Santosh,
Not so fast. Looks like there is more work left 
You might have missed listening to the recent 12 Aug Concall by the company? You will find Concalls on www.researchbytes.com
Hi Dhiraj,
Great to have you here, your forensic audits will definitely be of great value for us.
The cash position was high more due to low inventory levels as on Mar-14. Inventory reduced from 46 Cr as on Mar-13 to 10 Cr by end of Mar-14. As explained to us during AGM, they are in a position to manage inventory better with more stable yarn prices.
Sale of scrap was not 24 Lac in FY13, I think you saw the wrong entry. Still the jump was high from 1.6 Cr in FY13 to 14.8 Cr in FY14. But it is still small compared to total sales. The EBITDA margins were also influenced by the INR-$ levels.
Depreciation - we can check with them. But it will surely reflect in the FY15 BS. I think its more of a timing issue.
I think related party thing is something we have to live with in terms of KGL-KCL. But other group companies are not in infant wear business. Kitex Ltd is intoapparels…but domestic market. His Brother is the MD there. It could be just cross-holding in different group companies. They have lots of other businesses - Anna aluminium, Saras, Scoobyday etc. Here I am trusting the MD that he will be fair to shareholders as he has repeatedly mentioned and the group reputation is something they might never like to compromise on. They are particular that the listed entity should do well without any black marks.
Points 4,5 we need to get inputs from CAs here and check with them if required.
Increasingefficiencyof the labor intensive garmenting process is THE “story” aided with latest machines.
@ Vinod,
Appreciate your view on many issues. However, still would like to bring certain point:
Point 1) No problem with efficient working capital management, but it can not be done just on 31 March. The efficiency would come over period of time and hence the surplus fund shall be parked at least in FD and not in current account. Further, I would also like it to attention of forum that in Sep 30 2013, the company has reported Cash and Bank balance of Rs 90.72 Crore. So I assume that efficient working capital was already been effected in first half of year itself. Despite Sep 30 2013 and March 31 2014 Cash and bank balance over 90 Cr, I find no increase in interest income which would require understanding.
Point 2) Accept my error on Rs 24 Lakh which is actually Rs 1.66 Cr. Having said, despite that, scrap sales jumped 10 times and with doubling operating margin. Again need some more explanation
Point 3) On Depreciation also, as on MArch 31, 2014 Net block (incl. Intangible) is Rs 181 Cr which on Sep 30 2013 is Rs 140 Cr, March 31 2013 is Rs 117.2 Cr. So during first half itself, company added Gross block of Rs 25 Cr which shall at 5% depreciation increase charge by Rs 1.25 Cr which shall further added by Rs 60 Cr accretion in second half. So that part also need explanation.
On other issues, particularly Kitex Apparel Ltd, please note that both borthers, Mr. Sabu and Mr. Thomas became director on 28 Jan 2014. Further filing of ROC, the date of registeration of this company is 27 Jan 2014 and contact email of the company is md@kitexgarments.com, which I believe shall be email address of Mr. Sabu. The registered office address is also same as registered office of Kitex Garment. Enclosing ROC details Kitex Apparel Limited for your reference.
I do find positive sign of limited debt as compared with growth in revenue and activitiy level.I do not have any doubt about the business prospect except that margin of major customers also appearing to come under pressure (based on M&A question).However, recent experience says that in extreme fraud, it is next to detect before the event. The conservative tendency of management with excellent growth prospect with the discrepancies highlight would need more detail view before going for final conclusion in my opinion.
Thanks again for providing valuable input to queries and appreciate your efforts.
Dhriaj
Kitex-ROC-Data.xlsx (9.57 KB)
Hi All,
If anyone of you have been able to download KCL Annual Report and Annual Return from MCA website, then please share. I have tried it thrice by paying Rs. 100/- each time but somehow the data didn’t show up. Those familiar with the system may know that MCA gives a window of 3 hours only to download the documents after payment.
I will try again tomorrow but if anyone already got it then kindly share.
Thanks
Aveek
@ Aveek, What you want from MCA site? The report downloaded from MCA would be in XBRL form which you need to convert with help of special software. Instead in listed company, it is easier to download annual report from website of company or BSE/NSE. Additional information filed by company after its is AGM is called annual return where they filed details of all shareholder. In listed companies, since no of shareholders is large, size of file increases and hence company submit as a seperate CD. In any case, since they are listed they need to file shareholding along details of promoters and more than 1% stake held by public on quarterly basis. So except form Charge regeneration, there is hardly anything important which is filed on ROC. Any case, in listed companies those information are available from the company website or stock exchange. Please let me know in case you need any other information and I wrongly interpreted your query
Dhiraj,
I am looking for KCL report… Not KGL … It is unlisted company… I have all the requisite things to read those files downloaded from MCA. Also, I am looking for only two files of Annual Return and Annual Return attachments. All files are displayed separately in MCA public document viewing area against payment of fees.
