Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Rash and Reckless acquisitions of Zylog ?

with 176 comments

I will try to be brief with one example, because my incentives are inversely correlated to the amount of words I write. Less time to research and relax.

While Zylog continues to fall like a stone, optimists like me expectant of bloodletting stopping at or before 30 Rs levels. It started as a small trading bet which some of you may have squared off, but I decided to consider it as a long term investment.

It is amusing to eavesdrop on sheer imagination of chickenhearted opinions as well, some of it well meaning from survival instincts. While the scam is Proven against 300+ MPs in India, scam against Zylog isn’t proven yet !, so let’s take a chill pill.

Now for the cold calculated reasoning mind to take over.

Company has grown its consolidated revenues from 0.7 Crores to 2200 Crores between 1998 to 2012. PAT from 0.3 Crores to 205 Crores. (Please notice the decimals). Before we start pointing fingers on the un-accused and innocent-until-proved-guilty promoters, let us recall that company paid 112 Crores of income tax in 2012.

Let us analyse one acquisition, Brainhunter in 2010. I think it has been amazing acquisition for 35 Million $ in 2010. Let us look beyond the revenues of Brainhunter and its employee base. Brainhunter has 40+ employees and it was acquired from bankruptcy proceedings. It broke even next year itself made some profits in 2012. More importantly it gave Zylog a foot in the door at Canadian shores. 

Picture of the Canadian revenues renders as below for Zylog.

2009 Zylog Canada revenues 0
2010 Zylog Canada revenues 103 crores
2012 Zylog Canada revenues 810 crores

Besides being entrenched with its TalentFlow product (, which commands significant intellectual property and recurring licence fees in Canadian Government offices, company has been able to scale up services revenues along the periphery. One of the commendable policy that sets Zylog apart from other mediocre minds is their hands off approach towards subsidiaries and hiring and retaining talented people. Hiring John Mehrmann, for Canadian operations is one such example. Nothing wrong with a boutique consulting firm that lives in shadow of artist promoter who refuses to let go of paint brush but one needs to hire people more talented than oneself, should the desire to scale up has to see light of the day – company passes on this score colorfully. From nowhere to half billion dollar revenues in 14 short years – even though based on acquisitions commands respect. Not everyone makes money by inventing a bulb. Numerous companies thrive on acquisitions and turnarounds.

Canadian operations look delightful in mere two years of operations of the price paid (circa 150 crores).

Specialty products

Company have over six plus 100-200 crore product brands. This is based on my analysis of industry, alternatives, employees in division and Alexa rankings. 

Selling out a division which is profitable is a cinch with 1+ Trillion $ of dry powder waiting in wings, just in coffers of S&P 500. IT companies easily get sold at market cap of 2-5 times annual revenues and FMCG ones at 4-10 times revenues.  Although, there is no need to do that. They just need to hang around and manage the hiring and firing.
Company lives beyond humdrum existence of offshore development and maintenance. Each of products of company such as Field Power, Bank Companion, Silvanus 360 allows company to earn licence fees as Microsoft milks Windows OS. Company earns 17% of its revenues through licence fees of IP based software i.e.374 Crores out of 2200 Crores in Fy12. These product divisions of company can be sold at FMCG valuations i.e. 4-8X revenues.

Company has built proprietary products catering to niche segments which are becoming category leaders. I started analysing one such product for Waste Management which complies to WEEE and RoHS directives of EU, to guage market share of Silvanus 360 vs leader in this category. To my surprise, this product is the leader in its category. 

Cash Flow crisis

Shares pledged with banks have been sold, further accelerating downward spiral. All growth has been funded via acquisitions. Current position of the company is: 900 crore due from companies it renders services to. 1800 Crores will be paid as salaries this year. Cash flow crisis were to scare me if company had high fixed costs. Margins can be improved by letting go the loss and break even projects and increasing off-shoring mix.


I checked a number of other products in Waste management category which showed Alexa ranking in millions. From an outer space vantage point you can compare a business applications company with another business applications company.

Silvanus 360 alone ranks somewhere around RS Software, a 200 crore company, does as a whole

That is just one dimension of analysis. You need to estimate leadership position in an industry as well. Silvanus 360 is leader in Waste Management in EU whereas RS Software is a midget. 

Disc: 5-7% holding and in absence of any scam proven against the company over next 4 months will be comfortable to take up to 15-20%. I obviously expect multibagger returns in 2-2.5 years.


Written by amitdipsite

December 24, 2012 at 11:44 pm

Posted in Uncategorized

176 Responses

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  1. 200% i agree that zylog should be atleast 600 to 800C market cap, what would you make of Zylog management not responding to this fall in share price ?

    Disc :: 5% holding in my portfolio.


    December 25, 2012 at 3:07 am

  2. I don't know, but cash flow problems have to be genuine otherwise they would have done a buyback and not just revoke pledged. They continue to hire and expand

    Click search here:

    Amit Arora

    December 25, 2012 at 7:06 am

  3. I found a zylog EM research report while searching by backup hard drive, it might helpful in understanding zylog business. It's old report.


    December 25, 2012 at 11:27 am

  4. There were unusual volumes on 20th Nov and days following that. It seems some institution dumped lot of shares around 70-80 range. What does it indicate?


    December 25, 2012 at 11:33 am

  5. Correct, they have revoked their pledged shares? How much share is still pledged? Any ideas. I believe they have not revoked their entire pledge? right?


    December 25, 2012 at 1:19 pm

  6. Hi Amit,
    As always very informative post. I too hope that the company come out of red and post strong performance in 2 years time.


    December 25, 2012 at 1:21 pm

  7. Hi Amit,
    Omnitex Industries: What are your views on Omnitex at current price if some one is ready to hold for long term.. and what will be your advice in terms of growth prospectus specially number of omnitex going ahead..


    December 25, 2012 at 1:25 pm

  8. It is really re-assuring to hear positives about a company which has lost 80% of its market value and continues to loose further.
    I am looking to learn to make such analysis. Any guidance (links/books etc) in this regard would be really helpful.


