Arrow Coated Products – Update based on AR

Based on recent Annual Report, Company is trying to give more details about its future operation plans.

Following are taken from the latest Annual Report, which I found to be interesting and need a second look. That's why reproducing it here for all the investors.

(Point 1)

 Item No. 10:

Presently the existing Authorised Share Capital of the Company is 12,00,00,000 (Rupees Twelve Crores only) divided into 1,20,00,000 (One Crore Twenty Lakhs only) Equity Shares of 10/- each (Rupees Ten only). In order to augment further capital raise, it is necessary to increase the Authorised Share Capital to 15,00,00,000 (Rupees Fifteen Crores only) comprising of 1,50,00,000 (One Crore Fifty

Lakh only) Equity Shares of 10/- each (Rupees Ten only).

The alteration to the Capital Clause of Memorandum of Association of the Company is consequent upon increase in the Authorised Share Capital.

In order to augment further capital raise, the Authorised Share Capital of the Company needs to be increased.

(Point 2)

D. Arrow Care Division:

Arrow Care Division mainly comprises of products based on Health and Hygiene. This year Arrow plans to introduce atleast 3 Products Via this division. Arrow Carez, a soap and shampoo strip, which totally dissolves in water, Arrow Klenz, an innovative “Sausage” shaped WSF capsule containing precise quantities of active ingredients in liquid form. The container bottles (which were hitherto dispensed away, creating an environmental mess) will be re-used atleast 20 times. It’s a simple innovation, which bring down the prices of cleaning liquids and make it affordable for even rural India to use and clean their  table tops, glass windows, kitchens, cooking vessels, floors, toilets etc. In the near future, more products will be added on the same platform technology. Arrow has appointed atleast two exclusive franchisees for promoting this technology. It is expected to cover 30% of the Indian market in the coming 2 years.

With thrust on hygiene and sanitation, as per hour PM’s speech, these products will find their way into rural india, as we intend to make them most affordable and cost efficient products.

 (Point 3)

Notes to the Consolidated Financial Statements for the year ended March 31, 2014

(` in '000)
Particulars	As at 31st March, 2014	As at 31st March, 2013
Note 14 Non Current Investments Investment in Mutual Funds (Quoted) (Non Trade)
ICICI Prudential Regular Savings Fund - Regular Plan - Quarterly Dividend - 1483679 units (P.Y Nil)	15,000	--
ICICI Prudential Short Term - Regular Plan - Monthly Dividend - 1279252 units (P.Y Nil)	15,000	--
IDFC Arbitrage Fund-Regular Plan - Dividend 1599015.007 units (P.Y Nil)	20,000	--
HDFC Cash Management Fund - Call Plan - Daily Dividend Reinvestment - 1953612 units (P.Y Nil)	20,370	--

(Point 4)

Notes to the Consolidated Financial Statements for the year ended March 31, 2014

(` in '000)
Particulars	Year Ended 31st March, 2014	Year Ended 31st March, 2013
Note 22 Revenue from Operation
Sales of Products	30,841	37,785
Consultancy Fees	105,251	34,655
Royalty Income - Patent	221,325	77,805
	357,418	150,245

My Analysis & Explenation 

(Analysis of Point 1)

Company looking for tie up/ investment from PE funds, with some large players, that’s why planning to increase authorized capital

(Analysis of Point 2)

A lot of opportunities are there in these consumer sectors.

(Analysis of Point 3)

Point 3 increases my confidence in the published results! They have invested in mutual funds. Total investment amount (quotable) is 7.03 Crores. Shows that the reported figures and cash is real.

(Analysis of Point 4)

A consolidated patent income of Rs 22.1 Crore (Previous year 7.8 Cr), an increase of 183 % from the last year. Even if the company can increase this income by half the present rate, the share price will be more than 1000, with in next 3 years.

FFS 6: The Answer is

Against my thought, none of the readers were able to find the solution to the FFS 6 Question, also none were able to find a share which multiplied near to the magnitude I mentioned in FFS 6.

The top one’s are listed below, from the one's I got in my mail are,

Sl No.	Company	Lowest Price in 2001 *	CMP	Multibagger factor	Current Value of Initial investment (5 K)
1	Lupin	0.8	1377	1721	86.05 Lakh
2	Eicher Motors	17	11656	685	34.28 Lakh
3	Shree Cement	23	8683	377	18.87 Lakh

* : Adjusted to Bonus & Split

And the solution to the question is Kitex Garments

Its share price (FV = 10 ) on 18 – Oct – 2001 [Taken from BSE website ] is

Date	Open	High	Low	Close	WAP	No. of  Shares	No. of  Trades
18/10/01	0.60	0.60	0.40	0.40	0.42	62,900	63

And Present price of the share is (FV = 1)

  

So giving 394*10 / 0.42 = 9380 Bagger !!

Rs 5000/- invested will be Rs 4.69 Crores today !!!

