Rajen Shah, chief investment officer, Angel Broking selects Mahindra Ugineand Shanthi Gears as midcap multibagger stock ideas for the day. According to Rajen these stocks have the potential to earn better returns ahead. "In 2012-13 the turnover of Mahindra Ugine will be about Rs 2,000 crore. Profit could be as high as Rs 30 crore resulting in an earnings per share of about Rs 10. I am exceptionally bullish on this company from a little longer term perspective." "Shanti Gears is low profile gear making company based in Coimbatore. This company was doing very well in 2008 and 2009. Both these years it reported approximately Rs 250 crore of turnover and about Rs 45 crore of net profit. This year the company will report about Rs 4 kind of earnings. But next year I do expect a repeat of 2008-2009," he added. Below is the edited transcript of Shah's interview with CNBC-TV18. Also watch the accompanying video. On Mahindra Ugine This company trades at about Rs 47. Between 2004 and 2008 the total net profit made Mahindra by Ugine in these four years was Rs 187 crore which is more than the current market cap of the company. The aggregate profit works out to around Rs 46 crore per year. At that time the aggregate turnover in this period was Rs 700 crore. On Rs 700 crore the company used to report Rs 46 crore of aggregate profit. Today the turnover has more than doubled but the profit is not even Rs 5-10 crore. In this long time the turnover has doubled. It’s almost four years since 2008. The company is into alloy steel which is doing reasonably well. Its stamping business is likely to do exceptionally well because the capacity of stamping business is likely to move up by about 60-70% over the next two years. They are setting up a new plant at Pantnagar which were catering to Telco and M&M. Their ring business, which is a small business about Rs 30 crore is also doing reasonably well. Since the power cost in this business is very high the company has invested about Rs 14 crore in Wardha Power Company. The Wardha Power Company will commence operations anytime now and this is going to reduce its power bill substantially. So we have worked out that in 2012-13 the turnover will be about Rs 2,000 crore. Profit could be as high as Rs 30 crore resulting in an earnings per share of about Rs 10. I am exceptionally bullish on this company from a little longer term perspective. Its capacity expansion will come into play in 2013-14, then EPS could go as high as Rs 15 which was the EPS between 2004 and 2008. At Rs 15 kind of EPS the stock can easily touch Rs 115 in about three years from now. It is a Mahindra Group company. I was amazed to see XUV500 which is an international product coming from Mahindra Group. The future of this group is very bright. Companies like Mahindra Ugine should do exceptionally well because they are catering to the group companies besides other permanent companies. It is surely a multi-bagger in the making. On Shanthi Gears Shanthi Gears is a very low profile Coimbatore based company which makes gear, gear boxes. These are all specialised gears and some of them find application in Airbus and Boeing. This company is currently headed by P Subramanian who has got a very clean track record. He is a person of very good integrity and does a lot of philanthropic activities in South. Last year he gifted about 473,000 shares of Shanthi Gears to its 473 employees, 1,000 shares each to each and every employee. These are no ESOPs but gifts from his personal holding. This company was doing very well in 2008 and 2009. Both these years the company reported approximately Rs 250 crore of turnover and about Rs 45 crore of net profit. After that there were certain issues in the management and some top people left from the company. At the same time the company decided to go for some restructuring. They had six units have curtailed to four units. Lot of restructuring and regrouping was done and now the company is back on track. This year the company will report about Rs 4 kind of earnings. But next year I do expect a repeat of 2008-2009. Their employee cost has gone up by 50%. The employee cost was about Rs 8.5 crore in the first half of last year and has gone up to about Rs 12.5-13 crore in the first half of this year. In May this year, the company for the first time appointed a professional CEO Velumani. Velumani is an expert in the gear technology and has worked for 16 years in Flender and Winergy. Flender and Winergy is a part of Siemens Group. Siemens bought out Flender and Winergy for about 1 billion euro four-five years back. This company now is headed in a different zone altogether in the next two-three years. The company has got about 80 acres of land at Coimbatore which is worth Rs 80 crore and a cash of about Rs 45 crore. That adds up to Rs 125 crore whereas the current market cap is hardly Rs 315 crore. So, if one takes out this Rs 125 crore from Rs 315 crore we get Rs 190 crore of market cap. Next year’s profit will be about Rs 45 crore. One is getting this company for 4 PE multiple and that’s too cheap. The company is now getting into screw compressor business in a big way. Some top people from Atlas Copco could be joining this company. Disclosure: We own about approximately 7 lakh shares of Mahindra Ugine and10 lakh shares of Shanti Gears in our PMS product. On Fertiliser space A: I rarely go through all the things happening in this space because every second month we hear that there is a meeting on the fertiliser policy. I just go by demand-supply and currently while interacting with people I have realised that fertiliser demand is exceptionally high. There is a serious shortage of fertilisers and that is why I have been bullish on this space for the past three years. I am not concerned about the policy because hardly any investment has gone into fertiliser industry for past years because of non-remunerative prices and government policy. Government talks about brining down inflation to 7% I fail to understand how can you bring down food inflation by increasing interest rates? If they want to bring down food inflation increase the agricultural output. The best way to increase agricultural output is creating huge capacities for fertilisers. The government has to sooner or later bow down to the demand of this industry and that is going to lead to higher production of fertiliser. It will result in higher crop production and will ultimately lead to lower food inflation. The solution is not increasing interest rates but boosting crop output. No matter what happens in the short-term these all stocks are going to be multi-baggers in the long-term. One could see sell out happening in stocks likeCoromandel, Chambal and Mangalore Chemical. |
Wednesday, November 2, 2011
Rajen Shah's multibaggers: Mahindra Ugine, Shanthi Gears
Fastest Growing Small Companies 2011
| SMALL & STARRY-EYED |
Click here For The Full List of Fastest Growing Small Companies 2011 Every investor dreams to have a future Infosys or Titan Industries in her portfolio. But choosing the right gems out of over 5,000 listed companies is no mean task. Take heart, ET Intelligence Group has done the job for you. Here's a list of 100 Fastest Growing Small Companies that could be future giants. The phrase ?nothing succeeds like success? might be a cliché, but when it comes to demonstrating the success nothing quite succeeds like growth. It is the growth in revenues and profitability that validates the correctness of a business strategy or a robust business model. Better still, if this is achieved consistently over a period of time. Both large corporates and the smaller ones have their own set of growth stories. Still the limelight is never the same. Bigger companies are always the ones that are talked of more and corner the bigger share of attention. After all, their growth into biggies has already confirmed their success. However, as they say, ?the great thing in the world is not so much where we stand, as in what direction we are moving.' Going by this logic, we feel it is important to celebrate the growth stories even of smaller companies. They may be standing low on the ladder, if size were a criteria, but their consistent