LONG TERM AVERAGING OF EQUITY SIP’S IS RAPIDLY BUILDING WEALTH

Only 3% of the total Market Capitalisation in India is held through Equity Mutual Funds, whereas direct holding of stocks by individuals is nearly 22% of the market (7 times more); contrary to the developed markets where retail investors tend to hold the stock through Mutual Funds.

People usually prefer to invest in both Equity and Debt (Balanced) Schemes due to high volatility in the stocks but such volatility erodes when investing in long term. Equities are a great compounding factor and with government encouraging more entrepreneurs, the Indian Economy is surely in a booming stage which will further attract more investments.

India’s Equity Mutual Fund Investors who have kept there Systematic Investment Plans (SIP’s) for more than two decades, with mere monthly investment of ₹2000 are worth millionaires now.

For Example, if an investor who has invested ₹2000/month in SIP for last two decades, these scheme would have peaked the actual investment value from ₹ 4,90,000 to the current valuation of ₹ 97,71,152 i.e., 20 times the actual value over 20 years.

Worst Retirement Mistakes and Remedies to improve them

Some of these schemes include Franklin India Prima, Franklin India Prima Plus, and Franklin India Blue chip from Franklin Templeton Asset Management Company (AMC); HDFC Capital Builder and HDFC Equity from HDFC AMC; Reliance Growth and Reliance Vision from Reliance Mutual Fund; and ICICI Prudential Multicap Fund from ICICI Prudential AMC. All these are 20-year-plus funds and have made handsome annualised returns of as high as 23 per cent for investors.

The below is a quick recap of how these schemes have developed & performed in the past two decades :

20 Years of creating wealth

Why buying Mutual funds is smarter way of investing rather than trading in stocks?

  • One of the main benefit a Mutual Fund provides is that you don’t have to pick stocks, track them, make sector and asset allocation. Because buying and selling stocks are best done by a professional fund manager. For example, a 60 year old company’s stock might not exist and maybe your father/uncle must have forgotten to track that stock. Therefore, in such situation a Mutual Fund saves the investors dragged portfolio returns by replacing it with new performing stock.

Critical Illness treatments now in Installment/EMI form will be a mode of relief

  • Short Term Capital Gains Tax is ignored when the Fund Manager is conducting the buy and sell of equities within a year in Mutual Funds while the same is applicable when purchasing and selling stocks over the stock market.
  • Diversification of Portfolio with investment of few thousands of rupees which will reduce the volatility of high risk stocks and will add convenience to the customer.
  • The need to make the market irrelevant as investing in regular frequency with both high and low points of the market will average the cost of investment.

Therefore to escape from periodic evaluation, rebalancing while achieving higher returns, Mutual Funds add as a secret ingredient to your investments.

More than 4 lakh Pune flat buyers are victims of the builders

Dream homes turn a nightmare for flat buyers in Pune

 

A simple analysis of the figures shows that complaints related to the real estate sector constitute almost 80 per cent of the complaints filed both with the state and the National DCGRF in the country.

RITESH Jain (name changed on request) had booked a 2BHK flat in an ongoing project of a prominent builder in Kharadi in 2014. Two years later, he is yet to get possession of his flat. “The agreement that I had signed with the builder had said I would get possession by the end of 2015. The builder keeps on assuring me that I will get the flat soon, but that soon seems to be far away,” he says.

Jain, who is paying a hefty house rent, is now thinking of taking legal measures against the builder.

Jain’s predicament reflects the situation faced by lakhs of people in the city who are made to run from pillar to post to get possession of their promised flats despite making payments on time.

Housing bubble in pune
80% of complaints with consumer forum relate to real estate sector

Source : Indian express

Consider this: in the last six years, the Pune District Consumer Grievance Redressal Forum (DCGRF) saw 2,943 cases being filed, of which 1,815 related to the housing sector. This year, of the 306 cases filed with the forum so far, 242 related to the housing sector.

