Tried googling for judgement from Guj HC hearing on 28th Feb. Can’t see any updates anywhere.
Any news on it?
We keep saying that cyclical cos shd be bot when nobody loves them. This one has cracked big time now. It has halved in last 4 months. Even if APSEZ plans go 100% under water, how much co will be affected? Is it a good time to start buying this? Senior members pls advise.
Personally, I think this is a good price for anyone with a cpl of years time horizon.
Haven’t got any concrete update on the APSEZ case. As per the language of the judgment by SC in one of the articles, it seemed things are in favour of cos like OCCL etc and their shouldn’t be much problem. But still its a risk and if the new plant is shut-down, it would be a major problem.
Ayush
Thx Ayush.
“As per the language of the judgment by SC in one of the articles…”
You mean the same article snippet which Bosco posted above or any article after that? 28th Feb Guj HC was supposed to hold a hearing of all parties as directed by SC. Right?
Between this and Indag, both of which I’m holding some and they are back to my purchase price, which would you suggest looks more attractive to add?
Hi Suhail,
Yeah, it was regarding the above link.
OCCL does seem to have value but the demand needs to come back for the tyre industry for this co to be able to utilize its capacity. Hence its a matter of time.
While in the case of Indag the co is already doing pretty well and seems attractive at current levels.
Ayush
Would like to know view of members this could have on occl or indag…
I agree with ayush. Among the two dealing with tyres business, I think indag seems well placed because it is mainly into retreading and demand for that is likely to continue even in economic slowdown. In fact if people start cutting costs they might resort to retreading as a cheaper alternative.
Plus indag has a great balance sheet. Only overhang on it will remain about the promoters having to bring their stake down to the stipulated 75% and hence they will have to sell close to 2% stake.
Thanks Ayush and Hitesh bhai.
Both Indag/OCCL at 5% each, together make up ~10% of my PF. And both are at my original cost price. Does it make sense to derisk by switching part/full qty of Oriental to Indag. I like both stks, have given me good dividends in last 2 yrs (+ some PPBs at higher levels). At 5% div yield CMP selling Oriental seems like a crime at this juncture.
But I also want to make sure I’m not falling in love with them. Ofcourse I’ve seen major paper-profits evaporate in this meltdown in both. So my selling is not distressed, but if there’s opportunity cost to switch out of OCCL and reinvest in more attractive names, I’m open to it. Need a bit of help with this one. Should I switch? What shd be my thought flow behind this decision?
(That reminds me I still haven’t posted my PF in PF thread. Will do it asap)
The status of PIL against Mundra SEZ in which Oriental is a respondent can be tracked on Gujarat High Court website under the link of Case Status. It shows that the hearing for the PIL which was filed in Feb’13 keeps getting deferred to next hearing date every 15 days. It appears a little high-profile litigation as it involves Govt. of India and few relevant ministries like environment, corporate affairs etc.
This one may drag on & on.
(Posting another subsequent comment on feedback from Company Secretary of OCCL on this case)
A shareholder friend has shared an e-mail exchange with the company secretary of OCCL dated 16-Aug. Here’s the verbatim -
i) Regarding on-going PIL against Mundra SEZ for environmental concerns, what is the operating status of company’s new (5500+5500 mtpa) capacity as on date?
The Companyâs new plant at Mundra for 11000mtpa continues to operate normally.
ii) There is uncertainty since PIL hearing is being hanging for 6 months. What is company management’s assessment of best-case and worst-case scenario in coming 6 months or 1 year? Is there a probability that entire new capacity may become barred from operation? What is management’s alternate plan, can the capacity be shifted to a different location in worst-case scenario?
The Company continues to operate its and in the Companyâs assessment the threat to its operation being barred is low.
iii) Management has always tried to keep annual report and company announcements transparent and informative. Then, why there is no attempt to clarify or disclose this material development of PIL’s hanging fate to stock exchange or to investors via annual report or in notes to quarterly results. This unfortunately sends wrong signal to investor community about improper disclosure.
The present PIL is against the Adani Group (Adani MPSEZ) and not against the Company and in the perception of the Company, there is no imminent threat. However, your point is taken in right spirit and the need of appropriate disclosure shall be reviewed.
Keval
Thanks for the details, Keval. Any insights on the demand outlook etc? The co seems to be doing fantastic cashflows and a major beneficiary of rupee fall
Ayush
My Questions for which i am trying to find answers are:
1). Crude oil prices have started going up again. Will this have an impact 2007-2008 on sulphur prices putting pressure on margins.
2). In domestic market are they able to fully pass on the rise in prices in a weak environment considering the currency impact and the fact that they import raw material.
3). Europe market are they able to maintain pricing. From which plants(country) does flexisys have its manufacturing plants. How has currency impacted the manufacturing cost for Flexisys.
