I’d actually looked into this when it came up in a Screener search.
- Government is a major stakeholder (good or bad depending on the investor’s perspective - My personal investment philosophy is to avoid any business where the Government is involved.)
- Sourcing of raw materials is a major challenge. My father used to work in an industry where gelatin is a major raw material and according to him, over 70% of the raw material comes from the unorganised sector. With the clampdown on unauthorized slaughterhouses, there will be a reduction in supply and the authorized slaughterhouses will have increased pricing power. With the current government in place, we can confidently expect that the number of authorized slaughterhouse is not likely to increase with demand.
- Japanese parent is an old and well-established company.
- Gelatin is a commodity product which does not lend itself to branding or other ways to establish a moat.
These were some of the factors that led me to pass on buying this.
Disclosure: Not invested.