Investing Reflections On India

Sam Industries operates in three business segments i.e. Soy Products, Welding and Real Estate. It is a supplier of soy products including de-oiled cakes oil etc., welding products and invests in real estate ventures including housing construction and sale. The company has reported erratic revenues and profits over the last five years – reporting a net operating loss of 3cr on revenues of 24cr in the last financial year.  However, it had minimal net debt as at last financial year end. The soy business is exposed to the risks of fluctuating soy seed prices, which is dependent on monsoon conditions.  The welding business is exposed to the cyclical metal industries.  The real estate venture appears to indicate a lack of focus and is subject to the risks of interest rate cyclicality, high competition, execution delays etc. Management does not declare dividends despite lack of profitable growth in its core businesses.  Instead they have made unwarranted ...

Tyroon tea company owns one tea plantation and processing facility for domestic sales – mainly supplying black tea. The company has reported consistent growth in revenues and profits over the last five years – generating about 4cr of operating profits on about 22cr of revenues in the last financial year while operating with minimal net debt of under 1.5cr (as at 31 st March, 2010). The business is monsoon dependent and also exposed to the risks of stubborn wage inflation (which is insensitive to economic reality) and cyclicality – dependent on supplies of Sri Lankan and Kenyan tea stocks. Management haven’t declared dividends in any of the last five years, which may be justified if management can maintain profitable growth over the long future.