Views on Life & on Equity Investing

Wonder, Wealth & Abundance

Poddar Developers Limited (PDL) – Management Answers

with one comment

Dear All

Kindly abstain from asking me any further questions on this company, especially questions like “Is it a good time to buy, or is it a good price to buy”. It is a small cap and 1-2% portfolio weight is sufficient for a mid to large portfolio. People like me who consider investing in a company for 10+ years do not ask these questions, nor consider worth replying to such questions. Before investing a dime in stock markets or an Indian Rupee, please consider reading five books on investing, otherwise you have no business in business of investing, and you are likely to lose 90% of your virtual blips based wealth on stock market screen.

You can find books on investing from here:

http://www.valuepickr.com/forum/must-have-investing-basics-books

Secondly, if you do have a question on this company or any other company, please invest in couple of shares (2 would do), email, phone the company secretary. In my past interactions with PDL, company is prompt in addressing investor concerns.

=============================================================
 Earlier I wrote about PDL 

http://multibaggersindia.blogspot.com/2014/09/two-microcaps-2014.html

and

http://multibaggersindia.blogspot.com/2014/09/poddar-developers-india-micro-cap.html

Recently an ex-employee of the company raised a “red-flag” on the company here:

http://multibaggersindia.blogspot.com/2014/09/poddar-developers-india-micro-cap.html?showComment=1411989473159#c136596180869636547

Investors have to have an open mind to all possibilities and not be on auto pilot. Questions like these are welcome, but please do make sure that you own at least a share or two in the company.
 
With my preliminary search I found that PDL did get 34.5 Crores consideration for the land sold in 2006-07.
 =============================================================

From HVG:
Dear Amit,
I have worked closely with this (Poddar developers) company during 2006-07 and have also met Mr. Rohit Poddar to understand his plan. Company was earlier known as “Wearology” and they had a project in Karjat in Mumbai. Company had a very big plans with their land bank. And stock rose from double digits to 200 mark in a matter of 8-10 months. Mutual funds like DSP Merill bought stakes @ 215. However, what company did was very unethical. This land bank was in a subsidiary “Gopi Resorts” and one fine day it sold of this subsidiary. Company did not had any business on standalone basis. This raised a very serious issue on its corporate governance. I would just raise a red flag here. I understand you would have done your research but still this my 2-cents. I am open to critics as well as to change my perception about the company, if you can share your thoughts in detail. Probably I would be wrong.

ReplyDelete

Replies



  1. Dear HVG

    Thanks for the red flag. By no means we are defending this stock with an ostrich syndrome. Feel free to raise red flags.

    We will raise it with the management.

    The company (Wearology) did get 34.5 Crores on sale of Gopi Resorts, do you think that amount was less or unfair?

    http://www.bseindia.com/corporates/anncomp.aspx?curpg=10&scripcode=523628

    http://www.bseindia.com/corporates/anndet_new.aspx?newsid=ac647211-43d2-4710-bbb2-4227aa1a8434&param1=1

    http://in.reuters.com/article/2007/12/06/wearology-gopi-idINBMB00006020071206

    Regards

    Amit
     ==========================================================

 Upon raising this concern we have got following reply to a shareholder query:

 Thanks for your mail.

These are the facts.
A
            Gopi Resorts Pvt Ltd –
–   
            Gopi Resorts Pvt. Ltd was originally promoted by 4 partners. The only asset in the Company was approx 100 acres of  land in Karjat and the Company since its inception had no other activity. Poddar Group or Poddar Developers ltd (PDL)had nothing whatsoever to do with Gopi Resorts Ltd at this stage.
–          Mr Murari Munim was one of the 4 partners of Gopi Resorts Ltd. He was known to the Poddar family and approached us through a broker to sell the land to us. PDL met him and his partners and due to the legal and financial structure of Gopi, it was decided for PDL to buy the Company (Gopi).
–          PDL then made a master plan for the said land (thro SKM Australia), where substancial monies were paid out, and submitted it for approvals. The approvals proved to be inordinately delayed, largely due to our stand not to pay speed money to the relevant consultants and departments.
–          Because we did not succumb to the pressures of paying speed money, the “message” was sent loud and clear and even though we got delayed in launching our first affordable housing project, it has helped in all our subsequent projects.
–          In the meantime we received a lucrative offer to sell the land on an as is where is basis from an International real estate fund – Eredene –  and given the delays in approvals, we decided to sell Gopi Resorts Ltd.
It is in fact the profit that was generated from the sale of Gopi Resorts that allowed PDL to remain deleveraged and to purchase the land in Badlapur for the Badlapur project and 3 additional projects at highly attractive prices. The value of these lands have appreciated 5x of the land that was sold in Gopi. So it is complete fallacy to state that anything even remotely unethical was done in selling Gopi. It is in fact one of our best decisions. We don’t wish harm on anybody, but the buyers of Gopi Resorts have not delivered even 1 apartment on that site, whereas PDL has delivered over 3,000 apartments in the last 3 years across multiple locations.

                           
B      The timeline that is mentioned below is skewed –

We launched our first affordable housing project in March 2010. This was for approximately 1,200 apartments in Karjat (on another cheaper piece of land)

The second affordable housing project was launched in Badlapur in April 2011 by Shri Deepak Parekh

The third affordable housing project was launched in Shahapur in April 2013 by Shri Deepak Parekh

The 4th, 5th, 6th and 7th projects are being launched between October 6, 2014 and June 2015.

With our current fully paid land bank and pipe line of projects, we are Mumbai’s largest affordable housing developer.

C       The Poddar family has not sold any of its own shareholding to any outside investor in 2006 or 2007 or subsequently. Whoever bought shares – be it institutional or retail investors, all bought them from the open market. There was no QIP either planned or offered.  Hence the promoters of PDL have not stood to gain from any share transactions.

D      DSP Merill was never a share holder in PDL – not in 2006/2007 or even now. The statement is complete fabrication.

E       PDL is one of the most transparent, ethical real estate development Companies in India. Shri Deepak Parekh – Chairman of HDFC – has publicly stated that. Hence we do not wish to comment further on the un-factual opinion of one individual.

F      Last but not least, we encourage our shareholders to directly raise the concerns with us. We will endeavour to work on more visibility for shareholders through press and annual reports going forward.

 Disclosure: Invested. Views are personal notions and do not represent any organisation or company. I am not an investment adviser. Investment in stock market can (and many a times do) result in loss of principal capital.


http://www.elevendimension-funds.com

Written by amitdipsite

October 1, 2014 at 7:39 pm

Posted in Uncategorized

One Response

Subscribe to comments with RSS.

  1. [im]http://oi58.tinypic.com/28mn3tu.jpg[/im]

    Amit Arora

    October 22, 2014 at 5:17 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: