Gammon India: worth it!

Gammon India

CMP: 13.28

Market Cap: 180.30Cr

Gammon India is one of the largest civil engineering construction companies in India. Gammon India can also lay claim to having built the maximum number of bridges in the whole of the commonwealth (commonwealth is a term used for countries ruled by the British)  First project started in 1919 was the piling and civil foundation work for "The Gateway to India"  Gammon India was founded on 1922.

Other important landmark civil engineering projects are:

- India's first cable-stayed bridge at Akkar, Sikkim

- The longest railway tunnel in Asia for Konkan Railway at Ratnagiri.

- Mahatma Gandhi Setu Bridge spanning the river Ganges, between Patna and Hajipur in Bihar (Commerative stamp issued by Indian Postal department in 2007 "LandMark bridges of India)

- Terminal Building of Sharjah International Airport UAE.

- Elevated viaducts for Delhi Metro Rail Corporation

- India's First Second Generation Prototype Fast Breeder Nuclear Reactor

The list is endless .. the latest addition is going to be the Signature Bridge Across Yamuna river in Delhi 

So all said and done Gammon India is a well established name in civil engineering in India. 

Lets now look at why Gammon India is quoting at such a dismal price (Market Capital of 180Cr ) 

If we look at the balance sheet we see that.

1. Gammon India has a -ve networth of -432Cr

2. Total Debt is 10,306Cr

3. Has been reporting Annual report for 9 months for past 2 yrs 

4. 2014-2015 year end has been extended to 18 months ie Oct 1,2014 to March 2016

Income statement also has only a sad story to tell.. 

1. past 5 yrs Sales has dropped by 50%  8162Cr(2011) to 3885Cr (2014 [9 months])

2. Net profit is negative for past 4 yrs 

Lets look at Cash flows.. and its gets a little bit interesting

1. +ve Cash flows from Operations for past 3 yrs 

2. Company has been able to generate +ve cash flow from "Finance Activities" 

3. Gammon has not stopped deploying cash in new projects (-ve Net Cash From Investing Activities)

Clearly though Gammon India has been reporting losses for past 4 yrs, it has been able to scrape through as far as Cash Flows is concerned with finance still trickling in..

Price Chart: 

Price chart is something we already know about (180Cr Market Cap) 

1. Gammon India stock price was at its peak in 2008 of about 790/- per share..

2. During the financial crisis 2008-2009 it fell to its teens and then recovered to 200+ levels 2009-2010

3. 2011 -ve earnings started and company has been downhill since then.

4. 999 Day EMA(5 yrs) Exponential moving avg is 47.47 

5. 50 Day EMA is 14.02

6. 100Day EMA is 16.05

7. CMP: 13.28

Well there is no doubt that stock price is in the dumps. topline for year ending Sept 2014 was 3885Cr 

Market cap of 180Cr is like 4.6% of its Last reported Annual Sales..

Ofcourse 180Cr Market cap has no meaning cause there is 10306Cr of debt and 8770Cr of Contingent liabilities.. 

So 2 things is clear .. 

1. Market cap is peanuts for Gammon India considering that its a pre-independence Era company and is well established as a Civil construction Engineering company.

2. Gammon India is in dumps with 10306Cr debt and 50% drop in Sales in past 5 yrs... picture is Bleak!!

I think as investors one question in my mind is "Will it recover" Can I buy this worthless piece of paper and turn it into a crown jewel??

My answer is Resounding YES!!

1. Gammon has done a Corporate Debt Restructuring (CDR)

2. Cut-off date of CDR was 1st Jan 2013

3. Total debt aggregating 14,814Cr has been restructured. (both Fund & non-fund based)

4. CDR package provides a 10yrs repayment plan (including 2 yrs moratorium)

5. Interest rate has been lowered by 1% for 15 months ( that would be till April 2014)

6. Waiver of penal charges till date of implementation

7. Additional funding by way of priority loan. 

8. All securities envisaged under the CDR scheme have been created.

9. Promoters have been issued Zero Coupon (zero interest) Compulsory Convertible Debentures worth 100cr. So the promoters have bought in 100cr additional investment in equity of Gammon India on 26th May 2015 these CCD will be converted into shares @ a price of 25.30 per share.

10. On 14th August 2015 Gammon India has decided to restructure and segregate its businesses and created 2 wholy owned subsidiaries 

   a) Gammon Retail Infrastructure Limited (GRIL)

   b) Transrail Lighting Limited (TLL)

The rationale was..

   a) To create sector focussed companies

   b) To enable investments by strategic investors

   c) De-risk business from each other

   d) Deleverage balance sheet of the company.

