Manas Portfolio

[Kumar_manas]

@Sat

Did you come across companies like that ? Would you be able to share some examples.

I have already shared NMDC as an example of that-

1. PSUs - details on this post- Commodity and Cyclical Plays - #1400 by Kumar_manas NMDC which built huge steel plant. Inefficient employees and management of PSUs usually mismanage capex and cash, even if they have lots of it. This is typical characteristic of PSUs.

2. Capex funded by debt that gives low ROE for years/decades- textiles, paper industries are like a treadmill. ROE is very low, and leads to erosion of shareholder value.
   GPIL would have gone in this path and would have been a bankrupt company, if it did not have its own iron ore mine. Many steel cos went bankrupt that did not have iron ore mine of their own.

3. Capex/acquisition at peak of euphoria- Tata steel acquiring corus, and tata motors investing lot of money in tata nano plant. Tata steel survived all this mis-management because it had low cost iron ore mines. Tata steel survived because the JLR acquisition turned out well at least.