I spoke to the company’s CFO today and he told me to either meet him or send him a questionnaire. Have sent him questionnaire. However, digging deeper into the company, I found that the company has been regularly issuing equity to promoters and other corporate bodies (may be of relatives or someone else). In the last board meeting also they have issued ESOPs. I am not too comfortable with it. Any ways, have asked them following questions:
Company was not doing well till the time new owners (Mr.PankajSeth) acquired it. What was the reason for the turnaround?
What is companyâs installed capacity as on date? How much was it increased after the lastcapexexecuted by the company in FY12? What was the capacity utilisation in FY13?
What is the break up of sales in terms of woven fabrics and made ups in FY13, FY12 and FY11? What are theEBITDAmargins in each segment?
Who are companyâs main customers? What kind of contracts we have with them? What are the payments terms? What kind of products are sold in domestic market?
What is the market size of companyâs products? Who is companyâs biggest competitor? How is the competitive environment shaping up?
As compared to company’s sales, its profit after tax (PAT) has shown higher growth. What are the reasons for substantial increase in company’sEBITDAmargins over the past 3 - 4 years?
How is the company coping up with the slowdown in US and European markets? Has there been a major impact of the slow down on company’s product’s demand?
What are the future plans of the company? What is the capital expenditure (capex) expected to be incurred by the company in FY14 and FY15? What will be its source of funding thecapex?
Company has been continuously diluting equity by either issuing warrants,ESOPsetc to its promoters? What is the reason for that? What is the reason for issuing 4,50,000ESOPsas per latest announcement? Mr.VarunDagawas inducted in the board as per annual report of FY12? What expertise does he bring in to the company? How are the promoters related toShreyasCredit and Capital Pvt Ltd, the company to which warrants were issued in FY13?
What are the growth projections for the company in terms of sales and PAT for FY14?