Gulshan Polyols – Grossly undervalued !! Proxy FMCG play !!

Gulshan Polyols Ltd is an agro processing Company with a turnover of 500 crores FY16-17. Gulshan’s product lines consist of Sorbitol, MD, DMH, animal feed ingredients like gluten, germ and enriched fibres mainly meant for cattle, aqua, animals etc. mainly maize and Rice processing, , Native Starch, ENA and HFRS. It’s a sub-400 crores market cap outfit which is trading at 7X its FY 16-17 cash profits.

It is a multi-locational, multi-product company having a consistent profitable record for decades together.

What is important that it has been a cash rich company because of it’s clientele mainly MNCs, FMCG and top-notch Corporates. In the last 5 Financial Years Company has generated Free Cash Flow of more than 235 crores and the entire cash has been ploughed back in the Company to create productive assets of grain based businesses. Capex Programme is 100% over.

It’s customers’ line reads like ‘Who’s Who’ including Colgate, Hind Unilever, Dabur, Asian Paints, Wipro, KansaiNerolac, Berger Paints, Pidilite, Britannia, Henkel, ITC, TNPL, Cadila, IPCA, Pfizer, Novartis, Merck, Glenmark,AstraZeneca, Bata, Lakhani, Relaxo, Sintex, BASF, a host of paper mills and pipe manufacturers. The company enjoys a long term relationship with its clientele for more than two decades.

In two of its products, the company enjoys market leadership i.e. Sorbitol and Calcium Carbonate. Both businesses are more than 25 years old.

In the last 3 – 4 years, the company saw an opportunity to enter grain based businesses and set up many verticals.

Beauty of grain based businesses is that nothing goes waste and apart from main products, plant generates gluten, germ, enriched fibres which are used for cattle, poultry, piggery, aqua based units. In FY 16-17 it sold these by products worth 75 crores which is expected to double to 150 crores in FY 18-19 as it has commissioned two new plants. 

Company has at least 8 locations where the plants are located.

Prominent among them is Muzaffarnagar based facilities which is on 65 acres of land. Here the company has a Calcium Carbonate Plant, Native Starch Plant catering mainly within a radius of 150 kms to numerous paper industry units. The plant capacity is 60K tonnes pa

It has got a rice based MD and DMH plant running at optimum capacity.

In FY16-17 they set up a rice based High Fructose Rice Syrup (HFRS) and Brown Rice Syrup unit which is completely an import substitute and first in India saving around US $ 20 Million pa.

Another important thing is that Company got its products certified from Germany. And they have started exporting to developed markets like USA and Australia.

Muzaffarnagar facility is the only facility in India which has got dual feed ie Corn and Rice at one place.

Sorbitol is their main product generating around 250 crs turnover from Bharuch, Gujarat. The plant has a capacity to process 80K MTPA corn and this capacity will be expanded in the near future to cross 100K pa. This plant is most modern and meeting all pollution norms.

It is worth noting that Sorbitol is exported to over 35 countries worth 70 crores.

Company has been able to enter grain based ENA Plant with 60 KLPD capacity located at Chhindwara, MadhyaPradesh. Raw material is rice and can be changed to other grains as well.
This unit has a distillery, bottling unit and captive power plan. Seed marketing of their brand, Golden Deer for Rum and whisky is already on for the last two years. The ENA plant incurred a project cost of over 100  crores and ready to go into commercial production shortly in the current quarter itself. ENA is a high entry barrier business and business parameters are quite promising. Here again Company will have by products of gluten, germ, enriched fibres and also Dry Ice which will be manufactured by recovering Carbon dioxide and compressing the same into Dry Ice.

All three main locations i.e. Muzaffarnagar, Bharuch and Chhindwara are equipped with captive power plants making them self sufficient power wise.

3 / 4 years back the company entered the business of setting up of Satellite PCC plants and have set up half a dozen such plants. Prominent among their customers are ITC, Orient Paper and two units at Basundhara Group, Bangladesh. Company expects to set up more such plants in paper industry in view of the paper industry doing well.

During FY 16-17, the Company generated a cash profit of 55 crores on a tiny capital of 4.69 crores.

Promoters hold around 59 percent and more than 16 percent is held by Reliance Mutual Fund and Antara Evergreen Fund. More than 4 per cent is in physical mode leaving a floating stock of just 20%

The beauty of their businesses is that in FY18-19 i.e. next year, will have a turnover of 1000 / 1100 crores and out of which 90% will be grain based mainly Corn / Maize and Rice. And these businesses will have around 150 crores worth of products as by product which are mainly animal based i.e. germ, gluten, enriched fibres and dry ice.

