SUNSHIELD CHEMICALS - ACQUISITION BY SOLVAY

In September 2012 ,  Rhodia Amines Chemicals Pte Ltd Singapore and Solvay S.A. of Belgium made an open offer to acquire majority stake in Sunshield Chemicals @ Rs.51 per share .Offer will be closed on 19 December 2012.For the first time post announcement stock closed above open offer price today.Considering  Solvay's expertise in chemical field and its planned expansion in India ,It is a stock to keep in radar .CMP is Rs.55 /-

Link to Solvay Website HERE 

Link to Sunshield Website HERE

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KAVERI SEED COMPANY - LATEST INTERVIEW WITH ITS MD

 
For old posting about this company click HERE

              OVER VIEW OF KAVERI EXOTIC VEGETABLES' PILOT PROJECT

Sri Gundavaram V. Bhaskar Rao, Chairman and the Managing Director, Kaveri Seed Company Ltd., Andhra Pradesh is a technocrat with business acumen.  Agricultural family background and nurtured interest in farming destined him to become a graduate in Agriculture from College of Agriculture of the Andhra Pradesh Agricultural University now ANGRAU, Hyderabad in the year 1974.
As a seed entrepreneur, Sri Rao was instrumental to startup seed production programme of public bred hybrids & varieties of corn, bajra, sunflower and paddy in family owned farmland. In a couple of years time, established a seed processing plant to augment quality seed production with brand name of a proprietary concern- G.V.B Rao & Company. It soon became a partnership concern with MNCs producing contract quality seed. In a step wise accretion, the company grew over the years under his stewardship and registered as Kaveri Seed Company Pvt. Ltd. in 1986.The  growth in seed business  of Kaveri expanded the scope of the Company not only to produce and market seeds but also other agri-products – micronutrients, plant growth regulators biofertilizers and biopesticides. Both seed and agri-products of Kaveri brand carved a niche in the Indian market. Within two decades, Kaveri Seed Company scaled new heights in seed and agribusiness and became a listed Company in the year 2007.  The company’s image received a big boost by figuring in “Forbes Asia Best Under A Billion – The region’s Top 200 Small & Midsize Companies. It did hatrick by re-enlisting successively by Forbes   in 2011 and 2012 too .The leadership in Sri Rao won recognition by the fellow seeds men of A.P and he was elected as President of AP. Seedsmen Association for two consecutive terms
 Q1)      What are your company’s future plans?
 Kaveri Seed Company is committed to march ahead in its core seed and agri- product business. The company has plans to consolidate recently established lead in cotton, pearl millet and maize and carve a niche in vegetable seed and export market .It also intends to scale up their position in rice and sunflower Hybrid rice with huge market potential is the next major attraction for the Company’s business. The company’s thrust  is on “Development of Biotic resistant Rice through conjunct use of Bio and Hybrid technologies”  and “Marker-assisted dissection of genetic basis of yield and improving yield potential under drought stress in Maize”.  The Company is laying emphasis on high value olericulture by way of protective cultivation of premium vegetables and culinary herbs.  KEXVEG (Kaveri Exotic Vegetables) is our initiative in this direction.
 Q2)       What are your new products?
 The company reins enviably in its product portfolio – both in number and performance. The Company’s premier BT cotton hybrids – Jaadoo, Jackpot, ATM, singha & Barood  bajra hybrids -Super Boss & Fouzi  are  now  in the forefront of seed market and in the farmer’s fields. Sampada (red gram) Sampoorna, Super Sona & KPH 9090 (paddy) have created niche markets. Based on National Evaluation process, the ICAR has identified Company’s maize hybrids -KMH 25K60, KMH 3712 KMH 218+  and KMH 3426  Four paddy hybrids excelled in National trials In a similar vein, X 563 (Bajra) and KSH 950 (Jowar) are the hybrids of promise and likely to hit the market soon. In Sunflower the hybrids Sunkranti,  and Champ are in the demand in rain fed and irrigated areas.  Success has also been achieved in vegetable breeding; Significant progress has been made in breeding  for yellow vein mosaic virus (YVMV) resistant okra hybrids.
Q3)      How has this season been for your company?
Since KSCL is committed to quality at different stages of production, testing and processing, the demand for its products is on the rise, so the company has done well in spite of delayed monsoon.  This vouches for the genetic buffering capacity (Homeostasis )of its products to weather aberrations.
Q4)      Do you recommend any policy changes from the government?
Seed industry should be given the status of preferred industry by the Government. Policy support from the Govt. by way of encouragement to investment in research and infrastructure; minimal regulation and compliance; freedom to operate based on free market principles
 Q5)   Is power crisis impacting the seed industry?
Yes; since agriculture cannot wait, seed should be available to the farmers at the right time, in required quantity and desired quality to meet the food demand of the people.  The irregular supply and power cuts  derail all the operations of the seed industry including production leading to seed scarcity and eventually to food crises.
Q6)      It is said that India will become future hub for seed production of the       world. Your comments on that?
Availability of arable land, varied agro climate, congenial environment for seed production of diverse crops, trained manpower, skilled labour backed by a vibrant seed industry fifth largest in the world, certainly India has the imminent potential to become a global seed hub
Q7) What do you see the potential for paddy seed and maize seed in Indian seed   industry?
 Rice and maize are two important food basket crops along with wheat and their stagnant production and productivity makes the country food insecure. . The decline in yield gain for these crops is of great concern. Nevertheless, the R&D capabilities of seed Industry, as well pro business policy environment to support their growth, will significantly contribute to productivity gains in these two major crops. After Bt cotton, next growth driver of hope for industry is hybrid rice.
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 Courtesy : Gubba Cold Storage Ltd


