Sensex

Tuesday, May 10, 2011

Teledata Informatics Ltd: Financial Results for Mar 31, 2011

Teledata Informatics Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

K S Oils Ltd: Disclosures under Reg. 7(1) of SEBI (SAST) Regulations, 1997

Edelweiss Finance & Investments Ltd has submitted the disclosure under Regulation 7(1) of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 to BSERead More

D B Realty Ltd: Disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992

D B Realty Ltd has submitted the disclosure under Regulation 13(6) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 to BSE:Read More

Edserv Softsystems Ltd: a

Edserv Softsystems Ltd has informed BSE that the Company shall publish Audited Quarterly Results for the three months period ended March 31, 2011 as well as Audited Annual Financial Statements for the year ended March 31, 2011, before May 30, 2011. Hence provisional Unaudited Quarterly Financial Statements will not be published before May 15, 2011.

Tantia Constructions Ltd: Board to consider Dividend

Tantia Constructions Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 20, 2011, inter alia, to approve the audited financial results and to consider recommendation of dividend, if any, for the year ended March 31, 2011.

West Bengal State Electricity Distribution Company Ltd: Financial Results for Mar 31, 2011

West Bengal State Electricity Distribution Company Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Mangalam Cement Ltd: Disclosures under Reg. 7(3) of SEBI (SAST) Regulations, 1997

Mangalam Cement Ltd has submitted the disclosure under Regulation 7(3) of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 to BSE:Read More

D B Realty Ltd: Disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992

D B Realty Ltd has submitted the disclosure under Regulation 13(6) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 to BSE:Read More

D B Realty Ltd: Disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992

D B Realty Ltd has submitted the disclosure under Regulation 13(6) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 to BSE:Read More

Gujarat Apollo Industries Ltd: Financial Results for Mar 31, 2011

Gujarat Apollo Industries Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

BCC Finance Ltd: Publish Audited Results

BCC Finance Ltd has informed BSE that the Board of Directors of the Company have decided to publish Audited Financial Results for the quarter / year ended March 31, 2011, within 60 days from the end of the financial year i.e. up to May 31, 2011.

Welcure Drugs & Pharmaceuticals Ltd: Financial Results for Mar 31, 2011

Welcure Drugs & Pharmaceuticals Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Syschem India Ltd: Disclosures under Reg. 7(3) of SEBI (SAST) Regulations, 1997

Syschem India Ltd has submitted the disclosure under Regulation 7(3) of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 to BSE:Read More

Walchand Peoplefirst Ltd: Board approves Sub-Division

Walchand Peoplefirst Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, inter alia, has approved the following :

1. Sub-division of 23,00,000 (Twenty Three Lacs) Equity Shares of Rs. 100/- each into 2,30,00,000/- (Two Crores Thirty Lacs) Equity Shares of Rs. 10/- each.

2. Resignation of Ms. Poonam Barua from the Directorship of the Company.

3. Re-appointment of Ms. Pallavi Jha, as Managing Director of the Company on revised terms with effect from April 01, 2011 subject to the approval of the Members and Central Government.

4. Re-appointment of Mr. Sanjay Jha, as Whole Time Director of the Company on revised terms with effect from April 01, 2011 subject to the approval of the Members and Central Government.

HCL Technologies Ltd: ESOP Allotment on May 10, 2011

HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company has on May 10, 2011 allotted 2,64,356 Equity Shares of Rs. 2/- each, under the 1999, 2000 and 2004 Stock Option Plans of the Company. Consequent to the said allotment the paid-up share capital of the Company has gone upto 687,462,576 equity shares of Rs. 2/- each aggregating to Rs. 137,49,25,152/-.

Indo Asian Fusegear Ltd: Adjourned Board Meeting on May 12, 2011

Indo Asian Fusegear Ltd has informed BSE that the adjourned Board Meeting of the Company dated April 26, 2011 will be held on May 12, 2011, to receive, discuss and review the Scheme of Arrangement for restructuring by way of merger/demerger, of the Company as recommended by Special Committee of Directors in terms of the decision taken at the Board meeting held on April 15, 2011.

Rodium Realty Ltd: Financial Results for Mar 31, 2011

Rodium Realty Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

State Bank of Mysore: Change in Base Rate

State Bank of Mysore has informed BSE that the Bank has revised the BASE RATE upwards by 50 bps from
9.00% p.a to 9.50% p.a. with effect from May 11, 2011.

