Godrej Industries Ltd-This Godrej is Fresh like Cinthol

This is another gem from the house of Godrej but is not understood much by market like it does for Godrej Consumer products and Godrej Properties. It is the holding company of Godrej Properties with 60% shareholding and it also holds around 23% shares of Godrej Consumer products.

But its real gem is Godrej Agrovet ltd which is investing big in agriculture related businesses. GIL’s standalone business is chemical which deals primarily in Oleo chemicals like fatty acids, fatty alcohol, Glycerin and surfactants . These are chemicals derived from plant and animal fats. GIL was the first in india to launch animal fat free soap in india in 1918, we know it by the name of Cinthol launched in 1952. It is also holding prime land of 34 acre in area around its registered office in Vikhroli, Mumbai , which it is developing with Godrej Properties  and its share of profit will be 40% (actually it will get around 76%, as it is holding 60% in Godrej Properties also) .

Godrej Group as a whole holds huge land parcels in Vikhroli, which houses the fctories of the group manufacturing everything from soaps, chemicals, locks and furniture etc. No body knows how much land there is owned by Godrej group but estimates are for 2500-8000 acres of lands and this is real big. Even their chairman, Mr Adi Godrej states that unless political and regulatory issues are solved they can't number a figure. However they plan to develop some 1500 acres . As per some old estimates, this land is valued around 70000-90000 cr and on the same lines,  value of 34 acre land is around 1500 crores (although after development it will bring in much more to GIL).

Now we come to main course and it is Godrej Agrovet. It is india’s biggest Animal feed company with around 25% market share. It has recently opened a shrimp and fish feed plant in AP (remember our old horse Avanti feeds dealing in the same business). This business is growing very fast  and clocked around 2500 crores last year…this year I feel it will be around 3200 crore. Animal feed is going to be one of big business opportunity in india as demand for dairy and animal protein is rising very fast in india but production techniques are still old. Dairy production per cattle is almost six times in USA of india. Same is the case with fish feed which is yet to grow in india although poultry feed business is fairly developed but demand is outpacing supply very fast. This one business will add huge value to the company.

Godrej agrovet is also india’s largest producer of Palm oil with around 35000 acre palm oil plantations in india meeting vegetable oil demand of india. India is facing severe shortage of the vegetable oil and imports around 50000 crore worth of food oil. Oil palm contributed around 450 cr revenue last year but this year it will be around 600 cr business and one of the fastest growing.

GIL is betting big on farm inputs and seeds business which brings in revenues of around 450 cr…this year it will touch around 600 crores.  It deals in herbicides, plant growth simulaters, micronutrients, soil conditioners and is a reputed name in this line of business. It has divested its agri seeds units into Godrej Seeds & Genetics Limited. It will serve as its vehicle for entering the hybrid seed business in India. Godrej Seeds & Genetics Limited will focus its efforts on three major field crops-maize, paddy, and bajra. It has clocked turnover of 45 crore last year but this year it will be around 80 crores.

It is also having another businesses like fish feed JV with ACI in Bangladesh, Godrej Tyson foods for chicken processing, Nature Basket is the retail arm of the group. Godrej Tyson foods has made some inroads in making Indians aware of the branded chicken who likes to buy their chicken alive. But quality here is a big problem in india where due to no restrictions poultry farmers are feeding huge amounts of antibiotics and growth stimulators to their chickens in farms to raise the productivity but it is very dangerous for human body. So sooner we are going to see another revolution in Indian poultry industry of branded chicken and egg products. Venky’s india is another leading name in this race. Godrej Tyson foods has so far introduced Yummiez  and Real Good chicken brands in india and has received encouraging response so far. Tyson foods is the largest meat processer of USA. Turnover of the JV is around 400 cr and if focused properly can be one of the biggest surprise and success story due to in house capabilities in the fields of poultry feed.

Its retail arm nature’s basket is having 32 stores in big Indian metro cities with turnover around 200 crores. I am always skeptical of producers, Brand owners venturing into retail business…it is not their cup of tea. First of all Local Baniya is very hard to compete and then to understand and establish a retail model for Indian market where real estate is hugely overvalued is still a distant dream for Indian retailers.  If ever Online retail is going to beat offline retail in india in commercial terms, then costly real estate is going to play huge role.

