JUST JOCKEYING – PAGE INDUSTRIES LTD.

JUST JOCKEYING – PAGE INDUSTRIES LTD.

Just jaw-key-ing. There, that’s how you’d say it. An expression of comfort that reflects your change of urge to be crazy, uninhibited, carefree, un-posey, cheeky even. We’re all for it. Go ahead, easier said than done.

A “BRIEF” ABOUT THE COMPANY

Just jockeying ;) Sounds and feels familiar na? Well yes, I’m talking about one of India’s very popular brand for Innerwear/Leisurewear for Men and Women. The company behind getting the world renowned brand “JOCKEY^®” to India, Page Industries Ltd. was set up in 1994 by Genomal family.

The family had then been associated with JOCKEY International Inc. for 44 years as their sole licensee in the Philippines. Page Industries became a public company in March 2007 and is quoted in the Bombay Stock Exchange and the National Stock Exchange of India.

Page Industries Ltd., located in Bangalore, India are the exclusive licensees of JOCKEY International Inc. (USA) for manufacture and distribution of the JOCKEY^® brand Innerwear/Leisurewear for Men and Women in India, Sri Lanka, Republic of Maldives, Bangladesh and Nepal. Recently the contract has been extended for the next 20 years, i.e. till 2030.

CURRENT SCENARIO

As of the end 2008, the company employs over 6,000 people with manufacturing operations spread over three plants in Bangalore totaling 500,000 square feet of space. Page Industries commands wide spread pan India distribution encompassing over 16,000 retail outlets in 1,100 cities and towns and has revolutionized the innerwear market by launching exclusive JOCKEY^® outlets across India numbering 50 as of end 2008.

PEOPLE ON THE INSIDE

ACHIEVEMENTS TILL DATE…

® Awards:

In 2005 and 2009, the company was awarded the “best licensee of the year” by Jockey International Inc., as recognition for its outstanding achievement in establishing and strengthening the JOCKEY^® brand as a market leader in India.

® Adds New Geographies & Renewal of License till 2030

® In August 2008, Page Industries’ promoters, Genomal family and Jockey International USA celebrated their golden anniversary of association and both groups renewed their commitment to an even more exciting next 50 years. The new agreement will be for the next twenty years, extending through the year 2030 and will include additional countries, focusing on the Middle East.

FUTURE PLANS

® MORE JAW-KEY-ING!!!

New Sports and Leisure wear range for men and women

Jockey has become an aspirational brand overtime and has now evolved into a lifestyle brand. It is this aspect that has seen the company recently advance into the leisurewear segment for men and women with clothing that can double up as sleepwear, casual wear or gym wear under a sub-brand called Jockey Sport.

Jockey Sport can grow because it leverages the company’s core competence. There is synergy at the back-end because it uses the same technology used in creating innerwear. The leisurewear market is currently very fragmented in India, but is estimated to be about two-thirds of the Rs. 3,000 - crore men's innerwear market.

3D-innovations^®

Jockey has just introduced ‘3D-innovations^®’, a new product category exclusively for men which takes the meaning of “Comfort” to a new level. This range is targeted to consumers who appreciate the benefits of innovation and technology.

® SETTING UP EXCLUSIVE RETAIL STORES OF JOCKEY

Page Industries will set up 28 more exclusive brand outlets through the franchisee model, taking the total number to 75 by 2010. It has a market leadership of about 21% in the mens Rs 1, 600-crore middle and premium innerwear segment but has a market share of 12-13 % in the Rs 650-crore women’s premium innerwear segment which is also being addressed by brands such as Lovable, Triumph and Enamor. The premium mens innerwear segment in India is growing at 28%.

First Jockey lifestyle boutique opened in Nagpur – Tapping Tier Two City

As part of this expansion, exclusive Jockey outlets will open in Pune, Ambala, Chandigarh over the next few weeks; and in Hyderabad, Chennai, Coimbatore and Kota in Rajasthan over the coming months.

The international style exclusive boutiques carry the full range of Jockey inner wear and leisure wear.

Commercial Street, Bangalore

Adyar, Chennai

FINANCIALS

Lets take a look at some of the fundamentals of the company. The company’s performance over the past 5 years has been spectacular (from the time it’s listed)

Its debt/net profit ratio, which tells us the number of years a company will take to repay the debt, is also very reasonable at 1.32 years. Its ROIC has also been very high at approximately 33% over the past 5 years.