Please note KCL is a privately held company. It will be ultimately merged with KGL someday.
It is good to know present state of affairs of this company.
Aveek
Disc. Invested in KGL about a week or 10 days back. Allocation less than 2%. Still studying.
Hi Aveek,
I have uploaded few recent files here:https://drive.google.com/folderview?id=0B81O_hmoM5puTG82SFUzNjdHRzg&usp=sharing
You will have to download the file and open using Acrobat reader to see the content.
Best
Hari
HI Hari,
Many thanks … I really appreciate.
However, I am still unable to open the AR and P&L through through XBRL tool of MCA… Seems some problem in my PDF … Other docs opened properly…
Need to dig in my system to find out the issues…
Thanks again.
Aveek
Aveek…it seems you must be having older version of Adobe in which caseXBRL will not open up but in that case the system normally shows up the message to upgrade when you open up XBRL from mca21…do update your adobe version and check, things should get fine then.
Rgds.
Find enclosed holding of Mr. Sabu Jacob and his family in Kitex Children Wear Limited, as on July 9, 2014
| Holding | Shares hold | Face value | Value | Relation with Sabu Jacob | |
| Almeyya Jacob | 15000 | 100 | 1500000 | Mother | 3% |
| Bobby M Jacob | 17001 | 100 | 1700100 | Brother | 3% |
| Ranjitha Joseph | 1500 | 100 | 150000 | Wife | 0% |
| Sabu Jacob | 466395 | 100 | 46639500 | Self | 93% |
| Other members | 54 | 100 | 5400 | Others | 0% |
| 49995000 | |||||
Dear All,
I am few preliminary questions for anyone to answer…
-
When ever we talk of total market size of US$ 20 bn what are we exactly referring to? Is it the retail invoice value? If, yes, and if we go by what MD of KItex said in Conference call that “US 3 worth of FOB value sells at US$ 9 at US retail store” then can we assume that total FOB value of exporters would be about US$ 700 Mn - 800 Mn roughly? So, as on date the addressable market size of Kitex is about US$ 800 Mn which is growing at 4% rate? Or is it the FOB value of all exporters or am I missing something here?
-
Total sell of Kitex is US$ 73 Mn approx. in 2014. Total sales of Cater alone is US$ 2.6 billion and their COGS is US$ 1.5 billion. If I assume this COGS is the cost of goods they received at their warehouse, then it is FOB + say 20% - 25% other costs like freight, insurance, local transport etc. To make a like to like comparison, the FOB value of total goods Carter received at their warehouse is appx. US$ 1 bn to US$ 1.1 billion appx (1.5 billion less 25%). If this assumption is correct, then Carter itself buys US$ 1 bn worth of FOB valued goods worldwide. Assume Carter buys max US$ 30 Mn from Kitex (as it is the max order they accept as per MD) then where from Carter buys rest of the items? If there is only 12 players (as per Kitex MD) then Carter itself is buying much higher amount of Kidswear from other manufacturers than from Kitex. Who are they and where are they?
-
Carter has a Gross margin of 42% in 2013, 39% in 2012 (Kitex has about 45- 46%)… That they won some formidable Kidswear brand like carter’s and Osh Kosh B’Gosh etc… Do any of these brands get manufactured in Kitex’s KGL factory?
There are other questions of “adding up the numbers for Kitex story” which I guess have already been compiled … So not repeating here…
Aveek
2 Likes
Find enclosed PDF file of Balance sheet FY12 and FY13 and Profit and Loss account for FY12 and FY13 for Kitex Childernwear Limited. The company has Rs 133.58 Cr Sales in FY13 (Rs 192.50 Cr Sales in FY12), PBT of Rs 18.56 Cr FY13 (Rs 24.81 cr FY12) and PAT of Rs 12.63 Cr in FY13 (Rs 16.69 Cr in FY12)
https://drive.google.com/folderview?id=0By0hGT02saLNTk04Wk9URTBmQ2s&usp=sharing
1 Like
Dhiraj,
Very sincere thanks … Now I have been able to open all the files sent by you w/o problem. Really grateful! Did you face any issue while downloading these?
Mahesh,
Thanks. I am facing an Acrobat Pro and Acrobat Reader conflict while trying to download anything with XBRL tool from MCA site. It never happened before. Standard options are not resolving it. I will try to work it out.
Dhiraj,
They have uploaded the 2014 result on 5th August on MCA … By any chance do you have that too? The docs you enclosed is up to 31/03/2013.