growth indicates that they are moving in the right direction. They hold the potential to become India Inc's poster boys in years to come. While the ubiquitous disclaimer about future's uncertainties is definitely in order here, we recommend investors cherry pick companies from our list based on their individual research. Such investments could prove immensely fruitful over next the few years. THE STREET SHOW Last one year has been bad for the stock market and in times like this small and mid-cap companies tend to suffer the most. However, that was not the case with our last year's list of 100 Fastest Growing Small Companies. Between last and this October BSE Small Cap lost 36%, BSE MidCap fell 27% and BSE Sensex slipped over 15%. However, three in every four companies from the 2010 list of Fastest Growing Small Companies have outperformed the BSE Midcap Index in this period, while 52 companies have performed better than the BSE Sensex itself. One in every three companies gave a positive return during this period. It is worth noting that this performance is calculated based on monthly average prices and not point-to-point comparison. THE STAR CAST OF 2011 The list of Fastest Growing Small Companies remains, as usual, a representation of varied sectors from auto ancillaries, pharma & FMCG, chemicals to packaging and mining. Only about half the contenders of last year could make it to the list this time. In a few cases this was on account of the company's inability to continue to perform well. However, quite a few had to lose their rankings due to the raised bar. The list this year is topped by Ester Industries, maker of polyester film, which made a dashing entry into the list, thanks to the runaway prices of its final product. Zydus Wellness, our last year's topper maintained its momentum to secure the second place. While National Peroxide and Mayur Uniquoters improved their last year's rankings to take third and fourth places, respectively. A brief analysis of our 10 toppers follows the main story for readers' easy reference. ACTION & DIRECTION One of the key challenges in compiling this list was to weed out unsound and potentially dubious candidates. This is important because one can't worship growth just for the sake of it. We tried to achieve this by putting strict parameters for companies vying to enter the list. Only companies qualifying on all these accounts were considered for ranking. As such, making it to the ranking is itself quite an achievement. The first thing considered was the debt-equity ratio ? the gauge of leverage. Any company with a reading of above 1.5 in last three years was dropped for being too leveraged. Similarly, interest coverage ratio, indicating the ability to service the debt, had to be above 5 for three consecutive years for the companies to make it to the list. The next criterion considered was the return on capital employed (RoCE). RoCE is a measure to figure out how efficiently a company utilises its capital invested in the business. Too low a return and the company could end up in a debt-trap. Hence, companies that could get RoCE of above 15% for the past three years were only considered. Additionally, companies unable to generate positive cashflows from operations for at least two of the past three years were removed. Finally, the revenue benchmark to qualify as a small company was raised to 1,200 crore or below for the current financial year to accommodate the overall growth and inflation against 1,000 crore or below in the previous year. At the lower end, companies with a market capitalisation below 100 crore were excluded. Top 10 Companies ESTER INDUSTRIES
ZYDUS WELLNESS
NATIONAL PEROXIDE
MAYUR UNIQUOTERS
SANDUR MANGANESE
LUMAX AUTO TECHNOLOGIES
WABCO INDIA
ECLERX SERVICES
HAWKINS COOKER
EVERONN EDUCATION
The company has appointed new leadership and has ensured the soundness of its business fundamentals. In the past one month, its stock has recovered from the lows of 228 to the current level of 380. Its performance under the new leadership in the next few quarters will be crucial to restore the investor confidence. Click here For The Full List of Fastest Growing Small Companies 2011
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| Ramkrishna Kashelkar With inputs from Jwalit Vyas, Ranjit Shinde and Kiran Kabtta Somvanshi |
FY11 saw the demand for polyester film ? also known as BOPET film ? move up strongly on products such as mobile touch screens, LED televisions and solar panels. The prices soared as supply failed to keep pace, enabling companies to make a killing. However, as supplies grew, BOPET prices came down substantially. Ester Industries' June 2011 quarter net profit tumbled 81% y-o-y. This means the company is unlikely to maintain its feat next year. However, with its capacities more than doubling last year there will be a substantial volume growth.
Zydus Wellness, the 350-crore FMCG arm of Zydus Cadila group, has a strong product portfolio with an underlying health plank. The company has invested heavily on building its brands such as Sugar Free, Nutralite and EverYuth. Despite a subdued performance in the June quarter, the company's business continues to hold the promise of strong growth. Sugar Free is India's largest-selling low-calorie sweetener with an 86% market share. EverYuth range of skin-care products enjoy their leadership position in the scrubs and peel-offs category despite competition from MNCs and other Indian players. However, the company is facing intense competition in the face-wash category. Growing at over 20%, the company is poised to achieve its target of 500-crore revenue by 2013-14
Improvement in the prices of chemical hydrogen peroxide helped the industry leader National Peroxide in FY11. The company achieved 49% jump in revenues and 255% in net profits, while its production improved 11.4% to 71,826 tonne. The company expanded its hydrogen peroxide capacity by 24%, for which it had to shut down its plant in the April-June quarter for 70 days. Even after commissioning the plant, the commercial production could begin only from September 2011 onwards. This is set to affect its numbers in the first half of FY12. However, the second half of FY12 onwards it will enjoy the full benefits of expanded capacity.
Mayur Uniquoters is India's leading manufacturer of artificial leather and supplies to domestic automakers such as Maruti, Tata Motors, Hero MotoCorp, M&M, etc, and footwear makers such as Bata, Liberty, Action, etc. It has continued to grow well over last few years without leveraging its balance sheet and is one of the few companies giving quarterly dividends. The company has started supplying to overseas automakers such as Ford and Chrysler and is trying to enlist with GM, Toyota, BMW and Mercedes Benz. The company has maintained its position in the 100 Fastest Growing Small Companies list for second consecutive year and has proven a multibagger in last one year. It appears well placed to continue its steady growth in coming years.
Sandur Manganese & Iron Ore is India's secondlargest manganese ore miner and also operates a ferro-alloys plant with almost all its 2,000-acre mining land in Karnataka. The company benefited from the improved pricing scenario in FY11 although its sales volumes dipped on export ban in Karnataka, high freight costs and 20% export duty imposed on iron ore. The company's June 2011 quarter numbers were hit by Supreme Court's blanket ban on mining activity in Karnataka. This factor is likely to weigh on its overall performance of FY12 like other mining companies and could make it difficult to maintain its position in the list next year.
Lumax Auto Technologies is an auto-component maker supplying transmission and steering components, body and chassis and electrical components. Growing production of automobiles by both Indian and foreign players, a buoyant replacement market and rising costs have benefited Lumax. It is a debt-free, cashrich company and is planning to add two more plants to the existing six facilities in Maharashtra. Its entry into infrastructure lighting, although small at present, could safeguard it from cyclicality of the auto industry in the future.