Last year the company had a turnover of 500 crores. It plans to achieve a turnover of 750 crores in FY18 & 1100crores in FY19.



Disclosure: I personally hold the stock so my views may be biased.

Disclaimer: I, am not registered under SEBI (Research Analysts) Regulations, 2014. No content on this blog should be construed to be investment advice. Any security specific discussion on this site is not a recommendation to Buy / Hold / Sell. The purpose of this site is solely for investor education. You should consult a qualified financial advisor prior to making any actual investment or trading decisions.

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Maharashtra Scooters Limited – An Investment Company. Trading at a huge Discount.

Maharashtra Scooters Limited (MSL) was formed in 1975 as a JV between Bajaj Auto Limited (BAL) and Western Maharashtra Development Corporation, a Maharashtra State Undertaking (WMDC) with BAL holding 24% and WMDC being major partner holding 27%. A protocol agreement was signed that none of the promoters would increase or decrease their holding in percentage terms and would first offer the shares to other promoter  if anyone wants to exit.


BAL wanted to buy WMDC’s holding in MSL since long and in 2003 WMDC offered to sell  its holding to BAL which could not materialize on pricing issue. The matter was later decided by Arbitration Award in favour of BAL  but WMDC went to Bombay High Court and which held that Right of First Refusal under protocol agreement was void and WMDC was under no obligation to first offer shares to BAL. The Order  was appealed ny BAL with The Division Bench of The Bombay High Court  and in 2015 The Division Bench  held that WMDC would have to part off with their stake of MSL in favour of BAL at the rate  arrived at by the Arbitrator earlier. The matter is now pending in The Supreme Court.


MSL is basically an Investment Company now holding shares of various Bajaj
Group Companies. The current NAV  is more than 5500/-per share against its market price of 1800/- per share. It has also a land parcel at Satna..

It holds the shares of following group companies—


Bajaj Finance Limited

Bajaj Auto Limited

Bajaj Finserv Limited

Bajaj Holdings & Investments Limited

Bajaj Hindustan

Most of these are outperformers no doubt. It has already stopped its manufacturing activities of scooters since  long back (since about 2003) and announced it officially in its Annual Report of 2006. It has retrenched 80% of its employees in the past and is left with only approx. 100 employees now.

The Company has recently been converted into a CIC (Core Investment Company)  which is more or less like NBFC in nature and should augur well for the company in future.

The company is quoted at a steep discount of about 70% to its NAV. Most of the investment companies are quoted at a discount but this 70% discount is on the very high side for a company which belongs to Bajaj Group. All of its invested companies have outperformed for years in the past and are expected to do the same in future. The NAV for MSL would not become stagnant but would move up day by day with the performance of its invested companies of Bajaj Group.

We have seen in the recent past that the management has bought shares of Bajaj Auto limited, Bajaj Finance Limited. Once they are through the protocol with WMDC they would be in a position to buy the shares of MSL where they would get the holdings in Bajaj Group companies indirectly at a discount of say 70%.


We are sensing the awareness developing  recently amongst the investors for such companies which are quoted a heavy discount for no reasons.


For example—


Florence Infotech Limited is an investment company of JK Group and holds shares of JKPaper LTD and JKTyres LTD besides others. It has moved up from 565/- levels to 800/- levels in the month of March 2017 (15 days only) . This is despite the fact that its invested companies have not performed much during this month. This can be attributed to the awareness developing amongst the investors that such investment companies of big industrial houses can not continue with the discounting going on and should create value for the investors.

Similarly we have a good interest in Kalyani Investment Company Limited which holds mainly the shares in Bharat Forge Limited besides others. This is again quoted at a discount of 75% to its NAV. A company from Kalyani Group commands at least much lesser discount and investors have started sensing this thing slowly.

Summit Securities Ltd  which is invested in Ceat Limited  basically has moved up from the recent levels of 430-435/- to 525/- levels in a very few trading sessions.


Disclosure: I personally hold the stock so my views may be biased.

Disclaimer: I, am not registered under SEBI (Research Analysts) Regulations, 2014. No content on this blog should be construed to be investment advice. Any security specific discussion on this site is not a recommendation to Buy / Hold / Sell. The purpose of this site is solely for investor education. You should consult a qualified financial advisor prior to making any actual investment or trading decisions.