Indian real estate is overvalued mainly due to presence of around 40% black money…real estate in india is a parking facility for black money. So I can’t say much about its retail business but I think it will be good if it exist it and invest that money in its domain of expertise.

In 2012, GIL sold 20% stake on Godrej agrovet to Singapore government-owned investment firm Temasek Holdings for 572 crores valuing it around 3000 crores and it should be valued around 5000 crore now.

Moreover GIL is looking to list Godrej Agrovet within one or two years. This will bring huge value to the company like it did when group listed Godrej Properties.

Godrej consumer products’ market value is around 33000 crores and GIL’s stake of 23% is valued around 7500 crores and its 60% stake in Godrej Properties is valued around 3000 crores which values both for around 10500 crores and after giving it 30% discount the same will be valued around 7500 crores. Now add around minimum of 2500 crores for 34 acre land in vikhroli and it will add into 10000 crore which equals the market value of GIL at current market price of 300/-

That means we are getting Godrej Agrovet free of cost, which itself is on a strong growth trajectory and with the huge growth even in Godrej Consumer products and Godrej Properties the value equation for GIL is only going to heading towards sky.

A great buy at CMP of 300/-

(Views are personal and should not be taken as a recommendation for buy or sell a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)

Death-a contemplation-4th Part

This is 4th in the series. Read the first three at following links:

Death-a contemplation-1st

Death-a Contemplation-2nd

Death a contemplation-3rd

Some stocks worth Investing-KPIT Technologies, Radico Khaitan, Tata Coffee, Jain Irrigation,Tata Power

Radico Khaitan: Liquor…this is one sector which is going to witness huge activity going forward. First…we Indians don’t yet know what is really a whisky? What we drink in the name of whisky is nothing but neutral spirit extracted from molasses (By product of sugar) which is then blended with imported malt and grain scotch whiskies to get the flavor and colour of whisky. In india, they have given it a very funny name; Indian Made foreign Liquor (IMFL) which comprises Whisky, Beer, Vodka, Brandy, Rum etc. In foreign countries, Indian whisky gets the tag of rum as it is made from molasses and most of them find its taste terrible. Single malt or grain whiskies are like silk and these are enjoyed best neat without adding any soda/water/ice.

At present india has imposed huge import duties on imported scotch whiskies which inflated the cost of BIO (Bottled in Origin) whiskies by almost 3 to 4 times and BII (Bottled in india) by twice. This has protected the inefficient Indian liquor industry from high quality competitors. However there are some like Amrut distilleries from india whose single Malt whisky has been awarded as the world’s best twice which shocked the entire world. This prominently export oriented company has now started offering 1000 bottles in india also. Amrut is always in short supply globally. This shows with dedication and efforts Indian companies can give global brands a run for their money.

Scotch Whisky unions of Europe are eagerly waiting for india to sign the FTA agreement with European union which will force india to lower the high import duties on scotch whisky. Sooner or later india is going to sign the treaty. Whenever this will happen will prompt foreign companies to look for acquisitions in india to get hold of complex liquor distribution system of india where every state has its own set of rules with regard to wholesale and retail of liquor. Central and state level taxes are very high and these are stretched to the fullest by state governments to increase their revenues. Diageo has already done the same by acquiring USL. Secondly this will also make bulk imported whiskies cheaper for Indian companies for blending purpose which will raise their margins. It will also prompt them to focus on high quality grain based products in order to be competitive.

One more thing, in spite of global demand for whisky almost doubled in last 20 years or so, area under Barley (to make malt for scotch whisky) production has actually decreased during the period which is made up by rising production of barley per acre. Although barley produced in Scotland is best suited for scotch whisky but india can be a huge global supplier of Malt.

With this background, I feel it is worth risk taking to buy the Indian liquor stocks like Radico Khaitan/USL/Tilaknagar industries which are trading at multiyear lows. Radico CMP is around 88/-

KPIT Technologies: one of the very few of Indian IT companies focusing on product based growth model rather than linear growth model wherein more employees are added to get more generic orders mainly due to cost competitiveness like our IT behemoth Infosys. However now they are also trying to change their business model. KPIT is a research driven company focusing on strong IP creation. It provides services in the areas of Integrated Enterprise Solutions, SAP and automotive segment.

