hyderabad industries....result highlights

Result highlightsHyderabad Industries Limited's (HIL) revenues during Q4FY2006 declinedby 1.65% year on year (yoy). However, on a like-to-like comparison, therevenues of the building division increased by 13.1% yoy to Rs107.32crore.The weak prices of asbestos cement and the strike at one of thecompany's plants affected the profitability during the quarter. Theoperating profit declined by 16.2% to Rs11.7 crore. The buildingproducts division reported a profit before interest and tax (PBIT) ofRs14.88 crore during Q4FY2006 as compared to Rs18.29 crore in Q4FY2005.Typically, the March-July period generates strong demand for asbestos.The company has also announced a price hike of 10% in the beginning ofApril. I, therefore, expect a strong Q1FY2007.The heavy engineering division (HED) has been hived off. However, thecompany reported a loss of Rs9.69 crore due to the discontinuedoperations of the HED.HIL is utilising its strong cash flows from its operations to prepay a large portion of its debt. The reduction in the debt has impacted the interest cost, which has declined by 70% to Rs0.78 crore in Q4FY2006.The company has reported a profit after tax (PAT) of Rs37.6 crore inFY2006 as compared to a net profit of Rs9.06 crore in FY2005. However, the FY2005 numbers include a one-time extraordinary write-off ofRs16.04 crore. I expect the company to report a net profit of Rs46.5 crore in FY2007 and of Rs52.9 crore in FY2008. The stock trades at 7.6x its FY2007 and 6.7x its FY2008 earnings. I maintain a Buy on the stock with a price target of Rs700

LKP Merchant Finance-A RARE Entry

CMP Rs 176
12 Month Target : Rs 500


The Mahindra Doshi owned LKP Merchant Finance will soon put forth a re-organisation of its business operations. This re-organisation will pave the way for the entry of Mumbai’s most prominent bull to make a Rare entry into the LKP stock-with the grapevine claiming a stake sale of 20 per cent in two tranches for an undisclosed amount.

This is what LKP Merchant Finance does at present

It is a holding company for two wholly owned subsidiaries LKP Shares and Securities which owns a broking card for the BSE and LKP Forex which is the second largest Forex changer in the nation after Thomas Cook.

What will the re-structuring/re-organisation do?

The shareholders of LKP Merchant will get equal shares in LKP Shares and Securities and LKP Forex, and both companies will be automatically listed on the BSE. The strategic investor who has had past successes in stocks like Pantaloon, Provogue, Apollo Hospitals, Crisil, BEML, Viceroy Hotels and a string of other units, will be given a 20 per cent stake split into two tranches of 10 per cent each. This will be the strategic investor’s first ownership of a currency changing operation in the country and will bring in additional capital to allow LKP Forex grow. At the same time, the grapevine has it that the management has cleared all past dues of the Oriental Bank of Commerce through a one-time settlement. Thus making LKP Merchant debt free, allowing it to proceed with the re-structuring. The promoters-the Doshi family has already infused money into the stock broking operations making it even larger and stronger. The third phase of the re-structuring/re-organisation will involve merging LKP Securities-which holds a broking ticket of the NSE and which is presently an unlisted concern to be merged with LKP Shares and Securities.

So what will the shareholders get?

For each share held in LKP Merchant, they will get equivalent shares in LKP Forex and LKP Shares and Securities and both concerns will be separately listed. Investors would note that by way of volumes LKP Shares and Securities is amongst the top five brokers of the BSE and a de-merger and a consequent merger with LKP Securities (the NSE broking arm) will bring in more value for the shareholders. Also LKP Shares and Securities owns/operates out of as many as 170 branches/franchises across the length and breadth of the country, thus a listing will bring in immense benefits. On the other hand, LKP Forex which runs as many as 300 branches/franchises throughout the length and breadth of the country, and is the second largest currency changer after Thomas Cook should fetch high PE multiples post the listing. Concenterated Ownership As a prelude to such moves, the promoters have consolidated their stake to as much as 60 per cent and a couple of FIIs have also picked up about 3 per cent of the Equity. The public interest is about 25 per cent.

To me the sum of the parts valuation works out to Rs 500 per share, should everything proceed as per schedule and the de-merger gets completed by December 2006. The stock is relevant only for high-risk aggressive investors who can see the whipsaw movement on the exchanges and yet see through the whole process of unlocking value

Alumeco Extrusion...part 2

Projections

Rs. In Crores 9 Months October 2005 to June 2006 12 Months July 2006 to June 2007 Net Sales 66.80 100.40 EBITA 6.06 10.24 PBT 4.69 8.32 PAT# 4.62 8.23 EPS (Annualized) 5.00 6.65

Apart from rs 6.50cr extraordinary item for 2005/2006

(a) Due to the accumulated income tax loss already available, the Company will not be liable to pay income tax for next five years. The difference between PBT and PAT shown above is on account of FBT.
(b). Mr. Wolfgang Ormeloh the new Chairman of the Company regarding the above and is very bullish on the same. Since Danish Company holds 60% of the equity of the Company they are more keen to turns around faster than projected. II. The main strength of this Company is large number of extrusion tools in its inventory. There are more than 3500 tools, each tool costing more than Rs.50,000/-. Besides this, there are also about 1000 standard tools which are essential parts of the extrusion manufacturing process. In all the value of the tools will be about Rs.20 crores. Most importantly if somebody has to manufacture all these tools not only they would require Rs.20 crores as investment but also require about 5 years time to make these tools. This is the most important strength which has been the source for inspiration for the foreigners to invest in the Company. 80% of the tools in the Company will produce products for European Market. The Danish Company which has been helping Company for last four years will continue to export about 80% of our production to European Market. III. The new foundry The Danish shareholders have already approached Industrialization Fund for Developing Countries (IFU) for financing a new foundry for the Company. The Company has been purchasing billets from Behrain, South Africa and China at a premium. The Danish partner has plans to set up new foundry with an investment of Rs.600 lakhs during the year 2006-07 to manufacture billets for captive consumption. The Capacity of this foundry is placed at 10,000 Tonnes per year. With this new foundry, PPL can save about Rs.2 crores per year which will be a straight addition to EBITA from the year 2007-08. IV. Name change : Company’s name has been changed from Pennar Profiles Limited to ALUMECO INDIA EXTRUSION LIMITED . Alumeco A/S, Denmark who are the main shareholders of PPL through a holding Company namely OSI India Holding A/S, Denmark has ozone facilities for conversion of extrusions into automobile components in Germany, Denmark, Sweden, Finland, Norway, Italy and Switzerland. They buy about one hundred thousand tons (1,00,000tonns) of aluminium extrusions per year from China, India, (only PPL), Europe and South America. Ppl is supplying 6000 tonns per anum to Danish parent which is 8 % of their total requirement. Alumeco is not holding any equity in any other extrusions company other than ppl across the globe

Pennar Profile limited....ALUMECO

Pennar Profiles Limited (PPL) was originally promoted in August, 1988 by Shri Kavuri Samba Siva Rao as “Progressive Aluminium Limited”. The other group company under Shri K. Samba Siva Rao is Progressive Constructions Limited. The project was set up with one extrusion press having installed capacity of 4000 tons per annum. The company went into commercial production during October 1991. The Company’s performance right from the beginning was not satisfactory specially during initial years due to little focus by the management as the group was more interested in Progressive Constructions Limited which is very big company. During the year 1990 Pennar group came up with a large aluminium rolled products project near Nagpur namely Pennar Aluminium Company Limited (Palco). By December, 1993 the Progressive Aluminium Limited, has become sick and its net-worth got fully eroded. The Company was not paying its dues on account of principal and interest to Financial Institutions (FIs) and Banks. The Financial Institution lead by IFCI has invited Pennar Group to take over the management of Progressive Aluminium Limited. The Progressive Aluminium Limited was taken over by Pennar Group during January, 1994 and the name was changed to Pennar Profiles Limited. During the very first year of operation in 1994 under the new management, the PPL was turned around and started making profits. The Company has repaid all the dues to FIs and Banks including the old dues on account of interest and principal under the old Management

The Company’s production has improved to 4000 Tons per annum level. During the year 1996 the Company took up an expansion plan and added a second extrusion press, which came into operation by December 1996. The operations of PPL have been at good level and economical till December, 1997. From 1998 the sales have started to decline due to bad domestic market conditions especially due to slow down in economy in the country during the years 1998-2000. Specially the construction industry was down, very bad and the demand for aluminium extrusions from this sector have fallen drastically. During this period many extrusion companies in India have been closed. But PPL survived due to its committed management team and good quality. The company produced break even level during this period. By April 1999 the Company’s net worth has got fully eroded due to decline in operations and became sick and was registered with Board for Industrial and Financial Reconstruction (BIFR). After it has been registered with BIFR as a sick Company the promoters continued to operate the Company at a break even level simultaneously looking for alternative markets instead of purely depending upon the domestic market. The promoters of PPL have identified a German Company namely O&S Metallimport GmbH, Germany (OSM) which was already active in aluminium extrusions segment in Europe. This Company has shown interest in associating with PPL and also shown interest in revival of PPL. The market in Europe for aluminium extrusions which was about 2.0 million tons per annum has come in handy for PPL. With the help of OSM and the Company started exports to Europe from June 2000

The exports have grown tremendously during the subsequent years to a level of 400-450 Tons per month and the Company has become 80% exporting Company. The dependence on the domestic market has totally been removed with the help of OSM. In the meanwhile, the Company started concentrating in high value products sale for domestic market leaving the bad quality and bad payment terms market to other competitors with the result the Company was turned around from the years 2003 and started making cash profits. The Company has developed its aluminium extrusion die inventory to an extent of having most of the dies for European Market. Today the biggest strength of the Company is that it has more than 3500 tools in its inventory each tool costing about Rs.50, 000/-. This is the major strength of the Company. The Company has continuously developed export market, developed tools for export market and also developed excellent tool library for the OEM market of the domestic sector. In the meanwhile Appellate Authority for Industrial and Financial Reconstruction (AAIFR) took note of all these developments and allowed the Company to make an OTS proposal to all FIs and Banks. The OTS proposal was to pay Rs.11 crores to all the FIs and Banks to get a write-off of about 35 crores. The Company had discussions with Alumeco, Denmark which is the mother Company of OSM and arrived at an understanding to bring the entire Rs.11 crores from Alumeco to make the OTS payment to FIs and Banks. During the month of July, 2005 after having received the approval from AAIFR the OTS payments have been made to FIs and Banks and the Company is now a debt free Company. The Alumeco now holds 60% equity of the Company

BUY CALLS

I JUSS BOUGHT ANJANI FABRICS AT 28.5 AND WHIRLPOOL INDIA AT 29 TODAY....KEEP TODAY TO KEEP FOR A PERIOD OF 15-20 DAYS
KEEEP A WATCH ON THE SAME.....
ALSO REL COMMUNICATION FOR A TARGET OF 400 IN A SHORT TERM.....1-2 MONTHS


ONE CAN INVEST ACCORDING TO THEIR RISK CAPACITY

Sutlej Industries- Demerger of Invesment Portfolio will unlock Value

Sultej Industries, a leading exporter in the textile sector, is expected to notch up significant profitability over the next 2-3 years on the back of impressive volume growth driven by expansion & margin improvement. Enhanced focus on the garment export sector & improved product-mix towards higher margin products would become visible in the bottomline of the company over the next 2 years. In addition, with an investment value of Rs 174 per share, the company offers limited downside side risk coupled with substantial upside potential due to the growing core business.

