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Sunday 23 October 2016

Hester Bio - Notes from the Annual Report - 2016

• Cumulative production capacity of 6 bn doses once the Nepal capacity goes online
• 2015-16 performance was achieved despite a 6-month trough in India's poultry sector that affected the sector for 3 quarters. The trough was the result of high feed cost and low realization of poultry output of meat and eggs. This resulted in a lower replacement of chicks.
• Started trial production of two batches in its Nepal plant and submitted these to regulatory authorities in 2 African countries
• HBS has decided to make a strategic shift to health products over dependence on poultry products
• Focus on exports to de-risk company from exclusively depending on domestic market
• Poultry Vaccines Segment: Introduced two Poultry Vaccines namely the Salmonella Live Vaccine and the Inclusion Body Hepatitis Vaccine
• Large Animal Vaccines: started manufacturing and marketing of large animal vaccines. Currently, manufactures PPR and goat pox vaccine. The Indian plant at Mehsana produces the PPR Live vaccine strain meant for India (sungri strain); the Nigerian strain will be made in the Nepal plant for export markets
• Brucella abortus S19 vaccine will be commercialized this year
• Large Animal health Products Segment: Comprises of medicinal products, feed additives & disinfectants. HBS does not manufacture products themselves. The outlook for growth is robust and can outperform the other divisions in the near future.

Sunday 9 October 2016

Notes from Annual Report 2016: Poly Medicure

  • Revenue was 402.86 cr vs 381.9 cr in FY15
  • Net profit was 47.30 cr vs 61.01 cr (including 19.57 cr of exceptional items) in FY15
  • EPS was 10.72 vs 13.83 in FY15

  • PML is starting a new R&D center with an investment of 12.5cr which is to be operational by Q3 2016
  • New green field project at IMT Faridabad which is to be operational by Q3 2017 on an investment of 60cr
  • PML to focus on new market opportunities in Oncology, Nephrology & Respiratory Care segments
  • Product expansion is in process for Infusion therapy and Blood Management
  • PML is planning to launch 8-10 new products in FY17
  • PML is now exporting products to 95 countries
  • PML is now present in 3000 key hospitals in India and plans to expand to 5000 hospitals in next 2 years
  • Expanded the sales and marketing team with 80 new team members
  • The Indian medical device market is the top 20 in the world and 4th in Asia after Japan, China & South Korea
  • The medical devide sector was valued at USD 6.3 in 2013 and is expected to grow to USD25-30 by 2025
  • PML is the leading exporter of infusion therapy, blood management, gastroenterology, surgery and wound drainage,
    anesthesia and urology products
  • Over 65% of revenues come from exports
  • PML has 144 product and process patents globally; filed for additional 394 patents in India and worlwide

Saturday 8 October 2016

Notes fom Annual Report - Supreme industries

•    No of distributors have gone up from 2469 to 2699
•    Value added product share has gone up from 34.2% to 36.73%
•    Current average monthly borrowing is 401 cr. SIL expects to reduce it to 300 cr in FY17
•    Supreme Industries Sharjah is exporting products to 15 countries - GCC, Africa, Australia, UK, Germany & Indian sub-continent. It has made inroads into Maldives and re-entered Saudi Arabia. It has also penetrated Solvent Cement market in Australia
•    Statutory auditors M/s Choggmal & co have stepped down and has been replaced by M/s Lodha & Co.
•    Polymer consumption has increased by 14% in volume terms which is double of GDP, something which did not happen in the last decade.

•    New plant at Kharagpur has started production. Full capacity to be scaled up by June 2016.
•    Further expansion of pipe manufacturing is expected at Kharagpur plant
•    cPVC volume growth was 23.7%; cPVC manufacturing has stabilized at Kharagpur
•    Roto moulding plant is being commissioned at Kharagpur, to start by April end.
•    HDPE piping systems gorwth was at 24.09%
•    SIL has launched a variety of septic tanks in technology tie-up with a South African company. Many other varieties are expected to be launched for underground water storage
•    SIL has produced multilayer foam pipe of 200 mm diameter, BIS certification in process
•    SIL has developed a cheap & economic model of manhole cover
•    In process to setup a PVC plant at Jalgaon to produce 20,000 tons at full capacity and is expected to go on stream by Mar 2017
•    Submersible pipes are getting good traction. Monthly sales are expected to rise to 750 tons in FY17 from 270 tons.
•    Maharashtra Fire Department has issued a directive that makes installments of fire sprinklers mandatory in every room for residential building above 45 m and in common areas for buildings between 25m to 45m. SIL has tied up with FlameGuard of USA to manufacture and sell these sprinkler systems. SIL is planning to sell the same product in Sri Lanka as well.
•    The portfolio of bath fittings has reached 90 items. Chrome fittings are likely to be launched this year

