Balkrishna Industries


(kamiKazi) #81

Thanks Donald for the warm encouraging welcome! I hope to contribute in whatever little way I can and learn a lot from all you gurus here.

2). In my excitement, I didn’t realize I had not read it :slight_smile: Done now. Good reminder to chk Investor section of official website as the first thing. One surprise from that prez’n. They’ve mentioned paper/textile processing (slide 5). Never heard abt this division in any discussion here or elsewhere. Was it some old business, now defunct?

3). By debtor days here you mean dues owed by BKT to their suppliers or other short-term lenders, right? Because they’re already getting 100% advance from their customers (eg mines to whom they sell directly) and distributors. Or is there a differentiation between these two types of sales?

Ayush mentioned that he thinks they are only getting a token payment as adv. during order booking - which is generally the norm.

So if your version (and what I thought initially), is true, then isn’t it fantastic thatthis business gets 100% advance payment and pays its own suppliers with avg 50-60 days of credit. ie: they have zero/-ve working capital at risk? Somewhat like restaurant biz or giant FMCGs like HUL/nestle?

Pls let me know if my understanding of this situation is correct. I am trying to clear my basics here, so excuse my stupid Qn.

4). Yep. Maybe the team mentioned capacity doubling offhand - or maybe they are including tubes/flaps products too? Can we mark this point for future clarification from mgmt?

-kamiKazi


(Ayush Mittal) #82

Hi,

Thanks for the ground work and detailed write-up.

Paper/textile business was the historical business of BKT and has now been t/f to subsidiary. Its a stable business with abt 100 Cr turnover and decent profits.

Debtor days means the aveg time in which payment is collected from customers. Its a working capital intensive business and I don’t think they have too much of advance thing.

Capacity is being doubled and tubes/flaps etc areancillaryand small things…nothing to be concerned about, IMHO.

Thanks & Regards,

Ayush


(Abhishek Basumallick) #83

One thing that I dont undestand about this company is how theya re managing the rubber rpice fluctuations. They seem to have no/very little impact of huge fluctuations in rubber prices. Is it that they have long term contracts in place?

Similarly, they seem to be impervious to forex fluctuations when everyone else is either making gains or losses on the that front. These guys seem to have no visible effect! Not sure if it is too good to be true. Or I am missing something.

Ayush or others who follow this company closely, would love your views.


(sagar powar) #84

Hi

If BKT products are in demand what is the reason in jump of receivables from ~ 32 cr in 2010 to ~ 117 cr in 2011 ?


(kamiKazi) #85

Thx for the clarification Ayush. And good pts raised by Abhishek & Sagar.


(Ayush Mittal) #86

@Abhishek - They have been affected by raw material prices - in 2010 their OPM was 28.5% which has fallen to just 18.5% in 2011. If one takes an aveg of 7-8 years, OPM for BKT has been at 22-24%…so as of now co is facing lower margins.

As per concall details, they have a forex loss on the ECB withdrawn for expansion few months back. But the same is being capitalized as it is for expansion to come up in a year.

@Sagar - As per BS, debtors were abt 325 Cr in 2011 vs 240 Cr in 2010.

Regards,

Ayush


(sagar powar) #87

Hi Ayush

you’re absolutely right on debtor amounts.My figures are trade receivable amountfrom cashflow. sorrymissed tomention that.

Why are trade receivables increasing ? is BKT pushing the products on credit to gain market share ?

Cash generated from operations is 60 CR for 2011.last year this was 196 cr. what does this tell ?

contingent liability figure has jumped from 76 crto 949 cr for 2011?


(Ayush Mittal) #88

Hi Sagar,

The debtor amounts should be looked as a percentage of debtors. As the business will increase, absolute amount of debtors also increases. If we analyse last 5 yrs of data, BKT has kept debtor figures under check:

168.71 195.03 219.08 240.30 324.78
19% 20% 17% 17% 16%

The cash flow from operations has decreased due to seasonal stocking of natural rubber at favourable prices.

Contingent liability includes 650 Cr guarantee given for the purpose of import. Here is the extract from annual report - "Corporate Guarantee given by the Company to President of India through commissioner of Custom - 650 Cr"

Ayush


(sagar powar) #89

Thank you Ayush…i was wondering on jump in inventories from 80 cr to 200 crores. but your explanation on seasonal stocking of natural rubber makes sense.this is straightened now for me. Thank you sir !


