Investing Reflections On India

Dhan Jeevan operates a hospital offering various diagnostic and therapeutic services. The hospital operates in various areas of medicine including Urology, Gastroenterology, Cardiology, Neurology, Internal Medicine, and Radiology (including MRI).  It generally enjoys a high occupancy rate of its beds.  Further, the trend of greater numbers of people taking health insurance coverage bodes well for the hospital industry’s revenues. As a result of the above and other related factors, management intends on increasing the hospital’s bed capacity and expanding some of the hospital’s other facilities.  The company reported stable operating profits on similarly stable revenues (with minor growth) – reporting almost 1cr in operating profits on revenues of over 4.5cr.  It did not operate with any net debt as at 31 st March, 2012 although this is likely to change in the near future (see below). The business is not immune to reduced demand as a result of ...

Rishiroop Rubber is in the business of trading of industrial raw materials. The company supplies raw materials to various industries.  Management expects to widen the company’s product offerings and customer base – both domestically as well as internationally. The company reported losses or marginal operating profits in the years leading up to 31 st March, 2009 – after which it reported growing operating profits on growing revenues – reporting about 7cr in operating profits on revenues of about 60cr in the last financial year.  Investors ought to note that cash flows have not kept up (as is usually the case in rapidly growing enterprises due to working capital needs among other factors) and their commitments would also depend on how well management manages its financial position rather than just growth for its own sake. However, the company reported liquid assets and cash of about 12cr as at 31 st March, 2012.  Nevertheless, management have never decl...

Key Corp is a non-banking finance company (NBFC) engaged in vehicle financing. The company specialises in financing old/used vehicles and currently finances a large portfolio of old vehicles.  It is based out of the state of Uttar Pradesh (UP) and has operated in this business for over 23 years.  Management foresees ample scope for continuing and expanding its activities. The company reported marginal operating profits on a reasonably stable revenue base in the last five years except during the 2008/2009 downturn when performance took a hit as expected.  It reported about 30-40 lacs in net interest income on gross interest income of about 80-90 lacs in the last financial year.  It held liquid assets of about 12cr in various equity and debt funds as at 31 st March, 2012. The business is exposed to economic downturns, which reduces demand for vehicles, and a high interest-rate environment, which increases its cost of operation and squeezes margins. ...

Elnet Technologies is in the business of providing infrastructure to the business process outsourcing (BPO) industry. It is engaged in letting commercial office space to software and BPO firms in Chennai.  Despite the recent economic slowdown, these industries are still exhibiting good growth rates. The company reported stable operating profits on a stable revenue base – reporting about 9cr in operating profits on revenues of 17cr in the last financial year.  It did not operate with a net debt position as at 31 st March, 2012. The business is naturally exposed to the fortunes of the software/BPO industries.  These are, in turn, exposed to global economic slowdowns, adverse western policies on outsourcing, demand uncertainty, etc. It is also exposed to oversupply in the industry where large scale commercial space availability is putting pressure on rates per sq ft and occupancy levels.

Arihant Capital is in the business of providing integrated financial services. The company is primarily an equity broker but also provides commodity, currency, and bond brokerage as well as merchant banking, financing, distribution of financial products, financial planning, and depository services to over 100,000 customers across the country in the retail, corporate, and institutional customer segments. The company has reported fluctuating operating performance in the last five years roughly corresponding to the movements in the financial markets.  It reported 16cr in operating profits on revenues of nearly 60cr in the last financial year, while operating with net cash and liquid assets of about 50cr as at 31 st March, 2012. The business is primarily exposed to low equity brokerage volumes and declines in cash volumes during times of indifferent financial market sentiment, which usually parallels periods following panic and may be protracted.  Further, retail c...

Panasonic Energy manufactures Dry Cell Batteries. The batteries fall under two main categories – Zinc Carbon and Alkaline (aimed at the high income segment).  All batteries are now sold under the “Panasonic” brand name.  The company recently commenced manufacturing of Flashlights to complement the battery business. The company reported erratic performance in the last five years – reporting 5cr in operating profits on revenues of over 180cr in the last financial year.  It held a net cash position of over 20cr as at 31 st March, 2012. Management seems optimistic about the business as a result of very low consumption of batteries per person in India relative to global standards.  They also assert that the concepts of compactness and portable energy needs should spur demand for battery appliances and hence, batteries. Demand growth, however, is very low at about 4% per year – and some markets are even declining.  Moreover, changes in consumer...

Garware Polyester manufactures polyester films, which has a variety of applications in packaging, insulation, imaging, etc. among several others.  The company is the largest exporter of polyester films based out of India and is one of only two global manufacturers producing dyed polyester films.  It owns the “Global” brand of polyester films, which is prominent in the US and now introduced successfully in the Indian market. It produces polyester films in three broad categories, which are – plain (e.g. shrink film), sun control (used in automobiles), and thermal films, which is a recent addition. Management is looking to invest in research and development for launching new branded products in the solar film market; as well as market window films for offices, commercial buildings and malls to the premium segment of that market. The company reported reasonably stable performance over the last five years but has dipped in the last twelve months (see below) – rep...