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Wonder, Wealth & Abundance

Sarup Industries

with 49 comments

I had written a deep value investment idea for the partners in 2013. I had only invested in personal capacity and then sold most at no profit no loss.

I got a bit late in identifying the changes recently and again entered at 80 Rs levels post BSE announcements in Dec 2014, which I failed to notice and another on 6th of Feb, bought only after 10th Feb. Main proposition of the footwear company that started same time with same financial muscle as Relaxo, i.e. little to nothing, (and is 50 times smaller today than Relaxo) is a mall project. This project was held in suspended animation due to some conflicts, my guess and real estate slowdown.

The six floor mall project would have market value anywhere between 400 – 600 Crores. Even if Sarup gets 25% of the net constructed value, the company will derive 4 times its market cap.

Based on sale value of commercial shops in Model Town (which is one of the posh areas) part of Jalandhar, minimum price is 10,000 Rs/Sq. ft. and goes as high as 20,000 Rs/Sq.ft Constructed area is 3-4 Acres. Post construction 4-6 floors will be available for sale/letting. Based on worst case scenario as explained, company should either derive annuity income or get one off lump sum. Footwear business come free. 


Written by amitdipsite

February 12, 2015 at 7:36 am

Posted in Uncategorized

49 Responses

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  1. Sarup Industries is interesting opportunity . I have another pick DIL ltd on the similar theme .
    Current Market Cap of DIL Ltd is around 170 crores and what you are getting by paying 165 crores is amazing .
    1. DIL Ltd has cash of around 37 crores on March 2014 .
    2. They own commercial properties which gives them stable rental income of around 13 crores( Excluding ThaneOne ) . Generally , companies get rental yield of 3 to 5% , if we do reverse maths then value of this property itself should be around 260 (on 5% rental yield) to 434 (on 3% rental yield) .
    3. They own (associate company) and operate two Zela Luxury Health Clubs in Bangalore . Truly Luxuries !!!!
    4. They have 6.5 acres of land in Thane (Mumbai) in prime locations . They are developing this land into ThaneOne Corporate Park which awarded the “Best Office Architecture 2013” at Asia Pacific Property Awards, Malaysia. It is outstanding Corporate Park check their website. First phase (around 25%) is going to be around 198000 sq ft lease able area which will give rental yield of around again 12-15 crores per year and saleable rate in this area for commercial properties is around 13000 to 15000 so first phase itself has commercial property worth at least 260 to 300 crores . If you add phase-2 then it will be huge value even though they will need spend few more crores on phase-2 . After completion of both phases value of ThaneOne should be at least 1000 crores at current valuations.
    5. Fermenta Biotech (subsidary of DIL) was valued around 190 crores when Evolvence India Life Sciences Fund (EILSF), a private equity fund focused on the Indian life sciences industry had invested Rs.40 Cr for 21.05% stake in Fermenta Biotech Limited (FBL) in 2010 . We are now in 2015 and that too in bull market this valuation should have been increased by few fold .Initially pharma company name was Duphar which was promoted by Dr D.V.K. Raju . He had two sons . Dr Vijaya Kumar Datla and D. Vasant Kumar . D. Vasant Kumar was heading Duphar while Dr Vijaya Kumar Datla used to head Biological E . Vijay Kumar Datla passed away in 2013 . He was one of the early pioneers of the Indian vaccine industry, responsible for the operations of the company that has been one of the largest suppliers to the nation`s Universal Immunization Programme.Biological E has been making great strides in developing new vaccines in the past year. It had launched a Japaneses Encephalitis vaccine in 2012, and recently entered into a JV with GSK for the development of a hexavalent vaccine as well.
    FBL manufactures Vitamin D3 (Cholecalciferol) (the only manufacturer and supplier in India and among the top few manufacturers in the world) and constantly looks for value addition. They even do have some good set of granted patents .FBL provides customized environmental biotech solutions through consultancy, supply of suitable biotech products and services in three segments – sewage treatment plant (STP), lake and pond remediation and oil sludge remediation. Their proprietary product technology cleans the lake even if it is receiving a continuous input of waste water, which gives it an advantage over other existing cleaning methods.Generally Biotech and life science companies has very long gestation period .The total revenue of FBL in the year 2013-14 was 127.16 cr as compared to 101 cr.In 2013-14, Profit after tax was 7.96 cr as against 1.1 cr in the financial year 2012-13 (around 800% increase in profit ) . Clean India mission is going to provide huge opportunity on low base for them they need to grab it by both hands.

