With all due respect to all the seniors and guys having bullish stance on kaveri - just a few points.
Can we trust mgmt who has kept on passing ball on dividend/buyback since last 1.5 years?
Reducing guidance just before 1 month in a privately held analyst conference - no intimation on exchange. What does it say about quality of mgmt?
Govt. intervention in sector - hope of Kaveri getting high multiples/valuation goes down the drain right there. (that’s my view), no matter how high quality the business. Markets love consistency, govt. intervention just kills the story. Add to it the issue around tax - company may be 100% in compliance with relevant authority/rules on tax - but who can explain this to markets.
Lastly and possibly more important from pure investing point of view ignoring mgmt actions/dividend issue - Opportunity cost. Everything shifts to Q1 of next year. How many of us can sit and watch kaveri possibly going nowhere while markets/read specific stocks (given the mood they are in) go higher. Depends on investor to investor - but its very tough.
I think sometimes we forget the most basic economic criteria for anyone to do a business, Profitability
Cotton price weakness made it less attractive for farmers(by how much was big Question and was the main odds).
Also, management’s lack of transparency where it mainly failed to inform Market much before Q1 results like few software companies and Sun pharma etc where the management’s were quite upfront abt business weakness being seen OR integration issue .
Management inadequate transparency has caught everyone by surprise and most of us offguard and its a important lesson in terms of blind faith in management based on past history.
I stay focussed on business performance - all this is noise and can be interpreted either way. I would appreciate if other VP-ers chip with feeddback on the ground in
AP
Karnataka
Maharashtra
Gujarat
To see what real market thinks of kaveri’s products and their market position.
I prefer to focus on real data points, not inferences or opinions.
I also agree with vardha , most of these issues were known earlier (apart from the 64 cr royalty issue) and should not be considered only when price falls.Everyone has to take their own call based on their conviction of kaveri management and future outlook of cotton and seed industry .
I have been nudged by many to speak up, saying its a slugfest out there at Kaveri thread - hard to make an objective assessment out there from all the (valid) opinions & counter-opinions.
I have learnt a few things myself - so no wonder
Though its a difficult task, let me attempt an objective case statement, for myself.
Current Season performance
Has business performance suffered? - YES
Has the Business Environment for Cotton Seed industry in general and Kaveri Seed in particular, deteriorated this year? - YES
Did the Government price intervention queer the pitch beyond traditional variables (monsoon, pricing of competing crops, regional product preferences)? - YES
Was Kaveri Management’s response adequate - YES & NO
Had the Govt. price intervention variable NOT been injected - Kaveri Seed might have been in Control? - probably, YES
Did I fail to assess price intervention impact/take it seriously enough? - YES
But that’s already all behind us, right. What are the issues before us for objective assessment, from here on
Forgetting ROCE numbers (past, and a function of the business drivers), isn’t the Seed Business one where product/competitive effectiveness dynamics - subject to change every season/year - YES
BQ wise - it therefore CANNOT be slotted in the same category as others not subject to same dynamics - YES
What was most exciting in 2011-2014 years? - INDUSTRY-BEATING GROWTH
Having achieved Leadership position - that excitement had to be tempered? - YES
Maize & Paddy segments significant compensating contribution in near term? - NO
Can Kaveri Seed bounce back in FY 17? - YES, it can
Nuziveedu gaining in Telengana and Ajeet in Maharashtra makes it more difficult for Kaveri to bounce back? - YES, that might be a possible scenario - depending on this harvest performance
Are there now more variables queering the pitch in FY17 season? - YES
So how is the visibility for FY17 and beyond? - Post harvest will be a better time to take stock
Will the Royalty issue get sorted out one way or other ? Is it an Ignorable? - YES
Meanwhile what can be done? - Collect Sales/Volume data of Top Competition in Maharashtra/Telengana/AP as a priority - to assess what Kaveri Hybrids will be up against post harvest. Other markets have much less impact
Disc: The above are work-in-progress notes to myself. These are meant to trigger further discussion/debate. This is not a BUY/SELL recommendation. My notes/understanding/current holding is subject to change at short notice
@kunal, the nos you have shown for shareholding is till June 2015 (as Q1FY16)…but the real carnage is after that. In late July to Mid August. So, we never know may be the names you are referring have existed during this time and so is the selling pressure. I dont know, just thinking. Nevertheless, I agree with your logic that some one may sell depending his perspective and risk reward proposition; but I would stand to correct that the data presented by you is not be true and correct thing to look at as the time gap is there between Q1 shrholding reported date and now.