Disc : I have vested interest in KSCL

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TIL Ltd - BUY

  

   

I know ,many of you may raise eyebrows for recommending a loss making company this time.As a contrarian bet I am taking  one such company -TIL Ltd – for genuine investors.I believe if the poor performance of any company is only due to a temporary demand slackness in that particular industry ,such situations should be used to enter in quality companies from such  sectors. Proper time of entry and depth of patience will help to make robust return in such cases. As you are aware ,overall engineering industry in India is going through a rough patch due to lower capex for the  past few years.Delay in various approvals by government authorities for larger projects ,higher interest rate ..etc are the main reason for this scenario.I feel ,we are almost at the bottom of a poor capex cycle and it is the time to acquire quality companies from this sector and wait with patience to reap the benefits in medium to long term.TIL is a Kolkata based company manufacturing and distributing engineering equipments for sectors like material handling ,mining,construction,earth moving ..etc. TIL along with its subsidiaries  operating in four divisions –

1)    Material Handling ( Mobile Cranes,Tower Cranes,Container Handler,Forklift..etc)

2)    Equipment and Project Solution (Hot Mix Plants,HD Drills, Crushing and Screening Solutions ..etc

3)    Construction and Mining Equipments  (Excavators,Off-highway trucks,Loaders..etc

4)    Power System Solutions ( Diesel Generators with various capacities)

The above product profile clearly indicating company’s presence in each and every important segments of infrastructure development.

Company is also serving as the dealer for Caterpillar products for  north and east India and Bhutan through its  subsidiary Tractors India Private Ltd.During the past few quarters company came through serious challenges mainly due to poor  demand in  power systems and construction divisions on account of  delay in various infrastructure projects in roads, power and mining space. For FY 2010-11 company reported a top line of Rs.1380 Cr ,  net profit of Rs.60 Cr and an EPS of Rs.60 /- .In FY 2011-12 profit declined substantially to Rs.15 Cr and again in subsequent quarters of FY 13 TIL reported losses .  As a reflection of this bad financials its share price nosedives from a high of Rs.750 level to current level of sub Rs.200. I believe ,government will now  initiate some steps to improve the momentum of the economy including aggressive capex plans by PSU companies.Since there is not much distance  to the next parliament election ,chances are there for a speedy approval of projects which delayed in past many months or years.Altogether I strongly feel this is the time to buy quality companies from sectors which may directly benefited  by an improved  capex cycle.TIL is one such company operating in many of these  verticals and recommending it  for investors with enough patience which is now trading even below its book value of Rs.270/-.This stock is listed both in NSE and BSE and trading at CMP of Rs. 205 /- 