State Bank of Mysore: Revision of BPL Rate

State Bank of Mysore has informed BSE that the Bank has revised the Bank's Prime Lending Rate upwards by 50
bps from 13.75 % p.a to 14.25 % p.a. with effect from May 11, 2011.

Amit Spinning Industries Ltd: Financial Results for Mar 31, 2011

Amit Spinning Industries Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Mahaan Foods Ltd: Financial Results for Mar 31, 2011

Mahaan Foods Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

West Bengal State Electricity Distribution Company Ltd: Financial Results for Mar 31, 2011

West Bengal State Electricity Distribution Company Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Su-Raj Diamonds and Jewellery Ltd: Board recommends Dividend

Su-Raj Diamonds and Jewellery Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, inter alia, has recommended payment of dividend @ Rs 1.25 (One Rupee and Twenty Five Paise) per Equity Share (12.5%) for the financial year ended March 31, 2011 (April 01, 2010 to March 31, 2011).

The Proposed dividend is subject to the approval of the shareholders at the forthcoming Annual General Meeting.

Su-Raj Diamonds and Jewellery Ltd: Financial Results for Mar 31, 2011

Su-Raj Diamonds and Jewellery Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Amit Spinning Industries Ltd: Outcome of Board Meeting

Amit Spinning Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, inter alia, has consider and approved the resignation of Mr. R Sampath as Managing Director of the Company. However, Mr. Sampath will continue as consultant of the Company till further arrangements to look after the interest of the Company.

State Bank of India: Revision in Benchmark Prime Lending Rate

State Bank of India has informed BSE that the Bank has revised the Benchmark Prime Lending Rate upwards by 75 bps from 13.25% p.a. to 14.00% p.a. effective from May 12, 2011.

Muthoot Finance Ltd: Publish Audited Results

Muthoot Finance Ltd has informed BSE that the Company has opted to submit audited financial results for the entire financial year ending March 31, 2011 within a period of 60 days from the closure of the financial year ended March 31, 2011 and thus be submitting the audited financial statements of the Company for the financial year ended March 31, 2011 by May 30, 2011.

Sarla Performance Fibers Ltd: Financial Results for Mar 31, 2011

Sarla Performance Fibers Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Sarla Performance Fibers Ltd: Board recommends Dividend

Sarla Performance Fibers Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, inter alia, has recommended for payment of dividend Rs 4.50 per share on the equity share capital for the year ended March 31, 2011.

GTN Textiles Ltd: Outcome of Board Meeting

GTN Textiles Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, has not recommended dividend on equity shares in view of conserving available resources.

GTN Textiles Ltd: Financial Results for Mar 31, 2011

GTN Textiles Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Ardi Investments & Trading Company Ltd: Financial Results for Mar 31, 2011

Ardi Investments & Trading Company Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

State Bank of India: Review of Base Rate

State Bank of India has informed BSE that the Bank has revised the Base Rate upwards by 75 bps from 8.50% p.a. to 9.25% p.a. effective from May 12, 2011.

Kemrock Industries and Exports Ltd: Outcome of Allotment Committee Meeting

Kemrock Industries and Exports Ltd has informed BSE that the Allotment Committee of the Board of Directors of the Company ("Committee") at its meeting held on May 10, 2011, approved the conversion of 19,000 warrants into equal number of equity shares of Rs.10/- each upon exercise of option by M/s RPM International Inc., USA, to convert their 19,000 warrants into equity shares out of total 6,88,732 warrants held by them.

Accordingly, the Committee has allotted 19,000 equity shares to M/s. RPM International Inc., USA, on preferential basis, upon receipt of balance consideration of 75% (Rs.51,30,000/-,) payable on such conversion.

The above equity shares allotted to M/s. RPM International Inc., USA, are in accordance with the special resolution passed at the Annual General Meeting of the Company held on August 28, 2009 and as per the terms and conditions of Warrants issued to them at the Board Meeting held on December 23, 2009, and pursuant to applicable SEBI (ICDR) Regulations, 2009 for preferential allotment.

Consequent upon allotment of equity shares, as aforesaid, the paid-up share capital of the Company stands increased to Rs.16,77,24,660/- divided into 1,67,72,466 equity shares of Rs.10/- each.