Today’s vehicles are more of electronic devices with more and more of vehicle is about semiconductor Chips where millions of written codes control the way our today’s high tech vehicles function. KPIT has developed many IP based automotive solutions in the areas of in vehicle networks, body electronics, engineering design, infotainment, powertrain etc. It has also developed a component REVOLO which will convert the vehicle into Hybrid vehicle running on Gas and electricity from Batteries. It has filed 17 patents for the system and has already received four. It comes with a set of batteries, software and an electric motor which can be charged from standard electricity source. Batteries are also charged through regenerative braking system wherein electric motor rotate during braking and in process batteries are charged. The system recognize the driving pattern and start stop the power source from batteries and fuel engine as per the requirement like waiting at traffic signal.

We may be having a vehicle of higher power and strength but during normal driving in cities such a high performance engine is not required…in these situations Revolo shuts down the engine and start the battery powered motor and thus increases the fuel efficiency. As per KPIT management, Revolo can increase the fuel efficiency by 60%-80%.

Company derives a major part of its revenues from Offshore Product Development which is also going to be a major development in IT sector. KPIT CMP is around 164/-

Jain Irrigation is one of the best pick for solving the problems of indian agriculture...of low water levels, higher fertilizer subsidy. Both can be saved by Micro Irrigation which results in saving almost 50-70% odf water and 30-40% of fertlizer savings along with raising productivity by 50-200% in various crops. 

Govt will ahve no ther option but to make it mandatory to have micro irrigation by giving subsidy. although savings from reduced power and fertlizer usage will be huge as compared to total outlay on subsidy on micro irrigation.High debt of Jain irrigation is adequately safeguarded by pending subsidies from various state governments...there can be delays but ultimately most of it will come to jain. 

Only 7% of indian Farmland is Micro orrigated against 55% of USA and 95% of Israel. So just imagine the scope of scale...Jain Irrigation is 2nd largest micro irrigation comapny in the world after Netafam of Israel. CMP is around 86/-

Tata Coffee: First of all, Coffee is not a bean as it is regarded and thought of…instead it is a seed of coffee fruit. Coffee is a unique experience both for coffee brewer and drinker. It provides huge scope for creativity in brewing a splendid coffee. India which was predominantly a tea nation is bouncing towards coffee…however our knowledge about coffee drinking is preliminary. The powdered coffee we buy from our nearby stores is made of Robusta coffee beans which is a cheaper version of coffee as compared to royal class Arabica. Robusta is more bitter, less flavored with more caffeine as compared to Arabica. 2/3rd of Indian coffee production is Robusta. Also powdered coffee is either heat dried or freeze dried with former reducing the flavor and aroma of coffee due to heat hence freeze dried derives premium valuation in the market. Coffee is the 2nd largest traded commodity globally after oil and derives a turnover of 100 billion dollars.

Tata coffee is india’s largest coffee producer with 19 estates in india covering around 25000 acres. It is also the biggest producer of cardamom in india which is produced along with coffee. It produces around 10000 MT of coffee…almost half of which is exported and half is used to make instant coffee in its plants in india which commands better valuations and insulated from variations in global coffee prices as india is not a big player in coffee.

It derives 600 cr from its operations in india. It is having Eight’o clock coffee of USA as its subsidiary which is a more than 100 years old brand of USA. Its turnover is around 1000 crore and acquired by Tata in 2006. Tata is planning to launch the same in india also. 

Now I think the bigger future valuation creator will be its focus on freeze dried instant coffee segment than selling raw coffee beans globally. Also with Tata Starbucks JV growing big in india will provide huge growth opportunities to tata coffee as the JV is procuring its coffee from Tata coffee. Starbucks also has plans to source the coffee for its global operation also from Tata coffee.

With Indian customers now waking up to the idea of coffee and coffee chains, Tata coffee can reap the benefit from the massive distribution clout of its Parent Tata Global for tata tea in india. It has just recently opened a new instant freeze dried coffee plant in india. CPM is around 920/-

Tata Power: indian power sector needs great reforms and improvements to meet the current   demand as well as future demand to meet our growth targets. mundra plant is the main drag   on its financials due to costly imported coal which i feel was the fault of management for not    being able to calculate the possible chances of any high rise in coal prices.

However with cerc allowing to pass on the cost of around 50 paise to power distribution companies, the good time may come. Moreover with global oversupply of gas due to shale boom,     USA becoming net exporter of oil/Gas, technological improvements in renewable power…oil,       coal prices are going to fall further and there will be opportunities to buy coal mines at low      prices in usa/canada which i think tata can buy.