The 13 Year Price Chart

FFS discussed Stocks at a snapshot

Sl No.	FFS	Company	Link	Lowers Price since 2001 *	CMP	Multibagger factor	Current Value of Initial investment ( 5 K )
1	FFS 6	Kitex Garments	-	0.042	394	9380	469.1 Lakh
2	FFS 5	Mayur Uniqoutors	LINK	0.24	448	1866	93.3 Lakh
3	FFS 1	Symphony	LINK	0.82	1355	1652	82.6 Lakh
4	FFS 4	PI Industries	LINK	0.56	456	814	40.7 Lakh
5	FFS 2	TTK Prestige	LINK	6.9	4484	649	32.5 Lakh
6	FFS 3	Cera Sanitary	LINK	3.4	1630	479	23.9 Lakh

So I would like to conclude this series with this list. Once again, the relevance of analyzing these type of investment and return is to find out potential future multibaggers and learn to hold it long enough to make us financially free. A couple or some time single a investment  will do it for us on right companies at decent valuations (ofcourse, only if we hold enough – if we start selling completely from at 30% gain or at even at 100% gain- there will not be any multibaggers in our portfolio. THEN ONLY LAGGARDS WILL BE THERE!).

Some interesting quotes

1. “Everyone wants to find the next Multi-bagger, difficult part though is holding them.”

2. “Don’t bother finding the next multi-bagger if you aren’t going to develop the conviction to hold it.”

3. “If you are in great companies, a lot of times your biggest risk is boredom.”

Happy Investing.

FFS 6: A 9000 Bagger in 13 Years !!

Hi,

I am going to wind up my Financial freedom series with this share.

As mentioned in some comments, you might be already understood the importance of value investing.
This time, the stock I am going to discuss delivered tremendously with any bench mark! and I am not going to directly mention the name of it, instead giving you readers a guess work :)

5000 rupees invested in this share 13 years back ( weighted average price, exactly on 18-Oct-2001) might have turned Rs. 4.47 Cr in today's closing price. (8952 Bagger exactly)

I feel, So-many of you might be able to answer it. Please reply the company name to my mail id if you get it. My mail id is myvaluepickport@gmail.com 

The company's name will be revealed on next week.
rgds

PS: There is a reward for the first 30 Correct answer.

Prize :: If you provide your postal address along with your mail, I will be sending a book on value-investing. For the first 30 correct answers only!

Black Rose Industries - A 10 Bagger in making - BUY

Black Rose Industries Ltd. ( CMP on 8-Sep-14  = 9.93/- ) was established in 1990 as Asia Fab Limited, a textile manufacturing company. Now, Black Rose consists of three main divisions – chemicals, acrylamide, and textiles. The chemical division is engaged in the import, distribution, and export of a wide range of specialty and performance chemicals. The acrylamide division operates India's first and only acrylamide manufacturing plant. The textile division manufactures fabrics and made-ups for industrial applications. The company also has a fully owned subsidiary in Japan, B.R. Chemicals Co., Ltd., Japan.

RECENT ATTRACTION – ACRYLAMIDE – A Possible rerating candidate due to this:

The company produce and supply acrylamide solution under the brand name BRILMIDE^® at South Asia’s first and only acrylamide plant set up using a bio-catalytic technology exclusively licensed from Mitsui Chemicals, Inc., of Japan. The 10,000MT plant is located in the industrial estatate of Jhagadia, Gujarat and runs on a DCS-operated continuous process. Since starting of commerical operations in September 2013, the company has been increasing it sales and production to meet the ever growing demand of users in India and overseas.

The major application of this product is applicable to the future energy source – shale gas. The acrylamide is used for polymers for shale gas extraction.

The details about future trends in shale gas extraction can be read here.

1. Shale gas - game changer

2. ONGC starts exploring shale gas

Acrylamide is mainly used in but not limited to the following:

Polymers for enhanced oil recovery,
Polymers for shale gas extraction,
Polymers for shale strengthening,
Polymers for flocculation in waste water,
Binders and retention aids in paper,
Water proofing chemicals,
Cement additives,
Coating and paint emulsions,
Textile sizing chemicals and binders,

Future Outlook

Going forward the company is expected to deliver better numbers as another 80 – 100 Cr turnover will be added to the top line from the Acrylamide division. The company also plans to increase the production of Acrylamide from the existing 10,000 MT to 40,000 MT in future. Investors with enough patience and very long outlook can start buy in SIP mode for future appreciation.

10+ Year Price Chart

Pros

1. Growth oriented field of business – related to shale gas extraction story.
2. Tiny market cap of 50 odd Crores
3. Promoters Holding 75 % Share and No pledge

Cons

1.       Recent run up in share price
2.      Debt/equity ratio of more than 1.

Rating

Business Outlook	*******	( 7 / 10 )
Scalability	******	( 6 / 10 )
Promoters Quality	*****	( 5 / 10 )
Valuation	*****	( 5 / 10 )
Overall	******	( 6 / 10 )

Buying Strategy

The share has run a lot in the near term. Corrections may be possible from these levels, Even though it gives value for the buyers at this level too.

Long term investors can start investing in this scrip between Rs. 10/- to Rs. 12/- . Any dip in the price gives scope for better accumulation.

I am giving a 10x bagger target for this share in next 5 years, with only a limited exposure of 2 % to 4 % (max) in portfolio.

Disclosure : I have vested interest in Black Rose Industries