HDFC Mutual Fund - HDFC Gold Exchange Traded Fund: Declaration of NAV

HDFC Mutual Fund - HDFC Gold Exchange Traded Fund has informed BSE the NAV of the scheme and is placed at Corporate Announcement on BSE-India Website.Read More

Firstobject Technologies Ltd: Disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992

Firstobject Technologies Ltd has submitted the disclosure under Regulation 13(6) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 to BSE:Read More

HDFC Mutual Fund - HDFC Debt Fund for Cancer Cure - Dividend Payout - 50% Dividend Donation Option: Declaration of NAV

HDFC Mutual Fund - HDFC Debt Fund for Cancer Cure - Dividend Payout - 50% Dividend Donation Option has informed BSE the NAV of the scheme and is placed at Corporate Announcement on BSE-India Website.Read More

HDFC Mutual Fund - HDFC Debt Fund for Cancer Cure - Dividend Payout - 100% Dividend Donation Option: Declaration of NAV

HDFC Mutual Fund - HDFC Debt Fund for Cancer Cure - Dividend Payout - 100% Dividend Donation Option has informed BSE the NAV of the scheme and is placed at Corporate Announcement on BSE-India Website.Read More

Firstobject Technologies Ltd: Disclosures under Reg. 7(3) of SEBI (SAST) Regulations, 1997

Firstobject Technologies Ltd has submitted the disclosure under Regulation 7(3) of SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 to BSE:Read More

State Bank of India: Revision in Deposit Rates

State Bank of India has informed BSE that the Bank revises upwards the 'Deposit Rates' by 75-225 bps in few short-term maturities, effective from May 12, 2011.Read More

Nitta Gelatin India Ltd: Financial Results for Mar 31, 2011

Nitta Gelatin India Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Mangalam Cement Ltd: Disclosures under Reg.13(6) of SEBI (Prohibition of Insider Trading) Regulations, 1992

Mangalam Cement Ltd has submitted the disclosure under Regulation 13(6) of the SEBI (Prohibition of Insider Trading) Regulations, 1992 to BSE:Read More

Genus Commu Trade Ltd: Financial Results for Mar 31, 2011

Genus Commu Trade Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

Nitta Gelatin India Ltd: Board recommends Dividend

Nitta Gelatin India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, inter alia, has propose a dividend of Rs 4/- per share (40% of the face value of Rs 10/- per share) on the equity capital for the approval of the Company in the General Meeting.

Walchand Peoplefirst Ltd: Outcome of Board Meeting

Walchand Peoplefirst Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, has decided to recommends NIL dividend for the financial year ended March 31, 2011.

Reliance Infrastructure Ltd: Appointment of Additional Director

Reliance Infrastructure Ltd has informed BSE that Shri R R Rai, nominated by Life Insurance Corporation of India (LIC), has been appointed as an Additional Director on the Board of the Company with effect from May 10, 2011, on completion of the tenure of its earlier nominee Shri V R Galkar on the Board of the Company.

Chambal Fertilisers & Chemicals Ltd: Announces FY 11 results

Chambal Fertilisers & Chemicals Ltd has announced the following results for the year ended March 31, 2011:

The Audited results for the Year ended March 31, 2011

The Company has posted a net profit of Rs 3251.785 million for the year ended March 31, 2011 as compared to Rs 2490.512 million for the year ended March 31, 2010. Total Income has increased from Rs 36411.129 million for the year ended March 31, 2010 to Rs 47482.089 million for the year ended March 31, 2011.

The Consolidated Results are as follows:

The Audited consolidated results for the Year ended March 31, 2011

The Group has posted a net profit of Rs 2405.912 million for the year ended March 31, 2011 as compared to Rs 2172.288 million for the year ended March 31, 2010. Total Income has increased from Rs 41946.734 million for the year ended March 31, 2010 to Rs 57783.150 million for the year ended March 31, 2011.Read More

Chambal Fertilisers & Chemicals Ltd: Board recommends dividend

Chambal Fertilisers & Chemicals Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 10, 2011, inter alia, has recommended a dividend of Rs 1.90 per equity share of Rs. 10 each of the Company. The dividend, if approved by the shareholders, shall be paid within the prescribed time after the conclusion of the next Annual General Meeting.

Ad-Manum Finance Ltd: Financial Results for Mar 31, 2011

Ad-Manum Finance Ltd has informed BSE about the Financial Results for the period ended March 31, 2011.Read More

**[investwise]** Lloyds Group: A Dark Horse...

 

Dear members,
 
Lloyds Metals & Energy (BSE Code 512455) is part of the Lloyds group of companies, which also includes Lloyds Steel (BSE Code 500254).
 
While the group has been around since 1974, it did run into trouble in the late 90s, with both the companies coming under the purview of the BIFR..
 