WABCO India, now a 75% subsidiary of WABCO Holdings of the US, is a supplier of auto components to commercial vehicles industry. A significant revival in Indian commercial vehicles industry, thanks to investments in development of road and infrastructure, enabled it to post a strong revenue growth. As investments in roads grow with more and more private participation, the long-term growth trajectory will remain strong for the commercial vehicle segment. However, in the shortterm, cyclicality in the commercial vehicle market and rising raw material costs could be a concern.
Mumbai-based KPO operator eClerx has benefited from the buoyancy in the demand from the global financial market. Despite talks of a global slowdown, eClerx reported a strong sequential growth of over 6% in the five out of the six quarters ended September 2011, validating success of its business model. PBDIT margin above 33% shows that the new business did not come at the expense of profitability. This has helped in offsetting the impact of higher taxes due to minimum alternate tax on SEZ income. The company offers critical back-end services to the financial sector, which are not affected by the movement of business cycles. This should keep the company going during tough times.
Hawkins Cookers is seeing a huge demand for its products but was unable to meet it because of labour issues at its plants. Last year, the company's net sales grew 17%. The profit declined due to higher raw material prices. But now most of the labour issues have been resolved and input prices have come down from their peak. Hence the company will be able to run its plants more efficiently and higher growth can be expected. Besides, the company is financially sound with high return ratios, strong cash flows and low debt.
Education services provider Everonn Education has reported strong buoyancy over the past three years backed by sound return and liquidity ratios. Its stock has, however, plummeted 44% from the year-ago level following the judicial action against its erstwhile MD in early September.
Sunday, October 9, 2011
TUESDAY, SEPTEMBER 27, 2011
“I am the master of my fate; I am the captain of my soul.”
The people who sit on the sidelines will never score the winning goal. The people who judge you for living your own life are not living theirs. We must all really find out where we are getting our advice. Your inner voice is the best authority for you. It is the guiding source in which you should listen.
Orison Swett Marden said, "Don't wait for extraordinary opportunities. Seize common occasions and make them great. Weak men wait for opportunities; strong men make them." You are the creator of your own destiny! It is your own decisions which create your life.
Wednesday, September 14, 2011
VALUE PICK FROM INDIAN STOCK MARKETS: WEBSOL ENERGY SYSTEMS LTD- REPEAT
VALUE PICK FROM INDIAN STOCK MARKETS: GALAXY ENTERTAINMENT CORPORATION - WILL BIYANI WAK...
Penny Stock Tips - NSE BSE: Suven Life Sciences Ltd
Penny Stock Tips - NSE BSE: Torrent Cables
VALUE PICK FROM INDIAN STOCK MARKETS: AVANTI FEEDS LTD - CHANGING FORTUNES
Penny Stock Tips - NSE BSE: Twilight Litaka Pharma Ltd
Tuesday, September 13, 2011
Multibagger Stocks India: Sree Sakthi Paper Mills Ltd - High Dividend Yield
Wednesday, September 7, 2011
Tuesday, August 30, 2011
*''சிலிக்கான் கிங்'' பதவி விலகல்
உலகின் மிக சக்திவாய்ந்த நிறுவனமாக ஆப்பிளை மாற்றிய ஸ்டீவ் ஜாப்ஸ் பதவி விலகியிருப்பது பலரையும் அதிர்ச்சிக்குள்ளாக்கியுள்ளது. ஆனால் கணையப் புற்றுநோய் காரணமாக அவர் இந்த கடினமான முடிவை மேற்கொண்டுள்ளதாக உள்வட்டாரங்கள் தெரிவித்தன.
ஒரு அமெரிக்க தம்பதியின் வளர்ப்பு மகன் ஸ்டீவ் ஜாப்ஸ். புத்த மதத்தைச் சேர்ந்தவர். கல்லூரிப் படிப்பைக் கூட முழுமையாக முடிக்காத அவர், எழுபதுகளின் பிற்பகுதியில் தனது நண்பர் ஸ்டீவ் வோஸ்னியாக்குடன் இணைந்து ஆப்பிள் கம்ப்யூட்டர் நிறுவனத்தை ஆரம்பித்தார்.
இவரது நிறுவனம் தயாரித்த ஆப்பிள் 1 கம்ப்யூட்டர் மிகப்பெரிய தோல்வியைத் தழுவியது. ஆனால் ஆப்பிள் 2, கம்ப்யூட்டர் உலகில் இவரது நிறுவனத்துக்கான இடத்தை உறுதி செய்தது. 1980-ல் ஆப்பிளை பொது நிறுவனமாக மாற்றி பங்கு வெளியிட்டார். அது அவரை பெரும் கோடீஸ்வரர் ஆக்கியது.
1985-ல் தான் ஆரம்பித்த நிறுவனத்திலிருந்தே விலகிக் கொண்டார் ஸ்டீவ். எல்லா பங்குகளையும் விற்ற அவர், ஆப்பிள் பங்குகளை மட்டும் வைத்துக் கொண்டார். வெளியில் போய் நெக்ஸ்ட் என்ற கம்ப்யூட்டர் நிறுவனத்தை ஆரம்பித்தார். இந்த நிறுவனம் பின்னர் ஆப்பிளுடன் இணைந்தபோது, ஸ்டீவ் ஜாப்ஸ் மீண்டும் ஆப்பிளுக்கு வந்தார், இடைக்கால தலைமை செயல் அலுவலராக.
பின்னர் 2000-ல் அவரே முழுமையான CEO என அறிவிக்கப்பட்டார். அதன் பிறகு ஸ்டீவ் ஜாப்ஸ் தொட்டதெல்லாம் தங்கம்தான். ஐபோன், ஐபேட், புதுப்புது மேக் கம்ப்யூட்டர்கள் என தொழில்நுட்பத் துறையில், எல்லோரையும் பின்னுக்குத் தள்ளிவிட்டது ஆப்பிள் நிறுவனம்.
பாரக் ஒபாமாவுடன் அமர்ந்து விருந்து சாப்பிடும் அளவுக்கு பெரும் விஐபியாகிவிட்டார் ஸ்டீவ்.
14 ஆண்டுகள் அவரது தலைமையில் ஆப்பிள் சாதித்தவை பிரமிக்கத்தக்க வெற்றிகள் என தொழில்நுட்பத்துறை வல்லுநர்கள் ஆச்சரியப்படுகிறார்கள். அடுத்து ஆப்பிள் புதிய ஐபோன், அடுத்த தலைமுறைக்கான அட்வான்ஸ்டு ஐ பேட் போன்றவற்றை அறிமுகப்படுத்தவிருக்கும் நிலையில் ஸ்டீவ் விலகியுள்ளார்.