Gammon Retail Infrastructure Limited (GRIL): Transfer & vesting of the company's civil EPC undertaking ie. Civil Engineering, Procurement and construction business carried on by the company in roads, hydro-power, nuclear power, tunnels, bridges, buildings, cooling towers, chimney and other sectors as a going concern, which shall include all the properties, rights & powers and all debt, liabilities, duties and obligations comprised in and pertaining to the EPC business into GRIL against issue and allotment of equity shares by GRIL to GIL (Gammon India Limited)

Transrail Lighting Limited (TLL):  Transfer & vesting of the company's T&D Undertaking (as defined in the scheme) comprising of the Engineering, Procurement and construction business of the company in the Transmission & distribution sector, including the tower testing facility located at Deoli and the tower manufacturing facility located at Baroda and Nagpur, but excluding the tower manufacturing facility located at Deoli and the conductor manufacturing facility located at Silvassa, as a going concern,  which shall include all properties, rights and powers and all debts, liabilities, duties and obligations comprised... to the T&D business into TLL against issue and allotment of equity shares by TLL to GIL 

basically the company has created 2 100% owned subsidiaries which are Healthy (a going concern) and debt liabilities of these 2 Healthy companies have been separated (for sale in the future or to attract investments..)

11. On 27 Aug 2015 Step down subsidiary Gammon Infrastructure Projects Limited (GIPL) has divested its stake in 9 projects .. this will result in cash inflows of 563 cr plus advance waivers of 285cr another divestment of 50% stake in Vizag Seaport Pvt. Ltd. will result in 62.5cr, plus future cash flows of  100cr based on achieved milestone. So that should see 1000cr inflow into Gammon India Limited.

12. Gammon India on 21 Aug 2015 announced receipt of 397cr road project from Public Works department.

13. On 24th Sept 2015 Gammon India announced getting a 1799.99cr NHAI road project.

Conclusion: 
All these activities donot confirm that Gammon India is solvent. It does however indicate that the company is taking steps to reduce its debt burden. creating separate subsidiaries GRIL & TTL which are considered "A going concern" all point to positive development.

Though complete recovery will take years.. I think this is a good time to buy into Gammon India. If Gammon India was not in Financial difficulty we would have never seen such low price.. the brand is intact and we are still seeing new order flows.. Long term 5+yrs could be a multibagger.

Thrive: What On Earth Will It Take?

Foster & Kimberly Gamble (P&G promoter family) have released this interesting movie/documentary... must see for all...

Interesting part is the "torus" .. I found another interesting site "Kesh Foundation" which is talking about "Plasma Energy" which is also about Free energy and Torus...

News is there that Iran has captured 3 different DRONES of USA in mint condition... which is surprising as these drones have some kind of built in self destruct sequence to prevent capture of sensitive technology..

Also recent Nuclear treaty with Iran by western nations which will result in free flow of trade.. and that Iran has been alloted the big brother status in middle east sidelining long standing ally Saudi Arabia is a big shift..

Has Iran access to sensitive technology.. which America might be interested in..?

Published on Mar 24, 2015

The new "Free Energy" technology of Iranian born nuclear physicist, Mehran Tavakoli Keshe, has apparently rendered The Western Military Machine obsolete, as demonstrated in several military confrontations over the past few years, most recently with the simulated sinking of the USS Theodore Roosevelt Super Aircraft Carrier. incidents include:
1. The December 2011 Interception and bringing down and displaying on Iranian TV of America's most advanced drone weapon, the Bat-winged, high-flying and hard to detect, RQ-170 Sentinel drone. The Iranians displayed the immaculate gleaming white drone that looked straight off the production line and had just been plucked out of the sky.
2. The November 2014 disabling of the high tech AEGIS Class USS Donald Cook by a single Russian SU-24 Fighter Jet, in the Black Sea
3. The March 2015 simulated sinking of the Super Aircraft Carrier the USS Theodore Roosevelt by a French Submarine armed the technology and
4. Apparent subsequent chasing and disarming, by Russian Subs of the USS Theodore Roosevelt as it headed to the North Sea to engage Russian buildup in the area, forcing it into unscheduled port.
The defensive weapons technology that has now rendered the West, including the United States incapable of waging global war is called the Magrav Technology weapon and the Russians, among other nations have fully implemented this technology into their defensive capabilities, while the United States and its Western Allies have failed to develop counter measures to it.
Mehran Tavakoli Keshe, the inventor of this technology, is founder of the Keske Foundation which is tasked with dessiminating his new technology throughout the world, for the betterment of mankind.

Letter to Obama by Kesh

SputnikNews-Disarm-USS Donald Cook

Voltaire News: Unarmed Russian Bomber Disables USS Donal Cook

BBC: Iran Capture Latest US Drone

=======================

Kesh Foundation..

https://www.spaceshipinstitute.org/ (to teach Plasma technology) 

https://www.thenewenergyindustry.com/project/magrav-technology/

So this is controversial but maybe the need of the hour.. and is it why " Oil is being pumped and dumped " .. after all who will buy oil after we get "Free Energy"

========================

Mission and Vision: Kesh Foundation Space Ship Institute..

The KF SSI is set up to teach to industry, organizations, and individuals, how to develop systems and technologies based on the Keshe Foundation knowledge.

Nestled amidst the beautiful shores of Bari, Italy, the Institute is poised to become a central hub in the spreading of plasma technology and knowledge. With its state of the art, twenty-first century facilities, the Institute will be able to provide students and staff an immersive way to learn the plasma technology, to be the leaders of the new generation of scientists and plasma engineers.

