Jai Balaji Industries Ltd: A Hidden Mining Story

CMP: Rs.23.80

Aditya Jajodia, CMD, Jai Balaji Group
Photo: Moneycontrol.com

Introduction: Jai Balaji Group is one of the largest manufacturers of steel in the private sector in Eastern India. It has integrated facilities for producing steel in its manufacturing units spread across the states of West Bengal, Chhattisgarh, Orissa and Jharkhand in India. 

The Group 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. Jai Balaji Industries Ltd continues to have three wholly owned subsidiaries namely:

• M/s. Nilachal Iron & Power Limited==> It is a wholly owned subsidiary of the Company since 26.10.2007, having its manufacturing plant located in Kandra near Jamshedpur, Jharkhand. It currently, manufactures sponge iron. Work on increasing its capacity by 60,000 tonnes per annum has been initiated.
  The company has been allotted the Dumri Coal Block for captive mining from the Government of India, about 300 kms from the plant. Mining of coal is expected to start shortly and a Coal Washery ill also be installed to improve efficiency of the raisings. 
• M/s. Jai Balaji Steels (Purulia) Limited
• & M/s. Jai Balaji Energy (Purulia)

The company also has 101.1 MW power plant, Sinter plant to utilize cheaper iron ore fines and have also put up Coke Oven Plant.

Shareholding Pattern: The promoters hold 54.57% of the shares of the company while general public holds 41.07% of the shares of the company. The corporate bodies hold 13.14% of the shares of the company while the FIIs hold 4.3% of the shares of the company. In fact the  FIIs' holdings have increased from 3.71% in October, 2013 quarter to 4.36% in March, 2014 quarter. 

Financials: Net Loss of Jai Balaji Industries came as Rs.123.49 crore in the quarter ended March 2014 as against net loss of Rs.63.46 crore during the previous quarter ended March 2013. Sales declined 14.62% to Rs 434.35 crore in the quarter ended March 2014 as against Rs.508.70 crore during the previous quarter ended March 2013.

For the full year,net loss reported to Rs.318.95 crore in the year ended March 2014 as against net loss of Rs.213.13 crore during the previous year ended March 2013. Sales rose 27.81% to Rs.1946.00 crore in the year ended March 2014 as against Rs.1522.58 crore during the previous year ended March 2013.

Due to the increase in the raw materials cost, such as Iron Ore and Coke/Coal as a percentage of net sales, post FY11 and inability to increase end product prices due to competitive environment, resulted in EBITDA margins of the company taking a hit. This is one of the prime reasons why the company is posting huge losses. 

Now, most of the established companies, like SAIL, Tata Steel, Jindal Steel and Power Ltd etc, have their own captive iron ore and coal mines which puts a lid on the costs. But Jai Balaji Industries Ltd has to procure this at market prices and under such circumstances, the going got tough for it. 
As a matter of fact the it was allotted both Coking and Non Coking in the past and have also formed joint venture companies for implementation. But due to some nagging issues surrounding coal block allotment, the things got unnecessarily delayed. However, off late Dumri Coal Block received Environmental clearance and Forest Go Certificate. Forest clearance stage one has been received and stage two is under process. This is expected to significantly reduce the cost of the production in the days ahead. 

Triggers: 

• Company has 1.1 mtpa steel manufacturing company with diversified product range including pig iron, sponge iron, TMT bars, ferro alloys, alloy bars etc. Replacement cost of assets is over Rs.5000 Cr. It has debts around Rs.2200 Cr. The NAV of the company therefore stands at Rs.2800 Cr. 
• The company is also hopeful of commencing work on its proposed steel plant at Raghunathpur in the Purulia district of West Bengal soon. According to information available on the company's Web site, it plans to set up 5-mt steel plant, 3-mt cement plant along with a 1,215-MW power plant at an estimated investment of Rs.16,000 crore.
• The company holds varying stakes in four coal blocks-Dumri and Rohne in Jharkhand and Andal and Jagannathpur in West Bengal. It posses 700 mt of high graded coal. 
• The DRI Plant of 60000 MT & coal washery in subsidiary company M/s Nilachal Iron & Power Limited started its commercial production during FY13. In FY13, the company’s project for expansion of 350000 MTPA Coke Oven Plant along with Waste Heat Recovery Boiler of 80 TPH was completed and capitalized. The said coke oven plant is presently running satisfactorily. These efforts are helping it to improve the margins. 
• The company completed a CDR-scheme where it got reliefs both in terms of interest rate and debt. It is estimated it will be able to save Rs.25-30 Cr annually through CDR mechanism only. Moreover, steel demand was low in FY14 due to continuing economic crisis, however, spurt in demand is expected in 2014-15. A sharp pullback in demand of steel in the third quarter has pushed up steel consumption in the fourth quarter of FY14. Also, with as the government talking tough on inflation, the raw material price are expected to come down albeit in a very tiny manner and very slowly. This is expected to give an upward push in its bottomline going forward. 
• Jai Balaji Industries Ltd has recently informed the BSE that the Board of Directors of the Company at its meeting held on May 29, 2014, inter alia, have converted the remaining 65,05,000 warrants which were allotted on July 04, 2013 to Hari Management Limited, Promoter Group Company of the Company into 65,05,000 equity shares of Rs.50 each (including premium of Rs.40 per equity share). Earlier the Company on 4th July, 2013, issued and allotted 10,000,000 warrants to promoter group companies namely M/s. Enfield Suppliers Limited (1,900,000 warrants) and M/s. Hari Management Limited (8,100,000 warrants) on a private placement basis at an issue price of Rs.50 each. Also, the number of pledged shares have come down from its peak level of 92%. Company has further plans to release more pledged shares in due course of time.
• A Joint Venture Company ‘M/s.Rohne Coal Company Private Limited’ was formed in 2008-09 with the Registrar of Companies, NCT of Delhi & Haryana, in which the company along with M/s. JSW Steel Limited & M/s. Bhushan Power & Steel Limited are venture partners. The said Joint Venture Company was formed in terms of allocation of Rohne-Coking Coal Block in the State of Jharkhand by Ministry of Coal, Government of India. Both the Joint Venture Companies are in the process of setting up coal mining facilities at respective coal blocks. The Ministry of Environment and Forest (MoEF) has already granted the first stage forest clearance the Rohne coking coal block in Jharkhand.

Conclusion: Persistent slowdown in demand for steel and falling steel prices has squeezed profitability of steel companies in India. This was reflected in the Financials of the company during FY14. However, the global steel demand is expected to grow over by 10% in the next five years. Steel industry is vital for overall economic development of every nation as it is one of the core sectors. India is the largest producer of sponge iron in the world. Despite all the headwinds and lingering difficulties, the steel industry is likely to deliver growth with the current NDA government focusing on infrastructure development. 

At present the Indian Steel industry is on the growth path due to growing domestic demand, unexplored rural market and rapid urbanization. The strong growth in automotive industry and power sectors would drive steel output and consumption, in future. With the improvement in the economic recessions in the west, the potential for increase in demand is high.

Moreover, the total revenue of Jai Balaji Industries Ltd for FY14, came out to be Rs.1990.78 Cr, plus its assets (Coal Blocks + NAV) are available at just Rs.175.60 Cr. The book value of the shares of the company is Rs.72.59 against the CMP of only Rs.23.80. 