Company background


Sutlej Industries was incorporated in 1963 & belongs to the KK Birla group of companies, one of the leading business houses in India . It has world-class machinery at its three plants Bhawanimandi (Rajasthan), CTM at Kathua (J&K) and DGF at Bhilad ( Gujarat ). The company produces synthetic and blended yarns and 100% yarns with spinning, weaving and processing facilities of 140,000 spindles and 48 projectile looms. SIL offers fabrics in plain, twill, drill, satin, gabardine and jacquard weaves. The company presently is a leading Government recognized Golden Trading House exporting to 52 countries. The company exports to countries such as East European Countries (EEC), Middle East , East Africa , East Europe , North Africa and Far East .

Investment Rationale

Exponential industry growth ahead .....The phasing out of Multi Fiber Arrangement (MFA) in 2005 offers significant growth opportunity to developing economies like India . The demand for fabrics and yarn will increase in the months to come, as exports of textiles and apparel from the country are set to jump post-quota, which would eventually benefit the company. Indian capacities are also coming up and a lot of capacity build up will happen by 2006. The country’s export growth is expected to remain around 23-25 per cent this year, which has been the growth during the first four months of 2005. In 2006, however, the growth would be much higher. In addition, recent levy of anti dumping duty on cheaper Chinese imports augurs well for the domestic textile industry. Indian exporters will gain not just in higher orders, but also by way of more equal competition. The revaluation of Chinese currency is future would also make India much more competitive vis-à-vis China

Improved product-mix

Sutlej Industries is shifting its focus to cater to the garment export sector as a part of its strategy to ensure better product-mix and improved realizations. The company is already producing Lycra-based fabrics, the demand for which is growing in the Middle East . It has also been successful in marketing Modal and Modal blends within the country, the turnover of which is set to double in the next two years. The company in the previous fiscal, started production of Tencel yarns, which helped it to further widen its product basket. SIL has already achieved good amount of success with varied applications in apparels, bed-sheets, bath-rugs, terry-towels, denim, socks, innerwear, nightwears and sportswear. With all the major international tags such as Lycra, Teflon, Coolmax, Modal and now Tencel, in its product basket, Sutlej is all set to establish itself as a brand with presence across the country as well as overseas

Expansions to drive growth

The company plans to invest Rs 62 crore in the current fiscal to diversify into value added products by setting up facilities to manufacture garment and home textiles at its Gujarat fabric plant. Home textiles and garments business are the fastest growing segments in the textile industry. These projects will be implemented within one year and would help it to expand its presence in the textile chain. The company recently expanded its capacity to 156128 spindles in FY05 and has laid emphasis on regularly modernizing its plants with the latest technology so as to survive in the highly competitive and liberalized global business environment. The full effect of company’s expansion will be reflected in FY06. We expect SIL to report revenue growth of 26% & 22% in FY06 & FY07 at Rs 667 crore & Rs 812 crore, respectively. The bottomline on the other hand would witness a jump 76% & 34% in FY06 & FY07 to Rs 27.65 crore and 37.20 crore as a result of margin expansion on the back aggressive diversification into value added products

Big investment portfolio limits downside

SIL has a sound & fairly large investment portfolio the market value of which amounts to Rs 185 crore. The prominent holding of the company include 40.58 lakh shares of Zuari industries, 290 lakh shares of Chambal Fertilisers, 20.67 lakh shares of Oudh Sugar Mills, 3.6 lakh shares of Century Textiles & 4.3 lakh shares of Upper Ganges sugar. In addition, the company holds 0.82% (Rs 16 crore) in Pilani investments which is stated to value around Rs 2000 crore. These investments translate into per share value of Rs 174 as against current market price of Rs 199. Thus the core value of the business is valued at mere Rs 25 per share, which we believe is highly undervalued. These huge investments should cushion the investors from any downside risk while the growing core business would further unlock value

Sutlej Industries reported a 34.79 per cent rise in net profit to Rs 15.69 crore during 2004-05, as against Rs 11.64 crore in the previous fiscal. The company achieved a turnover of Rs 528.77 crore, showing a rise of 13.77 per cent over previous year. The operating margins improved by 138 basis points to 8.85% due to better economies of scale and tightening of string on margins as it continues to move up the value chain.

Outlook

We expect SIL to post strong growth in revenues and operating profits on account of capacity expansions and rising exports. The capacity expansion at Kathua ( Jammu and Kashmir ) unit by 28416 spindles would add to the topline & bottomline in FY06. In addition, this new unit will be eligible for special packages of incentives announced by the Central and State governments. SIL is also expected to witness significant net profit margin improvement to 4.5% from current 3% on the back of operational improvement, improved domestic realizations and better product mix. We expect SIL’s revenues to grow to Rs 812 crore by FY07, while bottomline would grow even more aggressively to Rs 37.2 crore

Valuations


Sultej Industries is expected to notch up significant profitability over the next 2-3 years on the back of impressive volume growth driven by expansion & margin improvement. Enhanced focus on the garment export sector & improved product-mix towards higher margin products would become visible in the bottomline of the company over the next 2 years. In addition, with an investment value of Rs 174 per share, the company offers limited downside side risk coupled with substantial upside potential due to the growing core business.

On all valuation parameters, the company is attractive. The market cap / sales ratio is a meager 0.40 while the price to book-value ratio is 1.10. The stock trades at 7.64 x FY06E EPS of Rs 26.06 & 5.67x FY07E EPS of Rs 35.06

Aravali Securities-A Palace of your Own

Buy at 21.....Target Rs 40

The Ernst and Young re-structured Aravali Securities will not only return to black in FY07, it will reward shareholders with dividend, and a shared ownership in Boutique Hotels. The latter owns and runs Udaipur's finest palatial property Hotel Devi Garh.

Some of the celebrity guests to have stayed in the DeviGarh Palace include the scions of the Royal family of Britain, actress Demi Moore, actor Richard Gere and celebrity receptions like those of billionaire Sant Chatwal's son Vikram were held in Devi Garh.

Adjudged by the British Tatler, Cosmopolitan, Vogue, British Airways and Air France as one of the Best 100 Boutique Hotels in the World, this is one stock investors need to lap up.

Aravali Securities which has announced the de-merger of its Hotels Division-Boutique Hotels India Limited (BHIL), is likely to complete all legal formalities by August 31st 2006. This will enable a listing of the BHIL stock by September 2006 on an automatic basis, as the general public which are the shareholders of Aravali Securities will hold more than 50 per cent of the Equity of BHIL.

As per the scheme worked out by Ernst and Young, shareholders of Aravali will be allotted 1.92 shares of Boutique Hotels for every 10 shares in Aravali FOC. Boutique Hotels owns a 7 star Palace Hotel- DeviGarh in Udaipur. (www.deviresorts.com). The Hotel has a 12 month occupancy of 90 per cent with a ARR of Rs 1500. The palace comprises of 56 suites.

Boutique Hotels will have an Equity of Rs 6 crore post demerger from Aravali Securities, and will in all likelihood report an EPS of Rs 15 for the FY07. The stock will be listed by September 2006 and should fetch a market valuation of Rs 150. In addition Boutique Hotels will set up a 7 Star Hotel luxury spa in Jaipur, adjoining the Jal Mahal Palace. As per the estimates of the State Government of Rajasthan, there is a shortfall of 7000 Hotel rooms in the City.

In a high powered meeting of the State cabinet CM Vasundhara Raje has cleared Boutique Hotels' proposal for a luxury spa, with an investment exceeding Rs 50 crore. The land for this luxury spa has been sanctioned by the State at 60 per cent of the market price or at about Rs 3300 per square metre.

Another 18 acres of land have been allotted by the State Government of Kerala for the setting up of a Luxury spa in Allepey-the pristine backwaters of Kerala. This Rs 50 crore project will be funded with a placement of 2 mn shares at about Rs 125-150, raising Rs 30 crore. The debt element will be Rs 20 crore, and the spa will have an opening in the summers of 2007.

The "spa" model has been vetted and found to be the ideal expansion strategy for Boutique Hotels by Ernst and Young. That apart the de-merged Aravali will hold about 33 lakh shares of Sirpur Paper and land worth Rs 50 crore in Delhi. This land will be sold in FY07, and help Aravali return to the dividend list shortly

Prajay Engineers Syndicate

Prajay Engineers Syndicate - Bidding acumen, buoyantrealty prices to boost earnings growth of 150%+ over next two years


Key Takeaways:

Prajay has been into realty development for the last two decades andis ably positioned to capitalize on the buoyant realty market in Hyderabad.Property prices have doubled yoy and are expected to surge further in themedium term due to Hyderabad's rising prominence as an alternative toBangalore.

Land titles are quite transparent as the deals are made directlywith the company and not routed through a promoter or interested parties.

Prajay has a landbank of about 10m sq. ft. (about Rs 1bn), thoughwith an approx. market value of Rs 7bn. Development cycle time is around18-24 months.

Prajay has a mix of mass housing and high-end housing projects. Themass housing (less than 1,500 sq. ft.) yields it Section 80I benefits of taxcredits on income from such projects. The high-end housing yields it marginsof over 30%.

