Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Further update on Elinchrom (Photoquip) in India

with 27 comments

I briefly mentioned in my previous post that the market size for this equipment in India is huge. There are other niches such as tripods, trolleys, bags, powerpacks where Elinchrom does not dominate at the moment. While I don’t know where the company would extend over the coming years, but those are correlated expansion regions.

I wanted to update everyone with conversation I have had with one of India’s renowned Photographer, Parikshit Suri (http://pksuri.com) Thanks for your call and time Parikshit.

There isn’t anyone more unbiased to converse with, regarding a company than an independent professional source. Philip Fisher recommends speaking with employees, ex-employees, competitors and users.

 Essence of our conversation was:

Photography is a sunrise Industry in India and future is extremely bright. Infact it sounded like Parikshit holds the stock and I was his customer. He was quite bullish on Photography as a profession in India with much better days ahead to come. Marriage is an established market and photo shoots are an integral aspect. (My pessimism in past was due to magazine and newspapers’ staff employed photographers in absolute numbers having gone downhill due to internet). However, fashion, corporate, wedding, niche, pre wedding more than offsets the staff photographers in newspapers, media.

Parikshit himself uses some Elinchrom equipment and corroborated that Elinchrom has significant mind share in India. My faith in the future of this industry is now solidified and it might actually become a growth industry in India in years ahead. I believe now it would not be fair to compare US and India and 1:5000 ratio of Photographer : Population that I extrapolated earlier may be on far pessimistic side.

Representation of Stock Movement with significant events in Photoquip’s life (Illustrated and contributed by MG (http://www.blogger.com/profile/12939470953672372322))

Please contribute with any facts and your thoughts..

Written by amitdipsite

November 2, 2010 at 6:46 am

Posted in Uncategorized

27 Responses

Subscribe to comments with RSS.

  1. Amit,

    Have you had a chance to evaluate Photoquip's management?I remember you mentioned how they diworsified once into cameras and had to almost go bankrupt.Are these guys smart enough to tap the opportunity? Are there any listed/non-listed competitors?

    Although i know if the industry as a whole does well and has enough tailwinds then irrespective of the management, going forward one can make decent money here.

    kudva

    November 2, 2010 at 8:21 am

  2. Kudva,

    I believe management is upto the job and open to answer any communication promptly. There are young members of the family also into this business now who completed education from the States, so management has requisite bandwidth.

    Business is now geared to take advantage of this opportunity.

    http://www.infinity24x7.com/photoquip.html

    When I mentioned that Klik and Gretag were failed ventures, I would not blame management. Its the nature of changeful business and its hard to predict evolution of technologies. Over 2000 car manufacturers have gone bankrupt in USA and last three will also die. Thats why I'd prefer tripods to flashlights. Afterall Bill Gates refused to buy Google for a miniscule sum of 20 million $ or thereabouts, same for Yahoo. Evolution is hard to predict…

    I know of following companies at the moment present in India:

    http://www.harisonphoto.com/

    http://www.bowens.in/

    Other links:

    http://in.linkedin.com/in/deepakkum

    http://in.linkedin.com/pub/pulin-soni/16/788/a7

    Lets see how it evolves. Opportunity is clearly present and brand renders management less important to a degree.

    Multibagger

    November 2, 2010 at 8:47 am

  3. To further add, I like their focus on only Elinchrom, there is plenty of new products that can be added to product line. Photoquip is getting rid of all non core trading, manufacturing outside Elinchrom, which I consider good.

    Management compensation is resonable, no employee over 24 lacs. No dividend is promised, everything will be ploughed back, which is fine with me. Whats wrong is to promise dividend, not pay or stagnate in growth and still neither buyback nor pay dividend.

    Multibagger

    November 2, 2010 at 8:56 am

  4. Hi Amit,

    Nice to get so much information in Detail.

    I Just wanted to know about SIMRAN FARMS.

    1).What Result do you Expect this Quarter.How much increase in top line or Bottom Line.

    2)Should one keep invested in this script for long Term.

    Will be waiting for your Comments.Thanks

    Anonymous

    November 2, 2010 at 9:26 am

  5. Amit, Just got some time to put down everything I had read and borrowed from you as a small illustration. http://imgur.com/1gxKe.jpg

    One thing that is missing is when did Elinchrom come into picture? Was there any time bound contract for manufacturing and/or nation wide distribution rights? Are there any risks of loosing this contract/rights?

    Some historic links
    http://www.expressindia.com/fe/daily/19991015/fbs15062.html
    http://www.expressindia.com/fe/daily/19991205/fco05056.html

    MG

    November 2, 2010 at 4:37 pm

  6. Hey MG,

    Nice job to have created a diagram. I'll use it with credit to you..

    I have asked questions back to management. Will respond back when I get reply.

    My assumption is Elinchrom Photoquip alliance is perpetual. In other countries small or big including from US to Dubai to Turkey, you'd observe that Elinchrom distributors are not just selling Elinchrom but many other brands. Photoquip used to sell Gitzo, Manfrotto but now they are 100% focussed on Elinchrom. My business hunch says this type of partnership and indegenous Photoquip R&D + manufacturing + distributorship is not easily replaceable, and one thinks of changing partners only in bad times, not when going is smooth. They (Elinchrom and Photoquip) work very closely since 1984. They had other brands especially for developing countries like India like Prolinchrom, now phased out but Photogs know about it, and modesl manufactured especially only for India.