Promoted by the Gupta family, the group doesn't have a great history of creating value for stakeholders but recent years have been quite different. With Lloyds Metals already having scripted a sharp turnaround and out of the purview of the BIFR, post its CDR, Lloyds Steel is on the verge of doing the same.
 
If the grapevine and sources close to the group are to be believed, the next 3 months could be a defining moment in the group's history and put them back in the race for being a significant player in the metals and mining business. Nothing unprecedented being talked about here though, just induction of a strategic partner, followed by expansion at a time when everything seems to be falling into place.
 
Here's what is being talked about... Lloyds Steel is on the verge of finalizing its CDR package, post which its debt levels are expected to come down significantly.  Side by side, the Gupta family had been looking to finalize a strategic partner who can recapitalize the company immediately upon completion of the same and thereafter go in for a tripling of capacity to 3mn MTPA. This at a time when its group company Lloyds Metals' iron ore mine of 90mn MTPA is all set to commence mining begins to make a lot of sense.
 
The Lloyds Group also had a small steel pipes business vested in a company called Lloyds Line Pipes, which also had some stake from the Miglani family (Uttam Galva). The same was sold in November last year to Delhi-based APL Apollo Tubes. Besides this, the Miglani family's association with the Lloyds group goes back one generation and they have had business relationships for over 3 decades.
 
Obviously when the group was embarking on its next big move, the Miglani family becomes the best option to fall back upon for a strategic partnership. So, while others like the Bhushans also evinced interest in the opportunity (which on a closer look appears to be much more attractive than the recent Ispat-JSW deal), sources say that the deal with the Miglanis is all but done and over with. In fact, they have already completed their due diligence. Further, the Miglanis are understood to have no interest in the engineering business of Lloyds Steel.
 
Therefore, the same is likely to be demerged into a separate listed company and Lloyds Steel shareholders are likely to get shares of the new company on a proportionate basis. Interestingly, this business is highly profitable and for the 9 months period ended December 31 2010, it reported a segmental EBIT of INR 50.14 crores. I would assume not much long-term debt is likely to get transferred to the engineering company. If one looks at the engineering business closely, then the margins and the return ratios both are much better than the commoditized steel business and have remained robust over the years. The engineering business operates across different sectors (steel, power, oil and gas etc) and the longer-term thought process of the Management I believe is to look at inducting strategic / technical partners in each of the areas, while looking to grow the overall engineering business to INR 1000 crores in 3 years, with limited external capital. 
 
On an as-is-where-is basis, if I were to hazard a guess as to the value that the market could attribute to the engineering business, this could be around INR 350 crores, at 10x FY11E PAT.
 
The capital infusion in Lloyds Steel, sans the engineering business, is expected to happen at a mutually agreed fair value, which sources say is a little under INR 30 per share. This is likely to trigger an open offer at the same price for an additional 20% stake. Even at these valuations, on a replacement cost basis, the deal would be fairly attractive for the Miglanis, being almost 15-20% cheaper than the price JSW paid for the Ispat acquisition.
The Guptas would be banking on iron ore from group company Lloyds Metal, which has flexibility to sell iron ore on merchant basis but obviously would be first meeting the Group's own requirements.
 
At a rated annual output of 3mn MTPA, which I believe, the Guptas are hopeful of scaling up to 5mn MTPA too over the longer term, the iron ore will be used not just to meet Lloyds Metal's sponge iron plant requirements but also the requirements of Lloyds Steel, which currently has a capacity of 1mn MTPA.
 
Its fair to assume that the key to any expansion plans and the quantum of capital infusion in Lloyds Steel would depend on when the iron ore mine of Lloyds Metals commences output.
 
The link below gives some useful insights:
 
All in all, if things play out as per plans, then there seems to be fair upside on the table for investors in Lloyds Steel... the stock is likely to be re-rated once there is a strategic partner in place and if one does back of the envelope calculations, then investors can hope for a 80-100% capital appreciation in a year's time.
 
However, what takes the cake is Lloyds Metals. Here's what they have: a 2.7 lakh TPA sponge iron unit, a 30 MW waste heat recovery based power plant and a 90mn MTPA mine with all clearances in place and no ongoing litigation / renewal issues.
 
The power plant has been commissioned only in end October 2010 and the resultant profitability of the entire operation has started getting reflected already, if one looks at the numbers for Q3FY10.
 
The cost of generation is INR 1.10 per unit and selling price is INR 3.30 per unit and 90% PLF is expected in FY12. The company has already made bulk of the investments required for developing the mine and long-term debt on the books is hardly INR 30 crores.
At a market capitalization of INR 459 crores, it would be safe to say that the market is not attributing too much value to the mining part of the business.
 