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Goldstone Infratech – A Multibagger in the making?

Background of Goldstone Infratech

Goldstone Infratech Limited (GIL) is a part of the highly diversified Goldstone Group, with major interests in Composite Insulators, Amorphous core-distribution transformers, Data Analysis and IT Consulting.

GIL is the largest manufacturer and supplier of Composite Insulators in India.

One good thing to look into is that since the last 10 years they have always been in the green. So it speaks of its track record. The company was paying dividend till 2012 after which it was stopped due to the pending open offer. Instead the money was ploughed back into the company. Existing customers are power transmission companies e.g. PGCIL

Company has recently tied up with BYD, a Chinese major, to assemble electric buses in India. More information on BYD can be found on and – Warren buffet is also invested in this company –

It has already received an order for 6 buses from BEST.

Recently the company bagged an order for 25 buses for the Manali-Rohtang stretch

The combined order will increase the topline by about 60 crores.

Goldstone has concluded trials in New Delhi, Rajkot, Hyderabad and is expected to receive the orders for the same.

Due to the tie up with BYD, the company holds an added advantage. For example :- Batteries form approximately 60% of the total cost of these Electric Buses. Ashok Leyland imported batteries from USA whereas Goldstone`s trial bus was fitted with one from none other than BYD itself who are the market leaders in Battery segment and originally belong to this segment only. Definitely this 60% cost component would be much lower for these people compared to USA batteries. Battery cost can well be said as raw material for the Electric Buses and BYD / Goldstone have a huge advantage on this count.

The company has an early mover advantage. With the receipt of orders from the government, they will have an upper hand in other state governments too. It is also worth mentioning that going forward they will have to undertake the maintenance of these buses which will help them increase margins and thus increase their bottom line.

Parent company / promoter is TRINITY INFRAVENTURES LIMITED promoted by Ponnapula Sanjeeva Parthasarathy, Indrani Prasad, Sunita Prasad, Mahita Prasad Caddell, Perubhotla Venkatrama Sanjivaraya Sarma are all US citizens and have multiple businesses in India.
(This should increase the confidence of the people who are not willing to bet on the company because it’s based out of Hyderabad.)

A bit about the past

Goldstone Infra had two triggers to watch. First the open offer story and academics say the open offer price should be 43/- (Of course, now that the current price is way higher than that price, it just acts as an insurance). The second trigger was about the Electric buses story which is gathering momentum and it might go up significantly.

They also tried to sell the insulator business to a US based company Maclean Power Systems. valued at 108 crores .

In retrospect, it seems that promoters were negotiating with BYD Auto for Electric Bus business. In order to concentrate on the bigger business opportunity they wanted to sell the Insulator business on “lump sale” basis and which is also borne out of their filings on Stock Exchanges.

But this information was not known to Retail Shareholders and public domain until February 13, 2016.
Since the promoters and minority shareholders were at loggerheads in view of a dispute pending over “Open Offer” Price the resolution was defeated as it was a Special Resolution.

And now it is proving to be a boon to minority shareholders. Now even if the “Open Offer” were to be made @ Rs. 43, no shares would be tendered in view of market price ruling much higher and improved business prospects. And Promoters if they want to increase their holding from 51% will have to come out with much higher offer. Alternatively, BYD Auto may also pick up holding in the Company which again will be at a higher price.

Overall a very safe bet with early signs of multibagger opportunity.


Key Developments ( Updated 15-March-2017)

Below are some the key developments that have taken place or have come to my knowledge recently. These developments may or may not be related directly to the Goldstone Stock as such but important from a sector point of view. So sharing them below. I would suggest all the stakeholders to go through it and understand the potential of the overall sector. Goldstone seems to get an early mover advantage. Price has already shown the true potential. Inspite being in T group the stock has show good upmove which shows that the strength is real and not speculative in nature.

Ministers to brainstorm policy for an all-electric vehicle future

Gadkari’s clean car plan: Electricity-run vehicles to replace commercial cars

Soon, No Permits Will Be Required for Electric Commercial Vehicles

 150 Electric bus proposed in Karnataka Govt Budget

Disclosure: I personally hold the stock so my views may be biased.

Disclaimer: I, am not registered under SEBI (Research Analysts) Regulations, 2014.
No content on this blog should be construed to be investment advice. Any security specific discussion on this site is not a recommendation to Buy / Hold / Sell. The purpose of this site is solely for investor education. You should consult a qualified financial advisor prior to making any actual investment or trading decisions.