FiberWeb India - Bouncer (growth) or yorker (trap)?


(jayesh265) #22

Sir,

I think it will be too early to pass a judgement like this… specially only on the basis of what info you can/can’t find on the electronic media.

Honestly, I think not sufficient homework has been done on this from my side…

  1. What if the products of the company are not specifics but of high/premium quality (I have not checked them personally)

  2. As far as demand of products is concerned, we need to get the answers ourselves.

  3. Rather than going through Shilpi Cables thread on VP, I request to go through the thread of Caplin Point Lab, which is an eye opener where the Team ValuePickr met the Management, also visited their new injectibles facility and advised investor to exercise caution which, I think was in the interest of investors. However, the stock proved a multibagger (100X for some investor as per thread) in a very short time …

fiberwebindia-brochure.pdf (304.4 KB)


(phreak) #23

@jayesh265 - Companies usually talk more about their business first up in their Annual Reports. This company has nearly nothing about its actual business. There is no mention of who its Customers or Competitors are. No outlook on the sector in terms of demands and risks. I request you to take a look at Gravita which is again a smallcap company but see the detail in their report. How can you buy a business without knowing what its prospects are?

The only information you can glean from the report is that their products are well-accepted and high-quality and demand is always high and Customers keep asking for more value added products which the company is going on supplying them at higher margins and is buying and selling low quality products from China to USA via UAE at 12-15% margins. This simply doesn’t inspire confidence for me. In essence, its a trading company if its the UAE subsidiary that is contributing to its topline.

Also the promoter has held 84 lakh shares in Sept 2016 when the share price was Rs.100. This has progressively reduced every quarter and now is at 76 lakh as of June 2017. After June, there is 4 lakh shares which have been sold by the promoter which means the shareholding in September will be 72 lakh shares or less! 12 lakh shares is nearly 15% of the promoter’s holding and that a lot of shares being sold just as the business is looking up dont you think?


(Sravan) #24

for demand, supply and risks, we can refer to the research paper by Orbis, which I have shared in the first post

main customers are Wal-mart and Johnson & Jhonson

and regarding the promoter share holding,

repeating the same post above, Abhisek Agarwal, Sulochana Devi and Gayatri Pipes are not promoters, they were issued preferential shares and are not promoters. selling of the shares is done by these investors.
again why they sold? please refer above post http://forum.valuepickr.com/t/fiberweb-india-turnaround-growth-story/12458/9


(bullrun1988) #25

I think UAE subsidiary made for the customers in USA who needs low quality product but should be with brand name FIBERWEB. As MD saying that customer in USA asking specially for fiberweb product and that export product is with high quality but some customer are ready to accept with low one but strictly with brand name FIBERWEB. Thats why they doing trading from UAE. I accept that they have given less info about the value added product they going to produce.


(buywise) #26

The product exported from UAE is not under the brand name FIBREWEB. As the management has clearly outlined this in concall - that they are not using the name FIBREWEB just to maintain the reputation of the quality of the co. It is being supplied by the name of subsidery


(Prasad India) #28

Friends,
Companies’ profits not supported with Cash Flow from operations and having negative reserves give a different picture. What I learned is that there are good examples such as Shilpi, Moschip etc.
If anybody is interested in a company without checking CFO it is in your own interest because its your money.


(phreak) #29

The interest income as well doesn’t correlate well with cash and cash equivalents in the books.

Cash and cash equivalents = Rs.21,51,47,839 (Rs.21.51 Crores).
Interest income = Rs.4,39,056 (Rs.4.39 lakhs)

That translates to a interest rate of 0.20%. Looks to be another red flag.


(Sravan) #30

I think they are not putting money in fixed deposit… :slight_smile:
just kidding…
why don’t you send query to company?
I’ve sent query about value added products…


(Shivram) #31

Some extracts from the Management Discussion and Analysis of 2015-16 annual report (in italics).
In summary, there is absolute lack of clarity in thought and in data. Lots of words which mean the same thing keep getting repeated.

As you are aware, your Company has been providing innovative and application focused products to
enhance value of its customers globally__The Company markets several value added products, which are
steadily gaining strength in the overseas market through a net work of dealers and customers. We
continue to develop new and innovative products for various applications.

Nobody seems to be aware based on the thread above. No info on what is the innovation, what is the application and what is the value. The 2 sentences are really the same content rehashed in different words!!

The Company sees several opportunities for profitable growth in the areas of value added products, and
a growing demand both in the international and domestic markets. Strong quality product development
and marketing efforts have enabled the Company to stay ahead.

Again no information on what is the value addition. Stay ahead of whom? Absolutely no data to prove the claims on quality product development and growing demand.

In view of the anticipated growth in the demand for the products of the company in the years to come
opportunities for the company to improve its performance is bright. The Company has also decided
to improve its manufacturing efficiency by incorporating various balancing equipments and also by
placing emphasis on efficient and professional management of the available resources of the company.
However, the changing International developments affecting the production and distribution of the
essential petrochemical products and raw materials are likely to have it s effect in our activities.

Again lots of words with no data.

The plant and machinery of the Company are of the state of the art technology. The products of the
company are of best quality and have been accepted by well-known end-users in many advanced
countries like U.S.A, U.K. etc.

Why is the Plant and Machinery state of the art, why are the products of best quality, who are the end users who have accepted it?

In veiw of very good order book position the Board will be considering expansion and /or diversification
plan.

If order book is good why would anyone diversify? In the worst case, diversification could make sense only if the company has enough and more cash (that again I know is debatable). Again why expansion, no information on what is current capacity, what is utilised capacity, how much demand is expected to go up and how much expansion is planned and how it will be funded. It is very funny indeed that the company wants to diversify instead of executing on its “good order book”.