The cost of mining is expected to be INR 700 per tonne and the royalty payment is expected to be INR 500 per tonne, thereby giving a total cost of INR 1200 per tonne. As against this, the realization per tonne is expected to be not less than INR 4000 per tonne. Even if one assumes that it takes 3 years from now to reach a peak annual output of 3mn MTPA, then in the 3rd year, the company will make a gross profit of INR 840 crores. On an NPV basis, even at a 15% discounting rate, the value of the mine could easily be INR 3000 crores.
 
It would be noteworthy to point out here that even the much talked about pure play on iron ore mining, OMDC, whose valuations have seen a surge in the last year or so, is not likely to do 3mn MTPA of iron ore production in 3 years. Its mines are embroiled in controversary and there is high degree of uncertainty surrounding the renewal of their leases. Despite this, the market has been valuing the company at well over INR 3000 crores, while it scaled to a peak valuation of over INR 5500 crores in November last year.
 
While all this sounds very rosy, the real risk to Lloyds Metals reaching its targeted mining output is trouble from the naxalites. This as we know is a problem that the mining industry in many parts of India has been plagued with. However, Lloyds has been lobbying with the Maharashtra State Government to help resolve the issue and also investing in creation of social infrastructure such as schools and colleges in the region, so as to appease the naxalites.
 
It is unclear as of now as to by when the problem will be resolved and full-scale mining operations can commence but for investors willing to stick their neck out and take a call that the matter will be eventually resolved could hit upon a goldmine of sorts.
 
The stock could be a multi-bagger over the coming couple of years.
 
My personal sense is that the mining operations should commence in the coming 6 months at least and the strategic partner in Lloyds Steel (which is likely to have a more financial and political muscle) than the Gupta family, would also be instrumental in driving the process. It would be in Lloyds Steel's own interest to enter into a longer term sourcing arrangement for iron ore from Lloyds Metals as currently they are paying much higher prices for their iron ore, which they also buy on 'spot' basis.
 
My hunch is that the end game for Lloyds Steel would be a complete sale maybe 3 years down the line, post expansion of capacity and if Miglanis are the ones who come in as strategic partners now, I wouldn't be surprised if the capacity is eventually sold to the Mittals, given their ongoing association with the Miglanis.
 
All said and done, both Lloyds Steel and Lloyds Metals deserve to be on the radar screen of investors looking for small-cap turnaround stories.
 
Regards,
 
Kunal
 
Statutory Disclosure: I have small portfolio positions in both Lloyds Steel and Lloyds Metal.
Dear members,
 
Lloyds Metals & Energy (BSE Code 512455) is part of the Lloyds group of companies, which also includes Lloyds Steel (BSE Code 500254).
 
While the group has been around since 1974, it did run into trouble in the late 90s, with both the companies coming under the purview of the BIFR..
 
Promoted by the Gupta family, the group doesn't have a great history of creating value for stakeholders but recent years have been quite different. With Lloyds Metals already having scripted a sharp turnaround and out of the purview of the BIFR, post its CDR, Lloyds Steel is on the verge of doing the same.
 
If the grapevine and sources close to the group are to be believed, the next 3 months could be a defining moment in the group's history and put them back in the race for being a significant player in the metals and mining business. Nothing unprecedented being talked about here though, just induction of a strategic partner, followed by expansion at a time when everything seems to be falling into place.
 
Here's what is being talked about... Lloyds Steel is on the verge of finalizing its CDR package, post which its debt levels are expected to come down significantly.  Side by side, the Gupta family had been looking to finalize a strategic partner who can recapitalize the company immediately upon completion of the same and thereafter go in for a tripling of capacity to 3mn MTPA. This at a time when its group company Lloyds Metals' iron ore mine of 90mn MTPA is all set to commence mining begins to make a lot of sense.
 
The Lloyds Group also had a small steel pipes business vested in a company called Lloyds Line Pipes, which also had some stake from the Miglani family (Uttam Galva). The same was sold in November last year to Delhi-based APL Apollo Tubes. Besides this, the Miglani family's association with the Lloyds group goes back one generation and they have had business relationships for over 3 decades.
 
Obviously when the group was embarking on its next big move, the Miglani family becomes the best option to fall back upon for a strategic partnership. So, while others like the Bhushans also evinced interest in the opportunity (which on a closer look appears to be much more attractive than the recent Ispat-JSW deal), sources say that the deal with the Miglanis is all but done and over with. In fact, they have already completed their due diligence. Further, the Miglanis are understood to have no interest in the engineering business of Lloyds Steel.
 
