Investing Reflections On India

Precision Pipes is in the business of manufacturing PVC Profiles and Extrusions for the auto and white goods (refrigerators) industries with autos being the dominant segment (90% of revenues) by far. The company has a prominent customer base including the likes of Maruti, Tata, GM, Toyota etc.  Its white goods customers include the likes of Voltas, Godrej, Videocon etc.  It primarily operates with a cost advantage to global peers and a technological edge to domestic competitors.  It has a technical collaboration with two Japanese companies.  The industry is set to grow at 10%+ over the next decade. The company reported consistent growth in revenues and operating profits over the last five years – reporting over 50cr in operating profits on revenues of over 200cr in the last financial year.  It used no net debt (as at 30 th September, 2011) to finance its operations. It is primarily dependent on PVC prices, which is dependent on crude oil prices a...

Hind Rectifiers manufactures rectifiers and converter/inverter equipment for the power electronics and power conversion industry. The company is a leader in several of its market segments.  It has a prominent customer base including Indian Railways and other multinational companies located in several countries including those in Europe.   It also carries out trading activities in semi-conductor devices and capacitors amounting to less than 10% of total revenues. The company has reported reasonably stable operating profits on similar revenues over the last five years – reporting about 15cr of operating profits on revenues of over 100cr in the last financial year.  It employed minimal net debt in financing its operations as at 30 th September, 2011. The primary risk pertains to a concentration of sales to the Indian Railways.  Although a large, stable and prominent customer, revenues would decline substantially if it were to lose this customer for ...

Vikram Thermo operates in the pharmaceutical industry and manufactures excipients i.e. inactive drug coating. The company owns the relatively popular ‘DrugCoat’ brand and has a reasonably prominent customer base. The company has reported consistent growth in revenues and profits over the last five years – reporting about 6cr of operating profits on about 30cr of revenues in the last twelve months.  It employed minimal debt in financing its operations. The company did report negative reserves about a decade ago as a result of accumulated losses.  This is largely irrelevant to the business as of today but may be a factor for consideration in case there appear to be indications of aggressive financial policies (e.g. taking on greater debt financing for expansions etc.), which isn’t the case at present. It is exposed to a lot of competition in the generics field (although somewhat mitigated by its brand).  It is also subject to the risk of crude oil price in...

Menon Pistons operates in the auto components industry by manufacturing pistons. The company has good market share in its industry segment with a prominent customer base such as Tata Motors, Eicher Motors, BEML, Maruti etc. The company has reported consistent growth in both revenues and operating profits in the last five years – reporting 17cr of operating profits on revenues of about 150cr in the last financial year.  It employed minimal financial leverage in accomplishing this performance. The business is primarily exposed to the risks of rises in prices of aluminium, steel, nickel, oil, lubricant etc. forming part of its input cost.  Since its fortunes are tied to the auto industry, it is indirectly subject to the risks impacting the industry such as high interest rates (for loan financing), oil prices etc. Although management does procure supplies from privately owned related parties, this does not appear to be significant - in relation to the size of ...