Also its defense arm SED is the gem in the crown as it is having highly advanced capacities to produce high tech products for Indian army. Its current order book is around 2700 crores. it is   having most advanced missile testing center in India…also producing high-tech night vision         equipment, highly advanced mobile phones for army etc.

 it is investing big in renewable power and power transmission and distribution, and to over-      come the dependence on India it is creating power assets globally. India can’t survive without      improving   its power sector and i feel due to its superior management and great track record…it is the best play on power sector.

(Views are personal and should not be taken as a recommendation for buy or sell a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)

Death a contemplation-3rd

This is the third post in the series. Kindly read the first two at the following links:

Death-a contemplation-1st

Death-a Contemplation-2nd

Why there is so much darkness here around everything? We, in spite of our desperate efforts to understand something of this process life, are just having huge numbers of opinions…of which we are sure of nothing. If life is for living for a purpose then why there is death? What is the purpose? Most of it… why this mystery is still unsolved? Why so much darkness? It seems that with our untiring efforts, we should have it solved if and only if someone is not putting the great efforts to hide the truth from us. Could that be our God? If not he then who is it? Or if in our present state of mind/consciousness it is not possible for us to conceive this mystery?

What are we and why we are? Am I just a collection of memories or my being, my persona…character is my reality?

I see someone assaulting the dignity of a girl in the lone street…if I have to save the girl; how the things will behave? Let’s see…I’ll try to save her and by doing this I’ll BECOME a Brave person or things actually are reverse…I’ll try to save her only because I am a BRAVE person. My brave nature will prompt me to act. My action will follow my nature…my innate nature will direct the flow of my actions, my action comes out of ME…they are just ME. It is not that- I AM what I DO…but I DO what I AM.

Second, in my bid to save her…whether I’ll first filter my memories to find out if I have done this before also? And if I hadn’t…I’ll not venture further into it or if I had done it earlier also then I’ll be happy to take the affair into my hands. But, in reality nothing of this sort happens…we never filter ourselves for action (but only for results)…because our actions are nothing…they are just demonstrations of ourselves…physical pronunciations of ourselves…our inner self…of what I am. Memories are irrelevant…even if I forget all my memories of bravery…but when facing a similar situation I’ll do the same action again…same type of memory is created…I’ll save the girl again. Memories don’t create me…I am the creator. Source matters not the extensions. So in order to be as it is as I am now…I don’t need any of my past memories. Erase all my memories and I’ll still remain. At the most I’ll lose the data…data regarding my parents, my love, friends…but processer is something else and it always remains.

So I save the girl and a memory is created in me…it is also created in that girl and culprit according to state of their mind. All of my memories reflect the different attributes of my being or my persona. Like my kindness if I donate, my being a true friend if I feel the pain of my friend. So different persons have different memories for one particular common event as all have different personas.

In nutshell, I will be the same person without my memories as my memories are direct outcomes of what I am. My past memories can’t affect my now time decision as they were created according to my state of being at that particular time and if I am a different person now then I’ll behave differently and so a different memory will be created.

That’s what death is. We die but we only loose our memories…nothing else. My persona, my being survives and we carry it as it is to our next life. Our journey of life never ends…we always start from where we left in our last attempt. We never start it from scratch as there is no logic in it. Life must be a phenomenon moving in circles; because when we take birth…can we say that that point was the beginning of ours? Can something emerge from nothing? Can it be possible that at one point there was nothing and the very next point we emerge? It happened only once when something emerged from nothing and that was our God…or the Beginning (My head bursts when I try to comprehend it).

Just look at your childhood…you can see that there are certain attributes of your character like bravery, kindness, fear, religiousness, music etc which you haven’t acquired in this life…these were part of you since your childhood…you were born with them…they just unveiled as you grow. You and your siblings are part of the same family…raised in same enviourment…but yet you are all very different by nature, have different views, aspirations…why? Because you are all just continuing your journey from where you left in your last life.

