Hi Ming,
I evaluated Pincon quite some back and things might have changed by now. I decided not to analyze it any further after a brief study. I will tell what I can recollect.
India is a country where enforcement of contract/security is very difficult. The regulators understand this and force as much disclosures as possible. Very few countries (don’t remember of any major economy) would have mandatory definition of “Promoters” that we have and we force these guys to disclose valuable information. The promoter’s integrity is very important to me. I didn’t like the way promoter has been treating the company. I do not always take accounting numbers, even fund infusion by promoters, at face value.
Last I checked, the company was mostly a trading entity operating at very low margins. Their asset utilization was very high. The low margins in business were inspite of big chunk of promoter loans that were interest free / at low interest (if i remember correctly). I don`t see virtue in generating huge trading revenues at low price margins. I do not agree with people who say that all alcohol firms in India are only blenders and bottlers and that manufacturing of alcohol is a misnomer. Even Aurangabad Distillery Ltd, which filed DRHP at NSE SME exchange, claims to make Rectified Spirit, Denatured Spirit and Extra Neutral Alcohol (ENA). One can look at pages 109 to 112 in their DRHP for a brief overview of alcohol manufacturing process. Pincon sells cheap alcohol and the audience who watches business news channels is not their target segment. Yet they have been spending money on advertising on these news channels. I am not comfortable with this kind of behavior. If I recall correctly, the company was generating low, or probably -ve, cashflows and taking large amounts of debt from banks. This appeared to be a low margin, trading-like business operating with dollops of other people’s money. It was a business that I weeded out at initial stages of evaluation and do not intend to look at anytime soon.
Hope this helps. Good luck!