Therefore, the same is likely to be demerged into a separate listed company and Lloyds Steel shareholders are likely to get shares of the new company on a proportionate basis. Interestingly, this business is highly profitable and for the 9 months period ended December 31 2010, it reported a segmental EBIT of INR 50.14 crores. I would assume not much long-term debt is likely to get transferred to the engineering company. If one looks at the engineering business closely, then the margins and the return ratios both are much better than the commoditized steel business and have remained robust over the years. The engineering business operates across different sectors (steel, power, oil and gas etc) and the longer-term thought process of the Management I believe is to look at inducting strategic / technical partners in each of the areas, while looking to grow the overall engineering business to INR 1000 crores in 3 years, with limited external capital. 
 
On an as-is-where-is basis, if I were to hazard a guess as to the value that the market could attribute to the engineering business, this could be around INR 350 crores, at 10x FY11E PAT.
 
The capital infusion in Lloyds Steel, sans the engineering business, is expected to happen at a mutually agreed fair value, which sources say is a little under INR 30 per share. This is likely to trigger an open offer at the same price for an additional 20% stake. Even at these valuations, on a replacement cost basis, the deal would be fairly attractive for the Miglanis, being almost 15-20% cheaper than the price JSW paid for the Ispat acquisition.
The Guptas would be banking on iron ore from group company Lloyds Metal, which has flexibility to sell iron ore on merchant basis but obviously would be first meeting the Group's own requirements.
 
At a rated annual output of 3mn MTPA, which I believe, the Guptas are hopeful of scaling up to 5mn MTPA too over the longer term, the iron ore will be used not just to meet Lloyds Metal's sponge iron plant requirements but also the requirements of Lloyds Steel, which currently has a capacity of 1mn MTPA.
 
Its fair to assume that the key to any expansion plans and the quantum of capital infusion in Lloyds Steel would depend on when the iron ore mine of Lloyds Metals commences output.
 
The link below gives some useful insights:
 
All in all, if things play out as per plans, then there seems to be fair upside on the table for investors in Lloyds Steel... the stock is likely to be re-rated once there is a strategic partner in place and if one does back of the envelope calculations, then investors can hope for a 80-100% capital appreciation in a year's time.
 
However, what takes the cake is Lloyds Metals. Here's what they have: a 2.7 lakh TPA sponge iron unit, a 30 MW waste heat recovery based power plant and a 90mn MTPA mine with all clearances in place and no ongoing litigation / renewal issues.
 
The power plant has been commissioned only in end October 2010 and the resultant profitability of the entire operation has started getting reflected already, if one looks at the numbers for Q3FY10.
 
The cost of generation is INR 1.10 per unit and selling price is INR 3.30 per unit and 90% PLF is expected in FY12. The company has already made bulk of the investments required for developing the mine and long-term debt on the books is hardly INR 30 crores.
At a market capitalization of INR 459 crores, it would be safe to say that the market is not attributing too much value to the mining part of the business.
 
The cost of mining is expected to be INR 700 per tonne and the royalty payment is expected to be INR 500 per tonne, thereby giving a total cost of INR 1200 per tonne. As against this, the realization per tonne is expected to be not less than INR 4000 per tonne. Even if one assumes that it takes 3 years from now to reach a peak annual output of 3mn MTPA, then in the 3rd year, the company will make a gross profit of INR 840 crores. On an NPV basis, even at a 15% discounting rate, the value of the mine could easily be INR 3000 crores.
 
It would be noteworthy to point out here that even the much talked about pure play on iron ore mining, OMDC, whose valuations have seen a surge in the last year or so, is not likely to do 3mn MTPA of iron ore production in 3 years. Its mines are embroiled in controversary and there is high degree of uncertainty surrounding the renewal of their leases. Despite this, the market has been valuing the company at well over INR 3000 crores, while it scaled to a peak valuation of over INR 5500 crores in November last year.
 
While all this sounds very rosy, the real risk to Lloyds Metals reaching its targeted mining output is trouble from the naxalites. This as we know is a problem that the mining industry in many parts of India has been plagued with. However, Lloyds has been lobbying with the Maharashtra State Government to help resolve the issue and also investing in creation of social infrastructure such as schools and colleges in the region, so as to appease the naxalites.
 