Chartically speaking, the stocks seems to be at the end of downtrend and should find support around Rs.22.40--21.70 ranges. The investors are suggested to accumulate the scrip, if this level holds. In any case, in the short term, the scrip is not likely break Rs.19.70 on the downside. The short term target for the scrip is Rs.29-31. 

Birla Shloka Edutech Ltd: A Turnaround Story
CMP: Rs.5.08

Introduction: Birla Shloka Edutech Ltd is one of the leading company in the field of educational services and has created its own niche through reliable, budget friendly and ethical approaches. Birla Shloka Edutech Limited was incorporated on 25th May, 1992 (Registration Number 066910) with Registrar of Mumbai as Rathi Mercantile Industries Limited. It was acquired in the year 1998 by the prestigious Yash Birla Group. The Company got its name as Birla Shloka Edutech Limited in December 2008. Today the company stands tall with the trust and confidence of its millions of delighted customers who form the backbone of the company’s new product innovations and researched. Company is engaged in providing IT Services & sale of IT products and has a curriculam based educational software programe viz., “XL@School “ as per the syllabus prescribed by different educational board that is  designed to impart academic knowledge through electronic media

The Company has three subsidiaries: 

• Birla Edutech Limited.
• Wholly-owned foreign subsidiary, viz. Birla Shloka Edutech ltd.FZE.
• Ojus Healthcare private Limited.The Shares in the later Subsidiary (51.10%) was acquired by the Company during FY13. The main object of the subsidiary is to establish hospitals, conducting research and development activities in the areas of medical science, to carry the business of providing the healthcare and health information. In addition to the main object it can also pursue e - Governance Project.

The company derives its revenue from either supply or on installation of educational content and services, content licensing, sale of content and technology products. 

Shareholding Pattern: The promoters have increased their stakes to 17.03% in Q4FY14 from 9.23% in the December, 2013 quarter. The general public holds 82.97% of the shares of the company. Among the general public Birla Bombay Pvt Ltd,  holds 2.68% of the shares of the company. Also, 4% shares of the company are locked in for trade. Moreover, corporate bodies  hold 12.42% of the shares of the company. 

Financials: For Q4FY14, the total income of the company came out to be Rs.33.69 Cr as against Rs.54.3 Cr in the same period previous year. The net profit of the company jumped to Rs.3.53 Cr as against Rs.2.77 Cr in the same period previous year. The EPS of the company for Q4FY14, came out to be Rs.1.68 as against Rs.1.32 in the same period previous year. On a consolidated basis, the total income of the company for FY14 came out to be Rs.101.09 Cr as against Rs.279.4 Cr in the same period previous year. The net loss of the company came out to be Rs.9.45 lakhs as against a net profit of Rs.30.8 Cr in the same period previous year. The reserves of the company as of 31st March, 2014 stood out to be Rs.93.99 Cr as against Rs.87.81 Cr in the same period previous year. 

Triggers:

• The Company has a curriculum based educational software program viz., ‘XL@school’ as per the syllabus prescribed by different Educational Boards that is designed to impart academic knowledge through electronic media. To cope up with the increased business opportunities, the Company has made considerable investment in research and development areas, ongoing quality enhancement program and infrastructure facilities, etc. 
• The Company has expanded its business in Information and Communication Technology (ICT) solution for various government schools segment. In March, 2014, Birla Shloka Edutech Ltd informed the BSE that it had received an order from School Education Department, Government of Tamil Nadu for implementation of Information and Communication Technology Scheme in 1820 Government High & Higher Secondary Schools in Tamil Nadu State with a Total Project Value of Rs.359 Cr. Few more such orders could flow into the company's kitty this Fiscal. 
• The government of India is keen to explore the Public Private Partnership (PPP) model for setting up of Schools which the private partner will design, build, finance and manage. The company sees enormous potential in this space for future growth as more and more states are likely to devise and implement similar schemes for Senior Secondary Education and probably in primary education too.
• The Company is aggressively participating in tenders of various state government projects and vigorously pursuing such initiatives across the country.
• The need for ICT solution in government school is growing and opportunities are available in this space. Retails opportunities are available by way of sale of software contents to the end customer directly.
• The Education sector is one of the most promising sector creating tremendous opportunities. Being a country having 50% of its population less than 25 yrs old, the Company sees bright prospects in this fiscal. The Company sees tremendous growth opportunities in the following areas:
  (i) ICT projects availed from School Educational Department, Government of Maharashtra: The School Education Department, Maharashtra along with DES & HS had invited various reputed and experienced organizations/ Institutes for the supply of Computer and connected accessories, Education software's, Online M.I.S., teaching faculty and provision of IT Education Services in 5000 Government Secondary and Higher Secondary schools in 10 groups (i.e. 10 regions) from the districts of the State of Maharashtra as specified in DTN for a period of five years through e-tender. The proposed project is about setting up of computer laboratories in Secondary and Higher Secondary schools all across the state of Maharashtra. It has been decided that a region wise implementation is to be done for the same and a representative number of schools have been chosen from the regions created. The Company has been awarded with the project for providing Computer and connected accessories, Education software's, Online M.I.S., teaching faculty and provision of IT Education Services to 850 Government Secondary and Higher Secondary schools for a period of five years. The Total Value of the Project is Rs.152 Cr. The ICT Solutions provided by the Company under this project will be on BOOT (Build Own Operate Transfer) model and will be transferred to the respective school(s) at the end of the tenure of Contract at an agreed price of Re. 1.
  (ii) Interactive multimedia learning and education system: The company has a well developed library of syllabus based interactive multimedia learning content for CBSE & Maharashtra State Board. The company has initiated the process of enhancing the features of the existing content and also develop the syllabus based interactive multimedia content for other state and central boards to expand the footprints in the segment of Multimedia Content for learning across the country.
  (iii) Development of Teaching Solutions and Learning Aids for Early Year Schooling: The company intends to set up development centre to create learning solutions for the young learners about the space, environment & relationships around them. The program will aid children to explore & nurture relationships they share within the spectrum of this space/ environment, empowering them to take ownership of the environment and relationships around them while contributing positively towards it. This unique solution together with the learning aids and collaterals developed by the company intends to provide unique teaching methodology and aids for Pre Schools. The company intends to have strategic tie ups with leading providers of collaterals like storybooks, music CDs, Story CDs, games and manipulative games, theme kits, toys, interactive games etc., to augment the solutions developed by the company.
  (iv) Supply of ICT solution to government and private schools: The company sees numerous opportunities under the ever increasing scope of Information and Communication Technology (ICT) of Government of India. The ICT is being presently used from School Education to University Education. The government is increasingly focusing at the Public Private Partnership (PPP) model to set up more number of Centers of Excellence and Skill Based Vocational Training Centers which will enhance the employability potential of students. The government of India, with the aim of improving Computer Literacy in Public Schools is increasingly opting for Public Private Partnerships to source IT Infrastructure and training under Sarva Shiksha Abhiyaan (SSA) Programme. Institutions have varying requirements and the private sector may be able to offer innovative solutions that will provide quality services and value for money.
  (v) Setting up and managing Teacher Training Institutes: In the coming years India is expected to face a huge demand for schools and teachers to educate its rapidly increasing school population. The curriculum in most of the existing Teacher Training Institutes does not equip teachers with the requisite skills to prepare students for tomorrow. The company is committed to setting up state of the art Teacher Training Institutes across the country that will attract the country's leading talent and prepare a cadre of highly skilled teachers who can ensure that each child learns in our classrooms.
  (vi) Supply of software as per customer specifications and requirements: The company is engaged in the business of providing customized software based on the specifications and requirements of its customers. The company sees more prospects and growth in this segment and therefore, is enhancing its capabilities and offer more products and services in this segment.
• The company came up with 100% Book Built FPO in Jan 11, 2010 - Jan 13, 2010 at an Issue Price: Rs.45 - Rs.50 per Equity Share to meet: (i) Capital expenditure for Turnkey Projects executed by the company under the BOOT model (ii) Capital expenditure on up-gradation of infrastructure and content development for XL@School (iii) Funding the proposed M&A activities and (iv) The Working Capital requirements This price is around 9-10 times the CMP of the shares of the company. 
• Recently there were some media reports that, the NDA govt will focus on e-governance for transparency, efficiency and accountability. President Pranab Mukherjee, who addressed the joint session of Parliament for the first time after the 16th Lok Sabha was constituted, said the government would embrace digitization of records and leverage technology. Pointing out that e-governance brings empowerment, equity and efficiency, Mukherjee said the newly-elected government will use the tool to improve service delivery and programme implementation. President Pranab Mukherjee said ICT will play a crucial role in the ways of working of the new government as it will be used to drive re-engineering of government processes to improve service delivery and program implementation. All these are positive for the companies like Birla Shloka Edutech Ltd. 

