Pincon Spirit Stock


(Ravindra Mutyala) #21

Which acquisition you are talking about? Singapore?
Please share its results statement if you have


(aashish2137) #22

My bad, I confused acquisition of Paul Distributors with Asansol bottling plant.
Here’s the latest (Dec '15) acquisition news: Asansol


(Abhishek shah) #23

HI guyz,

I have been tracking Pincon since long. Has anyone looked into one issue. I consider this as a huge red flag for stopping me from investing in this stock.

  • Check BSE announcements in dec 2014 and then in feb 2015. One private company Gomukh commercials was to be merged with pincon. This was in dec 2014. Strange is that the merger was called off in feb itself. So, this was no where mentioned in the AR of FY15. Gomukh is a promoter group company. When I called the IR and asked why did the mgmt cancel the merger - his answer was, the SEBI took much time in approving the merger. It was a strange answer. There was a pdf uploaded on the website of the company where the merger details were available. It is no more available now. One of my friend has the pdf with him.** I shall be soon uploading that 70 page document containing the merger terms and financials of Gomukh.**

Does anyone have any info/clue about this matter? Its a big red flag and questions the promoter integrity.


(v4value) #24

Abhishek, this is the least of the red flags…there are so many others, some of which are highlighted in the thread. The question is the current single digit p/e captures those issues…


(Ravindra Mutyala) #25

Companies main part of revenue is from Trading business which is value less. Leveraged balance sheet is also reason for low valuation. Increasing promoter’s holding will be positive.


(Abhishek shah) #26

Hi v4value,

Promoter acquiring 30% stake by not doing open offer is not a red flag as per my thinking. Now he will pay its price by doing open offer for another 26% of the stake at 132/-.

Again conversion of unsecured loan of 60cr is not a red flag according to me. He had given loan to company at 0% interest. Now he will be converting that 60 cr in piecemeal (every year 10 lacs odd shares).

I dont think the heavy debt is an issue since company doesnt pay interest on 60cr provided by the director Mr. Roy. The issue is in thin OPM compared to its peers like GM breweries.

As per my discussion with the IR, the company expects its margins to increase from 5% to 10% in next 2 years. Company is currently providing huge discounts, and trying to establish its brand and cut competition parallely.

Its a wait and watch game.


(Ravindra Mutyala) #27


#28

why would pincon want to declare a 1:1 bonus and bloat up the equity capital? Should this be taken as a negative? But the company is growing at a healthy pace…


(Pramod) #29

Long term debt has remained same. No attempt has been made by the management to clear some debts. Meanwhile , short term debt has increased by 100 crores , thereby increasing the debt to equity ratio of company. We will have to wait for AGM to know the cash flow. Also , have to wait and see whether Mr Market will punish for this


(roysavio) #30

I am really concerned about operating cash flows. Let us see what happens this year when the annual report is out. Otherwise the profits cannot be taken at face value. :slight_smile:

For me, at best, this is a trading bet, for I don’t see long-term value. The management giving another bonus also doesn’t inspire confidence. And if more states jump the prohibition bandwagon, the outcome will not be good for companies in that space.

Discl: Invested from lower levels


(rvetri) #31

Hello friends. I agree with Roysavio. In addition, the sales and profits are increasing because of increasing working capital. So the company is buying sales and profits by increasing credit period and outstanding. And funded by short term loans. Yes, it is a trading bet at best. And during irrational periods, it can shoot up. But does not suit my investment style…:innocent:


(indirachitra) #32

If we are taking an investment decisions it cannot happen in a particular stock where there is a thick cloud of doubt I think one has wait and watch for the clouds to get a clear view to take an investment view till then there are many safer bets in this sector this is just my humble opinion from the info I gathered


(Ravindra Mutyala) #33

Despite increase in 41% sales, receivables stood at same level which is a good sign.
Increase in short-term borrowings is due to shoot up in inventory levels to 190cr from 70cr (170% higher). This could be a strategy that, company is building up inventory for forthcoming demand due to elections in West Bengal.

Disc: Invested


(v4value) #34

Boarders, any thoughts on why the stock is in free fall post open offewr expiry on May 02?


(Agarwal) #35

Was going through the Annual Report, few points that actually made me nervous about the company were:

  1. High Debt to Equity Ratio crossing 2.
  2. Management is more inclined towards bottling of liquor instead of manufacturing and brewing them. Bottling looks low margin segment.
  3. Operating Cash Flows is negative, most of the cash generated from last quarters are through financing.
  4. Closing Stock increased substantially compared to last year.

Few Positive Sign that I saw were:

  1. Company trying to enter new segments in South India and other SE Asian countries, take over of the Singapore Company might be a good move.
  2. I saw lot of hoarding of Bangla No.1 behind local buses in Kolkata, seems management is spending good amount of money on advertisement.

