Skip to main content

Tirupati Starch and Chemicals


Tirupati Starch and Chemicals, based out of Indore, is in the business of manufacturing maize starch powder and dextrose anhydrous, which are used as additives in the food industry.

The company has generated reasonably consistent operating profits but somewhat erratic net profits as a result of debt financing – thereby exposing it to the interest rate cycle.  It generated about 3 crores in net profits on revenues of 50 crores in the last 12 months and has a reasonable debt/equity ratio of around 1:1.

The business, although appearing stable, is exposed to the risk of price spikes on its principal raw material – maize.  It is also highly dependent on power for its operations exposing it to the risks of inadequate coal supply and power shortages.  Moreover, the business doesn’t appear to possess any definite competitive advantage in this basic industry.

Management have not declared dividends despite lack of reinvestment of profits for growth.   Further, there is a listing of adverse remarks on the audit report.  Although these remarks don’t make the financial statements completely unreliable, they do shed some light on management’s commitment to clear and transparent financial reporting.  Moreover, management haven’t bothered to provide an intelligent discussion of the company’s business prospects - shedding light on their true attitudes toward minority shareholders.
Labels:

Comments

Post a Comment

Popular posts from this blog

IFB Agro Industries

IFB Agro Industries is in the business of producing alcohol (70% to 75% of revenues) and marine products. The company is based out of the state of West Bengal (WB), which is well known for its regressive attitudes towards businesses.  In the alcohol segment, it distributes ‘Volga’ vodka, ‘Jubilation’ rum, ‘Benjamin’ brandy (latter two launched recently).  Demand in the Indian Made Foreign Liquor (IMFL) appears to have a promising outlook with growth estimated at about 20% per annum.  It has also installed a new plant to enhance its country liquor production capacity since demand was outstripping supply – however, licenses weren’t granted by the state as at the end of last year.  In the marine segment, it distributes frozen marine products in the major metros through retail chains under the “IFB Royal” brand.  It also has a 48% market share in the shrimp feed trading business.  It had recently enhanced capacities in the marine division includi...
2 comments
Read more

On The Radar: India's Small-Cap Equities (Concluded)

We have been running a series of articles titled ‘Under The Radar: India’s Small-Cap Equities’ beginning in December 2011 - and followed up twice - with the last article in December 2013. We would like to conclude this series after updating the small-cap index level and returns, comparing it to our expectations ex-ante, and analysing the current scenario.  Following this, we have also outlined where we may take this blog in the future. The small-cap index closed at 11,087.07 on December 31 st , 2014.  This compares to a level of 6,150.65 in our last article – resulting in an advance of over 80% to date. This is a handsome absolute return by any standard, particularly compared to Indian government bonds, which yielded around 8-9% for the period.  This justifies the conclusion at the end of our previous article that “small-caps in India offer among the most attractive bargains during any time since 2006 and certainly in the entire Indian stock market today...
1 comment
Read more

Bharat Fertilisers

Bharat Fertilisers is engaged in the fertiliser business and construction activities. Fertiliser is considered a core sector industry in India and management assert that the company has the expertise, knowledge, and infrastructure available to operate in this industry.  Due to the troubles facing the industry (see below), management are buying up ‘sick’ Single Super Phosphate (SSP) units in the states of Gujarat, Madhya Pradesh, Karnataka, and Andhra Pradesh. Its construction and real estate activities are concentrated in Thane, Maharashtra.  It expects to let out commercial space within the next two to three years and generate about 5cr in lease fees per annum (before costs). The company reported erratic/marginal operating profits prior to the year ended 31 st March, 2009 but has shown growth in revenues and operating profits since then except for a minor downturn in the last financial year when it reported over 12cr in operating profits on revenues of about 3...
Post a Comment
Read more