The aim of the KF SSI is to teach and train every individual who goes through the programs, to enable understanding of the full principles of the workings of universal systems. This provides the knowledge to be able to survive anywhere in the Universe, with the peaceful use of the MAGRAV plasma technologies.

The KF SSI welcomes people from all parts of life, from highly-trained experts, to individuals who simply want to learn. There is no pre-requisite for applicants other than agreeing to the World Peace Treaty for peaceful development of the Magrav technologies. The learning environment at the KF SSI is open and adaptive. The emphasis is on developing a deep understanding of principles, rather than accumulating empirical knowledge. Students will be exposed to the basic Magrav plasma principles and related applications of positive gravitational positioning, creation of new materials, production of power, and health benefits.

The KF SSI is primarily a space-based organization, and learning all aspects of survival in space is a priority. Students and graduates will find job opportunities in support of KF SSI space technologies, and in spin-off companies of service to mankind on Earth. The unique combination of theoretical knowledge and practical training, will enable KF SSI students to develop an understanding of the Universe not available anywhere else.

========================

I think we all need to send our top of the class experts to Kesh Foundation and learn this latest Plasma technology .. which can be used for space travel, medicine, (food/energy for body on long haul interstellar flights).. I'm sure the world can  live in Peace.. and in Prosperity..

Book Review:The Rigveda Code By:-Rashmi Chendvankar

600 BC…. Three Hundred years after the epochal Mahabharata War... India is still haunted by the shadows of the devastating conflict of the Kuru cousins, which almost destroyed the entire land.... The epicentre of power has now shifted to the kingdom of Vrij, situated on the northern banks of the Ganga, ruled by an ambitious king who would not stop at anything to lay his hands on the most powerful weapon of the Mahabharata age... Soaring ambitions have once again brought the ancient civilisation on the dark brink of another full-scale war.... 

Against this backdrop, a warrior princess is set to change the political legacy of Ancient India – guided by her destiny... and a phenomenal man, who lived three hundred years before her... 

A man who is considered God today, but whose greatest contribution lies buried below layers of ancient history...

And buried below these very layers, lies the story of this warrior princess, who unravelled the mystery of His code – an eternal way to establish dharma in Bharat...

Will the princess change the way kingdoms in India are ruled? What is the destiny of Bharat?

=========

This is a work of fiction, inspired by elements of Indian mythology and Ancient Indian history. The geographical references mentioned in the book are however factual.

Chapters:

1. The Unique 'Rajyoga'

2. The Lost Chakra

3. The Kingdom of Kosal

4. The Great Guru of Archery

5. The Battle of Kaawar

6. The Wise Old Man of Bhoganagara

7. The Visitors From Takshashila

8. The Secret Revealed

9. Love Beckons

10. The Kshatriya Code

11. The Conspiracy of Kosal

12. The Soulmates

13. Dawn and Dusk

14. The Capital Under Attack

15. The Wish of Vasumna

16. The Words of The Lord

17. The Seige of Sravasti

18. The Shadows of The Great War

19. The Seige of  Vaishali

20. The Auspicious Chakra

21. The Rule of The Ganarajas

Epilogue:2012 Archeological site at Vaishali, Bihar

About the Author:

Rashmi is a legal professional in her early thirties. She is a commerce graduate, a law graduate and a qualified company secretary. She currently heads the legal and secretarial department of an IT company in Mumbai.

Rashmi has been an avid reader of ancient Indian history. She strongly feels that history textbooks are dry and limited versions of exciting stories, which should be excavated and brought to young readers. Her fascination with an amazing event of ancient Indian history which took place in 600 BC and its intriguing connection with the Mahabharat war, led her to write her debut novel “The Rigveda Code”. 

Rashmi stays in Mumbai with her husband, Lalit, her three year old son, Sohum, and her in-laws, Maya and Mohan.

Book: "The Rigveda Code"

Publisher: Partridge India www.partridgepublishing.com/india

=============

Stories are told to convey important underlying points which are to be carried over generations. The author in her book "The Rigveda Code" helps us decode the meaning of "the last Hymn of the Rigveda".

...Assemble, speak together, let your minds be all of one accord,

As ancient Gods unanimously  sit down to their appointed share..

The place is common, common the assembly, common the mind,

so be your thought united.

A common purpose I lay before you,

to worship with your offerings..

One and the same be your resolve,

and be your minds of one accord,

United be the thoughts of all, that all may happily agree..

Its a very well written book and an interesting read no doubt with good storytelling... The good part is that we are all looking back at our roots to get a better understanding of our true self..

If "Lord of the Rings" is used as an educational book .. "The Rigveda Code" would make an excellent educational book giving us(children) a glimpse of our rich heritage..

Did I know the meaning of the Last Hymn of "Rigveda" before reading this book?...... NOPE

Do I now understand the meaning of the last Hymn of "Rigveda" after reading this book??.. A definite YES!!

