PI Industries - Superior Business Model

Dear Mr. Siva,

You are right that relying on company’s guidance may prove dangerous. But to be fair to valuepickr team, I must say that such reliance on company’s guidance is placed only after their past performance, commitments,etc are put to stress tests. Hence, such reliance is more of informed reliance rather than blind faith.

Moreover, since the focus is on business, it is easy to get management statements cross checked from various sources.

I am reasonably confident that Valuepickr is the only forum which provides such indepth analysis and training. Icing on the cake is that there are no hidden agendas of the team and it is free of cost.

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Dear Mr. Sandeep, It is ok . I will keep track of this stock

With regards

Dear Siva

Thanks for sharing your extensive experience and the insights from the mining industry. Really appreciate your taking the trouble. Honoured to have people like you contributing actively on the forums.

And your point is well taken. However, you will agree that if we can get Industry Insights adding to our efforts,that is also the opportunity.This is exactly what we want to encourage at ValuePickr - that industry insiders come forward and share insights that a lay investor will take years to accummulate. Our analysis framework, hard work put in by members, and Industry Insights is an unbeatable combination:).

I am on the job - trying to identify friends/acquaintances from Farming community to provide more insights on the Agri Inputs business. You would have seen Saurabh Srivastava’s detailed comments/feedback from Bhopal on Nominee Gold, in the PI thread. Similarly I am trying to Get Pharma friends to tell me more on the CSM side of the business.

Meanwhile, one can have an open mind - and do due diligence by reading the last 5-10 yr ARs. I have seen many of us drawing premature conclusions, form experience, but not taking the trouble of doing the basics right…like reading up on the company and track record, read up on competitors, study Industry Reports - all of which are provided by members through links in this thread!

A nascent but seemingly excellent stock story like PI Industries, to my mind is always a Work-In-Progress. Let’s keep working on it.

-Donald

companiesof Onlyvery

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Hi Mr. Sivasubramania,

You have spent a great amount of time in financial markets and that is heartning… History shows that true long term investors invested in good companies always multiply their wealth relatively better…

I agree with your point that if one invests in the sectors and companies that he/she can undestand well, it will give him a relatively decent return as he will be aware of his own entry and exit points and will not be dependent on anybody…

Its also good that you come from a tracked company’s sector-background on which a thread is initiated in this forum… You can contribute a great lot to Solar’s thread…

Also I agree that mining is prone to many accidents and suppliers get compensated at a later date for temporary loss and so EBITDA margins will fluctuate QoQ… However, a long term investor has to take the view of many years and so these small hiccups don’t really matter much… Since you being in mining industry, you must be having an idea of the potential the domestic and international mining has in current context… Especially if we talk rgdg. Coal, the main user segment of our talked co., its demand is far outstripping supply and the production on domestic front has to rise sooner rather than later…

Also, since you have talked rgdg. accidents, you also must be aware rgdg. SAFEX, the international body formed by Explosives Manufacturers to report and study the accidents so that a safe working environment can be implemented while manufacturing of Explosives… Here, you also must take note that our talked co. (Solar) is the only company from India having representation on SAFEX Governing board…

I will not talk further here as this is actually PI thread and it better to discuss rgdg. Solar on its respective thread but I will say one thing that one has to look at all angles and discuss every company as comprehensively as possible so that true picture can emerge…

Rgds.

I…

Dear Mr. Donald & Mr.Mahesh, Sorry for continuing inthe same thread as the continuation is completed here. Otherwise other readers may miss important facts.

I hold (i) United Breweries (ii) Axis Bank (iii) Canara Bank & (iv) Cheminor Drugs (Dr.Reddy’s Lab now) right from the date of allotment (nearly 10-15 years). (recently, I exited Dr. Reddy’s around Rs.1600).Ibought Cadila around 9 years back. The return (bonuses, stock split etc) of all these stocks isquiteincredibale (Nazar lagjayaga). Reason: Good management in good industry outperforms.

