PEARL POLYMERS LTD.

PEARL POLYMERS LTD. BSE SCRIP CODE 523260 MANUFACTURERS OF PEARLPET PLASTIC CONTAINERS

Pearl Polymers Ltd. is one of the largest plastic Processors in India and the company has production facilities for manufacturing PVC compounds, polypropylene, brown films, readymade garments, injection moulding of plastic products, Blow moulding of PET Bottles and containers in various locations in North & West India. The company is the first and largest manufacturer of PET Bottles, Jars and containers in India under the brand name PEARL PET. The Company has also obtained approval for packaging of pesticides in PET Bottles. In 1984 - The company adopted Japanese Technology to produce polyethylene terphthalate (PET) Bottles. To strengthen its base, the Japanese Technology was further enhanced with technical tie up with M/s Fibrenyle Ltd., U.K.

The company has tied up with major user companies of mineral water, CSD, squash etc., to effectively book the capacity being created. Realizing the potential of a food grade and recyclable polymer as versatile as PET (PolyEthylene Terephthalate), Pearl Polymers Limited successfully ventured in the field of manufacturing and exporting of all types of PET bottles, containers, jars etc. using advanced Injection Stretch Blow moulding(ISBM)technology in 1984.

From one machine in 1984, the company has grown to over 40 machines in three locations with new locations under construction. All their units are ISO 9001 certified and are undergoing HACCP (Hazardous Analysis and Critical Control Points)certification.

The worldwide preference of PET resin in manufacturing containers has opened a plethora of packaging options for almost all industries like pharmaceuticals, beverages, confectionery, personal care, liquor etc. The Company works with customers in these industries to create functional, attractive and cost-effective packaging to meet their needs.

FINANCIALS

The company has a equity capital of 16.24 Crores made up of 1.62 Crore equity shares of Rs.10.00 each. Promoter group is holding about 60 percent of shares. Institutions like LIC and other high net worth individuals etc. hold about 16 percent shares, thus making a total of 76 percent. Remaining 24 percent is held with the public viz. about 40 Lakh shares.

The company is making fairly good profits and is expected the close the year end 2007-08 with an estimated profit 2.2 Crores with an eps of about 1.3. Our projections of eps are 1.8 by 2009, 2.6 by 2010. Thus, with a conservative PE ratio of 18 on forward earnings, we expect price level of 33 by April 2008 and 45 by April 2009. The present share price is about 24 – 25. Investors with a long term horizon can consider investing in Pearl Polymers Ltd.

Please note that investment in Secondary markets is fraught with grave risks and investors should consult their own financial consultants before taking any investment decision. The responsibility for such decisions will rest on the investors only.

BIHAR SPONGE IRON

BIHAR SPONGE : BSE SCRIP CODE 500058

Bihar Sponge is a joint sector company which was loss making. The share price has been hitting circuits of late and is now hovering around Rs.53.00 levels. I am appending the latest news item regarding the company :

QUOTE :

Umesh Modi, one of the promoters in Bihar Sponge Iron Limited (BSIL) has bought out partner DEG's 5.5 million shares (8%) in BSIL and with this acquisition, has increased his share in the company to 62%. Mr. Modi initially held 54% stake in BSIL. Bihar Sponge Iron Limited (BSIL) is a joint Sector partnership with the State Govt. of Jharkhand and was the very first coal based commercial sponge iron plant in India, which commenced operations in 1989. The Chief Secretary of State of Jharkhand represents the Board of the company and the Chairman is a nominee from State Govt. of Bihar (BSIDC). The ailing sponge iron plant had suffered financial setback in the initial years of operations on account of unprecedented devaluation of Rupee in early 90's and also on account of sudden reduction in import duty on scrap was restructured in the year 2004 by BIFR. The FI's and Banks waived a sum of Rs. 2880 million and promoter Mr. Umesh K Modi contributed Rs. 325 million by way of equity and the state government of Jharkhand provided a soft loan of Rs. 325 Million to the company's restructuring.

The company has since then come a long way, and has upgraded and modernized the plant besides increasing its capacity from 500 TPD to 700 TPD from additional contribution of Rs. 400 million by way of unsecured credit from Modi's. As a result the company has been able to turn around from the last quarter of Year 2006-07. The Govt. of India, on recommendation from State Govt. of Jharkhand has approved the allotment of 408 hectares of Iron Ore Mine to BSIL. The company sources indicate that the company is confident of completing the development work of the mine within next 3 years. The company sources also indicated a decline by about 30-35% in the cost of iron ore subsequent to the excavation of iron ore from the captive mine. Mr. Umesh K Modi is satisfied with the progress of the company and is extremely aggressive of the future plans and expects that the Coal Blocks would be allocated to the company to meet the growth plans.

UNQUOTE

So, the company is moving in the right direction and appears to be a multibagger. Please use your discretion and invest.

MAHINDRA UGINE STEEL CO. LTD. (MUSCO)

MAHINDRA UGINE STEEL CO. LTD. BSE SCRIP CODE 504823

INVESTORS WITH A LONGER TERM HORIZON CAN CONSIDER INVESTING IN SHARES OF MAHINDRA UGINE STEEL CO. LTD. AT THE PRESENT PRICE OF ABOUT 100.00 LEVELS.

