Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Puneet Resins – Part 2

with 17 comments

After a bit more legwork and probe on rubber industry my erstwhile belief that hot companies are privately held or concealed inside families gained more strength. While the tyre based rubber industry is dominated by less than 10 players, non-tyre rubber industry is fragmented amongst 100s of unorganised players.

Some people are satisfied with their lives and the majority unsatisfied all their lives, promoters are people hence they too fall in those categories. Its somewhat myopic really on their part to hide their fortune, penny wise pound foolish one could say, to not participate in shareholder friendly activity since doing so in short run would result in dividend outgo, hiring a few PR personnel, paying income taxes, sharing a small part of their growing fortune, something they ethically ought to do (since they were the ones who came with a begging bowl to capital market as opposed to partnering with like minded entrepreneurs) but over long run would help them build giant  organisations, given that they also possess business acumen to back it up.

After a little more probing I discovered that Rishiroop Group are actually rolling in dough. Swimming in the proverbial ocean of dollar bills like uncle Scrooge. They have the most extensive distribution network in non-tyre industry.

Half a dozen group companies are listed on http://rishiroop.com/group.asp?Qrystr=group

The one company you want to own in group and can’t own is Rishichem. Their principals are crème de la crème of the world for Rishiroop’s distrubution channel of non-tyre based rubber products.  Dow Corning, Dupont, ExxonMobil, you name it..
http://rishichem.com/principals/principals.asp

Anyhow, I feel that ( reserve the right to be wrong ) there may be a change of heart on their part and more business may be done through listed entities like Puneet Resins Ltd. and Rishiroop Rubber Ltd. Their son Aditya Kapoor, who completed his education in Europe and the US has joined business and has been recently appointed as an MD for Puneet Resins. I am not lame and gullible enough to fall for the fact that merely studying in a western country teaches you good corporate governance principles or makes you a better person. His father, Arvind Kapoor too completed B.Tech from IIT and M.Tech from the US, has run the business, all the while listed companies were in losses (at least for retail investors and IT department !) while the children completed education from the most exotic schools in Switzerland !

Lets keep them on radar.

Gujarat Reclaim and Rubber Products Ltd and Balakrishna Industries Ltd look excellent, solid, mighty in rubber for long term players. 

Written by amitdipsite

February 23, 2011 at 6:31 am

Posted in Uncategorized

17 Responses

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  1. Very interesting, eye opener, very deep exploration, Dear Amit…Thanks for sharing with us…So here comes the question of Corporate governance and share holder friendly management…Promoters are so greedy that they do not want to share wealth with share holders…Please do share more thoughts..

    Rahul Kumar Paliwal

    February 23, 2011 at 4:38 pm

  2. RJ himself went on record to say that 5000 listed firms on BSE are not worth investing out of circa 6000+

    But Lynch “Devta's” words are, in this game one who uncovers most stones wins!

    Munger says buy three stocks only, Lynch owned 1400+, both compounded far above market rates, boils down to ones style.

    Amit Arora

    February 23, 2011 at 7:31 pm

  3. As someone said, these corporates make the inmates of Tihar jail look like heavenly beings.

    While we abhor such practices, and those by a whole host of MNCs in India, our aim is to capture the loot from firing zone and we are not afraid of gun laced robber as long as we are dressed like an Iron Man.

    Amit Arora

    February 23, 2011 at 11:57 pm

  4. Hi Amit,
    Regarding one's style (the comparison between Lynch and Munger) I would like to say that Lynch made his money in 13 years of US Bull market whereas Munger made his money in 50yrs of both Bull and Bear markets.

    I would say Munger's approach is far more realistic and accurate, however it remains one of the toughest things to do.

    BlueHorizon

    February 25, 2011 at 11:24 am

  5. Humm..Agreed Amit. But in discovering one Diamond One first have to fail in 100 coal stones. So its a continuous learning game where an retails investor can loose patience. Right from 3M who does not want to put all products under its Indian subsidiary To Puneet rasins, all fatty people do not want to share their wealth.
    Would love to learn your experience on this.

    Rahul Kumar Paliwal

    February 25, 2011 at 6:04 pm

  6. True BlueHorizon,

    Lynch had tailwinds of a bull market. His style is safer but more demanding in terms of rotating stocks every week.

    Munger's approach is to make three to five decisions in life and rest of your life and your next generations will attain financial freedom.

    Amit Arora

    February 25, 2011 at 9:01 pm

  7. Lynch style offers more protection, not that one has to buy 100s of stocks for a start, 20-30 is appropriate for beginners. There is no easy way to reach good scores, either one is very lucky or 10,000 hour rule applies to investing too.

