Investing Reflections On India

Natraj Proteins is in the business of manufacturing soy products – primarily de-oiled cakes and soya refined oil. The company has reported stable operating profits on similarly stable revenues – reporting about 5cr of operating profits on revenues of about 190cr in the last financial year using a moderate debt load. It is primarily exposed to the risk of unpredictable monsoons affecting soy seed availability and prices, which constitutes its major raw material cost.  It is also exposed to the risk of a strengthening INR against US$ since it generates sizeable export revenues in US$.  It is also dependent on the specific risk of capacity constraints on the Indian Railways, impacting its despatch timelines. Management haven’t paid dividends in the last five years presumably to pay down its external debt.  This may be justified since it reduces financial risk to equity shareholders – Now that the debt load is moderate, it remains to be seen if they will initiate d...

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 ...