I am sharing my notes on the company.
General points:
- Manufactures high-speed steel threading taps (high precision requirement) and cutting tools supplied to OEMs in automotive and auto ancillaries segments
- High operating leverage business as requirement of new assets for growth is very low
- Highly fragmented industry and consolidated customers
- Originally setup as a proprietorship in 1976 by Mr. Ajay Prakash Kanoria (Nagpur-based first generation entrepreneur), reconstituted as a private limited company in 1995, converted to a public limited company in 2015 and is listed on NSE-Emerge
- Owns and operates wind-mills in Rajasthan (2 x 0.8 MW) and Karnataka (1.2 MW)
- Must maintain high inventory (140-180 days) due to large number of SKUs, just in time delivery to customers and significant lead time in importing raw materials
- Extends 80-100 days of credit period to customers
- Very good at equity investing
Expansion: Created a new subsidiary in March 2023, no details announced
Investment in marketable securities
- Out of 84 cr. networth, has investments in marketable securities of 48.5 cr. (FY17)
- Out of 104 cr. networth, has investments in marketable securities of 72 cr. (FY18)
- Out of 109 cr. networth, has investments in marketable securities of 65 cr. (FY19)
- Out of 122 cr. networth (March 2020), has investments in marketable securities of 88 cr. (September 2020)
- Out of 146 cr. networth, has investments in marketable securities of 99 cr. (FY21)
- Out of 200cr. networth, has investments in marketable securities of 162 cr. (H1FY23)
- Out of 226 cr. Networth, has investments in marketable securities of 185 cr. (FY23)
Fund utilization:
- Jan 2019: 18% (6.5 cr. limit)
- July 2019: 9% (6.5 cr. limit)
- May 2020: 10.5% (6.5 cr. limit)
- Dec 2021: 3% (6.5 cr. limit)
- March 2023: 9% (6.5 cr. limit)
Disclosure: Not invested (no transactions in last-30 days)
5 Likes
Below are some of my observations:
- This company is throwing off cash and they are using it for investments in securities
- They need negligible amount of money for capex
- Investment in securities itself is 187 crores which is spitting 16crores in interests per year.
- Cash conversion cycle is a concern given high inventory days.
Anyone has any details on their securities book, need to dive deep into that.
1 Like
They have a demerger announced, need to look into this
1 Like
Not invested but was considering for investment. But after reading about this company; I am having very negative view. I found few negative things, however my view can be biased as I am not invested. I reserve the right to be wrong!
Just consider these points before investing:
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Promoter is aged and no succession planning.
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Promoter is withdrawing salary in the name of his wife (maybe she is active).
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A lot of profit has been invested in shares and PMS from past 3-4 years which shows no growth plan or no money is need for bussiness. This is ridiculous for such a small company with such a small profit. Check their cash flow statement and go to notes.
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Promoter has created so many subsidery company and holding shares through it. Very complicated arrangement for such a small company. Inter party transaction looks suspicious because of it.
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No growth plan or capex.
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Its share price is easily manipulated because of very less volume. You just observe the volume of share for a week, you will understand it is getting manipulated by very small operators.
Thanks!
6 Likes
The record date for the demerger of Emkay Taps and Cutting Tools Limited is Wednesday, December 4, 2024. Demerger ratio is 1:1. Any one can give valuable insights on demerger of this company and future prospects post demerger.
3 Likes
regarding inventory management and cash conversion cycle, can you tell us why there is that long period(300+ days) of inventory days ? are they in retailing?
Inventory days are high because orders need to be fulfilled quickly, raw materials take time to arrive, and the company manages many different types of products.
2 Likes
Exactly! No information from the promoters.
