A new store of Sreeleathers is opened in Bankura, WB (100km away from Kolkata) in a 3 storey building in February,2020. The crowd was huge till the lockdown started.
Was interested in this story earlier as the sales growth has been encouraging and Sreeleathers is a legitimate profitable business and brand but avoided it on further research. You should have a good answer to my points as below:
- the promoters have shown no intent yet that they want to create market cap and hence minority shareholder value till now. No investor meeting, no updates, no concalls.
- Also there are lot of small body corporates holding substantial stake in the company amongst the public shareholders. So maybe the shares are just being sold from related entities to promoters. Who knows unless there is a display of creating value.
- I also remember while tracking this earlier, that at a time when the share price was hovering around 200 rs a share, the promoter announced a buyback at 150 Rs a share - this resulted in no shares being actually tendered in the buyback. Why would any sane promoter do is something I couldn’t understand but what is clear that the promoters are in bed with some very poor financial advisors.
- Salaries and other cost in the business are abysmally low - either they are being paid in cash or the expenses are being parked somewhere else artificially inflating the profits of listed entity
- Very high amount of cash has just been lying in the balance sheet - again with no buybacks and no major dividends. Poor capital allocation in my mind.
- The steadiness of manufacturing cost at 30% is baffling. Wonder whats the reason.
- No clarity on what business comes under listed entity and what comes under other entities.
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You’re right! I found out that they do not have any in-house R&D facility, no use of technology(as per Annual Report 2019). Also, they don’t care about investor’s expectation. Insignificant expansion, no dividend, no buyback - these action are very confusing.
Interesting article
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Sreeleather announced that buyback is completed and Promoter share is increased to 72.3% now
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2021 Annual results:
Sales 83cr vs 173cr previous year
Profit 11cr vs 28cr previous year
From Results,
5) The Covid-I9 outbreak and measures to contain it had caused significant disturbances and slowdown ofeconomic activities. The
Company’s operations for the period were impacted due to temporary suspension of trading activities. The opemtions are gradually
ramping up, in spite of limited availability of workforce and supply chain disruptions. Further , the sales of the Company during the
period were adversly affected, however with the easing out ofrestrictions the demand ofthe products is gradually increasing. The
Company has considered intemal and extemal sources of informations and determined, exercising reasonable estimates and
judgement, that the carrying amount of the assets are
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I had visited one of their stores in kolkatta way back in 2014, the products I had bought then lasted for a good 7 years and are unbeatable in quality and price even today. The only issue is they are not marketing. Recently I observed they have online ordering and delivery system but no tie up with any big e-commerce players. Further the online product catalog is also limited. I see lot of scope for improvement but may take time.
Disc - Invested less than 1% portfolio
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I checked and sreeleathersonline.com is part of listed entity sreeleathers…House of SL is not part of listed entity. Yes, They are using indirectly name of SL for gains…Anyone with more inputs?
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