Bomi - thanks - simple - I think given this convolution, no one is going to worry about it until late 2015 by which time the share price would have gone up significantly and options can be exercised.
I slept over the stock yesterday - I have a few other problems with the core business
)- dish washers is a category that is growing but not a category which is brand conscious for obvious reasons - dirty job, handled by the maid, no sense of emotional high etc. Infact, for a lot of modern retail it is a good category to squeeze in private brands - for eg., I buy stuff from reliance retail - pril costs Rs. 75-80 whereas a private label brand of reliance costs Rs. 50. I always buy the latter - in any case, the maid is doing the work and 50% difference is not worth the “brand”
-blue/whitener to me is a structurally challenged category as washing machine penetration increases for obvious reasons - you can’t add blue to the bunch of clothes going inside the machine together. Days of us taking pains to add blue, soak a white shirt are gone
-Margo, fa are good brands - but in niches. Henko is a good brand but driven primarily by push - go check out any retailer - henko is always a 1 + 1, 20% extra, bucket free extra - I always buy henko only for that
My sense is that the company is “pushing” products, sacrificing margins (see results over last 2-3 years) to show topline growth.
Unlike paras (where Mr. Raghunandan) came from, which had brands with high pricing power - for eg., moov, livon, these are also rans (Paras had an EBITDA margin of 22%) with a lot more competition.
Don’t get me wrong - this is not a bad business - this is an average business with a huge invisible rock around its neck (the debt) that the market thinks is a superstar business
That said, I am damn impressed with the auditors and investment bankers - this is the first time I have seen a zero coupon debenture trick without a provision for reserves.
Nice learning !