Prajay is developing an 80-acre plot comprising high-end villas, agolf course and a five-star hotel. The golf course is on a BOOT basis, for a35-year concession period. It is also developing other residential andcommercial dwellings, which, together, would add about 10m sq. ft. ofdeveloped space by FY10.

The golf course would be housing a 300-room five-star hotel. Thisproperty is in the vicinity of the new expressway, a 'ring road' that wouldconnect all the important destinations such as the upcoming newinternational airport.

Prajay's acumen at bidding is so good that it recently outbidReliance (ADAG) for 7,400 sq. yd. in an eastern part of Hyderabad. Reliancehas now offered to buy the land from Prajay and deploy Prajay's services todevelop a commercial dwelling on it.

Priced attractively at 6x PER of FY07E earnings of Rs 30 and growing at an over 150% CAGR to FY08.



Key Figures

March FY04 FY05 FY06 FY07 FY08
Net Sales (Rs m)178 233 810 2,460 6,500
PAT (Rs m) 5 44 200 690 1,628
PAT Growth (%)(41.7) 818.7 349.8 245.0 136.0
EBITDA 36 74 259 920 2,275
EPS (Rs) 0.6 5.8 8.8 30.2 71.3
PER (x) 286.7 31.3 20.5 6.0 2.5
Cash EPS (Rs) 1.6 6.9 9.2 32.9 76.1
FCPS (Rs) 61.7 (16.2)(20.1) (26.7)(24.4)
CPER (x) 113.3 26.0 19.5 5.5 2.4
EV / EBITDA (x)42.3 20.5 15.5 4.1 1.7
EV / Sales (x) 8.5 6.6 5.0 1.5 0.6
RoE (%) 4.8 34.4 16.7 36.6 46.3
RoCE (%) 4.6 20.7 15.2 23.12 8.1

CLASSIC DIAMONDS---Bringing the Stars into Our Lives

The Nirav Bhansali run Classic Diamonds is rapidly emerging as a major Branded Retail Story, with company owned stores projected to rise upwards of 50 by 2010. Classic, which was cutting about 25 lakh Diamonds every month in the financial 2006 will now be cutting as many as 4 million stones a month. This will result in a quantitative jump in Revenues and Earnings in FY07.

Equity: Rs 7 crore
Market Cap: Rs 140 crore
Diamond Sales: Rs 650-700 crore
Jewellery Sales: Rs 100 crore

Current Retail Outlets: 5 Locations: Bangalore, Hyderabad, Hong Kong, New Delhi, Ludhiana Targeted Outlets: 15 in 3 years.
Target Outlets: 50 by 2010 including London, New York, Paris, Tokyo Brand Name: Classic Jewels Sight Holder: De Beers, South Africa

Promoter Holding: 70 per cent
EPS FY06 e: Rs 20 +
EPS FY07 e: Rs 35+


Classic Diamonds India Ltd has informed BSE that the Company has set up one of the largest diamond cutting factory in Surat at Varacha Road, measuring an area of 225,000 sq ft. housing 5000 workers.From April 2006, the factory is fully functional. The factory will produce over 1.5 million stones every month. This factory houses state-of-the-art manufacturing equipments like high end laser machines, Siren planning machines etc. Using this high end technology the Company hopes to reduce production cost, minimize wastage and deliver goods with superior cut. This factory is built in accordance to the set standards of ISO 9001, Best Practice Principles (BPP) and Business Excellence Model (BEM).This factory will cater to domestic as well as the export market, the Company currently exports to customers in USA, France, Israel, Hong Kong, Italy, Turkey, Dubai and Belgium. The Company is also planning a significant foray into the local jewellery retailing.This factory provides a major thrust to the Company's growth plans of achieving over USD 250 MM sales in the next 3 years. The Company is one of the leading players in the diamond industry and is expecting an annual turnover of approx. $130 million in 2006. The Company is a sightholder with the Diamond Trading Company and with the ABER GROUP (Canadian mines).The Company is one of the largest Diamond manufacturers in the world already producing more than 2.5 million stones every month and is the largest producers of stars (below 2pts) diamonds in the world.

SATNAM OVERSEAS

PROMOTERS HOLDING : 44.12
MUTUAL N FII :16



Incorporated in 1989, Satnam Overseas Ltd (SOL) was promoted by Sri Satnam Arora, Sri Jugal Kishore Arora, and Sri Gurnam Arora as a private limited company but was subsequently converted to a public ltd company in 1992. Today, SOL has emerged as a leading food company from India offering a diverse range of authentic Indian food products with offices and customers in over 57 countries. Apart from being a dominant Indian player in the global Basmati rice market, it is the undisputed leader in the domestic branded Basmati rice segment with more than 35% market share. The company's flagship brand 'Kohinoor', enjoys excellent brand equity both in Indian and global markets and is known for its quality, aroma and flavour. Besides, it has other notable brands like 'Trophy', 'Charminar', 'Rose', 'Darbar', 'Shehanshah' and 'Falcon' in its portfolio.SOL has world-class, state-of-the-art plants with one of the largest milling capacities in India at 50 metric tonnes per hour. These plants are fully automated through the entire chain of processing of rice from paddy to the packaging of the final product and are fully computer-aided with state-of-the-art cameras to detect impurities and maintain quality, colour and size. The company has a very strong distribution network with more than 170 distributors, 475 stockists and over 2,40,000 retailers across the globe. SOL has also established two wholly owned subsidiaries in the USA and UK and a Joint Venture in Dubai (U.A.E.) to augment its marketing strength in these regions. Last year, it commissioned a new rice milling facility in the UK to process unmilled basmati rice exported from India for sale in England and the continent. For future growth and better profit margin, the company is focusing more on its branded business and is aggressively expanding itspresence in ready-to-eat foods (RTE) segment. SOL has an exhaustive product portfolio under its RTE segment including Veg. Pulav, desserts like moong/suzi ka halwa, wide range of heat & eat curries like dal makhani, chana masala, kashmiri rajma, aloo palak, kadhi pakoda, chhole etc, cooking pastes, cook-in sauces, chutneys, spices and a variety of combination (combi) meals. Recently, the company set up a frozen food processing facility at Bahalgarh, Sonepat (Haryana) having a capacity of 20,000 kg per day which has already started commercial production and received orders from Singapore, Mauritius, UK and South Africa. With this unit, its product basket is now diversified to include gourmet products, Indian Breads like parantha, naan, kulcha etc. and a range of snacks like samosas, spring rolls, vegetable kababs, dosa, vada, idli etc. In the near future, it has plans to enter into the business of fresh fruits and fruit based snacks and desserts.SOL has been awarded export excellence award for fifteen consecutive years since 1991 by the Agricultural & Processed Foods Export Development Authority (APEDA). With the govt. putting special emphasis on food processing, the future prospects of the company are very promising. To funds its expansion and working capital requirements, the company has raised around Rs.90 cr. through FCCB route. For FY07, it is estimated to report sales of more than Rs.600 cr. and NP of 28 cr. This translates into EPS of Rs.14 on its current equity of Rs.19.60 cr., whereas the diluted EPS works out around Rs.10

ONE CAN BUY 50% AT CURRENT N ANOTHER 50% ARND 78 LEVELS

follow up on my recoo

some coverage on the stocks suggested in thepast 2 weeks

rts power........booked my whole profit at 135 levels
nicco corp....arnd 20.....10 days bck....book profit at 28 now.
ramco system...booked my loss...8% frm my suggested levels....was advicedto take very small qty
freshtrops.....call at 100...book profit arnd 140 levels
raipur alloys....book 75% profit....60 to 135
gm brew at 90....right now 155........book 50% profit n sell rest on negative closing
india sucrose....book profit

BOOK PROFIT IN RTS N SHIFT TO NEYVELI LIGNITE

I JUSS SOLD RTS POWER.......N SHIFTED TO NEYVELI LIGNITE

MONDAY FOLLOW UP

yest 300 points rally was no shock.......a follow up buying was likely..though i think the selling will continue n we might see good correction in the next 2 weeks....i might think 100 times b4 taking fresh position now...i might be wrong again....ITS A WAIT N WATCH FOR ME

RTS POWER....UP 10%...keep holding...no fresh position shld be taken according to me....a negative closing n i might book all my profits....the operators r tlking abt pulling the price down a bit....keep holding till its firm....keep a close watch everyday

MADHAV MARBLES...UP 10%.....something seems to be cooking in this counter...one can buy this though the risk is high if market corrects...short term target is 160-175....currently 136......keep a stoploss of 120

RAMCO SYSTEM......UP 10%.....still 4% lower than my buy price......buy n forget types for a medium term.....invest small amt....a bit risky...though things r looking to be turning good in this counter

RAIPUR ALLOYS....HAVE BOOKED PART PROFIT AT 135.....ride the wave with the other half..might get a chance to buy low if market corrects......though can run up to 180 also...morgan stanley have taken stake in the company at 135 if i am not wrong

hyderabad IND......GOOD BUY AT CURRENT LEVELS.....INVEST 50% NOW

FRESH FRUITS.....TLKS OF RELIANCE TAKING IT OVER......SHORT TERM SPECULATIVE BUY WITH STRICT STOPLOSS...CAN TOUCH 150 SOOON

SHIV VANI OIL....NEWS OF RECEIVING ORDERS FRM ONGC.....BUY WITH STRICT STOPLOSS.....CAN CROSS 300 SOON

SHASUN CHEMICALS AND DRUGS -A challenging acquisition in difficult times

Shasun completed the acquisition of Rhodia Pharma’s custom synthesis assets and
shared its plans yesterday at the analyst meet. While this acquisition serves as a good
strategy for Shasun to enter the custom synthesis business, the size of the business and
the quantum of loss can potentially wipe out Shasun’s entire profitability in FY07E.
Management too expects to take two years to turn around this acquisition. This pain of
transition will get aggravated as Shasun’s other areas of focus too are progressing
gradually and require further investments and management attention.

