Vbc ferro a mutibagger in making

Rationale

Vbc ferro (VBC) is a Hyderebad based ferro alloy manufacturing company,

Equity Rs4.10cr.

This company is having investments of Rs 150cr in KONASEEMA GAS POWER LTD ( KSGPL) is a gas based power plant coming up near Rajahmundry AP, KSGPL putting up a gas based power plant with a capital cost of Rs1500cr with a capacity of 460 mw ready for commercial production, due to non availability of gas company doesn't started commercial production, as all r aware RELIANCE INDUSTRIES struck with huge gas reserves in Krishna Godavari basin near to this power plant.



In another 3to 6months RELIANCE will be able to supply gas to this company; KSGPL already signed mou with AP TRANCO for supply of entire production for 15 years.


Now KSGPL is planning to set up another 820 mw gas base power plant in AP with a capital outlay of Rs2800cr. Power finance corporation is sanctioned a term loan of rs 1000cr and other institutions also participating in this project. To complete this project funds requirement KGPCL is contemplating a public issue at RS 100- 110 per share in first qtr of 2009

Vbc ferro alloys is holding 15,00,00,000 shares in KGPCL with an investment of RS 150cr. If KGPCL comes out with a IPO at rs 110 value of investments held Vbc ferro per share becomes (market value will become rs1650cr divided by 41laks shares) RS 4024.

Plus vbc ferro is holding investments in ORISSA POWER CONSORTIOM LTD WHICH HOLDS LICENCE FOR 120WM HYDEL POWER PROJECTS

Plus ferro alloys business

Note on VBC Ferro Alloys Limited (VBCFAL)

1.	VBCFAL manufactures Ferro Manganese and Silico Manganese which are used in steel industry.
2.	VBCFAL is having a manufacturing facility at Rudraram village which is 40 km away from Hyderabad.
3.	The installed capacities are: Ferro Silicon 10000 MTPA, Ferro Chrome 31500 MTPA and Ferro/Silico Manganese 27000 MTPA.
4.	For the year ended March 2007, VBCFAL has achieved a Sales of Rs.72.60 crores. Net Profit Rs.3.71 crores, Equity is Rs.4.19 crores. Reserves & Surplus is Rs.134.46 crores. Book value per share is Rs.320.57 (Face Value Rs.10/-).
5.	VBCFAL holding mining rights for 60 acres quartz mines in Andhra Pradesh.
6.	VBCFAL recently got 300 acres of Manganese Ore mines rights in Andhra Pradesh which is now in scarcity. These captive mines will be operational within next 2-3 quarters. Due to availability of captive manganese ore, the company's cost of production is likely to go down by 25% - 30%.
7.	Zero debt company ( No Term Loans)
8.	VBCFAL is sitting on huge investments. It has invested in Konaseema Gas Power Ltd., (KGPL) a VBC group company, which has already implemented a 445 MW Natural Gas Based Power Project Phase-I with a capital cost to the tune of Rs.1700 crores, located near Krishna-Godavari Basin (KG Basin).
9.	VBCFAL invested Rs.134.31 crores in KGPL (13,43,05,000 shares) which is roughly around 30% of KGPL's equity. VBCFAL value of investment in KGPL will appreciate considerably on commencement of commercial production.
10.	VBCFAL invested Rs.6.16 crores in another group company – Orissa Power Consortium Ltd., (OPCL), which holds license to produce 100 MW (5 x 20 MW) Hydel Power in Orissa by December 2007. OPCL goes for production for 20 MW and the balance 80 MW will be commercialized in 2008 calendar year.
11.	Availability of cheaper power is very crucial for Ferro Alloys industry. To improve profitability, VBC is implementing a pit head coal based captive power plant through another group company viz., Karthik Rukmini Alloys & Energy Ltd., (KRAEL). KRAEL is setting up a 65 MW power plant at Kagaznagar (A.P). KRAEL got coal linkage from government. The KRAEL is expected to be operational in another 12 to 15 months.
12.	Total Fund requirement for VBCFAL Ø Intent to invest Rs.45 crores in KGPL Phase-II Ø Rs.10 crores for operationalization of captive Manganese Ore Mines. Ø Rs.18 crores for investments in KRAEL equity (Captive Power company).