•    SIL has introduced 8 new models this year and plans to add 7 new models this year.
•    SIL is looking to expand into export market with their new line of furniture
•    New plant being put up at Kharagpur; to start in the Q1 of FY17
•    Increased distribution channel partners to 746 and have started selling online as well; partnering with flipkart, amazon, snapdeal, pepperfry etc

•    SIL started manufacturing complete coolers for one company. Expects good growth in this segment.
•    BOSCH, a new customer, has setup a large manufacturing plant for home appliances. SIL expects good orders from them.
•    Working closely with Honda cars on multiple models

•    New facility setup and started in Malanpur (M.P) for roto moulded products
•    Two new plants being setup - at Kharagpur and Kanpur; to be operational in April/June 2016

•    A specialty product - high gloss film has been successfully developed
•    The PPD plant at Kharagpur is now fully operational and is expected to generate a revenue of Rs 50cr

•    Received initial educational order from HPCL for 5 & 10 kg cylinders; dispatches expected in April 2016
•    SIL received orders for 7.5 & 15 kg cylinders as well
•    FY17 may be a transformational year for this division

Sunday 2 October 2016

Getting Back to Basics - Presentaion at Investment Meet

We had the third meeting of your investment forum today. The venue was at Hotel Lindsay, bang opposite New Market. Thanks to Raghav for being gracious enough to arrange for the venue.

Friday 16 September 2016

HDFC Bank is the next HDFC Bank!!

FM, Arun Jaitley has earmarked Rs 700 billion (USD 10.5 billion) in bank capital injections in the four years to March 2019.

Ratings agency Fitch estimates, however, that USD90 billion in capital will be needed for Indian banks to meet Basel III banking rules due to be fully implemented by March 2019. Fitch says that 11 Indian banks may fail to meet those norms.

With the finance minister spelling out compulsions in providing additional capital for the PSU banks, it is a matter of time that we say consolidation and increased transition from  public sector to private sector banks and NBFCs.

This provides a very large opportunity for organizations which are well capitalized and are diversified into multiple lending lines. I continue to believe businesses like HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Bajaj Finance and others would do well over an extended period of time.

Sunday 11 September 2016

Century Ply - Notes from Annual Report 2016

Centuryply is among India’s largest interior infrastructure product manufacturers. The Company offers plywood, laminates, veneers, MDF, blockboards, doors, fibre cement boards and particle boards. It is also engaged in the logistics business through the management of a container freight station (India’s first privately owned CFS at the Kolkata Port).

Another unit in Laos is being commissioned. 5000 retail outlets added in 2015-16.

Launched new age products– Zykron and Starke (Wood Polymer Composite and Cement Fibre Boards). CPL expects to carve a 10% market share of the country’s B1,000 cr fibre cement boards market by 2020

Set up a particle board unit at Chennai, commissioning in June 2016, to capitalise on the fact that there are no similar units in the city

Commenced the construction of MDF unit at Hoshiarpur (Punjab). Following the commissioning of this unit, prlanned for July 2017, CPL will possess a capacity to manufacture 198,000 cubic metres per annum, graduating it to one of the largest in the country.

Grew the laminates business by around 15% on the back of a strong catalogue and distribution network.

Plywood capacity continues at 210,000 cubic meters

Laminate capacity continues at 4.8 million sheets p.a. Conventionally, new laminates would be introduced every second year; Centuryply revolutionised the space with the introduction of four catalogues a year.

The co did not reduce prices even though the competition did amidst sluggish demand. CPL maintained EBIDTA margins at 17%.

Raw material costs as a proportion of revenues declined from 53% to 38% in the three years ending 2015-16.

Working capital cycle reduced from 88 days to 70 days.

Container Freight Station at the Kolkata Port contributed only 5% to revenues in 2015-16, the corresponding EBIDTA margin was 46%.

Industry structure and developments
Wood panel products - The Indian wood panel market is valued at 28,500 crore. Plywood has a share of 63% (18,000 crore).
Plywood - India’s plywood industry is likely to reach a market value of 479.7 billion by 2019. This growth in the plywood market is expected to be led by a surge in the growth of commercial and domestic developments.

The MDF market is estimated to be  worth ~35 billion in India and has grown at a CAGR of ~5-8% over the last five years. The Central Government’s decision to withhold fresh licenses for the manufacture of plywood has widened the gap between demand and supply. This is a positive development for the MDF industry and will increase the use of engineered panel products.

Segment-wise performance
Plywood: Revenues from plywood business reported a growth of 2.94% from 1,243.06 crore in 2014-15 to 1,279.59 crore in 2015-16.
Laminates: Laminates reported a growth of 14.20% from 321.27 crore in 2014-15 to 366.89 crore in 2015-16.
Logistics: Revenues from the logistics sector reported a 12.50% growth from 75.42 crore in 2014-15 to 84.85 crore