    December 25, 2012 at 1:46 pm

  9. From Zylog 2012 Annual Report ::

    There is a cash increase of ` 5,851.33 lakhs out of operations.A large part of this increase is owing to the need to provide
    a cushion towards payroll cost. Post acquisition of Brainhunter in Canada, the consolidated outflow towards the salary
    commitments, administrative and marketing expenses have led to a substantial outflow of cash every month.The outstanding
    cash balance as of 31-Mar-2102 covers expenditure for a little over a month of our operations.


    December 25, 2012 at 2:39 pm

  10. Amit,

    Where did get 1800Cr figure for employee expenses,
    2012 Annual report says 355Cr (standalone) and 1178Cr (consolidated) for 2012.


    December 25, 2012 at 3:09 pm

  11. Hi Amit,

    Nice work analysing the products of Zylog.
    Do you also know about promoters? Are they credible?
    Markets unable to forget the bad taste left by the likes of DSQs and Pentasofts.



    December 25, 2012 at 4:35 pm

  12. Dear Excel

    I don't know them personally but how I know them is through what they have built and what they have shared with Govt. and minority. My case is only to do with strength of business and its survival.
    I tend to overlook whether promoters have evaded tax or have colluded with operators for manipulating stock price. I look at

    1. Growth of business and how solid its prospects are
    2. What will I get via dividends through growth

    Pentasoft, DSQ fooled investors and fudged accounts and took banks for a ride. Even Allied Digital Ltd fell 95% recently not based on any scam but business fundamentals failed, same for Glodyne. Its best to stay away from Chor Promoters but at a certain price there is value in every company.


    Amit Arora

    December 25, 2012 at 9:11 pm

  13. Chaitanya,

    Zylog paid 427 crores for three months ending September 2012 to Employees. They are still scaling up their business, its business as usual. So, average of 450 Crores * 4 quarters = 1800.

    What I am trying to say is, that there is plenty of scope of cut back without going out of business.


    Amit Arora

    December 25, 2012 at 9:22 pm

  14. With Omnitex I don't recommend buying much because there is no catalyst yet. If there is a catalyst like Westlife Development Ltd, then please don't hesitate to buy at even much higher price. I am anticipating that I will outlive promoters, and they will do something before they die 🙂

    Amit Arora

    December 25, 2012 at 9:26 pm

  15. I see it, I am trying to reach out to Zylog employees to find out if it's really business as usual there. I have already requested some feedback from around 10 Zylog employees (through common FB friends). I will post again when i hear from them.


    December 25, 2012 at 11:16 pm

  16. ramit, from publicly available information there are still 40L shares pledged. if they sold them in small chunks, then we don't know until next Quarter results.

    here are my calculations on pledge shares,

    Figure in Lakhs
    30-Sep Sept Pledged shares 72.3
    27-Oct Added to JM 2.6
    1-Nov Added to JM 0.6
    7-Nov Added to JM 4.5
    23-Nov Sold by Jm -15.45
    26-Nov Unpledged from AB -9.3
    Sold by IFCI -4.17
    Sold By Birla -6.85
    Sold By IFCI -3.6
    Sold By Karvey -3.74

    Total still pledged, around 40L shares.


    December 26, 2012 at 12:17 am

  17. Talent Flow, we  ‐‐ this is an upsell kind of scenario that we took from Canada, the solution, and brought it into the U.S. where we were able to on board clients which we are looking for either for an applicant tracking system on a vendor management system, vendor management system being the strategic impact as well as the tactical impact being the applicant tracking system. So in terms of  ‐‐ there is a huge flux in the market especially in the U.S. that caters to having lot of opportunities surrounding Talent Flow as well as the vendor management system.   
    Similarly if you look at social commerce, the convergence, both as what Ram rightly mentioned in terms of the convergence of social commerce and mobile, we call it the socomo. The SmartPrise social commerce solution that we have, that helps in terms of integrating also  ‐‐  one of those things that has implemented for a pharmaceutical company  ‐‐  we have also building  ‐‐  product development is to scan all the social networking sites for any events that impact any pharmaceutical company in the U.S. So that
    would help them to trigger certain complaints based actions respect to a product that is an FDA compliant or with the competitive advantages or any intellectual lawsuits, something like that. Our solution is kind of first of the breed in terms of the having to react
    to such of n scenarios in terms of the social commerce.   
    So there is a lot ‐‐ and a of pharmaceutical healthcare companies have immediately plunged in on to it and going forward with our offering on the social commerce as well as applicant tracking system because there is lot of flux in the market especially when the challenging times in the human resources are always on, in demand, the need for a very robust vendor management and applicant tracking system is a must and that's what we've got to able to enter into market and also take it forward to the South American markets in Brazil, Chile and all those other places.   


    December 26, 2012 at 5:45 am

  18. Thanks Chaitanya,

    Please update when you hear back

    Amit Arora

    December 26, 2012 at 5:47 am

  19. Nice thoughtful write up Amit.

    Once liquidity issue cmpy is able to overcome in next few Q's , this looks a def multibagger.


    December 26, 2012 at 2:59 pm

  20. Pledged share issue is over as per confirmed sources. It seems liquidity issue has suddenly pop'ed up(causing delays in salaries) only after the promoter's released the left over pledged shares from financial institution.


    December 26, 2012 at 3:02 pm

  21. Wah Jatin, thanks for the find…

    –>It may be noted here that historic flag planted on the moon in 1969 was made of Glen Raven fabric

    –>“We are satisfied with our growth in India. The future is fabulous with increasing investment in Indian infrastructure. We are upbeat for the next 100 years,” Mr. Gant noted.

    –>“we are not a manufacturing and marketing
    company. We are ‘market opportunities’ company.

    –>He said that the vision of Glen Raven and Strata India is to unlock minds of ‘our associates’

    Amit Arora

    December 26, 2012 at 10:07 pm

  22. Hi Amit..

    Unable to understand the Market.. JK Bank is trading at 6.4 PE TTM (ROE 21%),City Union Bank at 9 TTM PE( ROE 24%) and almost all the rest of the PVT sector banks are trading at minimum PE. Do you see any chance of these banks attaining 15 or more PE's if they keep maintaining >20% ROE down the line for next 2-3 years???