KONASEEMA GAS POWER LTD., - PHASE-I

1.	Generators, Gas Turbine and Steam Turbine for 445 MW Power Plant have been supplied by Siemens/LMZ Energy Ltd. EPC contract by L&T and LMZ consortium. O&M by NTPC and gas will be supplied by GAIL (India) Ltd.,
2.	In Phase-I of KGPL, Equity contributed by L&T 5.06%; IDBI 5%; LIC 4.82%; IL&FS 6.75%; GIC 4.82%; ELGI grop 9.55% and AMP Capital of Australia 8.89% and the balance by VBC group of companies.
3.	KGPL plant is ready for commercial production by February 2006. However, due to non-availability of gas from GAIL, the company could not start its commercial operations.

KONASEEMA GAS POWER LTD., - PHASE-II

1.	KGPL is implementing 820 MW Natural Gas based power project to take advantage of infrastructure which is already in place. The capital cost of Rs.2800 crores with Debt Equity ratio of 80:20 has been appraised by Power Finance Corporation Ltd., (PFC) which has funded a term loan of Rs.750 crores. Rural Electrification Corporation Ltd., has sanctioned another Rs.750 crores. India Infrastructure Finance Corporation has sanctioned Rs.300 crores. Andhra Bank, Axis Bank, Union Bank of India are other lenders to this expansion project.
2.	KGPL has entered into an agreement with Reliance Industries Ltd., (RIL) for supply of natural gas for Phase-II. Plant & Machinery is being supplied by Siemens and EPC contract by L&T and O&M by NTPC.
3.	Phase-II will be operational within 24 months from the date of financial closure and the financial closure is expected by December 2007. KGPL will be able to reap economies of scale & low overhead cost distribution which will result more profits as combined entity.

VBC Ferro Alloys Ltd., is a small equity based company having huge investments in Power Sector and going into backward integration of Captive Power and Captive Mines. In the next few quarters with this backward integration plan, VBCFAL will be benefited enormously in its core business i.e., Ferro Alloys.

Vbc ferro investment argument

Vbc ferro invested around Rs 130cr in konaseema gas power ltd(kgpl) which already implemented 445 gas based power plant (phase 1) in Andhra Pradesh. And in the process of implementing another 820 mw gas power plant (phase 2)at the same site to reap benefit from existing infrastructure available.

Konaseema gas power is in the process of raising Rs 500cr by way private equity from reputed institutions at Rs 50 per share, announcement expected by April 08

If calculate vbc ferro investments based on par with PE players available at dirt cheap valuation. now vbc ferro share price is at Rs 150 market cap is Rs 66 cr ,book value of investments in konseema alone Rs 130cr ,if u buy vbc ferro share at 150 ,value of konaseema works out to Rs 5.whrere as big PE player is picking up at Rs 50 ten times current price of vbc Ferro. If u take a discount as 50% to placement price vbc ferro should quote at Rs 750.

Konaseema gas phase 1 is expected to go for production in august as per original PPA signed with ap Transco total production should sold to ap tranco, but due delay in supply of gas by Gail ap govt has given a concession to sell 20%of production as merchant sale, now konaseema has sold 90 mw to Karnataka electricity board at rs 3.65 paisa as against rs2.10 to ap Transco. Hence kgpl will make money from day one.

Kgpl in process of registering with unfcc for carbon credits, on a conservative estimate rs 100 cr will come from corbon credit sales on 1250 mw production.

In 2008-2009 kgpl will come out with an ipo at rate less than rs 100 per share will further boost market price of vbc ferro.

Techno Electric and Engineering Company Limited

Techno Electric and Engineering Company Limited is a large EPC contracting company that is focused on the Indian power sector. We also possess specific domain knowledge that enables us to serve the Steel, Fertilizer, Metals and Petrochemicals sectors along with specialized jobs in diversified manufacturing.