Mahindra Ugine Steel Co. Ltd. (MUSCO) was incorporated on 19th December 1962. The Company commenced its operations in 1964 with a licenced capacity of 24,000 tons per annum (tpa) capacity. In 1981, MUSCO raised it's capacity to 75,000 tpa. Further in 1990, the Perin process which was being used was replaced by the Ladle Metallurgy Technology. The current capacity of the plant is 110,000 tpa.

Mahindra Ugine Steel Co. Ltd. (MUSCO) belonging to the Mahindra Group is the pioneer & well known manufacturers of alloy steel in the country. MUSCO is the most trusted brand when alloy steel is referred to. The company also has two stampings division to manufacture pressed sheet metal components and assemblies, one at at Kanhe, Tal. Maval, Dist. Pune & the other at M.I.D.C Ambad, Nashik, both in Maharashtra. Mr. Keshub Mahindra is the Chairman & Mr.Anand Mahindra is the Vice-Chairman of MUSCO.

The steel plant is located at picturesque town of Khopoli on Mumbai-Pune highway about 100 Kms from Mumbai. The production facility of MUSCO is spread over an area of 66.89 hectares (165.29 acres) comprising plant on 24.95 hectares (61.65 acres) and residential set-up on 41.94 hectares (103.64 acres).

MUSCO has its well-defined Quality Policy and Quality Objectives and follows it strictly. The steel division, was first among all steel manufacturing in the country to get ISO certification & was succesfully re certified for ISO 9001-2000 Certification in the year 2002 from RWTUV. In August 2005, it has also been certified for ISO/TS 16949:2002. Both the stampings division have also been certified for TS16949 certification since June 2005.

The steel division has implemented in May 2001,ERP system of SAP version 4.6c for 7 modules & has reaped immense benefits. The I.T. infrastructure is very strongly built on LAN connecting 250 workstations & 80 network printers for user online access of SAP servers, internal & external mail, file server for shared information. A very secure VPN enables connectivity to external world for our consulting partners, secretarial office & branch offices to access SAP & mails.

MUSCO's Steel Division located at Khopoli is a pioneer and a premier Alloy Steel producer and also a single source supplier to a large number of multinationals and other important customers in India. There are two Stamping Divisions one located at Kanhe near Pune & other at M.I.D.C Ambad, Nashik.

Stamping Business :

As a result of the remarkable growth in the Automotive industry, the stamping division at Kanhe has increased its throughout significantly & is expected to further significantly & is expected to further improve upon the capacity utilization. Like many other businesses, the stamping industry too has been a victim of over investment in small sub-optimal units which have traditionally been incapable of producing a quality product. The Kanhe stamping division has been able to move up the value chain & with group support, developed the capabilities to produce sub assemblies for Mahindra & Mahindra (M&M), Tata Motors & Ashok Leyland.

The recent joint venture announced between M & M & Renault is expected to create greater opportunities for the stamping business. Further, business opportunities are also arising on account of M & M foray into a joint venture with International Trucks for the manufacture of Light & Heavy Commercial vehicles. These business activities together with the consolidation of stamping business consequent to merger of Pranay Sheetmetal Stampings Limited (Pranay) into the company is expected to add value to the business.

CLIENTS/CUSTOMERS

The company has an impressive list of clients like Bharat Heavy Electricals Limited, Crompton Greaves, Siemens, National Power Corporation Limited, MARC, Timken, SKF Bearings, FAG Bearings, Tata Iron & Steel Company, NEI, NHB Bearings, Asian Bearings, Mipco Seamless, Texpin, RMP, Rolax, Fairfield Inc. Cummins, Ferromatic Milacron, Ingersoll Rand AND SO MANY OTHERS.

The company also supplies to Govt. Sector like Indian Railways, DLW, Ordnance Factory, Gun Carriage Factory and some overseas Corporates also.

Financials

The company has a share capital of 32.48 Crores made up of 3.24 crore shares of Rs.10.00 each with reserves of 137 crores, commanding a book value of over 53 per share. Promoters group hold 55% shares, Mutual funds, financial institutions, FII etc. hold 22.82% shares and Bodies Corporate hold 4.51% taking the total such holdings to 82.33%. The remaining about 17% is held by the public. Therefore, floating stock and consequently trading volumes are low.

The company has been performing exceedingly well in the past few years. It is also paying dividends. It reported a net profit of about 44.91 crores in FY 06-07 with eps of 13.83. It came out with excellent June 07 qtr. profits of 6.07 Crores and Sept. Qtr. 07 profits of 7.51 Crores. The profits have no doubt taken a dip, but are expected to improve in future with the increased leverage in stamping business consequent upon the tie up with RENAULT. Good days are ahead also on account of M & M foray into a joint venture with International Trucks for the manufacture of Light & Heavy Commercial vehicles. These business activities together with the consolidation of stamping business consequent to merger of Pranay Sheetmetal Stampings Limited (Pranay) into the company is expected to add value to the business.