We have revised our consolidated estimates for FY07E down to a net loss of INR 291 mn
from our earlier estimate of a net profit of INR 428 mn. This not only reflects the loss in the
acquired business but also reflects our lowered estimates on the formulations business
where we have still not seen any ANDA filings. We have assumed a break even of Rhodia
operations in FY08E which too might be slightly optimistic given the over capacity in
custom synthesis.
With a net loss in FY07E and a PE of 24.7x on FY08E earnings, the stock looks very
expensive and we thus downgrade our rating from ‘BUY’ to ‘SELL’.

Key Highlights


The cost of acquisition was not disclosed, however, Shasun mentioned that total
investment will be to the tune of USD 30-35 mn over two years including the upfront
cost of acquisition.
The transaction includes UK manufacturing sites at Dudley in England and Annan in
Scotland. The capacity of both the plants put together is 525 Cu. M. Both the plants
are USFDA inspected and approved for many products.
With this Shasun gains access to contract manufacturing technologies like Hydrolytic
Kinetic Resolution, Aromatic Bond Formation and Radical Trifluoromethylation.
Although the transaction includes only acquisition of facilities and not business,
Shasun is confident of retaining the entire client base.
These assets generated sales of USD 72 mn in CY05 incurring USD 11 mn loss at
EBITDA level.
Rhodia Pharma has 14 products in Ph II B and above. Currently, 10 products are
already commercialized generating 35-40% of total sales.
The acquisition currently will be funded through debt and internal accruals, but
Shasun did not rule out the possibility of an equity dilution.



Financials
Year to March FY05 FY06E FY07E FY08E
Revenues (INR mn) 3,252 3,549 7,084 7,865
Rev growth (%) 21.5 9.2 99.6 11.0
EBITDA (INR mn) 639 662 218 836
Net profit (INR mn) 311 336 (291) 194
Shares outstanding (mn) 45.8 48.1 48.1 48.1
EPS (INR) 6.8 7.0 (6.1) 4.0
EPS growth (%) 21.9 2.8 (186.5) (166.7)
PE (x) 14.7 14.3 (16.5) 24.7
EV/EBITDA (x) 8.3 8.0 24.3 6.4
ROE (%) 22.8 20.8 (23.5) 14.4

KRBL

Delhi based KRBL Ltd., is the largest rice miller and basmati exporter inthe world. Having seen an increase in demand for basmati rice (which is produced only in India and Pakistan) from cities situated mainly in MiddleEast and USA, the company has turned upbeat about the export outlook and thus it is all set to increase its production. The company has good distribution network and it has already tied up with Omar Ali BalsharafEstablishment (a leading super market chain and FMCG trader in Saudi Arabia) who has also picked up a 8.35% stake valued at US $ 3.07 million and alsowith other leading players in USA.With an installed capacity of 67 tph (tons per hour), the company is all set to complete the second phase of the acquired 150 tph Dhuri plant. InDecember 2003, KRBL acquired this 132 acre facility to process rice and theco-products namely rice bran oil and furfural. The unit was sick, when KRBL accquired and is being revamped in three phases.For the first nine months the company has achieved net sales of Rs. 5435 mnout of which nearly 52% was exports, as compared to sales of Rs. 5027 mn forthe complete previous year. Being a low net margin industry the company has taken various steps to improve it by selling the co-products, which generates high margins.

The operating profit of the company has increased by near about 100% and further more with an annualized EPS of Rs. 16 for FY06 the company is trading at 12x, which is substantially low, then its peers like Lakshmi overseasltd.

United Phosphorus: united we stand.. !

United Phosphorus is amongst the top 7 players in the Crop Protection business worldwide. This company is one going global. We like its businessmodel of using acquisition route for gaining entry.
Crop Protection business: A Generic opportunity.The Global Market is around $ 35 bn. of which about 70% is non patented. USand Europe consume 50% of the global sales. The Generic companies accountfor only $ 7 bn. The major sales still are made by the innovator companies.BASF, Dow, Bayer..are some of the names here.The entry barrier is high. The registration process is lengthy and involves high-cost. The capital intensity is high in this case and creates a need for strong distribution tie-ups. This has been the reason for very few serious generics players.In this scenario, the price erosion is limited to 5-10% post the product going off patent. This is very much different to the Pharma sector where there is cut throat competition in the off patent space. Post the exclusivity sales period the price erosion in the Pharma market is as much as 90%.

United Phosphorus Limited (UPL) is the largest crop protection company inIndia. The company ranks fourth amongst the generic agrochemical companiesin the world. It products include fumigants, fungicides, insecticides,rodenticides and herbicides. It is the world's largest producer of AluminiumPhosphide from India and Napropamide from UK.Size has given UPL a strong advantage over the others in the Crop Protection business. To add to this it is highly profitable. The reason for theprofitability is its backward integration and Chemistry Skills. The manufacturing costs in India are about 30% lower than in Europe and the US.This helps the company in breaking even faster in the acquisition that i tmakes.Indian crop Protection industry is 12th largest in the world. Rough sales of about Rs 3200 crores. Consumption levels are low given the lower penetration, lack of organized farming and poor understanding and the lackof risk taking capability of the farmer.

A small division: Industrial Chemicals & Intermediates: This is now only a small part of sales at about 5- 7%. Growth has been limited because ofChinese competition. The company manufactures of white phosphorus, redphosphorus and compounds used in various industries like matches, fireworks,pharmaceutical and pesticides. Almost 50% this production is used in-housefor manufacturing various technical grades.We think that the VAT story is playing out in the Pesticides as well. TheIndian Market is highly competitive. We believe that there is a large level of unorganized market. With implementation of VAT we think that this company should reap the benefits of the same. The company has a network of more than 5000 dealers and 25 offices established a distribution network in various markets, some of theminorganically. Implementation of VAT may offer an opportunity of growth inIndia

UPL has 25 generics registered across the world, and established adistribution network in various markets. So really what it has done is created a distribution engine. The idea now is to acquire smaller brands from the established players and leverage on this distribution network and its own lower cost manufacturing. The price erosion and smaller size of some brands has the bigger players looking to offload this to ready buyers. The focus of the established players is more on Seeds and higher end patentedproducts. Interesting to note that the company has almost 40% of revenues from acquired companies. We believe growth could explode here..Through acquisitions, strategic alliances and subsidiaries, UPL has built a network across the globe -- in Europe, America, Asia Pacific, CIS, Africaand Australia with fully owned subsidiaries in Argentina, Australia,Bangladesh, China, Cuba, Denmark, Honduras, HongKong, Japan, Mauritius,Mexico, Poland, Russia, South Africa, USA, UK, Zambia, Zimbabwe and representative offices in Sri Lanka & VietnamUPL has established its presence in the high consuming nations, its only amatter of time that these products will start seeing exponential growth. UPLin India was a price warrier. We think thats what brought in the volumes.The low cost Indian Manufacturing offers an opportunity to try the same in Developed Markets as well.The company recently raised $150 mn in FCCBs (convertible bonds). This has been normal for the company to raise money just ahead of an acquisition.This the company just did that by acquiring Advanta for Euro 61 mn. This company has an Ebidta margin of Euro 11 mn This company is based out ofNetherland and has 4 subsidiaries. This is a big acquisition and makes UPL abig player in the Indian Seed market as well.We believe implementation of VAT may offer an opportunity of strong growthin India. (This needs to be reconfirmed). We are not sure .. how big is the unorganized sector in this business.The reduction of subsidies to Agriculture in US and Europe is a threat which needs to be understood. One could argue.. that given UPLs higher margins manufacturing it will be able to weather the storm better.. but really would it lead to that needs to be understood well. The other risk to contend to is that India accounts for 35% of revenues and that is still prone to the vagaries of the monsoons.The green environmentalism is a threat to an extent. A ban on certain products on the back of high toxic levels of health issues could have some slowing. However given the range of products that the company has.. we think that this risk is not high ....Derisked nature of business.

Given the derisked nature of business in terms of number of products and geographies, we believe U Phos is well positioned to play the Generics game.Given the large size of this company. We think it offers a good investment play on the Global Agriculture and the low cost generic manufacturing capabilities without the inherent risks of price erosion.The sales from the subsidiaries will see good upsides as the consolidated entity begins to deliver.

Simplex Castings -Ticket to ride the Indian Railways

Simplex Casting (Simplex), part of the Simplex group of industries manufactures heavy castings in grey cast iron, alloy cast iron, stainless steel and steel. The products of the company are used primarily in steel plants, power plants, mining and cement plants, defence and the railways.

It has a foundry capacity of 20,000 metric tonne (MT) and a steel ingot forging capacity of 5,000 MT. The company has manufacturing facilities at Bhilai, Raipur & Rajnandgaon in Madhya Pradesh. Simplex is a preferred supplier of castings to the Indian Railways (IR), with a wide product profile that includes casnub bogies, coco bogies & bolster assemblies, which are used in railway wagons. Out of the total revenues of Rs100 crore earned by the company in the last financial, around 27 per cent is billed to the Indian Railways. Simplex supplies approximately 4,000-5,000 MT of castings every year. Key Beneficiary of increased pace of IR's wagon procurement During the last few years IR's wagon procurement has been on a slower pace as compared to the growth in its freight revenues. Given the buoyant outlook for India's domestic as well as the export-import (exim) trade, IR will have to necessarily step up the pace of its wagon procurement programme, which in turn augurs well for Simplex. Simplex has been operating at close to 75-80% of its 20,000 MT capacity, and hence the company has enough headroom to meet the additional demand from IR. This in turn implies that there could be a significant increase in its free cash flows and an improvement in the return ratios.


Performance : In the first 9 months of the FY2006, Simplex recorded a 23.3% yoy increase in Sales to Rs78.7 crore. For the same period the operating profit rose by 75.8% yoy to Rs7.9 crore and the PAT surged by 275% yoy to Rs1.6 crore. The OPM has expanded by 298 basis points to 10.0% in 9MFY2006. Simplex is trading at a TTM PER of 11.6x. However, if the increased budgetary allocations of the Indian Railways are factored in for the FY 2007, not only will Simplex be able to record a stupendous surge in revenues but it will raise capacity utilization close to 100 per cent. This will help the corporate report profits in excess of Rs 6 crore or an EPS exceeding Rs 10 for FY07. At 5 times projected earnings for FY07, this is one of the cheapest stocks trading around.
Growth of Railways will be a major driver for Simplex .The higher capital expenditure of the Railways is expected to flow towards the acquisition of rolling stock ie locomotives, coaches and wagons (to support the freight traffic momentum), telecommunication and signaling projects (safety being a thrust area) and better infrastructure (to facilitate better, wider and faster connectivity). The changing face of Indian Railways with its improving financial health is a positive sign for all stakeholders..viz Simplex Castings. The suppliers of capital equipment and services like Simplex Castings could show healthy growth which coupled with a higher operating leverage (based on a hypothetical example of a 30% surge in the IR capex will result in a exponential increase in profitability during FY2007.