"நான் ஒரு நாள் இந்த நிறுவனத்தில் இல்லாமலே போகலாம். அதற்கான நாள் வரும்போது, நிறுவனம் அடுத்த கட்டத்துக்கு செல்வதற்கு ஆயத்தமாக இருக்க வேண்டும்" என்பது ஸ்டீவ் ஜாப்ஸ் அடிக்கடி கூறும் வாசகம். அது இப்போது நிகழ்ந்தே விட்டது.
இப்போது ஸ்டீவ் ஜாப்ஸ் ஆப்பிள் நிறுவனத் தலைவராகவும், டிம் குக் தலைமை செயல் அதிகாரியாகவும் செயல்படுவார்கள் என்றும், ஸ்டீவ் தொடர்ந்து நிறுவனத்துக்கு வழிகாட்டுவார்; முதலீட்டாளர்கள் அச்சம் கொள்ளத் தேவையில்லை என்றும் ஆப்பிள் நிறுவனம் அறிவித்துள்ளது.
ஆனால், ஆப்பிளின் இந்த அறிவிப்பு முதலீட்டாளர்கள் அச்சத்தைப் போக்கியதாகத் தெரியவில்லை. நேற்று ஸ்டீவ் ஜாப்ஸ் தனது விலகலை அறிவித்த அடுத்த சில நிமிடங்களில் ஆப்பிள் நிறுவனப் பங்குகள் 7 சதவீதம் வீழ்ச்சியடைந்தன.
Sunday, August 28, 2011
charts and trading system for MCX commodities
attached are the screen shots of our trading systems for mcx intra
Wednesday, August 3, 2011
ENRICH SHARES: LATEST PORTFOLIO OF MR. RAKESH JHUNJHUNWALA AS ON...
Sunday, July 3, 2011
BTST calls
accuracy of the calls will be around 80 percent
only one call will be provided per day
charges rs.3000 per month
trial calls rs. 1000 for one week
traders willing to subscribe to our service,kindly provide us your payment details with mobile number to the mail id: stoxtrends@gmail.com
bank details
swing trading systems for meta trader(MT4)
Screen shots of various swing trading systems for mt4
time frame: half - hourly charts
Tuesday, June 7, 2011
Essential Benefits of a Stock Screening Strategy
All successful traders find a way to make their trading more efficient. They have learned to simplify and optimize the processes of identifying, executing, and managing trades on a daily basis.
Developing a series of stock screens and and trading strategies allows you to be very systematic in your trading. You’ll find that an hour in the evening and the first hour of trading is about the only time you’ll need to review your current trades, clean up your watch list, run your screens, and add new stocks to the list (unless of course you decide to blog about your trading experiences!).
Benefits Of Using a Screening Strategy
v Analyzing over 10,000 symbols by hand is a daunting task
v Gain experience trading similar price and and indicator patterns
v Only trade reliable price patterns
v Significantly improve your win / loss ratio
v Create a constant stream of profit probable trades (watch lists)
v Easily filter bad trades and pinpoint trade execution timing with the use of watch lists
v Tailor trading plans with a mix of easilly executed trading strategies that suit your personality and tolerances
v Improve accuracy of profit targets and stop losses
v Systematize your trading and eliminate “rat brained” emotional trading.
v Create a reliable daily schedule for trading
v Significantly reduce “homework” time and spend it doing other things that you enjoy
v Improve confidence in your trades and noticeably reduce trading stress
Friday, May 27, 2011
trading the breakouts
Thursday, May 26, 2011
canslim
Born in Oklahoma and raised in Texas, William O’Neil has accomplished a lot over his 53-year professional career. After graduating from Southern Methodist University, O’Neil started his career as a stock broker in the late-1950s. Soon thereafter in 1963, at the ripe young age of 30, O’Neil purchased a seat on the New York Stock Exchange (NYX) and started his own company, William O’Neil + Co. Incorporated. Ambition has never been in short supply for O’Neil – following the creation of his firm, O’Neil the investment guru put on his computer science hat and went onto pioneer the field of computerized investment databases. He used his unique proprietary data as a foundation to unveil his next entrepreneurial baby, Investor’s Business Daily, in 1984.
O’Neil’s Secret Sauce
The secret sauce behind O’Neil’s system is called CAN SLIM®. O’Neil isn’t a huge believer in stock diversification, so he primarily focuses on the cream of the crop stocks in upward trending markets. Here are the components of CAN SLIM® that he searches for in winning stocks:
C Current Quarterly Earnings per Share
A Annual Earnings Increases
N New Products, New Management, New Highs
S Supply and Demand
L Leader or Laggard
I Institutional Sponsorship
M Market Direction
Rebel without a Conventional Cause
In hunting for the preeminent stocks in the market, the CAN SLIM® method uses a blend of fundamental and technical factors to weed out the best of the best. I may not agree with everything O’Neil says in his book, How to Make Money in Stocks,but what I love about the O’Neil doctrine is his maverick disregard of the accepted modern finance status quo. Here is a list of O’Neil’s non-conforming quotes:
- Valuation Doesn’t Matter: “The most successful stocks from 1880 to the present show that, contrary to most investors’ beliefs, P/E ratios were not a relevant factor in price movement and have very little to do with whether a stock should be bought or sold.” (see also The Fallacy of High P/Es)
- Diversification is Bad: “Broad diversification is plainly and simply a hedge for ignorance… The best results are usually achieved through concentration, by putting your eggs in a few baskets that you know well and watching them very carefully.”
- Buy High then Buy Higher: “[Buy more] only after the stock has risen from your purchase price, not after it has fallen below it.”
- Dollar-Cost Averaging a Mistake: “If you buy a stock at $40, then buy more at $30 and average out your cost at $35, you are following up your losers and throwing good money after bad. This amateur strategy can produce serious losses and weigh down your portfolio with a few big losers.”
- Technical Analysis Matters: “Learn to read charts and recognize proper bases and exact buy points. Use daily and weekly charts to materially improve your stock selection and timing.”
- Ignore TV & So-Called Experts: “Stop listening to and being influenced by friends, associates, and the continuous array of experts’ personal opinions on daily TV shows.”
- Stay Away from Dividends: “Most people should not buy common stocks for their dividends or income, yet many people do.”
Managing Momentum Risk
Finally, O’Neil always keeps a safety apparatus close by – I like to call it the 8% financial fire extinguisher rule. O’Neil simply states, “Investors should definitely set firm rules limiting the loss on the initial capital they have invested in each to an absolute maximum of 7% or 8%.” If a trade is not working, O’Neil wants you to quickly cut your losses.
The above content is taken from this post in the Investing Caffein Blog
Wednesday, April 20, 2011
Trading is against human nature
Trading is against human nature,' says Rakesh Jhunjhunwala, while talking about his investment approach in the stock markets. He says:
All risk taking is associated with two human conditions, viz the greed for profits and the fear of losses. The ability to strike the right balance between fear and greed is the most vital determinant of profitable risk taking. Human nature operates on the chance of a gain rather than maximizing gains.
