Shalibhadra Finance - microcap NBFC, growing steadily


(TT) #82

Speak with him again?


(Gurjot) #84

As mentioned earlier, I spoke with Minesh Doshi (MD) on Wednesday to inquire about the annual report and dividend payment.

He said that they don’t have any soft copies of the report and the BSE needs to scan each page and upload it on their site which is why it’s not been uploaded on their site yet. I have received a physical copy of the AR yesterday and I’m sharing the relevant sections here.

Regarding dividend payment - He mentioned that this is the first time they are doing an electronic transfer (ECS) of the dividends which is taking time. (Although he sounded apologetic of the same but this is no excuse and I’m not sure whether they’re liable to pay interest as of this day)

Certain highlights of the annual report :-

  1. 15% growth in live contracts
  2. 0% remuneration to directors (this is really surprising for me. Are they already too rich and this business doesn’t matter to them or do they have another business running in parallel? They definitely can’t sustain themselves on dividends - amounting to 30 odd lakh for 20+ family members.
  3. They haven’t done any CSR activity in the FY based on their profit. Would be great if someone can share the implications of that?
  4. SEBI has initiated penalty proceedings against late filing of certain documents. This is under investigation - how serious is this?

Disc - Invested


(Gurjot) #85


(JatinK) #86

Thanks Gurjot.

Really Helpful. Reduces a few doubts that were coming in mind on promoters’ credibility due to no AR & no dividend received.

On CSR- I think that a minor issue. Many small companies have not done full required CSR activity this year & they should be getting more time to complete that.

On non-compliance- Could be minor penalty from SEBI depending on seriousness of issue.


(ManavBansal) #87

Great Work Gurjot

Like everybody else I am also dying to know what you thought of the MD - Minesh Doshi

a) Did he share anything about future prospects of the company
b) Did he come across as a honest and straightforward guy
c) Was he humble and did he give you, a minority shareholder adequate attention or was he a bit authoritative
d) What was your overall impression of him

I like these guys,I think in NBFC business having honest and ethical promoters is half the battle won,almost, everytime investors lose money investing in an NBFC is when they invest in promoters who are dishonest and over aggressive

SEBI thing and CSR are minor things, these guys are facing teething issues with going digital, moving the dividend payment system from physical to digital is a very positive step long term, short term pain is guaranteed though

It is great to see physical growth in contracts and opening of 3 more branches,plus the supposed branch in MP - this shows that management is stepping on the gas

The Negatives -
The ecosystem in which this company operates is under a lot of stress, it was heartening to see physical business growth, but the environment is stressful, if anybody can make it work, these guys can,let’s see
At some time in the future, these guys will convert their unsecured loans into equity to increase capital base, this is normally done at book value, it is both a negative and a positive, negative because we get diluted, but positive because it gives the company even more operating leverage to drive business growth,everybody asking why these guys are working at no salary, this increased equity stake is what will be their payoff in the future for the work they have been putting into the company, from whatever I can decipher from their behavior, they will do it in a way which would be least harmful to minority investor interests


(ManavBansal) #88

Most Importantly - I reserve the right to be wrong :smile:

I got a lot of positive feedback from forum members, so that just makes me a little conscious

Over to Gurjot, to fill in the missing bits


(Gurjot) #89

Thanks Manav.

First of all, let me say that I had no intention of speaking to the MD and my only intention was to speak to the Investor Relations Officer regarding AR and dividend. So I didn’t really have a list of questions when I got to know who I was speaking to.

How this actually happened is - I asked the person picking up the phone that I want to speak with the Investor Relations Officer. The line was transferred to someone I believe Manav spoke with. Not a very polished guy, speaking in crude hindi.

  • He said the company has transferred the money for the dividend within 5 days of the AGM and it is now the banks issue. It is the banks that are causing this delay. (which was putting me off as it was difficult for me to communicate with this person)

  • Then he said the company has shared both the soft and hard copies of the AR to the BSE and he doesn’t know why the BSE has not uploaded the AR. Again saying that the BSE is causing the delay.

  • Starting praising the management and saying they don’t take a single rupee as salary (which I didn’t believe until I saw the AR and I would love to speak to the MD again on this topic :expressionless:)

  • Regarding Q2 results, he said he doesn’t know when they’ll be announced. He took my address details for sending the AR and said I’ll receive it soon.

Few minutes later, I received a call from the company and they wanted to confirm my details for the AR.

I confirmed my details (good thing because the other person had made a mistake in my address) and then started asking about the dividend payment issue again as I felt I could communicate with this guy a lot better,

  • He accepted the delay in dividend payment saying this is the first time they are doing a ECS and that is causing the delay. As I said earlier, he sounded apologetic about the delay.

  • Then he asked me how many shares of the company I hold? (Now I’m not sure if that is appropriate or not but I felt he shouldn’t have asked that)
    I asked him if he’s the Investor Relations Officer (IRO) of the company or the person who I spoke with earlier? He said he’s the MD and the other guy I spoke with is a operational worker and doesn’t know much and that they only submitted the hard copy of the AR to BSE.

  • Anyway, I told him I liked their company and hold XYZ shares and would like to 3-4x my holding based on their future performance. To try and talk about the performance he talked about the poor rural demand in current environment (I’m actually forgetting if he mentioned the poor monsoon as a reason because I remember asking him about the drought for the last 2 years)
    On future prospects - He only talked about the immediate future saying H2 is generally better because of Navratri and Diwali and expected demand to pick up.

  • I asked him about the Q2 results announcement and he said they’ll be announced on Thursday. So may be the hard copy of it has been sent to the BSE and have not been uploaded on their site yet. He also said that I can speak to him anytime if I have any questions.