The company was formed in 1963 with a mission to provide comprehensive engineering procurement and construction services to core sector industries in India

Since inception, Techno has groomed itself in the field of comprehensive engineering, procurement and construction services for Fuel Oil Storage and Handling System, Comprehensive Piping systems including Power Cycle Piping, Process Plant installation, Fire Protection Systems, EHV Switchyards, EHV Sub Stations, Power Plant Cabling System, Plant Electrical Distribution System including Plant Earthing Systems and Lightning Protection System and Plant Illumination Systems. All in the largest sizes and complexities installed nation wide.

Techno has worked in one capacity or other in setting up of more than 50% of the Power Generating capacity in the country (more than 50,000 MW) and has similarly participated in building more than 50% of National Grid for execution and transmission of Power from one region to another.

Today we are actively involved in APDRP and Rajiv Gandhi Rural Electrification Program of Govt. of India. We have also acquired in recent past, capabilities in setting up small capacity Power Plants and executing Balance of Plant jobs for larger capacity Thermal/Hydro Power Plants.

Bearing testimony to Techno's quality and consistency of performance, not to mention its position as a market leader, are the repeat orders from industrial giants such as NTPC, POWER GRID, BHEL, MSEB and BSES, amongst others.

key devalopments

* The comnpany has received major orders from Tata Chemical and Rajasthan Vidyut .
* It has order backlog of Rs 650 crore which are executable in 18 months.

* It has cash in hand Rs 170 crore.

* Order book for generation business is of Rs 450 crore, Transmisson is Rs 350 crore, Rs 100 for Distribution and 15 crore for Refinery.

the Company has bagged many prestigious orders, the major amongst them, are for Setting up of 2 x 40 M W Waste Heat Recovery based Power Plant for Bengal Energy Limited; Fuel Oil Handing System for2 x 600 MW HisarTPP at Hisar, Haryana through Reliance Energy Limited; Ash Water

Recirculation and Treatment System Package for Farakka STPP, Stage-Ill (1 x 500 MW) and Korba STPP, Stage-II (1 x 500 MW) of NTPC Limited; Water Intake system for 2 x 500 MW Simhadri TPS ofNTPC Limited; Fabrication and Installation of Aluminium Bus Bar System at Jharsuguda Smelter Complex of Vedanta Aluminium Ltd; Turnkey execution of 400 KV GSS at Hindaun, Jaisalmer and Banner (Extension) Sub-Stations of Rajasthan Rajya Vidut Prasaran Nigam Ltd; EPC construction of 2 Nos. 400 KV Line Bays for Vijayawada TPS, Stage-IV, Unit-7 of APGENCO; EPC Construction of 132/33 KV Sub-Station at Kurseong of West Bengal State Electricity Transmission Co. Ltd; 132 KV Receiving Station at Bina Refinery Project of Bharat Oman Refinery Ltd at Bina (M.P); Power Distribution Package at Bhatinda Refinery Project of HPCL-Mittal Energy Ltd; Power Distribution Package in setting up of Coach Factory of East Central Railway at Harnaut, Bihar; Electrical Installation work for New Parli TPS, Unit-2 (250 MW) and for Paras TPS, Unit-2 of MSPGCL and Sub-Station Package (Package-C) for Sub- Transmission System associated with BSTS, Phase-II, Part-II of BSEB from PGCIL.

Company has participated in many prestigious tenders in Public and Private Sectors and some of them in which it is competitively placed are likely to be finalized shortly in Companys favour.

DIVERSIFICATION

Company has ambitious programme to be a major power producer in the field of Non-conventional Energy through setting up of Bio-Mass Power Generating Units all over the country and has already obtained licenses for 2 Nos Units and obtained permission to set up 10/12 MW Bio-Mass based-Power Plants, one in North Dinajpur District of West Bengal and the other in Rajgarh District of Madhya Pradesh. These projects are programmed to be completed during the year 2009-10. These projects are being taken up through a special purpose vehicle and are fully owned by your Company.

Company has also been selected as a Franchisee for power distribution for Barwala & Narnaund Sub-Divisions of Hisar Circle by Dakshin Haryana Bijli Vitran Nigam, Haryana. The agreement is under negotiation and is scheduled to be signed shortly. The total load involved is 85 MVA with a consumer base of+55000.

