What went wrong-Whats happening right:-
1)Scripscan:JHS svengaard lab ltd
Business:Starting with manufacturing of only Toothbrushes the company widened its scope to Toothpastes, Mouthwash and Denture Tablets and today is an oral care product manufacturer and exporter. Apart from working on its own brands the company also offers Contract Manufacturing Partnership to brands in the domestic and the international market. One of the most prominent brands manufactured under the company’s name is Dr. Gold which was launched in April 2009 with economy, mid economy and premium toothbrush categories.Some of the prominent brands partnered with in the domestic market are P&G, Amway India Enterprises Pvt. Ltd., Dabur India Limited, Elder Health Care Limited, J. L. Morison’s India Limited and in the international market are - Dr Fresh , Peanuts , Lavoris, Hello Kitty , Walgreens and Walmart.
Special mention:Promoters allotted themselves lakhs of shares at 98rs.Tano mauritius,the private equity firm which got a great success ratio, bought shares worth 25crs at 98rs.
What went wrong:-Company took many small clients for volume growth resulting in sticky receivables.Few large clients halved their off-take.Numbers nosedived and company posted losses.Input prices went through the roof but because of fixed price contracts company couldn't pass it to the clients.The company had one of the worst financial years.
Whats happening right:It sacrificed the smaller clients and concentrating on fulfilling the requirements of the large reputed ones.Changed its business model in an unique manner where the clients would pass on to everything and JHS would only concentrate on global product quality and timely delivery.In this way it would avoid the prolonged receivable cycle and any volatile input prices.Merged its group companies for better synergies.Started exporting again after a long time.A stock worth betting on at present prices.
What else:I bought it because its a perfect fmcg proxy.The largest toothbrush manufacturer from India(300 million tooth brushes).It caters to the need of 1 trillion Proctor and gamble in our country.The company has got number of amazing tax and excise benefits.Replacement cost of its assets would be 300-400crs.Present marketcap is only 60crs.
2)Scripscan:Jai balaji industries ltd
Business:Jai Balaji is one of the largest manufacturers of steel in the private sector in Eastern India. It has integrated facilities for producing steel in eight manufacturing units spread across the states of West Bengal, Chhattisgarh, Orissa and Jharkhand.The company has a chain of value-added products which include DRI, Pig Iron, Ferro Alloys, Alloy and Mild Steel Billets, Reinforcement Steel TMT Bars, Wire Rods, Ductile Iron Pipes and Alloy and Mild Steel Heavy Rounds.With vibrant and dedicated people forming the core, the company has grown from strength to strength under the dynamic leadership of its promoters and directors.Its combined experience has propelled the Group into the league of formidable steel players in Eastern India, which has not only diversified into power generation in West Bengal and Chhattisgarh but has progressed work in allied industries like cement as well.
Special mention:Promoters have bought shares worth 12crs at 180rs,worth 2crs at around 40rs and took shares 50crs worth of warrants convertible into shares at 50rs.
q)What went wrong?
ans)The coal scam hit it badly.Numbers went pathetic because of higher input costs and lower product prices.High interest costs took the toll out of it.
q)Whats happening right?
ans)Did a recent debt restructuring successfully resulting in lot of interest costs savings.Coal scam has presumably ended and none of its coal blocks have been deallocated.Company backwardly integrated by putting a .35mtpa coke oven which would save 100crs input costs from present fiscal.Interest rate further would see a cut, saving more finance costs for the company.Raw materials prices have started softening and product prices have jumped a bit,albeit in a very tiny manner.A counter to watch out for with very limited downsides and huge upsides.
What else:I bought it because the replacement cost of its assets are 4000crs.Debts are 2200crs.So we get the Net asset value at 1800crs(4000crs-2200crs).Further it has 700mt of high grade coal resources which should get valued into thousands of crs in near future.At present Jai balaji is only valued at 200crs which is a pure bankrupt valuation.