Anil Gupta: "Emerging Frugal Innovations in Energy"

Global Natural Oil Polyols (NOP) market is anticipated to reach USD 7.92 billion by 2020

SAN FRANCISCO, January 6, 2015 /PRNewswire/ --

======================
I thought the data that I published was free sample info.. but it seems donot  have the rights to publish it.. so I've removed the data 
==================

from:		Saurav <saurav@grandviewresearch.com>
to:		WhatsupPrahalad@gmail.com
cc:		Haakon
date:		Tue, Jan 13, 2015 at 11:52 AM

Dear Team,

It has come to our attention that content from our website (www.grandviewresearch.com) has been posted on your website, without authorization. Please refer to the link below:

http://whatsup-indianstockideas.blogspot.in/2015/01/global-natural-oil-polyols-nop-market.html

We hereby request you to delete this on an immediate basis as Grand View Research Inc. has not authorized publication of this content anywhere on the internet, by any company or individual.

Thanks & Regards

Saurav Chakravorty

7755984772 / 9730655543

Grand View Research

E-mail: : saurav@grandviewresearch.com

=====================

=happy investing

whatsup-indianstockideas.blogspot.com

Jayant Agro:Chart Reading: Predicting the future

As the markets are rising there are a number of requests for price targets.. which got me looking at the charts for Jayant Agro.. 

PN: Charts are predicting the future based on past history of stock price movement.. These predictions will only stand true if it follows historical price movement..

Personally I feel this is a breakout year for Jayant and we could see the stock become a multibagger..

-------------

I have taken the maximum possible range for my Exponential Moving Average i.e. 999

Since 200Day EMA is considered as 1 year.. (There are 52 weeks in a year,  considering only Monday-Friday= 260days ) minus the Holidays 60 days we get 200 Day EMA = 1 year..

So 999 Day is like 5 yrs (200 x 5 = 1000) 

So long term trend is 5 yrs and then I have taken the 200 day EMA for signalling...

------------------------

3 year term: If you see the chart the peaks and troughs considered are:

2005 low: 34.04 .. 2008 High 122.75 (360.60% increase in 3yr period)

2010 low: 62.29 .. 2012 High: 152.50 (244.82% increase in 3yr period)

-------------------------

So the bull cycle starts when 200Day EMA crosses 999Day EMA from the bottom and lasts 3 yrs and we have 2 confirmed cycle in past 9 yrs..

Bear cycle starts when stock price falls below the 200Day EMA

-------------------------

FALSE START: If you see there is a False start in the middle 2007.. where the stock price did not go below the 999Day EMA and resumed its journey back up again.. to a new 52 week high..

Similar "False Start" in 2011-12 period giving traders a chance to dip in twice!! in the 3 yrs period doubling your returns!!

-------------------------

Conclusion: So the time period is 3 yrs.. Trigger is after the 200Day EMA crosses 999Day EMA .. till stock hits a new 52 week high (250-350% from base) and signals a sell when the 200Day EMA is broken.. 

Next cycle starts after the 200Day EMA falls below 999Day EMA and again  200Day EMA rises above  999 Day EMA. Next bull cycle start

Latest bull cycle started at 95.4 

Current Market Price:109.70

Current 200Day EMA: 102.65

Current 999Day EMA: 103.29

Target Price 250-360% from base of 95.40 = 238.40- 343.40

Time Period: 3 yrs starting June 2014 - till June 2017 

If you see the 999Day EMA(Green line)  its been continiously rising so even if on the outside the stock seems to be underperforming but the base 999Day EMA in past 10 yrs has increased from 34.04 to 95.04 which is extremely bullish for investors in Jayant Agro organics..

----------------------

PN: As soon as the trend is known to the general public ..the rules of the game are changed.. so its quite possible that the trend no longer stands the test of time.. Please do your own deep dive before investing.

Jayant Agro:Quarter 2014: Result Review

Jayant Agro results for quarter ending June 30,2014 is out. Let us review the results with horizontal (Y-Y)and vertical (% Sales)  comparision

Horizontal Comparision:

Jayant results are seasonal in nature due to castor seed being the primary raw material which is agro based input.. year on year comparision is the best option. Comparing the "Quarter June 2014 to  Quarter June 2013" results we get the following observation

Total Income from Operations: UP 14.88% (Positive)

Sales on a Y-Y basis has increased which is a positive development.

Total Expenses:                        UP 15.72% (negative)

- Cost of Material:                      UP 12.81% (positive)

- Purchase of Stock in Trade:      UP 49.59% 

- Change in Inventory of Finished Goods: UP 33.45%

Total Expenses are up 15.72% which is more than rate of increase in income (14.88%) so that's a negative development as costs(expense) has increased at a higher rate than sales increase eating into profits..

Sales increase: 14.88%

Expense increase: 15.72% 

Difference: 0.84%

Digging deeper into Expenses.. "Cost of Material" is up 12.81% which is positive as increase in "cost of material" is less than increase in sales (14.88%) Cost of goods is not the real reason for increase in expenses..

"Purchase of stock in trade"(up 49.5%)  and "change in inventory of finished goods"(up 33.45%)  seem to be the main culprit for increase in expenses.. (though employee expenses and other expenses have also increased at a higher rate than increase in sales..)