Despite the downturn in the economy experienced by some sectors Page Industries’ performance has been good. In fact for the third quarter ended December 31 2008, its sales touched Rs.67.34 crores; registering a growth of 30% over the sales of the corresponding quarter of the previous year.

Sale for nine months ended December 31 grew by 35% to Rs.198.25 crores and PAT amounted to Rs.26.08 crores for the nine months, registering a growth of 34%. The Board declared a third Interim Dividend of 40% and this along with two Interim Dividends already declared amounted to 140% for the year 2008 – 09.

Shareholding Pattern:

The total promoter holding in the company is quite high at 64% - another good indication!

LOOKING AHEAD

Page Industries Ltd. has recently launched the new “Just Jockeying” campaign for Jockey, positioning the brand as a fun, youthful lifestyle choice, to appeal and tap the free thinking mentality of today’s youth. And what an eye catching ad it is indeed!

The next thing about the company which caught my attention was that they are launching new products and segments like Jockey Sport and selling casual t-shirts and people are buying their products!. I felt compelled to come back and check the company behind jockey and checked its past performance. After a long time I felt compelled about writing a post. I’m completely convinced about the company, its brand and its policies, about everything. The company is opening up exclusive retail stores and is in an expansion mode even during a downturn!

I would love to hear views from experts and anyone interested in the company.

REFERENCES

http://www.moneyworks4me.com

http://www.jockeyindia.com

Vakrangee Softwares Limited

Vakrangee Softwares Limited is a premier integrated document and printing related services provider with global scales and skills. It was incorporated in 1990

Today Vakrangee is a leading solution provider in specific BPO operation for government departments and private clients. Company is already working with major players of the industry like TCS/CMS, C-DAC, GODREJ & BOYCE and many more.

Vakrangee has proven track record in handling- Manuscripts of around 75 thousand polling booths of Maharashtra Voters Database of the village Panchayats in the biggest state of India, Uttar Pradesh that falls after 11 Countries of the world in population count.

BUSINESSES

Line of Business:

· Document Management Services (DMS)

· Printing Management Services (PMS)

· IT & IT Enabled Services (ITes)

*The data in the tables above has been taken from the Director’s report.

Verticals:

· Government

· BFSI

· Utility

· Retail

· Aviation, Hospitals & others

Products:

· Human Capital Management (HCM): (In Advance Stage of Development)

· E-Edministrator: (In Advance Stage of Development)

· Voters Identity Card Software: (Supported by Bi- lingual Technology)

· Matdata Suchi: Electoral Roll Management System

· Voter's Data Entry Package with Online Transliteration Technology

· Cyber Saver

Future Plans:

A new hub office is coming up at Gurgaon with another large scale variable colour data printer followed by 100 other small offices across the country to bank on these opportunities. Vakrangee also plans to open a mega global client-servicing centre at Navi in Mumbai, by the end of 2010-11.

People Driving the Company: 2008 (03)

Financials:

Take a look at the company’s performance over the past 9 years. Vakrangee Softwares Ltd. has managed to grow at impressive rates. Even if we check the y-o-y growth rates, the company has performed well. The company is literally debt free as the Debt/Net Profit ratio is a meager .03

Retention ratio = 1 – (avg dividend / net profit) = .90 which implies that the company ploughs back 90% of the profits back into the business to expand. How do we know if the company is utilizing this money efficiently? We check ROE and ROIC. If the company is making a return of above 12% on an average, it can be seen as a positive.

The average ROE of Vakrangee for the past 10 years is 15.99 and the average ROIC (for the past 10 years) is 16.87. ROIC gives an even better picture of how the company is utilizing the money it invests in the business as it incorporates the debt factor along with the shareholder’s funds. Moreover there has been a consistently increasing trend in the ROE as well as ROIC.

The Latest Results:

The quarterly eps numbers are unadjusted and are showing a declining trend. But if we take a look at the adjusted data, then we get a very different picture. Just take a look at the vast difference in the adjusted and unadjusted figure for TTM Eps and the PE ratio:

*The data is adjusted for extraordinary items.

You must be wondering as to why you even need to look at the adjusted data. We take adjusted figure so that we get to see the profit coming purely out of the business. Thus removing extraordinary items from the eps, gives us a clearer picture. As seen above, the difference in many cases is very different when adjusted for the extraordinary items.

Thus after we take a look at the adjusted figures, we immediately see that the company has performed well and the PE ratio is really low.