Link to Company Website HERE

Link to latest Annual Report HERE

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HERITAGE FOODS TO HIVE-OFF RETAIL BUSINESS TO ROPE IN PARNERS - ET REPORT

 7 Dec, 2012, 04.00AM IST, C R Sukumar,ET Bureau

HYDERABAD: Heritage Foods IndiaBSE 4.99 % (HFIL), the Rs 1,400-crore retail and dairy products company promoted by the family of Andhra Pradesh's former chief minister N Chandrababu Naidu, will hive-off its retail business into a separate arm to rope in strategic or financial partners, said a top official.

The move assumes significance in the backdrop of the government's move to allow foreign direct investment into the retail sector, allowing foreign companies to buy a controlling interest in Indian retailers.

"The board has approved a proposal to hive off the retail business into a wholly-owned subsidiary and to rope strategic or financial partners in a bid to accelerate the pace of growth in retail business," HFIL president M Sambasiva Rao told ET.

A separate entity, Heritage Foods Retail, was registered for the purpose and the transferring of the retail business to the subsidiary will take place along with the firming up of new partners, said Rao.

He ruled out promoters divesting stake at the parent company level. Heritage Foods, founded by Chandrababu Naidu in 1992, had in 2006 forayed into food and grocery retail. It currently operates in Andhra Pradesh, Tamil Nadu and Karnataka.

The retail division now has 72 'Heritage Fresh' branded retail stores with a total retail trading space of 2.1 lakh square feet. "It is a volume business and we want to at least double the retail trading space over the next two-three years with the help of partners in these three southern states," said Rao.

For the year to March 2012, the retail business reported sales of .`299 crore but had negative EBITDA (earnings before interest, taxes, depreciation and amortisation) of Rs 18.3 crore.

"We are open to roping in both domestic and foreign partners," he said. "There are some pure investment players who may be interested to invest and allow us to manage the business and some domestic and foreign retailers keen on active role in running the business".

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HERITAGE FOODS - COMPANY CLARIFICATION

In response to the news item published in today's Business Standard (reproduced in my previous posting) Heritage Foods now issued a clarification to BSE as follows :

 

With reference to the news item appearing in a leading financial daily titled "Premji fund back in retail with Heritage Foods stake buy ", Heritage Foods (India) Ltd has clarified to BSE the following :- "1. The Company decided to subsidiarise Retail business and a wholly owned Subsidiary Company namely Heritage Foods Retail Ltd was incorporated and the decision of the Board was informed to the Stock Exchanges on September 26, 2008. Company is open for strategic partnership in retail business for accelerating its growth. However before finalizing any of such deal the Company will follow the prescribed guidelines as per the Listing Agreement. 2. Company is not looking for any strategic investor at the group company level (HFIL) and the promoters are not looking to sell their stake. 3. The buzz in the market regarding open offer by a strategic player with a total transaction value of $ 100 Million, is not true."

MY OBSERVATIONS



1) Company not denied the investment by Azim Premji's investment fund, which happened during last week of October and first week of September at a price of Rs.380- 390.

2)Heritage denied the entry of a strategic Investor to the main company but nothing commented about a dilution of stake in their retail venture. I feel ,in near future company will de-merge its retail operations into its wholly owned subsidiary and divest some stake of this subsidiary to a strategic investor  . This will surely help the company to reduce its financial burden to a large extent and also help the company to retire its debt substantially over the next few years.

3) Regarding open offer by a strategic player for the company with a TOTAL transaction value of $ 100 Million is really an unthinkable figure. If the author mean this value is for  ENTIRE company , based on some of the recent transactions happened in dairy industry  in India it should be many  times higher than the mentioned figure and in this case I think the promoters will not dilute any stake in their  main company ( Heritage Foods)  at this point of time.

