The Rs 1600 Cr advance we heard during the trip always looked fishy. It was just not adding up. Now with your report this puzzle has been solved!!
But its sad to know that its the farmer who finally pays the price for this. With more companies behaving like Nuziveedu and Kaveri, hopefully farmers will end up paying the right price and traders will go out of their dirty business.
Though the working capital management will be bit more challenging going forward, the seed companies will still be far far better off than other companies in the agri sector. Look at the receivables of Jain irrigation, Dhanuka agritech, VST Tillers etc. The good seed companies will still have an attractive business to run and should focus more on R&D and farmer education.
Though all seed cos have high inventories I think the shift to lower advances will be gradual. The stronger ones will successfully carry over lower inventories and some more āRaasiā stories will unfold among the weaker ones.
I think Kaveri will emerge stronger. We heard lots of good words about how grounded they are and how Mr Vamshidhar is working hard doing field trips to work with dealers and farmers.
Thanks. Yes, there is time on our hands. No need to hurry. Markets are also not going anywhere in a hurry.The whole idea is to do the homework well-in-time, for high-conviction stocks. Opportunity meets the prepared:)
At the same time Kaveri Seeds is a much more discovered stock, than say it was last year. It used to be clubbed in general with other Seed companies - painted with the same bad broad brush. I suspect that isnāt the case anymore.I have always believed in a steady accumulation process, along with each incremental gain in Conviction! There might well be a spike in the counter before results season, in anticipation.
India is becoming a large agriculture exporter with surplus of USD 20 billion with cotton being a major contributor .Thanks to increased productivity from use of bt cotton n hybrid seeds and ready market in China future is bright for cotton sowing in India.more n more farmers will go for it .Due to large CAD n weak rupee cotton exports will be very lucrative.Besides cotton maize n rice are the major exports where again kaveri is having good presence.
From some of the reactions I am getting, it looks like most people are not getting the import of these reports right. These reports state the facts as seen in Maharashtra. One needs to take these inputs in for what they are, but also read in between the lines:
1). Mahrashtra is a very different market from Andhra Pradesh.
2). Kaveriās prospects and ability to influence outcomes with more field-work/presence, schemes, promotions is entirely different in Maharshtra & AP
3). Kaveri can do very well in AP - you canāt rule that out. You can rule that out in Maharshtra, perhaps
Anyone interested in tracking Kaveri should focus on AP market. The key to big outperformance by Kaveri or the absence of it - lies in AP. Thatās all being said, nothing more, and nothing less:)
Look forward to all the help. Next we will be getting back to finishing the FMCG and non-FMCG best buys track. The likes of ITC, Nestle, PAGE industries and the like.
If you have friends from FMCG, please let us know.
Normally the small farmers who need money immediately tend to get low prices while the bigger rich farmers who can wait and has sufficient knowledge of the market get the maximum prices. Although the small farmers gets more than the MSP.
**We need to think why Kaveri can not do what Nuziveedu has done so far. They have done so in parts of A.P. and probably will try to employ the same strategy in other parts of A.P. and Maharashtra also. I am optimistic with Kaveri. **
Channel check indicates price pressure being witnessed in Maharashtra due to excess stock. Appended news item report similar situations in northern states. Need to check for AP as well. How and to what extent it will impact Kaveri is the moot point.
Thanks for the link Nishant. Itās getting really interesting. I hope we are able to keep track of the developments in major markets of Kaveri and take a timely call.
There was a one-third page advertisement of Nuziveedu Seeds on the back page of Gujarat Samachar last Saturday. Looks like preparing for the IPO or want to enter Gujarat in a big way??
@Manish - Thanks for the input. IPO is on the backburner, we heard. They must be trying to increase presence in Gujarat! Please keep us posted. Kaveri in contrast has been putting out Ads in AP and Maharashtra incl. TV Ads in regional channels.
@Raj - A suggestion. Better not to try to time it to perfection. You gotta have conviction, you gotta build up decent positions, leaving it to the last minute may prove counter-productive. Got a sense about timing Kaveri - from your recent posts:). If you canāt see much downsides from here, that should help in building/accummulating from before.
@Anil - if you were referring to drought situation - we have established before that there can at most be a 5-10% contraction, with all factors incl. drought. Let that not deter your decision-making. Please go through earlier posts in this thread thoroughly for more conviction.
I am from hyderabad, i can see some ads in local tv channels about jadoo. also some ads in local news papers. because of mahasen cyclone, the coastal area is experiencing few drizzles and southeast monsoon may start in next couple of days from andaman as per news papers
Actually i do have a decent position from lower levels and sold some at 1360 levels only to add it back at 1200 levels. But have scope to add more. For which, yes, iām looking for some kind of confirmation of developments on the ground.
While i have conviction on the story, In my heart, i feel that, we are going to see a kind of_Lollapalooza_event this season, either way. Just that, am not sure, which way
Reduced acreage, over production of seeds, price war, possibly farmerās getting a last minute choice to select from superior quality at higher price Vs little inferior quality at reduced price etc etcā¦ can complicate things in the minds of buyer. I think it can swing either way. So, i have a little guarded stand in that sense. This story, to me, at this point of time, doesnāt look as easy as some of our other names like Amara Raja, Cera,Atul etcā¦
I was referring to how easy/difficult it is to understand the business, and not commenting on the valuation at this point.
In general, i find it easy to understand the businessdynamics of a company, if i can place myself as prospective buyer of the product/service of the company.
