CAMPHOR & ALLIED PRODUCTS LTD - JOINING HANDS WITH A WORLD LEADER

 Camphor and Allied Product is a niche play in Indian Specialty Chemical Segment. It is  the largest exporter of specialty aroma chemicals from India . Its product range includes fragrance chemicals such as amberone, pharmaceutical products like  camphor and terpineols, aromatic chemicals like  citwanene, and  industrial chemicals such as alpha pinene.This company taken over by one of India’s largest fragrance manufacturer Oriental Aromatics Limited in 2008 at a price of Rs.167 per share.Using the modern technology of Dupont ,USA  CAPL is the largest manufacturer and pioneer in Turpine Chemistry in India. Company’s  products are mainly  exported to Europe, UK and US for use in flavours, fragrances, pharmaceuticals, soaps, cosmetics, tyres, paints , varnishes...etc.

                                                                                           Not only the status of India’s largest aroma chemicals manufacturer but its new relation with  AganAroma & Fine Chemicals    which is a subsidiary of Makhteshim Agan Group -an affiliate of ChemChina - ( Chem China is  the largest Chinese chemical company ) creating interest in CAPL . As per the agreement with Agan  ,high margin products produced at company’s new plant located at Vadodara will be marketed by Agan worldwide . Agan will also provide technology expertise to camphor. Company claiming this  is the world’s most advanced plant for manufacturing high margin Musk and related products.Last year company started commercial production from this facility and the recent results of the company speaking for itself.

Now company is planning to give priority to reduce its debt .Last year company sold a non core land asset to limit the dependency of debt for setting up the new plant.Last year company also skipped the dividend due to this reason .With robust performance in  ongoing financial year ,let us hope the company will back to dividend list in this year.In the latest  December quarter  CAPL reported a turnover of Rs.77 Cr ( last year same period Rs.54 Cr) and net profit of Rs.8.20 ( Rs.4.5 Cr) .For the nine months  of this FY ,CAPL reported a net profit  of Rs.14.53 Cr and an EPS of Rs.28.30 .Now company completed major capex and result of the same started to flow .

                                       Click on the figure for a better view

CAPL  is  in a  niche segment backed with strong support of a world leader but  a less researched company  by market participants  . With revival in western economies, scaling up the production capacity to full utilization level ( Currently around 75-80 % level) , reduction in debt using improving cash flow ,possibility for  further expansion in relationship with Agan  ..etc ,  company is expected to report even  better numbers going forward.

Recommending to invest with a long term view at CMP of Rs.182 .Stock listed only in BSE


Link to Company website HERE

Link to Agan Aroma HERE

Link to Makhteshim Agan Group Web site HERE

Disc : It is safe to assume that I have vested interest in CAPL

CAPLIN POINT LABOROTORIES - UPDATE

Caplin Point Laboratories recommended @ 86 currently trading around Rs.167 .( Old posting HERE)   .Stock already appreciated about 100 % in less than three months. Now company informed BSE that its new Injectables plant started commercial production from today onwards.( Read HERE) .It is an important development in the history of the company and recommending to HOLD  it for long term

SUNSHIELD CHEMICALS - UPDATE

Sunshield Chemicals recommended @ Rs.62 on 27 November 2013 .Today stock hits its life time high @ Rs.138 .Today in an important development , Rhodia Group agreed to accept the reverse book built price of Rs.1200 for for its another listed company Rhodia India and decided to de-list .Rhodia India ( Formerly Albright Wilson Chemicals ) acquired by Rhodia group from its old promoters  at a price of around  Rs.160 few years back .Sunshield is the only other listed company owned by Rhodia in India ( Ultimate parent company is Solvay) .In my previous posting itself I indicated the possibility of a de-listing for Sunshield too in future .Now with this aggressive offer price ,chances increased for a de-listing offer for Sunshield in not so distant future.Strongly recommending to HOLD this stock and even chances for some quick gain can't be ruled out on the basis of Rhodia's today's decision.

Disc : I have vested interest in Sunshield Chem.

KSB PUMPS - BOOK PARTIAL PROFIT

KSB Pumps recommended @ Rs.212  ( Link HERE)  currently trading around Rs.350 . Recommending to book partial profit and keep the remaining quantity as cost free.

KIRLOSKAR OIL ENGINES LTD - BUY

 

Just before the general election , many investors are searching for stocks which may out perform if a stable government came to power .Since the uncertainty about the outcome  is higher we should think about the opposite side  too. What I means is , we should select stocks which will not under perform if the next government is not a a stable one ,too.Considering both these situations and the recent run up in many sectors like Engineering,Infrastructure ..etc ,it is not an easy task to select a good stock for this purpose.But still there is few stocks available at reasonable valuation which may out perform in a positive election outcome but will not fall much even if there is any negative outcome.This week let us look into one such stock – Kirloskar Oil Engine.