McNally Bharat Engineering--- CNBC-TV18's exclusive interview -dated 4th april 2006

The company is planning to raise around Rs45-50 crore. Its board is meeting tomorrow to decide about the instrument to raise this capital.Its MD Srinivasan Singh says that the raised amount will be used for capitalexpansions and also for augmenting its working capital.

Excerpts from CNBC-TV18's exclusive interview with Srinivasan Singh:

Q: Going forward what is the finance McNally Bharat wants to raise in valueterms ?

A: In monetary terms, it may be around Rs 45-50 crore.

Q: What are the routes that you would like to use for raising this and how soon does the company want to raise this money?

A: There are 3-4 different options. It maybe an FCCB or preferential sharesissue. Tomorrow we have a board meeting, where we will take a final decision. We would like to make the plan in a manner so that we are able to get our funds latest by mid-June.

Q: Where would you deploy this money? Are you looking at some expansion plans?

A: We are increasing our activity level dramatically. This year our turnoveris around Rs 350 crore. Next year, we are expecting around Rs 600 crore; andfor the following year, it should be around Rs 750 crore. There are plentyof orders in the market for our line of business.We are also trying to expand our factories in two different places. So we need some money for capital expansions and also for augmenting our workingcapital.*

Q: What is your order book position as of now?

A: We have Rs 750 crore orders on hand.

Q: How much more orders do you expect?

A: We are well placed. There are two tenders, which are approximately of Rs260 crore. These will be decided by mid May or April end. That will take our order book to around Rs 1000 crore.There are a number of orders, where we have participated though tenders forRs 1500 crore. If we get our share, it will be quite substantial. By the end of the year we would like to have an order backlog of Rs 800 crore, even if we reach the target turnover of Rs 500-600 crore during the year.

Q: What kind of expansion is this going to be ?

A: We have a factory around 250 km down south from Kolkata. We want to expand both in terms of hardware and software. We are trying to introducesome automatic machines and expanding our factory site to take care of ournew type of business, which we have entered into.

Q: Given the strong order book position, what kind of growth can we expecton your margins?

A: We are expecting good growth from hereon. But in this project business,which we are in, most of the orders are of long-term nature in terms ofexecution. Increase in steel prices was a setback for the company. That is why, in our previous orders, which we had taken, the margins were slim. Eventhe market situation was not good either. Now, our turnover is going to increase. But more emphasis is being given onthe bottomline. So for the next few years, say by 2009-2010, we expect our turnover to be at least about Rs 1000 crore with margins of Rs 50-75 crore.

Su-Raj Diamonds - a discussion

Su-raj Diamonds should explode at the bourses. Some reasons -

a) The scrip is at a fwdPE of 7.55

b) The NCAV of the stock is a good 97.60 rupees while the CMP is much lower at 64.15 (Apr 7th) - a true Grahamian stock !!!

c) Cash rich company with 26.50 rupees of cash per shared

d) Has a dividend yield of almost 2% (which is a rarity these days)

e) The company also has investments of 43.21 crs on it's books..The growth in sales has been good and consistent ... 495 crs (FY02), 583 crs (FY03), 723 crs (FY04) and 1028 crs (FY05). The company would close at 1150 crs for this financial yr ... another rising sales yr. Likewise, growth in profits is at 10.97 crs, 12.11 crs, 21.89 crs and 30.69 crs over the last 4 yrs.

I estimate the profits for FY06 to close at 34 crs. Note, that the P/E ratio of Su-raj Diamonds is much lower than it's peers - Vaibhav Gems, Goldiam International, Rajesh Exports, Shrenuj & Co. etc. However, Su-raj Diamonds has never moved much. Movement has largely been between the 50 rupees to 70 rupees range over the last one yr.

Surprisingly, a number of analysts have given a thums up to the stock over the short and medium term. Is this stock worth investing in?


icici report on the same .......... http://content.icicidirect.com/PickofWeek.asp?id=207

ind swift labs update

Ind Swift inaugurates its new manufacturing facility at Baddi

Ind Swift Ltd has announced that extending its manufacturing base in yet another tax heaven, the Company on April 10, 2006 put to operation its new State of the Art, finished dosage manufacturing facility in Baddi, Himachal Pradesh. The new facility will manufacture Tablets, Injectibles and Liquids and will be eligible for the Central Excise and Income Tax benefits available to industrial units set up at Baddi.This is the sixth manufacturing facility of the Company and second facility which the Company has put up in the tax exempted zone. Earlier the Company has a facility in Jammu, which is also a tax free zone. The Company has recently inaugurated its 100% Export Oriented unit in Derabassi Punjab, which would cater to the Export Markets.The state of the art facility which has come up at an total investment of Rs 400 million has all the latest machinery and equipments. The unit will have capacities to manufacture; 1800 million tablets/annum, 120 million ampoules/annum, 60 million vials/annum and 120 millions Syrups/annum.The new facility is built as per the FDA standards and will be inspected by TGA & MHRA.With the commissioning of this project, the Company will further strengthen its position in the Anti-bacterial, Anti-diabetic, Cardiovascular, Hyperlipidemic, Antifungal Antihistamine, Antidepressant, Anti ulcers therapeutic segments."The new facility will definitely give a competitive edge to the Company as we plan to pass on the excise benefits to our customers. We expect the new unit to generate an additional revenues of 160-175 crores with 10-12% net profit margins in next three years" said Mr. V K Mehta, Director.The Company has emerged as a Pharma Company with one of the largest manufacturing facilities in India, with overall annual capacities of 7200 mn Tablets, 240 mn Capsules, 180 mn Ampoules, 120 mn syrups, 96 mn vials & 36 mn Dry Syrups.With the setting up of this unit, the Company has also given final shape to its expansion plans, where it has invested over Rs 1000 million. The Company now has six manufacturing facilities located in four different states; two facilities are in Parwanoo (H.P.) and then one facility each in Baddi (H.P.), Panchkula (Haryana), Derabassi (Punjab) & Jammu (J&K).To further seize the opportunities the Company has recently purchased another 7 acres of land in the Tax free zone of Baddi for setting up a new formulation facility dedicated for manufacturing the Oncology, Cephalosporin's, Beta Lactum, Herbal & Neutraceutical products. The Facility when operational will be largest in terms of capacity in the north India.

HOTEL LEELA

Bangalore continued to be the market leader in terms of occupancy and ARR (Average Room Rate) and is considered the best hotel market in Asia at present and one of the best in the world. Average occupancy has shot up WITH now ARR 19000 per day. last year contribution from The Leela Palace Kempinski, Bangalore at Rs.139 crores was more than 50 % of total income. The Leela Palace Kempinski, Bangalore has carved a niche of its own in the business segment and enjoys the highest RevPar in the country. This unit has been ranked by CRISIL as the best performing hotel in the country. Mumbai, the financial capital of India, continued to experience a large surge in demand which was reflected in relatively higher ARR, especially in north Mumbai. The ongoing improvements to infrastructure in terms of wider roads, flyovers and Highway development and renovation of the Mumbai Airport will add to demand since not much of hotel construction is to be seen.

New Projects in view:

(a) Chennai: The Company has acquired land at Chennai for the construction of a Five Star Deluxe Luxury Hotel (about 280 rooms in phase-I) and IT Park and the project work will be commence after receipt of the necessary approvals. This hotel is expected to be ready for operation in the year 2008-09.
(b) Hyderabad: The Company has identified suitable land for setting up a Five Star Deluxe Luxury Hotel. The land identified has an FSI to set up a 300 room hotel. The process of acquisition of the land so identified is under process. This hotel is expected to be ready for operation by end 2007-08.
(c) Kovalam (Kerala): The Company has proposed to acquire an existing and operating Resort Hotel located in the pristine and scenic Kovalam beach. This hotel, located partly on the peak of a cliff and partly on the beach is very unique and offers an exciting experience for the discerning high-end international tourists coming to India for long holidays.

Projects under implementation:

(a) The Leela Business Park, a joint venture project with Rockfort Developers (a combine of HDFC and Rahejas) is almost completed and the same is expected to be fully completed before the end of July, 2005.
(b) The preparatory work for the construction of additional wing at The Leela Palace Bangalore is in progress and the project is expected to be completed and commissioned during first quarter of the financial year 2006-07.
(c) The civil work for The Leela Palace Udaipur is expected to be completed during the year 2005-06 and thereafter the balance work of interiors and services, etc. would be taken up

The hotel industry in India never had it so good, and it is expected that all hotel stocks will continue to outperform in the coming future, on the back of rising ARR's and record occupancy levels.The management seems to have come out with a guidance of 100% to 150% y-o-y growth inFY-07 in comparison to FY-06. Hotel Leela may close FY-06 with a PATof 100crs. (Q3 np was 32.25crs., while that for Q4 may besignificantly higher).If we are talking of a 100-150% rise in profits for FY-07, that wouldmean a np of anywhere between 200crs to 250crs. Even assuming the lower-end, this would translate into an eps of above 25, and considering the high discounting which the industry enjoys, I would put down a conservative target of 700 by the end of FY-07


MY VIEW : one shld invest 25% arnd 325 levels......another 50% arnd 275 n rest at 250 if it ever falls in the worst market condotion

garware wall rope

Garware Wall Ropes a dominant player bothin the local and international markets is engaged in manufacture of synthetic cordages,fishnets,and sports nets.
The products of the company are widely used in industries like fishing, sports shipping, oil exploration, agriculture etc to mention a few.

POSITIVES

1) Company has been regularly introducing value added products on a customised basis
2)Product range covers a host of industries
3)more than 35%of the turnover is contributed by the export market and the share of this is expected to grow further in coming years.
4)A consistent dividend paying company and even at current price of 49 the yield is attractive. 5) Rising polymer prices are now under control and this could benefit the company.