We have a conservative expectation of FY 08 profit figures 35 Crores, with eps of just about 11. With the above plans taking final shape in the years to come, we expect an earning projection as under :

Our earning projections

FY 07-08 Net Profit : 35 Crores EPS 10.80
FY 08-09 Net Profit : 48 Crores EPS 15.00
FY 09-10 Net Profit : 65 Crores EPS 20.00

Even if we take a conservative P.E. ratio of 12 going by forward earnings, the share should command a valuation of at least 120 going by the forward earnings. Our share price projections are 140 by April 2008, 220 by April 2009 and 280 by 2010.

The share touched a year’s high of 144 and low of 70. Now it is trading at around 100 levels. In our opinion, the shares can be purchased by conservative investors, as this company belongs to a reputed group and has considerable potential to go up.

People should use their judgement and invest, because investing in secondary market is risky. Investors who are not ready to rake risks, should follow mutual fund route or go in for safe avenues like Bank deposits etc.

We advise for a minimum tenure of 2 years and there may be ups and downs in the share price in he short to medium term. Our analysis is purely based on fundamental studies of the company.

People with a longer time horizon can consider investment in Mahindra Ugine Steel shares.

SUDDEN RISE IN PRICES OF PENNY STOCKS

Dear Investors,

A peculiar trend has developed in the market. So many penny stocks have started hitting upper circuits and many persons are giving tips left, right and centre to invest in several of these stocks.

Many of the companies are loss making and some of them have been referred to BIFR also. Many gullible investors are jumping in the bandwagon to make a fast buck.

I appeal to all of you to use your discretion, judgement and intelligence before making a call on these companies. In my opinion, it is always advisable to invest in fundamentally sound companies with a solid future.

It pains me to see some one suffering a loss, because most of the persons who are associated with me belong to middle class families.

Wish you good luck

REVISTS OF EARLIER POSTS

TO HONOURABLE INVESTORS :

I AM REVISITING SOME OF MY EARLIER POSTS :

SPEL SEMICONDUCTOR

I had mentioned in my earlier post that SPEL would start moving, once it is moved from T segment to normal rolling cycle. This has happened from 3.12.2007 when the share was shifted to normal cycle inasmuch as the share is hitting upper circuit of 5% daily with delivery of almost 100 percent. I have been receiving e-mails from enthusiastic investors who have entered at 24.00 levels, who are sitting on almost 40 percent profits. But in my considered opinion, SPEL has a long way to go.

Therefore, SPEL is a clear hold.

NANDAN EXIM

This scrip was recommended at 3.65 to 3.85 levels with a price target of Rs.6.00 in one year. The target has already been achieved on 10th December 2007 itself. Those who are holding it may be entitled for rights. You may use your discretion.

NOIDA TOLL

Noida Toll, in my expectations based on fundamental analysis, should move northwards after December Qtr.results are announced. My target of Rs.50.00 for December 2007 has already achieved and I had placed a conservative target of Rs.70 by April 2008.

Noida Toll is a clear hold.

ALPS INDUSTRIES

Alps is moving on expected lines. The company has commissioned a new manufacturing unit in Uttaranchal and the production would go into full stream shortly. The benefits should start accruing within 3-4 months. So, Alps is a clear hold.

PLEASE NOTE

I am giving only the broad guidelines. Investors should consult their own financial analysts, use their discretion and invest. Investing in secondary equity markets is loaded with all risks.

WEST COAST PAPER MILLS LTD.

WEST COAST PAPER MILLS

West Coast Paper Mills belongs to the famous S.K Bangur group. The promoters are holding substantial shares and the shares are also held by institutions like Insurance Companies.

West Coast Paper is a profit making dividend paying company engaged in manufacture of paper and packaging products. The equity of the company is about 9 crores made up of equity shares of Rs.2 each. The reserves are more than 100 crores.

The Company has issued 41,73,400 Global Depository Receipts (GDRs) at the rate of USD 2.164 per GDR (equivalent to Rs 85/- per GDR, including premium of Rs 83/- per GDR) amounting to USD 9031237.60 to various investors. Each of the GDR will be convertible into equity share of Rs 2/- each at the option of the GDR holder.

The company has further allotted 58,80,880 Equity shares of the face value of Rs 2/- each @ 85/- per shares (including premium of Rs 83/- per share), amounting of Rs 49,98,74,800 to Qualified Institutional Buyers under Qualified Institutions Placement (QIP) route.

With the above two placements, the equity may rise by Rs. 2 crore but the reserves will rise by 160 crores. This will substantially shore up the book value of the company. The company has substantial expansion plan and with the above funds deployed properly, the company’s interest outgo etc. are expected to come down, thereby increasing the profitability.

Considering all the above factors, the share is going pretty cheap at the present price levels of 89 – 91. We, therefore, give a call to accumulate with a price target of 150 in one year, 200 in two years and 240 in three years.

In due course, with substantial reserves, the company may also be a bonus candidate.

STATUTORY WARNING

Investors are requested to do their own studies and our advice is only for long term investing. Investors are investing with their own risk and responsibility