Let us take a look at the latest Shareholding Pattern of the company. What we see here is that the FII holding in has dropped from approx 34% as on Dec 2008 to about 18.1% in Mar 2009. The total promoters share is also quite low at 19.11%. This is not a good sign and caution needs to be exercised while considering this aspect.

SHARE HOLDING PATTERN

A Few Vitals:

52 week High - (08-06-2008) Rs 225.00

52 Week Low - (03-06-2009) Rs 19.00

Market Capitalisation 109.89

To conclude, let me tell you how I felt writing about this company. When I started off, I was really excited, but for some reason I lost interest and it took me three days to finish this post. This post is mostly about providing information and I hope that it will be helpful in some way. You can draw your own inferences.

Source:

1. Company website - http://www.vakrangee.in/

2. Director’s Report -

3. Moneyworks4me.com

Glossary

This is a glossary of the terms I used in my earlier posts: My Recipe of Sensible Stock Investing

1. Return on Equity - ROE:
The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

ROE is expressed as a percentage and calculated as:


Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholder's equity does not include preferred shares.

Also known as "return on net worth" (RONW)

2. Return On Invested Capital – ROIC:
A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. The return on invested capital measure gives a sense of how well a company is using its money to generate returns. Comparing a company's return on capital (ROIC) with its cost of capital (WACC) reveals whether invested capital was used effectively.

The general equation for ROIC is as follows:


Also known as "return on capital"

3. Net Sales:
Net Sales is the amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any discounts allowed. The sales number reported on a company's financial statements is a net sales number, reflecting these deductions.


4. Book Value:
The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities

The general equation for Book Value is as follows:


5.Earning Per Share – EPS:
The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.

Calculated as:


When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period.

Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number.


6.Price/Earnings Ratio – P/E Ratio:
A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated as:


For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95).

EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters.

Also sometimes known as "price multiple" or "earnings multiple".

Episode 2: My Recipe of Sensible Stock Investing

Hey folks, welcome back. This post is a part of the series of episodes on My Recipe of Sensible Stock Investing. I know the break was too long and my apologies for the delay. Let’s begin without wasting any time. Let’s see where we were last time. I first mentioned the two golden rules and then we discussed about the ingredients and also where I get it from.

It is important to understand the two golden rules. The first golden rule says - Invest in a company that’s worth owning forever! What does it mean? It means that before analyzing a company we need to understand its business.

I look at the following aspects of a business:

· Its Products or Services (Patent / Secret)

· The Customers (Switching or Substitutes)

· The Raw material providers

· Company’s Brand recognition

· The Industry it operates into and the industries growth prospects (Entry barriers, Government Regulation)

· Management

These are a few basic necessary business aspects one should look at. But what are we looking for? We are looking for a company which has a competitive advantage in one or more of these aspects as compared to its peers. The company should stand out.

When you decide that the company is worth owning forever and it has a competitive advantage which it will be able to sustain, we move on to the next step: Golden Rule No. 2 which says - Buy shares at 50% discount or lower and sell at MRP provided it gives minimum 20% compounded annual rate of return.

To find out the company’s real worth and to be able to predict a future growth rates, we first see its past performance. There are hundreds of ratios, but we will focus on a few selected ratios (remember our ingredients) which represents the broader picture (There is a glossary at the end, where I have provided the formal definition as well as their formulae). Just take a look at this:

We will now learn how to mix all these ingredients and in what proportion so that we are all set to enjoy a lavish meal. Ready? Ok so here we go:

1. ROE: Return on Equity represents the ability of a company to generate profits utilizing the equity (i.e. the total shareholder’s funds). It measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

This is an important number. As a shareholder, I want to see the company earning a minimum return of 15% year on year on the money I have invested (You can set a minimum according to your understanding). A company with a higher ROE is always better as its ability to generate profits and grow at a faster rate is high. If the company has been doing so consistently in the past, it seems more likely that it will continue to do so.

2. ROIC: Return on Investment Capital is the rate of return a business makes on the cash it invests in itself every year. Some of you might be wondering what’s the difference between ROE and ROIC. Well ROIC is a more comprehensive measure of the company’s profit generating ability. Why? Because ROIC includes debt.

ROIC is a true measure of the company’s returns and gives a fair picture of the profitability as it includes the debt component. Companies can raise a lot of debt to increase their ROE (return only on the equity capital excluding debt); hence showing a rosier picture of the return, but the main factor that needs to be taken into consideration is the Debt.