The Risk Management Committee
_reviews and monitors the identified risks and mitigation plans at regular interval. Some of the risks _
identified and analysed by the Management are as under:
The Audit Committee and the Board are apprised of the significant risks and mitigation efforts made by
the Management in its quarterly meetings.

If you are searching for the “risks as under”, keep searching. Maybe they wanted to google the risks and add it sometime later but forgot! Or may be, they want to indicate that the risks are really the audit committee, the board and the management !!:slight_smile:

Your Company’s main business is “Polymer Processing” and all other activities of the company revolve
around this main business.

Why does Polymer Processing require a double quote? Double quote is normally used when you do not exactly mean what is within the double quote or when quoting someone else! What are the other activities that revolve around Polymer processing? You either process polymer or you dont. What can anyone do around polymer processing that is innovative, adds value and is accepted in developed countries like US, UK etc?

Good luck to all who are invested (sorry speculated) in this.


(jayesh265) #32

Hi,
I would still wait, let the company perform for some time before take a final call.
There are so many negative things pointed out on this company.

I compare Fiberweb with Shilpi Cable on this parameter and found this:

The aforesaid data has been taken from www.screener.in

Means it is not comparable with Shilpi cable on the basis of Cash Flow.

  1. I think the Cash and Cash Equivalents are “as on 31st March, 2017” and might not be there through out the year. Hence calculation of interest can’t be done.

  2. Many times the cash is used for so many other activities that earning interest on this is not always possible (anyway cash can’t generate interest until it is invested :slightly_smiling_face:)

  3. We should not forget that the company’s networth was negative and the same has been turned positive only during 2016-17.

  1. Should we expect perfection from a company which was declared “Sick” and has come out of BIFR just one year ago?

  2. However I agree that many doubts are quite genuine and definitely require caution.

Now there are some positives as well:

  1. LIC is a shareholder here.

  2. Mr. Praveen Sheth is also holding 29.8 lakh shares (no selling by him) Can’t say how much control Ms Soniya has as a director in M/s Gayatri Pipes.

  3. Promoters still hold more than 52 % shares which is not a bad figure.

  4. During the Q-4, concall, Mr. Praveen Sheth correctly said who is their main competitor:

now look at this:

I found both of these facts correct going through this:

BCH.pdf (2.2 MB)

I think it’s a quarterly magazine published by a third party company Business Co-ordination House Pvt. Ltd and exclusively related to technical textiles.

Thats why I would still wait and watch.

I think a little bit of scuttlebutt can end the speculation here. If someone from Daman can actually verify the activities going on in their premises there, whether the company actually exist and is working etc.

Thanks…


(phreak) #33

Pravin Sheth himself seems to have been a director at Gayatri Pipes. Also, interesting thing is that the email address for Gayatri Pipes is [email protected].

http://companiesmate.com/1099663/gayatri_pipes_fittings_private_limited/

This seems to be a company founded by Pravin Sheth himself although he pretends like he doesn’t know who the promoters of his own company are when the question of share sale by Promoter group company Gayatri Pipes is concerned.

This is a classic example of how to answer a question without actually answering it. “Who are the competitors?” is a direct question to which the answer is “World is a competitor”.


(Sravan) #34

and this link shows that he’s inactive in Gayathri Pipes
https://site2corp.com/in/gayatri-pipes-and-fittings-private-limited


(Prasad India) #35

Dear jayesh,
I agree with what you are saying. But I have taken only last 4 years of CFO.
Added to this the reserves were negative till previous year. Could be due to trading losses.
Normally I look for a strong cash flow which actually supports the belief in a company.
But I had my fears, hence a caution is recommended. As you rightly pointed out a scuttlebutt would sediment the doubts.
Regards,
prasad


(Prasad India) #36

I would advise you to see page 64 of recent AR or balance sheet. The trade receivables have increased and payable have decreased.
disc: on the radar but no positions.


(jayesh265) #37

Dear Prasad,

I just wanted to say that we need to investigate it a little more and things will be crystal clear.

In case the company is genuine, the opportunity appears very good.

I’m also watching it closely just like you . However, it will not be possible for me to visit Daman and do a ground level cross check.

I request valuepickr seniors @Donald, @ayushmit and @hitesh2710 to look into the matter and guide a novice like me as to how to proceed in this matter. I’m sure it will be a great learning experience.

Regards,

Jayesh


(bramha) #38

And the sell of by Gayatri Pipes & Fitting is continuing. Between 13-15 Sep, Gayatri has sold another 135000 shares.
PS: Soniya Sheth is Director in Gayatri Pipes & Fittings.


(phreak) #39

Promoters fined for not disclosing. Just another red flag in a long series on this counter. http://wap.business-standard.com/article-amp/pti-stories/sebi-slaps-rs-31-lakh-fine-on-3-entities-for-disclosure-lapses-117091900993_1.html


(Sravan) #40

what is the period of these lapses for which it is fined. in the link it shows 2013 to 2014. if we take count of red flags, once could never ever invest in pharma sector, there are all colored flags in pharma left and right :slight_smile: and those flags affect business in pharma


(Sravan) #41

Here is new Report from Bank of Baroda with BUY call with target price of Rs.470 (45% up) published today

http://www.bseindia.com/xml-data/corpfiling/AttachLive/afa24d93-c260-4f8b-acb3-994287591e3b.pdf
can also download below
afa24d93-c260-4f8b-acb3-994287591e3b.pdf (475.0 KB)


(phreak) #42

Have certainly never seen a company notify the exchange about a research report on itself. This is a first.