Read also

Worst Retirement Mistakes and Remedies to improve them

While Pune’s real estate market is known for positive growth bucking the countrywide trend, problems, especially from the consumer side, have also seen a quantum jump. Delay in giving possession of tenements, failure to provide amenities and preventing formation of residents’ welfare society are some of the common complaints from consumers.

The figures from the consumer forum, activists say, do not even represent one per cent of the whole problem. Vijay Sagar, member of the All India Grahak Panchayat, a consumer rights body, says that in Pune alone, there are more than 4,000 housing projects affecting more than the 4 lakh flat buyers. “As per the development control rules of the Pune Municipal Corporation (PMC), each flat can house five persons. So more than 20 lakh people are affected in such cases,” he says.

Read more at

Dream homes turn a nightmare for flat buyers in Pune

 

War against the Builder’s Mafia raaj in Pune

A few days ago, in the press conference, Mr. Vijay Sagar, Mr. Vilas Lele & Ms. Seema Bhakare of Akhil Bharatiya Grahak Panchayat Pune published first list of 41 projects which have looted, cheated & exploited around 15,000 flat buyers and declared war on builder mafia raaj in Pune.

Grahak Panchayat gave to the press the copy of an ultimatum letter sent to Chief Minister of Maharashtra Shri Devendra Fadnavis.

Along with andolan, Grahak Panchayat also announced that Public Interest Litigation (PIL) will be lodged against the State Government, local bureaucrats & Pune police for non performance of duties.

Here is the first list of projects in which the nexus of builders, bureaucrats, police & politicians have exploited Pune flat buyers.
  •  Lodha Belmondo Gahunje – Sahajanand Hi Tech Construction Pvt. Ltd / Palava Dwellers Pvt Ltd

A) Approx Rs. 50 Lakh Each

B) No possession without paying escalated property price.

C) It seems that the builder has cancelled some agreements & resold the flats.

  • KUL Ecoloch Phase 2 Mahalunge – KUL Kumar Builders:
    A) 750 Flats – Approx Rs. 14 – 25 Lakh EachB) Construction stalled for years.C) Infrastructure charges Rs. 2.5 Lakh collected from each flat buyer
  • Misty Trails Hadapsar – Bhujbal Brothers Construction Company

A) 178 Flats: Approx Rs. 40 Lakhs Each

B) Construction stalled for years. Bank has attached the project. No action on FIR.

  • Forest Mist Hadapsar – Bhujbal Brothers Construction Company:
    A) 80 Flats – Approx Rs. 40 Lakhs Each

B) Construction stalled for years.

buiders scam

 Valay Hadapsar – Bhujbal Brothers Construction Company:
A) 20 Flats – Approx Rs. 40 Lakhs EachB) Possession delayed by 2 years. Construction stalled for years.C) Electricity meter 1,50,000 + Development charges Rs. 2 Lakhs collected from each flat buyer.

  • Aura City Shikrapur – Jalan Maple Developers:
    A) 1000 Flats – Rs. 14 – 25 Lakhs EachB) Incomplete project. Construction stalled. Possession of a few flats given. No completion certificate. No basic facilities provided. Ongoing legal cases.

Trishul buider scam

  •  Shalini Lake View Undri – Trishul Builders:

A) 500 Flats: Rs. 8 – 10 Lakhs Each.

B) In 2010 the building was demolished as it was constructed on reserved government land.

C) Money was collected from more than 500 flat buyers. Money not refunded. Hundreds of legal cases ongoing. No action on FRI lodged in 2011.

  • Bharatiya Jan Ghar Yojana 2015 – India Housing Day 2015 – Aapla Ghar – Maple Shelters:
    A) 15 projects – Rs. 11 – 18 Lakhs per flatB) Booking amount collected Rs. 1 – 3 Lakhs. No flat agreements.
    • Neo City Wagholi – Maple Shelters & Jalan Group:
      A) 1200 flats – Approx Rs. 26 Lakhs EachB) Incomplete construction. Delayed possession.C) Electric meter – Rs. 25,000. Infrastructure charges – Rs. 1.5 Lakh. Parking Rs. 1.5 Lakh. Society formation Rs. 5,000. Collected from each flat buyer.