    Also my question to you.. CUB,JK Bank and Yes bank which one do you feel can give you more returns by 2015/2016
    (through both PE expansion and earnings CAGR). Very confused on zeroing on one among these three. As all three have very good growth prospects and PE expansion scope


    December 30, 2012 at 10:42 am

  23. Hi Amit,

    I recently did a post on PC Jeweller. Would be great to have your feedback on the same.


    Disclaimer: I own it. I have a vested interest in whatever I say. Please take care of your interest.

    PC is the second largest listed jewellery retailer after Titan with highest margins amongst the jewellery retailers

    Owns 30 large format stores >5000 sq ft in north India and plans to add 20 new stores to become a pan India player

    Crisil report on PC Jewellers

    I am posting a table comparing the 4 listed Jewellers to highlight the standing of PC

    Profitability/Ratios (%)___PCJ___TBZ___Thangamayil___Gitanjali___Titan
    EBIT margin (3-yr avg.)__10.1___6.7____8.6__________9.0_______8.7
    PAT margin (3-yr avg.)___7.7___ 3.0____4.3__________5.0_______6.1
    RoE (3-yr avg.)_________54.4__38.1___42.5_________35.0______39.0
    RoCE (3-yr avg.)________43.1__25.5___32.6 _________32.0______57.0

    No doubt it has the best profitability ratios in the Industry

    If you look at the momentum in the financials for the last 5 years it clearly indicates that they are doing something right which provides them edge over other players

    in (Rs Crore rounded) and (%)
    Operating inc_321____624____986_____1977___3042___1856
    EBITDA mrgn_6.8____9.6____10.0_____9.9 ____10.9___12.6
    Adj NP (cr)___13_____ 31____66______145_____231___141
    Adj Net Mrgn_ 4.0_____5.0____6.7_____7.4______7.6____7.6
    RoCE (%)____26.2____30.9__35.3_____53.3____40.7____NA
    RoE (%)_____40.1____55.1__53.1_____57.8____52.5____NA
    AdjEPS (Rs)__5.9____14.0 ___16.6_____32.5____17.3____NA
    No. shares-mn_22.2___22.2___40.2_____44.7____134.0___NA
    Net worth_____39____73_____178_____325_____556____NA

    in the first half of FY13 they did a profit of 140 crores, generally the first half contributes 40% of the profit now assuming that 60% of profit would come in the second half (1.5x of H1) i.e. 270 crore the FY13 profit comes to 350 Crores which says that it is quoting at a P/E of 7.6 times earnings (on current market cap of 2670 crores).

    this is a 60% discount to what a smaller player like TBZ is quoting at.

    The issue here is that a third of PCJ's revenues comes from less profitable exports segment and that is the reason why markets are a bit confused as to which bucket they should assign it in terms of valuation. Over a course of next few quarters PCJ would fall either in the category of TBZ/Titan (P/E> 20) or that of Gitanjali (P/E of 7).

    The management has already indicate that their focus area would be Jewellery retailing.
    PCJ is more comparable to a retailer than an exporter. Gitanjali has its own issues in terms of a large part of revenue coming from exports to its less profitable franchisee model
    as well as its smaller store format is far inferior to the large format of PCJ, Titan or TBZ.

    I think it is just a matter of time before the market recognises its true value and assign it multiple it deserves.

    I agree that QonQ delivery would be very important for the rerating. Looking at the growth momentum of last 5 years and the expansion plans coupled with delivery track record of the current management I think it is very likely that the coming 4-6 quarters are going to be of more than satisfactory performance.


    December 30, 2012 at 5:03 pm

  24. Dear Excel

    I have not probed too deeply in PCJ but their large format store should make them money over the next few years. I don't know how much they will pay back by dividends through. All organized jewellery companies in India must make money because un-organised is still 90% in value.

    I had Gitanjali Gems at 60 Rs in 2009, I sold less than a year later. But that is one stock where I contradict myself, I overlook shortcomings of promoters if business is strong. But Choksi is compulsive liar. Its possible he continues to pull wool for another 20 years and continues to make investors rich, but I can never get to buy that company again because I know him.

    Same way, if promoters are sincere then it can do well, but as you can see even dishonest ones are going great guns in this sector.

    Couple of things I did not like about PC Jewellers is focus on market cap, he wanted IPO valuation at 4000 crores. Second, his website is shit for his 4000 crores desire. MALE/FEMALE section on website, its not toilet !

    Comfort level with Thangamayil is still higher.

    All the best


    Amit Arora

    December 31, 2012 at 8:39 am

  25. Amit,

    Can you please comment upon the prospects of Ricoh India disregarding the second delisting possibilities?


    December 31, 2012 at 12:16 pm

  26. Thanks for your reply.
    It all depends on one's comfort level


    December 31, 2012 at 8:52 pm

  27. Thanks Excel,

    You should make money and we should delve more now.

    Amit Arora

    December 31, 2012 at 10:17 pm

  28. Hi Excel

    Page 168 and Annexure XVII Page 208 of Prospectus Dt: 16 Dec 2012. Loans to promoter group companies 702 crores, any more details on same ?


    Amit Arora

    December 31, 2012 at 11:25 pm

  29. Hi Amit,

    What I have been told by someone who follows the company closely is that these are the receivables related to sales made to HK and Singapore distributors which might be owned by the promoters.
    That's the dichotomy the retail business is probably the best in India and their exports business could be like that of gitanjali.
    They would be betteroff demerging both the businesses.



    December 31, 2012 at 11:41 pm

  30. Hi Amit,

    Would be glad if you provide your insights on my above query. still in dilemma.


    January 1, 2013 at 2:45 am

  31. Hi Excel,

    Are these sales of diamonds? If yes then the biggest problem for investors is that valuation of inventory is done by company itself. No external auditor does valuation of diamonds. So often, lot of profits/losses are hidden here.