Conclusion: The Book Value of the shares of the company is Rs.50.36 and at Rs.5.08 it has a market cap of only Rs.10.47 Cr, against reserves of Rs.93.99 Cr as, of 31st March, 2014. In March, 2014 quarter it showed a turnaround. On the daily candle stick chart too, it seems a temporary bottom has been formed, as it bounced back from the oversold positions. Risk taking traders can buy at least 10, 000 shares of the company and keep holding. It is a screaming buy at the current market price.

Allied Digital Services Ltd: Future Prospects Look Good 

CMP: Rs.21.40

Introduction: Allied Digital Services Ltd provides a range of IT infrastructure services and solutions including managed services and physical and information security solutions to leading Indian and global corporations. The company has a presence in over 132 locations in India, and over 40 states in the USA, through its acquisition of Enpointe Global Services. 

Allied is an ISO 9001: 2000 certified company with a global command center certified  under ISO 27001: 2005. Allied Digital Services Ltd, is among the few companies, with a truly pan India direct  presence in 132 locations across the length and breadth of India--serving over 40, 000 pin-codes on the same day. It has the following subsidiaries:  

(i) Allied Digital Services LLC 

(ii) Digicomp Complete Solutions Limited

(iii) Allied Digital Inc (USA) 

(iv) En Pointe Technologies India Private Limited

(v) Allied Digital Singapore Pte Limited 

(vi) Allied Digital Asia Pacific Pty Limited (Australia) 

(vii) E-Cop Surveillance India Pvt. Ltd

Shareholding Pattern: The promoters holds  43.71% while the general public hold 56.29% of the shares of the company. Among the general category, the FIIs hold 2.96% of the shares of the company and corporate bodies hold 8.47% of the shares of the company. It has a very small equity capital of Rs.29.09 Crore and hence, the number of floating shares are also less. 

Please Click on the Chart to get an Expanded View

Financials: The company recorded a profit at the net level of Rs.9.2 Cr in FY14, as compared to the net loss of Rs.5.1 Cr in the corresponding quarter previous year. The Basic EPS stood at Rs.2, an increase of 281.8% over the same period previous year. The EBIDTA margins have also improved by 420 bps and the company has returned to black after a long phase. The market cap of the company is only Rs.99.84 Cr against the FY14 turnover of Rs.181.88 Cr. Moreover, the P/E of the shares of the company is only 7.73, while the industry P/E is 20.73. A decent P/E re-rating of around 15, can take the scrip to around Rs.41-42. The book value of the shares of the company is Rs.149.40, while the price to book is only 0.14. 

Triggers:

• The Company has been taking transformation initiatives coupled with key innovations to make the business future ready. Key among the initiatives under this program is skilling the entire organization in terms of technology, process and leadership to ensure that the organization is ahead of the curve when the opportunities present itself to it. 
• The company has laid great emphasis on sustaining profitability going forward. One of the key drivers identified for this is a change in customer focus where buying patterns are moving from a capex model to an opex model. Earlier the company laid more stress on selling hardware to the clients while the present focus is on selling solution and services there by benefiting the customer as well as adding to its bottomline. From a business model perspective, it continues to focus on the Infrastructure Management Services vertical where the management believes that the fastest growth is predicted to happen. 
• The IMS industry currently accounts for US$ 524 billion, nearly a quarter of the US$2.3 trillion overall IT spend and is moving towards a remote delivery model where services are increasingly delivered by vendors from low-cost locations. India being one of them, hence, the company stands to benefit. 
• As a strategy, the company has been concentrating on weeding out low margin hardware business, which has depressed the topline of the company. It is expected that the fortunes of the US business will improve as the economy in the US is improving. With the new immigration law being underway, the local US IT  services business mi see acceleration. Though the UK market is a bit cautious, the rest of Europe barring couple of countries, have started to show some improvement.
• The India business is showing a radical change from its stand on cloud services compared to last year. Now many organizations are ready to move to cloud based services. The apprehension for security in cloud is declining. Data analytics is also an area of attraction globally. Mobile enablement of applications continues to get focus globally. The IT surveillance business is going to be a big one in the current year globally. IT infrastructure transformation continues to be of prime importance. The company management hopes to be a major beneficiary from  all the transformations. 
• The company's internal processes have improved, while its US operations are very stable with improved  credit rating. Its UK operations are also getting stabilized. The company recently completed its fifth anniversary in the US. Globally, the company in its transformation journey has revamped its offering with a new branding called “ADiCube”. Moreover, its “Integrated Service Delivery Framework”, has matured into a successful product venture “ADiTaaS (Allied Digital integrated Tool-as-a-Service).
• As a Master Systems Integrator of ICT and PSS, Allied Digital provides greater depth of solution and support to its customers combined with a single point of responsibility and accountability. This has helped Allied Digital to sign several on-going sales agreements instead of one off sale agreement with Banks, Retail chains and other multi locational customers who are interested in dealing with a single MSI having Pan India presence instead of signing multiple contracts with regional / local systems Integrators. This provides cumulative growth opportunity for the Physical Safety and Security business as well as increased customer retention for Allied Digital.
• As a Master Systems Integrator Allied Digital now carries a larger portfolio of solutions that includes Video Surveillance, Access Control, Intelligent Traffic and Toll Management systems, Building Management and Energy Management systems. Adoption of ICT in PSS has further strengthened Allied Digital’s presence in the market as a total Systems Integration solution provider as compared to traditional Physical Security Systems OEMs who are now product focussed.
• Its emphasis on quality has now started showing results with excellent growth in its Remote Management business. The company not only increased business from existing customers but also added several new overseas customers who are being serviced remotely from its state-of-the-art Remote Management centers in Mumbai, Pune and California.
• During, FY15, the company aims to deepen its engagements with existing clients, draw repeat business, and emerge as the "First Choice" and the preferred partner for its marquee global customers.The Company sees its eco-system of critical partnerships and alliances with reputed global companies as an important asset and will continue to explore opportunities to further expand it. The Company’s differentiated business model with strong capabilities in its chosen verticals, programme management track-record, investments in intellectual property, and a reinforced leadership team are great advantages in the prevailing macro-environment that remains volatile.
• The management truly believes that the investments that it has made in the last few years to build world class infrastructure and expertise in the space of Network Operating Center (NOC), Security Operating Centre (SOC) and Cloud are going to put it ahead of its competitors. It has a world-class facility at Rancho (USA) to assemble, test and deploy machines in large quantities. Similarly its enhanced capacity at its Global Command Center (NOC and SOC) can take on the additional businesses, which it expects in the space of Remote Infrastructure Management Services (RIMS) and Managed Security Services (MSS). 
• It has already demonstrated our cutting-edge Mobility Solutions to one of the leading players in the industry ad it has been extremely well received and deployed. The mass adoption of cloud, virtualization, mobility etc. will place the organization in a much positive and profitable position in the near future.
• Primarily its foreign currency earnings are in US dollars. The exchange rate between the Indian rupee and US dollar has been favourable to the company in FY15. 
• Although the company has a fairly matured security services practice with large customer base, it does not contribute large share in its overall business. Currently, managed security services contribute to about 5-7% of the total business of Allied Digital. It feels that Indian security industry is at an inflection point and from here only those players who have strong security practice will survive. Hence, it sees a huge growth potential in security services space. Also, Nevada Gaming commission had issued Information Technology Service Provider License to Allied Digital. 
• Allied Digital won MSP of the Year 2013 Award – LANDesk Software USA. In May 2014, Sunil Bhatt, CTO received the award for MSP of the Year 2013 on behalf of Allied Digital in Las Vegas, USA---this is the third award in the row.