Marathi article

  • KUL Ecoloch Phase 1 Mahalunge – KUL Kumar Builders:
      A) 850 Flats – Approx Rs. 55 Lakhs Each
      B) Incomplete construction. No basic facilities. Delayed possession.
      C) Police complaints against agitating flat buyers.
      D) Builder has threatened that flat possession will not be given unless apology letter in the form of affidavit is submitted.
    E) Infrastructure charges Rs. 2.5 Lakhs collected from each flat buyer
  • Srushti Regency Wadegaon Kesnand – WS Developers:
    A) 1980 Flats – 36 Rowhouses – 93 Shops – Approx Rs. 14 – 37 Lakhs EachB) No sanction from town planning (PMRDA). No environmental Clearance.C) Stalled project.D) Society formation – Rs. 20,000. Parking – Rs. 50,000. Electricity meter – Rs. 35,000. Development charges – Rs. 25,000 – collected from each flat buyer.

Read also

Pune’s real estate unsold inventory reaches to 2.8 lakhs units

  • Revell Orchid Lohegaon – Rainbow Housing & Revell Realtors:
    A) 550 Flats – Approx Rs. 34 Lakhs EachB) After delay of 2 years possession was given without Completion & Occupancy Certificate.C) No water line. No society formation. No conveyance.D) Infrastructure charges Rs. 3 Lakh collected from each flat buyer. Amenities not provided.
  • Vista Luxuria Manjri – Parmar Indus Associates:
    A) 400 Flats – Approx Rs. 20 – 32 Lakh EachB) Violation of Environmental Clearance. No Completion & occupancy Certificate.C) Solar Rs. 35,000 + Society formation Rs. 25,000 + Car Parking Rs. 1 Lakh + Electricity meter Rs. 25,000 + Development charges Rs. 1.70 Lakhs – collected from each flat buyer.D) 198 flat possession was delayed by 1 year. No compensation given.

Palladium Grand Dhanori – Raojee Construction & Shreyas Shelter

      A) 140 flats
      B) Violation of Environmental Clearance. No PMC water supply. No Sewage Treatment Plant. Firefighting system not working. No solar power. No proper approach road. Society not formed after 8 years of flat possession.
      C) Builder beats & theatence flat buyers.
    8) No help from PMC officials & cooperative department.
  • Defence Colony Radheshwari Nagar Bakori Wagholi – Supertech Construction:
    A) 290 Flats – Approx Rs. 24 – 33 LakhsB) Illegal floors. No possession. No amenities.C) Car parking Rs. 1 Lakh + Electricity meter Rs. 1 Lakh – collected from each flat buyer.
  • Aarohi at Sus – Teerth Realties:
    A) 220 Flats – Approx Rs. 25 – 40 LakhsB) Ongoing legal cases. Basic facilities not provided. Sewage treatment plant not working. Inadequate parking. No water supply. Some possession not given for the last 6 years.
  • Songbirds Bhugaon – Enerrgia SKYi Developers:
    A) 1200 Flats – Approx Rs. 65 Lakh EachB) Incomplete construction. No amenities. Delayed possession.C) Maintenance Rs. 1.5 Lakhs + Electricity meter Rs. 25,000 + Infrastructure charges Rs. 3 – 5 Lakhs – collected from each flat buyer.D) No possession without payment of compulsory club membership Rs. 2 Lakh
  • Mantri Eternity Dapodi – Mantri Developers:
    A) 100 Flats – Approx Rs. 65 – 100 Lakh EachB) Construction stalled. Possession delayed. 90% flat price collected.
  • Jade Residences Wagholi – Dheeraj Realty Mumbai:
    A) 1,000 Flats – Approx Rs. 40 Lakh EachB) Illegal floors constructed.C) Incomplete construction. Delayed possession. Amenities promised in the brochure not provided.D) Electric meter Rs. 60,000 + Development charges Rs. 19000 + Society formation Rs. 10,000 + Parking Rs. 1.5 to 2 lakhs – collected from each flat buyer.
  • KDS Aangan & KDS Dham Charholi – KDS Infrabuildcon:

A) 500 Flats – Approx Rs. 11 Lakh Each

B) Rs. 50,000 – 4.5 lakh collected from the flat buyers. No construction. Land sold. Refund cheques bounced. Ongoing consumer court cases. No action after police complaint.

  •  Viva Hallmark Bavdhan – Viva Swaraj:
  • A) 250 FlatsB) Society not formed. All amenities not provided. Tanker water.C) Car parking – Rs. 1 Lakh – collected from each flat buyer.
  • Suyog Nisarg Wagholi – Suyog Development Corporation:
    A) 600 Flats – Approx Rs. 32 Lakh EachB) Delayed possession. Society not formed. All amenities not provided.C) Infrastructure charges – Rs. 1.70 Lakh + Amenities charges Rs. 2 Lakh – collected from each flat buyer.

Read also

Real estate rental yield is below one percent

 

  • Oxford Paradies Sus Gaon – Oxford Group:
    A) 200 Flats – Approx Rs. 16 Lakh EachB) Society not formed. No amenities.
  • N D Tower Akurdi – ND Developers:
    A) 118 Flats – Approx Rs. 30 Lakh EachB) Amenity charges Rs. 25,000 + Electricity meter Rs. 25,000 + One Time Maintenance Rs. 25,000 + Car parking Rs. 1.5 Lakh – collected from each flat buyer.
  • Pride Greenfields Pimple Nilakh – N K Developers:
    A) 105 Flats – Approx Rs. 38 Lakh EachB) Society not formed. No amenities. Ongoing legal cases.
  • Ivy Estate Wagholi – Kolte-Patil:
    A) 1,000 Flats – Approx Rs. 43 Lakh EachB) Amenity charges Rs. 1.5 Lakh + Electricity meter Rs. 50,000 + Car Parking Rs. 1.5 Lakh + Infrastructure charges Rs. 75,000 + One Time maintenance Rs. 1.16 lakh – collected from each flat buyer.C) Inadequate parking
  • Surbhi Habitat Dhanori – Sukanto Roy Developers:
    A) 12 FlatsB) Society not formed. Insufficient water supply. Construction not per agreement.
  • Suyog Saffron Rahatani – Suyog Construction:
    A) 84 flatsB) Insufficient water supply.C) Electricity meter Rs. 75,000 – collected from each flat buyer.
  • Unique Icon Bhairav Nagar – D. S. Company:
    A) 9 FlatsB) Society not formed.C) Incomplete construction.D) Society formation Rs. 50,000 – collected from each flat buyer
  • Park Spring Dhanori Lohegaon – Pride Purple & Rainbow Housing:
    A) 392 Flats – Approx Rs. 30 Lakh EachB) Parking Rs. 3.50 Lakh collected from each flat buyer.C) Tanker waterD) Delayed possession.
  • Maxima Wakad – Piyush Thakar:
    A) 174 Flats – Approx Rs. 30 Lakh EachB) Delayed possessionC) Society not formedD) Tanker waterE) Car parking Rs. 1.5 lakh + Electricity meter Rs. 50,000 + One time maintenance Rs. 15,000 + Society formation Rs. 15,000 – collected from each flat buyer
  • Puraniks Abitante Bavdhan – Puranik builders Pvt Ltd:
    A) On cancellation of flat booking amount not refunded. Threats to deduct Rs. 1 Lakh cancellation charges.
  • Greenland Rahatani – Ashwini Developers:
    A) 293 Flats – Approx Rs. 45 Lakh EachB) No amenitiesC) Car parking Rs. 1.25 lakh + Electricity meter Rs. 50,000 + Amenity charges Rs. 3 Lakh + Society formation Rs. 30,000 + One time maintenance Rs. 36,000 + Infrastructure charges Rs. 2 Lakh – collected from each flat buyer.
  • Lushlife OVO Undri – LUSHlife Developers:
    A) 352 Flats – Approx Rs. 55 Lakh EachB) Society formation Rs. 25,000 + Amenity charges Rs. 1 Lakh + Infrastructure charges Rs. 3.25 lakh – collected from each flat buyer.C) Possession delayed by more than 2 years
  • River Residency Chikhali – Ishwar Parmar Group:
    A) 261 Flats – Approx Rs. 25 – 30 Lakh EachB) Illegal construction. All amenities not provided. 2 wheeler & 4 wheeler parking sold. Tanker water.C) Electricity meter charges Rs. 30,000 collected from each flat buyer.
  • Laxmi Satyam Residency Dhanori – Vijay Laxmi Developers:
    A) 70 Flats – Approx Rs. 40 Lakh EachB) No completion certificateC) Infrastructure charges Rs. 1 lakh + Electricity meter Rs. 30,000 + Car parking Rs. 1.5 lakh – collected from each flat buyer.D) Tanker water
  • Freedom Park – Mittal Brothers:
    A) 156 Flats – Approx Rs. 50 Lakh EachB) Car parking Rs. 75,000 + Electricity meter Rs. 75,000 + Amenity charges Rs. 50,000 – collected from each flat buyer.C) All amenities not provided.
  • Pavan Park Mohammadwadi – Satish Appaji Sawant:
    No agreements in spite of collecting lakhs of rupees as booking amount in 2013.
  • Kamalraj Balaji Residency Dighi – Kamalraj Group:
    A) 160 Flats – Approx Rs. 35 Lakh EachB) Car parking Rs. 1.5 Lakh + Electricity meter Rs. 60,000 + One time maintenance Rs. 30,000 + Society formation Rs. 30,000 – collected from each flat buyer.C) Society not formed.D) Taker water
  • Sai Luxuria Rahatani – Sai Associates:
    A) 132 Flats – Approx Rs. 32 Lakh EachB) Infrastructure charges Rs. 50,000 + Electricity meter Rs. 50,000 + One time maintenance Rs. 24,000 – collected from each flat buyer.C) Possession delayed by 6 months. –
“Take strict action in 30 days or  “Builder Mafia Raaj Hatao – Pune Flat Buyers Bachao” andolan will be launched” – under the leadership of Akhil Bharatiya Grahak Panchayat, flat buyers in Pune sent an ultimatum to Maharashtra CM Devendra Fadnavis:

 

 

Credit source to  ravi karandeekar

Worst Retirement Mistakes and Remedies to improve them

A retirement date which is at least 30 years away and considering an average inflation rate of 7%, each rupee you have today will be worth only 13 paise. In other words, you will have to make your money increase at least 7.6 times today simply to match up with inflation. Also you need to earn returns to grow your corpus.

As per the Retirement landscape, India’s young population is expected to bring down the ‘dependency ratio’ over the next 30 years with a higher proportion of the population in working age bracket (26-35years) and therefore the average savings rate are projected to increase.

However the motive of increase in the savings rate are more skewed towards the saving for children accounting for 35% of savings than saving for retirement which accounted for 12%.

Of course saving for child’s education is important but the number one priority in 30’s is retirement planning. Financial Planners advise to put money for long term which also takes into account the inflationary cost.