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HERITAGE FOODS - UPDATE

COURTESY : BUSINESS STANDARD


Premji fund back in retail with Heritage Foods stake buy 


 Raghuvir Badrinath / Bangalore Dec 05, 2012, 00:50 IST

Premji Invest, the $1.2-billion private and public equity fund of Wipro chairman Azim Premji, has bought a stake in Hyderabad-based Heritage Foods. The latter is a publicly held company, owned by Chandrababu Naidu, former chief minister of the state, with revenue of around Rs 1,400 crore in 2011-12.
It is understood that the stake was bought recently, after a private equity fund managed by the Kotak Mahindra Group offloaded a majority of its 10 per cent stake in the open market. With this, Premji Invest has again takenp direct exposure into the food and groceries retail chain sector, despite the ongoing legal tussle with the promoters of Subhiksha, the failed retail chain in which they’d put a huge amount, shortly before the latter went bankrupt.
While Premji Invest did not respond to queries for this report, senior management officials of Heritage Foods confirmed the move.
Prior to this investment, the PE fund took exposure in Fab India, JSM Corp (which runs the Hard Rock Cafe in India), Trent (part of the Tata Group), Carnation (a car servicing company started by Jagdish Khattar), Manipal Global Education and Healthcare Global (a cancer care chain), among others.
The management of Heritage Foods is understood to be in the advanced stages of spinning off the company’s retail arm, which runs 75 neighbourhood convenience stores under the ‘Fresh’ brand, focused on South India. Heritage Foods gets 90 per cent of its revenue from the dairy business; the rest comes from agriculture and bakery segments.
Heritage’s president, M Sambasiva Rao, told Business Standard they were open to a strategic partnership in the retail business. This business contributes around five per cent, at Rs 300 crore, to the revenue; it report a loss of Rs 20 crore in 2011-12.
The PE sector is also abuzz with reports that Heritage might also be looking for a strategic investor at the group company level. “The stock price during the past three months has had a good run. It has gained as much as 80 per cent and is trading at Rs 465 a share on the NSE. There is a buzz in the market that a strategic player might take a stake and then make an open offer in a total transaction value of $100 million,” two investment bankers told Business Standard.
However, the management of Heritage Foods categorically denied that the promoters were looking at selling stake in the main company. A senior official said during the past two quarters, the profit levels had improved substantially, with the dairy business performing well as procurement costs come down. “That is one of the reasons for the spike in the stock price,” he said.

OLD POSTING ABOUT  THIS  STOCK - HERE

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LA-OPALA RG -------- REPEAT

La-opala RG  is a stock recommended twice in this blog once around Rs.60 and again @ Rs.165. Now repeating this stock third time @ Rs.190 . La-opala is a name to reckon with in the  Indian organised crockery market and an undisputed leader in premium segment. Company also exporting its opal and glassware products to many countries.Recently company completed a major capacity expansion program in its Sitarganj Factory ( upto 100 % increase in production capacity of this unit ) which will start to contribute from this financial year onwards.With this expansion company is expecting to increase its export contribution from current 20% to 30% in total turnover. Company already owned another piece of land worth about Rs.20 Cr and management indicated  this will be utilised in future for further expansion.Government’s decision to impose anti dumping duty against cheap imports of opal ware from UAE and China for five years will help the company to sustain and improve its margins.Now the company is also targeting corporate business including supply of products to star hotels..etc.which is  untapped till now .Another important point to note is that the company’s efforts to reduce its debt level .In past four years La-opala reduced its debt level  by 50 % which is very important and prudent decision by the management in a high interest rate regime. La-opala is expected to end FY 2012-13 with an EPS of Rs.15+ and FY 2013-14 with Rs.20+ , based on this current valuation is  still at the lower end for a company operating in premium housewares segment with established brand and showing steady growth.There is no strictly comparable pairs but the demand trend of these products are almost similar to the products offered by companies like TTK Prestige ,Hawkins ..etc Citing all these positives management is aggressively purchasing shares( Sample Filing HERE) from open market in past few weeks even the price ruling around its life time high.Considering the favorable demographic changes ,increasing nuclear family centric life  trends ,changing spending habits ,,etc  companies like La-opala  is expected to post robust growth going forward.Recommending this stock third time as a long term buy even at CMP of Rs.190 for investors with some risk appetite.Stock is listed both in NSE and BSE.

Link to Company website HERE

Disc : I have vested interest in La-opala.

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