Conclusion: The company earlier bagged a massive order of Rs.224 Cr in Pune City. The company's overseas branches have started to perform. Looking both chartically and fundamentally, the scrip looks attractive for short term perspective. The investors should accumulate the stock of the company on all declines, for a target of Rs.41-42 in the coming days.

Veer Energy and Infrastructure Ltd: A Steady Upmove Expected

CMP: Rs.5.28

Introduction: Veer Energy  and Infrastructure Ltd (VEIL) develops, implements, finances and operates large scale projects in the renewable energy sector, especially in wind energy. Currently, Veer Energy wind farms in operation and construction represent a substantial reduction in carbon dioxide emissions annually. The company is currently active in western region of India with approximately 75 MW successfully commissioned. Significant future growth is expected in both core and new markets, supported by a large development pipeline and Veer Energy’s network of joint development ventures with world class local developers & contractors. Veer Energy’s development of wind energy is consistent with what is prescribed by the Kyoto Protocol. Once in operation, wind farms are a virtually emission free energy source, providing clean and sustainable energy. Veer Energy works to be actively involved in all key phases of wind farm development, finance, construction, and operation.
Basically, the company develops infrastructure for the wind farms and is not into manufacturing of wind turbines. The company identifies a place based on wind analysis. It then develops a complete infrastructure for these wind farms at that location, which are then sold to investors as well as to various wind turbine manufacturers. Investors have an option of selecting the wind turbines they want as the company gives them the required infrastructure.

Shareholding Pattern: The promoters hold 35.51% of the shares of the company,  while the general public holds 64.49% of the shares of the company. Among the general public Shriram Credit Company Ltd (5.13%), Shriram Insight Share Brokers Ltd (1.52%), Sparrow Asia Diversified Opportunity (7.03%) and Anand Rathi Global Finance Ltd (1.82%) holds substantial stakes in the company. 

Financials: For March 2014, the operating income witnessed a growth of 18.3% on a year on year (YoY) basis during the quarter. The expenses were up at a higher rate of 20.2% YoY during the same period. 

• The rise in expenses led to a fall in the operating profit by 17.6% YoY during the quarter. The operating margins declined to 3.5% as compared to 5% in the March 2013 quarter. 
• Depreciation charge increased by 19% YoY, while interest charges declined by 86% YoY for the March 2014 quarter. 
• At the bottom-line level, the company’s net profit declined by 4% YoY to Rs 4.8 m led by higher expenditure in the quarter under review. 
• The company’s board recommended dividend of Re. 0.06 per share for the financial year ending March 2014.
• At the current price of Rs.5.28, the company’s stock trades at 13.89 times its trailing twelve month earnings. The Industry P/E is 16.44.

Triggers: 
(i)  The main Business of the Company is to create infrastructure development facilities for the installation of Wind Turbine Generator. As one of the pioneer in this field, the Company is very well positioned to take advantage of ever increasing demand for the renewable energy resources. According to Hindustan Times, 9 June, 2014:

• The Narendra Modi-led government has started work on a plan to ensure half of all homes in major cities receive some power from solar or wind energy sources by 2019.
• The plan includes fresh incentives to encourage companies and individuals to invest in renewable energy sources and setting up giant solar plants in states such as Rajasthan and Gujarat.
• The decision to give a big push to renewable power sources was behind the Prime Minister’s decision to bring the ministries of conventional and renewable power under Piyush Goyal. Sources told HT that Modi asked Goyal to go big on renewable energy.
• This is keeping in line with the progress made in generating green energy by Gujarat during Modi’s tenure as chief minister. Gujarat implemented the Jyotigram Yojana that provided 24/7 power to each household. The scheme depended on solar, wind, biomass and waste as energy sources to generate about 25,000 MW annually.
• Goyal has promised to replicate this Yojana and was in the state to study Gandhinagar’s success story.  After meeting the PM, lieutenant governor of Delhi Najeeb Jung also sent a team to study the Gujarat model this week that resulted in fresh power proposals for the Capital.

In view of this development, the management is hopeful to achieve better results in the coming years. It is also exploring the possibilities of starting operations in the state of Maharashtra, Gujarat and Rajasthan, in full steam. 

(ii) During FY13, the company has commissioned 28.90 MW in Rajasthan. Total MW commissioned till date is 59.30 MW out of 79.5MW of total order in Rajasthan by March 2013. The balance was commissioned in the year 2013-14.

(iii) Moreover, it has some relation with Southern Wind farm Ltd, which is an ADA Group Company floated by Anil Ambani. It is also a vertically integrated company and at a market cap of only Rs.37.56 Cr, it could be a good takeover candidate

(iv) India is one of the developing country, and the scope for improvement in India’s energy system is vast. Renewable energy currently makes up a negligible share (0.36%) of total primary commercial energy supply while 96.9% of such supplies come from fossil fuels and 2.76% from hydro and nuclear resources. The non-commercial combustible biomass and wastes which contributes to the extent of 24.5% of the total energy supplies are excluded in this balance. Wind Energy is where India competes globally in manufacturing and deployment in the present scenario. With these the market grew to be third largest in the world riding on the success of strong policy and regulatory framework. In 2011, India surpassed 3,000 MW in annual installations. This marked a 138% growth over a two year horizon; a remarkable achievement in times of global economic depression.