There is lack of focus on the magnitude of gains and losses, which is why I maintain that successful trading and investing requires you to go against the basic tenets of human nature. We are programmed to learn, and we learn to a pain. But in trading and investing, you have to learn to take a loss.
In trading, the first and the last principle is that trading is trend and price based, and not opinion based. This requires you to square an unfavorable trade regardless of your opinion. This means that if I buy a stock at Rs 100, and then the price falls to Rs 95, I take my loss and square off my trade. This is counter-intuitive to most people. This is the one common quality of all successful traders.
I have tried to rationalize this many times, and am always reminded of Winston Churchill, the British prime minister who led the country into WWII, who said, "You have to lose many a battle to win the war". I think anybody who wants to trade should not only remember what Churchill said, but also what George Soros says, "It's not important whether you are right or wrong, it more important how much you lose when you are wrong and how much money you make when you are right".
Great fortunes are made by the occurrence of the unknown, and the first portend of the unknown is price, price and only price. Good trading requires three qualities: broad idea of direction, knowing what and how much to risk, and knowing when and how to take a loss.
To be successful in investing, many elements have to fall into place. But four things are critical. There has to be an attractive, addressable, external opportunity; a sustainable competitive advantage; scalability and operating leverage; and the management should be of high quality and integrity. All have to be present but they still constitute only 50% of our necessary requirement. It is important what one buys, but it is more important at what price one buys.
In The Smart Manager, I have talked about my ten commandments of investing. The top three are:
Be an optimist. It's a necessary quality for investing success
Expect a realistic return. Balance fear and greed
Invest on broad parameters and the larger picture. Make it an act of wisdom, not intelligence
I am happy to say that a loss in investing has been a rare occurrence in my career, and the key to it is that I am an investor who focuses obsessively on value. Therefore, I may have made a mistake in buying NIIT in 2001, but I still made a profit.
Friday, March 18, 2011
Investment Strategy: Spring in their steps
Optimistic of their future, many small-caps have embarked on expansion
Information about companies and the industry in which they are operating is criticalfor investors, particularly small and retail. Information gives investors an edge whileinvesting. Sourcing authenticate information about companies is a difficult task for smallinvestors.Finding out and tracking a reliable source of information is important for investors.The notes to accounts published along with the quarterly results is one of the reliablesources of information. Companies share important information about their past and presentthrough the notes to accounts. The notes are even futuristic and provide vital informationabout its future outlook,
Investors should refer to detailed results for better understanding and treat the notesas a reference point. The notes help a great deal to ensure apple-to-apple comparison. Asmatter of fact disclosures in the notes will help investors to get behind the numbers andanalyse the core operational performance of companies. Further information shared in thenotes to account should be used as pointers and investors need to find out additionalinformation from other sources such as annual reports to make meaningful interpretation.
In its pursuit to track valuable information, Capital Marketscanned the notesto accounts of over 2,000 companies for the quarter ended June 2010. An attempt has beenmade to simplify the technical or accounting language. For convenience, companies havebeen divided into three categories based on market capitalisation: small (less than Rs1000 crore), mid (between Rs 1000 to Rs 10000 crore), and large caps (over Rs 10000crore). This article, the last in the series of three articles, focuses on small caps.
One of the prominent trends among small-caps in the June 2010 quarter was theiroptimism about their business operations and industry outlook. Many of these companies areexpanding their capacities or in the process of doing so. In one case, a company’sboard has approved installation of manufacturing facilities. A few have commencedcommercial production and have completed modernisation-cum-optimisation projects.Companies have given an update about expansion plans in progress and also commented on theschedule of completion, whether it is as per plan, and have shared information aboutexpected date of plant going on stream.
A company has entered into collaboration agreement with a foreign company forcommercialisation of new technology. A company’s board has approved formation of ajoint venture company with a US-based company for marketing of products in the US.
Investors need to be careful while analysing the bottom line as a few small-capcompanies have accounted one-time or non-recurring items or cash inflows as part of otherincome, which should have been treated as exceptional or extraordinary items. Forinstance, fire insurance claim received is treated as other income. Profit on sale ofinvestments profit is also accounted as other income.
Companies have also commented about operational performance and the reasons. A companyhas seen erosion in profitability due to increase in input costs, discontinuation ofproduct line due to adverse market conditions, power cuts and failure, and annualmaintenance shutdown. In case of a few companies, future looks bright due to their orderbook position.
Following is the company-wise information shared by small-caps through the notes toaccounts of the June 2010 quarters.
Revathi Equipment: Extraordinary items represent inventory written off an accountof derivation in net realisable value by Rs1.7 crore.
* Factory at Gummidipoondi in Tamil Nadu commenced commercial production of concreteequipment from April 2010.
UB Engineering: Commenced construction of structural fabrication steel unit inChattisgarh.
* UB Infrastructure was incorporated as a wholly owned subsidiary in May 2010.
HOV Services: Certain number of equity shares was reclassified from the promoter tonon-promoter category from April 2010, resulting in drop in promoter holding from 55.83%to 48.59%.
DIC India: As per the share purchase agreement signed in March 2010, sold itsentire shareholding in DIC Coatings India to Valspar (Singapore) Corporation Pte Ltd forRs 40.06 crore in June 2010. The income from transaction has been treated as extraordinaryitem.
Zenith Computers: Out of the outstanding foreign currency convertible bonds (FCCB)of US$ 10 million, bought back US$ 1.81-million FCCBs in the June 2010 quarter.
Varun Industries: According to the amendment to accounting standard (AS)-11,exchange loss of Rs 98.48 lakh in long-term foreign currency monetary items added to thecost of fixed assets in the June 2010 quarter.
Riddhi Siddhi Gluco Biols: Other income included insurance claim of Rs 3.77 crorerelating to fire that took place in May 2007 at its Gokak unit in Karnataka.
Delta Magnets: Acquired 100% equity stake in MMG India Pvt, Ltd, and MMG Magdev,United Kingdom, in the June 2010 quarter. These companies are into the soft ferritebusiness.
Century Extrusions: On expiry of previous wage agreement, a new agreement has notbeen reached due to excessive demands of workmen. The matter was under conciliation withthe additional labour commissioner. However, workmen resorted to agitation inside factorypremises seriously disrupting normal production. The firm has declared work suspensionfrom 2 July 2010, which was withdrawn on 24 July 2010. Normal operations resumed only on28 July 2010.
Thangamayil Jewellery: Cost on advertisement not accounted in accordance with theAS, resulting in overstatement of profit by Rs 11.79 lakh. After taking into considerationthe extended life span of unexploited advertisement, expenses charged to this quarter isfair and proper, as per the company.
Swaraj Mazda: Engaged in legal battle over Modvat credit of Rs 4.66 crore, whichhas lapsed. The amount lapsed is not accounted or written off from the books of accounts,though adjusted in excise records.