Around 10 years back, Voltas got a large order for supply of P&H shovels. The commission team head discussed in a dinner party about the prospects of Voltas. He handedover me last two Annual Reports of Voltas. He explained me the details of different segments and their future prospects. He said that hehas accumulated lot of shares. I was impressed with the story and accumulated huge shares of Voltas for 40% of my portfolio at the average price of Rs.38 (FV Rs.10 at that time). In fouryears, it was quoting around Rs.500. Irechecked that story was still intact.But, I was nervous. I sold nearly 40% of my holding. Three four months later it was quoting around Rs.700. The story was still intact. One day there was a correction of Rs.40 in share price and sold my remaining 60% on the same day as I did not want to lose the huge notional profit (nearly 20 bagger). I had never madesuch money in market and was too happy. That stock went up to Rs.2200 within one year!!!. When story is intact, one should hold for long term.

In last two years also (which was a flat market), I made not less than 3 baggers in Vguard, Page, Hawkins.

Why I say do not depend on company source only has a strong reason. Before investing in Hawkins, I studied TTK prestige and Gandhimathi Appliances (Butterfly brand). I had good contacts with TTK Prestige & Gandhimathi. All told me “a strong buy due to bright future prospects”. I had no personal contact with any one in Hawkins.Past Annual reports of Hawkins was very impressive. Especially ratios were wonderful, moreover, I read the report of few analysts of a site and impressed. So I betted on Hawkins.Now thereturn of TTK prestige and Gandhimathi Appliancesis much better in last two years. Competitor’s strength is also required to be taken into account.

Now, I am bullish on Coal India (the only large cap I hold), Solar and Thangamayil.

I end the discussion here. Let’s discuss only about PI Industries in this thread.

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Great Approach Mr.Sivasubramania, keep it up… Indian markets need more long term investors who can buy good stories and hold for long term…

Rgds.

Dear mahesh,

iam new to this forum and iam invested in this stock,have gone thru their annual reports etc.As iam not from this sector i would like to know the impact of genetically modified crops/BT coton on the products that PI makes.I generally buy stocks to hold it for a lifetime.Is PI that kind of a stock.

Hi Biju,

GM crops will takes years and years to catch up in India as still the indian agriculture is not mature enough for such trend… Still we need to catch-up in agrochemical usage to world average as today we are even behind pakistan on that front…

With rgds. to your second query, yes, as the factors seem right now, PI is a future bluechip company in the making…

Rgds.

Mahesh,

This entirely may not be true e.g. Bt cotton has grown quiet fast in India. The others like brinjal etc. have not taken off due to opposition and claims of certain sections that the GM seeds may be harmful and foreign cos. trying to experiment in India w/o testing elsewhere etc. But if these gain acceptability then in no time they can scale. This has been the case in Nominee gold or Bt cotton.

Hi Donald,

4). Mahesh mentioned this

5). Monsanto who with Butachlor/Alachlor introduced weedicides had sold the Asia division of weedicides to Sinochem, China in 2008. This would also have opened some space for the other players. This would also indicate that the bigger players having fertilisers, seeds are more interested in bigger pies and bigger stakes than in weedicide.

Nominee gold being new has been indicated to not have any harmful effects on living beings and no water contamination which is a big plus.

The reason for NG doing better than other herbicides in PI portfolio would be that compared to other products typically rice, cotton, wheat does better due to the production in India. e.g. atrazine is for sugarcane which has limited regions producing and these may not be using herbicides much less than say wheat or rice. Also Atrazine is manufactured by other players as well and hence PI necessarily does not have the monopoly it has with NG.

The sustainibility of this would primarily depend on no other new product coming into market and nominee gold being protected by patent and labours being wooed by MNREGA. If these go then probably there would be a big risk but till that time Nominee Gold should be able to grow up. There is no dearth of market for this.

1).

-Bispyribac Sodium2.

3).

4).

PIâs R&D facility receives GLP Certification

**New Delhi, September 19, 2011: **PI Industries Limited (PI), a leading Indian Agri-Input, Custom Synthesis Company announced that its R&D facility at Udaipur has been accredited for âGood laboratory Practices (GLP) and Norms on OECD Principlesâ by National GLP Monitoring Authority (NGCMA), Government of Indiaâ in the field of Physical â Chemical Testing. Good Laboratory Practice (GLP) refers to a quality system of management controls for research labs to ensure the uniformity, consistency, reliability, reproducibility, quality and integrity of the tests conducted therein. PIâs certification follows the grant of full membership to India as an OECD member country. Hence, the physical / chemistry related data generated in PIâs GLP accredited lab would now be acceptable by the registration authorities (agrochemicals/pharma etc.) in all the OECD countries such as USA, Europe, Japan etc. The GLP certification meets PIâs strategy to provide comprehensive solutions under one roof and broadens its portfolio of custom synthesis and manufacturing solutions to cover chemical process research, molecule development, analytical method development, synthesis of high purity / impurities of chemical entities for analytical reference standards, 5 batch analysis under GLP conditions, scale up studies, process / plant engineering and commercial scale production. _PIâs R&D & QC labs are already ISO-17025 accredited, which attests to their consistent reliability of the tests and calibrations performed in these labs, and have a documented quality management system.

Commenting on the development Mr. Salil Singhal, Chairman, PI Industries Ltd., said: “Iam immensely pleased that our R&D facility has received GLP accredition. This certification is another significant milestone in our commitment to strategically partner with our global clients and support them across all the phases of product development and commercialization. For PI, an organization inspired by science, this not only helps PI to grow its business opportunities, but also adds to the reputation of its products and personnel.”

_

Commenting on the development Mr. Salil Singhal, Chairman, PI Industries Ltd., said: “Iam immensely pleased that our R&D facility has received GLP accredition. This certification is another significant milestone in our commitment to strategically partner with our global clients and support them across all the phases of product development and commercialization. For PI, an organization inspired by science, this not only helps PI to grow its business opportunities, but also adds to the reputation of its products and personnel.”

Hi Mahesh,

_ [

http://www.indiankanoon.org/doc/979870/

](http://www.indiankanoon.org/doc/979870/)

_

This is a sebi order on PI Industries & tells how promoters wanted to buy 949 pubilc shareholders for Rs 17 per share when the Bookvalue was around Rs 107 per share,stating reasons like poor industry prospects.

Does it shows the lack of promotor integrity.

This certificate may not materially affect the near term prospects but it definitely enhances the company’s reputation especially its R&D capabilities.

Any company outsourcing business to PI would like the latter to conduct the necessary R&D and if that is acceptable to various organisations then it adds to the attractiveness of PI as a vendor.

Hi Mr. Rao,

Not atall… When you read a particular article just go into detail regarding the factors prevalent at that time…

At that time, there was no trading in the shares of company with equity capital hardly of 3.54 cr. with 90-92 % promoters holding…There was no impetus provided by the Govt. for agriculture sector and the business was highly volatile… CSM business was getting built and at that time there was no firm order-book and so risks were there as it was a asset-building business… Look at the financials… in FY01 it posted a minor loss as also in FY03, a year after the order, the profit dipped to a considerable extent…

Hence, based on the factors prevalent at that time, it was a good decision to give an exit opportunity to the minority shareholders so that if they don’t want to take the risk they can exit… Delistingdepicted the confidence of the promoters to take risks and build a strong business solely by themselves…

I don’t think the episode in any way raises any question on promoters integrity…

Rgds.

Hi Mahesh,

_

Link: http://www.indiankanoon.org/doc/979870/ _

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Hi Mahesh/Donald,

Can one of you share me the documents(All 10 Year AR’s & any other industry reports)related to PI. Sorry for troubling you.

Thanks In Advance.

Donald… if you have uploaded all 10 years ARs in shared workspace then kindly send the link to him or else inform me i will send them via mail to him…

Rgds.

reports)related

Pesticides, soil, all count in GM cropsâ effectiveness, finds study

The finding could significantly increase the amount of money farmers spend in buying and spraying pesticides

Tue, Sep 27 2011

New Delhi: Genetically modified (GM) pest-resistant crops may not be the panacea they are made out to be, a new study shows, with specific reference to Bt cotton.