(v) Wind Energy is becoming increasingly popular because:

• It is one of the most environment friendly, clean and safe energy resources. 
• It has the lowest gestation period as compared to conventional energy. 
• Equipment erection and commissioning involve only a few months. 
• There is no fuel consumption, hence low operating costs. Maintenance costs are low. 
• The capital cost is comparable with conventional power plants. For a wind farm, the capital cost ranges between 4.5 crores to 5.5 crores, depending on the site and the wind electric generator (WEG) selected for installation.

(v) With the Crude Oil prices shooting above $100 per barrel, the prospects of wind energy looks bright. Also, it has an equity capital of only Rs.7.11 crore and from that around 70% is blocked for trade (or there are very low floating stocks in the market). This gives premium to the stock price. 

(vi) The book value of the shares of the company is Rs.6.16 (CMP: Rs.5.28) while the book values some of its peer group companies like Suzlon Energy Ltd is Rs.9.72 (CMP: Rs.32.5), KSK Energy Ventures Ltd is Rs.64.25 (CMP: Rs.100) and NTPC is Rs.97.49 (CMP: Rs.153.45). This gives the share much room for appreciation. 

(vii) The Company has floated a 100% subsidiary "Veer Enterprise-GMBH" in Germany to explore the possibility of expansion in the field of non conventional energy with the help of collaboration with any company in this field with a wide experience and capital resources. The management hopes to turn this company into black soon. 

(viii) According to Projects Today, Veer Energy  and Infrastructure Ltd, in association with Shruti Power Projects, has been sanctioned a loan from Indian Renewable Energy Development Agency (IREDA) for its wind power project at Vinjalpur, in Jamnagar district of Gujarat. IREDA has signed a loan agreement worth Rs.52.56 crore with Veer Energy’s subsidiary, Shruti Power Projects, for setting up the 12 MW wind-based power project at Vinjalpur.

The project is being set up at a cost of Rs.75.60 crore. The company is expecting to commission the project by 31 August, 2014.

Conclusion: Veer Energy and Infrastructure Ltd, the Mumbai-based wind-power developer, bought solar panels for its first project in India from U.S.-based New Millennium Solar Equipment Corp, in 2012. At that time Veer Energy planned to install 400 thin-film panels of 58.5 watts each for a rooftop project in the Sanand district of the western Indian state of Gujarat. 
However, according to my close sources, now it has decided to concentrate more on the development of Wind Power. 
Besides, the share has not taken part in  a major way in the whirlwind rally post NDA government assuming office in Delhi. Also, the scrip has corrected sharply from its recent high of Rs.7.64 made on 12 June, 2014. The stock could be accumulated near the supports of Rs.5.10-5.20 for targets of Rs.7-8.4 in the short term. It is a Re.1, Face Value scrip. 

Marg Ltd  (Rs.19.75): Will Slowly Move towards Rs.89-90

Book Value: Rs.180.91

Market Cap: Rs.75.28 Crore only

MARG Limited (formerly MARG Constructions Ltd) is one of the leading Infrastructure & Real estate Company in south India. MARG was awarded with the prestigious "Excellence in Infrastructure" award at the Construction Industry Awards 2012, Chennai. MARG is focused on achieving holistic regional development, unlocking economic prosperity and creating inclusive & sustainable growth models. 

The Company, by itself and through its subsidiaries, is undertaking the development and operation of infrastructure projects in the areas of marine infrastructure, urban and industrial infrastructure, thereby pioneering the development of economic growth centers. It owns and operates a port at Karaikal, Puducherry with handling capacity of 28 MTPA and is also developing a 612 acre special economic zone (SEZ), as a part of MARG Swarnabhoomi - 'The Land of New Thinking' on the scenic East Coast Road between Chennai and Puducherry.  MARG’s EPC division provides integrated turnkey solutions by offering a plethora of services including integrated design, engineering, material procurement, field services and construction & project management services for infrastructure sector and real estate projects for its various subsidiaries as well as external customers. The Company also offers quality residential spaces, predominantly catering to the mid segment and affordable segment categories and commercial spaces as developing a multi-use commercial building, in the heart of Chennai's IT corridor, comprising retail space (mall & multiplex), office space, hotel and service apartments. Besides this, the Company is developing and executing various commercial & residential projects in other states, which have gained momentum in recent years.

Positives  

Though concerns continue to exist over the current account deficit scenario, prevailing supply side constraints, inadequate infrastructure investments and long term policy directions, but with INR appreciating against the USD and the newly elected NDA Government likely to give greater impetus to infrastructure development and planning (to double investments in the infrastructure sector, over the period of next five years), is expected to give a major boost to the construction and infrastructure activities. The NDA Government is focused to make major amendments to land acquisition laws, which is hoped to accelerate the process of Land acquisitions.

EPC VERTICAL

The FY12-13 was a challenging phase and emerged as a year of consolidation for project execution and other business aspects. It has an unexecuted EPC order book is at Rs.3,800 Crores as of March 2013 constituted by 19% for Group assets like Port, Mall and others and 81% for external customers including 45% for civil work for group’s projects for residential and external customers and 36% for Government, PSU and other Corporate EPC customers. It is participating in fresh tenders in FY15. 

MARG EPC division has signed agreement with Momentum Group, an Irish-registered Company established in 1983 with its headquarters in Dubai, which qualifies MARG to foray into off and on-shore oil & gas sector. The Momentum Group actively markets well drilling and program engineering services providing total drilling operations management for jack-up, land drilling and pipeline projects all over the world. Some of their most recent projects and services being in the Caspian region (Azerbaijan, Russia, Turkmenistan), Far East (Malaysia), Middle East (UAE, Iraq, Kuwait), Turkey and North Africa (Egypt).

MARG is in the process of building a healthy pipeline of additional EPC contracts - bidding for mega contracts in the specialized areas like marine, industrial projects, urban infrastructure and solar & alternate energy sector.

Apart from this, recent approvals obtained for residential projects, infusion of funds into MARG Junction; Launch of Service Apartments will increase the EPC division’s turnover from MARG in the forthcoming years.

The EPC division which was catering to the need of in-house and external projects has successfully handed over Pushpadrum Residential Project and is in the process of handing over its other residential project MARG Vishwashakthi at Tirupathi. Twin Disk project is completed and full-fledged development of MARG Institute of Technology Science is being done in Swarnabhoomi. 

On completion of Berths & allied Infrastructure, Edible Oil & Molasses Tank farms, Marine Loading & Unloading arms, Truck loading system execution is now focused and is nearing completion on construction of break waters, Stacker Cum Reclaimer, Wagon Loading System, Ship Unloaders and Conveying System in Karaikal Port. 

The external project team has completed wagon fabrication work for Braithwaite Company Limited, Jhansi I & II for Northern Central Railways. Multi Storied Residential project for BHEL is completed & Residential project for HUDA in Rewari, Haryana, as well as 200 bedded Cardiothoracic Hospital for Military Engineering Services is nearing completion in Northern Region.

MARG EPC has been appreciated for safety practices, a notable achievement as the present accident frequency across all project sites is 0.25, as per Indian Standard: 3786-1983.

Some of the prestigious projects include construction of head quarters for Bureau of Police Research & Development (BPR&D), National Crime Records Bureau (NCRB) and allied works at Mahipalpur, New Delhi from NBCC. Other projects include medium format assignments like construction of a school and miscellaneous city beautification work at Mahe, awarded by Government of Puducherry and Construction of Facilities for Research in Experimental Nuclear Astrophysics (FRENA) laboratories for Dept. of Atomic Energy, at Kolkata. 