I remember something of my life…from early childhood days when I was around 5-6, I had a very strange liking for music…I still remember the strange feelings which I felt while listening to some songs played on radio which my father used to play…I felt very strange feelings of peace and mystery while listening to those songs. My love for music went on rising and I was enjoying music all the day while studying, doing gym, jogging, roaming…It was music everywhere. Then around age 23…i told one of my relative who was in music field that I wanted to learn music. He only laughed at me. I bought one small keyboard and my Aunt (Bua Ji) played for me the music of one song…I went on playing it for days…and all of a sudden I started playing some new tunes by myself…after that there was no looking back…I played very difficult compositions on my own…I even created some tunes on my own…now I can play any song that too without any formal training. I am sure that somewhere it has linked with my past life. Music must have been a very important part of my past life.

We grow as a person in our life…evolve, improve, change and then die…born again…and the evolvement process starts again. We never cease to exist. Lord Krishna has used the words “Marandharma” for Arjuna and “Mrityuloka” for earth in Geeta. Death is implied in our world…it is a part of being in here. If we extend the words of Lord…then there is no death for those living in other “Lokas”…these lokas may be those who are above earth (Material World) in hierarchy.

But we never go empty handed from here…Alexandra was wrong when near his death, he ordered to show his empty hands out of his coffin while going to graveyard to convey the message that even after having such a vast wealth accumulated by killing; he was going away empty. But he never went empty handed…before death he learnt the shallowness of wealth…he witnessed the bigger picture of life. He evolved in that life journey. We never come here empty handed nor we’ll go empty handed. Life is very generous…it makes sure to enrich us.

I don’t feel that our memories are stored in our physical brain because if they get stored in the brain, then with it our memories become a part of our physical existence. But our brain gets vanished, when we die…and so logically with the destruction of our brain, all our memories must also get destroyed. But literally all of our Rishis/Gurus say that they remember their past lives. However if our memories are physical phenomenon, then how our Gurus can claim that they remember their past lives? We have seen so many real life examples. Are our memories got stored in our soul?

But we all know scientifically that whenever someone gets his brain damaged accidentally, then he faces severe problems in recalling the past memories. So where really our memories are stored? And what should we take of the claims of our Gurus? But they don’t need to lie. So is there exists some sort of “cosmic memory” where all incidents are got stored and anyone can recall them after getting an access to this “cosmic memory”. I can’t say about it but I feel when we die…our memories start to fade out just like our dreams…when we wake up in the early morning…we can recall most part of our dream…but slowly into the day…we forget most of it. So when someone dies…for some time he remembers everything and if his attachments and unfulfilled desires are not strong then he starts to forget everything and moves out to start a new journey. But some with strong willpower can stay for long…we call them ghosts.

Here I remember something very important…some 10 years back…someone asked me how we change…transform. How a trembling person becomes a brave warrior? Like Angulimaal changed when he encountered Mahatma Buddha…from a ruthless killer he became a saint and preached Buddhism and Peace after that. At that time I couldn’t answer him…I myself didn’t have any experience in that. But life taught me some of the hardest lessons during this passage, mostly with a slap. We change, transform when we conceive, absorb, comprehend the truth in its purest form…wisdom, knowledge or Gyan transforms us. Like i am a big foodie…who can’t control his urge/greed for tasty food…so here I am always with full mouth, fatty, weak and ill. And then one day I think; I have eaten so much of tasty foods in my life till now…but where is that taste…that feeling now…it is nowhere in me, my mouth. And then cometh the realization that taste is illusion…unquenchable…and I find my greed for food falling. This is wisdom. Most of our fears are because of fear of death. One day someone like Lord Krishna comes to us and bring our soul out of our bodies…we see our bodies laying lifeless and realize that we are something more than bodies and we see our fears, timidness, jealousy, greed going away…we are transforming.

We are also on our journey…journey to the unknown. But see our children…our young people…they are not happy…although they are living…because someone else (parents) is choosing the aim of their lives…so they are confused…they are misrouted…as they are doing things which they never liked in their previous attempt. That was why astrology was invented; to know the journey of the child…to know what he can do best for him to feel greatest happiness.

Buddha saw an old man dying and he in one moment felt the impermanence of worldly matters or things…and so with that all wealth…most beautiful women, tasty food became useless for him and he left everything to start his journey towards reality…permanence.

We also know his story; we daily see people dying…but we never feel like Buddha…why???

Because he started where he left in his last birth. And we left our journey somewhere else…

Some stocks worth Investing-KPIT Technologies, Radico Khaitan, Tata Coffee, Gloster Jute, Godrej Industries, jain Irrigation, tata Power, venky's india

I can't post detailed studies on these stocks right now due to time constraint. but will post short analysis on these...