    Vikas Modi

    February 12, 2015 at 10:45 am

  2. Thanks, I tracked that until two years back, had a Helicopter JV with a Czech company which closed, Zela was not reaching scale to be profitable. Fermentis is the feather and valuable and a foreign fund also invested in it.

    Amit Arora

    February 12, 2015 at 6:26 pm

  3. Thanks Amit for your quick input . They had invested around 1.9 crores in Joint Venture Company; VasKo Glider Czech, which is in the business of developing magnetic technologies and wheelchair. It didn't work out as plan . It may be wrong investment or trick to …… . Since , amount was small and that happen in 2005 so I have not given much weightage to it . I also don't like their too much diversification . Because of these issues only it is undervalued .
    I don't know much about Helicopter JV . I didn't get any information on Helicopter in annual reports , may be it was in some article or news .

    Vikas Modi

    February 13, 2015 at 6:52 am

  4. Thank you amit for your wonderful analysis. Hats off!!!

    Prag Patel

    February 13, 2015 at 7:05 am

  5. True, no need to give too much weight to minor failures, they work like a Mini venture capital firm


    Amit Arora

    February 13, 2015 at 7:06 am

  6. Hi Amit,

    The website floor plan says that it will be 4 storied buildings, how did we arrive at 6 floor…and you say 4-6 will be let out then what about 1-2.

    Summing up above does it mean – actually 4 floors which are none other than 4-6 that you mentioned.

    And do have any information about the 25 percentage or is this a guess?


    Shaikh Vasim

    February 16, 2015 at 10:33 am

  7. Hi Amit
    I have few questions wrt this company.

    1. Do you think the management will share the rental income as hefty dividend(s) and not invest back in their footwear business?Though the management has always maintained a high dividend payout, averaging 50% over FY 13 and 14.
    2. Your views on the footwear business and its performance as I couldn't find much info regarding this in their AR?
    3. Any updates on when the construction activity will be completed?

    Ravi Shankar

    February 17, 2015 at 9:16 am

  8. Upper Ground, Lower Ground, First, Second, Third and Fourth.

    25% is worst case scenario, can go up to 50-60%


    Amit Arora

    February 18, 2015 at 6:01 am

  9. 1. Yes
    2. Mostly outsourced manufacturing of Reebok, Puma, Nike etc, low margin
    3. 12 months max

    Amit Arora

    February 18, 2015 at 6:03 am

  10. Hi Amit,

    A classical example of value hunting. 🙂

    It will be great help if you can clear my following doubts.

    In which way they funded for the mall project ?

    1. Thinks it's NOT based on debt or equity or internal accruals

    but based on

    2. Some agreement with EMAAR MGF & Shalimar Corp Limited

    3. Do you have any idea about the revenue / profit sharing coming in the agreement?

    Thanks in advance


    Myvaluepick Portfolio

    February 19, 2015 at 4:47 pm

  11. Hi MVP,

    Have you raised it with the company?


    Amit Arora

    February 19, 2015 at 6:45 pm

  12. No.. Initially I thought contacting you, since you might have studied it in detail.

    Anyway raise it with company now, but don't know whether they will reply or not.


    Myvaluepick Portfolio

    February 20, 2015 at 6:25 am

  13. Company is very very stingy in sharing information unlike most of other companies. The only other company I know is Hawkins Cookers, which does not share any information. Call up the number 0181-2271556,2271557,2271558 and see what you can get, and update me.

    My understanding is that Sarup will also take some loans. They made Emaar MGF wait for 5+ years, mall started in 2007 and was stalled since 2009. So, Sarup should get better deal this time.

    An acre in that area is 50-100 Crores, 3 acres – 150 Crores.
    Construction 100 Crores. Final output 400-600 Crores.

    Let me know your findings, thanks.

    Amit Arora

    February 20, 2015 at 8:08 am


    Mall Boom – 2nd last para.

    On average, 300 crore, including price of land is been spent on construction – that too in 2008. Amit's valuation of 400-500 crore should be near (atleast).

