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Friday, March 12, 2010

Beckons Industries Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Beckons Industries Ltd
BSE code:531937
cmp:11

Story:Lot of people suddenly are going gung-ho in the above mentioned counter.So is it worth paying all the attention?Lets check out folks.

a)The company presently undertakes the manufacturing of computer stationary
and other peripheral items on commercial basis.This business of the company is still passing through and acute recessionary state due to the change in technology and decrease in demand of continuous computer stationary.Due to the change in the use from Continuous Computer Stationary to that of cut sheets and as introduction of modes of computer peripherals,the existing business of the Company is being continuously effected since last many years.The company has been trying its best to explore the alternative use of the available plant and machinery but no positive results are up-coming.Since the company has entered into long term contracts and arrangements with Government sectors whereat for billing and other purposes the continuous computer stationary is being used, it has become compulsion to continue with the existing business even though with no margin.

b)The other segment i.e. Bio fuel (The renewable energy), the 1st Phase of research and development work on Algal Technology i.e. prototype has been completed and work on II nd phase of its Demonstration and validation is still going.Its production stuff and algae has been frequently discussed so am not penning about it but my issues are:-

1)Some people are hyping about the great growth story another reason being Deutsche bank which owns a lot of stake in the company thanks to conversion of its GDR.It should be prudent to note that the same bank is the leader in P-notes segment and am pretty sure the investment in beckons relates to that.Theres no point about such a gigantic bank taking stake in a tiny company which is yet to evolve.As we all know black money moves out from our country gets channelised only to come back using this participatory notes as a vehicle.

2)Am told the management own 7-11% stake in the company.Huuh,11% stake is a pity.The management would get salary whether they holds any stake or not,with higher stake they works harder as price increases they would be the biggest beneficiary.With such a meagre stake they may not care to work that diligently.Also,Under India`s companies law, an entity holding 26% plays a crucial role in influencing board decisions and virtually enjoys management control.So if the company has such a great future why other companies are not coming to acquire it?So many cash rich companies are hungry for small companies with robust future.Honestly,beckons is an easy acquisition candidate anybody can acquire it,But why would they?I am not bullish about it,neither convinced about the management as they came in this algae arena just few years ago.The core business has been stagnant for years,they couldn't make it big.So many reasons to refrain from making an investment in it.

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

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