Indian Hume Pipe Company: Value of the orders on hand stood at Rs 1254 crore endJune 2010 as against Rs 1519 crore end June 2009.
GHCL: With the approval of the Reserve Bank of India (RBI), it bought back andcancelled 725 FCCBs with face value of US$ 10,000 each at a discount. This resulted in asurplus of Rs 42 lakh, which has been transferred to the business development reserve, asper the scheme of arrangement approved by the Gujarat High Court.
* No provision made on outstanding guarantees of Rs 376.25 crore to Dan River, US, andRosebys, UK. As amount is not quantifiable this would be adjusted against businessdevelopment reserve in subsequent years upon reasonable certainty.
* Of the US$ 79-million FCCBs, bought back US$ 57.25-million FCCBs end June 2010 at asignificant discount. Any premium payable on the remaining US$ 21.75-million FCCBs to beadjusted against the securities premium account. Thus, does not expect any impact on theprofit & loss (P&L) account.
IFB Agro Industries: Production of rectified spirit from molasses distillery wassuspended from 11 June 2010 due to inordinate delay in disbursement of allowable molassestransportation cost by the excise department and also due to non-availability of molassesat economically feasible prices.
Schrader Duncan: Operations at the Mulund plant in Mumbai ceased completely.Entered into agreement with workmen and staff for payment of Rs 14 crore as voluntaryretirement compensation.
Kanoria Chemicals & Industries: Gain or loss arising from the effect of changein foreign exchange rates on revaluation of the outstanding FCCBs and premium on it shownas exceptional item.
EIH Associated Hotels: Travel advisories issued by several countries post-terroristattacks on Mumbai in November 2008 continued to adversely affect travel and tourism. Thedepressed global economic situation further impacted travel to India.
Infomedia 18: Prepared financial statements for the fiscal ending March 2010 (FY2010) on going-concern basis as the company is taking various effectors to revive itsbusiness. Auditors have commented on this. Incurred a loss of Rs 6.12 crore in the June2010 quarter and accumulated losses stood at Rs 99.49 crore end June 2010. Had raisedequity through rights issue of Rs 99.92 crore to augment equity in FY 2010. Unutilisedfunds from rights issue stood at Rs 19.76 crore. Its parent company has also extendedfinancial support. Is in the process of restructuring its business. Entered in to anagreement with Knowledgeworks Global Pvt Ltd in May 2010 to sell its entire equity stakein its four subsidiaries. This will result in significant cash flows in FY 2010.
Balasore Alloys: The auditors have expressed their inability to ascertain liabilityarising out of advances of Rs 5 crore as against which supply of materials is pendingbeyond the stipulated delivery schedule in the accounts for FY 2010. The company ispursuing the matter and is hopeful of refund or supply of materials in due course.
Zen Technologies: Value of orders on hand stood at Rs 3.55 crore end June 2010.
Hatsun Agro Product: In their limited review report for the June 2010 quarter andin their audit report for FY 2010, the auditors have qualified certain income tax relatedmatters under dispute. As per the management estimates, the financial impact will bearound Rs 1.5 crore based on legal advice. The management believes that no incrementalprovision are required.
* There was a fire at its Kancheepuram plant in Tamil Nadu in the June 2010 quarter. Itis hopeful of recovering the loss incurred from the insurance company and has accountedfor Rs 1.50 crore as insurance claim receivable.
Asahi Infrastructure & Projects: The board has approved the installation ofmanufacturing of the fly-ash gypsum brick plant at three sites: Partur district in Jalna,Maharashtra, and two more to be identified. Also approved to manufacture and market theprecast ferro-cement building components on large scale.
Shiva Cement: Kiln was closed for 20 days in the June 2010 quarter.
GMM Pfaudler: Changed its accounting policy for revenue recognition of largecontracts from recognition on completion basis to percentage of completion basis from 01April 2009. Sales of the previous quarter included Rs 4.2 crore based on percentage ofcompletion. There is no revenue booked under percentage of completion in the June 2010quarter.
Gontermann Peiper: Foreign exchange fluctuation loss of Rs 2.19 crore in the June2010 quarter.
Suryalata Spinning Mills: Manufacturing capacities at the Urukondapet unit AndhraPradesh was enhanced by 2016 spindles with two-for-one (TFO) twisting division 3,648spindles for value addition to yarn from 15 June 2010.
Fine Line Circuits: Depreciation was higher by Rs 14.86 lakh in the June 2010quarter as depreciation on plant and machinery for FY 2010 was subsequently reworked basedon the remaining useful life of the assets.
Hindoostan Spinning and Weaving Mills: Value of property and surplus or shortfallon property development by Kalpataru Heights located on the property at Mahalaxmi inMumbai would be accounted on resolution of dispute with the developer, which has beenreferred to arbitration.
Andhra Petrochemicals: Modernisation-cum-optimisation plant commenced commercialoperations from 1 May 2010. Post expansion, installed capacity increased to 73,000 tonnesper annum.
BSL: Expansion projects of the weaving and processing division and vortex spinningare going on as per schedule.
Beckons Industries: Collaborated with a US company for commercialisation of algaetechnology.
* Tied up with Hong Kong-based company for transfer of algae technology to South Asiancountries.
Kajaria Ceramics: Setting up a six-million square meter per annum polished andglazed vitrified tile manufacturing capacity at existing location at Gailpur in Rajasthan,which is expected to go on stream by December 2010
Prime Urban Development India: The realty division obtained approval forconstruction of villas on part of its lands admeasuring about five acres, owned at Tirupurin Tamil Nadu. Construction is scheduled to commence shortly.
* Exceptional items represent net loss on sale of buildings belonging to its TFOtwisting unit at Sathyamangalam in Tamil Nadu.
LKP Finance: Income from operation included Rs 3.56 crore from profit on sale ofshares held as investments.
Stone India: The auditors have commented on liability of Rs 2.28-crore rental tothe Kolkata Port Trust. The matter is pending with the high court. Provision made of Rs94.48 lakh, considered as adequate by the management. Paying rental since August 2005, asper the directive of the Supreme Court.
VBC Industries: Konaseema Gas Power, an associate company, commenced production ofpower for its third unit from 30 June 2010.
Steelcast: Profit margin under pressure due to increase in input costs that couldnot be passed on to customers. Increase in fixed costs arising from investments made tocreate additional capacities, benefits of which are yet to be realised and sharp increasein salaries and wages impacted profitability.
* The board approved formation of a joint venture company with Michigan Steel Group,USA, for marketing of steel castings in the US.
Aries Agro: The sulphur bentonite unit at Fujairah, UAE, commissioned in the lastweek of July 2010.
Transcorp International: Other income included Rs 2.18 crore from profit on sale ofinvestments.
