he is hale n hearty, v simple life style,eats only home cooked food,does yoga.I think next 5-7 years no problem.both his daughters on board.
Varadha, Vivek - To my mind, succession and key-man risk is critical in this company. Given the charm which Mr. Chandran exudes, I am not sure any succession plan would match up to the company he has built.
Having said that, the arguments for mitigation / non-mitigation of this risk are conjectural in nature. I suppose only the promoter and his associates can throw light on this issue. For all we know, he might have trained his daughters really well (As Vivek has pointed out).
Karan, thanks for sharing and a superb write-up.
Could’ve avoided this statement.
karan- Daughters are taking an active participation in affairs of the company. If he guides them for few years they will also get trained fully
whipsaw - Sorry, I realize that too Its just that textile has remained a male-dominated industry. My apologies for being sexist.
Jainaj - I hope thats the case!
after your messaged just checked my woodland t-shirt, its PIMA cotton…written on back tag as a branding…and probably from Ambika
@Donald @ayushmit , Update- As per some sources - the addition of 30 K spindles would not take 3 years. By June 2016 the building would be ready and full production should commence from September 2016 as customers waiting for long. Also mentioned that since 2007 company made it a point to not add capacity until all the debts are cleared which speaks Volumes of the Management.
Are Egyptian cotton prices declining which will lead to further boost in net profit for Ambika?Also was surprised to note that Egypt does not owns the copyright for Egyptian Cotton.Indian cotton is mentioned to be as good as Egyptian cotton.Which one couldd it be Sankar 6??
shareholding pattern disclosure in BSE, Valuequest moat fund increases stake to 2.431% (sanjay Bakshi)
Disc: 5% of portfolio
@all - fantastic work done with ambika.
Great learning for a novice like me.
While it appears like a good mid to long term secular bet, I will avoid the company purely because of the exceptional dependence on Chandran for all aspects of their operations. Concur with @varadharajanr
Thank you again!
The article also hints that supply of egyptian cotton may decline. That is indeed a risk for Ambika. I think he is the only yarn producer in India who is that dependent on imported cotton.
Senior VPers - Is there a plan to do a Management Q&A for this particular name? Thanks
(Emphasis in the quote mine)
I think this is indeed the case. From what I’ve come to know out of new interactions in the industry:
- Ambika’s technology and production processes have been developed in-house over a period of time by Mr. Chandran.
- The management is very fussy about the production process and have taken steps to ensure that it does not get leaked
- Some of these steps include segregating workers according to processes (Even within spinning, there are various steps; as a worker, I will, not know whats going on in the next steps or previous steps). allowing very few visitors inside etc.
This seems like obsession to me on guarding the process, ala Coca-Cola. Wonder what they are doing to make it so secretive!
Great thread this. I live in Dubai, but the manufacturing units of Ambika Mills are located within a ten minute drive from my home in India. I have already started to explore a bit about the company through my contacts there. I will be in India in Sep when I will try and do a more focused research on any issues unclear at that point.
Disc: Initiated investment for tracking purposes
Has anyone gone through this document @ http://indiankanoon.org/doc/230068/
This relates to the promoter’s case against 2 ex promoters.
I am not completely sure as to what can be inferred from this.
Please find below some extracts:
P.V.Chandran (the appellant herein) had a 19% share
P.K.Ganeshwar, and M.Rathnaswamy 38% share combined
As of 2005, the company had the bank liability to the tune of approximately Rs.140 crores
In the said circumstances, the company proposed to increase the share capital.
After negotiations with Unit Trust of India Investment Advisory Services, the appellant allotted to them 8,75,000 equity shares of the face value of Rs.10 each and at a premium of Rs.175/- per share, as evidenced by the agreement dated 19.05.2005.
On 19.05.2005, the shares were allotted to the Unit Trust of India Investment Advisory Services Limited at the premium of Rs.175/- per share.
The allotment was at a discount of approximately Rs.60/- per share against the trading in stock exchange on that date.
At that time, certain differences arose between two groups of promoters, viz., the appellant group and the group comprising of P.K.Ganeshwar and M.Rathnasamy. Finally, a resolution was arrived at through the intervention of UTI Venture Funds Management Company Private Limited, the Manager for the Unit Trust of India Investment Advisory Services Ltd. As per the agreement, the UTI Venture Funds Management Company Private Limited would facilitate the sale of the whole shares held by the two dissenting promoters P.K.Ganeshwar and M.Rathanasamy comprising approximately 21,99,000 shares at an average price of Rs.250/- per share. It was accepted that the appellant would continue with the company and assume the management.
Thus, the appellant, with a view to settle the dispute, had assured the dissenting promoters, to realise the price of Rs.250/- per share, with the assurance that in the event of the realisation being less than Rs.250/- per share the appellant will compensate to the extent of shortfall. The parties agreed that the bank of Nova Scotia, having its branch office at Coimbatore would act as an Escrow agent in respect of the above transactions. Accordingly, an escrow agreement was entered into on 24.08.2005. As per the escrow agreement, the appellant would assure the sale realisation at the rate of Rs.250/- per share to the dissenting promoters and in the event of a shortfall, such shortfall would be made good by the appellant. If there was any excess realisation over and above Rs.250/-, that would be taken by the appellant. The shares were sold at a higher price and thus, the appellant received Rs.2,74,12,446/- for the assessment year 2006-07.
What isn’t clear is how the share was valued at 250 bucks when the share price was nowhere close to that number in May 2009. Can someone shed some light?
This is a privately negotiated sale and this can happen at a different price from that in the market, given the control premium that comes with it.
Thanks for the clarification.
Now the other piece.
While it is clear there was a dispute between Mr. Chandran and the other 2 promoters, it isn’t clear as to how it was resolved in the end.
I think it’s important to understand if the other 2 promoters were treated fairly. If they weren’t, then minority shareholders shouldn’t expect to be fairly treated either.
Though an interesting piece of news, it is over 10 years old and the company has had a lot of public material on how it has treated its shareholders over this period. So, you can also make your inferences from that.
Probably, they’ve treated the minority shareholders well over the last 10 years. As is a case, most of the time, it’s a case of investing with less than perfect information.
Although I am not completely convinced I think it’s a negligible point and can be ignored unless there is a way to dig deeper and find out.
Disc: Have take a small position in the company.
The link which you attached is a case of appeals in Income Tax and not case between Promoters.
Correct me if I am shooting wrong.