There was sharp
appreciation in the price of gold in past few years.This is mainly due to a
shift in asset allocation by individuals and countries in favor of gold at a
time of financial turbulence around the glob.This unstoppable increase in gold
prices forcing lower class and lower middle class people to look into cheap
alternatives for the purpose of making ornaments / jewellery .This is not the
trend only in our country but in many other places too.This situation improving
the potential of another business – Imitation Jewellery. Beads is an important
part of this business.This business is dominated by unorganised sector and
there is only one listed company from this space – Banaras Beads which is
manufacturing in manufacturing and exporting glass beads, imitation
jewellery and other similar products.Banaras beads came out with an IPO in 1995
with a premium of Rs.75 per share. Thereafter there was some serious disputes
between the promoter family members which ends in a series of court cases and
intervention of company low board ( CLB).Trading of company’s stock suspended
from stock exchanges from 2003 to 2011.During this period company’s growth
severely affected and no dividend distributed.Now company almost
settled the disputed and cancelled the allocation of about 30 lakhs
shares issued to a group of family members according to the direction of CLB.
From a turnover of Rs.15 Cr in 2007 company grown to a Rs.35 Cr in 2011-12.Now
BBL is planning to tap the opportunities aggressively by expanding its design
and production facilities ,finding new export channels ,entering into new
territories ..etc.At present company exporting its products to about 60
countries including USA, Africa, Europe and Arabian countries.Company is now
adding another 75000 Sq Ft facility ta Varanasi which is expected to complete
in another few months.Recently company launched fashion jewellery items under
the brand ‘De-Lemon’ and also launched an online shopping portal for
Fashion Jewelery & accessories ( Link below).Even this industry is
dominated by un organized players ,company’s like BBL having advantage of most
modern designing facilities,adoption of contemporary styles,Image of brand
..etc. .FY 2011-12 was company’s first full year post re-listing .In FY 2011-12
,BBL reported a sales of Rs.34 Cr , net profit of Rs.4.75 Cr and an EPS of
Rs.7.10.Another point to note is its dividend pay out .Last year company
declared a dividend of 40 % .On the basis of current market price this
provided a dividend yield of 10% ( tax free) .I believe this was one of
the highest dividend yields last year.We can’t guarantee this will repeat in
future but there is possibility for the same since company is expected to
complete this FY too with similar level of profit. Since company is running
near its full capacity ,performance is expected to improve further with
the functioning of new facilities by next year. End of long dispute at
management level will help the company to concentrate in business from hereon
and demand scenario for imitation jewellery is expected to pick up further.
Even this company’s stock listed in both stock exchanges it frequently traded
only in BSE .Because of this low liquidity ,it is only suitable for those like
high risk high profit kind bets and not for average risk takers.Invest
only a very small portion of your corpus in these kind bets.BBL is
trading at a price close to Rs.40 /-
Link to Company's
online shopping portal HERE
Link to Company
website HERE
