Bad results
Impairment of 79 crores due to subsidiary, segment wise results do not show benefits due to Covid in healthcare
I was not expecting any major impact due to healthcare product in Q4FY20 results. If one look at segmentwise annual sales of Healthcare products, in FY19 consolidated it was hardly 16% (maintained at same level in FY20 as well). Further, Sanitizer and Mask price are also controlled by the Government order so one shall expect higher sale growth than profit growth from healthcare segment.
On other hand, Safety and Industrial and Transporation and Electronics (two largest segment) were expected to adversely affected (Together accounting for 70%+ sales during FY19 and FY20). So despite adverse market situations, Honeywell has shown better performance, 3M peroformance is moderate in my view. Of course we like to see growth in top line and bottom line, but when 80% business is not alloweed to work for 8 out of 90 days, we need to put that persepctive mind. Rather, I was more disappointed when Q3FY20 results were announced. This time at least, there was reason for not able to operate for some day, in Q3FY20 there was no such constaint.
We need to be ready for lumpiness in 3M results. Couple of years, company profit decline and jump majorly in one of the years which put it in different range. Hence, I feel it would be difficult to take short term tradning call and valuation level in 3M India in my view.
Appreciate your efforts to quickly put forward results (along with oneline view of yours on results).
Discl: Among my Top 5 holdings, my view may be biased, investor shall consult his/her investment advisor, Not a SEBI Registered advisor, Not recommending stock. No trade in last 12 months
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Thank you @dd1474 for dissecting the quarterly results. Agreed that lumpiness in price would rule the roost. You are absolutely right in saying that it’s very common for 3M to show poor results for a few quarters / years, followed by a stellar performance. Bet you, the price would be on a different orbit with the stellar performance
Since you are holding both 3M and Honeywell like myself, which one would you hold, if you are asked to pick one for the coming bumpy ride in the next 12 - 18 months. My mind is leaning towards Honeywell but I don’t know as i have a bias towards 3M for many known reasons. A real baffling moment as i hold more 3M than Honeywell.
Would appreciate your thoughts. Thanks.!
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If one year performance and price to go by Honeywell pass with distinction. However, market is full of surprise in future. I am not able to get hold of Honeywell structure in India and hence decided to take my full quantity in 3M and waiting Honeywell to correct. I have no understanding of which business would grow and how parent interest are aligned to minority shareholder in interest. In past, Honeywell Managment was reasonable to minority shareholder and hence invested around 25% of my required allocation. Waiting for price to correct to increase my allocation further in Honeywell.
I have not answer about switching from 3M to Honeywell. It would individual choices based of his/her risk profile and valuation. Only future would tell whether such switch would be right or wrong. Currently, I do not intend to move over to Honeywell from 3M at current valuation. I may change my view without informing forum. So please do your assessment and take your decision.
Discl: my view may be biased due to my holding, not a recommendation, not a sebi registered advisor.
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Like how they are innovating with Indian needs and not just “Borrowing Patents” from their parent.
https://www.urbantransportnews.com/3m-india-unveils-make-in-india-anti-heat-solution-for-metro-railways/
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Recent Disclosures →
Throughout the lockdown period, we operated our Ranjangaon plant for manufacture of essential commodities such as respirators, sanitizers and certain medical products, with great commitment from our employees and solid on-ground support from the local authorities. We are very thankful to them for their support and contributions. During this period, we were able to increase the output of our respirators by about 35% to 40% versus prior run-rate through various productivity measures. We have also increased our sanitizers output by 60% and making additional investments to increase capacity to meet the needs of the healthcare sector. Our Ahmedabad and Bangalore factories were shut throughout the lockdown period, as was the Pimpri factory of 3M Electro & Communication India Private Limited( a wholly owned subsidiary of the Company). All these three factories have gradually reopened between April 23, 2020 and May 8, 2020.
We are confident about our ability to manage this crisis through our financial stability, our well-known brands, our customers and consumers, our committed employees, support from the Government and guidance from our Parent Company, 3M Company, USA.
There is no impact on capital and financial resources of the company. The Company is debt-free and carried cash and cash equivalents of around Rs. 665.77 crores as of March 31, 2020, as already disclosed to the stock exchanges on May 29, 2020.
As a socially responsible corporate citizen, during April – May 2020, the Company, as an immediate response to COVID-19 and after assessing needs from the local authorities in Ranjangaon and Pimpri Chinchwad Municipal Corporation, Pune, supported by providing about 45000 cooked meals and dry rations to support over 90,000 people.
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Anyone aware why is 3M masks not available on any of the ecommerce websites throughout lockdown and even now? If they have increased capacity, why they are not available to buy for normal retail consumers? Thanks
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they are available in medical stores in Gujarat.
It is available on Amazon.
Edit - I am a bit confused with the prices.
I bought the pack of 10 in October for ₹179
However, now it is being sold for ₹1353.
It might be possible that sellers are different, but I am a bit sceptical about its legality after masks have been added to ECA,1955.
Update – While this is for the parent company, it should follow here too.
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A Century of Innovation: The 3M Story
3M Book.pdf (6.8 MB)
This book was published in 2002 remarking 100 years of 3M’s foundation. Planned to read this over the weekend.
Here is the ToC -
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Fake 3m mask’s has been rampant this year!. The chairman of a chain of pharmacies in Beijing has been sentenced to 15 years in prison for selling more than 500,000 counterfeit 3M.