I expect the company to achieve an EPS of close RS 9/10 for the year to end MARCH 07..........buy arnd 45 levels......target arnd 75-80 seems quite likely

RISHI LASER

Rishi laser is a leader in the usage of Laser Cutting for manufacturing components and assemblies.Ris(RLCL) set up its first Laser Cutting facility in 1995. Even though Laser Cutting was very popular in Western Countries at that time, Laser Cutting of metals was very new to India.The progress in the first five years was very slow because Laser Cutting was still looked as a very expensive method of processing steel. Also the Indian Engineering Capital Goods Industry was passing through a very difficult period in later nineties.

The scenario has completely changed today for the sector and the company. The Engineering and Capital Goods sector is booming in India and Laser Cutting is fast becoming a very standard method of processing flat steel. RLCL now has 5 LCM spread over four locations and the Company is now embarking on major growth path to add further facilities to enhance capacity.

According to the management,"Rishi does not export anything directly till now. However we see this as the most exciting opportunity today". During the past months RLCL has had a continuous steam of visitors from Europe looking to outsource Laser Cut and fabricated components / assemblies from India. The visitors include the Global Purchasing people from Companies with turnover in excess of $ 1 billion and are the most famous names in the Engineering World. The management adds,"They were very surprised and delighted to see these kinds of facilities in India. Negotiations are at a very advanced stage with two large multi billion dollar groups and we expect export business to start in a small way this year fy05-06". Rishi now has planned to focus on exports and is therefore adding substantial capacity mainly targeted at exports.

Expansions.........Rishi last fiscal completed its expansion at Bangalore with the construction of new facilities and addition of CNC Bending facilities.The Company added new CNC Plasma Cutting and CNC Punching facilities at its Pune Works and with the addition of these machines the Company now has the widest range of flat steel processing machines in the country.RLCL also recently set up a Sheet Metal Processing facility in Nashik.Futher the Company has embarked a major expansion at Pune to cater to the export markets. The expansion would include facilities for Laser Cutting, Bending, Welding and Assembly.The benefit of all these expansions will start to reap exponential growth in the coming years for rishi laser cutting.

Outsourcing Oppurtunity=Due to increasing cost pressures,the European Companies are increasingly being forced to outsource components and assemblies. RLCL is well placed to supply light and medium fabrications because of its modern facilities, good Engineering base and experience of similar supplies in domestic industry.We beleive,In the current global economic scenario the trend towards outsourcing will increase. Also it would important to note that,India has a tremendous cost advantage where the items have a high Engineering content. RLCLs products are not mass produced items and require Engineering inputs at all stages.Thus Outsourcing can become a huge growth provider for the company in future.

Outlook=The demand has grown for the sector and the company all round as the Engineering Industries have revived and are booming. As per CMIE the ongoing CAPEX by India Inc will be over Rs. 8,00,000 crores.The demand in Electrical Switchgear Industry and the Earth Moving sector has exploded due to increased spending on infrastructure. We believe that this process will get accentuated as India will have to spend increasingly large sums of money on infrastructure if GDP has to grow at 7% to p.a.The Company has moved towards more value addition to cut steel. By doing this the potential market that the Company can cater to has increased by 100 times. This has also opened opportunities for RLCL to move from light fabrication to medium fabrication.The management says," We believe that the opportunities in the medium fabrications are substantially higher - especially from the Earth Moving Industry".Thus all things are looking up for rishi laser and this all will take the companyto new heights.

Conclusion.................Rishi has been consistently perfoming well over the last 3years or so and the same trend is expected to continue in the coming years as well.We expect RLCL to deliver a topline of aound 36crs and a bottomline of about 3.6crs for fy06 respectievely.With a low equity base of 5.6crs the bottomline results in an EPS about 6.5rs.Further it is trading at a P/E of 8x its expected EPS of Rs 11 for FY07.

WAIT FOR DECLINE N CAN BE BOUGHT ARND 75 LEVELS

ITL

ITL is an established leading metal cutting solution provider offering widerange of machines,tools and cuting lubricants.ITL has been the pioneer in introducing India's first double column type metal cutting machinein theyear 1990 and since then, ITL has supplied more than 2000 machines acrossthe country and global markets.

ITL has started designing and manufacturing of complete turnkey projects as well as equipments for production of tube and pipes which includes tubesmills, draw benches,straightning machines etc, Which are neccesary forproduction of ERW, Seamless pipes and stainless pipes. The company has already exported 2 projects and supplied 3 projects in india. Recently, ITL has developed and manufactured India's first high speed CNCcircular sawing machines and the same has been well accepted by most of the engineering industries.It is a perfect solution for cutting requirements ofmost of the automotive component manufactures and its expected that in times to come, they will shift from conventional cutting machines to circularsawing machines because of their higher productivity and high degree of automotion along with quality cuts.The company is also sitting on a heftyorderbook of around 20crs and its increasing all the time.

Financial Performance: For FY05, Company had acheived sales of 17.20 CRS with a NP of a mere 40lakhs. On equity of 3.30 CRS., EPS stood at 1.30.ITL's profits was not high because steel prices had gone up substantially over last 2 years.The companyhad undertaken 4 export orders based on the then prevailing steel prices atlow margins to enter the export market. With surge in steel prices, Its margins were effected. Going forward,Company plans to put escalation clauseinto its contracts.

Future Prospects:The enggineering industry in India is on an upswing on the back of huge demand from the contruction,infrastructure and capital goods sector. This has resulted in an increase in the demand for metal cutting machines. ITL is well placed to take advantage of this oppurtunity as it is a leader in high speed sawing technology and is in the process of establishing itself inthe domestic and global markets as an innovative and reliable "Cuttingsolution provider". Its current employee strength stands at 210, With 55Engineers, Of which 18 are in the CAD department. Moreover there are 9Engineering,2 Polytechnic and 3 ITI colleges at Indore, Thereby giving thecompany a locational advantage to attract new talent.

Wide Product Range: Itl has a wide product range in metal cuttingsolutions.The company offers 60 different models of brandsaw machinesranging from 100 MM TO 1,500 MM cutting capacity with Manual, SemiAutomatic, Automatic and fourth generation CNC machines. On the back of itstechnical tie up with a German company ,ITL manufactures 3 models of KatoSawing machines with cutting capacities of 250 MM and 400 MM diameter inIndia as per KLasto technology. Further, ITL is the hub fortube technology for leading manufactures.With technical know-how from varios Mnc, Itoffers state of art equipment craftedby a highly experienced technical team.Its tube mills have acapacity ofmaking 20 inch diameter tubes/pipes. All This makes ITL a Pioneer in cutting technology and also places it at an advantage over it peers,Thus ITL is best positioned to capitalize on the demand arising from the tube and pipe manufacturing sector. The company was among 5 corporates who participated in the exhibition held at Germany. There has been an excellent response to the company's productsas it has received 61 inquiries with trial orders for 25 machines estimatedat RS. 30M.The consignment is to be shipped by December 2005. Further, The company has represntatives in U.S.A. and Germany, which helps it to maintain relationship with its exisiting customers and also acquire new customers. ITL is set to appoint 5 dealers,one each in UK, Poland, Germany, Turkey andSouth Africa to capture a share of the export market.

For FY07, ITL is likely to acheive turnover of RS. 35 CRS. and NP of RS.3.65 CRS. which will give EPS of 12. ITL is trading at just 8.2 times of FY06E earnings and just above 3.4 times FY07E earnings

60% can be bought right now at 35 levels n rest at 28-30 levels.....solid support arnd those levels

mcnally bharat

India's premier turnkey engineering and execution company was set up in 1961, as a joint venture between Bird & Co. Ltd., India and McNally Pittsburgh Inc., USA, the world's largest manufacturers of coal washeries. Another technical collaboration agreement followed in 1966 with Kennedy Van Saun Corporation, USA, which gave access to their wealth of experience in the field of minerals processing.
Today, the company has the unique distinction of being stewarded by two of India's biggest business houses: the blue-chip Williamson Magor Group and the industry major, G. P. Birla Group.
Over the years, MBE has played a pioneering role in the emerging areas of bulk material handling, coal and mineral beneficiation, pyro- processing and related auxiliaries. It has executed more plant projects than any other company in India - nearly 150 - in various core industries on a turnkey basis from concept to commissioning, including the design, manufacture and supply of major equipment, in-house. MBE presently comprises of two independent operating divisions - Projects Division, Calcutta and Products Division, Kumardhubi - and a wholly owned Subsidiary - McNally Bangalore Industries Ltd. (MBIL in Bangalore. MBE's commitment to quality is best reflected in the ISO 9001 accreditation that both the Divisions and the Subsidiary have received. In 1999-2000, the company has acquired 90% of the equity in Eroterv Waagner Biro, the company's present collabororators which enables the company to bid internationally. Also during the year, the company was successful in getting first Coal Handling Plant order and Ash Handling using the technology of Eroterv Waagner Biro of Hungary at its plant at Neyveli. The company finalised the collaboration agreement with Konecranes of Finland for manufactures of Port Cranes. It also adopted technology for design and manufacture of Vibrating Screen in line with Siebtechnik,Germany. some details from directors report of 0405

FINANCIAL RESULTS: The Accounts of the current year have reflected a profit of Rs.34.5 million before taxes on an enhanced turnover of Rs.2865.3 million. The various steps taken to exploit the growth of the infrastructure sectors such as Highways, Ports, Mining, Mineral Processing and Water have enabled the Company to end the year under review with an outstanding order book of Rs.7000 million. The forward profit projections of the Company reflect this improved status and your Board expects an increase in the turnover and operating profits of the Company for the year 2005-2006. In view of the improved performance, the Board has declared a token Dividend of 2.5% on the equity shares of the Company, subject to the approval of the Members.

OPERATIONAL REVIEW & PROSPECTS

TURNKEY INFRASTRUCTURE PROJECTS...............All our new Business Units have made quick inroads in the market, completing the projects ahead of schedule and have a bright future, a summary of which is as under: Material Handling ; The Company has bagged orders for 3 major Coal Handling Plants totaling Rs. 3930 million from WBPDCL & DPL for Sagardighi, Santaldih & Durgapur Power Plants. All the 3 projects are currently progressing as per schedule. The Company has also commissioned the Green Anode Plant (Rs. 637 million) for Balco Smelter Project at Korba in a record time of 19 months. Mineral Benefciation; The Company has successfully commissioned the Hindustan Zinc Expansion Project at Rampura Agucha. This project (Rs. 770 million) has been executed under an Agreement with Outokumpu Technology Oy of Finland and has been commissioned in a record time.

