Check out how things have changed. First Nikhil says Punj would not sell. Then things change... Punj exits...
Jul 11, 2010
Pipavav Shiyard - 533107
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| Name of Company | Pipavav Shiyard |
| BSE Code | 533107 |
| NSE Code | |
| ICICI Code | |
| Established | |
| My Take | Dislike |
| Headquarters | |
| Promoters | SKIL infra(Nikhil Gandhi) and Punj Llyod were promoters. Punj LLyod has exited in favor of SKIL. |
| Story | Nikhil Gandhi seems to have the big political connections. He previously sold the SEZ in Navi Mumbai to Mukesh Ambani. |
| Sector | Shipping |
| Sub-sector | Manufacturing and repairing |
| Website | |
| Positives | Some DII/FIIs including LIC and IDBI hold some shares in this company. Has 1000 Cr as reserves. Currently setting up an intergrated ship building facility which would be the largest in India. |
| Negatives | 6500 Cr market cap for a company not even making profits. Compare it with an established player, larger revenues and reasonably growing Bharati Shipyard which has a 600 Cr market cap. Valuations are highly unreasonably. Wait for this scrip to nosedive soon. Out of the 39.5 % shareholding, half or 20% is pledged. Revenues of BG are triple and Bharati are double the valuations of pipavav. |
| Peers | ABG, Bharati |
| News | |
| Price @ blogged | 97.65 (10-Jul-10) |
Pipavav Shipyard - Nikhil Gandhi interview
Can you please confirm that via SKIL Infrastructure, you are buying out Punj Lloyd's 20% stake. If so, at what price and how much will you be paying for it?
Yeah, this is to confirm you that SKIL Infrastructure Group has done deal with the Punj Lloyd to buy their 19.6% stake in the company and we have informed the regulatory authorities about the same. We would be paying an accumulative price of 656 crores to buy the Punj stake and over and above, we would be going for an open offer which would be about 24% above the price we have paid to Punj Lloyd whereby the total commitment of the SKIL Infrastructure is likely to be in excess of 1450 crores approximately.
Could you tell me why Punj sold out? There were some news reports that they perhaps needed the cash, they cannot really hold onto this but did they tell you why they want to sell of? Did they try to find another buyer or did they come straight to you or did you want to buy it? How did this transaction work out?
First of all both SKIL and Punj have been great partners and we enjoy great relationship with each other. Punj wanted to talk to us straight and we did the deal by discussing with each other, this was No. 1. No. 2, they also had a three-year lock-in period.
It is just about below two and a half years that they have invested into the Pipavav Shipyard. No. 3, when you have lock-in shares, there is always discount to the market price and fourth, yeah, Punj would be investing cash into the core competencies infrastructure because post budget, there has been a lot of impetus and lot of support by the government for public private partnerships and private sector investments and government investments and things like that. So Punj would be efficiently putting the money to work.
That is what I understand. One more thing that just over two years, the Punj is making a neat profit of nearly 300 crores on a 350-crore investment, nothing withstanding that one year which was last year which was very bad for everyone in the world. They could still muster a very handsome profit and that is good for them and for us, we can consolidate our stake and demonstrate our higher degree of commitment to this company. So it is a win-win for both.
I am with you on that. I believe they sold the stake for you at 4930. I have two related questions. One we saw in the case of Fame Adlabs that a third party can come in and say now we do not like the valuation, why was this done at this price. We think shareholders should have gotten more wealth out of this. We have seen this happening. This battle has played out for the last one or two months. How do you feel with something like that and how did you arrive at that valuation? If you can just walk us through what was going through because this was a major stake and I would say Punj did not invest this as an investor but they want to be in shipbuilding. For them to get out, there must have been some thought process.
No. 1 is that we arrived at a valuation based on number of factors. First and foremost is that currently if they wanted to do the deal, it could be a promoter to promoter transfer. No. 2, they also recognise that it is a large deal and large sum of cash is required to be put on the table. No. 3, if we were to buy the entire stake together, we will also be obliged to put another 20% off table. You will appreciate that this was the first time corporate India that five months after raising 500 crores from the public, the promoters are putting in 1500 crores on the table. This is not a small commitment, it is a huge. So all those things taken into account, this price both parties felt it was fair. No. 2, insofar the public shareholders are concerned, we are putting in a great offer. It is a great offer to the public.
If Punj wanted to sell, they could have gone and sold it to somebody else, so is there a regulatory requirement that they sell to you and is the market so weak that they had to sell it at 4930 and they could not find perhaps a higher value than the market value that exists today?
It was not only buying of the Punj stake but it was buying of 40% stake. Please realise this case and the other case you are referring to are two completely different ballgames. As I said there is a degree of discount because the commitment which SKIL will bring on the table would be far larger compared to anyone else in this kind of situation in the country before. So it is a very fair deal and both parties are very happy and I am sure if you are my shareholder, you will be very happy because if I am buying at 61.5, I know what I am doing because the company is going to do better and better and then their shareholding values will further go up.