Profit from Operations: Down 4.67% (Negative)

The 0.84% increase in expenses has resulted in a 4.67% decrease in Profits from operations  since actual sales increase was 14.88% we should have seen an increase in profits.. so the actual drop in profits is like (4.67+14.88 = 19.55%) comparative decrease in profits..

Clearly the purchase of stock in trade and change in inventory has impacted profits in a big was as Jayant has leveraged operations. The only positive is that its not cost of goods but more of inventory and stock in trade doing the trick..

Other Income: UP 2140.68%

Huge spike in other income(294.65 lakhs Last year: 13.15 lakhs) .. looking at the results there is an interest income of 206.69 lakhs (2.06cr) which was missing last year (june 2013=0.92 lakhs). My take is that company used to report "Net finance cost"  ie. (Finance cost - interest income) and now they have separated the two due to new reporting regulations (I think).. so we should see increase in interest income and in finance cost.. 

Profit Before Finance cost: UP: 13.43% (negative)

Profit increase is less than the increase in sales.. so its negative  

Sales increase: 14.88%

Profit Increase: 13.43% 

Difference: 1.45%  while Difference in case of expenses was 0.84% Profit before finance cost is also being supported by 2.06cr Interest income.. So actuall Profit before finance is much worse..

Finance Cost: UP 80.40% (negative)

Finance cost as we discussed is up due to interest income going up.. lets reduce the interest income

True Finance Cost(2014) : Finance Cost: 1139.48 Less Other income: 294.65 = 844.83 lakhs

Finance cost (2013): 631.65 lakhs 

Increase in finance cost: (844.83-631.65)/631.65 = 33.74%

Clearly finance cost have increase at a rate higher than increase in sales or increase in expenses.. but then inventory has increased 

Real inventory (2014):(Purchase of stock in trade + Change in inventory of finished goods) (7207.76 - 5614.36)= 1593.4 lakhs

Real inventory (2013): (4818.32 - 4207.11)= 611.21 lakhs

% increase in inventory: (1593.4-611.21)/611.21 = 160.69%

On a Y-Y basis inventory (Purchase of stock in trade + Change in inventory) has increase 160.69%

Conclusion: finance cost has increased but so has inventory of goods.. so it could be stocking up for future sales or it could be a negative development due to pile up of the inventory (unsold goods) we will know in the future..

PBT: Down 32.20%

TAX: Down 45.39%

Net Profit: Down 25.09%

PBT,TAX, Net Profit all are down.. the good part is "Taxes are down" by a greater percentage than PBT or Net Profit.. my understanding that Modi govt has given tax incentives.. to corporates.. and looks like that is what is happening.. companies are reporting higher expenses and hence lower taxes..

Conclusion of Y-Y comparision:
Sales have increased 14.88% which is a positive..
Expenses have increase 15.72% but its not the cost of  goods but inventory and purchase of stock in trade which has resulted in increase in expenses..
Other income is up and finance cost if up.. looks like as part of new reporting guidelines..companies have to report interest income as a separate line item which has resulted in increase in finanace cost.. the other major cause of increase in finanace cost is due to increase in inventory or stock in trade(my assumption) based on sharp increase of 160.69%..

my take is that the results have been disappointing primarly due to clever accounting..as sales have increased and "cost of goods" is still well under control.. The main target could be reduction in taxes.. which is the reason for higher inventory reporting, higher interest payments and drop in profits..  Higher inventory could indicate higher sales in subsequent quarters.(positive spin)

PN: these are my personal intepretation of results based on publicly available information and could be wrong. Please do your own deep dive

Vertical Analysis.. everything is compared on a % of sales basis..

1. Cost of goods for June 2014 quarter is less than March 2014 or June 2013..
Also Year end cost of goods is lower.. so Jayant does have higher cost of goods during the 1st half and maybe lower cost of goods in 2nd half (higher profit margins in 2nd half??)

looking at year end Cost of Goods 2013(68.30%)  & 2014(73.76%)  Cost of goods is definitely trending up.. but the company has been able to maintain its profit margins
2013 (NP Margin: 2.19%)
2014 (NP Margin: 2.64%)

2. Purchase of stock in trade is the primary reason for increase in expenditure..

looking at the figures clearly nothing seems out of order in june 2014 results..  new segment reporting of interest income has been normalized in the income statement.. Taxes are lower.

If you read the notes section of the report.
- Depreciation is higher and depreciation for previous years has been directly reduced from the company reserves.. depreciation at consolidated level is higher by 17.64 lakhs for the quarter June 2014

- Inventory calculation method has been changed from "First in first out" to "weighted avg.." which has resulted in consolidated profits being lower by 1cr for the quarter june 2014

Conclusion: My take is June 2014 is just another quarter.. with not much changes .. lower profits higher inventory.. are part of reporting.. and donot see anything extra ordinary or out of place.. "Its Business as usual"
Link to June 2014 Results Company Website

Jayant Agro: Fudged..Return on Capital Employed(ROCE)??

