The fact that chickens usually come home to rest and sleep has long been known, but the idea was used figuratively only in 1809, when Robert Southey wrote, “Curses are like young chickens, they always come home to roost”.
Debt-laden Shapoorji Pallonji group is exiting/divesting one after other good business to save itself from default. The group is now, about to separate its Hygiene product and water purifier maker Eureka Forbes Limited.
The Structure:
The transaction:
🔎Merger of ATPL & EFFSL with EFL
🔎Merger of EFL with holding company FCL
🔎Finally, demerger of EFL business with it's listing
Demerger transaction will be 15 equity shares of ₹10 each of Eureka Forbes (FESL) against 1 equity share of ₹10 each of FCL. It means paid up capital of newly listed company will be 15x (₹ 193.5 crore) of the current paid up capital of FCL i.e., ₹ 12.9 crore.
While Aquaguard being a household name, health & hygiene business generates > 80% of the revenue, margins are absurdly low, compared to other industry players :
Kent RO Systems has been consistently posting EBITDA margins north of 20%
It's evident that imprudent monetary management has destroyed a brand which has substantial value. Now, US PE firm Advent International which oversees assets worth $75 billion is buying Eureka Forbes valuing it at 4400 Cr.
Eureka Forbes, sold for 4400 Cr, will give some breathing space to SP group which is facing crisis to raise funds and is forced to sell its crown jewels, but for investors, this is an opportunity, the mother of all special situations: Demerger + Promoter change
Despite recent sharp rise in prices, Forbes & Co still trades at 2.6X sales. Arrival of new promoters in Advent may cause a perception rerating.
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Alufluoride Limited (AL) is a leading manufacturer of Aluminium Fluoride (AlF3). Lets first understand the chemistry to get down to the business.
AlF3 is an inorganic compound used primarily in the production of aluminium. Adding AlF3 to the production process of aluminium lowers the consumption of electricity required in smelting process and thereby it contributes to the reduction of production costs of aluminium.
AlF3 is produced by reacting dry Alumina Hydrate with Hydrofluosilicic acid, manufactured as a coproduct in the production of phosphate fertilizers. Fluorine gases, otherwise effluents are scrubbed with water to produce Hydrofluosilicic acid - thus converting "Waste into Wealth"
Installed global capacity of solar panels has increased massively in the past decade. Today, total installed capacity of photovoltaic cells is estimated 900 GW.
However, there has been a mystery flaw that has been taking away potential electricity from the photovoltaic cells. Solar cells only achieve 20 percent efficiency—for every kW of equivalent sunlight, about 200W of electrical power can be generated.
During the first hours of operation after installation, a solar panel's efficiency drops from 20 percent to about 18 percent. An absolute drop of 2 percent in efficiency may not seem like a big deal, but it’s a 10% drop in electric generation.
PG ELECTROPLAST:
PGEL specializes in Original Design Manufacturing (ODM), Original Equipment Manufacturing (OEM) and Plastic Injection Molding, catering to 30+ brands
The Company has grown ~2.7 times in five years at 22% CAGR. EBITDA has grown at 20% CAGR. Capex done is last 5 years is ~ INR 220 Crores.
Business Breakup:
Plastic moulding contributes 60% in PGEL’s topline followed by product sale, electronics, mould manufacturing & others contributing 27%, 6%, and 7% respectively.
NEED OF THE HOUR : RENEWABLE BIOMASS FUEL
One of the greatest challenges of 21st century is to meet the growing demand for energy for transportation, heating, and industrial processes.
Excessive consumption of fossil fuels, particularly in large urban areas, has resulted in generation of high levels of pollution during the last few decades.
All petroleum-based fuels can be replaced by renewable biomass fuels such as bioethanol, biodiesel, bio-hydrogen. Bioethanol is one of the most promising biofuels from renewable sources. Indian gov intends to raise ethanol blending in petrol to 20% by 2025 from the current 7%.
In the Old West, it was common for people to put their valuable possessions in a coffee can and keep it under the mattress. Since this approach involved no transaction costs,
the value of the coffee can in the long term was entirely dependent on the wisdom and foresight used to pick the objects to in the coffee can. Impressed with the power of this approach –
Of buying great companies and then letting them for ten years – Robert Kirby coined the term “Coffee Can Investing”.