30 years after whatever work we have done and whatever we have achieved in life, we are not going to risk our credibility and money and particularly shareholders' money. Both the parties have achieved very smart deal both in terms of buying Punj and putting an open offer. So rest is on the shareholders that how they want to take it forward.
Yeah, this is to confirm you that SKIL Infrastructure Group has done deal with the Punj Lloyd to buy their 19.6% stake in the company and we have informed the regulatory authorities about the same. We would be paying an accumulative price of 656 crores to buy the Punj stake and over and above, we would be going for an open offer which would be about 24% above the price we have paid to Punj Lloyd whereby the total commitment of the SKIL Infrastructure is likely to be in excess of 1450 crores approximately.
Could you tell me why Punj sold out? There were some news reports that they perhaps needed the cash, they cannot really hold onto this but did they tell you why they want to sell of? Did they try to find another buyer or did they come straight to you or did you want to buy it? How did this transaction work out?
First of all both SKIL and Punj have been great partners and we enjoy great relationship with each other. Punj wanted to talk to us straight and we did the deal by discussing with each other, this was No. 1. No. 2, they also had a three-year lock-in period.
It is just about below two and a half years that they have invested into the Pipavav Shipyard. No. 3, when you have lock-in shares, there is always discount to the market price and fourth, yeah, Punj would be investing cash into the core competencies infrastructure because post budget, there has been a lot of impetus and lot of support by the government for public private partnerships and private sector investments and government investments and things like that. So Punj would be efficiently putting the money to work.
That is what I understand. One more thing that just over two years, the Punj is making a neat profit of nearly 300 crores on a 350-crore investment, nothing withstanding that one year which was last year which was very bad for everyone in the world. They could still muster a very handsome profit and that is good for them and for us, we can consolidate our stake and demonstrate our higher degree of commitment to this company. So it is a win-win for both.
I am with you on that. I believe they sold the stake for you at 4930. I have two related questions. One we saw in the case of Fame Adlabs that a third party can come in and say now we do not like the valuation, why was this done at this price. We think shareholders should have gotten more wealth out of this. We have seen this happening. This battle has played out for the last one or two months. How do you feel with something like that and how did you arrive at that valuation? If you can just walk us through what was going through because this was a major stake and I would say Punj did not invest this as an investor but they want to be in shipbuilding. For them to get out, there must have been some thought process.
No. 1 is that we arrived at a valuation based on number of factors. First and foremost is that currently if they wanted to do the deal, it could be a promoter to promoter transfer. No. 2, they also recognise that it is a large deal and large sum of cash is required to be put on the table. No. 3, if we were to buy the entire stake together, we will also be obliged to put another 20% off table. You will appreciate that this was the first time corporate India that five months after raising 500 crores from the public, the promoters are putting in 1500 crores on the table. This is not a small commitment, it is a huge. So all those things taken into account, this price both parties felt it was fair. No. 2, insofar the public shareholders are concerned, we are putting in a great offer. It is a great offer to the public.
If Punj wanted to sell, they could have gone and sold it to somebody else, so is there a regulatory requirement that they sell to you and is the market so weak that they had to sell it at 4930 and they could not find perhaps a higher value than the market value that exists today?
It was not only buying of the Punj stake but it was buying of 40% stake. Please realise this case and the other case you are referring to are two completely different ballgames. As I said there is a degree of discount because the commitment which SKIL will bring on the table would be far larger compared to anyone else in this kind of situation in the country before. So it is a very fair deal and both parties are very happy and I am sure if you are my shareholder, you will be very happy because if I am buying at 61.5, I know what I am doing because the company is going to do better and better and then their shareholding values will further go up.
30 years after whatever work we have done and whatever we have achieved in life, we are not going to risk our credibility and money and particularly shareholders' money. Both the parties have achieved very smart deal both in terms of buying Punj and putting an open offer. So rest is on the shareholders that how they want to take it forward.
The stock of course has reacted to this news at last count, it is at about 66, up about 3.5%. The open offer price at Rs. 62 per share, do you want to
consolidate your stake further from here in the company, what are the plans going forward because there might be a case where at 62 the price may not look as attractive, would you be comfortable with 40% if shareholders decide to not tender on the open offer ?
If shareholders decide not to tender that would mean that they are supporting my plans and if they want to sell or some of them want to sell, I will be happy to consolidate up to 51%, that is No. 1. No. 2, we are betting big on India's oil and gas sector, defence production and defence offset. The government policies are very transparent and robust. This area has a huge untapped potential. We want to make sure that we are in for a long haul.