Jay Shree Tea & Industries: Made further investment of US$ 6.6 million (Rs30.25 crore) in its wholly owned overseas subsidiary, Birla Holdings Dubai. The subsidiarymade multiple acquisitions in the June 2010 quarter. First, a 60% equity stake inOCIR-THE, the tea estates owned by the government of Rwanda, with made-tea producingcapacity of 41 lakh kg per annum, through consortium agreement with Rwanda Mountain TeaSARL. Second, 100% equity stake in Kijura Tea Company and Bondo Tea Estates, with made-teaproducing capacity of 13 lakh kg per annum.
* Difficult to estimate taxable profit for FY 2011 as the tea business is highlyseasonal in nature and, hence, current and deferred tax would be provided at the end ofthe year. This has been commented upon by the auditors in their review report for the June2010 quarter.
Mangalam Cement: Six wind mills, with capacity of 1.25 MW each, commissioned inJune 2010.
* Work on setting up of captive thermal power plant of 17.5 MW going on in full swingand to be commissioned by December 2010.
* As per the high court approval, deferred tax liability for FY 2011 and for the June2010 quarter would be adjusted against the securities premium account at the end of theyear.
Mangalore Chemicals & Fertilizers: Fertiliser subsidy accounted for based onthe nutrient-based subsidy policy announced by the government for FY 2011.
Williamson Financial Services: Other income included write-back of liabilities andprovision for diminution in value of investments made in the earlier years that is nolonger required.
Oriental Carbon & Chemicals: Started work on a 5,500-tonne per annum insolublesulphur plant in a special economic zone (SEZ) at Mundra, Kutch (Gujarat).
Lumax Industries: Has set up production facility at Haridwar in Uttarakhand, whichcommenced commercial production from March 2010.
Sulzer India: Other operating income includes a writeback of Rs 4.53 crore from adisputed legal matter which was pending since 1997.
Industrial Investment Trust: Formed a wholly owned subsidiary, IIT Media andEntertainment Pvt Ltd, with capital of Rs 15 lakh.
Abhishek Industries: Hedged its foreign currency fluctuation exposure in FY 2010 bytaking various derivative options from various banks with maturity up to January 2013. Asper the company, these options are proprietary products of banks and do not have a readymarket. Also, the marked-to-market (MTM) model is usually bank-specific instead of beingMTM. Due to the significant uncertainties associated with these derivatives, whoseultimate outcome depends on future events, loss on such derivatives cannot be determinedat this stage.
Lanco Industries: The mini-blast furnace plant was shut down for aboutone-and-a-half month for revamping and reinstallation of hot blast stoves.
Mukand Engineers: Turnover in the June 2010 quarter was less as clients’ siteswere not made available as per schedule. The order book position stood at Rs 198.59 croreend June 2010.
Golden Tobacco: Closed its Mumbai manufacturing facilities after taking permissionof labour commissioner in June 2010.
* Converted certain flats in Mumbai into stock in trade and surplus of Rs 2.67 croretreated as other income in the June 2010 quarter.
Amforge Industries: Due to lock-out declared at the plant, physical verification ofinventories was not undertaken and diminution or impairment in value as well as fixedassets could not be worked out.
* Provision for income tax and deferred tax, if any, for FY 2010 to be made at the endof the year.
Umang Dairies: Sales in the June 2010 quarter higher due to higher sale of brandedproducts.
* Carried forward losses and unabsorbed depreciation and may not have taxable profit innear future. Hence, considered appropriate not to create deferred tax asset as per AS-22.
* Auditors have commented on certain balances of debtors, loans & advances andcurrent liabilities, including advances from customers and secured loans in the process ofconfirmation and reconciliation, in FY 2010. The company is in the process of confirmationand reconciliation.
Cybermate Infotek: Received work orders from five hospitals from implementation ofhospital management software.
National Peroxide: Operating profit significantly higher on year on year comparisonas a result of increase in sales volumes of both hydrogen peroxide and hydrogen gas.
* There was a plant shutdown for 24 days in May 2009 for maintenance and replacement ofcatalyst.
* Other income included dividend of Rs 1.33 crore received from subsidiary NaperolInvestments, which is non-recurring. Therefore, results of the quarter strictly notcomparable.
Samtel (India): Deferred tax assets not recognised as per AS-22 on uncertainty offuture taxable income.
* The management finalized agreement for supply of labour in the previous quarter.Necessary amendments made in the memorandum of association, enabling the company toundertake this agreement. However, the company continues to carry on trading activitiesand is exploring other options. Accounts prepared on going-concern basis.
Saurashtra Cement: Exceptional items represent reversal of provision for diminutionin value of investment. Any diminution or reversal for losses in investment in subsidiarycompanies to be considered at the end of the financial year.
Bellary Steels & Alloys: All expenses including interest and depreciation onexisting operations capitalised as they are under implementation.
Pan Electronics (India): Worked out deferred tax assets. However, tax impact of netdeferred tax assets not recognised in books based on the application of principle ofprudency, as required by AS-22.
Sundaram Brake Linings: Provided detailed note on losses arising from derivativetransactions. Disputes arising out of certain derivative transactions entered into onbehalf of the company with some banks have been settled. Net amount paid shown asextraordinary expenditure. If there are defaults on its financial commitments under thesettlement claimed by the bank, the entire amount of Rs 84.12 crore would become payable.
Chokhani International: Decision pending on its claim on ICICI Bank for Rs 210crore on account of the bank’s negligence, resulting in total loss of thecompany’s most valuable assets, which had a value more than sufficient to meet claimsof secured and unsecured creditors, by failing to carry out timely maintenance despitereminders from the court receiver. Therefore, cost of fixed assets less depreciationprovided and value of inventories amounting to Rs 48.81 crore, as intimated by the debtrecovery tribunal receiver, deducted from secured loans. Considering this, the managementis of the opinion that no amount whatsoever is due and payable to financial institutions.
Ashirwad Capital: Deferred tax liability to be calculated and provided whilefinalising the accounts.
Ceat: increased its stake to 100% in Associated Ceat holdings Co Pvt Ltd, SriLanka.
ABM Knowledgeware: Revenue of approximately Rs 7 crore and corresponding cost ofapproximately Rs 5.6 crore out of one-time software supply contracts have been fullyexecuted in the June 2010 quarter.
* Provision for deferred tax liability, if any, to be made at the end of the year.
Kamat Hotels (India): Opted for amended AS -11. Resulted in a loss of Rs 2.09 crorein the June 2010 quarter as against gain of Rs 5.77 crore in the June 2009 quarter. Losshas been added to the cost of relevant fixed assets if related to capital asset and toforeign exchange fluctuation gain or loss difference account in other cases.
l After the shareholders’ approval received in June 2010, the Reserve Bank ofIndia (RBI) has issued no objection certificate to revise the conversion price of US$13-million FCCBs as per pricing norms notified.