    I had similar doubts last year between Jockey International and Page Industries.

    Can you drop me an email, link is on top right “View my complete profile” and I shall provide you names and number of people in Photoquip who may be able to clarify all your questions.

    Go through list in this page, and open website of each distributor. While everyone else in all countries sell 10-20 other brands of allied equipment, not just studio lighting, Photoquip is like part of Elinchrom.

    http://www.elinchrom.com/distrib.php?agent=60

    US Distributor

    http://www.bogenimaging.us/Jahia/home_page

    Australian Distributor

    http://www.kayellaustralia.com.au/

    Regards

    Multibagger

    November 2, 2010 at 7:25 pm

  7. Hi Anonymous,

    Simran Farms is in an industry that is growing @ 40% and unlikely to attract smart talent. That is great for Simran Farms.

    I am not ready to believe in any epidemic like Bird Flu, its nonsense. Its only in mind, wont impact survival. Only thing that can spoil show is rise in input prices of Soyabean, Maize. Secondly, presence of competitors in SIMRAN's dominating states in North India that undercuts and offers better rates to contract farmers. This is also unlikely to happen soon. Only Venky's and Saguna are big enough to shake them off now. So sales should keep growing.

    I wanted to protect downside due to raw material prices so I left Simran's hand. Fairweather friend one could call.

    Multibagger

    November 2, 2010 at 7:38 pm

  8. @Kudva,

    Look at Apple, its tasted death literally and has come back from its grave. Thats the problem with technology. However, I am glad that Rotalux softbox brand by Elinchrom is least likely to change in next 50 years, its still a Gold standard in Industry.

    In last couple of years Elinchrom has been coming with more bags, handles, booms, I hope they continue in this boring space…

    In 2010 they came out with following new things as per website:

    http://www.elinchrom.com/news.php

    1. iPhone, iPad (iOS) based interface
    2. Rotalux softbox 70cm
    3. Hold up gear
    4. Tripod
    5. Snap Bag
    6. Car battery charger

    I consider 2,3,4,5 to be less changeful. While all of them involve technology but brand also plays part.

    In 40-100 years we may have programmable dust solutions when Nike, Reebok and brands wont matter but until then these are solid items. The 1st and 6th are technology items which any competitor without brand name can make eventually.

    Regards

    Multibagger

    November 2, 2010 at 8:25 pm

  9. hi amit,

    i am newcomer to ur blog. i bought photoquip @ 43,i want to invest in ur other recommendations too.please suggest me some other companies that i should buy at current levels.

    Anonymous

    November 3, 2010 at 4:03 am

  10. I apologise, no recommendations. Please read the disclosure. Its your money, your gain your loss. It should be your brain, your confidence, your conviction. I am unwilling to take that burden.

    Otherwise indexing or MF is best for those who dont have time.

    Multibagger

    November 3, 2010 at 5:46 am

  11. thnx sir, photoquip is a very unknown company. and as of now it seems to rule the market.. hence i would like to invest in it for short term.(2-3yrs). maybe if it catches up i may increase my investment duration too..once again thnx for throwing up light on this company..
    rajat sharma

    Anonymous

    November 3, 2010 at 3:10 pm

  12. Hi Amit,

    nice blogs n analysis especially on one segment.. highly appreciated… I invested some money in photoquip after I got convinced.. thanks to you for sharing insights n other relevant information. that really helps..
    Do you track Avanti feeds? I think its one of the organised player in an unorganised aquaculture industry and growing steadily… I just thought to check your input or suggestion on that.

    Thanks once again for taking out time and helping others thru your informative blogs..

    Rgds,
    Nitin

    Anonymous

    November 3, 2010 at 5:21 pm

  13. Two more observations from Annual Report, I could download full report today because reportjunction have switched to paypal account, which was broken last week. (Earlier it was 100 Rs per report until last week now its 250 Rs per annual report. Reportjunction has good business model by the looks. I am not aware of any competitor. If you know, please let me know. I typically pay for and download only one when I need).

    – Bad debts are down from 49 lacs per annum to 9 lacs. There should be very little bad debts for premium business

    – Printing business closed

    – Both domestically manufactured and Swiss made gear businesses, are growing equally strong

    – Best for the last. Company has been writing off expenses to the tune of 80 Lacs per year (1.5 Rs EPS) over the last five years, it will be completely written off by 31st March 2011. So 1.5 – 2 Rs EPS will get added automatically.