Port Handling : During the year 2004-05, 5 Nos. ELL Cranes for Kandla Port Trust have been commissioned. The progress of execution of 300 Ton Goliath Gantry Crane for Cochin Shipyard and 2 Nos. RMQC for Haldia Port are satisfactory. The Company has also bagged orders for 4 Nos. Grab Unloaders from MPT Goa for Rs. 324 million this year.

Ash Handling : Ash Handling Plant Projects for NTPC, Rihand and GMDC, Akrimota Thermal Power Stations are now in final stage of erection. The Company is likely to get orders for more such projects in the near future.

Water Management Systems : During the year, the Company has successfully commissioned TWAD Board Water Supply Project, Ahmedabad City Water Supply Project and Raw Water Pipeline Project for INDAL, Hirakud. 4 More Water Supply Projects for Rajasthan Urban Infrastructure Development Project are under various stages of execution. Highways The Road Project at Gajol-Hilli sector is progressing as per the plan. During the year, the Company successfully completed NH2 sector being constructed on behalf of Gamuda, Malaysia. MANUFACTURING During the year under review, the operation at Kumardhubi has improved substantially.The unit started breaking even from November 2004 onwards and continues to earn profit from February,2005. There has been marked improvement in quality and delivery commitment and customer satisfaction has improved. During the year, the Fixed costs at the unit, particularly employment cost has been reduced under early separation scheme. The operation of the unit is expected to further improve in the coming years. The unit is maintaining healthy order book. EWB-MBE INTERNATIONAL KORNYEZETVEDELMI KFT EWB LIMITED The performance of the subsidiary during the year is satisfactory. The unit has bagged strong order book in east Europe and South-East Asia. Your Company continues to receive valuable technical support from its subsidiary in Dry Ash Handling Technology, which is used in Power Projects. PROJECT FUNDING The Company has been examining various growth opportunities from time to time in line with its objective of becoming globally competitive. While it is envisaged that the internal generation of funds would partially finance the proposed investments it is thought prudent at this stage for the Company to raise a part of this fund requirement through the issue of securities in the domestic/international markets as set out in the accompanying Notice. It is therefore proposed to issue appropriate securities for an amount not exceeding the equivalent of US$ 7 million in one or more tranches in such form on such terms and timing and in such manner at such price or prices and at such time as may be considered appropriate to the various categories of investors in the domestic /international markets as set out in the Resolution for the approval of the Members. The Board after elaborate consultations and considerations has thought it prudent to cancel the proposed Rights Issue. JAYAMKONDAM LIGNITE POWER CORPORATION (JLPC) JLPC during the year has converted a part of the loan into its share capital. As per the latest information, Neyveli Lignite Corporation has stepped into the project as new partner. INDUSTRIAL RELATIONS Industrial relations during the period under review have been cordial and your Directors record their appreciation to the workers, staff and officers at all levels for their sincerity and hard work throughout the year.

MANAGEMENT DISCUSSION & ANALYSIS REPORT INDUSTRY STRUCTURE AND DEVELOPMENT The infrastructure sector covers the services of transportation (railways, roads and road transportation, ports and civil aviation) communications (telecommunications and postal services), electricity and other services such as water supply and sanitation, solid waste management and urban transport. Construction activity is an integral part of a country's infrastructure and industrial development and hence can rightly be termed as the basic input for socio - economic development. Its presence and contribution is immense in terms of providing huge opportunities for direct and indirect employment. Construction sector has grown at 6.3% between Financial Years 1995 to 2003. It contributes about 5.2% of the GDR (Source: CMIE) 1. Infrastructure sector and Engineering Industry is poised for major growth in next 5 years. 2. Highways construction sector is expecting further 20000 KM order finalization under N-S-E-W sector of NHDP of NHAI. 3. With Indian economy targeting an annual growth rate of 8-10% in the future. Major modernization of existing parts is expected shortly and the process has already started. 4. Under special focus of Prime Minister's Special Fund, major thrust have been given for augmenting water supply to the dry-zone of the country. 5. Major investments are expected under the private mining sector specially in the steel, aluminium, zinc and copper sector. 6. Major expansion is expected in power sector under the public sector banner of NTPC, State Power Corporations and also under the Private Sector Power Generation.

OPPORTUNITIES & THREATS

Obviously this growth in infrastructure provides the Company with several opportunities not only for business but for business at more profitable levels even though competition remains substantial. The principal threat remains from the public sector companies, which continue to enjoy purchase preference despite all protestations to the contrary. The other major threat is the inordinate rise in import costs, particularly steel, which adversely affect contract with fixed price.

SEGMENTWISE OR PRODUCT WISE PERFORMANCE The Company is engaged in turnkey projects in infrastructure and related manufacturing activities and therefore the question of segment-wise performance does not arise.

OUTLOOK : The outlook for the year 2005-06 is certainly stronger than that of the last three years. The Company has taken some steps in mobilising fund and non-fund facilities to finance the growth in business that it is confident of achieving.

RISKS & CONCERNS : While the Government of India has taken major steps in relaxing norms and providing growth inputs for all sections of industries there are some sectors like power and labour reforms that still require attention, only after which Indian Companies can be fairly competitive internationally

wait for a correction......good support arnd 110 levels

sunil hitech

Sunil Hitech (BSE code 532711), an engineering company recently came out with an IPO. Currently the market capitalization of the company is 132 crores at the current market price of 131.75.

Whole-Time Director at Sunil Hitech Engineers, Sunil Gutte in an interview to Moneycontrol said that profit for FY07 will be around Rs 8-Rs 9 crore and the net sales would be around Rs 200 crore. NTPC, a customer of Sunil Hitech has plans to add 5000 mega watt in this particular financial year. In the 10th and 11th five year plan they have proposed 1,00,000 mega watt additions. NTPC, BHEL and all major electricity boards have been customers and Sunil Hitech has been working with them for over ten years. So they expect to get good orders.

The company's unexecuted order-book, as on November 31, 2005 was Rs 178 crore, this was two-and-a-half times its 2005 revenues. Therafter it has been getting further contracts. It has been awarded contract by Bharat Heavy Electricals Ltd (BHEL) recently for Erection, testing, assistance for Commissioning. Trial operation and handling over the Boiler and Auxiliary including ESP, Rotating machines, Ducts and Dampers, Power Cycle piping etc. of 2 x 250 MW Unit - 1 of Bhilai Power at District Durg, Chattisgarh. The Value of the contract is Rs 13 crores and is to be executed over a period of 18 months. Apart from this it has been awarded a contract by Maharashtra State Power Generation Company Ltd (MSPGCL) for New Parli project - 1 x 250 MW Main Storm Water Drainage, Arrangement for TPS Area at New Parli Power Project, Parli Vajinath, Dist Beed, Maharashtra. The Value of the contract is Rs 3 crores and is to be executed over a period of 6 months.
Most of the orders are scheduled for completion by FY-06 and FY-07. Given its track record of completing projects before time , a jump in revenues of FY-06 and FY-07 can be expected. Sunil Hitech is now targeting the EPC (Engineering, Procurement and Construction) business in the captive power plant segment (5 MW to 60 MW). Over the last couple of years, Sunil Hitech has also taken up contracts of higher value. Slowly it seems to be moving up in terms of order size. A track record of timely or early execution of contracts is also a big help when bidding for contracts. Operating margins at 8-9 per cent are somewhat higher than other companies in the same industry. Sunil Hitech owns the equipment used in operations. This means it will have better control over costs and profit margins when it chooses to scale up operations.

Sunil Hitech is into erection and fabrication of power plants. It has participated in the civil work for power plants up to 500 MW. Its client list is impressive comprising of NTPC, BHEL, Reliance Energy and Skoda Export. Many orders received during last year are from BHEL which itself has an order book bursting at the seams. The funds raised in the IPO are being used to finance its working-capital requirements, capex plans and repayment of high-cost debt. For a company as small as Sunil Hitech, growing in an industry like Infrastructure is going to be a cakewalk as long as the promoters mean business. The company post IPO has 34.66 % public shareholding. It has chosen to have a major promoter shareholding, a very positive sign.For the half year ended Sept 30, 2005 it had a bank balance of 4.74 crores. This shows that it has no cash flow troubles. In the same period it had sales of 58.78 crores.
For the year 2006-2007 it is projecting sales of 200 crores. This is a growth rate of 70-75 % in sales. Net profit will be 8-9 crores as per Sunil Gutte, director. On an equity of 10 crores, this gives an EPS of 8-9. At the current market price of 132, this is discounted 15 times going forward. For a company growing at this pace, in an industry where opportunities abound, the valuation is very cheap.
We expect a re rating in this stock. There will be many triggers for the stock price over the next few months with repeated orders expected. A price of Rs.250 over the next one year is likely

ramco system......news arnd

some massive restructuring going on in Ramco currently. they have 5 grps, 3 of them loss making, they r going to do away with those groups, lots of VPs, middle managers have been laid off. They r going to keep only their 2 most profitable groups including the aircratft ERP group ( #1) in its space.Also note that RJ increased his shareholding in Ramco ( see BSE) site. All this points to great near term future. There also rumours of it getting merged with Satyam ( thanks to a marriage that happened recently)