    Sharing wealth – there is a quotation, “Never shake hands again with a person if you do not get all five fingers back the first time” Although one cannot bet a big portion of portfolio with suspect management but at certain quotations price and value are in such a disequilibrium that management integrity does not matter. On top of that if management is buying from open market for years then it makes sense to bet. RJ too did bet on several suspect names.

    We need to understand that human beings are not so different from each other, you are quite similar to Ratan Tata for 99% of part, you may disagree. For me all promoters are same, some more selfish some less, nobody including myself is Mother Teresa but in all cases self interest comes first.

    Now if and only if you have built your “reputation” / name over decades, then only would you like to keep it intact otherwise you'd continue profit maximisation for yourself disregarding rest.

    Generally good companies increase dividend every single year with growth in profits or provide an explanation – not a boilerplate text in annual report for reasons. This would narrow down our universe to 200 stocks in India. Otherwise follow the promoter…obviously with good business prospects. I don't have views on MNCs except that they want to delist asap – hardly a multibagger prospect.

    Amit Arora

    February 25, 2011 at 9:28 pm

  8. Makes Elinchrom the only game in town to allow control of studio units by iPhone / iPad. Released on 24-Feb-2011

    http://itunes.apple.com/app/elinchrom-skyport-wifi/id420885632?mt=8

    Wares will be displayed in 13 cities across the globe

    http://www.elinchrom.com/news.php?tab=expositions#content

    Amit Arora

    February 26, 2011 at 9:29 am

  9. Mr. Amit, I have started following your blog very recently. I just found it great.
    Also , I found out in the recent budget that there is no import duty liberalization on rubber which was very much expected by most of the tyre manufacturers in the context of upward cost pressures. This again adds protectionism to the domestic rubber suppliers. What do you feel ?

    stock_logic

    March 4, 2011 at 10:40 am

  10. Thanks,

    Input raw materials have risen a great deal for rubber industry and India is a net importer of raw materials. On top of that China dumps finished products, so I am not against protectionism completely. All countries are favoring one or another industry, but gradually these barriers will be removed.

    Competition within rubber industry inside country should be intense for consumers.

    I did not understand your question about liberalization of rubber ? Govt has reduced duties on import of rubber raw materials to favourable to tyre industry in Budget 2011.

    Amit Arora

    March 6, 2011 at 3:18 am

  11. I got what you meant. Thanks.

    Are you bullish on Puneet Resins yet ?

    stock_logic

    March 9, 2011 at 9:28 am

  12. Only a little bit position right now and watching on their expansion into manufacturing and their intentions. Its a developing story..

    Gujarat Reclaim and Rubber Products and

    Balakrishna Industries

    look excellent, solid, mighty in rubber for long term players.

    Amit Arora

    March 9, 2011 at 9:08 pm

  13. Amit Congrats on your fantastic R& D capabilities.You are enjoying one of the best quality of life in NZ.

    So whats your take on puneet resin at this price for purchase.It seems that era of MK kapoor is over n now the next 2 generation rules.
    Adstral continues to be a good story & the co has moved to its owned office which si a good sign.
    Their blazemaster getting requisite sanction will be the next trigger.

    Vivek Gautam

    July 24, 2011 at 10:29 am

  14. Dear Vivek,

    Thanks. Tap water is potable in NZ so saving money on RO / filtering🙂

    I don't feel that confident to bet a big part on Puneet as in other micro caps due to its linkage with underlying cyclical industries but all these compounds are magic money minting formulas, be is Astral, Vinati Organics, Puneet Resins etc Coca Cola formula is not the only secret in town🙂

    Amit Arora

    July 25, 2011 at 1:10 am

  15. YES TRUE BUT VALUATIONS ARE SO Low & big growth is visible in their user sector.The major issue is that turnover is mostly from trading but what abt the new manufacturing set up n expansion by puneet resin.

    what abt the management quality of aditya kapoor n arvind kapoor n the recent turnaround in performance?

    Vivek Gautam

    July 26, 2011 at 6:49 am

  16. Yes Vivek, Valuations are low, dividends are increasing, promoters are buying. However, in a year or two the results can be temporarily down as industry is cyclical. Its a rich group with long history, if intentions are clear, it can make money for investors. Can't lose shirt here now.

    Regards

    Amit Arora

    July 26, 2011 at 7:32 am

  17. Promoters keep buying to both the listed Entities, are they serious now in public front and want to take those listed entities to next level, A Million $ Question..

    http://www.bseindia.com/xml-data/corpfiling/AttachLive/Rishiroop_Rubber_International_Ltd_080811_SAST2.pdf

    Rahul Kumar Paliwal

    August 8, 2011 at 6:37 pm


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