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Vivek Shah60 Answers  |Ask -

Financial Planner - Answered on Jun 19, 2023

Asked on - Jun 11, 2023Hindi

Ans: The Company was originally incorporated as Vikas Multicorp Limited in the year 1995. The Company changed the name from 'Vikas Multicorp Limited' to 'Vikas Lifecare Limited' by passing a Special Resolution consequent upon change of name and fresh Certificate of incorporation issued by the Registrar of Companies, NCT Delhi on April 09, 2021. The Company operates in the business of recycling plastic waste and trading of polymer compounds, manufacturing of polymers compounds.

Until 2019, the business of Company was engaged in the trading of various Polymer Compounds such as Ethylene-vinyl acetate (EVA Compounds), Polyvinyl chloride resins (PVC resins), chlorinated Parrafin, Polyethylene Compound (PE Compounds) and Thermoplastic Rubber Compounds (TPR Compounds). However, subsequent to the acquisition of `Recycled and Trading Compounds Division' of group concern `Vikas Ecotech Limited' under the Scheme of Arrangement approved by National Company Law Tribunal, Principal Bench, New Delhi, the Company started manufacturing Polymer Compounds such as PE Compound, Polyvinyl Chloride Compound (PVC Compounds), V lend SOE Compound, Polypropylene Compounds (PP granules), TPR Compounds from FY 2019-20 onwards.

The Company is a del credere agent of ONGC Petro Additions Limited (OPAL). The Company has a single manufacturing plant located at Shahjahanpur, in Rajasthan. The Company business is divided into two major segments which includes recycling materials and trading of Polymer Compounds.

During the period 2021, the Company completed the acquisition of `Recycled and Trading Compounds Division' of group concern `Vikas Ecotech Limited' through demerger, thus shifting the entire manufacturing of recycled material in the Company and hence putting greater emphasis on taking this production process to greater heights. Post demerger, the Company acquired the `Recycling and Upcycling Division" from the Demerged Company i.e. Vikas Ecotech Limited, pursuant to which the Company had to incur extra expenses to carry out the new manufacturing and recycling process that came along with the acquisition of new business segment .

The Scheme of Arrangement under Section 230 to 232 Companies' Act, 2013 between the Company and Vikas Ecotech Limited (the demerged Company) and their respective Shareholders and Creditors of two companies for demerger of Trading unit Business undertaking as a going concern into the Company on the Appointed Date at the opening of business hours on 01st April 2017, has been sanctioned by the Hon'ble National Company Law Tribunal, New Delhi vide Order dated 31st October 2018. Certified copies of the Order of Hon'ble National Company Law Tribunal, New Delhi have been filed with Registrar of Companies at Delhi and the Scheme has become effective from 01st April 2017.

During the year 2019-20, pursuant to the Scheme of Arrangement, Shareholders of Vikas Ecotech Limited were allotted equity shares of the Company in the ratio of 1:1

In December 2020, the Company initiated trading in raw and finished cashew nuts to pursue one of the business strategies to venture into FMCG Industry.

The Company is venturing into a new business segment "Food protection and Personal Hygiene" segment of FMCG industry" with the total investment of approx Rs. 100 crores and have signed a definite agreement for acquisition of a portfolio or trademarks, comprising of popular and well established national brands such as S.R. Foils.

With the acquisition of the prestigious 'Brand portfolio,, the Company is initiating the process to identify and acquire an existing plant for manufacturing these items in the interim, alternate arrangements are being made to produce these products through third party contract manufacturing.

The Company is at advance stages to form partnerships through acquisition, merger or joint venture with players dealing with herbal drugs to use their marketing network and enter into retail, food protection and personal hygiene section of FMCG and to be in the retails business of consumer goods like, spices, flour, pulses, grams etc.

The Company has signed an MoU with a huge and renowned collection centre. This collection centre is a Producer Responsibility Organization formed to facilitate recycling of all kinds of packaging waste and contribute towards cleaner and greener environment. They specialize in collection and aggregation of all packaging waste in a professional and organized manner backed by technology.

Risks and negatives:
Decline in Net Profit with falling Profit Margin (QoQ)
Decline in Quarterly Net Profit with falling Profit Margin (YoY)
Major fall in TTM Net Profit
High promoter stock pledges
Company has low interest coverage ratio.
Promoter holding is low: 11.4%
Company has a low return on equity of 3.28% over last 3 years.
Promoter holding has decreased over last 3 years: -43.9%

Looking at the current high valuation of the company and company making loss and also on the above risks and negatives. Its better to be away from such businesses.

Hope this will help you. Happy Investing...

Disclaimer: Information provided is only for educational purpose. Please consult your investment adviosor before making any investment decisions

Vivek Shah60 Answers  |Ask -

Financial Planner - Answered on Jun 19, 2023

Asked on - Jun 11, 2023Hindi

Ans: G.G Automotive Gears was incorporated in Feb.'74 as a private limited company, was converted into a public limited company in 1994. The company was promoted by the Gajra family of Bombay.

The company started manufacturing gear box housing and other type of housing for automobile vehicles in 1978. Subsequently, it started manufacturing precision gears for the Indian Railways, industrial gears for cooling towers and in various process industries like cement, steel and sugar. In 1993, it started manufacturing industrial gear boxes for oil extraction plant, gears for plastic extrusion machines and material handling equipment for Port Trusts.

A project for manufacturing locomotive gears and gear pumps with an installed capacity of 3000 Pa each has been completed during 1995.

BHEL, Indian Railways, Uranium Corporation, Jawaharlal Nehru Port Trust, etc, are some of its reputed customers. The company successfully entered the export market by securing a trial order from General Electric, US.

In 2000-01 the company has PPAP (Production Part & approval Process) milestone of General Motors Corporation, USA, This will facilitate the company to compete in the international market. The company had launched Hydraulic Gear Pumps for Loaders/Earthmovers on trial basis.

Strong Annual EPS Growth
Effectively using its capital to generate profit - RoCE improving in last 2 years
Effectively using Shareholders fund - Return on equity (ROE) improving since last 2 year
Efficient in managing Assets to generate Profits - ROA improving since last 2 year
Growth in Quarterly Net Profit with increasing Profit Margin (YoY)
Increasing Revenue every Quarter for the past 4 Quarters
Strong cash generating ability from core business - Improving Cash Flow from operation for last 2 years
Increasing profits every quarter for the past 4 quarters
Promoters increasing shareholding QoQ

Stock is trading at 21.4 times its book value
Though the company is reporting repeated profits, it is not paying out dividend
Company has low interest coverage ratio.
Promoter holding is low: 32.2%
Company has a low return on equity of -0.16% over last 3 years.
Company might be capitalizing the interest cost

The company is NANO cap category with market cap of only 48 crores. If you dont understand the business and the risks involved in the same than its better to stay away and if you plan to invest than make sure you keep track of business and its perfomance on regualr basis to take informed decisions.

Hope this should help you. happy Investing

Disclaimer: Information provided is only for educational purpose. Please consult your investment adviosor before making any investment decisions
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.


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