Port

Karaikal Port – a deep draft, all weather port is owned and operated by Karaikal Port Private Limited - a subsidiary of MARG Limited. The Port is now in the fifth successful year of operations. The Port has handled 6.61 MMT of cargo in Financial Year 2013 as against 6.01 MMT in Financial Year 2012, which is a straight 9.98% increase. Revenue for the Financial Year 2013 went up by 25.14%, from Rs.221.35 crores to Rs.277 Crores. EBIDTA for the Financial Year Rs.2013 is Rs.133 Crores and Rs.100 crores for Financial Year 2012, recording a rise of 33%. 

During FY13, it handled 1,231 rakes as against 1,087 rakes handled in FY12. A total of 3,090 rakes have been handled since the commencement of railway operations. The company has entered into contracts with many major cement companies like Chettinad Cement, Dalmia Cement, Madras Cements and The India Cements for handling their coal imports. 

Karaikal Port added new cargos to the portfolio like Fire clay, Lime Stone, Iron Ore, Wheat and Maize and efforts will continue to bring in additional cargos to the port. With the iron ore mining ban in Karnataka, JSW has started importing domestic iron ore in the forms of fines and lumps for its Mecheri Plant through Karaikal Port. The cargo is expected to continue through the next year as well. 

With the UPA government’s decision to export the surplus  wheat, it has contributed a total volume of 172,000 MT in FY13 and significant volumes is likely to flow in this year (FY15) as well. Maize is another significant addition to the cargo portfolio in the recent times and is expected to add traffic to the port in FY15 too. Terminalisation opportunities are being explored for Coal Terminal, Liquid cum General Cargo Terminal, LNG Terminal and Container Terminal. Port has created lot of interest among national and international bulk cargo traders.

SEZ

MARG is developing two special economic zones in the field of Engineering Services and Multi Services spread over 612 acres as part of ‘MARG Swarnabhoomi – The Land of New Thinking’.  This Project is developed by New Chennai Township Private Limited, a wholly owned subsidiary.  MARG Swarnabhoomi is located on the scenic East Coast Road, midway between Chennai and Puducherry.

Engineering Services SEZ is promoted at MARG Swarnabhoomi with the objective of attracting clients in various segments like Auto Components, Fasteners, Valves, Pumps, Power components, Electronic components, Electronic meters, Renewable Energy, etc. M/s Grundfos Pumps, M/s Virgo Engineers, M/s P.H. Hydraulics and Pneumatics, M/s Eswari Electricals, M/s Kwik patch Ltd and M/s Twin Disc (Far East) Pte Ltd are operating in Engineering services SEZ. M/s Tecpro Energy Systems has registered lease deed and is in advanced stages of setting up their premises in MARG Swarnabhoomi. 

Total exports from the engineering SEZ in FY-12-13 was Rs.52.69 Crores The Multi Services SEZ is promoted in MARG Swarnabhoomi to attract clients in various segments like IT/ITES, Knowledge Hub, BPO, KPO, Animation, Medical Tourism, R&D, Publishing etc. 

M/s Biophenolika Polymers Private Limited, an Indian unit of Italian firm Cimteclab, a research and development company with international manufacturing facilities specialized in the field of high performance polymers, biopolymers, protective coatings, and flame retardants have signed an agreement to set up their premises at the Multi Services SEZ.  Swarnabhoomi Academy of Music (SAM) is the first professional college of music in India offering a range of programs in contemporary music that includes rock, jazz, classical and world music. The students from 6 countries have been in enrolled in SAM. SAM has signed the Initial twining partner agreement with McNally Smith an international music school based out of Minnesota. SAM is also awaiting the international experience agreement from McNally. The construction of the Science & Technology Park with world class amenities is in full swing and 80% of the project is completed.

On the education front, ‘Swarnabhoomi Academic Institutions’ (SAI) is functioning in MARG Swarnabhoomi. The Knowledge based ecosystem is a unique differentiator for MARG Swarnabhoomi wherein it houses institutions catering to basic education, higher education and vocational skills training institutes. 

MARG Navjyothi Vidyalaya School is operational in Swarnabhoomi with a count of 400 students. The school is affiliated with CBSE and fully equipped with Audio/Science and Math lab and offers courses up to 10th Std.  MARG Institute of Design and Architecture Studies (MIDAS) operating in Swarnabhoomi offers two-five year undergraduate programs - Bachelor of Architecture and Bachelor of Architecture Interior Design and is affiliated to Anna University. 80 students have enrolled in the course offered by MIDAS in 2012-13. MOU with Central Institute of Technology, Australia and ITEES, Singapore is signed for multidisciplinary vocational and and hospitality programs respectively. 

As part of 300 acres Educity- new institutions and programs will be introduced by 2014-15, which include a Management College, an AICTE approved engineering College and an Arts and Science degree college.

Real Estate Development

MARG ProperTies – residential arm of MARG, since its inception from October 2009 has emerged as one of the leading real estate developers in Chennai. MARG’s residential development is moving forward as lot of infrastructure growth is happening in Tamilnadu and the company has a strong presence in Chennai where there is a huge demand for residential space.

To cater to the housing demand and leverage the economic growth drivers, the company has a strong project pipeline and land bank near the suburban micro-markets. The company’s project portfolio is primarily skewed towards mid and low income segment which forms the bulk of the residential demand.

As the South & West Chennai is getting developed rapidly, MARG ProperTies projects which are located in these areas are benefitted more. Second phase of Nemmeli Desalination Plant and the proposed Country’s longest elevated corridor (45km) in OMR augurs well for South Chennai residents. The upcoming industrial parks and the proposal of doubling the Sriperumbudur – Guduvanchery rail line adds spur to the West Chennai residents. Planned satellite cities, improved connectivity and social infrastructure will further drive growth.

MARG ProperTies has further created an avenue to get closer to its customers through ProperTies Shoppe at Kottivakkam, OMR and Ashok Nagar. It is the first of its kind in the real estate industry to create more touch points and offer the company’s wide range of products to customers through experience and consultative selling. Interactive touch screen kiosk is another unique innovation from MARG ProperTies to touch base with its customers.

In FY2012-13 MARG ProperTies registered residential sales of 0.39 million sq ft (369 units) at a sale value of Rs.132 Crores, total sales (ITD) till March 2013 was 1966 units (2.12 million sq ft) at sales value of Rs.552 Crores.

With the revival of the Indian economy, the real estate sector is booming. Families are shrinking and relocating to cities, creating a demand for urban residential space. As per CMDA estimate, the demand for housing in Chennai is estimated to be at 4.0 lakhs in 2011 and it is expected to reach 6.6 lakhs by 2016.  To capitalize the residential demand and with a clear understanding of the real estate business backed by scale, people, process and technology coupled with innovation, MARG ProperTies is poised to garner a large market share across a wide product range. 

Real Estate – Retail & Commercial, MARG Junction, a 1.8 million sqft. integrated mixed use commercial project comprising of a mall (6.76 lacs sqft), Serviced Apartments (2 towers - 3.2 lacs sqft with 295 keys) and Club (50,000 sq.ft) is being developed by the company’s subsidiary, Riverside Infrastructure (India) Private Limited (RIPL).

