio is favorable. Do you think without any such negatives we will get a Rs.300 Cr turn over company at Rs.50 Cr market cap ?. If one ready to take that risk go for it otherwise there is many blue chips with less risk element , but the return from both such cases will be always different :)

      Delete
  11. Skm is the victory of vp efforts only...

    ReplyDelete
    Replies
    1. No never, it is the victory of management who tried their level best to bring back the company from trouble.

      Delete
    2. Sir but you recognize the management efforts and shared with us or else I was never knowing such company and business exists.

      Delete
  12. Very true . Two of the high conviction picks from VP sir, Granules and SKM constitutes 40 percent of my portfolio . Granules is already a 6 bagger for me and I am sure SKM eggs will give multiple return in years to come .Thank you Sir for the guidance that you provided.

    ReplyDelete
  13. Dear Sir, At current valuation, which stock is preferable - Albert David or Kopran?

    ReplyDelete
  14. Sir
    What is your views on Patels Airtemp having very good last quarter result and strong order book. The stock has came down recently without any change in its fundamentals. Is this a good opportunity to add further.
    I am very thankful to you because of your guidance I am earning good returns in stock market.
    Sir Please share your views on Patels Airtemp.
    Thanks

    ReplyDelete
    Replies
    1. Yes, it is one stock deserves better valuation

      Delete
  15. sir,
    will SKM give chance to enter at lower level ???

    ReplyDelete
    Replies
    1. Already given many opportunities. I don't think there is any meaning in asking this question after wasting such opportunities. First you decide how much worth you are seeing in a company and take decision based on that . If market movement is the only factor deciding your investment decision , it may be very difficult to succeed.

      Delete
  16. Sir views on pnb gilt karuturiglobal eco board this all r high profit co. But price are still low should i buy this stocks

    ReplyDelete
    Replies
    1. Not strictly tracking any of these cos. But I could not understand what you mean by a ' high profit Company ' Eco board is a company not reported a single Rupee profit in any of the last five years.

      Delete
  17. Sir Please provide your view on GMR Infra...

    ReplyDelete
  18. Dear VP,

    Please share your views on IVRCL Infra if you are tracking it. Is it a convincing\potential turn-around.

    ReplyDelete
    Replies
    1. Search your site 3 times but could not locate IVRCL Infra, pls help

      Delete
  19. Sir,
    Your views on South India paper mills?

    ReplyDelete
  20. Please provide your opinion on Pricol Instruments from Investment perspective

    ReplyDelete

  21. Can you put some light on Empire Industries?

    ReplyDelete
  22. Respected sir, your pick jenburkt pharma today touched higher circuit. Do you give any profit taking opinion?

    ReplyDelete
    Replies
    1. May take out profit and make it cost free

      Delete
  23. Regards sir, your views on nandan denim and aries agro for long term view

    ReplyDelete
  24. sir,
    What is your view on Lawreshwar Polymers Ltd, can we buy for long term ?

    ReplyDelete
  25. Dear VP, are you by any chance tracking a company called "Alkali Metals"? It is in the specialty chemicals sector, and it looks to be on the verge of a turnaround in fortunes.

    ReplyDelete
  26. Respected VP sir , I have been following your blog since one year. This is very first time I am commenting here. First of all, thanx a lot for your oracle picks from the stock market .
    Sir, I want to invest in good company . As a begginer I just know two thing in the market, first is to pick good company and second , sit silently.
    It took almost 15 days and I found 8 companies.
    These 8 companies seems good and doing fine business ( according to my little knowledge ) .
    But I am not quite sure about my research weather they will regain the momementum or not and about their future progress.
    I picked these companies from two progressing sectors i.e pharma and IT.
    I really need your suggestion on these companies and of course , not about their trading price but their potential and worth in future . These companies are

    1- Hikal ltd
    2- Sonata software
    3- Tata Elxsi
    4- Bliss GVS pharma
    5- Suven life
    6- Aarti Drugs
    7- Shasun
    8- Shilpa medicare

    Kindly give your advice on these companies if they are present in your knowledge. Thanx


    ReplyDelete
    Replies
    1. Only stock I am tracking from above list id HIKAL which recommended @ Rs.54 ( adjusted to stock split) . At CMP Rs.150 , neutral on it

      Delete
  27. Dear Sir what is your views on Barak Valley Cement ,Biopac Corporation.

    ReplyDelete
  28. Dear Sir,

    Any value in subscribing for VRL LOGISTICS IPO?

    ReplyDelete
    Replies
    1. Before asking try to spend some time to check the same question was answered ....check the 5th question on this page itself...

      Delete
  29. Dear sir

    What is your view on Titan biotech and Gujarat Themis? Thanks

    Regards
    Shankar

    ReplyDelete
  30. Dear Sir,

    Any update on this old stock
    http://value-picks.blogspot.in/2010/09/conart-engineers-ltd-watch-it.html

    I tried to find you answered it before, as any comments but not find.
    http://www.searchblogspot.com/ -> i tried it conart + value-pick.


    ReplyDelete
  31. Dear Sir
    We convince stock buy for long term n suppose to buy stock rs @100 n rise 150 then again came down 100 rs so what can do at that level or 50 % book profit or wait for long term compounding. study q o q result or any other tool that can we consider plz advice it .