Kirloskar Oil Engine (KOEL) - is the flagship company of Kirloskar group . Company is the leader in diesel engines,agricultural pump sets and generators.Company’s operations are broadly classified into four divisions – power generation,Large Engines,Industrial engines and agri related.Company is a trusted name in power generator business with its most popular brand ‘Kirloskar Green’ Genset .In this series company manufacturing gensets with ranges varies from 5 Kva to 3000 Kva. Large engine division catering mainly shipping industry and marine applications and  manufacturing propulsion engines (Product range 1060 KWm to 3020 KWm ) .In the agriculture division company supplying diesel engines and pump sets  ranging from 3 hp to 130 hp. Company also making industrial engines in 20 hp to 800 hp category for industrial applications in mining,material handling ,construction,fluid handling ..etc. Even if many of these industries were in bad shape due to policy paralysis and general recession ,company reported consistent performance . After establishing leadership position in large gensets ,company recently introduced portable gensets in the lower KVA range.Company  also taking efforts to increase its export which increased 20 % in last year.

                                                                               KOEL is a company with strong balance sheet and good return ratios .It is a zeo debt company with good operating cash flow . Company declared 250 % dividend last year .Promoters holding close to 73 % stake and another 14 % held by large investors.In last FY ,company reported a top line of Rs.2357 Cr and a net profit close to Rs.200 Cr .

                                                                         Recommending Kirloskar Oil Engine as my pre-election pick @ CMP Rs.182 .Stock listed in both exchanges.


Link to Company website HERE 


Disc: It is safe to assume that I have vested interest in KOEL

VST TILLERS TRACTORS - UPDATE

VST TILLERS TRACTORS   recommended on 18 May 2013 @ Rs.340 .Today stock hits its life time high @ Rs.939 . Stock appreciated about 175 % in less than one year .Recommending to sell 1/3 of your holding and keep the rest as cost free

Read old posting HERE

IGARASHI MOTORS / ARROW COATED PRODUCTS - UPDATE

IGARASHI MOTORS INDIA LTD -  is a stock recommended earlier @ Rs.50  ( Link HERE) .Today it moved up by 20 % and closed @ Rs.162 . Recently company acquired by global investment firm Blackstone Capital Partners through Agile Electric Sub Assembly Pvt Ltd. Company's financial performance improved substantially in recent December quarter ( Sales improved from Rs.70 Cr to Rs.93 Cr and net profit moved from Rs.6 Cr to Rs.13 Cr .) . Introduction of  more hybrid vehicles and recovery in auto sales in foreign countries will help the company to report better numbers in future . More than this ,considering the current share holding pattern ( majority owned by an investment firm) we can't rule out the possibility of a stake sale in favor of  some bigger players .Company already have a joint venture with Robert Bosch GmbH ( the parent company of listed company BOSCH Ltd) .Read related news HERE  . Still recommending to HOLD the stock even after more than 200 % appreciation.

ARROW COATED PRODUCTS LTD



This stock recommended  with a detailed report about Six months back @ Rs.12.50 which now trading around Rs.42 . Because of its uniqueness ,in my previous report , I have mentioned it as a potential multi bagger .As expected ,company reported better numbers later and today  announced an exclusive supply Co-operation Agreement between Tsukioka Film Pharma Co. Ltd Japan ( Read it HERE which is self explanatory ) . Considering the niche products backed by patented technology ,I believe it is only a beginning .Still recommending to HOLD it for long term

For detailed report Click HERE

ORCHID CHEMICALS & PHARMACEUTICALS LTD. - BUY

Orchid Chemicals is a stock I recommended at higher price few years back . Later its financials worsened and stock price crashed to lower level due to its mounting debt.Company was trying to reduce debt through a CDR package but it delayed for a long time .Even without implementing CDR , company turned to EBITDA positive in latest quarter.Now  CDR package approved by the lenders ( Read the details HERE).  With this approval  company can now  complete the deal with Hospira ( Sale of  Orchid's active pharmaceutical ingredient (API) manufacturing facility in Aurangabad, Maharashtra, and an associated research and development (R&D) facility in Chennai which is pending since August 2012 ) ,  and concentrate in  other existing business (antibiotics API and oral formulations),and  niche therapeutic products. On sale of this unit company is expected to transfer 30 % of its business ,but profitability will improve due to reduction in debt and availability of much needed working capital. Considering company's strong R&D pipeline ,I believe company can regain the reduced business in another few years .Recently U. S. health regulator Food & Drug Administration (FDA) inspected its Irungattukottai, Chennai-based oral formulations facility  and approved it without any observations. Those with some risk appetite can BUY and HOLD this stock for long term.Stock is currently trading @ Rs.49

Link to Company website : HERE

Link to latest Annual Report HERE

Disc : I have vested interest in Orchid Chemicals.

