3nity.in@gmail.

com
This is not a buy or sell recommendation. We are in the process of compiling data
sheets of companies that we track / own so that in future we may use these for buying /
selling stocks of such companies. Reason for sharing is hopefully somebody who has
more information / insight may get in touch with us or for a healthy debate.



Rossell India

Date : 19-May-14
Traded In : BSE B (533168)
Face Value : 2
CMP : 48.70
EPS (TTM) : 5.56
P/E : 8.75
Market Cap : 178.73 Cr
Enterprise Value : 226.53 Cr
52 Week H/L : 55.5/ 26.10
Website : http://www.rossellindia.com/

Our base report is available at http://www.scribd.com/doc/205998883/Rossell-India


Q4 2014 Results





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Annual results





The results are good but do not look sexy. You must be thinking Im nuts when I speak
about the results being good when the net profit for year ending 2014 was Rs 20.39
crores when the previous year it was Rs 30.27. To analyze the results we need to take
the following into perspective.

Year ending 2013 had an exceptional gain of Rs 13.58 crores (Sale of lemon tree
hotel stake).

Kebab Xpress expanded from 2 to 6 outlets and its segment loss was at Rs 5.10
crores (2014) against Rs 2.46 crores (2013)

LT debt reduced to Rs 31.87 crores (2014) from Rs 41.78 crores (2013)

Non current investments increased to Rs 68.38 crores (2014) from Rs 60.81
crores (2013)






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Segment results breakup








The core tea business is doing exceedingly well. The aviation and hospitality divisions
not having stabilized are running into losses. The company seems to have faith in the
both the divisions and has invested in their capex.












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Kebab Xpress sales data

The below data is based on back of the envelope calculation. Thus it would be more
indicative than accurate








The sales at Kebab Xpress outlets seem to be picking up. The operational losses also
do not seem to have drastically risen if we take into account the number of stores
opened.


Debtor days



Selling a product is one thing but getting the payment for is a totally different world. The
speed at which the payment comes after the sale denotes the importance of the product
to the customer. In the corporate world 60 90 days are the norm for the payment to be
settled.

The tea from Rossell India seems to have a struck a chord with the customers

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Corporate governance?

So far Rossell India does not seems not to have any issue with corporate governance
but an incident that occurred recently shows us that we need to have a look at the
company / stock with microscopic lenses.

24 Mar 2014 - Rossell India Ltd has informed BSE that the Board of Directors of the Company at its meeting
held on March 22, 2014, has decided to appoint Mrs. Vinita Gupta, Wife and Ms. Samara Gupta, Daughter
of Mr. H. M. Gupta, Executive Chairman as Executive Vice President and Vice President (CSR) respectively
with effect from April 01, 2014, subject to the consent of the Members of the Company by way of Special
Resolutions pursuant to Sec. 314 and other applicable provisions if any, of the Companies Act, 1956

01 Apr 2014- With reference to earlier announcement dated March 24, 2014 about the proposal to seek the
consent of the Members of the Company by way of Special Resolutions to be conducted by Postal Ballot
process for appointment of Mrs. Vimta Gupta, Wife and Ms. Samara Gupta, Daughter of Mr. H. M. Gupta,
Executive Chairman of the Company with effect from April 01, 2014, Rossell India Ltd has now informed
BSE that, due to inability of the appointees to accept such appointments from April 01, 2014, the Board of
Directors in its Meeting held on April 01, 2014 decided to keep the same in abeyance and also to abandon
the proposed Postal Ballot.

It was further decided that the aforesaid appointments shall be taken up for discussion by the Board in due
course.

04 Apr 2014 - Rossell India Ltd has informed BSE that Mr. P. L. Agarwal, a Director of the Company,
tendered his resignation as Director on and from March 28, 2014. The same was recorded by the Board in
their Meeting held on April 01, 2014.

Rishab Gupta, son of the executive chairman is already employed as an EVP. They
have tried to bring in the wife and daughter into the company. Though it is not illegal, at
a time when companies are trying to get in professional managers into the company, this
attempt looks a step backward.

The explanation given for the back tracking does not seem to be adequate and the
subsequent resignation of the independent director also raises eyebrows.


Opportunity cost

Rossells best quarters are sept and dec. The remaining quarters are lackluster. Market
also seems to treat the company as a tea company. If the Hospitality and Aviation
business kick off there is going to be a definite re rating of the stock. If they do not do
well, the company will get the valuation of a tea company. This should be considered to
see if there is any opportunity lost due to not investing the vested amount in another
stock which would go up along with the markets or due to NaMo effect


Synopsis

The company seems to doing well. The results are good. The results seem to be
incremental rather than big bang. It is evident that the market does not seem to think of
the results as spectacular.

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References

1. www.bseindia.com



Disclaimer

General: This report is not a buy / sell recommendation. Buying stocks must be done
after careful analysis and the above report can be used as a base for the analysis and
should not be used as sole basis.

Vested Interest: The author has bought the above mentioned stock at an average price
of ` 37. He may purchase / sell the same in the future in the short or long term based on
his conviction and his financial situation.

Data Validity: The data is collated from various sites in the internet. Even though we
have tried our best, there may be discrepancy due to human error while collating the
data. The author should not be held responsible for such mistakes. The data can be
looked up at various websites given in the reference section.

Valuation: The author is not an expert and his valuation may be off the mark.