e-Nagar

March 30, 2011

suggestion box

Filed under: History — pegasus @ 8:01 AM

Okhil Chandra Sen wrote this letter to the Sahibganj divisional railway office in 1909. It is on display at the Railway Museum in New Delhi. It was also reproduced under the caption “Travellers’ Tales” in the Far Eastern Economic Review.

“I arrive by passenger train in Ahmedpur station and my belly is too much swelling with jackfruit. I therefore went to a toilet. Just I was doing that nuisance that guard makes a whistle blow for the train to go off and I am running with ‘lotah’ in one hand and ‘dhoti’ in the next when I fall over and expose all my shocking to men and women on plateform. I am leaved by the train at Ahmedpur station.

This is too much bad, if passenger go to make dung that dam guard cannot wait train for five minutes for him. I therefore pray your honour to make big fine on that guard for public sake. Otherwise I am making big reports in the papers.

Yours faithful servant,

OKHIL CH. SEN”

Any guesses why this letter was of historic value?

It apparently led to the introduction of toilets on trains.

In the first 55 years of operation of the Indian Railways, there were no toilets in trains. On July 2, 1909, an aggrieved Babu Okhil Chandra Sen lodged a complaint to the then Transportation Superintendent, Sahibganj. After this, the railway authorities had no other option but to introduce toilets in all lower class carriages in trains running more than 50 miles at that time. Okhil wrote this letter in his anguish. Though the letter certainly lacked the basic English grammar but it really became an important document in the history of Indian railway.

I am writing this post, because although many of us are disgusted from the service provided by government (and also private sector companies), very few of us have the courage to do anything about it. A simple letter of complaint goes a long way in improving the systems.

March 9, 2011

Lakshmi Overseas (BSE:519570, NSE:LAKSHMIEFL) (LTP:43.10)

Filed under: Investing — pegasus @ 7:12 PM

Facts
This thirty year old company is one of the largest non-basmati rice processing company in India. The company distributes food grains in the wholesale market under the brand of “Lakshmi Foods”. This company is headquartered in Punjab. Mr. Balbir Singh Uppal, its Founder & Chairman & MD, looks after its policy matters while his son looks after its daily operations.
The promoters hold 45% of the shares (none pledged) while the rest are available with institutions & corporates (33%) and individuals (20%) as of end-2010.

Till recently, Food Corporation of India (FCI) accounted for a bulk of its purchases. Now, the company is actively expanding its client base by entering branded retail rice segment. Last year, the company entered into the high-margin basmati segment by processing and exporting PUSA 1121 Basmati rice to Middle East.
Apart from rice, the company also operates in other food grains and oils. The company also recently started 30 MW captive energy generation from rice husk which is to be expanded to 105MW in a couple of years. The company is also known as “Lakshmi Energy and Foods Ltd (LEAF)”

Financials
The company’s financial year ends on 30th September. The company recorded a topline of Rs.1166cr in FY10 and a bottomline of Rs.84cr. The topline has been growing erratically @ 23% over the past five years while the profit margin has stayed between 5% and 15%. Raw material expenses contribute to 75% of the total revenue (down from 86% five years ago).
The company has ~1 year of inventory days, which is a feature of basmati rice companies. The company’s debt translates into interest expense of less than PAT, which is manageable.
The cash flow from operations has been erratic due to increase in inventory level. The company has been consistently raising cash from the market to invest for growth for the past five years. Recently the company has approved a dividend payout for its investors.

Risks
The company is highly susceptible to acts of nature like floods or drought. However, the company has demonstrated great resilience in controlling its expenses in the past.

The company is also dependent on policy matters of the government related to export of non-basmati rice. Recently, the ban on export of non-basmati was partially lifted. FII holdings in the company is gradually going down, but I presume that is because the US market is recovering and most FII are re-balancing their portfolios to invest in the US Market.

Positives
The company announced a decision to buy back its shares in Nov’10. Now, the company has only two months of the 6-month period left to act upon this decision. Buy-back will accompanied with a rapid price rise.

Recently, the promoter of the company was involved in a legal case due to death of a few workers in his factory. The investigations are going on but the result is not expected to have a significant impact on the
stock price.

The stock price of the company recently fell to its all time low. This forced the institutional investors to liquidate their holdings which resulted in the stock being available at an even cheaper price. However, due to strong fundamentals of the company, the stock is expected to move up significantly to its fundamental value.

Analysis
The company is currently trading at a P/E of 3.6 and EV/EBITDA of 5.4 which is ridiculously low considering the strong expected growth. I would recommend a strong buy for this stock.

Disclosure: Of course I have a position in the company and intend to square it when the price goes up.

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