In a country like India where 1 out of 10 people continue working in the later life to provide income for themselves it is necessary for investing early for retirement. There are many good investments which people have made like investing in education, investing for child’s marriage, long term equity investments, early age savings etc. By the mode of primary & secondary data we approached some respondents and found certain bad and worse investment like:

  1. No diversification in the Portfolio
  2. Poor Asset Allocation
  3. No consultation from Investment Experts/No research/No proper guidance
  4. Averaging Investments
  • No diversification in the Portfolio: People keep on investing in stocks without gaining knowledge of how the company is performing, is the portfolio diversified across various sectors, Is the portfolio a high risk/low risk portfolio, Stocks invested are left idle and no portfolio updates are received, etc. Such mistakes by investors attract losses and hence disinvestment happens.
  • Poor Asset Allocation: An optimum asset management is a key to earn better returns. These involves right balance in classifying assets in the form of real estate, Balanced/Equity/Debt Mutual fund, stocks, gold & jewelry, insurance ,bank deposits, Provident & Pension Funds etc. A poor asset allocation like investing 70% of your money into equities and 30% into real estate is a mistake. The investor may perceives that it is High Risk High Return Game but falls in a trap by losing money. Therefore, an asset allocation should be done in such a way that if the performance of one asset weakens, the other assets in the portfolio should are not affected which hence puts the targeted average return in place.
  • No consultation from Investment Experts/No research/No proper guidance: The growth of investing in financial assets in India has just peaked up with 7.30% financial investments and 10.40% physical investments of the (GNDI) Gross National Disposable Income for the year FY2014-15 but there is no proper consultation or guidance provided to the investors thereby which the investors savings get invested in the unproductive assets which give low yields or are high risk assets. Therefore, there is a primary need that investors gain basic knowledge and do considerable research before and during their investment cycle.
  • Averaging Investments: Investors find it difficult to invest long term in falling market, trading in volatile market or short selling to make profits. Sometimes investors buy shares at a very low price thinking that the company stock price will eventually rise and some invest in stocks which are purchased at a higher price but then the investor short sells the stock at lower price due to volatile markets. Such averaging investment decisions affect the investor’s profitability by earning no gains. Therefore, an investor should smartly invest by doing its homework/ systematic research on the investments he/she is pursuing to invest.

The below diagram shows the gap in India’s Household Plans in accordance to the age and the investments made thereof:

The gap in India’s household plans :

 

The gap in India’s household plans

Example:

A retirement date which is at least 30 years away and considering an average inflation rate of 7%, each rupee you have today will be worth only 13 paise. In other words, you will have to make your money increase at least 7.6 times today simply to match up with inflation. Also you need to earn returns to grow your corpus.

Critical Illness treatments now in Installment/EMI form will be a mode of relief

A retirement date which is 10-15 years away will have to invest in equity-linked products which are flexible products that help beat inflation in the long run and are also tax effective. Such products are equity mutual funds, including retirement funds, equity-linked insurance and pension plans, and the National Pension System.

A retirement date which is immediate will have to invest in fixed-income investments. This includes products like debt mutual funds, tax-free bonds, non-convertible debentures and even fixed deposits. The choice of investments depends on each individual’s need for flexibility, tax effectiveness and risk preference.

To conclude “Do it right and your golden years can be filled with independence, joy, and freedom.”

Parag Milk Foods Ltd IPO

The three investors who are selling shares via the IPO are India Business Excellence Fund (IBEF) which is a unit scheme of venture capital fund Business Excellence Trust, India Business Excellence Fund I (IBEF I) and IDFC Private Equity Fund III (IDFC PE) which is a unit scheme of venture capital fund IDFC Infrastructure Fund , IBEF is selling 21.09 lakh shares, IBEF I is selling 39.17 lakh shares and IDFC PE is selling 82.59 lakh shares via the IPO.

From the promoter group, Netra Shah is selling 20.04 lakh shares and Priti Shah is selling 11 lakh shares. Other selling shareholders are selling a combined 31.81 lakh shares.shareholding-pattern-parag-milk-foods-1Anchor Investors : Parag Milk Foods has raised Rs 342.85 crore by selling 1.51 crore shares to a total of 17 anchor investors ahead of the opening of the company’s initial public offer (IPO). The shares were allotted to the anchor investors at Rs 227 per share, the top end of the Rs 220 to Rs 227 per share price band for the IPO.