    ReplyDelete
    Replies
    1. Sorry , I am not a positional trader

      Delete
  32. Sir, Can I buy Dolphin Offshore at CMP? Kindly suggest !

    ReplyDelete
    Replies
    1. Suggested to enter at Rs.84 and book profit at Rs.215

      http://value-picks.blogspot.in/2014/11/dolphin-offshore-enterprises-india-ltd.html

      @ CMP Rs.137 , No new suggestion

      Delete
  33. Hi Sir, Balaji Amines was in upper circuit and hit all time high today. Thanks a lot for recommendation. I am holding this ever since your recommendation.

    Thanks
    Venkata

    ReplyDelete
  34. Dear VP this blog symbol and your name is in capital letters whereas in MMB your name is in small letters with different symbol. Now the issue is that someone in MMB Has created ID exactly the same as in the this blog and messaged as "Not so waste but you are some what right and better to buy pioneer.".....kindly clarify please in this confusion.

    ReplyDelete
    Replies
    1. I never posted such a message ,Please take due care.

      Delete
  35. The making of India's first “smart city”-Gujarat International Finance Tec-City, as it is called, is being constructed in collaboration with IL&FS Engineering and Construction

    https://www.google.com/url?rct=j&sa=t&url=http://qz.com/384097/photos-the-making-of-indias-first-smart-city/&ct=ga&cd=CAEYACoUMTExNDI1MjU3NDkzMTI0Mjc5MzgyHGM1MWJiZjI2MTgyYmU4YjM6Y28uaW46ZW46SU4&usg=AFQjCNFp1Sw-UmlaqOYherpnWSNLW8SOiQ

    ReplyDelete
    Replies
    1. As I mentioned in my previous posting, IL&FS Engg. is my most preferred sector pick.

      Delete
  36. What is your take on
    1.Kitex garment
    2.Ashok Leyland
    3.Future capital
    4.Sadbhav engineering
    5. Jubiliant food
    6.Manglam cement

    ReplyDelete
    Replies
    1. Tracking only Mangalam Cement which already suggested almost Rs.100 lower than Current price.

      Delete
  37. Sir good morning pls suggest your view on aeiges log .hold for further gain or sell .thanks

    ReplyDelete
    Replies
    1. Low risk takers may take out profit and keep the balance as cost free

      Delete
  38. What is your view on cupid rubbers

    ReplyDelete
  39. Hi sir, what's your opinion on the following:
    1. Gvk power
    2. Ansal Properties
    3. Kausambi vanij
    4. Gammon infra
    5. Bajaj hind
    6. Gmr infra
    7. Genus power

    ReplyDelete
    Replies
    1. Not tracking any of the above ,as of now

      Delete
  40. Hello Sir ,How the Equity dilution in Aimco will impact the future prospects ?
    (it is proposed to increase the Authorised Share Capital of the AIMCO Pesticides from the existing Rs. 10,00,00,000/- (Rupees Ten crores only) divided into 1,00,00,000 (one crore only) Equity Shares .of Rs. 10/- (Rupees ten only) each to Rs. 15,00,00,000/- (Rupees fifteen crores only) divided into 1,50,00,000 (one crore fifty lakhs) Equity Sharesof Rs. 10/- (Rupees ten only) each, by creation of additional 5,00,00,000 (Five crores only)Equity Shares of Rs. 10/- (Rupees ten only) each, as indicated in the Resolution.)

    ReplyDelete
    Replies
    1. I don't think funds raised by companies is to keep it idle .It may utilized for expansion of business

      Delete
  41. Sirji needed your views on the following companies if you are tracking them:
    - JSW Steel
    - Lanco Infratech
    - Gujarat Gas Company

    Thanks in advance

    ReplyDelete
  42. hello sir your view on mahalaxmi rubtech (514450)

    ReplyDelete
  43. Sir your view on voith paper and fabrics

    ReplyDelete
  44. Sir, Your view on heidelberg cements?
    thank you in advance!!

    ReplyDelete
  45. Hello VP sir, I know you have already recommended Godavari drugs. You have also recently replied to one of your followers last month during the fall last month from 70s to 40s.. I need your advise on whether I could enter into it in the current levels.

    ReplyDelete
    Replies
    1. Pls check once again what I mentioned when it was around Rs.50

      Delete
  46. Sir, my query related to man infra is nt being approved or answered since last 3 times...plzz reply sir...i find man infra a potential small cap..market cap of just 1000 crores and order book of over 2000 crores and management confident of clocking 6000 crore topline in next 5 years..wats ur view sir? Also plz tell ur view on coral labs...very much fundamentally strong small cap pharma

    ReplyDelete
    Replies
    1. Many times in last six months replied that I am not tracking Man Infra

      Delete
  47. Sir, I have bought Bayer crops... hw is this co.. I am long term invester.. Plz do reply. I m first timer..Thanx

    ReplyDelete
    Replies
    1. Conviction should be generated before buying not after

      Delete
  48. Hy sir,
    I want some information about sangal paper which you suggested earlier..

    ReplyDelete
  49. Sir what is your opinion about Rupa and com.

    ReplyDelete

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