@Sanjeev, Intention was not to show who has bought and who has sold but to stop looking at the SH pattern and does it really matter when one has to take a call on HIS investment thesis? Answer is NO
Point that I am trying to make is Fund managers are people like you and me. They also think the way we do. but no two fund managers in this world are same. So their entry/exit should not matter to us. Beauty of this forum is we are doing as rigorous research as any other Fund manager does (may be more but not less).
Donald correctly pointed out what needs to be done from here on (ask yourself relevant questions) and thats what I meant by saying, “Invert, always invert” which means start thinking about what could go wrong from here and think which side of risk-reward is heavier and take decision based on that.
There has been several complaints from discerning senior readership of VP, that the discussion quality is deteriorating fast - too much of non-value additive comments or worse, dogmatic one-sided, one-upmanship posts/counter posts that are cluttering up many threads - classic examples being Kitex, Just Dial, Kaveri Seed, and some more …
So much so that folks are getting turned off - from posting/reading their or others distilled thoughts - because it all gets drowned in this one-upmanship opinion-bazi violence as we are calling it …If this is not nipped in the bud, this could be something that alters the very character and charm of VP. we are being alerted.
It has not gone un-noticed that in some cases, Managements/their actions are directly being written about as if one is sure these are outright Frauds. Strong views/counter-views are welcome in any debate - but we need to rise above cheap levels - and bring a modicum of rationality back to dissecting issues at hand - with a view to taking them to a logical conclusion - we are not here to deliver Verdicts, are we? and that too repetitively, ad nauseum !! (what is more galling, folks are doing this without visiting the company, without meeting the management and confronting them, without doing any real diligence on the ground that can stand its test).
Please note that Moderators have been empowered to
Identify and warn the worst repeat offenders (this is already on)
Go through and wield the axe retrospectively (even in borderline cases, and perhaps at the cost of some unavoidable deletion of valuable discussion inputs/pointers)
Don’t forget Every Member is empowered to FLAG - If the above resonates with you, please do your bit to help us keep VP’s charm intact. By all means be gentle and kind, but be firm in messaging the defaulters, and unrelenting with your flagging. If you do care, you should also do this with retrospective effect !
All for a good cause, for a “Swatchh” VP a cleaner, more responsible VP !!
cotton sowing this year is 110.23 lakh hectare compared to 118.81 lakh hectare last year.
The total sown area under kharif crop as on August 21, 2015 stood at 938.41 lakh hectare compared to 929.48 lakh hectare for the corresponding period last year.
A press release from the Ministry said rice was sown/transplanted in 333.65 lakh hectare, pulses in 101.96 lakh hectare, coarse cereals in 167.69 lakh hectare, oilseeds in 168.25 lakh hectare, cotton in 110.23 lakh hectare, sugarcane in 47.84 lakh hectare and jute and mesta in 7.80 lakh hectare.
Last year, cotton, oilseeds and jute and mesta was sown in more hectare than the current year.
Cotton in 118.81 lakh hectare, oilseeds in 168.45 lakh hectare and jute and mesta in 8.13 lakh hectare, the release said.
However, it was less in the case of rice which was sown/transplanted in 332.09 lakh hectare, pulses in 92.57 lakh hectare, coarse cereals in 162.27 lakh hectare and sugarcane in 47.17 lakh hectare.
Kaveri thread is being closed temporarily for Clean-up/Maintenance along with Kitex, Just Dial and Vaibhav Global threads.
Kindly bear with us a for a few days.
Let us see if pruning works;
if that doesn’t we may have to start restricting posting rights for folks
We are hoping that we don’t have to resort to the last resort!
I attended the Kaveri AGM and i very specifically asked the management about the status of receivables as of that day and the management confirmed that the receivables are ~50cr as they have not sold on credit and even that was mainly to government so no need to worry. I initially asked on the sidelines and then once again during the AGM proceeding- where it was in my list of written questions submitted to where the management reconfirmed low receivables. I actually asked if i would see this reflected in 30th Sep balancesheet and they confirmed affirmative. May be other members who attended AGM could confirm this.
I was shocked to see the receivables at 190cr. Given that the credit risk management was a key theme which influenced lower sales (refusal to sell on credit) - i find it quite disturbing that a few days before the quarter end senior management’s estimate of receivables is so way off.
- Kaveri Seed might have been in Control? - probably, YES
a cleaner, more responsible VP !!