4). How is the demand environment both in India & Europe. How long will it take for them to start utilising their capacity.
hi ayush,
please excuse if this is off topic. Are you able to buy/sell in this scrip after being included in illiquid category ? I never had any luck buying few stocks which are included in PCAS. how do you tackle this aspect of investing …
1). May be it may rise. But if you look at the very long term chart of Sulphur, its a very very stable commodity and very easily available. Usually, the cost of increase gets passed on now as they have quarterly agreements. Flexisys in past has always increased the prices whenever sulphur rises (with a lag)
2). They are net exporters…import is very less for them (in value terms when compared to export value)
3). From what I understand, the insoluble sulphur prices are stable at $ 2100-2300
4). The demand situation seems to be still weak.
@mvalue:
If one is really interested in buying and selling, its possible, though it has become very difficult.
Ayush
Hi…
can anyone suggest where i can get the annual reports of the company from FY’05 to FY’09.
Any site where they would be available for free or anyone who has worked on OCCL
You might like to use the paid website -http://www.reportjunction.com/ Link: http://www.reportjunction.com/
We were very fortunate to be able to meet Oriental Carbon Senior Management, at very short notice this time.
Despite the slowdown in customer business, company appeared very confident. The good thing is they are running at 90% capacity already so they have found ways new markets/new customers to grow. There will be a lag effect 3-6 months before $ effect starts to show up. Going forward things are looking good. This is a great simple business to track - and Ayush will argue mouth-wateringly cheap!
Will let Ayush add his comments - he is the main bull in OCCL. I keep waiting on the sidelines to get completely convinced. Please bear with us for some time before I can update the Management Q&A - which I must add - this time was pretty intense, challenging, and enjoyable! Both sides seemed to enjoy the dual. Wish to record gratefulness for the active/energised participation by Delhi-based Gaurav Sud in getting to the bottom of things, here.
The Periodic Call to Auction thing is big dampner, though. Senior ValuePickrs will rule against inclusion in ValuePickr Public Portfolio till such time such artificial restrictions are removed and normal price discovery mechanism can resume in this counter.
thanks donald for the updates…
regarding this call auction thing…I would argue that it is a good thing in disguise if one is convinced about the story…You always tend to get the companies in question cheaper… due to market apathy…
hitesh.
Hitesh/Ayush
Counter-arguments:
a) This doesn’t work well for Opportunistic Portfolio bets - where we are counting on big mis-pricing and real price-discovery within 6-9 months. With normal price-discovery not happening, they continue to remain mispriced, yes - and there goes to naught our main investment theme - a 50% possible upside in 6-9 months (becomes unlikely). Ayush will maintain the committed find ways of sustained buying here also; but I think the more important point is it becomes very difficult to sell at the price I want to and in the quantity I want to. Exit being more difficult than entry, defeats the purpose, I thought:(
b) None of our Long Term Portfolio bets have fallen into this category. As Ayush says, there is a distinct Market-Cap filter also being applied and dominant businesses have escaped that net despite low liquidity/transactions. So Periodic Call Auction has not made things any better really -for long term conviction bets - I don’t get these kind of companies artificially cheaper for any sustained period of time. So not of use to me, again:(
We have highlighted the impact of this to OCCL and urged them to consider increasing liquidity to get ahead of that inane “10000” nos transaction criteria (irrespective of value).
I am concerned about the Co. investment in its subsidiary Schrader Duncan Ltd. How does this investment help the Co. Infact, it brings down the ROCE big time for the Co. Apart from the investment by way of equity n loans given to Schrader, it has also perhaps increased the debt in the consolidated Balance Sheet. The promoters, with a share holding of 56% are using the funds of the Co. to shore up their stake/interest in Schrader. This I find against the interest of the minority share holders of the Co. Was the Co. and its share holders not better off if this investment instead was used to retire debt, thereby improving its balance sheet considerably.
Would appreciate views / feedback on this.
Dear Rajeev,
Please read last year’s OCCL Management Q&A for this answer - there are things that happen in companies for historical reasons, relationships, inside knowledge of a financially no-brainer decision (arguablly, strategically not a greta fit) that may not be apparent to an outsider having a first look in. let me know your reactions after considering Managements response on this one.
Also - to make a different but significant point - I am amazed at how many ValuePickrs spend enough time on ValuePickr trying to follow/ understand a business, but fail to read the relevant Management Q&A. Agreed our site is poor in highlighting valuable content such as these (hopefully we will rectify this as we have better access to quality resources), but why cant you guys go through the entire thread - when studying a business with enough seriousness as you seem to have done- how do people miss seeing the links for Management Q&A in the threads. (assuming nobody reads the text-heavy Home Page).
This is a mystery to many of us - who swear by Management Q&As - probably it’s to do with that going through the entire thread is also quite painstaking today:) but still beats us - why serious investors miss spotting the Q&As - just goes to tell me how important it is to highlight importance of quality content - in a no-brainer user-friendly way - something that no one can miss. I have seen comments from folks who have spent the better part of an active 2013 at ValuePickr - not knowing about our Management Q&As (that entire part of the website the comment highlighted) - so obviously we are doing a very poor job:(. But Instituitional analysts do not seem to miss that:)…
