Investing Reflections On India

Orient Abrasives is in the business of manufacturing abrasive grains and generating thermal and wind power. The company demerged its refractory business in November 2010 that formerly contributed about 70% of revenues.  Past performance and balance sheets are largely irrelevant to an analysis of the company except to the extent it relates to the remaining abrasives and power businesses that constitutes only about 30% of its former self.  After demerger, the net assets amounts to about 160-170cr (as at 30 th September, 2011). It manufactures fused alumina grains and calcined products – some of which are sold to the former refractory business.  Management expects exports to grow substantially in the future.  The company also generates thermal power for captive consumption and sells wind power to state power distribution companies.   The abrasives business is power intensive and hence, exposed to high power costs (including increasing captive costs).  It is subject to the