ITS A RISKY PICK THOUGH....INCASE ONE INVEST JUSS INVEST A SMALL PORTION WITH A STOPLOSS OF 200

rajendra mech

Incorporated in 1970, Rajendra Mechanical Industries belongs to the Remi group. The company is promoted by Chiranjilal Saraf along with his two sons, V C Saraf and Rajendra C Saraf. The company manufactures stainless steel seamless and welded pipes and bright bars at its manufacturing unit in Andheri,Mumbai. It obtains technical assistance from Kobe Steel, Japan. In 1994, the company diversified into real estate. It shifted its manufacturing facilities to Tarapur and developed an industrial complex at the Andheri site,The Comapny obtained ISO 9002 certificate from TUV. The company has also developed some property in Andheri, Mumbai. The company caters to following user industries-Petrochemicals, Refineries, Fertilizers and Pharmaceutical industry. Some of the customers include IOCL, IPCL, GNFC, IFFCO, Madras refineries, Mangalore refineries and Ranbaxy Laboratories. Tubes manufactured by the company also find user base in power projects (BHEL). The company has an annual capacity of 4500 tonnes with 2/3rd of the capacity which can be utilized for both welded and seamless pipes and tubes. The company is operating at 80% capacity utilization rate. The company is expanding the capacity to 5500 tonnes, which will fully stabilize starting FY07. The company imports seamless pipe to convert them into various sizes as required by its clients from various user industries. Import of seamless pipes is done against the exports done by the company. Average cost of seamless pipes is $4000/tonne. Out of the total capacity 75% is utilized for welded pipes and rest for seamless pipes. Seamless pipes and tubes have an average realization of Rs 350/Kg and Rs 140/Kg for welded stainless steel pipes. The company in September 2005 has bought out condenser tube manufacturing unit (IDCOL) based in Orissa for Rs 10 crores. This unit has an annual capacity of 1000 tonnes, which depending on the order flow will be expanded. Average realization for condenser tube is Rs 250/Kg. The company expects additional 20-25 crores from this unit once the operations are stabilized. This product finds user base in thermal power stations and other power projects. This unit was initially set up to cater to BHEL. The company will also continue to supply to BHEL. The company has dismantled the equipment and placed it at Tarapur (MIDC) in Maharashtra. The company has also installed a 1.6 MW windmill project (February 2006) in Maharashtra for a total cost of Rs 8.5 crores. It will supply to MSEB for Rs 3.5/unit, with an escalation clause of Rs 0.15/ Unit every year. The company will enjoy a tax shield with 80% depreciation for six months. The company also has a 12000 square feet space, which they have developed and have leased out for which they annually get Rs 5 mn as lease rent. The total project cost for funding the acquisition and windmill project is Rs 22 crores. Project cost is funded through Debt (15 crores) and rest through preferential allotment (15 lakh shares @ Rs 34). After the preferential allotment, the equity capital has risen to Rs 47.9 mn.

walchandnagar industries

Walchandnagar Industries Ltd. Cmp=600
Target=892
Duration=9 months
Promoted by Walchand Group, WIL was established in 1908 with small equity capital of 2.50 lakhs. Company is engaged in the fabrication of cement plants, sugar plants and critical equipments for space and defence sectors. WIL has consistent track record, steady performance, and has paid dividend for 75 years in its 97 years existence. Although heavy engineering is its core business, company also has small presence in Foundry, Infotech and hospitality sectors.

Performance Review: Financial Performance:- Year Ended. 30/9/05 30/9/06E 30/9/07E ----------- ------------- ------------- Sales 278.00 340.00 410.00 NP 7.72 13.50 16.50 Equity 3.00 3.00 3.00 Reserve 193.00 EPS (Rs) 25.73 45.00 55.00 For FY05, WIL achieved turnover of Rs. 278 crs., registering growth of 25% over previous year. PAT increased by 95% to Rs. 7.72 crs., giving EPS of 25.73 on small equity of 3 crs.
A) Heavy Engineering Product Segment: The segment achieved turnover of Rs. 23432 Lakhs (Previous Year Rs. 18714 lakhs) accounting for 86.93% of Company's revenue. The turnover increased by 25.2% as compared to the previous year. Eventhough the profit also improved as compared to the previous year, the increase was not commensurate with increase in turnover as the margins were affected due to abnormal rise in steel prices during the first six months of the year. During the year, Spherical Reactors for Numaligarh Refinery project using 65mm thick low Alloy material involving critical welding process were manufactured for the first time in the Country by the Company. Certain critical components for Defence Application were also manufactured for the first time in India during this period. Company also completed an important EPC project for Nuclear Power Corporation. The overall order book position is reasonably good for all the products except the Sugar Machinery. However, with changing market trends it is hoped that for Sugar Machinery the Company will be able to book some indignous/Export orders in the near future. The orders on hand for Space, Defence, Nuclear Power, Boilers, Gear Boxes & Cement Machinery are comfortable and the Company is also participating in EPC Contracts for prestigious Defence Projects.
B) Foundry & Machine Shop: This segment has achieved revenue of Rs. 3081 Lakhs as against Rs. 2539 Lakhs in the previous year. Both the sales and PBT have improved as compared to the previous year, due to continued increase in demand for CI & SGI Castings. The modernization and upgradation of Foundry is in progress and is expected to be completed by Feb. 06. On completion of the modernization, the division will be able to manufacture CI & SGI castings of larger dimensions, with better value addition and profitability. C) Other Segments: These include (i) the unit at Dharwad for manufacturing Pressure & Temperature Gauges and Sector Mechanisms (ii) Walchand Infotech Services Division (iii) Hospitality business. The total revenue from these segments was Rs. 686 Lakhs for the year 2004-2005 as against Rs. 543 Lakhs for the year 2003-2004. The unit at Dharwad improved its performance significantly both in turnover and profitability as compared to the previous year due to good marketing effort and overall improvement in productivity. The performance of the Infotech Services Division did not improve as the orders could not be booked for its product . The performance of Hospitality Division has improved as compared to previous year, due to measures undertaken for controlling wastages and reduction in fixed costs. Performance of the unit at Dharwad is expected to further improve as its products have found wider acceptance in the market. The unit has planned to improve its facilities to meet the increased demand for Pressure Gauges and Sector Mechanisms. The Hospitality Division is expected to further improve its performance by improving turnover and continuing efforts on controlling costs. Future Prospects: With higher GDP and buoyant industrial sector, prospects of WIL are extremely bright. Ofer info is rising. As in January 06, WIL has order book of Rs. 450 crs. In the recent past, WIL has executed some EPC type of contracts. Now, company has created a separate division named 'Walchand Projects Group' but avail of growing opportunities in this type of business. Its turnover has been growing during last few years and trend is likely to accelerate in future. Company has undertaken upgradation and expansion of manufacturing facilities. Valuations: Trailing 5 Quarters:- Q1 Q1 Q4 Q3 Q2 FY06 FY05 FY05 FY05 FY05 Sales 55.32 35.95 99.35 69.15 52.98 PBT 2.18 - 1.75 8.08 4.31 0.41 PAT 1.35 - 1.75 5.87 2.70 0.25 Equity 3.00 3.00 3.00 3.00 3.00 WIL has reported PAT of 1.35 crs. on turnover of Rs. 55.32 crs. in Q1FY06 compared to loss of 1.75 crs. in Q1FY05. It means, company has turned around by 3.10 crs. in Q1. It has been possible due to higher sales and lower metal prices. WIL reports best performance in Q4 (July-Sept.). We estimate that company should achieve turnover of Rs. 340 crs. and PAT of Rs. 13.50 crs. for FY06 which will give EPS of 45. Stock is trading at 14 times of FY06E Earnings. For FY07, turnover should further rise to Rs. 410 crs. and NP of Rs. 16.50 crs. giving EPS of 55. Its book value is Rs. 643. Market value of its investments is nearly Rs. 20 crs. which works out to around Rs. 67/- per share. Conclusion=Majority of big engineering companies are quoting at P.E. Ratio of 20-40 times. Looking at valuations in the peer group, WIL is definitely underpriced and also the Company is likely to grow rapidly for next 5 years

JBF IND

Q:Could you give us more details on the plant and how and when do we see revenues coming in?

A: JBF is a producer of polyester chips and Partially Oriented Yarn, POY.We have a current capacity of 1,20,000 metric tonnes per annum. The existing plant is located in Silvassa and last year we clocked a turnover ofRs 800 crore.Also, very recently, we have set up another plant to the capacity of2,16,000 at Sarigam, Gujarat. This plant is for the production of polyesterchips on the continuous polymerisation process. It was set up at an outlayof Rs 170 crore, out of that Rs 70 crore was met through an equity issue andthe balance Rs 100 crore through internal accruals, partly by debt too.I am pleased to say that this is world's single largest stand-alone plantfor production of polyester chips.

Q: What can we expect as a result of this?

A: On an anualised basis, the additional turnover from this plant would bein the order of Rs 1000 crore. Even if we take the first year of operation,the plant operates at 75% capacity utilization and the revenue should be inorder of Rs 750 crore. Our earlier turnover was Rs 800 crore and this shouldadd another Rs 750 crore. So the total turnover of the company should double. On a conservative estimate basis, the total profitability should also double.

Q: In terms of cost saving on raw materials, power and fuel is also a bigcost for you, which has gone up about 5% at this point. For cost savingwhat is the road for JBF?

A: In the recent Budget announcement, the customs duties on the raw materials went down from 15% to 10%. Excise duties were reduced from 16% to8%, that was on finished goods. When we take the custom duty reduction from15-10% , and local producers price their products on import parity basis,the 5% reduction would tend to a reduction of about Rs 2.50 per kilogram inthe overall raw material costs. At the same time, excise duty has been reduced on finished goods from 16%to 8%, that 8% reduction would lead to above Rs 5 per kilogram reduction inthe raw material prices to the ultimate consumer. Therefore, the entirechain would get a price concession of about Rs 7.50 – 8. Now that can be shared in some manner, we can keep about Rs 2 and pass about Rs 4.

Q: Your project in Emirates of Ras Al Khaimah, could you give us moredetails on that?

A: This is a 324,000 tonnes per annum project and it is a chips and filmmaking plant. This will be set up in a place called Ras Al Khaimah in UAE,which is about an hour's drive from Dubai. The total investment for thisplant is USD 90 million and the equity is about USD 30 million. Out of that,we have a 60% contribution. So we have a major shareholding in this plant.The first phase of this plant would be operational somewhere in the firstquarter of the next year. As I foresee, on an annual basis it shouldgenerate a turnover of USD 325 million. We hope that atleast 15% of this would be profit generated. The dividends coming out of this would be addedto our bottomline, as this plant is a subsidiary of JBF Industries.

What are your FY07 targets for topline and bottomline?

A: We are in line to achieve our targets for topline and bottomline. Withthe commissioning of new plant and with the concessions that we have got inthe Budget, we hope that our profitability should improve further. We alsohave certain plans of expanding POY in the future.

Q: Could you give us a target for FY07 either on EPS front, topline orbottomline?

A: It will be very difficult to say, but definitely in terms of total sales and profits, they should double