    Shaikh Vasim

    February 20, 2015 at 10:49 am

  15. Thanks

    from your link, “Reliance group had bought almost 2.94 acres in front of Medical College on Garha road for Rs 107 crore at a PUDA auction a few months back.” This area is 3 acres, and most exoensive area of Jalandhar, Model Town.

    Market may not give value to Sarup until they increase dividends from rental income like Empire Industries.


    Amit Arora

    February 20, 2015 at 11:01 am

  16. You can check price of shop in Model Town or in Mall in Jalandhar on or similar site. Mall will be 500,000 sq ft.

    Amit Arora

    February 20, 2015 at 11:03 am

  17. Thanks all
    cs at the co seems to be very rude in sharing any information regarding mall project but according to the staff it seems like the mall will take another two years to be fully functional
    shalimar corp which is the new jv partner also has no updates regarding this but still apart from all this sarup is a real multibagger maybe after 4-5 years it can yeild unbelievable returns
    I too hope to stay invested rather than exit at higher levels
    some TRADELINK EXIM INDIA PRIVATE LIMITED has bought 25000 shares at a price of 120 rs
    hope to get more information from fellow members at earliest

    agrawal dinesh

    February 20, 2015 at 11:39 am

  18. Brand List- Mall of Jalandhar
    Anchor Stores
    Shoppers Stop Anchor 1 20152
    Max Anchor 2 11840
    Adlabs Cinema Anchor
    Line Shops
    Inexcess UG 04 Waga UG 08
    Optique UG 07 Bison London UG 24
    Pranks UG 21 Lee- Cooper FF- 20,21,22,23 2057
    Café' Amore UG 18 Kapsons( pepe) FF 43,44 1388
    Café' Amore FF 07 1500 USI FF 51,52 1175
    Café' Amore SF 07 Numero Uno FF 27,28, 41,42 1374
    RPG Cellucom UG 19 Koutons FF 24,25 861
    RPG Cellucom UG 20 John Players FF 48,49 1200
    Good Things LG 22 Lee FF- 31, 32, 33, 34, 35, 36 2410
    Wills UG 29-33 Wrangler FF- 29, 30, 37, 38 2000
    Meena Bazaar UG 34,35 Priknit FF 10,11 1001
    Kapsons FF25,26 Pinnacle Retail SF 34,35,36
    Woodland UG 36,37 *Turtle FF 12,14
    Ms. Lee UG 38 Graty london FF 03A, 03B 650
    UCB UG 50,51,52 Hues FF 11A, 11B 993
    Jansport UG 49 Status Quo FF 50 595
    Kippling UG 11,12 REYNOLDS SF 52
    Weekender UG 43 Pizza Hut UGF 003,005
    Zuni UG 47,48 Police UG 14
    Bella UG 45,46 Nike UG 15, 16, 17

    agrawal dinesh

    February 20, 2015 at 1:54 pm

  19. Brand List- Mall of Jalandhar
    Line Shops
    Shoppers Stop 20152 1209120 1511400
    Max 11840 710400 888000
    Café' Amore FF 07 1500 120000 112500
    Lee- Cooper FF- 20,21,22,23 2057 164560 154275
    Kapsons( pepe) FF 43,44 25 26 1388 111040 104100
    USI FF 51,52 1175 94000 88125
    Numero Uno FF 27,28, 41,42 1374 109920 103050
    Koutons FF 24,25 861 68880 64575
    John Players FF 48,49 1200 96000 90000
    Lee FF- 31, 32, 33, 34, 35, 36 2410 192800 180750
    Wrangler FF- 29, 30, 37, 38 2000 160000 150000
    Priknit FF 10,11 1001 80080 75075
    *Turtle FF 12,14 0 0
    Graty london FF 03A, 03B 650 52000 48750
    Hues FF 11A, 11B 993 79440 74475
    Status Quo FF 50 595 47600 44625
    samsonite 683 54640 51225
    sold 432 34560 32400
    vaccant 10656 852480 799200

    60967 4237520 4572525

    304835 21187600 22862625


    agrawal dinesh

    February 20, 2015 at 1:54 pm

  20. Dear Dinesh, thanks for the valuable info. I asked them whether it will take 3 years, response was, ” we are taking working capital loan to fund this project want to finish asap. “

    Also one time rerating is possible, esp after dividends, but too early to expect mega multibagger as markets only give big valuations to perpetual growth stories not one offs. I will be satisfied with few 20 to 30 rs dividends back to back every year.

