As Warren Buffett would say… If you are not a liquidator, it really doesnt make sense to look at the liquidation value of the company. Waiting for the Market-Value to recognise the Liquidation-Value does not make great investing sense.
I completely understand our primary play here is betting on a turnaround based on new management and added capacities.
I have 2 questions.
1). What is the reason that since 2010 though sales has grown the PAT has not? I did notice that there is a additional Interest burden but even the EBIDT growth is nor much. Basically the EBIDT is not consistent.
2). What is the remenuration package to the new Managers? Is it attached to performance of the company?
As said by me before in this thread too, don’t misinterpet my mention of liquidation value as the possible market value that can be attained by Shalimar…its a mention to just judge the possible downsides, but, if not managed properly, such downsides can be significant…
Rgdg. your queries,
1…Again, as mentioned by me before in this thread, its a case of mismanagement of productive assets, or, if i can say, pathetic management of productive assets not over last few but many years…but, this also leaves ample scope of improvement…
2…Basic remuneration is never attached to the performance, especially when manager is coming from a good postion in previous job and when you need him more to better manage your company…its the presentation that the manager gives rgdg. how he can improve the future of the company which is taken into consideration while making such appointments, especially when promoters are not involved in day-to-day activities…a contract is signed and other added pay packages like commission, esops, etc. are linked to performance…however, in case of shalimar, in addition to basic pay package and other related incentives, a ~1.5 % equity is also give as esop to md…as far as my knowledge is concerned, he is entrusted the responsibility to build team he likes and improve the performance of co…other senior level positions are filled by him and definetly each manager will have some performance linked incentives that is common…
Balkrishna…Shalimar is a co. to not have significant exposure but to have some exposure in the portfolio because the scope of improvement is tremendous…but, such cos. also come with a risk that our exposure either doesn’t perform for too long or might even depreciate significantly in case cash starts burning which is not the case yet…it is not advisable to chase this stock and if one thinks of having a limited exposure, only do it on dips and bad market sentiments…
1) Below is the highly impressive trend in qtrly profit:
0.40 [Q4]
1.82 [Q1]
4.13 [Q2]
2) Management looks upbeat on Q3-Q4 stated the reason that two price hikes are done till Aug 13 and its benefits would be reflected into H2-FY14.
3) Revenue projection is in the range of 600-650 Cr which augurs well. Margin improvement is due to better product mix and reduction in free goodies to dealers.
4) Still no mention of 4th plant progress anywhere. Its now like a dark horse.
My feel is that if H2-FY14 comes out well then stock is due for rerating. But any subdued outcome will delay the rerating as investors would require some consistancy in results. Overall intentions of promoters look good to make Shalimar more profitable in near future.
Management is taking more time than I anticipated in reviving the co., branding initiatives are not taken that is negative…in the interview to Cnbc, CEO told that initiatives will be taken in 2h, but, already one qrtr. Has passed and nothing has happened…at 50-60 it was a bargain buy because of the assets it held…but, above 80-90 management has to deliver…as I had said before its a case of mismanagement of productive assets and that continues…although I hold the shares I am disappointed with the static ness of the new management…
QoQ, results are slowly improving. Shalimar has changed the product mix to support better margin and its evident in Q2 results. Moreover management has indicated Q3-Q4 should be better and they are trying to fix the things. I feel we have to give some more time to new management and then take a call.
My reply was in response to Jatin who asked for my view and I need to be frank…u are right management has taken some initiatives but that is only wrt. Ground level presence…if one wants to change the product mix in favour of high margin products in decorative segment then one needs to create pull for the product by proper branding and that is not visible…we need to give new management the time but time taken is getting slightly on lengthier side and that’s not good that I need to admit it inspite of being an investor into the co…we need to watch q3 and q4 closely.
New date given for operationalisation of plant is q1FY15.
You are right. My current strategy is also to stay invested and monitor Q3, Q4 and ofcourse Q1. Even if they dont do anything very different and bring the company on historic track of average growth rate still i find stock is due for rerating!
If all above doesnt happen then i will SELL.
New date given for operationalisation of plant is q1FY15.
Last year they seem to have hired some PR firm and got published in forbesindia. The high profile CEO has resigned since then & someone from Akzo Noble ( surender bhatia ) has joined in.
Interesting thing to note :
Surender bhatia was drawing close to 70 lakh per annum at Akzo Nobel.
He has joined Shalimar with a salary of less than 50 lakh + incentive bonuses.
How to interpret this ?
Link to last years article after which stock rushed from 80 to 150+.
“We will be back in profit for the full year in the current fiscal. We are aiming at Rs 450 crore topline in 2019 -20,” Shalimar Paints vice-chairman Ashok Kumar Gupta said.
The company is planning for in-house production of alkyd resins, an important ingredient in synthetic paints, to cut down on costs. The company has already established a remarkable jump of 48 per cent in revenues in the March 2019 quarter over the corresponding period in FY18.
“We are doing Rs 30 crore revenue per month and we will increase it to Rs 40 crore,” Gupta said.
Shalimar Paints has three operational manufacturing plants in Chennai, Sikandrabad and Nashik with a total capacity of 73,560 kilo litres.