Aveek
@Aveek, You are most welcome. I have downloaded XBRL file in PDF by downloading software from MCA Site. It is hell of the time consuming job. Took around 30 minutes to convert 4 files.The company has uploaded annual return for 2014 but Balance sheet and P&L are not appearing on MCA site as on date.
@ Hari: Have you used any software to download all documents with correct name for file? I face all kind of trouble when I download any documents from MCA for my other work? My email is dhirajdave@yahoo.com and would request you to share details of any software if you are aware off.
One more concern area which come to my knowledge is default by Kitex (not sure Garment or other business) being defaulted in April 11 to March 12. Please refer to Page 57 in file with large size and hence stored. The company name is appearing in EPFO Default for Rs 79 Lakhs.
https://drive.google.com/folderview?id=0By0hGT02saLNTk04Wk9URTBmQ2s&usp=sharing
Aveek,
The US import data table in this thread shows import value for US baby wear for 2013 as 2.4bn USD so I would take that as the addressable market for Kitex.
Bobby
Dhiraj,
Thanks… yes, downloading anything from MCA is a complicated, frustrating and wasteful process but at times it’s really worth the effort. Earlier, it was even worse.
Regarding PF default, we can check with management if needed but many times it is more technical in nature than a wilful default. You may find names of NTPC, TNEB, Tata Cummins, Aditya Birla Money as defaulters in your enclosed file. I had a consulting assignment in a SME company which had a PF problem for years for no fault of their own.
To me on the first look, the interesting part is… there were serious fall in revenue from FY 12 to FY 13 in KCL … If it’s a sellers’ market, then why is it so? It becomes all the more important to know the P&L of 2014 of KCL … What is the revenue is 2014? There are 3800 people working in KCL too (what do they do?) and MD said in 2015 the revenue would be about Rs. 250 Cr. min for KCL.
Yes Dhiraj, I use a software to download - http://www.ventureintelligence.in/downloader.htm (will ask a colleague to mail you by tomorrow)
Link: mailto:dhirajdave@yahoo.com
Link: https://drive.google.com/folderview?id=0By0hGT02saLNTk04Wk9URTBmQ2s&usp=sharing https://drive.google.com/folderview?id=0By0hGT02saLNTk04Wk9URTBmQ2s&usp=sharing Link: https://drive.google.com/folderview?id=0By0hGT02saLNTk04Wk9URTBmQ2s&usp=sharing
@Aveek,
Point of PF well taken. However, what would be important to note is which company it is and whether auditor has commented on default in FY12 for the company? I know at time no fault of the company, there is default but then in that case, Auditor shall appropriately comment in audit report and that is were singing on within 3-4 days of closure of financial year is concern. I understand that audit firm also have moderate reputation and appointed with Cottage Industry of Kerala and appear to be ok based on google search. But still, when we are looking at multi begger, let us collectively ask and satisfy all our doubts, more on negative side, as possible.
KCL revenue decline is steep at the best and disaster at the worst. Further, we also need to understand that despite 33% decline in KCL revenue in FY13, there was no decline in Kitex Garment which maintained stable sales of around Rs 296 Cr. Similarly, as compared
with around 27% fall in PAT for KCL in FY13, there was increase in PAT for KGL in FY13. Since both operate in same business, it give me impression that Management is using unlisted company to cushion hard impact of adverse environment, which shall be good for minority investor in short term, but definitely cost in long run.
Dhiraj
Dhiraj,
Yes, the story is getting more thrilling!.. My gut feel was that some input about KCL is must for building strong conviction and for that I tried to download the KCL files for a long time yesterday. Good that I got help from guys like you and Hari.
If both KGL and KCL are in same business but customers are segregated very clearly then revenue shifting from one to other is not possible, if we believe what MD has said. However, looking at KCL numbers, it seems either things were different till 2013 or there may be some inconsistency in what MD is claiming. Even then the seller’s market theory of MD is facing serious question.
If KCL took the beating for benefitting KGL in 2013 then also it makes no sense as we need to build the story keeping KCL in mind. Secondly, if it depends on management discretion (which revenue to book where and when) then it itself is a matter of serious concern.
On the matter of auditor comment on PF and on your earlier very important observation about fast auditor signature (even before bank reconciliation) are issues which only management or auditor can answer.
Lastly, as I wrote in my conference call update (posted few days back as a dropbox link), I don’t look at Kitex as a multi bagger or a very long term conviction bet. I still take it as a 30% growth machine (hopefully) for next two years and take it as an opportunistic bet. But with building of conviction, opinion may change, either way.
Hari,
Can you kindly share that MCA downloader with me too… Please… It’s a regular headache for us too. I will send a mail to you thru’ VP now with my email ID.