I was looking at all the high PE stocks.. and one thing which struck me was the ROCE of Jayant agro is lower than other high PE stocks....

now looking at the 5 yrs (2009-2013) ROCE data for Jayant agro in money control I get.

Stand Alone Jayant Agro 5 yrs Avg. (2009-2013)ROCE = 17.44%

Consolidated Jayant Agro 5 yrs (2009-2013) Avg ROCE = 16.79%

ROCE =16-18% range is "ok" not too high, not to low maybe one reason for lower PE for Jayant Agro..

but then I decided to do ROCE calculation myself for Jayant Agro..

---------------------------

according to Investopedia:

ROCE = Earnings Before Interest and Tax (EBIT) / Capital Employed

where Capital Employed = (Total Assets - Current Liabilities)

I opened each year's Annual report (available here)

Using the Profit loss statement got the EBIT 

Using the Balance Sheet got the Capital Employed (Total Assets - Current Liabilities)

My calculations for ROCE Jayant Agro:

Stand Alone Jayant Agro 5 yrs Avg (2009-2013) ROCE = 26.26%

Consolidated Jayant Agro 5 yrs Avg (2009-2013) ROCE= 27.37%

5yrs Avg ROCE in Moneycontrol (stand alone)=17.44% 

5yrs Avg ROCE from Annual Report(stand alone)= 26.26% (calculated myself)

HUGE Difference!!

5yrs Avg ROCE in Moneycontrol (consolidated)=16.79%

5yrs Avg ROCE from Annual Report(consolidated) = 27.37% (calculated myself)

Again HUGE Difference!!

well then just to confirm my calculations ..I also calculated ROCE for a couple of different companies (1 year only) using Annual Reports from BSE Website

================

Checked Astral Poly Technik

Moneycontrol Data 2013 ROCE= 31.47%

Annual Report 2013 Data ROCE= 30.59% (calculated myself)

------------------------------------------

Checked Atul Limited

Moneycontrol Data standalone 2013 ROCE= 26.51%

Annual report 2013 calculated ROCE= 23.92% (calculated myself)

-------------------------------------------

Checked GAEL data

Moneycontrol Data 2013 standalone ROCE= 19.97%

Annual report 2013 calculated ROCE= 23.44% (calculated myself)

=====================

as you can see the ROCE calculated(annual report) and from Moneycontrol website,difference is not that much for other companies..

Conclusion: ROCE and other stats though available from sites.. its best to do some quick chk calc.. to confirm data is correct.. Jayant Agro ROCE is close to 26-28% range instead of 16-18% published by moneycontrol.. another reason to make Jayant Agro an attractive investment destination..

Jayant Agro: the good guys in the US court case against now defunct Biotor Industries

there is some rumor going around in investment circles (read valuepickr) where it has been incorrectly stated that the Promoters of Jayant Agro had a court case against them in US court.. for poaching two employees who stole customer relationships and sold them to Jayant..

here it is from what was posted on valuepickr

---------------------------

Posted by Narayanan Ravindranathan at Tuesday 14:02

This company used to supply castor oil to a US based company which then sold it to end users. The US company filed a court case against Jayant for poaching two of its employees who essentially stole customer relationships and gave it to Jayant thus damaging the sales of the US based company. The US company won the case in court and Jayant coughed up some damages. But avoiding such things is one possible reason why foreign companies will want to have control of suppliers like Jayant.

---------------------------

Link to the valuepickr article.

well here's the read deal.. Actually Jayant Agro Organics Director (now Chairman)"Abhay Udeshi" actually helped the US company  Acme-Hardesty by informing the President of Acme-Hardesty Cindy Cox about the rogue employees .. Its best you read the article yourself.. 

As they say The Truth will set you free!!

----------------------------------

June 25, 2008 

Castor Oil Creates Courtroom Drama 

By George Gill

Trade secrets. Clandestine meetings. Wired money transfers. Downloading confidential data. Those aren’t scenes from a spy thriller, but instead part of court document allegations in a Pennsylvania case involving a castor oil and derivatives distributor, two former employees, and an India-based exporter of castor oil and derivatives.

In February 2007, Jacob Stern and Sons Inc. – parent company of castor oil and derivatives distributor Acme-Hardesty in Blue Bell, Pa. – filed suit against two former employees and its former supplier Jayant Oils and Derivatives Ltd., Mumbai, India, alleging breach of contract, misappropriation of trade secrets, breach of duty of loyalty, interference with existing and prospective business advantage, unfair competition and civil conspiracy.

On May 21, 2008, a jury in Montgomery County, Pa., found in favor of Jacob Stern and Acme-Hardesty, awarding $7 million in damages -- $4.6 million against Jayant, and $1.2 million apiece against former Acme-Hardesty employees Adele Savaiano and Fred Hawco. Attorneys for each side disagree on whether Jayant can be held responsible for the entire $7 million award. After the jury trial concluded, the defense filed a post-trial motion to set aside or reduce the jury verdict amount.