(ROHIT ) #90

Hello people. Firstly thanks on the great information provided above

Few interesting articles if not read already

http://www.tirereview.com/article/72777/with_gpx_purchase_done_alliance_chief_touting_companys_new_strengths.aspx

http://www.tirereview.com/Article/88538/finelyfocused_bkt_attains_rapid_growth_in_just_three_years.aspx

I have some queries on the company and Industry and it would be very helpful if they can be addressed on this forum

  1. WC cycle / Recievable risk:
  • Just wanted to be clear on advances recieved from customers/distribuotrs when order is taken. Is this just a token amount or some % of sales? where are these advances reflected in Balance sheet if its a big amount?
  • What is the credit/Recievable risk to co? Is all sales on cash ? If hypothetically order is cancelled by distributor once the goods are put on transit who bears the risk ?
  • I got the impression that sales are on cash basis . sales recognised when goods put on the ship for transit and only recievable days is for the period goods are on transit ? In that case why are the Rec days high at around 60 days ?
  • Also Inventory days seem very high at close to 80-90 days ? I assume they make to order ? Even creditor days at 45 days seem a bit high ?
  1. Industry
  • What has been the historical Industry growth for OHT segment (say last 5-6 years) (Read somewhere above Industry growth is 4-5%, any source to this data ?)
  • What is the Industry and company historical sales mix between Agri and Construction/Mining segment ? Current agri mix is 65% but how has this moved historically for both co and Industry
  • Also whats the growth differentials between Agri and Non agri segment ?
  • Breakupof Industry growth into volume vs. price growth ?

3). Beyond the current capex how would the future capex of company be funded ? Would it be done through internal accruals only ?

4). Any info on industry demand supply scenario? Read somewhere that Industry is facing some capacity constraints whichhelped BKT somewhat? Any additional data on this ?

5). Balancesheet shows advances given of Rs 138 crores ? What are these advance given for ?

I would appreciate comments on the above queries. Thanks

Rohit


(Ayush Mittal) #91

Hi Rohit,

Thanks for the above links, they do provide some valuable details.

Regards,

Ayush


(Nigam) #92

Another wonderful Quarter from BKT but I am shocked at how fast the stock has moved to 240s.

Does anyone know the conf call number to dial in (scheduled for tomorrow 2:30 PM) ?

thanks

Qleap


(Mahesh Shah) #93

Hi Nigam,

Its 66295862 and 30652522

Rgds.


(kamiKazi) #94

Great results from BKT. Truly a great call from Ayush, and what a coincidence that I got opportunity to meet them around same time foll. which I invested.

Had it not been for that chance event, maybe I would’ve sat out of this one.

And even I’m surprised at the sudden jump in stk-price. Infact, I was about to put in my next round of SIP, when last week or so, stk started moving up and ever since then, I’ve been painfully watching it go out of my purchase reach :frowning:

Now wondering what would be a good time to do so?

Hope some of you fundoo guys can post your views/analysis post the conf-call and guide us.


(Nigam) #95

thanks Mahesh !

Another wonderful Quarter from BKT but I am shocked at how fast the stock has moved to 240s.

Does anyone know the conf call number to dial in (scheduled for tomorrow 2:30 PM) ?

thanks

Qleap

Hi Nigam,

Its 66295862 and 30652522

Rgds.


(Ayush Mittal) #96

Hi Guys,

Yes, the co has delivered much more than the expectations yet again. Its one Gem of a company to remain invested in.

Ayush


(Abhishek Basumallick) #97

Ayush, did you or anyone else join the conf call? Wanted to know if there are any new developments? Does anyone have the con call transcripts?


(Ayush Mittal) #98

Yes I was present in the concall. To get the transcript, perhaps you can write to their investor relation ppl.


(Vivek Gautam) #99

The latest issue of Business India covers the OTH segmnt highlighting the huge size of opportunity .

Siyaram is a decent old group with 20 year of track record which gives huge confidence in todays world of ephemeral companies like Tanla,ICSA,XL telecom etc etc


(Donald Francis) #100

http://www.cospp.com/news/2012/04/16/expert-eye-balkrishna-industries-big-expansion-on.html