We want to demonstrate this very strongly and that is the reason we are putting in this kind of commitment. No one does like this as we are doing. That is raise the 500 crores five months ago and put in 1500 crores off the table. So we are basically here for a long haul. We will be taping the untapped potential in the oil, gas and defence offset market and shareholders will be delighted to see the performance of Pipavav Shipyard going forward.
SKIL Infra if it had this kind of money, why did Punj not get out before the IPO because at the end of the day, they were co-promoters and how are you raising the money and how much you need to raise? I am just trying to figure out how are you paying for it and what was the whole rational of the IPO?
You cannot predict tomorrow, otherwise we would have all been God. The question is that situation develops very fast and post-IPO lot of situation developed whereby both the shareholders thought that how they can continue with their commitments in the respective areas and Punj found it nice to sell make profits, use the cash, put them to work for some better purposes. We thought that at this rate what we see is somebody else may not be able to see. So we want to take it forward by putting in more money. It should be seen in a good life because I am not selling away the company. I am actually investing more money. You guys should be happy, in fact if you have not bought my shares please go and buy one.
Do you as a promoter suggest that they should not tender their shares in open offer, you think you have got a lot of value to offer to them, they should sit with it and they will make a lot of money. Open offer is a regulatory requirement, so would you say don't sell of, don't worry, I am here, this company will deliver more than you can see, just stay with me?
Do you think I have ability to advise the wise people, wise investors? Investors are the wisest community.
What is your view, you are the promoter, you are running the company, I am just saying what is your view?
Having said that, when I am putting such a large capital, surely I know what I am doing. There is a lot of potential what I can see. Maybe some people may not be able to see today but I am sure they will realise tomorrow and they will all gain and benefit. So I would certainly say that those investors who have put faith in me, stay with me and have the excitement and fun in times to come because we are not to create value always. Even if the Punj Lloyd over the two years, they have made 300 crores profit for 350 crores investment. I am sure those investors who are coming now like for example somebody bought last week on Friday, some 25 million shares change hands. So I am sure if they have bought at this price, they are going to be benefited and benefited big time.
On the order book position from an FY11 perspective, where do you see your order book position standing and how much would you be able to monetise of that in terms of revenues and profits by FY11 and also there is some buzz in the market about 20% of the current order book position being under pressure and some execution delays on that front, very quickly run us through those two updates.
No. 1, our order book is very comfortable and we are expecting some more development during the course of next two quarters in terms of the order book. No. 2, we have the order book fully intact with 1000 crores advances from the customers. We have constructions of the ships going full swing. In fact last week as we speak, we laid the keep for all the 12 ships for the ONGC far ahead of time which actually pleasantly surprised the analysts and everyone else because when the contract was awarded there was a lot of buzz like what you are doing right now that we are under pressure, the price is low and so on.
So we are far ahead of time and we have the best of man and machinery to deliver the goods to the customers and on time within the specified cost.
Source: ET
If shareholders decide not to tender that would mean that they are supporting my plans and if they want to sell or some of them want to sell, I will be happy to consolidate up to 51%, that is No. 1. No. 2, we are betting big on India's oil and gas sector, defence production and defence offset. The government policies are very transparent and robust. This area has a huge untapped potential. We want to make sure that we are in for a long haul.
We want to demonstrate this very strongly and that is the reason we are putting in this kind of commitment. No one does like this as we are doing. That is raise the 500 crores five months ago and put in 1500 crores off the table. So we are basically here for a long haul. We will be taping the untapped potential in the oil, gas and defence offset market and shareholders will be delighted to see the performance of Pipavav Shipyard going forward.
SKIL Infra if it had this kind of money, why did Punj not get out before the IPO because at the end of the day, they were co-promoters and how are you raising the money and how much you need to raise? I am just trying to figure out how are you paying for it and what was the whole rational of the IPO?
You cannot predict tomorrow, otherwise we would have all been God. The question is that situation develops very fast and post-IPO lot of situation developed whereby both the shareholders thought that how they can continue with their commitments in the respective areas and Punj found it nice to sell make profits, use the cash, put them to work for some better purposes. We thought that at this rate what we see is somebody else may not be able to see. So we want to take it forward by putting in more money. It should be seen in a good life because I am not selling away the company. I am actually investing more money. You guys should be happy, in fact if you have not bought my shares please go and buy one.
Do you as a promoter suggest that they should not tender their shares in open offer, you think you have got a lot of value to offer to them, they should sit with it and they will make a lot of money. Open offer is a regulatory requirement, so would you say don't sell of, don't worry, I am here, this company will deliver more than you can see, just stay with me?
Do you think I have ability to advise the wise people, wise investors? Investors are the wisest community.
What is your view, you are the promoter, you are running the company, I am just saying what is your view?