It is unclear as of now as to by when the problem will be resolved and full-scale mining operations can commence but for investors willing to stick their neck out and take a call that the matter will be eventually resolved could hit upon a goldmine of sorts.
 
The stock could be a multi-bagger over the coming couple of years.
 
My personal sense is that the mining operations should commence in the coming 6 months at least and the strategic partner in Lloyds Steel (which is likely to have a more financial and political muscle) than the Gupta family, would also be instrumental in driving the process. It would be in Lloyds Steel's own interest to enter into a longer term sourcing arrangement for iron ore from Lloyds Metals as currently they are paying much higher prices for their iron ore, which they also buy on 'spot' basis.
 
My hunch is that the end game for Lloyds Steel would be a complete sale maybe 3 years down the line, post expansion of capacity and if Miglanis are the ones who come in as strategic partners now, I wouldn't be surprised if the capacity is eventually sold to the Mittals, given their ongoing association with the Miglanis.
 
All said and done, both Lloyds Steel and Lloyds Metals deserve to be on the radar screen of investors looking for small-cap turnaround stories.
 
Regards,
 
Kunal
 
Statutory Disclosure: I have small portfolio positions in both Lloyds Steel and Lloyds Metal.
Dear members,

Lloyds Metals & Energy (BSE Code 512455) is part of the Lloyds group of
companies, which also includes Lloyds Steel (BSE Code 500254).

While the group has been around since 1974, it did run into trouble in the late
90s, with both the companies coming under the purview of the BIFR..

Promoted by the Gupta family, the group doesn't have a great history of creating
value for stakeholders but recent years have been quite different. With Lloyds
Metals already having scripted a sharp turnaround and out of the purview of the
BIFR, post its CDR, Lloyds Steel is on the verge of doing the same.

If the grapevine and sources close to the group are to be believed, the next 3
months could be a defining moment in the group's history and put them back in
the race for being a significant player in the metals and mining business.
Nothing unprecedented being talked about here though, just induction of a
strategic partner, followed by expansion at a time when everything seems to be
falling into place.

Here's what is being talked about... Lloyds Steel is on the verge of finalizing
its CDR package, post which its debt levels are expected to come down
significantly. Side by side, the Gupta family had been looking to finalize a
strategic partner who can recapitalize the company immediately upon completion
of the same and thereafter go in for a tripling of capacity to 3mn MTPA. This at
a time when its group company Lloyds Metals' iron ore mine of 90mn MTPA is all
set to commence mining begins to make a lot of sense.

The Lloyds Group also had a small steel pipes business vested in a company
called Lloyds Line Pipes, which also had some stake from the Miglani family
(Uttam Galva). The same was sold in November last year to Delhi-based APL Apollo
Tubes. Besides this, the Miglani family's association with the Lloyds group goes
back one generation and they have had business relationships for over 3 decades.

Obviously when the group was embarking on its next big move, the Miglani family
becomes the best option to fall back upon for a strategic partnership. So, while
others like the Bhushans also evinced interest in the opportunity (which on a
closer look appears to be much more attractive than the recent Ispat-JSW deal),
sources say that the deal with the Miglanis is all but done and over with. In
fact, they have already completed their due diligence. Further, the Miglanis are
understood to have no interest in the engineering business of Lloyds Steel.

Therefore, the same is likely to be demerged into a separate listed company and
Lloyds Steel shareholders are likely to get shares of the new company on a
proportionate basis. Interestingly, this business is highly profitable and for
the 9 months period ended December 31 2010, it reported a segmental EBIT of INR
50.14 crores. I would assume not much long-term debt is likely to get
transferred to the engineering company. If one looks at the engineering business
closely, then the margins and the return ratios both are much better than the
commoditized steel business and have remained robust over the years. The
engineering business operates across different sectors (steel, power, oil and
gas etc) and the longer-term thought process of the Management I believe is to
look at inducting strategic / technical partners in each of the areas, while
looking to grow the overall engineering business to INR 1000 crores in 3 years,
with limited external capital.

On an as-is-where-is basis, if I were to hazard a guess as to the value that the
market could attribute to the engineering business, this could be around INR 350
crores, at 10x FY11E PAT.

The capital infusion in Lloyds Steel, sans the engineering business, is expected
to happen at a mutually agreed fair value, which sources say is a little under
INR 30 per share. This is likely to trigger an open offer at the same price for
an additional 20% stake. Even at these valuations, on a replacement cost basis,
the deal would be fairly attractive for the Miglanis, being almost 15-20%
cheaper than the price JSW paid for the Ispat acquisition.
The Guptas would be banking on iron ore from group company Lloyds Metal, which
has flexibility to sell iron ore on merchant basis but obviously would be first
meeting the Group's own requirements.

