Forget politics. There have been glaring unexplained red flags in this at least since 2point2’s blog 5 years back. Yeah, it has been that long.
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Sabu Jacob says he didn’t enter politics voluntarily. He was forced to start Twenty20 because of the circumstances he was put in by the politicians/politics around his company.
Here is the interview in Malayalam.
Being an entrepreneur is not easy anywhere. Growth/profits doesn’t come easy especially when you have to fight non business forces in addition to market competition.
Hoping something good comes out of the latest development.
Disc: Invested at higher rates and holding.
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To the old timer VPians following Kitex, isn’t 1000 crore investment in 2 years is to big seeing the ash flow and cash balance?
The current cash and bank balance is about 150 Crore and additionally another 177 Crore in receivables. In a normal year they generate cash in the range of 100 Crore. In one year they can easily deploy about 350 Crore - the balance can come inform of project financing from banks - the business model is robust enough and they should be able to mobilize long term credit at relatively lower rates.
Another possibility is that Kitex Garments together with Kitex Childrensware(KCL) making the investment - Kitex Childrenware should also be able to mobilize similar cash as KGL and then the net credit requirement would be relatively low. The family has other businesses including spices & curry power venture in name of Saras, Aluminum utensils business with brand name of Anna Aluminum etc which are all large, well established and very profitable.
We will get to know the fine print only once the actual model is shared with share holders. The long term wealth generation in this company will be directly linked to how management is able to grow its existing relationship with the retail giants in US and the consequent market share gain. Hope management comes up with a robust road map soon and channelize its energy into business rather than wasting time and energy on non productive stuff including the political foray. Finally I really hope they replicate the current model in Telangana - it is one of its kind where the employees are provided respectable salary, good quality food, strict 8 hours of quality job(with no unnecessary over time), neat & tidy dormitory to stay and one day off every week.
AJ
Disclosure: Invested at levels above 200 and not planning to average until i see turn around in business prospects.
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Thanks for the reply, I would too like to monitor the development. Tracking Kitex as i have recently started tracking textile.
But then wouldn’t someone who has skeletons in the cupboard hide rather than go out so publicly against the govt?
Again, KITEX group is an established name and doesn’t seem like Sabu Jacob is as bad as some are making him out to be. However, I could be proven wrong in the future but seems like many of the accusations/doubts might be unwarranted. Perhaps, this could be the reason why this share could be a bargain.
It’s hard to judge the performance of a company that depends on exports in the middle of a pandemic. So, I would like to wait and see for a few quarters once things settle down in their target markets.
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Stock has moved 20% each day for last two sessions - is anyone aware of any big news? I have been holding this one since much much higher levels and have mentally written it off but it showed up on Moneycontrol under “Only Buyers” today
Cheers
Read 3-4 recent comments, KITEX group, world’s 2nd largest manufacturer of kids apparel is moving into Telangana with an initial investment of ₹1,000 Cr.
Just listed to Mr. Jacobs bite on CNBC TV18 -some interesting take aways’.
- The merger with KCL is nearly finalized and be announced in the next few weeks.
- Company’s capacity is booked out until December 2021 and the numbers will start reflecting from Q1 2021.
Now I’m extremely enthused by the point 1 above as the business reporting will be a lot more transparent and more importantly the US entity will become a subsidiary of the combined entity resulting in consolidation of financial reports.
Will wait for the Q1 financial result along with finalization of merger to add more - lets see if the Mr. Jacob executes all that he is talking about.
I continue to back the company and held on to this for last many years even after seeing my portfolio bleeding significantly due to its underperformance - while the opportunity size along with potential market share gain continues to be robust, the USP of the company has always been the quality of its products meeting or exceeding the best in class quality standards followed in developed economies and the way it treats its employees. In an industry which is muddled with all sort of human right violations and employee exploitation, Kitex has always stood out and took care of its employees (especially the young woman from under privileged villages in North East and Orissa forming more than 60% of its total work force) by providing skill training, safe & secure stay, good quality food, standard working hours and salary meeting the government guidelines - helping them find a lively hood for themselves and support the micro economies they come from.
Hope Kitex get to capitalize on its capabilities during this decade and get back to creating wealth for itself and the minority share holders.
AJ
Disclosure: Remain invested and closely watching the developments.
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Looking at the track record of the company…the merger payout will need to be closely watched…it will probably favor the promoters and give them excessive shares in kitex
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Sabu mentioned on July 12th in an interview that -
Company’s capacity is booked out until December 2021 and the numbers will start reflecting from Q1 2021.. and the Q1 result vouch that statement. Indeed a great result !
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Kitex Results Announced… All looked ok, but I am stumped by this disclosure
Is this something wrong? Want to understand this better.
Results: https://www.bseindia.com/xml-data/corpfiling/AttachLive/30a405db-ee01-4f26-bfde-970548ee2548.pdf
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@siyaram7 . Please go through the above comments , A value lesson , and description of the company.
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