Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Freakonomics and Cravatex Announcement

with 10 comments

Just about to complete a superb book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven Levitt and Stephen Dubner, Amazon Link

A must read for anyone who liked Influence by Robert Cialdini. Clearly the book has over 50 man years of research behind it. I’ll post very interesting snippets from the book on widespread cheating by teachers in Chicago public schools, complete bewilderment of reasons behind drop in crime in the US in 1990s, Sumo wrestling considered sacrosanct by Japanese have implicit cheating as a cartel even though no money is changed, sage percipience of Narcotics business from a university graduate who lived amongst gangsters as a research work for four years. Steven is a non ordinary economist a detective and spy who has a lot of spunk and spark about him trying to figure stuff out.

—————————————————————————-

Cravatex

Since I am following this stock I noticed an announcement BSE on the 10th of March which prompted me to look into motivation behind it.

More details on the announcement is at

http://www.bseindia.com/stockinfo/anndet.aspx?newsid=1542710e-0111-4168-b0d6-eb4c93254233&param1=1

It is too early to comment on the prospects. There have been some changes in top management of FILA UK and Directors of Cravatex Ltd, Proline India Ltd i.e. Rajiv Batra and Rajesh Batra have stepped down as directors from Jan 2011 as can be seen from link below. Guessing this must have been part of negotiations to be mafia of whole of Indian subcontinent including neighbouring countries under their territory.

http://www.companiesintheuk.co.uk/ltd/fila-%28uk%29

Both brothers own a few other companies registered in UK dealing in sports.

http://www.companiesintheuk.co.uk/Company/Find?q=person%20RAJIV%20BATRA

http://www.companiesintheuk.co.uk/Company/Find?q=person%20RAJESH%20BATRA

Incase you did not know FILA faced financial hurdles due to over endorsement few years back and now the business is being resurrect globally since 2008. SBI group of Korea owns it along with management who went for rights issue and loans to capitalise the company.

Most of the innovation and extension in apparels like Golf apparels, Mountain wear, Innerwear / Undergarments and Kids range besides the sports range is coming in Korea, US and should follow in other countries with a time lag.

http://www.fila.co.kr/2010/main/main.html

Written by amitdipsite

March 16, 2011 at 11:16 pm

Posted in Uncategorized

10 Responses

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  1. Two interesting Links on stats for Wedding Photographers in United States

    http://www.slrlounge.com/business-the-wedding-photography-market-sizeestimating-the-number-of-wedding-photographers-in-the-united-states

    Official figures from Bureau of Labour Statistics state that Photographers are increasing in the US from 152K to 169K. Does not include tax evaders obviously !

    http://bls.gov/oco/ocos264.htm

    Amit Arora

    March 18, 2011 at 1:24 am

  2. Sir.. Even i did come across that announcement about Cravatex but couldn't understand the motive behind that. Would be glad if you can look into it more deeply and come with an analysis such that it can be treated as a positive and inspiring sign for the future of the company or not..

    sandeep maddali

    March 18, 2011 at 6:19 pm

  3. How Peter Lynch gets credit for Symphony Ltd and Photoquip Ltd by convincing me that diamonds can be found in no growth Industries.
    ———————————————–
    Growth of an industry has little to do with growth of a company. In his book One up on wall street and chapter called “Blossoms in the Desert”, it is about Lynch`s love affair with really good companies in really bad industries. The trouble with investing in really good industries is that it attracts the attention of many others who want a piece of the action, hordes of players show up to take a piece of the pie, and even with the big profits of the industry the competition ends up so fierce that even people in the best industry can end up losing money to the lower cost competitors. As Yogi Berra once said about a famous Miami Beach restaurant, “It`s so popular, nobody goes there any more.”, exactly the point that Lynch is making. Instead Lynch really likes terrible industries, airlines, steel, tire retreads, can making, textile companies etc. He doesn`t buy every stock of course, he looks for the one with the lowest operating costs. When times get hard most of their competitors will fold, leaving them with a huge market share in an industry no one wants any more, and since their costs are so low they often make a profit, even in the bad years. What then happens one day is the industry improves, leaving this very low cost producer with virtually no competition in a market that suddenly has the potential for explosive growth.

    Amit Arora

    March 18, 2011 at 7:40 pm

  4. Lynch's shared wisdom was the same reason I bought Relaxo Ltd. Its competition isn't with Bata, Reebok or Adidas. Its competition is unorganised footpath sold slippers and shoes. When rubber prices rise as they have done now, then Relaxo does suffer but competitors pack up and enter bankruptcy. Over next 2 years Relaxo weathers the storm and comes out far stronger.

    Cravatex
    ——–
    There is nothing to probe in Cravatex announcement. Management is making efforts to grow business and advertising the same.

    Amit Arora

    March 18, 2011 at 7:47 pm

  5. Hi Amit

    You mentioned in 'equity desk' forum that cravatex owns a property worth 30 crores in mumbai. any more details please? 30crore means close to rs 250 per share.

    selvan

    March 18, 2011 at 9:36 pm

  6. Hi Selvan,

    That is correct. While the exact price of property can be debated to be anywhere from 25-55 crores, the fact is that as per their AR and also confirmed by me with management, they are getting 4.6 Crores rental income. Check AR Page 26, Licence Fees is rental income.

    Two Implications:

    1) As yet margins on operating business are thin
    2) If they close all loss making business and reduce their business volume to stick to just profitable business, assume that is just half, they will still earn 40 Rs per share from rent and 20 Rs from operating business.
    3) They are also paying 5 crores Rent to landlords per annum. Its a volumes game with very high fixed cost initially.

    Regards

    Amit

    Amit Arora

    March 18, 2011 at 9:58 pm

  7. Continued good tidings for Elinchrom, demand outstrips supply
    —————–

    Elinchrom's US distributor is Bogen / Manfrotto.

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

    One of their Senior Manager's is Mark Astmann

    http://www.linkedin.com/pub/mark-astmann/8/579/365

    Notice the comment on this forum made on the 18th of March 2011 (today is 19th of March 2011):

    http://photography-on-the.net/forum/showthread.php?t=1014880

    “When I spoke to Mark Astmann a few weeks ago he said he's having a very difficult time getting product from Elinchrom. Of course, he attributed the shortages to the booming popularity of Elinchrom.”

    Amit Arora

    March 18, 2011 at 11:35 pm

  8. FILA Korea is first in revival of brand. Most of the media is recent here

    http://www.youtube.com/user/FILAKOREA#p/u/7/b-7Q10Nlldk

    Amit Arora

    March 19, 2011 at 5:57 am

  9. I watch a lot of tennis and for last 2 years though I had seen a few tennis player's being sponsored by FILA, I had not seen FILA in any other big way. But that's apparently changing..I was watching Indiana Wells Masters a few days back and FILA was the official sponsor. FILA prominently figured in on-court adverts, umpire chair, ball boys and other officials were wearing FILA stuff too.

    Nitin

    March 22, 2011 at 5:29 am

  10. Thanks,

    There was a time when they were #1 in Tennis. They are sponsoring Kim Clijsters, former #1, as of today #2 http://en.wikipedia.org/wiki/Kim_Clijsters

    FILA sales have yet to meaningfully reflect in results.

    Amit Arora

    March 22, 2011 at 9:21 am


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