    Hence, would be a good idea to prefer pure gold plays like Thangamayill or TBZ.

    Also, from my sources in the industry haven't heard great things about them.


    saurabh shankar

    January 1, 2013 at 7:07 am

  32. Biggest black box is the promoter entity which owes these guys 702 crores. He does not disclose the Name of this promoter entity which is responsible of 99% of debt to even institutions. In the end all institutions have labelled him CHOR. I know there is lots of visibility of retail stores which account for 75% of revenue and this can well be a multibagger.

    But the way he has grown business in exports from 0 to 1000 crores in three years and non-disclosure of this foreign entities accounts, it can become a vehicle for siphoning off money.


    Amit Arora

    January 1, 2013 at 7:15 am

  33. Hi Amit and Saurabh,

    There are concerns about the 1/3 business which comes from exports. But the 2/3 of business which is retail is probably the best in India. Their karol Bagh branch does around 500 crores of sales a year with 7% net margins (just compare this with biyani's pantaloon).

    The question is unooth (camel) kis tartaf baithega at PE closer to TBZ or the one closer to Gitanjali.
    I think they would have a valuation lesser than but closer to TBZ. earnings momentum is such that you might not get the stock even at 200 levels after the quarterly numbers.

    I would also point towards the institutional investors who have given a thumps up to the company viz they shunned the Tara Jewels issue.
    Also I have seldom seen Kotak managing the IPO of farji companies.

    I am sure institutional investors would have asked the same set of questions we are raising and got an answer and are comfortable with the answers.

    Who says stocks are about pure numbers ? There always is a subjective element of faith.



    January 1, 2013 at 8:37 am

  34. Hi,

    Another thing which could be measure of their real profitability if the tax rate. For TBZ it's around 30% for PCJ it's 20% in the first half ( and lower for previous years) for gitanjali it is around 5-6% and for shree Ganesh it is <1%. I think the 20% tax rate can be explained by the third of revenues coming from exports and rebates associated with exports.



    January 1, 2013 at 8:44 am

  35. Hi Excel,

    There is no doubt on the retail business, but my single biggest concern is that a lot of money can be siphoned out via the export business. Considering the low borrowing cost of export business, it is a hugely lucrative option for most Gems & Jewellery clients.

    Generally, in diamond industry it is a common practice to have sister concerns in HK/New York etc which are managed by family members of promoter group. There is usually no transparency on this part of the biz and shareholder wealth creation is last thing on mind.

    The point I am trying to make is that when u have a mixed business(retail+export) u need to be doubly sure of the management. This wont be a case where business is so good, that mgmt. can be ignored.


    saurabh shankar

    January 1, 2013 at 11:03 am

  36. Up 10% today at 165. Markets are damn efficient


    January 1, 2013 at 2:11 pm

  37. LTV remains at 60%. Rush for gold loan co's fellas


    January 3, 2013 at 5:38 am

  38. Financial sector has way to go in '13

    – Indiabulls Finance
    – Capital First
    – GIC Housing
    – Muthoot Finance
    – Manappuram
    – Bajaj Finance

    I own last four so far

    Amit Arora

    January 3, 2013 at 7:48 am

  39. Hi Amit,

    Can we hold below ones for another 2 years ?

    For the long term, 3+ years:

    – Titan Industries

    – Wim Plast, no nonsense silent work horse management with decent brand image

    – Page Industries

    – Cravatex – I cant advertise and promote enough shamelessly, even though Batra's should be doing it instead of me

    – Cera Sanitaryware

    – Globus Spirits – repeat order business, govt. enforced oligopoly in Delhi, Haryana with 20-30% market share

    – J&K Bank



    January 3, 2013 at 9:04 am

  40. Not just Financial Sector Amit, we're waiting for full list for Long and Shorts of 2013 just like 2012… 🙂

    Enjoy Money

    January 3, 2013 at 9:06 am

  41. Hi Amit,

    What are your views about Redington India?
    Will really appreciate if you answer it.



    January 3, 2013 at 5:23 pm

  42. Great picks Vikas !

    Amit Arora

    January 3, 2013 at 10:24 pm

  43. Dear Elton

    I have not looked at it closely. If they get into servicing, financing, value addition, then its cool. Otherwise for distribution business I don't like it.

    Why should a value investor buy a 900$ iPad, when a 100$ Chinese tablet is available at (Subsidiary of 80 Billion $ in revenues Alibaba). I know people do want to buy electronics, that is why I have Bajaj Finance. Finances 20% of TVs in India + more.


    Amit Arora

    January 3, 2013 at 10:43 pm

  44. Furniture business is great as well. That is one area where I believe people don't buy cheap products. Furniture has set my retirement back by few months. Bajaj Finance does that. Sorry, you came for apples I am selling you bananas.

    Amit Arora

    January 3, 2013 at 10:50 pm

  45. Thank you so much Amit for your reply.
    I am happy as far as i get fruits for the price of fruits 🙂

    Appreciate your views. Just one more thing, do you find bajaj finance expensive at CMP (around 1400)?



    January 4, 2013 at 10:07 am

  46. Great picks of AA 🙂

    Veerendra Gowda

    January 4, 2013 at 10:09 am

  47. Hi Amit,

    I misread. The 702 crore outstanding is from others and not from promoters and group companies of promoters.



    January 4, 2013 at 2:51 pm

  48. Amit, what made you call Mehul a compulsive liar ?


    January 5, 2013 at 6:24 am

  49. HI Amit..
    Happy new year 2013!!

    Is there any plans going on regarding the merger of Vikas WSP and Vikas Granaries?..

    Then how u will compare between Vikas WSP and Rhodia Chem as rhodia also into gaurgum business.




    January 5, 2013 at 6:45 am

  50. Very interesting newsletter in the same vein as he has been for the past five years, resource shortage, climate change, poverty ahead.

    2050 predictions is a very bold step. It does not come even 25% close when the time comes.