    Thanks again

    Amit Arora

    February 20, 2015 at 6:48 pm

  21. Hi Amit,

    Still tracking photoquip & one can go for sip in this stock at current scenario ??


    February 21, 2015 at 5:51 pm

  22. Thanks Amit, I really appreciate your clear views – clearly stating that a one time re-rating is possible along with the reason. (Highly knowledge :)).

    But just for my knowledge, thinking that the Mall's Valuation would be 300 cr expecting this in addition to footwear business as total market cap in future would be foolish thing right? Thats what replacement cost valuation would be – the Harshad Mehta type which is not the right valuation metric.


    Shaikh Vasim

    February 21, 2015 at 6:52 pm

  23. SBI may have 2 Lac Crore INR of buildings and Land, SELAN Exploration 20,000 Crore INR of oil, what counts is not the value of assets but when will shareholders (“believe”) get money in their pockets.

    If a company is getting 10 Crore rent per annum from a 400 Crore mall, it may be valued at 100-150 crores. But if the company sells the mall tomorrow and returns all the money back as dividend, its now worth exactly 400 crores. Cash with company should be heavily discounted as it can be misused, abused, wasted, badly invested etc.

    Amit Arora

    February 21, 2015 at 8:55 pm


    sshivaram reddy

    February 22, 2015 at 10:05 pm

  25. Hi Amit
    Do you own or tack Mold-tek packaging? The company is a leader is IML packaging and considering the low margin nature of business, they have been cutting costs greatly by developing inhouse robots at 1/3rd the cost of imported ones. They have also started making molds and labels in house and all these initiavtes have improved the margins and the bottomline considerably. The last 3 quarterly results have been really good.
    The share of IML packaging which was 0% a couple of years back is now at 30%. The traditional screen printing still accountgs for 70% of the sales today. The management aims to improve the IML share to about 70-75% over the next 2-3 years.

    They have recently done a QIP and raised 55 crores for starting plants in Sharjah, Vizag, Gwalior and a new toolroom in Hyderabad.

    1. Do you think the stock price might not move much because of the management diluting equity through QIP?

    2. Do you see a moat in the form of IML packaging technology? The management says they are the only packaging company in the world to manufacture inhouse robots for their IML packaging?


    Ravi Shankar

    February 26, 2015 at 3:44 am

  26. Dear Ravi

    I am not tracking and following Mold Tek but appears the management is doing plenty of dog and pony shows, are charismatic personality. Numbers and stark industry reality belie the MOAT characteristics.

    Best wishes

    Amit Arora

    February 27, 2015 at 11:15 pm

  27. Hi sir,

    waiting eagerly for ur next hidden gem. when can we expect 🙂
    ur stock picking is totally different and u have unique type of story telling . thanq


    March 10, 2015 at 11:59 am

  28. Hi Amit, Im an amateur investor who has just started investing in equities.
    Can I pls contact you and learn the beautiful and intricate way you use to pick stocks.

    Vidhant Jain

    March 17, 2015 at 7:13 pm

  29. Hey Amit, do read the Outlook Business article on Ghost Malls of India.


    March 25, 2015 at 1:05 pm

    Biological E is not a subsidiary of DIL LTd. It is separate unlisted entity.Even then DIL ltd is good pick for long term.

    Vijay Narayancd

    April 22, 2015 at 1:11 pm

  31. Sir, Please give your view on Standard Industries Ltd (530017)

    Market Cap: Rs.130 cr.
    Reserve : 88 cr.
    1)Ghansoli-62.5 acre land at Ghansoli , the property is located at a prime location right next to Reliance Corporate head quarters(market value-2300 cr.(approximately)
    Image Link-
    2)Prabhadevi, Mumbai : Stanrose apartments with a built up area of approx, 30,000 sq ft. This is a sea-front location in one of Mumbai's most prime areas. (market value- 50 cr( approximately.)
    Image link-
    3) Sewree – Mumbai : 16,825 sq. Ft.plot(market value-180 cr. (approximately)
    4)Bharuch, Gujarat ” approx 10 acre.
    5)Surat ( Salt pan land ) : 3200 acres consisiting of two parts of 2000 acres & 1200 acres. These have been with the company for a long time through its wholly owned subsidiary Standard Salt Works Ltd
    company`s land bank value more than 3000 cr.