The field trial by scientists in Nagpur shows that the soil the plants are grown in matters almost as much as insect-killing genes and pesticide sprays.

The finding could significantly increase the amount of money farmers spend in buying and spraying pesticides. It could also mean lower yields than those promised by manufacturers of GM seeds.

The study, published in the peer-reviewed journal Current Science, says that the quantity of toxin exuded within a Bt cotton plant sowed in deep soil was nearly three times as much as that of shallow soil and there was marked reduction in the amount of toxin (which combats pests) that was present in the plant during the months of October and November, when most of the cotton is matured and most vulnerable to pest attacks.

The study also found that the extent of soil moisture, which can vary between extremes in a season, was a crucial factor in regulating the amount of toxin that was measured within the plant.

â…This decline coincided with the peak boll formation stage. At this stage, the toxin concentration was 0.48â2.40 μg/g. The toxin concentrations were, in general, less than the critical concentration of 1.90 μg/g…â wrote the authors D. Blaise and K.R. Kranthi of the Indian Institute of Soil Science, Bhopal, and Central Institute for Cotton Research, Nagpur, respectively. The tests were performed over the monsoon of 2006 and 2007 over 21 test plots in the Nagpur instituteâs cotton fields.

At least 60% of Indiaâs agricultural land is rain-fed, the extent of moisture in the plant swings between extremes, and according to the study, exposes cotton to pest attacks at a level much greater than previously imagined.

âThere is no doubt that we need Bt cotton. But in regions like Vidarbha which is rain-fed and has a lot of shallow soil, Bt cotton wouldnât work as well as in other parts of the country. The study just points out that you need different kinds of cotton in different regions. A one-size-fits-all approach canât work,â said Kranthi.

Bt cotton now accounts for over 90% of the countryâs cotton acreage and has been credited with tripling the yield since 2006 and making India a net exporter as well as worldâs second largest producer of the commodity.

Itâs largely due to the success of Bt cotton and its acceptance among farmers that several companies and agricultural research institutes have been trying to integrate the Bt gene into food crops in India.

Indiaâs major cotton producing states are Gujarat, Andhra Pradesh, Maharashtra and Punjab which all have varying soil topographies and varying exposure to monsoon rainfall.

Genetically modified cotton today uses one or more genes from a soil bacterium called Bacillus thuringiensis that trigger an insecticidal protein.

These toxins are usually fatal only to a bug called the American bollworm, considered the chief cotton pest and, as a result, the target of most sprays.

Though Bt cotton seeds are costlier than their non-Bt counterparts, its proponents claim that seeds engineered in this way dramatically reduce the spraysâand, hence, costsâin protecting cotton crop. It is estimated that pests cause losses worth $120 billion (Rs. 5.9 trillion today), of which losses worth Rs. 60,000 crore take place in India.

Pesticides worth $8 billion are used every year in India, with cotton accounting for nearly $3.8 billion of this. GM technology is expected to reduce at least 50% of the expenditure on pesticides.

Last year, Kranthi had pointed out several âunforeseenâ consequences of the widespread adoption of Bt cotton. In a report, he said 90% of the current GM cotton hybrids appear susceptible to mealy bugs and whiteflies (also considered a minor cotton pest) and that insecticide use in cotton, as measured by value, appears to have increased from Rs. 640 crore in 2006 to Rs. 800 crore in 2008.

Invitation for Acrobat.com shared workspace sent.

-Donald

reports)related

Hi Mahesh,

would you like to throw light regarding the hedging policies of PI industries. As rupee has depreciated a lot in last 2 months how is it gonna affect PI P&L.

Rgds,

Not to a significant extent Anand as CSM business has provision to pass on currency risks as well as raw material risks… With rgds. to Agri Input business, already around 10-15 % rise in prices of end products is done in last qrtr. but I think here margins pressure should be visible although not to a significant extent…Company follows a prudent hedging policy the details of which can be found in AR…

Rgds.

Hi Mahesh,