Scripscan:Kohinoor Techno Engineers Ltd
cmp:2
Code:519485
Investing-reflections:Kohinoor Techno Engineers is in the business of software development for diamond machinery.The company is over 25 years old with an 80% market share for laser machines and has a worldwide customer base. Management intends to move into the business of producing diamond machinery directly. They also engage in short-term diamond trading/manufacturing/processing as and when market conditions appear lucrative.The company’s net worth, however, has gone nowhere in the last decade and has been reporting negative reserves for the last decade. Performance over the last five years has been marginal at best and net profits over the last year were just under 7 lacs on revenues of about 3cr.The business is dependent on the capital investment cycle, which is adversely impacted in a high interest rate environment. The industry appears to be a highly competitive where the company has limited competitive advantage as evidenced by their low profit margins.The company reported 1.7cr of accumulated losses indicating the lack of economic viability in its current business.Management have indicated that they are looking to enter new markets and produce new products including textile products because of ‘changing government rules and world market scenario’.This seems to be prime indication that the future course of the business is unpredictable at the moment and more importantly, untested. Equity shareholders would be taking a bet on the capability of management in their new ventures.
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