@jana_n - have been tracking the social media updates of the same and it seems some traction is happening here + product expansion(they launched infant beddings etc). Also, the profiles of Kitex US key employees are good to look at. I could be wrong too as the sales from own brands in US has been really poor till last AGM update.
@AJ41 - I think consolidated is not being done as the networth is negative of US co. one can assume 10 Cr loss there.
@ayushmit agreed and thanks for the responseā¦ Its very much possible that the company has a negative net worth and hence not consolidated.
Additionally it looks like they have not yet impaired the value of these investments in standalone financial statement - we could well see them doing that in March 2020 considering the net worth is already eroded and since the losses are mounting. The worst case scenario is a 27 Crore hit on stand alone profit and loss account if they decide to impair the carrying balance(will have no impact on the consolidated financials though).
AJ
Disclosure: Invested.
Ayush,
How can one be sure this time, that sales of KCL are not moving to KGL a thing which most doubt.
Sir,
There is no rule that a negative net worth company should not be consolidated. If they are doing so, I will be careful. Already enough has happened in this company in past. Same excuses were there for not providing Auditor Report etc
Hi Ashwini,
The problem with Kitex has been that it has been a controversy stock and the same kind of questions/negatives/short comings will keep getting raised despite the data being out there (shared by someone a bit earlier in the thread too). When KCL will do well, people will say the nos have been shifted from KGL and when KGL will do well it will be vice-versa 
I would agree with you that this company has some serious issues and for many this stock would be un-touchable. Now, lets reverse the question, are there few positives too or is it a fraud company? What are such data points?
PS: I honestly donāt want to indulge in this thread and be seen as someone pushing the stock or something. I was invested from few years back and didāt get out when the huge run happened. However, the fall was huge later and at some point I felt there is lot of value as the market paints this co like a total fraud while I had been going to AGM etc and could see the huge infrastructure, people, huge no of clothes being made, second/third line of management, efforts to grow etc. Overall its a risky stock as there is some issue or the other that keeps happening here.
@ashwinidamani - we are talking about an associate company and not a subsidiary. Associates are consolidated based on equity method(basically your loss is capped at your equity exposure) and if the net-worth of the associate is eroded you end up not having anything to report(You can refer to Accounting Standard for more information).
Best regards,
AJ
Misdemeanors can be priced in if risk of ruin is negligible (say negligible debt levels with decent cash flows). Whatās risky at 500 may not be as risky at 100. You can control the bet by controlling the exposure, so that even the negligible risk of ruin for the stock doesnāt end up being a large risk at the portfolio level or at net-worth level. These sometimes make for great risk:reward ratios. Kitex was one such at around 100 levels with very favorable risk:reward. Management actions here-on can change market perception on a continuous basis, which can keep improving the risk:reward for continuing to hold or for new entries (can be trailed by continuous evaluation).
Problems arenāt un-rectifiable and perceptions arenāt set in stone. There is a bit of reflexivity as well with the market participants willing to change opinion based on the price and the promoter as well could probably change behavior to support the price which as a best case can lead to a reinforcing cycle. Am seeing some good signs with the business and the promoter behavior so far. Letās see how far it goes (with a trailing stop, of course).
Disc: Have a trading position
I apologise. You are rightā¦Thanks for pointing this out. This had totally skipped my mind
The current situation in China should work positively for Kitex. I guess more customer in US and Europe would start buying from trusted partners in India/ Bangladesh.
Kitex is in a position to swiftly ramp up production, considering all/most of its workers staying in company provided accommodation. The quality certification from the best of partners across the globe will be an added advantage.
Just wait for March and June numbers and i guess most of us will be surprised.
AJ
Kitex has a few things going for it going ahead.
Key monitorable remains the sales growth and balance sheet strength. March quarter numbers and accompanying statement of balance sheet should provide idea about inventory, working capital and subsidiaries working.
One negative over the short term will be people will not spend much over the next few months due to prevailing panic. All non-essential items may suffer a huge blow as people in most places are literally afraid to go out of their house. While at this stage I am unsure when this fear will recede, I feel that shopping for dresses might not be high up the list in peopleās mind at this stage. At the same time, this provides an interesting opportunity for some sector such as ready to eat food and long life food, antibiotics and medicine. I base this purely on personal experience looking around whatās happening here.
Buying for infants and newborns is something that cannot be postponed and hence I think Kitex might not suffer too much.
Management has guided for sales of 205 crores for q4 fy 20. If that happens overall Fy 20 numbers might look great. (impact of stronger dollar and no provision for MEIS anymore) .
Management is issuing clarification for discussions happening in MMB forum!! Seriously!
https://www.bseindia.com/xml-data/corpfiling/AttachLive/2299ee40-2fd0-46b0-bcaf-da5052496030.pdf
While its easy to find faults with investment picks of well known and well respected figures, the whole essence of learning from a guru is to try to learn a process he/she teaches and then try to improve upon it to suit our own style and apply it to find good companies and avoid costly mistakes.
Just making a list of the formerās mistakes is not going to help our cause to grow as an investor.
Someone who is ready to share his teachings and learnings should be respected and applauded because I have not seen too many people open to sharing their knowledge in the investor community so openly.
Has anyone tried to determine how will Covid 19 impact sales of Kitex?
Some key clients have closed stores, but sales of Carter/Gerber happening via Wal-mart/Target & online should continue as essential stores that canāt be closed.
Does this situation turn in favor of KITEX due to current situation?
Overall sector view:
Kitex is making ICMR quality PPEs (hazmat suits?) as per press conference by Kerala CM today evening 6 PM.
This might be the only part of business working.
Called company on the number mentioned in website, response I got is - Everything is closed, labour in hostels went back home even before lockdown.
Results of a key client Carters which has #1 market share in North America:
https://ir.carters.com/static-files/ba45d9b1-a764-493f-bbac-28d92aa0f3ea
ā¢ In 15 days of lockdown Sales declined 12% & resultant loss per share of $1.82
ā¢ Expect COVID-19 to have a material impact on: Net Sales, Profitability and Cash Flow
ā¢ Extension of payment terms with suppliers, vendors, and landlords
ā¢ Suspension of share repurchases and dividends
ā¢ Reduction in planned capital expenditures by ~50% vs. LY
Probable impact on Kitex - Receivables going up, planned capex delayed/scrapped
Infantwear is clearly not immune to Covid19