    April 23, 2015 at 7:59 am

  32. Difficult to say, asset plays often turn sour than not. Depends on promoter integrity.

    Amit Arora

    April 25, 2015 at 7:51 am

  33. DIL LTD(506414)
    M.cap-150 Cr.
    Reserves-130 Cr.
    They own commercial properties which gives them stable rental income of around 13 crores(6.5 acres of land in Thane in prime locations.They are developing this land into Thane One Corporate Park) The project will be spread across 0.9 million sq. ft. The Major Tenants Targeted & Signed are the likes of IT companies, Bank and Financial companies, supporting F&B retail.
    Image link-
    Video link-

    Fermenta Biotech ltd (subsidiary of DIL limited(506414)
    Video link-


    April 27, 2015 at 7:49 am

  34. Hi Amit,

    Any updates whether the work is going on at Mall site and likely completion schedule ?



    June 7, 2015 at 3:30 am

  35. Sarup Industries Ltd has informed BSE that pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015 the Trading Window, for dealing in the securities of the Company, shall remain closed for all directors / officers / designated employees/connected persons of the Company from June 13, 2015 to June 17, 2015 (both days Inclusive).

    The trading window shall remain closed for the purpose dissemination of unpublished price sensitive information in Board Meeting scheduled to be held on June 15, 2015.

    agrawal dinesh

    June 13, 2015 at 12:47 pm

  36. Mall is under construction and it may take a year

    Amit Arora

    June 13, 2015 at 7:31 pm

  37. 1.Further, Sarup Industries ltd share in the project is 79% out of which profit sharing with Shalimar is SIL 84% and Shalimar 16%.

    · 2.Our Company has right now decided to lease its share of Mall. Later on, Board may decide any option.

    · 3.Company has not yet taken any loan for this project, However Company has taken the in principal approval of loan from the Bank.

    · 4. Company has already executed agreement for leasing approx 70000 sq feet share of the Mall.

    ross taylor

    November 2, 2015 at 4:03 pm

  38. Dear ross taylor
    could u pls share from where u got this info as it is not on the co website or bse website
    further at what rates they have leased the 70000 sq feet and also remaining 21 % share is with whom emmar mgf or else
    any other info may be welcome
    thanks and regards

    Ashok Nagda

    November 3, 2015 at 4:48 am

  39. Info mailed by company sec on being asked the question.. rate not disclosed by company..70000 includes mainly anchor like lifestyle

    ross taylor

    November 8, 2015 at 5:54 pm

  40. I have a communication with Company official n come to know that Emmar Mgf is not involved now in this mall might be due to poor execution due to lack of money but they built most of mall portion hence will hold 20% of rantal space


    December 5, 2015 at 6:32 pm

  41. Hi Amit,

    Are you still invested in Sarup Industries ?


    December 22, 2015 at 3:05 pm

  42. Dear Totalview

    Out of it.

    Pls send me your email id, will share something.


    Amit Arora

    December 26, 2015 at 7:01 am

  43. hi,
    why r u out of it, is there any specific reason. plz do let me know.


    January 12, 2016 at 12:05 pm

  44. Hi Amit,

    Could you please let me know the reasons why you are out of Sarup industries now? Please mail me if you cannot explain the reasons here. My mail id is

    Value investor

    January 16, 2016 at 5:03 pm

  45. Hi there

    I wanted to invest in companies which do not have one-time-story (i.e. Mall / real estate) but have continuous growth ahead.

    No other negative as such


    Amit Arora

    January 17, 2016 at 5:59 am

  46. hi,
    i am right now looking at escorts, it has grt future with an able management. i think when the rural sector gets back to normal. its sales and margin can improve a lot and also there railway business can be the dark horse, might grow above 20% for several years. please share ur views


    January 19, 2016 at 10:09 am

  47. what happened in sarup it has already halved
    any negative other than qtrly result

    agrawal dinesh

    February 24, 2016 at 12:40 pm

  48. Hi Amit,
    Any negative news associated with this company. Can we still hold on to this stock.


    March 4, 2016 at 5:45 am

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