    Probabilities range from 20% of humanity left by WW3 to a space faring civilization. So, I am not very worried about ocean levels, lack of coal. There is abundance of everything in universe..if imagination is applied. There is even infinite matter too in the universe.

    Path to happiness is not 1 lac –> 1 crore –> 100 crores –> 1 million crores. Why is so much growth required ? For me money is only tiny part of the end game. You have to realize your full potential as well as a human being and understand all the mysteries of cosmos. More important question to be addressed is how to make humans tolerate each other, how to get asses to destroy tanks/B52 bombers/nukes etc.. Without that, I'm afraid its listening to a frog in the well who can only see so far, problem isn't resource shortage at all, it is not even top 10 problem. Its just that US has had a tough 15 years integrating its manufacturing losses. Absent WW3, we should all live 20s of times better in future.

    Amit Arora

    January 5, 2013 at 9:37 am

  51. What your view on A. K. Capital? It was on your list of i think 2011 but now you do not talk about it…Why?

    Is it a good investment with rate cut expected in this quarter/year?


    January 5, 2013 at 2:07 pm

  52. I heard back from couple of zylog employees, they say all is good and don't know anything about rumors…so i would think company operations are going well.


    January 5, 2013 at 10:53 pm

  53. Thank you Chaitanya, wish you best for your investment.

    Amit Arora

    January 5, 2013 at 11:53 pm

  54. Amitji,
    Will you give your view on Delta Corp?


    January 5, 2013 at 11:57 pm

  55. Hi Amit,

    I remember you had on your radar Ricoh India sometime back. Would appreciate if you could comment upon it?


    January 5, 2013 at 11:59 pm

  56. Amit,
    Don't you feel that for Photoquip also you have to outlive further to see action in the stock market?


    January 5, 2013 at 11:59 pm

  57. Happy New Year Zain

    Unaware of any merger or Rhodia but if I get time I will write on Vikas WSP.

    All the best

    Amit Arora

    January 6, 2013 at 12:13 am

  58. Photoquip should play out before 2020, has anyone bothered looked at domestic sales growth rate and reduction in exports revenues ? Rubbish stocks growing at 10-12% but some brand name have tripled recently eg La Opala, Vadilal.


    Amit Arora

    January 6, 2013 at 12:17 am

  59. Hi Amit,

    What are your views on Dabur India.


    January 6, 2013 at 4:47 am

  60. I dont think that zylog is going below 50 since majority of buying is waiting for sub 50 levels.It will consolidate from 50 to 70 levels this quarter before finally going pass 100 and will further consolidate around 150


    January 6, 2013 at 6:35 am

  61. Amit, lets leave WW3 for a while as we dont know if and when it will happen, and only talk abt growth in US, do you see previous growth of 3.5% GDP achievable ? Biggest problem is ageing populations. open up on immigration and issue Green Cards to youngsters, problem will reduce.


    January 6, 2013 at 6:36 am

  62. That sounds nice ! FY1H-12-13 position is again different Domestic Revenues – 10 crores Exports – 25 crores ! May be they are engaged in Corvi project.


    January 6, 2013 at 6:53 am

  63. There is lack of imagination is what I am saying. A person can be economically productive until age of 90+, he may not be able to run. US can't even grow if the present disparity of wealth, short term corporate greed perpetuates. Again whether US grows at 3.5% or 0% or 1%, we can be impervious to it as well by investing in bull markets, commodities, industries, countries, companies.

    Why can't all countries grow 4% cagr for next 100 years, its certainly possible with right policies, discoveries and tapping human potential. US does not need any green card to young people. If they get their act together, each country can manage itself without external help.

    Amit Arora

    January 6, 2013 at 7:50 am

  64. Hi Amit,

    Zylog has another subsidairy which seems to be making money, setting up Wi-Fi hubs
    2 facts noticable is the nos of states they are present in & India Category A ISP license

    the next link talks about their revenues, government projects like smartcard &
    e-governance (Rashtriya Swasthya Bima Yojana (RSBY)

    this link is when they started the wi-fi business in 2009


    January 7, 2013 at 11:37 am

  65. Jatin

    January 8, 2013 at 1:06 pm

  66. Jatin

    January 8, 2013 at 1:15 pm

  67. Hi Amit,I am writing for the first time on this blog though I am a regular visitor of your blog. First of all hello to you and everybody on this blog.I am thinking of accumulation in zylog since I could not find any major reason for its grand downfall.


    January 9, 2013 at 1:18 pm

  68. Photoquip India Ltd has submitted the disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992


    January 10, 2013 at 6:38 am

  69. Another bout of promoters' buying started ! It seems they will carry out 5% creeping acquisition during the current quarter !!! Two consecutive days of buying 11,000 shares by Directors as per disclosures submitted to BSE !!!!


    January 10, 2013 at 9:13 am

  70. Suzi -> Deccan Chronicle -> KFA -> Marg -> Zylog -> Arshiya , whose next ?


    January 10, 2013 at 12:01 pm

  71. Stock market is a place where a company that grows profits by 1% (INFOSYS) gets to be a darling and its stock is hugged my FUNDS which rises by 15% on the same day, but one that grows profits by 55% (CERA) is ignored. Rationale is IBM – can't-get-fired Institutional imperative analogy vs career risk with small stock.

    Wrote about Cera

    Expecting it to be a multibagger again. Bought this at 30 Rs in 2009, 150 Rs in 2010 and 450 Rs in 2012.

    Amit Arora

    January 11, 2013 at 11:08 pm

  72. Hi Amit,

    Do you feel the same about HSIL?



    January 11, 2013 at 11:56 pm

  73. Amit,

    What are your views on the proposed rights issues by Bajaj Finance? In 2006 they came out with 6:10 rights issue. Can you hazard a guess as to the price range at which the rights would be a buy?

    Disclosure: BF is part of my core holding

    Shiv Kumar

    January 12, 2013 at 5:56 am

  74. Hey Elton,

    Definitely has potential but Glass business, EVOK retail are let down. Focus on institutional segment (more discounts) also a downer.