V2 RETAIL - FROM Rs.1000 TO Rs.10 , WILL IT REVERSE FROM HERE ?

' Crisis' -  is a possibility both in life and business . Individuals /entrepreneurs approaching such situations in different ways .Some of us will try to run away from crisis and a minority will face such situations,learn from mistakes and came out with more success than ever.Let us look into business field .Last five years were very tough for entrepreneurs worldwide due to many reasons.Many well known industrialists shut their shops due to their inability to face challenges and we have many examples even from India for that in recent times .Let us look into an interesting story of an entrepreneur who is fighting for survival .

                                                                                     Vishal Retails ( Now V2 Retails)  , promoted by Ram Chandra Agarwal was a hot stock ever since its listing.Company  came out with an IPO  in 2007 @ Rs.270 which oversubscribed by a whopping 81 times.Stock hits a high of Rs.1001  in 2008 which now quoting around Rs.10. Reason for this sharp fall is very well narrated in the below link ,so I am not reproducing the same as such.

Reasons for Vishal Retai's Big Fall  ( Its is an old news item before sanctioning the CDR ,but it will help you to understand what has happened )  - LINK HERE

Read further only after reading the content of the above link.

 The Second Innings

What attracted me into this penny stock is the willingness of promoter to accept his faults and his confidence and hardwork  to succeed again . Company sold its old business to  TPG and Sriram Group in 2011 for Rs.70 Cr (liabilities to the extent of Rs. 823.20 Crores and assets of Rs. 393.78 Crores transferred in this deal )Ram Chandra Agarwal lost everything he had built over 24 years .But, like many others he is not ready to surrender.Now he is in the process of building brick by brick what he lost .He confesses that he had committed lot of mistakes in Vishal Retail ( Read it HERE : Ram Chandra Agarwal on What he learned from Vishal Retail's 10 big mistakes) . 

With the little corpus left after paying back major portion of debt and his personal savings he re started the same business with some differences and with lot of precautions to avoid his earlier mistakes.He changed the name of his company from Vishal Retail to V2 Retail ( V2 –Stands for value and variety).As on 31 October 2013,company opened 15 V2 retail outlets. Delhi (3),Himachal Pradesh (2),Bihar (5),Uttar Pradesh(1),Karnataka (1),Jharkhand(1) and Odisha(2). This time V2 store initially selling only textile items and aiming the middle class in Tier II and Tier III cities.If the recent sales figures are any indication ,he is doing the right thing this time .
 

 Click on the figure for a better view

In latest December quarter company reported a turnover of Rs.70 Cr which is an improvement over 100% compared with same period last year. On the bottom line company reported a profit of Rs.3.26 Cr v/s Rs 97 lakhs . Diwali and other festival sales falls in December quarter and this figure may not repeat in March quarter .But I strongly believe after a long gap of many years this company will report positive numbers in this full year. Promoters also exhibiting their confidence by pumping additional capital to the company . Board will meet on 21 March 2014 to consider the allotment of  3952720 shares to Mr.Akash Agarwal (son of Ram Chandra Agarwal ) who  just  completed  MBA from Luncaster University of UK and joined the company recently.

There is lot of negatives to avoid this stock  - history of failure in the same line of business,accumulated losses,pledged shares ( pledging of promoter holding  was a  pre-condition for sanctioning debt re-structuring package) ,contingent liabilities ..etc..etc,etc ).Against all these odds there is only one positive – attitude of promoter and his confidence and hard work to regain everything he lost.In a recent interview he express his confidence to make V2 among the largest 5 retail chains in India in next 5 years. Only time will tell the fortunes of Mr Agarwal in this second innings. If there is any truth in the proverb – “Well began is half done” ,this time he may succeed .I hope ,our B-school students will learn  the story of V2 and Agarwal  as a case study in few years down the line to understand the up and downs of business .

 Stock price appreciated recently  after the  declaration of its December quarter result ,but even now V2 is trading at the cost of a single glass tea or coffee.Whether to take the risk or not ,it is up to you .Stock is trading @ Rs.14  and listed in both exchanges.

 A must watch video in the below link

Rags to Riches  - LINK HERE

Link to Company Website HERE

 Suggested  Readings

1) The Second Innings -  LINK

2) V2 boss hopes to learn from Vishal mistakes, get second-time lucky - LINK

3) Vishal founder goes slow, steady with V2 Retail - LINK

Disc: I have vested interest in V2 Retail
# Information from publicly available documents have used to prepare this report  without extra verifications in some cases .So do own due diligence before acting on.