Reliance is the biggest manufacturer of PP in India. Zenith management had confirmed in AGM that they source majority (about 90%) of their RM from Reliance and they pass on any increase / decrease in RM prices to their customers.
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Q3 results were bad. Any idea why the employee costs are going up?
Undervalued deeply: Cash balance + Investments = Rs.34 Cr.
Why the market has discounted heavily?
Maybe because of Q3 FY18 (last quarter) company has an operating loss of Rs. 0.69 Cr. The loss is because of the decrease in sales and high fixed cost (employee cost).
Key Points:
- Rajeev Rungta, Managing Director: Current positions- Present in the board of Naga Dhuseri(listed) and many others. Remuneration from Naga Dhunseri is Rs. 39,000 in FY18 which is very less.
- High Remuneration of Key Managerial Personnel: Rs. 64Lacs. in FY18 vs Rs. Rs. 73Lacs. The net income is Rs. 3Cr. in FY18 vs Rs. 6Cr. in FY17. 20% of net profits as remuneration is extremely high.
- Directors shareholding: They own extremely less amount of shares(1.79%). The remaining promotor’s stake is held by corporates.
- Loss in Q3 FY18: I called the company’s Mumbai office they told me to contact Varodara branch but no one is picking up the call (tried several times at different days).
Conclusion: Management involved in too many companies with directorship role, low remuneration in Nage Dhuseri so might be other interests of the management in that company, high salary withdrawal from the company and using shareholder’s money in the name of medical expenses of his father, low management’s shareholding.
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