    Amit Arora

    January 12, 2013 at 7:53 am

  75. Veerendra Gowda

    January 16, 2013 at 6:41 am

  76. They are now moving into other Speciality Guar Gum Polymers. Silver Nanoparticles synthesized with Guar Gum polymers is an upcoming field.

    Cash on BS will be utilized for a new factory near Jodhpur with capex of 500cr. So no special dividends here.


    January 16, 2013 at 9:24 am

  77. Hi Amit,

    What do you think about Bajaj Electricals and S Mobility as a business and investment?



    January 17, 2013 at 12:02 pm

  78. hi amit,
    can u please check out confipetro and let me know the potential of this company. that wud be really helpful.

    Ankit Solanki

    January 17, 2013 at 4:49 pm

  79. Amit,

    Had visited a store in my city for buying a washing machine. This was a fairly large retail store selling washing machines, TVs, etc. The finance was being provided by Bajaj FinSERVE and not Bajaj Finance. I asked the executives also, they said its finSERVE which is doing most of the lending…



    January 20, 2013 at 1:32 pm

  80. Hilarious article, “Xanthan Gum is a cost effective substitute to Guar Gum”

    Just went to market to buy Xanthan Gum for bread making touted as substitute of Guar Gum. Its priced 8$ per 100 Gram. Guar Gum is 5 $ per 100 gram. Good luck trying to find alternatives! Get 10 million acres of land first from China or Africa !

    In United States too substitutes are expensive

    Amit Arora

    January 20, 2013 at 8:53 pm

  81. Reverse journey has gathered momentum at Zylog's counter. After having traded around 75 a few days back, now it is trading around 57 !!!! Isn't appropriate to a stock of the situation?


    January 21, 2013 at 1:37 pm

  82. Dear all,

    Swelect energy is the one stocks we needs to Scrutinize…Some interesting facts.

    1) 500 cr cash against the market cap of 159 cr.
    2) They are planing to foray into solar business & LED business.
    3) Regular dividend player (special dividend of 120 Rs)

    Same like Vikas WSP, market is not believing its promoters….both are potential multibaggers if the promoters do something (other than running business,which they r doing already)

    Shanid V H


    January 21, 2013 at 2:26 pm

  83. Vikas WSP`s Jodhpur SEZ unit may start production in 9 mths

    Rahul Paliwal

    January 23, 2013 at 2:57 am

  84. Hi Amit,
    Geodesic another Debt free co. after FCCB redemption available at 1 PE ! Yet to find any red flag.


    January 25, 2013 at 6:57 am

  85. Dear Shanid

    Thanks for the idea, appreciate your passion to look beyond the grazed pastures. Worth looking into


    Amit Arora

    January 26, 2013 at 12:14 am

  86. Shriram Asset Management Company is reviving Mutual Fund Business. Also arranged for second round for funding from Shriram Transport. Looks good at 22 crores

    Amit Arora

    January 26, 2013 at 12:54 am

  87. Hi Amit,
    Looks like your expectation of below 40 is likely to be met with at Zylog counter!!!!


    January 26, 2013 at 5:45 am

  88. 23X a year ! Hell with Value investing. Hell with TMJL , Crav, Atul, Cera, Vikas, Zylog etc etc. MMMIndia rocks. Shame on you RJ ,WB, GS. Only Sergei Mavrodi !!!

    Hmm another PonziScheme :p


    January 26, 2013 at 6:57 am

  89. you forgot sterling biotech, sterling international


    January 26, 2013 at 9:54 am

  90. Hi Amit,

    Photoquip has been growing topline 30%+ CAGR for the last four years. Even the PAT has grown from 1.51 crs to 4.34 crs during the period. However, looks like FY1213 topline will at best be flat or even with downward trends. In fact, I expect a net loss for FY1213 if Corvi's heavy expenditure on brand introduction and promotion is accounted for as revenue expenditure. How do you view it?


    January 26, 2013 at 3:07 pm

  91. Thank u Amit for ur nice words.
    Will try to work on this idea and come back to you.

    Shanid V H


    January 28, 2013 at 1:12 pm

  92. brainhunter job search App by Zylog


    January 28, 2013 at 2:54 pm

  93. Hi Amit,
    December 2012 shareholding pattern on Zylog is published !!! Promoters' holding has gone down !!! Would eagerly wait for your comments !!! Any change in investment thinking on Zylog?


    January 30, 2013 at 5:40 am

  94. Nothing has changed fundamentally in my opinion, I have not bought below 60 though and my cost price is 68ish. Would make a call after I digest next two quarter results.

    Amit Arora

    January 30, 2013 at 6:55 am

  95. Hi Amit

    Checked about Zylog with a close friend who runs a software co in Chennai. He has no way of knowing if there is outright accounting fraud, but the cash crunch and salary delays at Zylog are real. Also he has heard rumors, that Zylog's service delivery in RSBY was found unsatisfactory and they may have to take a large hit on their debtors due to this.


    January 30, 2013 at 7:19 am

  96. I have an active experience of RSBY and I can say that it's a dangerous vertical as far as vendors are concerned. Politically very sensitive being mass-centric and it's very difficult to perform satisfactorily. Issues after issues keep on cropping.


    January 30, 2013 at 7:30 am

  97. I think your approach of taking a small position and then adopting a “wait & watch” policy is probably the best way to deal with investments in Zylog.


    January 30, 2013 at 7:32 am

  98. Very interesting ! My acquisition cost is identical though I have purchased below 60 as well ! However, would request you to keep on updating as frequently as possible as good stakes are involved !


    January 30, 2013 at 7:32 am

  99. Jatin

    January 30, 2013 at 8:43 am

  100. Wilson now with Cravatex..


    January 30, 2013 at 8:47 am

  101. As per Amit's disclosure it's 5%-7% of holding which I consider to be meaningful !In fact, we would be looking forward to increasing the stake thus reaffirming the faith on the counter


    January 30, 2013 at 9:10 am

  102. hi Amit,

    Your views on Vikas WSP @CMP will be a great help sir. I believe zylog may see a quarter or two of weakness but it most definitely is a multibagger in the not so distant future. I would also appreciate your views on tulip.



