That is a JV between KCL and KGL. The USA LLC
True but all the investment made through KGL? How to know how much of all coming from each?
Also its crucial to analyse the financial reports of KCL. for last 3 years. Can anyone suggest from where or which website I can get the KCL financials for last 3 years.
I am no senior, but I hope to shed some light. This will typically be equity capital (but that is an easy assumption to make, it could also be debt or any hybrid). The investment has to be done at fair value, which means that the equity issued to KGL will practially be at a higher valuation than initially. Unless the other entity also contributes to the capital, KGL will have more than 50% stake. But then there is a conflict of interest for the KGL promoter in determining fair value of the US entity.
The circular does not give any additional information to see how this will be handled.
Kitex Childrenswear financials till FY16
Thanks a lot Amit for the excels.
Yes Sir-I do a bit of technicals & used to be a shareholder of Kitex-no longer now. Its headed to around 275 from an Elliot perspective.From candles , its a bearish engulfing pattern clearly calling for new lows. I have no exposure & dont intend to take.
These inverted cup and handle like formations can be positive and negative. If the price breaks the handle and closes below then the downward trend should continue. The price broke the handle yesterday and closed below and today it recovered a little bit and closed at par with the handle. If in the days to come the price closes above consistently then the pattern would have failed and thats a positive sign. Prices will go up.
If the prices close below consistently then investors in kitex need to be cautious ( read : prices will be under pressure )
The context is also important. The red line is the barrier that kitex will have to surmount if it wants to reach its heady heights of 1000+ ( its PE is still ~21 )
My take on the situation is - if you like the business ( the business is good but Mr Market has overvalued it and thats why prices are down) then there is no harm in waiting because its almost certain that you will get a better buying opportunity later ( according to me i cant see prices going up in the near term) OR
if you think that there is something wrong with the business then now would be a good time to introspect and decide if you want to move on.
However i am certain of one thing, if you have a sizable amount invested in kitex - it is decision time.
Came across quite well written article on Kitex… It raises quite a few questions regarding Kitex and it’s management.
Old one…already in the thread above…serious readers shud not waste time.
I don’t think anything is wrong with the business. Every business experiences a slowdown. However, I am more concerned with the quality of the management. Unfortunately retail investors do not have sufficient information in this case to make a wise choice. How to read Sabu’s words? Is the nonchalance in his responses reflecting the temporary headwinds, which is insignificant considering the long-term potential of the business OR does it reflect sheer manipulation of facts and figures showing zero respect towards shareholder’s concerns? Has the company done enough wrong to conclude that the management is greedy? I don’t think so. But I am waiting for the evidence to safely conclude that the events happening are beyond the control of the management and they are not intentionally over-committing and underachieving. Having said that, it would be good to be guided by someone on this board who might have had a closer understanding of the promoters and their intentions.
I have certain queries :
- There were losses from the associate companies
2016 - Approx 2 crores
2017 - Approx 8 Crores
2016 Was declared as US subsidiary .
What was the nature of these losses ? Were these forex losses as disclosed in the interview by the MD .
They had infused capital in The US subsidiary
2016 - 4 crores
2017-2018 - Another 6 Crores .
Have a doubt why they are doing this ?
- As the majority sales comes from Exports , why was their Forex position not hedged ?
Kitex MD Mr Jacob, reiterated in the conference call Q3 FY1617,that yearly Capex of 25 to 30 cr for the next 3 years will be sufficient to bring in the desired growth in revenues. He also stated that small small manoeuvreing in the existing machineries are required like putting some catalytic equipment in the existing machineries which can automate and greatly increase the production capacity of existing plant and machinery. Now within 3 months he has announced of a plan of around 250 cr investment in Capex for next 3 years for sales growth. He has not given an iota of this plan to investors in Q3 con call. Now wherefrom this gigantic of a plan of 250 Cr capex came from in such a short period of time is difficult to understand. In the Concall Q3, he has been asked a number of times about future capex plan. Now such inconsistent guidance to investors is a concern which kept on repeating for the last 2 years. Investor community wants transparency. Too many variables are coming up one after another like forex issue,cash issue. Other expenses has shot up. So is receivables & inventory signalling deterioration in working capital structure. Still there is no attempt on the part of the management to explain with clarity these queries
which is clogging the vision of the investor regarding the business. A great management states facts -clear and easy and transparent for the investor to understand the business situation. The key issues in Kitex on the minds of the investors are not addressed and a sort of extravagant and nonchalant answers to investor queries are observed. The coming days will unravel the whether the concerns are really becoming painful or it is just normal business ups and downs.
Warren Buffett repeatedly keeps mentioning something like this…
“I would like to include all those details in the Report for Berkshire Hathway that I would like to know from you if our positions gets interchanged”
Here in case of Jacob, there are three possibilities:
- He does not understand what Investor wants to know.
- It is arrogance oh his part for : who are you needing to know
- He does not want Investors to know.
Even if any of one above is correct, is not a good sign. And this was my precise reason when few quarters back, i vacated the position.
The promoter is showin the moon and giving moon rocks - pun intended…You can read the above threads very well elucidated…Possible Non exential Reserves, giving one type of strategy and doing the other etc…lack of consistency mostly
I see that ValueQuest india is a share holder with around 10 lakh shares in the company. So, what does the fundoo professor see in the company? He even describes the MD of Kitex as one of the intelligent fanatics in his blog post/essay.
Also, who would do the following? https://en.wikipedia.org/wiki/Twenty20_Kizhakkambalam
I am not sure what to make of it. I read a lot of negatives about this company and the management, but I am not sure what to make of it all.
Perhaps, we should put this company in the too hard pile?
Can Garments business be a great business in ten to twenty years? Is risk from automation high?
Show me a garment manufacturer who has scaled beyond $1B. Also this guy promises too much and fails to deliver. Also many unanswered questions. Definitely too hard. There are better opportunities.
That retired professor’s company is called “Softwear Automation”. Interestingly, They are presenting their tech to Gerber this week. http://softwearautomation.com/gerber-press-reception-embrace-your-digital-reality-may-9th/
In his Lecture 24 - The Management Factor ( since its specially pertinent in this business ) Professor Bakshi writes - Maybe he is giving kitex investors a hint
“If you want to learn to empathise with an entrepreneur, read literary fiction. Most investors don’t do that and I think they miss something important. They form opinions about people who are out there creating wealth, sometimes in very difficult environment. They have no clue what it takes to get there. Reading literary fiction has helped me empathise with the people who run businesses. It has helped me understand that no one is perfect. People make mistakes and entrepreneurs are human beings and not machines programmed to “maximise shareholder value” for you all the time”