The “Provision” is for the loss in Value of Mutual Funds. It’s not real loss. Almost 60% of the Book is in Mutual Funds. So it’s not a surprise.
Also since the results are as on March 31, 2020, it’s apparent that even the Provision value is inflated temporarily.
Is it correct that the no. of shares is only 30 lakhs? 
Yes.
The number of Demat Shares are 29,59,064 and the number of Physical Shares are 40,936.
Refer to the latest Annual Report.
Hi @dineshssairam , what’s the pros/cons for retail/minority investor of a Co having less number of shares like here 30lac ?
Annual report 2020 -
Can you share the location of the annual report for 2020? It is not yet on the DHP website
https://dilindia.co.in/financial-information/
Got it. It is here
I have not read the Annual Report yet. But I’m surprised they sold the Ishlampur land. I always thought it would be used for future expansion.
If they’re going invest that money in Mutual Funds as well, it’s worrying.
Looks like the Ishlampur land was sold for a price of INR 4.89 crores
The company says that dealings with related paties were on arms length basis and based on fair market value
Rent paid is less but to a ‘related party’
Dabriwala constructions has a stake in DHP
I strongly suspect the land was sold to Dabriwala constructions.
Company invests in ‘retail’ plans of mutual funds - Is it possible that a promoter entity is the broker?
Things are not adding up - the company pays rent to Dabriwala constructions, company sells land (most likely to Dabriwala),
I have a small amount invested in DHP (150 shares). These inter-party transactions are unnerving
Dabriwala Construction is a Promoter of DHP India and yes, it is also run by the Dabriwalas. It’s their family business.
The rent being paid was always there I guess. It is a very small amount. The office location of DHP India is owned by Dabriwala Constructions.
These are not red flags in my opinion. I just want to understand why they had to sell the Ishlampur land and what they plan to do with the cash.
The investment in Mutual Funds and all activities related to that has been my single constant worry with DHP India.
I am interested in knowing ‘to whom’ the land was sold? Was it Dabriwala constructions? In which case, it is a related party transaction not disclosed in the annual report
Why are they investing in ‘retail plan’ of mutual funds?
If it’s not given in the Related Party Transactions report, it was probably not sold to Dabriwala Constructions. But yes, if someone is attending the AGM, they could ask the question. We can try writing to the CS, but in the past I’ve had no luck with a response.
Yes, that’s an issue. I remember someone told me on Twitter that the CFO manages all financial investments. I posted the tweet in this thread a whole ago. This is a legitimate concern.
Calculated the potential savings the company could have by converting from Regular Plan to Direct Plan, basis the mutual fund units reported as at March 31st, 2020 and NAV as at July 30th, 2020.
Comes to Rs 47,19,313/- per annum.
As I am a new member, I cannot upload the excel working file here.
@dineshssairam could you please take the file from me, review it if possible and upload it here for the benefit of members?
DHP India - Annual Report FY20 Review
COVID Impact
Company expects no material impact over the long term.
Pain over the short term is expected in any case.
Results - At a Glance
A flat year at best. I ignore anything after this because the loss from Mutual Funds are included, which is not operational in nature.
Key Shareholders
Dr. Vijay Malik increased stake during this year too.
Secretarial Compliance: No deviation
Audit Compliance: No deviation.
Managerial Remuneration
Managerial Remuneration has been well within the Statutory Limits since 2010 (Annual Reports not available in BSE before this).
Ishlampur Land
This land parcel was acquired during FY12 at a cost of Rs. 1.37 Crores.
It was sold in the last quarter.
However, over the years there have been multiple investments in this land in between as well.
The IRR from this land seems to be a meagre 5%. I still do not know why the land was sold and what the company plans to do with the proceeds. Currently, the proceeds seem to have gone into the bank and not into Mutual Funds, which is a promising sign, I guess?
Balance Sheet
Cashflow Statement
CFO was flat, but Net CFO is better thanks to the tax break.
Annual General Meeting
https://www.bseindia.com/xml-data/corpfiling/AttachLive/0d2ecf9d-7010-4524-a937-a35540ede3b6.pdf
AGM, unfortunately, is still going to be conducted in physical format. If anyone is attending, please ask the question on why the land was sold and how the proceeds are supposed to be utilized. Also, the question on why the company is not liquidating Mutual Fund investments and distributing it as dividends can also be asked. But from my experience, B2B companies are often stringent with cash. We can’t blame them. In a crisis, B2B businesses with little to no safety net are the first to go bankrupt.
Overall, I would say a decent year. I look forward to at least one more quarters’ results before deciding whether or not to increase my stake. I mostly want to understand whether the crisis will damage the B/S or not. Everything else seems to be in order.
As per the Cash Flow Statement, proceeds from sale of fixed assets is 6,55,28,814 and profit on sale of fixed assets is 1,64,89,480. This should primarily be related to Islampur land sale. So maybe not a very huge profit from land sale.
Factory operations closed from 20th March to 10th May as per their BSE filing. Should see some pain in the June quarter results, unless they had adequate stock to fulfill the orders and have ramped-up the production after starting production from 11th May.
The sale proceeds from land seem to be parked in the current account. don’t know for how many days. Could have been better had it been in liquid fund or short term FD maybe. Company definitely needs to have a good treasury management system. Also, like I highlighted in my earlier post, company is losing out on approximate Rs 47 lacs per annum (which would only grow going forward as the investments increase) by investing in Regular Plan of mutual fund and not the Direct Plan (Working in excel will be posted soon). I believe, we need to highlight this number to the directors, rather than just making qualitative statements.
Any thoughts by other members?
About 5% return approximately. Yes, the Direct Plan would save them a lot of money. Also their MF portfolio looks like it has recovered back significantly.
Also yes, thank you for pointing out the investments over the years. I missed that. Here’s the updated calculation:
About the money being put into Current Account, we don’t know when the land was sold and whether they have any immediate plans for the money. Let us wait at least 1-2 quarters more before passing any judgement on this.
If we look at this stock historically, the earnings get muted and then they rise significantly. The MF investments in Q1 would have gone up high. They have good MFs like Axis Bluechip.
I added some more DHP during the week at 321. Now I hold 330 shares at an average price of INR 327. My main reason for holding this is holding by Vijay Malik as mentioned in annual report.