Having said that, when I am putting such a large capital, surely I know what I am doing. There is a lot of potential what I can see. Maybe some people may not be able to see today but I am sure they will realise tomorrow and they will all gain and benefit. So I would certainly say that those investors who have put faith in me, stay with me and have the excitement and fun in times to come because we are not to create value always. Even if the Punj Lloyd over the two years, they have made 300 crores profit for 350 crores investment. I am sure those investors who are coming now like for example somebody bought last week on Friday, some 25 million shares change hands. So I am sure if they have bought at this price, they are going to be benefited and benefited big time.
On the order book position from an FY11 perspective, where do you see your order book position standing and how much would you be able to monetise of that in terms of revenues and profits by FY11 and also there is some buzz in the market about 20% of the current order book position being under pressure and some execution delays on that front, very quickly run us through those two updates.
No. 1, our order book is very comfortable and we are expecting some more development during the course of next two quarters in terms of the order book. No. 2, we have the order book fully intact with 1000 crores advances from the customers. We have constructions of the ships going full swing. In fact last week as we speak, we laid the keep for all the 12 ships for the ONGC far ahead of time which actually pleasantly surprised the analysts and everyone else because when the contract was awarded there was a lot of buzz like what you are doing right now that we are under pressure, the price is low and so on.
So we are far ahead of time and we have the best of man and machinery to deliver the goods to the customers and on time within the specified cost.
Source: ET
Jul 10, 2010
Bharati Shipyard - 532609
Name of Company | Bharati Shipyard |
BSE Code | 532609 |
NSE Code | |
ICICI Code | |
Established | 1973 |
My Take | So-So |
Headquarters | Mumbai |
Promoters | |
Story | Company build ships, has diversified into wind power as well. Started as a small company in Ratnagiri. Now has shipyards at Ratnagiri, Mumbai, Goa, Kolkata, Dabhol and Mangalore. Manufactures variety of ships. |
Sector | Shipping |
Sub-sector | Ship building, ship repairs and Wind power |
Website | |
Positives | Regularly profitable company. Revenues have grown from 260 Cr in FY06 to 1350 Cr in FY10. Company is trading at <5 times earnings (market cap at current prices is 670 Cr, net profit is 140 Cr). EPS is around 50. Can expect a regular dividend of Rs. 3 – yield is >1%. Good DII holding. 38% promoter stake - nothing pledged. |
Negatives | FY09 shows 1000 Cr debt when annual profit was around 138 Cr. NPM's have reduced from 20% to 10% - interest is one of the reasons for this. Reserves seem to fluctuate – some years have reserves, some don't. |
Peers | ABG Shipyard, Pipavav Shipyard |
News | |
Price @ blogged | 239 (5-Jul-10) |
Jul 5, 2010
Gujarat Alkalies and Chemicals - 530001
Name of Company | Gujarat Alkalies and Chemicals |
BSE Code | 530001 |
NSE Code | GUJALKALI |
ICICI Code | |
Established | |
My Take | So-So |
Headquarters | Vadodara |
Promoters | Gujarat Government |
Story | 917 Cr market cap company at current prices. |
Sector | Chemicals |
Sub-sector | Manufactures and markets |
Website | |
Positives | Regular dividend paying company (can expect dividends in September, expected yield is 1.7% or more). Not very costly as 171 Cr is FY10 net profit, while market cap is 917, i.e. at 5.3 times. Around 13% or more NPMs have been maintained in the last 5 year timeframe. 1300 Cr reserves for a 1300 Cr revenue is attractive, the reserves is more than the market cap itself. Around 25-30% of this share is held by DII's. |
Negatives | 37% promoter holding. Gujarat Industrial Investment corporation has pledged its full 9.69% stake. This company is not growing – 940 Cr to 1300 Cr revenues from FY06 to FY10. The company has a 330 Cr debt in FY09. |
Peers | |
News | |
Price @ blogged | 125 (5-Jul-10) |
Sun TV Network Ltd - 532733
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| Name of Company | Sun TV Network Ltd |
| BSE Code | 532733 |
| NSE Code | |
| ICICI Code | |
| Established | |
| My Take | Like |
| Headquarters | |
| Promoters | |
| Story | Has regional TV channels in south India. |
| Sector | |
| Sub-sector | |
| Website | |
| Positives | 77% promoter holding. 17K Cr market cap for a 567 Cr profit – this is such a great cost – but higher valuations are fine as this is a very profitable company. Dividend declared for FY10 is at Rs. 6 = 1.3% dividend yield, not the regular yield but this company is a regular dividend payer – can expect 0.5% yield. 1800 Cr reserves for a 1400 Cr revenue in FY10. Average NPM's are at 40%. Lowest was at 39.71%. Even better news is its zero debt operation. |
| Negatives | Very near 52 week high – can buy at lower levels. |
| Peers | |
| News | |
| Price @ blogged | 430 (5-Jul-10) |
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