    January 30, 2013 at 4:23 pm

  103. Promoters grp holding going down is not a good sign,but Individually Sudarshan & Ramanujam have increased there holdings.Reason as why Sudardshan and Ramanujam increased there stake when something is fishy and irreparable?

    LIC has increased there holding,but zylog may less than 1% of portfolio. Most of the private finance Institutions have left Zylog as per shareholding pattern.

    Let see how Q results turns up in mid of blood bath .


    January 30, 2013 at 4:26 pm

  104. My main point is that there is at least some truth in the rumors that Zylog is under financial stress.


    January 31, 2013 at 10:02 am

  105. Any change in views about Thangamayil?? Its been falling from 340 odd levels and has gone below the comfort zone for a lot of investors?? Results seem to be not great although sales have gone up..Your views shall be appreciated.



    February 1, 2013 at 9:49 am

  106. “Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” – WB

    Results are awesome, future is bright. Please probe reasons for fall in profits.

    Amit Arora

    February 1, 2013 at 9:30 pm

  107. **Comic**
    Three days in a year in Wellington, New Zealand you don't need to watch movies or visit theater as whole city is dressed up with characters from them.


    Amit Arora

    February 1, 2013 at 10:06 pm

  108. it seems Inventories have been increased by 40Cr Q-Q basis.


    February 2, 2013 at 1:10 am

  109. I spent some time in trying to understand MPS. This industry itself is very fragmented. MPS gets 5% of India's outsourcing work from overseas in pre-press services. i.e. 200 crores out of 5000 crores.
    99% of revenues are from exports. 100+ crores in previous year were spent on employees on revenues of 190 crores, India's skill cost arbitrage.

    75% of activities in pre press are commoditised. A few complex activities like custom application development, subscription management are less competitive. Management quality of the company is great. Business does not require a lot of capital and bountiful dividends can be continued. Recent growth can be partly attributed to digitisation and tablet/smart phone driving several content formats. It has already become a commodity.

    Although all companies can offer similar services using skilled labour, at the moment MPS is one of the biggest companies. Repro India Ltd, bse listed, is doing well for similar reasons.

    Publishing industry isn't exactly sunrise, and plagued by piracy, can result in debtors defaulting as it occurred in 2010 when MPS had to write off post client's bankruptcy
    Repeat business opportunity isn't very high

    Amit Arora

    February 2, 2013 at 10:09 pm

  110. Sorry, that is wrong answer.

    #1 Gold price on downtrend from 1790/oz on 1st September to 1600/oz on 31st December.

    #2 One-off write off for Ad expenses.

    Both are non-recurring, 41% growth in sales, hence awesome.

    Amit Arora

    February 2, 2013 at 10:33 pm

  111. Yaah Amit ! We have reached close to this limit on Zylog counter and no panic-stricken signals :))


    February 3, 2013 at 2:42 pm

  112. Hi amit
    assume you are aware that zylog has a 175 Cr equity infusion planned in Q4 of the year. if the promoters do it at the current prices, it will be good deal for them as they can easily double their stake at current prices


    Rohit Chauhan

    February 3, 2013 at 10:21 pm

  113. Thangamayil promoters started buying again, as the stock goes cheaper…
    Bought 10000 shares from open market on 4th Feb, when the total delivery was close to 30000 at an avg price around 275..
    Looks a sureshot buy at these levels….
    What do you say?

    Kunal Banker

    February 6, 2013 at 6:10 am

  114. Dear Rohit

    Thanks for the update. I hope they don't infuse instead buy from open market or better still reduce workforce and size of company. Wishes are horses..


    Amit Arora

    February 8, 2013 at 10:53 pm

  115. Bumper results by Zylog!!

    This will start hitting UC for next few sessions/weeks until mkt cap comes into valid terms.
    Pledged gone down below 10% and EPS stands 10.16 with Net 33.4 cr.


    February 12, 2013 at 1:41 pm

  116. I am in sorry , reg the Pledged share, in excess of 70% of promoters holding is pledged thats still not a good sign.


    February 12, 2013 at 1:51 pm

  117. Zylog's December 2012 financial results are out !!!! Amit, your insight analysis is solicited.


    February 12, 2013 at 2:45 pm

  118. The results have been good for zylog

    Inquisitive Stranger

    February 12, 2013 at 6:36 pm

  119. Hi Amit

    Do you see any reason for recent fall of Vikas WSP share price?Some says that results are manipulated and operators are selling their shares.


    February 14, 2013 at 7:19 am

  120. Wow ! earns 5.7/- a share and distributes 5/- …almost 100% dividend distribution !!


    February 14, 2013 at 12:05 pm

  121. totalview

    February 14, 2013 at 3:04 pm

  122. Hi Amit, What is your current view on Vikas at cmp of 32?



    February 15, 2013 at 5:07 am

  123. Nothing wrong with results. Debt it still pretty high, someone should now their books to treat them good for 1000 Crores!

    Amit Arora

    February 15, 2013 at 5:54 am

  124. your views on cravatex?


    February 15, 2013 at 7:46 am

  125. Hi Amit..

    Planning to add Infinite comp at cmp… whats your suggestion?? Is it a good by??


    February 16, 2013 at 6:02 am

  126. Hi amit
    Can you share ur thoughts as to how to exit multibagger stocks more specifically how to handle multibaggers once they have become a 2-3 bagger also how to protect profits and handle lean periods.


    February 16, 2013 at 11:19 am

  127. bb

    February 20, 2013 at 5:38 am

  128. Almost everyone predicts Gold prices to fall in coming months. Will fall in Gold Prices impact Thangamayil's profits ?