Disc: I am a novice investor still trying to learn the art of investing. Any criticisms are welcome.


#36

Promoter was accused of fraud earlier. My advise would be to stay away unless you want to speculate.


(Agarwal) #37

I have sold my entire holding with a nominal profit. After reading Graham and Dorsey I became aware that a management can make or break a company. Will be following the stock though might reinvest if the debts are lowered. Anyone from Kolkata who might be willing to go to AGM would be quite helpful. I have never been in an AGM it might be a good way to know the promoters.


(Ravindra Mutyala) #38

From the press release

Performance Overview (Consolidated)
 Total Revenue grew by 42.6% to Rs. 9,879.5millionas against Rs. 6,928.1million in FY15
with all business lines reporting a robust performance
 Deeper penetration in existing markets and addition of point-of-sale in new
markets resulting in wider presence
 Organic expansion complemented by inorganic initiatives which are strategically
undertaken to enhance product range, bouquet of brands and distribution / retail
network
 Volume performance led by positive growth across all segments
 IMFL division in own brand registered a robust increase in volumes of 64%yoy in
FY16
o Key brands in IMFL segment: Highland Blue, Ultra Force, Ruby Gold, and
King’s Coin
 During the year, Volumes in IMIL division were 100%yoy higher
o Key brand in the segment: Pincon Bangla No. 1
o Recently acquired Bengal Tiger and Uddan
 Edible Oils division volumes grew by 34% yoy in FY16
 EBIDTA grew by 63.9% yoy to Rs. 581.4 million in FY16
 Margins expanded as the increased scale of operations and wider presence
resulted in benefits from operating leverage
 PAT higher by 53.1%yoy to Rs. 255.0millionas compared to Rs. 166.6 million in FY15
 Diluted EPS in FY16 stood at Rs. 17.3per share
 The Board has recommended a Final Dividend of Rs. 0.75/- per share as well as issue
of Bonus Shares at the ratio of 1:1, both are subject to the approval of shareholders at
the AGM

FY16 - Key developments
 With the acquisition of two popular IMIL Brands viz “Bengal Tiger” and “Uddan” in
West Bengal, PSL has established itself as the leading player in the IMIL segment
 In December 2015, PSL acquired the IMIL bottling unit of National Industrial
Corporation Ltd., (NICOLS)at Asansol, West Bengal– has commenced production of
Bangla No.1 from the facility enabling ramp up of volumes by catering to the mining
belt of West Bengal
 IMFL products are witnessing wider acceptability in Karnataka, one of the largest and
most lucrative IMFL market in India
 Entry into Karnataka market offers multiple benefits - in addition to the significant
growth potential, Karnataka will serve as a gateway to the southern region which
enjoysthe largest market share volumes of alcoholic beverages amongst all regions
in India
 In Karnataka, Pincon Highland Blue Whisky, Pincon No. 1 Whisky and Pincon Kings
Coin Whisky are key selling brands from PSL’s portfolio

Commenting on the results, Mr. Monoranjan Roy, Chairman & Managing Director, Pincon
Spirit Limited, said:
“We are excited to deliver exponential growth across all our business segments. The recent
spate of acquisitions has elevated PSL to the largest IMIL player in the Country. We now have
three formidable brands in West Bengal and surrounding markets, viz. Bangla No.1, Bengal
Tiger and Uddan which cater to varied customer preferences enhancing our share of business
with retailers. The addition of the bottling unit in Asansol will aid further ramp up in production
of Bangla No.1 to cater to the demand in the coal mining belts of West Bengal. We are at the
forefront of revolutionary growth in the IMIL segment and very enthusiastic about the growth
prospects in the coming years.
In the IMFL segment, we have bouquet of products at varied price points offering significant
value to customers relative to competition. Our integrated presence enables us to identify
gaps in current offerings in the market. Low cost IMFL Brands of PSL has created a unique
customer segment with mass acceptability. PSL is at the forefront of this shift to tap the opportunity with its entry level range of products. We have also increased geographical
penetration in West Bengal and our foray into Karnataka has met upward growth in market
demand. We are also enhancing our foothold in Jharkhand and Odisha.
In the FMCG segment, our edible oil brands have witnessed healthy traction in operations. We
are working on introducing additional products in edible oils and non-alcoholic beverages. We
are confident of emulating the success we have had in our other segments.
We have laid the foundations of a robust business model with a manufacturing to retail
presence. We are confident of maintaining the growth momentum as the all the business
segments have multiple opportunities waiting to be tapped.”


(Agarwal) #39

Can anyone please tell me about the negative cash flow from operation ? Does is mean that company is loosing money in their core operation of the business ?


(v4value) #40

Did any boarder attend the AGM? Thanks