At a rated annual output of 3mn MTPA, which I believe, the Guptas are hopeful of
scaling up to 5mn MTPA too over the longer term, the iron ore will be used not
just to meet Lloyds Metal's sponge iron plant requirements but also the
requirements of Lloyds Steel, which currently has a capacity of 1mn MTPA.

Its fair to assume that the key to any expansion plans and the quantum of
capital infusion in Lloyds Steel would depend on when the iron ore mine of
Lloyds Metals commences output.

The link below gives some useful insights:
http://www.indiainfoline.com/Research/LeaderSpeak/Mr.-Rajesh-Gupta-Managing-Dire\
ctor-Lloyds-Steel-Industries-Ltd./25018609


All in all, if things play out as per plans, then there seems to be fair upside
on the table for investors in Lloyds Steel... the stock is likely to be re-rated
once there is a strategic partner in place and if one does back of the envelope
calculations, then investors can hope for a 80-100% capital appreciation in a
year's time.

However, what takes the cake is Lloyds Metals. Here's what they have: a 2.7 lakh
TPA sponge iron unit, a 30 MW waste heat recovery based power plant and a 90mn
MTPA mine with all clearances in place and no ongoing litigation / renewal
issues.

The power plant has been commissioned only in end October 2010 and the resultant
profitability of the entire operation has started getting reflected already, if
one looks at the numbers for Q3FY10.

The cost of generation is INR 1.10 per unit and selling price is INR 3.30 per
unit and 90% PLF is expected in FY12. The company has already made bulk of the
investments required for developing the mine and long-term debt on the books is
hardly INR 30 crores.
At a market capitalization of INR 459 crores, it would be safe to say that the
market is not attributing too much value to the mining part of the business.

The cost of mining is expected to be INR 700 per tonne and the royalty payment
is expected to be INR 500 per tonne, thereby giving a total cost of INR 1200 per
tonne. As against this, the realization per tonne is expected to be not less
than INR 4000 per tonne. Even if one assumes that it takes 3 years from now to
reach a peak annual output of 3mn MTPA, then in the 3rd year, the company will
make a gross profit of INR 840 crores. On an NPV basis, even at a 15%
discounting rate, the value of the mine could easily be INR 3000 crores.

It would be noteworthy to point out here that even the much talked about pure
play on iron ore mining, OMDC, whose valuations have seen a surge in the last
year or so, is not likely to do 3mn MTPA of iron ore production in 3 years. Its
mines are embroiled in controversary and there is high degree of uncertainty
surrounding the renewal of their leases. Despite this, the market has been
valuing the company at well over INR 3000 crores, while it scaled to a peak
valuation of over INR 5500 crores in November last year.

While all this sounds very rosy, the real risk to Lloyds Metals reaching its
targeted mining output is trouble from the naxalites. This as we know is a
problem that the mining industry in many parts of India has been plagued with.
However, Lloyds has been lobbying with the Maharashtra State Government to help
resolve the issue and also investing in creation of social infrastructure such
as schools and colleges in the region, so as to appease the naxalites.

It is unclear as of now as to by when the problem will be resolved and
full-scale mining operations can commence but for investors willing to stick
their neck out and take a call that the matter will be eventually resolved could
hit upon a goldmine of sorts.

The stock could be a multi-bagger over the coming couple of years.

My personal sense is that the mining operations should commence in the coming 6
months at least and the strategic partner in Lloyds Steel (which is likely to
have a more financial and political muscle) than the Gupta family, would also be
instrumental in driving the process. It would be in Lloyds Steel's own interest
to enter into a longer term sourcing arrangement for iron ore from Lloyds Metals
as currently they are paying much higher prices for their iron ore, which they
also buy on 'spot' basis.

My hunch is that the end game for Lloyds Steel would be a complete sale maybe 3
years down the line, post expansion of capacity and if Miglanis are the ones who
come in as strategic partners now, I wouldn't be surprised if the capacity is
eventually sold to the Mittals, given their ongoing association with the
Miglanis.

All said and done, both Lloyds Steel and Lloyds Metals deserve to be on the
radar screen of investors looking for small-cap turnaround stories.

Regards,

Kunal
+91-98202-18086

Statutory Disclosure: I have small portfolio positions in both Lloyds Steel and
Lloyds Metal.

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