Pincon Spirit Stock


(AbhijitMani) #84

Does anyone know anything on "BACS enterprises ", the company acquired by PS ?


(roysavio) #85

I wonder if reduction in ethanol prices will benefit Pincon too:


(AbhijitMani) #86

@abhishek90 : Pincon has had two prices increases ( last one on 4aug & the one announced today).
What could be the impact on the margins going forward?

Regards,
Abhijit.


(Abhishek shah) #87

Hi Abhijeet,

This should be positive for the company. Margin expansion should come on books.


(KarthickRS) #88

Hi everyone, i have a query regarding this stock. As per the 31.03.2016 balance sheet of Pincon Spirits, diluted EPS is greater than basic EPS! can anybody explain?


(Billu) #89

You said > very few companies make profit in this business

As for my understanding, this business is very profitable in India, unless the promoter happens to be Vijay mallya. Why do you say that the business isnā€™t profitable?


(Abhishek shah) #90

Hi,

I was talking about the edible oil business onlyā€¦check my comment aboveā€¦alcohol is a highly regulated but profitable businessā€¦


(Billu) #91

sorry, my bad.
ā€¦


(Seeker) #92

I have a few questions on Pincon for the fellow boarders who have been following this story for some time:

  1. PSL is now selling around 1.25 Crore bottles/month in West Bengal of IMIL. Is there anybody from West Bengal region who can confirm that the market share is indeed 20% in West Bengal by doing on the ground check?
  2. PSL has high Working Capital requirement which causes the D:E to be high and interest coverage to be around average. Does anyone have insight on whether this capital intensity will come down as they scale up and how this compares to other players in a similar segmenT?
  3. Management: @abhishek90 you have mentioned that you have met the management. Any insights that you can share about the meeting - who all were there, what is your sense on how the operation is run, their vision of the future of the co, etc that either makes the case stronger or weaker.
  4. Risk: Beyond prohibition which has been discussed in this thread, what are some of the other risks that people see.

(Abhishek shah) #93

I met the IR ā€¦and the VP - Financeā€¦they seemed quite confident about businessā€¦they said that OCF will become positive in FY18ā€¦you can check the genuiness of pincon IMIL products from the west bengal excise websiteā€¦this is a very regulated marketā€¦you can only hike prices if govt allows you toā€¦hence there is enough evidence of pincon being a big player in West Bengalā€¦the company seems to be on trackā€¦valuations are proper now vis a vis a high riskā€¦


(Gaurav Agarwal) #94

Hi Abhishek

What information is available on the website of Bengal Excise? Can we crosscheck their numbers?


(Abhishek shah) #95

The numbers canā€™t be checkedā€¦but there is a list of brands that sell IMIL in WBā€¦pincon has the highest number of varieties of products listed thereā€¦with udaan and Bengal tiger also mentioned with equal number of good variety of productsā€¦
The prices of IMIL are fixed by govt. No company can charge price above what is given by govt. Recently there was a price hikeā€¦55% of MRP is exciseā€¦only 45% is the worth of the productā€¦highly regulated marketā€¦and so there is nil chance that the sales that pincon is showing is a fraud sales. They simply canā€™t do thatā€¦
Said that IMIL is a volume game for themā€¦but they now have established their name in this stateā€¦I had also read in one of the media reports that the excise collection in liquor in WB has increased manifolds since last couple of yearsā€¦this piece of info was somewhat validating what pincon was screaming aboutā€¦arrest of illicit liquorā€¦


(Gaurav Agarwal) #96

We need a source to cross-check their numbers. Is it not surprising that even their oil segment is growing at a scorching pace?


(Seeker) #97

I have also talked to IR and they seem to be reasonably confident about the company. This story will work out if the growth that we all expect does come through. However, what is not clear to me is why their competitors like IFB Agro is having such a hard time growing in West Bengal and they are able to grow so aggressively.

Their edible oil segment might be growing because they are able to sell their product through government channels. However, definitely worth checking the competitors in that space as well.


(AbhijitMani) #98

This a high debt driven company.
Yes, while the QoQ growth continues, things should be fine for next few quarters atleast.
But extremely aggresive expansion might stretch the balance too thin.
Also, Pincon Spirits is not known to be very high on the coporate governance list ā€¦
So , some good & some negatives for PS.


(Abhishek shah) #99

IFB agro shut down their IMFL division and started into IMIL. They say that IMIL is growing at a scorching pace in WB and they want to grab this opportunity. There is a media interview of IFB agro on this. You may google it.

Why is the oil business growing so well? I would suggest not to look at the growth rate here. Rather look at the total sales from oil segment. The growth rate is high albeit lower base. Also, this is something what was told to me by management -

" In WB, fish and rice is the staple food. In rural areas (mostly), it is men who goes to purchase oil, rice, fish and other basic staple items". Since, men is the target customer, company launched oil with the same brand name to enhance the visibility of the brand amongst men. Moreover, there are two process - manufacturing oil and refining it. Pincon doesnt manufacture oil. They only do refining and the packaging part.


(Abhishek shah) #100

This is the link to the list of all the IMFL brands registered with state of WB. Its in alphabetical order. Check the rates of Officers choice, Mc Dowells and Pincon for 1000 ml. Pincon is positioned at the entry level as the management has been telling us.

http://wbexcise.gov.in/CommonUser/RegisterBrand_Liquor.aspx?type=28

This is the link to the list of all the IMIL brands registered with excise WB. Check for Udaan, Bengal tiger and Pincon. Here the rates of all the brands for a particular ml will be same. Government decides the prices for all the brands.

http://wbexcise.gov.in/CommonUser/RegisterBrand_Liquor.aspx?type=28

Check the bottom of this page - raids carried in WB since Jan, 2016 to curb illicit liquor.

http://wbexcise.gov.in/Default.aspx

e-governance -

Can a citizen under RTI ask for the details like excise paid by a particular company during the year??


(Abhishek shah) #101

This is a media report on how other states want to replicate the WB model of curbing illicit liquor. Data is provided about the scorching growth rate of country liquor consumption in WB. The consolidation wave has started in the state - shift from unorganized to organized segment.

And here is the Annual Report (2012-13) of West Bengal govt. Do control + F and search for Priya laboratories and Youth Laboratories (subsidiaries of Pincon). Pincon was not into IMIL in 2012-13. Check on page 63 and onwards - curbing of illicit liquor. Couldnt get the latest annual report since not uploaded on their website.

http://wbexcise.gov.in/writereaddata/Budget_Speech/2013_Report.pdf


(Seeker) #102

Thanks Abhishek for the deep digging. The volumes of 1.25Cr bottles/mth is a combination of them growing their own brand - Bangla No. 1 but also from the acquisition of 2 other brands they did in 2016 - Bengal Tiger and Udaan. So seems to me that there is a justification as to why their volumes from IMIL can continue to grow.

On Edible oil, my sense is that co is not going to be focusing as much on edible oil as they have their hands full with IMIL and IMFL.

In looking at a few other companies in this space, realized that Pincon has much higher working capital intensity than some of the other players. As they reduce this intensity both Balance Sheet and Cash Flow statements should start looking much better.

Are there any other interesting companies that folks have looked at in this sector?


(roysavio) #103

The CEO seems to have resigned:

http://www.moneycontrol.com/mccode/news/article/article_pdf.php?autono=8201121&num=0

He was appointed in April 2016:

Not sure of the impact but a CEO going in less than a year doesnā€™t seem very heartening, no?