    Ashwini Damani

    February 22, 2013 at 7:23 am

  129. Nothing significant for jewellery retailing brands in my opinion if holding for long term.

    Amit Arora

    February 22, 2013 at 9:47 pm

  130. What's your take on Orbit Exports, Mayur Uniquoters, Accelya Kale ? Have you studied

    Vivek Gautam

    February 25, 2013 at 3:27 am

  131. Amit do you have any views on Eimco Elecon n Caplin Point?

    Vivek Gautam

    February 25, 2013 at 3:29 am

  132. Dear Vivek

    I like first two and their prospects. I own only Orbit. Also about Accelya, I feel they have a limited market, thus growth should be uneventful in my opinion.

    Amit Arora

    February 25, 2013 at 6:23 am

  133. Amit,
    Just saw your short write up on mps… The result were good also the dividend was announced…
    Can you please let me know your views after the results…
    Personally i feel there is much more upside left at cmp.
    Dis: i hold the stock


    February 25, 2013 at 4:50 pm

  134. Hi Amit,
    Indian markets are witnessing carnage of small and mid-cap stocks !!! What are your views on it? Isn't the right time to locate some value picks? Would welcome your insights…


    February 26, 2013 at 10:36 am

  135. Hey Amit,After app 12 ucs,Zylog is going down everyday with lcs.What do you think about this?And what about proposed equity dilution?


    February 26, 2013 at 1:09 pm

  136. Amit,

    Should we keep holding RS Software,as it has seen quite a fall recently.What could be the reason? Same question for globus spirits as well.


    February 27, 2013 at 6:10 am

  137. Abhi,

    I have sold both of them.


    Amit Arora

    February 27, 2013 at 6:12 am

  138. Amit,

    One more question:
    So is it like that if stock price falls more than 25%, sell them? Or expect turnaround?



    February 27, 2013 at 6:20 am

  139. Vikas WSP approves delisting of equity shares.


    February 28, 2013 at 9:01 am

  140. I mean delisting from regional exchanges:
    i. The Delhi Stock Exchange
    ii. The Jaipur Stock Exchange
    iii. The Ahmedabad Stock Exchange
    iv. The Cochin Stock Exchange

    Cheers 🙂


    February 28, 2013 at 9:25 am

  141. Hi Amit,

    Can Vikas be bought at cmp of 30/-. please advise.



    February 28, 2013 at 9:41 am

  142. Hi Amit,

    Why you sold RS & Globus?
    Have you sold thangamayil & zylog also?



    February 28, 2013 at 5:19 pm

  143. Hi Amit,

    There are no updates for a while now. Hope everything is fine there.



    March 5, 2013 at 9:33 am

  144. Dear Amit,

    Yes ….

    We are Waiting to hear from you….

    Shanid V H


    March 7, 2013 at 1:10 pm

  145. Thanks folks

    Everything is fine and dandy. I am not doing too much analysis into investing and busy with other things.


    Investing article collection worth a read from Charlie Munger:

    Indian Stocks:
    All stocks are down in terms of price (not value) by over 15%. Only stock that I own which has not come down in value and price is Cera Sanitaryware. That does not imply that its value price mismatch is highest or I should buy more of it. Lots of stocks offer great value like GIC HF, Tourism Finance Corp, Zylog, Vikas WSP. Solid growth stocks include Bajaj Finance, Cera, Thangamayil, TBZ. I have only added some Gulshan Polyols recently and sold nothing.


    Amit Arora

    March 9, 2013 at 1:25 am

  146. Hi JK

    Sold RS Software because it is not focussing on building products.

    Sold Globus Spirits because they continue to dilute equity.

    Rest I am holding


    Amit Arora

    March 9, 2013 at 1:29 am

  147. Hi Amit,

    In the book “The Dhandho Investor”, the author talks about Steward Enterprises(Chapter 13) during the year 2000 as an example of “Low risk, high uncertainty” scenario. He talks about how the market mistakes uncertainty for high risk and how a value investor should make use of such opportunities.

    I think Zylog currently is such an opportunity. I find many similarities between the two (acquisitions, leverage, etc..) If you have read the book, please share what you think. If not, you may find it a interesting and useful read.


    Balaji S P

    March 10, 2013 at 3:47 pm

  148. I had liked his simplicity of thoughts, see how he is talking point to point, “Hospital can not be made through 2cr, so has to give 100cr” Now here he is not looking at 100cr n 2 cr diff, what he is looking at Fish's eye (Hospital)..

    I found him opposite to perceived image, A greedy can not talk like this, at least my exp with people until now says so.

    Rahul Paliwal

    March 12, 2013 at 2:49 am

  149. What sort of impact on revenues do you see on application of KYC norms for buying gold abv 50k on TMJ's business. They mostly have rural customers.


    March 14, 2013 at 5:02 am

  150. Hi Jatin,

    One positive I see is Organized players will gain market share as unorganized players will find it more difficult to meet new regulations.


    Balaji S P

    March 14, 2013 at 2:07 pm

  151. Unfortunately this is the state of capitalism in East and West

    I hope a fine is slapped which is commensurate with Annual Profits of these Banks

    Amit Arora

    March 15, 2013 at 6:27 am

  152. In my opinion in short and long term all branded jewellers will lose, TMJ to TBZ unless they start splitting receipts over 50k to 49999, which is easy


    Amit Arora

    March 15, 2013 at 6:28 am

  153. Hi Amit,

    I read your blog regularly, you wrote a lot about photoquip and Cravatex in past. whats your take on these two for long term, Thanks in advance.

    And what are your views about persistant Systems and Redington india.


    March 16, 2013 at 3:01 pm

  154. Dear Shashi

    I own Photoquip and invested for long term and like it. Cravatex, they have leading brands and market leaders like Polar Heart Rate Monitors, Johnson Fitness Brands. FILA will take time, years, so I am not adding more but reducing. They have recently got WILSON which is a leader too! that makes it interesting again. But there are cheaper bargains already.


    Amit Arora

    March 17, 2013 at 6:45 am

  155. Dear Amit,

    What is your opinion of Hawkins and Symphlny? Are they overvalued at present prices?


    March 17, 2013 at 5:21 pm

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