I consider it as the most important number among others. It should be above 15% per year on an average for the last 10 years. We first want to see the 9 year average, then the 5, 3 and 1 year averages. And REMEMBER we want ROIC to be staying consistent or going up.

3. Net Sales, EPS and Book Value: Next I look at these numbers. Again I want to see a consistent growth of minimum 15% year on year as well as (average growth rates) over 9, 5, 3 and 1 year.

EPS tells us how much the business is profiting per share of ownership. Book Value is what you would be left wit if the business was sold off, paid off any debt and took the money that was left. It is also referred to as the Liquidation Value. BVPS (Book Value Per Share) is an excellent indicator of the long term growth.

4. Debt/Net Profit: This ratio tells us the time a company will take to pay off its entire debt if it continues to grow its profits at the current rate. So we don’t want this ratio to be more than 3.

Debt / Net Profit = .25

Based on the above analysis, you then have to arrive at an expectation of the rate at which the company will grow in the future. If I think that I understand the company’s business model and it has a competitive advantage which makes it stand out, then we classify it as a green company (in MoneyWorks4Me terminology).

Initially investors find it difficult to arrive at their own expectations. In that case one can refer to what the analysts are saying, what is the industry growth rate and check the company’s past growth rates all in combination. One can be a little conservative initially and once you have more confidence in your assessment, it’s all yours. But remember the 2^nd golden rule: Buy at 50% discount. So whatever you think the company is worth today (it’s MRP), buy it at a 50% discount to that.

I might have missed out on some important parts in an attempt to keep it simple enough for everyone to understand. Please excuse me for that and give me your views, suggestions and feedback. I will try to cover a few more aspects of taking stock investing decisions in the next post, till then sayonara.

P.S. I hope the recipe turns out to be a success. Do let me know as and when any of you try it out. Glossary will be here soon.

References:

Moneyworks4me.com

Rule#1 by Phil Town

My Recipe of Sensible Stock Investing

It’s a long one. Okay that was not to scare you; on the contrary, I’m going to keep it short & simple. I’ll cover it in a series. And don’t worry I’m not inspired by Ekta Kapoor’s K series. So it’s going to be a sweet and a short one. Before the chef shares the actual recipe, a few words about the chef and her journey to becoming a value investor -

Episode 1 – The Discovery of the Chѐf

I’ll share a little secret today. I did my Masters in Economics and secured the highest or maybe the second highest marks in the Financial Economics Paper. Guess what? In spite that I didn’t know ABC of stock market investing! Surprised? Yeah I know it’s surprising but it’s true. By the way I’m not the only one! This is what happens to most of the people!

The problem is that there’s too much information, too much advice, and no clue about where to start. And moreover, it’s damn boring, because you don’t understand anything! No one tries to make it interesting enough! Trust plays a crucial role. Whom should we trust? We get advice from every possible person – be it your friends, your broker, financial analysts with an entire universe of possible views or your relatives. Where to go, what to do are some of the questions which loom large in the minds of novice investors like I was then. I’m still in a learning phase and I guess it’s a continuous process – it never ends.

Have you also been through this stage? I have and my journey did not start till I read about the concept of Value Investing. Now I’m not going to sit and bore you guys by delving too deep into the concept. But yes, it deserves a small brief.

The concept invented by Benjamin Graham, followed by the world guru of investments, Warren Buffett rests on two simple rules. At MoneyWorks4Me these are called the Two Golden Rules:

Golden Rule No. 1: Invest in a company that’s worth owning forever!

Golden Rule No. 2: Buy shares at 50% discount or lower and sell at MRP provided it gives minimum 20% compounded annual rate of return.

We will discuss how to apply the two rules in detail a little later.

The next step involved finding processed (or adjusted) historical data of companies I wanted to evaluate. Data is a much broader term and to narrow it down, I focus on Net Sales, EPS, Book Value, PE, ROIC, ROE and Debt/Profit ratio for the past 10 years. Whoa, quite a big list, isn’t it? You must be wondering as if I’m sitting in a nice restaurant (a la carte) and ordering from an extensive menu card!

Two questions must be popping in your head right now. One where do I get it from, i.e. which restaurant I’m talking about? And two, what is this data adjusted for?

The answer to the first question is that I’m lucky to be a part of MoneyWorks4Me.com – a website from where I get all the data. The answer to the second question lies in the fact that companies are very smart when it comes to playing around with financial data. Thus we have to adjust the data for splits, bonus issues, extraordinary items, etc. Believe me it’s a task to compile these numbers, then adjust them and then sit and interpret. It all seems so complicated! I hate it when things get complicated. I like it simple.