FUTURE OUTLOOK

The key concern in the power sector is that the capacity addition has not been in commensurate with the increase in demand for power. After dismal performance in the 10th plan the government set another ambitious target for me 11th plan of 78577 MW. In the first year of the plan i.e., 2007-08 an addition of 9263 MW was made which is again 57% of the target of 16336 MW. Although the annual rate of capacity addition has improved significantly over last 2 years, it has to double to meet the ambitious target set for the 11th plan period. However the silver lining is the projects over 53300 MW are under construction comprising 68% of the total 11th plan target.

Taking note of the various constraints like fuel availability, equipment crunch both for main equipment and Balance of Plant, the Government has revived the system of allotting coal blocks to Power Generating companies and also expressed the need of setting up of more equipment manufacturing companies like BHEL. The competitive bidding route for setting up/developing Ultra Mega Power Project in Private Sector with all clearances in place is a step in right direction. With efforts being made on almost all the fronts to address these bottlenecks, it is likely that performance during the 11th Plan will be much better than the 10th Plan.

To achieve the inter-regional power transmission capacity of 37150 MW by 2012 through creation of transmission super highways, the Government plans to set up a number of 765 KV Sub-Stations interconnected with matching transmission lines. In addition, the state Grids are also being up-graded to 400 KV from the present network of 220/132 KV. The focus is to utilize the unevenly distributed generation resources in the country to their optimal use by creating stable and reliable National Grid.

In the power distribution segment the emphasis is to reduce the huge technical and commercial losses through Accelerated Power Development and Reform Programme (APDRP) schemes for Urban/semi-Urban areas and through Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) for rural areas as recommended by the task force constituted by the Ministry of Power. Now the RGGVY Scheme has come under the ambit of Bharat Nirman.

Company has active participation in all the above schemes and has already bagged certain prestigious orders. Further, the Company has availed new opportunities in the Power Sector through diversification like setting up of Bio-Mass based Power Generation projects under Non-conventional Energy scheme, to be a Power Distributor as Franchisee and your Company will continue to explore all possibilities to reap the benefits of the same.

Company has a very small gross block of less than Rs 10 cr. It is not only a debt free company but a cash rich company having liquid investment worth Rs 150 cr and cash balance of approx Rs 25 cr which is equivalent to almost Rs 30 per share. Investors are strongly recommended to buy at sharp declines with a price target of Rs 200 in 15~18 months.

Narmada Gelatines Ltd (526739) C.PRICE: 67.45 Rs

The Company also proved its dedication to Research and Development by continuously innovating and discovering new processes and products. In 1988, SWGL developed Industrial Gelatine Protein Colloid (IGPC) as an import substitute for the defence sector. This resulted in the Company getting the prestigious National Award for Import Substitution from the Government of India in 1992. In 1990, it improved its liming technology, a major step towards rationalisation and reduction of cost. In 1991, it established the photographic grade gelatine and in 1992 it developed two new products, namely-Haemaccell-a plasma expander used for surgical purposes, and Spray-Dried Gelatine, thus gaining an edge over its competitors. Also in 1991, it started exporting gelatine in a small way to countries like United Kingdom, Switzerland, Germany and Bangladesh.

The Company has diversified into vermiculture. It has upgraded its effluent treatment plant for constraining the odour of the raw material used in the production of gelatines.

The Shaw Wallace group, after the demise of its founder Mr. Manu Chabbria has been in the process of selling off its businesses and has already exited the flagship company ShawWallace & Company Ltd., which has been bought by Vijay Mallaya's UB Group.

The other companieswhich have been sold off include Hindustan Dorr Oliver Ltd., and Mather & Platt Pumps Ltd.. Recently they sold Falcon Tyres Ltd to wealth sea pte ltd at a price of 151.70 currently stock is trading at 850 rs. The next company in line for the sell off could be Narmada Gelatines Ltd.

The company has an installed capacity of 2750 mtpa for Gelatine,4200 mtpa for Ossein, 10,500 mtpa for Dicalcium Phosphate and 2500mtpa for Bone Meal, on a single shift basis.