As on 31st March 2013 around 267,705 sq.ft of mall space has been leased and received EOI’s from brands for around 119,803 sqft. Over 57%(both signed & EOI’s) of the Gross Leasable Area (GLA) is now finalized, Apart from the anchors signed in FY10-11, EOI’s were obtained from key mini-anchor brands like Blu-O, Time zone, Reliance Trends & Reliance Digital during the year, Top Vanilla brands like Levis, Titan, Nike, Puma, Lee, Wrangler were signed. The average rental achieved of Signed & EOI agreements as on 31st March 2013 is Rs.76/- psft p.m.The hotel component is now being converted to Serviced Apartments with 295 keys along with 50,000 sq.ft business center and 65,000 sq.ft of banquet facility.

Highlights

• MARG Ltd's FY13, Revenue Stands at Rs.762 Crore, including EPC revenue of Rs.748 Crores, with Current order book at around Rs.3,800 Crores-plus. Its 9M-Income comes at Rs.233.47 Crore. It is expected to end FY14, with a total revenue of Rs.300-310 crores. 
• Karaikal Port Private Limited (KPPL), a subsidiary of the Company has successfully handled 6.61 MMT of  multi-cargo in FY12-13 and reported a top line of Rs.277 Crores and EBITDA Rs.133 Crores. The Port has handled 19MMT of Cargo since its commencement.
• MARG Swarnabhoomi has sold 402 apartments (0.4 million sqft) with sale value of Rs.74 Crores during FY12-13, taking cumulative sale booking to 2042 apartments (2.02 million sqft) with sale value of Rs.341 Crores. In FY14, the company is expected to generate around Rs.85-90 crores from the sale of apartments. 
• MARG ProperTies Limited, the real estate arm of MARG has sold 369 units (0.4 million sq ft) in FY12-13, with sale value of Rs.132 Crores, taking cumulative sale booking to 1966 apartments (2.12 million sqft) with sale value of Rs.552 Crores. In FY14, also, the numbers will be along the expected lines. 
• MARG bagged a double at CIDC Vishwakarma Awards 2013: G R K Reddy, CMD – MARG Group was chosen as ‘Industry Doyen’ & MARG Ltd, as the ‘Best Professionally Managed Company’.
• MARG Karaikal Port was Chosen as the ‘Innovative Port of the Year’ at South East CEO Conclave & Awards, 2012.  
• Two awards at 'Construction Week Awards 2012' at Mumbai: (i) Excellence in CSR (Winner) (ii) Infrastructure Company of the year (Runner up).
• Marg Ltd has total of 58 Subsidiaries as on 31st March 2013, out of which 5 Non Wholly-Owned Companies and 53 Wholly-Owned Companies, including 25 Step-down Subsidiaries.

• JOINT VENTURE: The Company has following major joint venture companies:
• (i) M/s. Future Parking Private Limited (in which MARG holds 51% of paid-up share capital), is a joint venture with M/s. Apollo Hospitals Enterprise Limited for the development of Multi Level Car Parking (MLCP) at Wallace Garden, Chennai on BOT basis, with a provision of right for development of commercial complex along with the MLCP facility for the entire BOT period. (ii) Signa Infrastructure India Limited (in which MARG holds 74% of paid –up share capital), is a joint venture with M/s. Housing and Urban Development Corporation Limited (HUDCO) for Techno-Financial collaboration. (iii) M/s. Rajakamangalam Thurai Fishing Harbour Private Limited (in which MARG holds 39% of paid-up share capital), is into joint venture with M/s. Rajakamangalam Thurai Development Trust to develop a fishing Harbour at Rajakamangalam Thurai in Kanyakumari District of Tamil Nadu.

Outlook The infrastructure industry is expecting a MAJOR IMPROVEMENT, this year (FY15), after suffering a repeated setbacks, during the last three fiscals (FY12, FY13 and FY14). 

The outgoing UPA Government of India had taken measures to stabilize the economy and revive the sentiments which are expected to have positive effects for the economy in medium to long term. The slow growth in the infrastructure sector was primarily driven by a range of sector-specific issues, such as land acquisition, environmental clearances, high interest rate regime and macro-economic factors. Marg Ltd is prepared to capture the growth in the high end, focused to meet the challenges and is committed to deliver the best in adding value to the company. Marg Ltd is known for ‘Innovative Thinking’, enjoys strong brand image due to the past performance which will act as a catalyst in ensuring a sustainable growth in future. In addition, the new affordable housing scheme, steady growth in port activities, industrial urban infrastructure services and increased opportunities for EPC shall drive growth prospects to the Company’s business.

The infrastructure sector in India is still in its nascent stage and a lot of development is required in logistics, ports, railways, road connectivity, communications and power. This opens up newer opportunities for the companies like Marg Ltd.  Caution & Conclusion

While the assets created by MARG are poised for growth and value creation in the long run, due to the present economic situation and allied reasons, there is a temporary cash-flow mismatch. This has put some pressure on the current liquidity situation in MARG and its ability to service debts. Managing this temporary cash-flow mismatch will go a long way in ensuring that the value creation envisaged by all the projects in the mid and longer term are intact.

As part of the initiatives to achieve this, the Company has discussed with all the bankers and bilaterally renegotiated most of the loans with principal / interest moratorium and extended repayment period, matching the cash flow generation capabilities of the Company. Further, Management has also tightened up more the cost monitoring initiatives by ensuring that optimum levels of resources are deployed, leveraging maximum efficiency. These measures have improved the cash flow position and has also allowed the Management to concentrate on the business development and execution. Marg Ltd (Rs.19.95) is a huge company and slowly its share price would move towards Rs.89-90 mark or may be even higher. Hence, buy the shares of the company whenever it comes out of the circuits and keep holding. Moreover, if SEBI order on OPEN OFFER is enforced in future by the honourable Supreme Court of India, then it could move towards Rs.300 plus mark in the coming days. It is Mega-Bagger in the making, therefore, it is a must for every portfolio. 

Plethico Pharmaceuticals Ltd: Highlights

CMP: Rs.39.05 Book Value: Rs.160.60 & Market Cap: Rs.133.03 crore (Only)

Incorporated in 1963 as a small partnership firm, the company has now transformed into a fully integrated pharmaceutical and nutraceutical company with strong research and development capabilities coupled with a robust manufacturing platform. 

Today the Company manufactures and markets variety of pharmaceutical formulations, nutraceuticals, herbals, lozenges, candies, food supplements, dietary supplements and many other consumer and healthcare products in India and internationally to several key markets across the globe. Company's manufacturing facilities are complying with world class specifications backed by an in-house R&D Center. Plethico possesses core competence in finished formulations and herbal preparations since last four decades. The existing activities are spread globally with product portfolio of about 500 formulations in more than 20 therapeutic segments. The company has significant presence worldwide with strategic tie-ups and alliances and a very strong global marketing and distribution network in CIS, African continents and third front including Latin American Countries, Middle East, South East Asia and GCC. With significant presence across the globe, Plethico is committed to become an innovative and integrated partner to the global pharmaceutical industry by creating a profitable enterprises with due respect to the stockholders' interests, corporate governance and social responsibilities.