Castor oil comes from castor beans’ fatty oil, which is extracted through pressing, then followed by solvent extraction. Castor oil and its derivatives are used as a raw material in chemicals used in the manufacturing of greases, lubricants and surfactants.

David Walton, an attorney with Cozen O’Connor, in West Conshohocken, Pa., was co-counsel for Jacob Stern and Sons. Walton said the case had serious impacts on Acme-Hardesty’s business.

“You have key employees leaving, secretly helping a competitor, and helping a supplier prepare to compete against you,” Walton told Lube Report. “They were having the rug pulled out from under them by the supplier, Jayant, which said they were going to stop supplying them and start competing against them. Then it turns out later that two of their key employees were hired by Jayant to start a competing company.”

Jayant was represented by Michael Banks, an attorney with Morgan, Lewis and Bockius in Philadelphia. “The defense contends that Jayant, together with Miss Saviano and Mr. Hawco, engaged in legitimate competition with Acme-Hardesty, and that they were entitled to do so,” Banks told Lube Report. “We don’t believe there was any factual basis for the verdict in favor of Acme-Hardesty.”

According to Banks, Jayant and JODL have gone ahead with their business plan. Early in the trial, the judge signed a special preliminary injunction that restricted the right of Jayant to sell to Acme-Hardesty’s customers. “Right after the trial was over, the judge dissolved that injunction, giving Jayant the right to compete fully in the United States, which it has been doing,” Banks said. “Jayant is encouraged by that, and intends to sell its castor oil products in the United States now.”

Banks said he filed the post-trial motion shortly after the jury decision, asking the judge to set aside or reduce the verdict amount. The case is now in a briefing process, according to Banks.

Ed Taylor of Sebris Busto James in Bellevue, Wash., is co-counsel representing Jacob Stern. Taylor said he doesn’t believe his clients could have done anything further to prevent what happened. He said Acme-Hardesty had confidentiality agreements in place, which the two former employees had signed, and a computer system with appropriate password protections and security.

“I think the reality is if people are bent on taking away information improperly and trying to use it, it happens at all kinds of different businesses and different industries,” Taylor told Lube Report. “I think the best way to prevent it is when courts do what this one did – send a message that it’s not OK.”

According to Taylor, Jacob Stern and Acme-Hardesty have recovered from the lost supplier relationship with Jayant. “For the products that Jayant sold to Stern, there are other providers of castor oils and castor oil derivatives,” he said. “I’m sure there was some disruption at the outset while having to go through with getting approvals and so forth for new suppliers, with certain customers who have exacting specifications. The approval process required some time to publish that, but I think that’s all well laid out now.”

Thomas Rees of HighSwartz LLP in Norristown, Pa., represented Savaiano and Hawco. “Our view is the damage awards were A) not supported by law, and B) excessive,” Rees told Lube Report. Rees said he filed a brief Monday as part of the post-trial motion, which he said will be argued on Aug. 13.

An amended, verified civil action complaint filed in July 2007 alleged that, “throughout the course of defendants’ employment, Jacob Stern, through Acme-Hardesty, made available to defendants confidential proprietary business information, including but not limited to, its customer and supplier lists, castor oil data shipping and distribution information, purchase data, pricing, sales data and other trade secret information and confidential information.”

According to the complaint, in December 2006, Jacob Stern CEO Jonathan Atkatz spoke by phone with Jayant President Rajesh Kapadia. During the conversation, Kapadia abruptly informed Atkatz that Jayant would create its own office and sales organization in the United States. “Kapadia denied at the time that any former employees of Acme-Hardesty were working with Jayant and denied that Jayant intended to hire any present or former Acme-Hardesty employees,” the court documents alleged.

In January 2007, while visiting suppliers in India, Atkatz and Acme-Hardesty President Cindy Cox met with Abhay Udeshi, a former Jayant employee who was director of Jayant Agro Organics Ltd., a separate and distinct business entity from Jayant. During the meeting, the complaint states, Udeshi informed Atkatz and Cox that Jayant intended to distribute castor oil products directly into the U.S. market and showed them press articles indicating the intent.

According to court documents, Udeshi further informed Atkatz and Cox that Savaiano and Hawco met extensively with Jayant’s president and other Jayant representatives in Mumbai in July 2006, that he observed Savaiano in Mumbai during that time, and that Savaiano and Hawco intended to represent Jayant’s business interests in the United States.
((Who is the good guy??? Jayant Agro Organics))
The complaint stated that upon returning to the U.S., Atkatz and Cox initiated an investigation of the activities of Savaiano and Hawco during and after their employment. In the course of the investigation, they learned that in May 2006, Savaiano and Hawco, while still employed by Acme-Hardesty, met with Jayant and several key castor derivative customers. According to court documents, the meeting wasn’t disclosed to Cox or Atkatz, as was required by Acme-Hardesty’s standard operating procedures.

The court documents indicated Savaiano and Hawco in or about March 2006 agreed to financial terms for their relationship with Jayant. At the time, Savaiano was purchasing products from Jayant on behalf of Acme-Hardesty, and Hawco was attempting to expand Acme-Hardesty’s market for castor oil derivatives.