Gelatine & its Consumers

Gelatin is a niche product industry derived from the protein, collagen.The Gelatin industry at present consists of three large players whocontrol 58% of the world market and a small group of about 25companies who share the balance of the world market. More than 80%of gelatin production is undertaken in high cost continents andcountries such as North America, Europe and Japan.

The principal end-users of gelatine are the food, pharmaceutical, photographic industries, with users in technical applications.

The largest market for gelatine is the food and food processing industry. The consumption of gelatine for this industry (ediblegelatine) is estimated to represent some 61 % of the total market. This market also includes the nutraceutical segment, which is the market for health supplements, vitamin capsules and tablets.

The second largest market for gelatine is the pharmaceutical industry with an estimated consumption of around 21 % of the total market.

The photographic industry is the third largest consumer of gelatine, absorbing some 13% of the total market in various applications. In addition to the three types of gelatine produced for the above-mentioned industries, technical gelatine is also produced. This is used in the manufacture of abrasive papers, in sizing paper and textiles, and in the production of printer's rollers and matches.

COMPANY FIN DATA:

Equity Share Capital 4.03 Book Value 95.23

DIVIDEND 25% Market Cap 27.2 cr

Share holding: Promoters hold 75% Private Corporate Bodies holds 7.01% public holds 17.47%

DEBIT: it has only 1.8 cr debit

LAST 5 YEARS FINANCIAL DATA

	Mar ' 09	Mar ' 08	Mar ' 07	Mar ' 06	Mar ' 05
Sales	68.98	56.22	52.86	50.33	46.11
Other Income	1.03	1.37	1.19	1.26	1.87
Stock Adjustment	0.94	-2.38	0.25	-0.99	-0.79
Raw Material	30.92	27.71	25.58	25.54	22.82
Power And Fuel	12.16	11.39	9.87	9.90	9.35
Employee Expenses	6.97	6.90	6.59	7.51	6.20
Excise	0.00	0.00	0.00	0.00	0.00
Admin And Selling Expenses	0.00	0.00	0.00	0.00	0.00
Research And Development Expenses	0.00	0.00	0.00	0.00	0.00
Expenses Capitalized	0.00	0.00	0.00	0.00	0.00
Other Expenses	7.16	5.43	5.85	5.26	5.27
Provisions Made	0.00	0.00	0.00	0.00	0.00
Operating Profit	10.83	7.17	4.72	3.11	3.26
Interest	0.46	0.29	0.27	0.41	0.69
Gross Profit	11.40	8.25	5.64	3.96	4.44
Depreciation	1.48	1.36	1.30	1.58	1.27
Taxation	3.49	2.48	1.76	0.14	1.20
Net Profit / Loss	5.86	4.34	2.38	0.93	1.87
Extra Ordinary Item	0.00	-0.07	-0.20	-1.31	0.10
Prior Year Adjustments	-0.57	0.00	0.00	0.00	0.00
Equity Capital	4.03	4.03	4.03	4.03	4.03
Equity Dividend Rate	25.00	20.00	15.00	11.00	0.00
Agg.Of Non-Prom. Shares (in Lacs)	10.08	10.08	9.43	8.43	8.43
Agg.Of Non PromotoHolding(%)	25.00	25.00	23.39	20.91	20.19
OPM(%)	15.70	12.75	8.92	6.17	7.07
GPM(%)	16.28	14.32	10.43	7.67	9.25
NPM(%)	8.37	7.53	4.40	1.80	3.89
EPS (in Rs.)	14.54	10.77	5.91	2.31	4.64

Conclusion: last year company has invested 3.28 cr for expansion, which resulted first quarter (June 09) performance jumped to2.18 cr as compared to 1.27cr last year. sales also jumped to 20.49 cr compared to last year sale of 15.86 cr. We expect company my post 12 cr (30 Rs e.p.s) for full year and pay dividend 40 %. Current price is at 67.45 rs . we expect a price target of 125 Rs in next six months time. If promoters sells the company price may go to 150 levels (After sale of falcon tyres, stock jumped from 150 to 850).

CAUSION: LIQUIDITY IS MAIN CONCERN FOR THE STOCK