It’s an art and you become a master when you write something which even a layman can understand. Well am still learning and hope I will be able to master it one day. Best of luck Charu ji. Ok I’m already deviating from the core. What was I talking about? Ah! Yes, I was talking about adjusted historical data. (You know chef’s can be like this at times. So please excuse me for deviating!) After collating the raw material for my recipe, I geared myself for the real task; the task of evaluating companies.

And we’ll meet after a break…

Commercial Break:

Bade: Abe tu kal kya kar raha hain…

Chhote: Kal main busy hoon

Bade: Kyun kahin jaa raha hain kya?

Chhote: Haan kal subah P.M. ke saath meeting hain..

Bade: P.M. ke sath?

Chhote: Haan

Bade: Subah subah?

Chhote: Haan kyun?

Bade: Subah mil hi nahi sakye who.

Chhote: Kyun?

Bade: Abe woh P.M. hain shaam ko miley ge… A.M. hota to subah milta na..

Chhote: Bakwas Bankar..

Disclaimer: The above image and joke have been adapted from 9XM.

Welcome back. I hope that the break was refreshingJ. I at least tried to make it one. Okay so we have the ingredients ready. All we need to do is to start cooking. Don’t worry; I’ll take you through the steps of making the perfect blend of ingredients with the art of cooking it on a low flame. And then we’ll enjoy the scrumptious recipe (our investments) with a glass of old wine (our handsome returns)! What do you say? Mouth watering?

But hey, we’re out of time! Hehe, this is how serials are nowadays, they end before they even begin to show something. But don’t worry we’ll meet again soon, same time, same place. Don’t miss me too much…I’ll come back soon! Till then, sayo nara, shabha khair, shubh ratri, bye-bye.

Suzlon – The Typhoon of Green Energy

This is a continuation of the post I had written on MoneyVidya blogger network, Suzlon - Hawa Ka Jhoka? Off late I have been hearing rumors about Suzlon being able to sustain itself. People also think there is a considerable risk associated with the business of the wind turbine major.

Before I delve into the matter of risk, let me talk about Suzlon’s recent acquisition of Martifer Group’s stake in REpower Systems AG on Friday, 5th June 2009 (Suzlon has thus increased its stake by 14.4% in the final tranche of shares). With the conclusion of this transaction, Suzlon holds 90.72% stake in REpower.

A few Words about REpower Systems AG:

REpower Systems AG is one of the leading turbine producers in the German wind energy sector with a market share in excess of 10%. In addition to the development, licensing, production and sale of reliable, state-of-the-art turbines, REpower offers intelligent professional services such as our comprehensive maintenance and service packages.

The Adoption

Investors had all kinds of doubts about this acquisition. But Suzlon trounced all its critics. Three promoters offloaded 6 crore shares (about 4% stake) through open market transactions. Rambhaben Ukabhai sold 2.75 crore shares, Girish R Tanti 2.35 crore shares and Nidhi Tanti 0.9 crore shares. The sale of shares at Rs. 94 a share amounted to Rs. 565 crore.

The promoter group’s holding in Suzlon after the transaction has reduced to about 60% (still a decently high stake!). The completion of the purchase of Martifer’s stake in REpower is a major milestone for Suzlon. And they did so quite efficiently.

Going Ahead

The adoption has already begun to bear fruits. The stock surged some 154% in the recent rally from Rs. 35. The big question is if the giant will be able to take it forward in a successful way. Will the acquisition continue to bear fruits in the future as well? I have full faith in Suzlon. Only time will tell how successful this will turn out to be.

Okay, let’s get back to the risk factor. Well I agree that there’s a lot of scope for improvement in technology and since the industry is still quite nascent, there is a risk associated. Let’s turn to a few facts: The wind industry has enjoyed a period of uninterrupted growth of 34% CAGR over the past 5 years. The world is now looking for the energy security with the governments, looking to diversify energy source, to mitigate the geopolitical risk around oil and gas supplies. So the market is there, it just needs to be tapped in the right way and at the right time. This is where Suzlon has to prove itself time and again.

The road ahead is a tough one. It’s not free of roadblocks. Thus Suzlon has to continuously work upon its technology, which it has been doing in the past as well. It seems to be well geared with this acquisition to take advantage of new and latest technologies, new markets and tap the huge market that still remains unexplored. Best of luck dear Suzlon.