“Savaiano and Hawco never disclosed to Acme-Hardesty that they were negotiating terms under which they would leave and work for Jayant, or that they had agreed to financial terms to work for Jayant,” Jacob Stern’s court filing claims. Savaiano and Hawco each received initial $50,000 payments via wire transfer from Jayant in early June 2006, pursuant to consulting agreements signed with Jayant, according to court documents, while each was still employed by Acme-Hardesty.

Acme-Hardesty retained a computer forensics expert to analyze data from the laptop computer used by Savaiano during her employment with Acme-Hardesty, and to review data maintained on the Acme-Hardesty computer server, specifically e-mails to and from Hawco and Savaiano. “The documents and information extracted from Savaino’s computer and the server not only confirmed, but provided additional detail regarding defendants’ secret meetings with Jayant and key customers of Acme-Hardesty,” court documents alleged.

According to Jayant’s Web site, India is the largest exporter of castor oil, while the European Union is its largest importer. The site also said China, which used to be a net exporter of Castor Oil, has now turned a net importer as it concentrated on manufacturing value added castor oil derivatives in its country rather than exporting the castor oil. According to Jayant, Brazil has now become a net importer due to increase in its domestic consumption.

----------------------------------

Link to the original article

Now a well respected site such as "valuepickr" has people spreading false rumors .. 

I must add the culprit is also named "Jayant Oil"  while the "Good Guys" are  "Jayant Agro Organics"

and there could be confusion in the mind of readers..  but if they have read the actual article .. I dont think there is any confusion.. as its clearly stated in the article 

Acme-Hardesty President Cindy Cox met with Abhay Udeshi, a former Jayant employee who was director of Jayant Agro Organics Ltd., a separate and distinct business entity from Jayant.

but such a statement with no link to original article clearly indicates something is fishy!! with what was written in Valuepickr!! 

The most important thing that one learns in life is to not take things at face value.. always get to the bottom of things and always dig a few feet deeper.. to get to the truth.. and THE TRUTH WILL SET YOU FREE!!

=happy investing in Jayant Agro Organics.. Promoters are a hardworking bunch and a close knit family .. which is always a good thing!!

Jayant Agro Organics: 676 shareholders hold 92.91% shares

The more you discover Jayant Agro the more intriguing it get.

I was looking at the shareholder data given in 2013 Annual report

if we look at the no of shareholders and % shareholding..
104 people hold 82.43% stake.. so it is a close knit of investors..

if you consider all investors holding 1001 share or more.. 676 shareholders hold 92.91% stake in Jayant Agro which indicates how concentrated is the shareholding for jayant agro..

NO significant holdings of FII, DII or any institutional investors..

Now Jayant Agro Organics is the largest processor of castor oil and castor oil derivatives in India. with India producing 80-85% of worlds castor oil production.. Jayant is the largest player in the world in castor oil and castor oil derivatives business..

a 1001 share purchased in Jayant gets you in the top 676 investors who control 92.91% stake in Jayant
10,001 shares purchased in Jayant agro gets you in the elite group of 104 investors who hold 82.43% stake in Jayant.
---------------------
Jayant Agro Organics
CMP: 128
MCap: 190cr
ROCE: 19.45%, ROE: 22.61%
3yrs CAGR Sales: 21.49%
3 yrs CAGR inNet Profits: 43.88%
PE: 4.83 (March 2014)
EV to Sales: 0.30
EV to EBIDTA: 4.96
7 yrs 588% increase in profits and 335% increase in sales
=================
Consolidated Sales/NP/dividend numbers.
March 2007 Sales 462.49Cr Net Profit: 6.76Cr Div:1.25
March 2008 Sales 605.96Cr Net Profit: 9.51Cr Div:1.25
March 2009 Sales 875.86Cr Net Profit 7.49Cr Div: 1.25
March 2010 Sales 904.01Cr Net Profit: 12.47Cr Div:1.50
March 2011 Sales 1,175.26Cr Net Profit: 24.92Cr Div 1.75
March 2012 Sales 1,832.26Cr Net Profit: 31.35Cr Div: 2.00
March 2013 Sales 1,624Cr Net Profit: 36.24Cr Div: 2.25
March 2014 Sales 1,550Cr NProfit: 39.75cr Div: 3/=
=================

Jayant agro stock price has in past 7yrs(April 1,2007)  has increased 119% while earnings have increased 588% ..
5yrs  compounded annual growth rate in profits is: 32.51% and
5 yrs compounded annual growth rate in sales is: 21.46%
5 yrs Return on Equity is: 19.99%
-------------------

Conclusion: Jayant stock is undervalued by a mile.. such high growth rate companies should command PE of 
(Growth + 8) = 21.46+8 =  PE of 29.46. worlds largest processor of castor in country that produces 80% of castor with great return on capital employed..consistent dividend payout since inception for more than 20+ yrs...Only 676 shareholders hold 92.91% shares.. long term investors can expect PE and sales growth to deliver long term (3yrs) price target of atleast 1000/=  per share... ie Mcap of: 1500cr. Must buy!!