Apt Packaging: Not recognised deferred tax assets in the accounts consideringuncertainties about future profits.
Swasti Vinayaka Gems Corporation: Deferred tax liability to be calculated andprovided at the year end.
Wadala Commodities: In view of uncertainty of profit to offset brought-forwardlosses, not recognised deferred tax assets.
Madras Fertilizers: Ammonia and urea plants shut down for four days and nine days,respectively, in the June 2010 quarter for annual maintenance and power failure.
ADF Foods: The unquoted investments in the subsidiaries are of long term and thereis no permanent diminution in the value. To do an impairment exercise at the year end, asper policy.
Total Exports: No interest provision made as final settlement of loan withfinancial institutions still in progress.
Nelco: Obtained approval of the shareholders to transfer undertakings comprisingtraction electronics, supervisory control and data acquisition and the industrial drivesbusinesses on a slump-sale basis to Crompton Greaves for Rs 92 crore.
* After implementation of the SAP ERP system from 01 October 2009, the accountingpolicy on valuation of raw materials has been changed from the weighted average method tothe moving weighted average method. This change does not have a significant impact on theresults for the June 2010 quarter and nine months ended June 2010.
* Other expenditure included charge of Rs 56.24 lakh for the June 2010 quarter andcredit of Rs 2.07 crore for the nine months ended June 2010 (June 2009 quarter credit ofRs 1.58 crore and charge of Rs 56.55 lakh for the nine months ended June 2009) on accountof foreign exchange fluctuations impacting monetary items, as per AS-11.
Sinclairs Hotels: Other income included Rs 66.31 lakh in the June 2010 quarter andRs 36.55 lakh in the previous quarter on account of income from investments of surplusfunds.
Century Enka: Shared information on preferential warrants allotted to promoters andstatus on conversion of warrants in equity shares.
JCT Electronics: Deferred tax assets not accounted due to uncertainty in realisingagainst future taxable income.
Blue Coast Hotels: Interest and finance charges of Rs 5.38 crore including Rs 2.75crore of interest on investment in new projects.
Binani Industries: Binani Zinc, subsidiary of Binani Industries, invested inMeridien Minerals, Australia, through its wholly owned subsidiary, PZ Minerals (Australia)Pty Ltd, to ensure long-term availability of zinc concentrate.
Amrit Corp: Sold or transferred its investment in ABC Paper to co-promoter EsteemFlnventures by way of interse transfer between the promoters at the close of the June 2010quarter as part of restructuring of shareholding among the promoters of the company.
Sri Ramakrishna Mills (Coimbatore): Power shutdowns and 20% power cut was in forcein Tamil Nadu.
Emmsons International: Foreign currency forward contract income or loss includedprovision made on MTM basis, as per revised AS-11.
Sumeru Industries: In the process of establishing salt-pan project in the Kutchdistrict of Gujarat.
Excel Crop Care: Excel Crop Care, Africa, was incorporated as a wholly ownedsubsidiary in Tanzania in June 2010. To commence business operations in the second half ofthe financial year.
Greenply Industries: The medium density fibreboard unit, situated at IIE,Pantnagar, Uttarakhand, was largely inoperative in the June 2010 quarter forsynchronisation of machineries in the continuous manufacturing process. During theprocess, there was an unfortunate incident that caused damage to the Thermax boilerfurnace on 22 June 2010. Discussions were initiated with the supplier. Furnace of boilerneeds to be replaced. Cost of replacement would be borne by the supplier. Normaloperations are expected to resume by 15 September, 2010
Firstobject Technologies: Total revenue included Rs 8.46 crore from IT / ITES andRs 60.7 lakh from e-learning.
Shri Keshav Cements & Infra: Capacity expansion is nearing completion as perschedule of planned growth. Benefit of the expanded capacity to accrue from the next threequarters.
Bhagiradha Chemicals & Industries: Manufacture of chlorpyriphos, along-standing product of the company, discontinued in July 2010 due to adverse marketconditions. Chlorpyriphos was contributing around 50% to sales. Developing alternativeproducts that are expected to be in the market in the next 12-18 months.
Vinyl Chemicals (I): Extra-ordinary items relates to gain on prepayment of deferredtax (sales tax) under the Maharashtra Value-Added Tax Act, 2002
Maral Overseas: Life of spinning plant and machinery was revised back to 18 yearsin FY 2009. Therefore, the depreciation for the June 2010 quarter not comparable.
Enkei Castalloy: Figures of the June 2010 quarter are not comparable due todemerger of the wheel division. The current results pertain to the foundry division only.Sales of the foundry division stood at Rs 44.71 crore and profit before tax Rs 3.15 crorein the June 2009 quarter.
Rubber Products: For valuing raw materials, followed inclusive method as in thepast instead of exclusive method. All taxes included, as per AS-2.
* Debtors subject to confirmation and included some debits that are overdue. Theseincluded dues from railways, government departments, and public sector undertakings. Legalaction for recovery of dues in progress. No provision made for doubtful debts.
ITD Cementation India: Recognised variation claims of Rs 50.42 crore till 30 June2010, which are also included in sundry debtors. These claims are disputed by thecustomer. Out of this, Rs 28.01 crore is under arbitration. For the balance variationclaims of Rs 22.41 crore, received arbitration awards in its favour. These have beenchallenged by the customer. Considering the legal advice, the management is reasonablyconfident of recovery of the amounts awarded.
* Debtors end June 2010 included Rs 33.84 crore, representing interim work bills forwork done which have not been certified by customers beyond normal periods ofcertification. The management is reasonably confident of the certification and recoverybased on past experience.
* Debtors end June 2010 included Rs 12.25 crore, which was recognised as income in theearlier years. Based on the payment schedule originally agreed with the customer, theclaim was expected to be received over a period of time commencing from FY 2009. Noamounts have been received till date and further rescheduling of payment not yetfinalised. The company is in advanced stage of discussion and confident of recovery.
* Recognised escalation claims on two road contracts, aggregating to Rs 20.28 crore,till 30 June 2010. Debtors included Rs 11.40 crore. The claims are disputed by thecustomer. The company has received favourable verdicts from the dispute redressal boardand in arbitration thereafter. The customer has appealed against the arbitration award.The management is reasonably confident of recovery. Not recognised any turnover orescalation claims on these road contracts in the June 2010 quarter.
* Debtors end June 2010 included variation claims of Rs 15.15 crore, for which thecompany has received an arbitration award, which was, subsequently, upheld by the districtcourt.
Bright Brothers: Reduction in equity capital was an account of buyback in the June2010 quarter.
Axis IT&T: Over the last two financial years, expanded operations and tookoptimisation measures resulting in improved profitability.