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Note: The artciles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

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Archives : Old artciles

Wednesday, October 31, 2007

Jyoti-Set to give "Jyoti" to your portfolio

Scripscan=Jyoti Ltd



Story=Jyoti is an engineering company based in Baroda catering to the vital sectors of the economy. After passing through some tough years on account of recessionary situation in the engineering sector and riots in Gujarat, Jyoti is poised for a strong growth ahead. It has a large order book of around Rs6 bn (4x
FY07 sales), to be executed over a period of one to two years. It also includes a big order from Hindustan Construction (which has taken a strategic stake of 10.4% in the company) of Rs2.55 bn for lift irrigation schemes in Andhra Pradesh.At a PE of 6.2x for FY09, the stock looks attractive on account of its strong order book position and with its customer segments doing well. Further, the s trategic inve stment by Hindustan Construction, a leading player in construction, engineering and power sector displays the confidence in the management and business potential of Jyoti and would also help it by way of increased business opportunities.

A scrip to write a new scripture for itself.Altogether a great buy.







A 15rs stock


Scripscan-Western India Shipyard Ltd.
Code No: 531217
CMP Rs. 15.50
Target-27
Duration-6-9 months


Introduction- WISL, India's largest composite Ship & Rig repair facility in the private sector is one of the world's advanced multi-dimensional and multi-purpose yard, offering modern, streamlined, sophisticated Ship and Rig repair facilities and services. WISL's state-of-the-art Floating Dry Dock has a capacity to repair ships upto 60,000 dwt and to accommodate ships upto 225 m. length and 32.5 m. in breadth. The yard has been designed and established in collaboration with world leaders in Ship Repairs. Functionally laid out, and built around the gravity centre concept, the yard is 90% covered by lift and carry facilities. WISL is strategically located at Goa along the West Coast of India at 15 degrees 25 feet North and 73 degrees 47 feet East and is geographically best positioned to offer a complete range of ship repair services.

FACILITIES:-

BERTHING FACILITIES:
4 Wet Berths
1 Berth (For smaller vessels upto 70 Mts. of length)
FACILITY FOR TANKER/OTHER SHIP CALIBRATION OF SAFETY ALARMS/TRIPS FOR MACHINERY, BOILER, BALLAST & CARGO TANKS:

Replacement of Defective Sensors in most cases of repairs to electrodes.
Annual Caliberation of Gas Detection instruments, supply instruments and calibration etc.
IOPP Survey Requirements? E/R 15 PPM Monitor/Oily Water Seperator Spares /Oil Discharge Monitor Control System-Repairs and Spares supply.
Boiler Operation? Problems/Controls/Repairs, Spares and presenting for survey.
Manufacturer of Electric Panels? As per samples/drawings available.
Manufacturer of seals of Westad Make B/F V/V's (50 MM to 400 MM).
Fire Detection System Checks, Repairs, and supply of Sensors.
Repairs of DEfective PCBs on Board for all equipments in E/R, P/R Bridge, Radio Room etc.
Walkie -Talkie repairs and supply.
Radio Room Equipment - Spares Supply.
Inert Gas System Repairs.
Machinery Monitoring System.
Oil Rigs Related Jobs,Ballast Handling Systems.

Storage Facilities:

Custom Bonded Areas/Store
Main General Warehouse
Ship Service Parks
SERVICES: WISL offers following services:-

SHIP SERVICES:

Routine maintenance and damage repairs. Cargo hold/tank space blasting and coating. Main engine Overhauls.
Rudder, propeller (CPPs) and tailshaft repairs. Cargo gear overhaul and repairs.
Heating coil hydro test and electric works.
Hatch cover modifications and container cell guide conversions.
Auxiliary machinery overhauls.
Major conversion and modifications.
COVERSION WORKS:

Equipment Installation
Jumboization.
Alteration of type of classification and re-engineering.
FINANCIALS: Despite being one of the most modern ship repair facilities and extensive facilities/infrastructure, company fell into bad times. It appears that company was not being managed very efficiently, leading to higher overheads and wasteful expenses. Further, company spent huge sums for setting up the project which was unable to provide commensurate returns as shipping industry was passing through bad times earlier.


Q U A R T E R E N D E D Y E A R E N D E D
3 1 - 3 - 0 7 3 1 - 3 - 0 6 3 1 - 3 - 0 7 3 1 - 3 - 0 6 3 1 - 3 - 0 8
(crs.) (crs.) (crs.) (crs.) (crs.)

Net Sales 22.80 5.73 53.34 42.80

Net Loss - 3.89 - 15.66 - 20.75 - 24.47

Equity 100.85 83.81 100.85 83.81 20.17

Note:- FY08 Equity on Rs. 2 F.V.


Latest Update: Since last 1 year, there had been repeated rumours that L&T etc. were interested in taking over WISL. However, this did not materialize (may be these were only rumours).

However, now it is almost confirmed that ABG Shipyard has won the bid to acquire controlling stake in the company. Existing promoters hold just 7.80% Equity in the company. Under the deal, FIs which hold around 40% of the Equity will sell their stake to ABG Shipyard at par. However, FIs have agreed to sell their stake at par because ABG Shipyard will pay off entire loans which WISL owes to FIs. WISL has not been able to perform well in last 2 years, due to crunch of working capital and continues to incur losses. If, this state-of-affairs continued for another 2 years, FIs would have lost all hopes of recovering their loans from WISL. Current arrangement works out win-win situation for all. Firstly, FIs are getting an immediate exit without incurring any losses and recovering their full debt. Secondly, WISL will get infusion of funds from ABG and will resume full operations in near future. Thirdly, ABG will be able to turn around WISL which will definitely provide handsome returns to ABG on the investment they are making.

We feel that, once deal is completed and ABG acquires full control of the company, there will not be any dearth of business for WISL. It will be able to operate at full capacity due to boom in Shipping Industry. We expect WISL to turn profitable in 08-09. Equity will stand reduced to around 20 crs.

Conclusion-With ABG Brand, WISl scrip will definitely be re-rated. Investors are bound to give premium to ABG expertise and financial strength. Share Price can go upto Rs. 25-27 within few days after official announcement.An investment opportunity which can provide very high returns.



Regards,
ARUN
I can be reached at-arunanalyst@rediffmail.com

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