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3M INDIA FY20 AR NOTES
In FY 2019-20, we added our third customer innovation center at Mumbai, in addition to our centers at Bengaluru and Gurgaon.
Our India R&D team developed a coating technology for the Indian railways to reduce the temperature in passenger trains, which I am proud to share has earned an honourable mention in
Fast Company’s World Changing Ideas in the Energy category.
3M Company worldwide was recognised for the seventh consecutive year by Ethisphere® as the World’s Most Ethical Company, underscoring our unwavering commitment to ethical practices.)
Our manufacturing plant in Ranjangaon, Pune remained operational right through the lockdown period. We significantly increased the production of respirators and hand sanitisers, directing our supplies to a number of government and private healthcare providers, and nodal agencies in India.
All the Plants have been able to achieve the environmental sustainability goals set for the year. All the plants have sewage treatment facility and effluent treatment plants and the treated water is recycled for cooling tower make and horticulture within the facilities.
The plants have also installed rainwater harvesting systems to divert the rainwater for ground water recharging.
With the approval from State Pollution Control Boards, plants continued sending non-hazardous waste to cement companies for co-processing there by helping reduce the carbon footprints.
On World Tourism Day, 3M Aircraft Exterior Films helped deliver the message of “Celebrating India” to the world, when it was draped on the national carrier. This highly specialised film was chosen for its superior performance under extreme conditions at high flying altitude.
3M Graphic Films were also applied on a special run of trains to celebrate Mahatma Gandhi’s 150th anniversary and on the Karnataka State Transport tourist buses to wear a festive look during the annual Dussehra celebrations in Mysore.
Royalty rates to 3M, USA
FINANCIAL PERFORMANCE
NEW LAUNCHES/ R&Ds
-
Safety and Industrials
- Launch of Paint Coating Protection
- Development of double sides Polyester Tape
- Natural Buff Pads with 3” diameter developed for the Auto OEMs
- BIS Approved Ear Plugs
- The following products are in final development stage - IR reflective cooling solutions for paintable surfaces & Polyurethane based Pipe coating for water pipelines
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Transportation and Electronics
- Launch of new Film for Automotive applications
- Development of light weight,3-D moldable Multi-layered Insulation for Acoustic solutions in Automotive vehicles
- Launch of Smart Variable messaging signage Systems Version 2.0
-
Healthcare
- Launch of locally manufactured Water softener: This helps to reduce the hardness of the water at the point of entry of individual house by use of unique resin-based formulation.
-
Consumer
- Range of new floor care products & Scouring tools
FUTURE PLAN OF ACTION
- Build capabilities in technology and product development to serve the needs of Indian customers.
- Development of products specific for Indian market, especially in the areas of Vehicular emissions (target to Bharat Stage VI),Corrosion Protection, Automotive, Adhesives and Tapes, Abrasive products for industrial and consumer markets, healthcare products, traffic and personal safety and graphics.
- Further localisation of manufacturing of products to meet Indian market needs.
SUBSIDIARY INFO
- 3M Electro & Communication India Private Limited (‘3M E&C’ or ‘Subsidiary’) is a wholly owned subsidiary of 3M India Limited.
- 3M E&C offers a complete range of products that include the Cable jointing kits ranging from 1.1Kv to 132 KV, Heatshrinks, Coldshrinks, Kastex, Electrical Insulation Tapes, Busbar tubes, DIY Electrical kits, various kinds of water filters, water softners, Hi flo filters, Wholehouse filters, Zeta +. In India, 3M E&C has manufacturing facilities at Pune.
As the Company did not get the requisite approvals of 90% of the total no. of Shares and 90% of the value (amount) of Creditors, the Scheme did not go through under Section 233(1)(b) of the Companies Act, 2013. The Company will go ahead with an alternate option under the Companies Act, 2013 for the merger going forward.
INTER-COMPANY AGREEMENTS
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The Group has entered into Intellectual Property agreement with 3M Innovative Properties Company and 3M Company, USA effective 1 July 2006 for the payment of license fees in the form of royalties. Accordingly, the group has incurred an expenditure of Rs. 4,156.04 lakhs for the year ended 31 March 2020 (31 March 2019: Rs. 5,472.36 lakhs).
-
In order to avail economies of scale , the Group has entered into inter-company services support services agreement with 3M Global Service Center Management Company, USA with effect from 1 April 2019. The Company is charged with comprehensive support services charges by 3M Global Service Center Management Company for the services received from all the 3M group companies in the areas of Laboratory, Technical assistance and Manufacturing, Selling and Marketing, Strategic and Managerial, Information Technology, Routine Administration and Foreign Services Employees Expenses and Outsourced Services of Transaction Processing on competitive conditions. Expenditure here amounted to Rs.12,582.66 lakhs. (Previous year - Rs.13,180.95 lakhs)
These are personal notes and some point may have been missed. I recommend reading the AR for a better understanding.
Dis - Part of core portfolio.
Edit - @yourraj , yeah, really sorry, seemed to have missed that part. Edited now.
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3M to discontinue Automotive Graphics Biz wef Nov 20
Dated Article but if one looks at 3M India balance Sheets, the Royalty and Corporate Management Fee is likely to keep on increasing exorbitantly, irrespective of business growth. 3M India - High Fee to Parent
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Came across this ecommerce website selling exclusively 3M products. Strange that this website does not appear easily on searching for any 3M products by google search. Anyone aware if this is owned and operated by 3M or is it any authorized 3M online storefront?
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