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Sandur Manganese

About the Company:

  • 65 Year old company

  • Y.R. Ghorpade, the former Maharaja of Sandur, after he merged the Sandur State with Union of India, was awarded a mining lease over an area of 7500 ha. It was he, who founded the Sandur Manganese & Iron Ores Limited (SMIORE) and the lease was transferred to the company. Out of this, 2800 ha of area, which was largely iron ore bearing, was deleted when our lease was renewed in 1974 and retained by the Government. During the second renewal, the company voluntarily surrendered another 1500 ha of forest area for land preservation. Finally the lease was renewed over an area of 3200 ha with effect from 1st January 1994.

  • With a view to ensure better protection and development of the forested land, Founder Y.R. Ghorpade, magnanimously gifted about 1600 ha of his personal property in 1980. Out of the 3200 ha, we work on 2005 ha, keeping the balance 1200 ha reserved for future use.

Let’s look at some of their past nos
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Then the mining crisis happened

One of the few honest company in mining

Only Mining Lessee to have been awarded 5 Star rating in the state of Karnataka and one of 3 in the Country to have got 5 Star rating

SC allowed category A mines to operate with a cap on production. This cap is being relaxed gradually.

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Why it could be interesting now?

Financials - https://www.screener.in/company/504918/

To Summarize:

  • At Mcap of 700 Cr
  • Stock trading at 5 PE
  • Profits for last 3 years - 56 Cr, 107 Cr, 142 Cr
  • Business generates high margins and free cash flows. Co is debt free with cash on balance sheet
  • Optionality of substantial increase in operations
  • Expansion of 400-500 Cr underway - co investing into Coke Oven plan, ferro alloys etc as forward integration

Negatives:

  • Highly volatile commodity
  • Regulated by Govt. Strange rules in Karnataka
  • Major expansion into steel in coming years

Disclosure:
I am a SEBI registered RA and founder of www.intelsense.in. I have no current investments in this stock, neither have I recommended it to my members. However, I may do so in the future. Please do your own due diligence before deciding to invest. This post is for educational purposes only.

20 Likes

@basumallick I came across this company when I visited Hampi and stayed at Sandur at the Maharajah’s palace (converted into ITC Welcome Heritage hotel - Shivavilas Palace). The history of the family/promoter is impressive and as per my research from public news and ground check with few people they seem to have been running the mining operation sustainably and within legal boundaries (which is rare in most Karnataka mining operations)

But I felt that the company and promoter have social bent of mind and too focused on social welfare. Given that they were ex maharaja and also elected politician, this makes sense on their part. I don’t have any hard data point to prove it.

7 Likes

Holding shares since market price of 350 but sad to know 1 st quarter 2019 promoters pledged @ 55 % of shares,can u throw some light why

Good read to understand company history and future plans. Analyst meet with Ayush Mittal.

2 Likes

Hi @vipinsays,

Sandur Manganese has taken up a capex plan and needs approx 650 Cr for its Phase-1. Out of which 400-450 Cr is to be funded by debt and remaining equity.
Company towards the end of Q4FY19 has started implementing the plan and to secure the 470 Cr debt from Axis, ICICI & Indusind bank a promoter company called Skand Pvt Ltd has pledged 35 Lac shares with Axis Trustee Service Ltd (acting on behalf of lenders).
The reason we don’t see debt on the books as yet is that the transaction happened near the FY closing. We should expect to see debt in half year b/s (Company has so far drawn 150 Cr debt in Q1FY20).

Skand Pvt Ltd is the majority holder of SMIORE with 46 Lac shares i.e 52.94% holding. It has 2 main directors, belonging to the promoter family, Mr. Suryaprabha Ajai Ghorpade and Mr. Ajai Murar Rao Ghorpade.

Hope this helps!

Regards,
Yogansh Jeswani
Disclosure: Tracking

4 Likes

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Thanks for the detailed explanation