    Look for “Miscellaneous expenses not written off”

    http://money.rediff.com/companies/photoquip-india-ltd/16570006/balance-sheet

    Look for “Other write offs”

    http://money.rediff.com/companies/photoquip-india-ltd/16570006/profit-and-loss

    Multibagger

    November 3, 2010 at 8:43 pm

  14. Hi Amit,

    Thanks for your Reply on Simran Farms.But you didnt answered my question Buddy.I wanted to get your View on Upcoming Results of SIMRAN FARMS .I Read your earlier article about simran farm and you said to reduce simran farms and also mentioned that they promised dividend but didnt paid infact all of the top management people increase their salaries.Which was very Surprising.Do you have any idea what date results are expecte? One more thing Srinivas hatcheries.I had a look at this script.75% promoter holding and this company has good land bank also.I dont know why market doesnt gives it true value.Your View on this.Thanks.Wish you a very Happy Diwali.

    Anonymous

    November 4, 2010 at 8:12 am

  15. Hi there,

    Simran Farms, is only on scanner. Should do 30%+ topline for next two years.

    Srinivasa Hatcheries: Should perform same as Venky's coz of its association with Venky's.

    Difficult to say when real estate value gets realised, its for patient investors… Stock market does not pay much for cash on books either so real estate is more distant.

    Thanks,
    You too Happy Diwali.

    Multibagger

    November 4, 2010 at 8:34 am

  16. did you notice tax rate for photoquip? It is very low from many years. any reason why it is low?
    yr 2009 2008 2007 2006 2005
    Tax Rate(%) 1.50 2.82 4.60 3.95 -16.07

    Bhola Meena

    November 26, 2010 at 3:52 pm

  17. Hi Bhola,

    I did, have not bothered to ask company as their earnings until now have been 80-90% through exports and in various sectors Govt. allows Tax deductions of of 100 per cent of export profits.

    The Government offers many incentives to companies in India with a view to stimulating industrial growth and development. The incentives offered are normally in line with the government's economic philosophy, and are revised regularly to accommodate new areas of emphasis.

    One would hope, given India's pathetic track record as a manufacturing base – this to continue, or assume this as a risk if one is conservative.

    Multibagger

    November 26, 2010 at 6:57 pm

  18. From someone I know:
    ——————–

    Hey, I was on vacation to attend a marriage, and you know (Yes You got it right), I found Dlite flash lights there. Then I asked Photographer if he is aware of this brand Elinchrom and he replied, 'yes'. He said there is entire set of studio which Elinchrom sells.🙂

    Multibagger

    November 27, 2010 at 8:50 pm

  19. Photoquip jobs ad sometimes in April, 2010:

    http://mirchee.com/a/searchresults.do/queryString-Photoquip

    Rahul Kumar Paliwal

    December 5, 2010 at 5:52 am

  20. Hi guys

    Photoquip has invested in kiri dyes and it is revealed recently that kiri promoters are frauds ( colluding with operators).
    The investment is a paltry 50 lakhs ( now worth half that amount). Of all the scrips in the world, why did they opt for kiri??? TED FLAG????? I hope that the promoters are genuine.

    selvan

    December 10, 2010 at 3:42 pm

  21. Mates

    When operators jacked up the price of photoqip apprx. 10 to 45 between jan 2005 to june 2005, the promoter holding has fallen down from 52% to 27%. Now, this is a BIG RED FLAG.

    Please have alook at the shareholding pattern and the share price during the above mentioned period. Are these promoters are involved in photo equipment or selling & buying their own shares???
    May be a coincidence. Not an assuring coincidence though.

    selvan

    December 10, 2010 at 3:59 pm

  22. Hi Selvan,

    Can you please send a link as to where you found that KIRI Promoters are fraud, my google search did not return me any information.

    There can be any reason for selling. I doubt that Buffett would keep his holding intact if Operators jack up BRK.A Class share to 5 lac $.

    Thanks

    Thanks

    Multibagger

    December 10, 2010 at 10:14 pm

  23. Hi
    http://www.moneylife.in/article/72/12111.html

    This is the link regarding kiri. at the bootom of the article.

    BTW, i have also invested in photoquip. Your eloborate write ups were a big help in understanding the business.Thanks.

    I don't know what warren would have done ( personaly i feel that he will will not sell if operators jack up the price); however Azim premji didn't sell any shares in wipro eventhough the market cap was higher at 2000 than its today.

    Thanks

    selvan

    December 11, 2010 at 3:12 am

  24. Hmmm everything is possible, nothing can be ruled out.

    Symphony Ltd is also listed in the article, Man that stock went from 20 – 700.

    From what I have seen, Ramesh Damani and RJ also invest in such stocks, regardless of Corporate Governance eg: Ruchi Soya, Symphony, United Breweries.

    Multibagger

    December 11, 2010 at 3:40 am

  25. Hi

    Business looks good.

    Not so sure about the promoters.

    This is not a stock which you buy and go on holiday where there is no internet connectivity.

    Lets ride the tide … with wide open eyes….

    BTW, the annual reports are available photoquip.com itself.

    selvan

    December 11, 2010 at 5:11 am

  26. I read about Dhirubhai Ambani also took support of operators to kick our bears from Reliance counter. Its un ethical.

    We have think in terms of aligning our interests with promoters interests.

    For the past 4-5 years promoters have been buying around 5% limit to avoid triggering open offer. So nothing of the sort has happened on this counter in this period.

    Lets stay on guard.

    Multibagger

    December 11, 2010 at 5:40 am


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: