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Metrochem Industries



Metrochem Industries is currently engaged in the business of real estate activities.





It formerly owned a dyes and intermediates division, which was demerged from the company in the last financial year.  The proceeds from the demerger are currently deployed in real estate activities with the bulk of it tied up in advances for construction etc.


Therefore, the past record of profitability is irrelevant to assessing future business prospects.  It operated with a net cash position of about 30cr (as at 31st March, 2010).


The business is exposed to the risks of the real estate industry including construction material price rises, low availability of land for construction, high competition, vulnerability to economic downturns, increasing customer bargaining power (as a result of greater information availability etc.), greater government regulations on real estate activities etc.


The lack of a decent track record in real estate activities would prevent the formation of further sensible judgments on future prospects from publicly available information.


Management declared the same dividend rate as before the sale of the business implying an unwillingness to share the fruits of the business with the rightful owners.  Although the presence of any dividend at all is appreciated, the extent of management commitment to equity shareholders must be questioned particularly in conjunction with the facts mentioned above.
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