About Natrol, USA

Natrol is synergistically operating in the Herbal and Nutraceutical sphere, predominantly present in USA. It has a portfolio of healthcare and wellness brands representing quality nutritional supplements, functional herbal teas and sports nutritional products. Established in 1980, Natrol's portfolio of brands includes Natrol®, MRI®, BioSil™, Laci Le Beau®, Promensil®, Trinovin®, Nu Hair® and Shen Min®, which are household names in USA. It distributes products nationally through more than 54,000 retail outlets as well as internationally in over 40 other countries through distribution partners and subsidiaries in UK and Hong Kong. The company pledges to deliver nutritional products with uncompromised service, quality, and innovation through the best that science, nature, and technology can offer as consumer needs are central to Natrol's focus.

Indian Operations

For more than 48 years, Plethico has been at the forefront of providing top-notch healthcare products for curing critical and chronic diseases worldwide. With its apt chemistry skills and low cost advantage both in research and manufacturing coupled with skilled manpower, Plethico has emerged as an excellent healthcare institution committed to deliver high quality sustainable healthcare products. Social transformation, lifestyle changes, higher disposable incomes, health consciousness and regulatory changes have boosted the consumer healthcare segments significantly in India. Plethico has forayed in these market segments and identified consumer healthcare as a major growth area. The Consumer Product Division today has an established range of products in sports nutrition, confectionary, lozenges, pharma OTC and herbal supplements marketed across the country with a vibrant supply-chain network. Plethico is swiftly moving towards basic research driven undertaking with a vast portfolio of quality products and healthcare services. 

Global Operations

At Plethico believes that going forward a successful global company will be the one that enters into business-enhancing alliances and acquisitions with International companies that have established competencies. Recognizing this philosophy, the company had made initial beginnings of entering the International market through acquisitions, joint ventures and strategic alliances that has led to quicker growth, better capital allocation and plugging of business gaps. In 2003-04, the company decided to stretch its wings into new geographies and acquired controlling stake in CIS based Rezlov Group of Companies. In early 2008, the company acquired US$100million US based leading nutraceutical company Natrol Inc. having a portfolio of premium health and wellness brands with predominant presence in the US, UK and Hong Kong. Within the course of five years, the company has concluded major acquisitions across the globe that enabled the company better positioning in the global markets. Plethico has evolved from an Indian pharmaceutical company to a global organization with an international footprint in terms of outlook, focus, presence, customers and employment. The acquisitions gave the company a strong foothold not only in CIS, Africa, South East Asia, Latin America and GCC but also in other regulated markets like US, Europe, Australia, New Zealand and Hong Kong. 

Today, Plethico has operations in 25 countries, exports to over 40 countries and presence in almost 20 therapeutic segments with more than 500 product approvals. The extensive distribution and marketing network successfully established the company as a dominant player in many regions across the globe. Internationally, the company is now on an exponential growth path, continuously expanding the target markets to add new countries to its operational business map.

Manufacturing

The company has two ultra-modern, fully integrated, state of the art, WHO-GMP certified units located in the lush green, pollution free surroundings of Indore, in the state of Madhya Pradesh, in Central India. Both the plants conform to the regulatory requirements of USFDA, UKMHRA & the CEU guidelines. The manufacturing unit at Kandla also complies with the WHO-GMP specifications. In order to expand its manufacturing capacities, the Company plans to setup an ultra-modern manufacturing unit at UAE. All the plants are well equipped with the most modern and validated manufacturing and analytical equipment and detailed SOPs are in place, with respect to Quality management, Personnel, Premises, Equipment, Documentation, Production, Complaints and Self Inspection / Audits. All the plants are eco-friendly in design and operations, in conformity with Indian and International standards for effluent treatment.

Product Portfolio

Sustained growth is the quest of every enterprise, more so in pharmaceuticals, where newer product registrations and effective marketing of products, adds buoyancy to the product stability. In order to widen the product spread, Plethico has successfully diversified its product profile over pharmaceutical formulations, OTC drugs, nutraceuticals, herbals and sports supplements. A coordinated effort between market research, product development and product launch teams, ensures a continuous flow of new products in our pipeline thereby feeding the respective market segments to ensure sustained growth in volumes and margins. 

With over 400 different formulation in more than 20 therapeutic segments, Plathico has a strong presence in Cardiac, Anti--Malarial, Anti-tubercular, Anti-infectives, Pain, Gastro, Cough  & Cold and other nutraceutical segments. Identification of new therapeutic categories, products, innovation in Novel Drug Delivery Systems & Patient compliance is the basis of its product selection. A range of clinically proven herbal products, developed from scientifically validated herbal extracts offers a safe and natural alternative in treating lifestyle related disorders like diabetes, high cholesterol, sleep disorders, digestive disorders and pain management. 

Research and Development

Its R&D is a manifestation of its belief in quality and innovation. Commitment of channelizing substantial revenues into R&D has always made sound business sense of Plethico. "As we sow, so shall we reap", is the research and development philosophy it follows. Over 400 product approvals and an innovation team of 40 research personnel in two separate R&D centers, is testimony to its focus on R&D. The company's team consists of committed scientists with expertise in botany, pharmacognosy, analytics and pharmacology as well as consultants having long associations with the herbal drug industry. Procuring authentic material, pharmacological evaluation in laboratory models, formulation development and modern clinical trials are integral processes of the herbal product development cycles. It is presently strengthening development in the areas of effervescent products, finger printed herbal extracts, range of medicated/center filled lozenges, sustained release formulations, fast melt tablets and use of pelletization technology.

Key Developments during 2009-12

• Company's Kalaria - Indore Unit got approval from the Medicine andHealthcare Products Regulatory Agency of UK (UKMHRA).
• Company's Kandla SEZ Unit have been awarded highest export  award consecutively for the fifth year.
• Formation of a new step-down subsidiary in UAE - Natrol Global FZE, LLC to strengthen marketing of nutraceutical and herbal brands in UAE, CIS, south East Asia and African Countries.
• Successful business integration with Tricon LLC, UAE in which company acquired 20% equity stake during 2008.
• Successful commencement of business operation by UAE subsidiary Plethico International Limited through outsourcing at large scale.
• Company's Kalaria-Indore Unit got approval from TGA Australia.

Financials

On a consolidated basis, in Q3FY14, the total income of the company came out to be Rs.364.04 Cr as against Rs.471.63 Cr in the same period previous year. The net profit of the company for Q3FY14 came out to be Rs.44.07 Cr as against a net loss of Rs.75.23 Cr in Q3FY13. The EPS of the company came out to be Rs.12.94 in Q3FY14 as against Rs.(-) 22.09 in the same period previous year. 

The consolidated financial results comprise unaudited results of its wholly owned subsidiary Plethico International Ltd and Plethico Global Holdings B.V., Netherlands having different step-down subsidiaries particularly Plethico US Holding KFT Hungary, Natrol Inc., USA. and Natrol Global UAE., The financial results of subsidiary companies have been regrouped and / or rearranged wherever necessary due to Indian GAPP audit conducted.

Conclusion  Buy the scrip of Plethico Pharmaceuticals Ltd at the CMP of Rs.39 .05, for a target of Rs.47-48 in the short term. Now, HUGE MONEY is likely to chase good companies, whose shares fell due to some extraneous factors. The 52-week high and low of the scrip are Rs.236 and Rs.31.25.