Indo Asian Fusegear sold its switchgear business to Legrand France last year. It now plans to deploy the proceeds into the power generation business and has renamed itself ‘Eon Electric’. The rest of the operating segments are related to power generation i.e. cables, wiring, lighting, energy metres etc. These segments comprise about 1/3 rd the size of the business before the sale. The sale of a substantial portion of its former business makes past performance irrelevant. The company had about 290cr of liquid assets (as at 30 th September, 2011) at its disposal for its new venture(s). Management has no track record in the business they have committed to invest the funds in, thereby increasing the risk of loss. The power sector is plagued by SEB insolvencies, government dictated tariffs, high debt burdens and overcapacity. Although this does not preclude management from making a good deal with the cash resources, the lack of an es...
An Individual Investor's Perspectives On The Indian Financial Markets