Overall he seemed like an honest, humble and down to earth guy in his manner of speaking. I felt confident with the way he said that I could speak to him anytime.

The only caveat is that I’m not sure if he was trying to ascertain my shareholding at that time and whether if he knew my shareholding it would have made much difference in the manner of speaking.

PS: I refrained from sharing all this information on Wednesday itself as I wanted to wait and verify some of these details myself. Having received the AR, seeing the remuneration, reading the AR etc has definitely laid to rest any ethical promoter related doubts I may have had about the company.


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(ManavBansal) #90

hahahaha…Gurjot, he must have put you in a tizzy by asking you the number of shares you hold :smile:

He is the owner/promoter, the sole boss so to say, not an employee, he might have been curious, you must be one of the few minority shareholders to talk to him

I know one thing, if I was in his place,I would also ask you how many shares you held out of plain curiosity,since you are directly contacting the company

I have been asked this question plenty of times,and in almost all the cases, it is the promoter directly asking me, not an employee, smaller company owners are very interested in this aspect

From what you wrote, he was not promotional about the company, he told you something that I had written earlier about the environment being tough and his point about H2 being better is valid

Now that this is done, Gurjot, how many shares do you hold anyways (Just kidding :grin:)

If you ever get asked this question by a promoter ever again, you should reply,less than you,otherwise you would be listening to me :smile:


(Alok Bhola) #91

Thanks Gurjot for posting copies of certain important pages from the FY15 AR.

Can you please also post copies of the following three pages:

Balance Sheet;
Statement of Profit & Loss; and
Cash Flow Statement.

Thanks,
Alok


(TT) #92

Do you buy the statement that results have been sent to BSE but not uploaded? BSE is not so lax, it uploads results at best by early next working day if they have been sent at the end of the day.


(Gurjot) #93

Agreed.

But then the Annual Report was made well before the AGM on 29th Sept and it still hasn’t been uploaded on the BSE website a month later.

So I don’t know who is at fault here?

One thing is for sure - with each passing day the dividend payment issue might suddenly drag the CMP down. The only saving grace is there are very few individual minority shareholders.


(TT) #94

Gurjot

In this day and age, I do not think the BSE will sit and scan the annual report themselves. This must be a requirement upon the company to send a soft copy to the exchange. Either I am wrong or the MD does not know of this requirement. I still think these days all filings are generally electronic, sending the exchange a physical copy probably means it’s still lying around somewhere unclaimed.

Regards

Tushaar


(TT) #95

Results out. Completely flat results, marginally higher revenue eaten up by higher finance cost. 9687FF94_B396_40B5_A983_17AD0720B7E1_172916.pdf (42.1 KB)


(Gurjot) #96

Yup - poor quarter for the company. The MD had spoken about the poor demand environment but saw a much better H2.

A couple of points to note about the management integrity:-

  1. As had been communicated by the MD - they are such a small firm that they still send physical copies of the results/annual reports and expect BSE to scan each page and upload the information. You can see that in the latest results.
  2. I was told the results would be announced on 29th Oct (scroll up the thread) and that is the date mentioned on the results page.
  3. Dividend has been credited today through NEFT :smile: :smile: :smile:
    (Currently available at more than 2% div yield and stable growth of 15-20% per year, RoE >20%. Only needs to continue for 2-3 years for some serious re-rating :sunglasses: )

(Alok Bhola) #97

I glanced at their Financial Statements for FY14 (FY15 has not yet been uploaded anywhere). Following amused me:

PBT according to the Cash Flow Stmt: Rs 4.20 cr
PBT according to the P&L Stmt: Rs 4.79 cr

Inventory Change according to the Cash Flow Stmt: Rs 4.61 cr
Inventory Change according to the Balance Sheet: Rs 1.55 cr

Total Working Capital Change according to the Cash Flow Stmt: Rs 4.01 cr
Total Working Capital Change according to the Balance Sheet: Rs 1.49 cr

I have no idea what to make of these Financial Statements.

Those having access to FY15 Financial Statements might want to comment on whether such inconsistencies exist in FY15 Stmts as well. If yes, all the reported figures lose their sanctity, unless someone is able to explain these inconsistencies.


(Kartik Mahajan) #98

Hi,
I am a newbie and usually visit ValuePickr for reading/learning purpose quite a number of times in a month.

I was completely convinced about this story( and quite impressed at the research work done), until I saw that Manav’s account has been deactivated( and read the thread about his communication with the Admin) I would like to thank Admin for bringing this to notice. Really enjoy this forum.

Regards
kartik


#99

What was highlighted was potential abuse/misuse of VP Forum for Newbies to take note of, be aware of such malpractices, nurture a healthy skepticism whenever superlatives are used, when risks are glossed over, and there isn’t enough attention/discussion on downsides/risks.

Newbies are encouraged to note that this is a very small microcap NBFC with just 15 Cr in Annual Sales. Investing in such small business are fraught with many risks. Beware whenever ordinary achievements (the right things to do) are pitched with superlatives. Beware when Titles use Superlatives as in this case “Mispriced + Steady Growing NBFC + Terrific Management + Inflection Point”

Shalibhadra Finance - Investment merit - is a different matter. A healthy balanced discussion is encouraged.


(mukul aggarwal) #100

Any idea when they are going to report q3 results??


(Hitesh Patel) #101

I think its today as I saw nos reported on bse while looking for torrent pharma results.:slightly_smiling:


(Prashant Kulkarni) #102

Here r the results linkhttp://www.bseindia.com/corporates/anndet_new.aspx?newsid=a10128be-03a1-4a56-b35b-643f7f820312