Among the anchor investors, Nomura India Investment Fund Mother Fund will be allotted 22.02 lakh shares, Tata Balanced Fund will be allotted 19.21 lakh shares and Abu Dhabi Investment Authority – Behave will be allotted 14.23 lakh shares. Other investors include, Government Pension Fund Global, Morgan Stanley Mauritius Company and Copthall Mauritius Investment, among others.

List of Anchors Investors

List of Anchor Investors Issue Detail:

Issue Open: May 4, 2016 – May 6, 2016

Issue Type: Book Built Issue IPO

Face Value: Rs 10 Per Equity Share

Minimum Investment : Rs 14300/- on lower price band

Issue Price: Rs. 220 – Rs. 227 Per Equity Share

Market Lot: 65 Shares

Promoters – Devendra Shah, Pritam Shah and Parag Shah

Book Running Lead Manager – Kotak Mahindra Capital Company Limited, JM Financial Institutional Securities Pvt Ltd, IDFC Securities Ltd, Motilal Oswal Investment Advisors Private Limited

Parag Milk Foods offers discount of up to Rs.12/- on Issue Price (per Equity Share) to all eligible Retail Individual Bidders and Eligible Employees.

parag

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Summary : Parag is one of the leading manufacturers and marketers of dairy-based branded foods in India. The company commenced its business in 1992 with collection and distribution of milk and has now developed into a dairy-based branded consumer products company with an integrated business model, manufacturing a diverse range of products including cheese, ghee (clarified butter), fresh milk, whey proteins, paneer, curd, yoghurt, milk owders and dairy based beverages targeting a wide range of consumer groups through several brands. The company derives all of its products only from cows’ milk. The company’s aggregate milk processing capacity is 2 million litres per day while its cheese plant has the largest production capacity in India, with a raw cheese production capacity of 40 MT per day.

Parag sells its products – primarily milk, curd products, ghee, paneer, butter, cheese products, UHT milk – under Gowardhan and Go brands while also selling premium cow milk under Pride of Cows brand and flavoured milk under Topp Up name.

Gross fresh milk accounted for 20.3% of its total revenues for the nine months ended 31 December 2015.

Ghee, butter and cream accounted for 28.5%

Cheese/paneer accounted for 18.7%

UHT (Ultra Heat Treatment) products accounted for 4.8%

Whey products accounted for 2.9%

Skimmed milk powder and dairy whitener accounted for 10.1%

Other products such as curd, fruit yoghurt, gulab jamun mix, and flavoured milk accounted for 4.9%

Parag’s manufacturing facilities are strategically located at Manchar in the Pune district of Maharashtra and Palamaner in the Chittoor district of Andhra Pradesh with milk processing capacities of 1.2 million litres per day and 0.8 million litres per day, respectively.

Its institutional customers include restaurant and cafe chains such as Yum! Restaurants (India) Private Limited (for Pizza Hut, Taco Bell and KFC), Jubilant Foodworks Limited (for Domino‘s Pizza) and Sankalp Recreation Private Limited (for Sam‘s Pizza).

Objects of the Issue:

1. To meet the capital expenditure requirements for expansion and modernisation of existing manufacturing facilities at Manchar and Palamaner;
2. Investment in Subsidiary for financing the capital expenditure requirements in relation to the expansion and modernisation of the Bhagyalaxmi Dairy Farm;
3. Partial repayment of the Working Capital Consortium Loan; and
4. General corporate purposes.

On performance front, on a consolidated basis the company has posted turnover and profit of Rs. 900.54 cr. / Rs. 18.90 cr. (FY12), Rs. 927.15 cr. /Rs. 20.77 cr. (FY13), Rs. 1089.50 cr./ Rs. 15.97 cr. (FY14) and Rs. 1440.52 cr. /Rs. 25.97 cr. (FY15). For first nine months ended 31.12.15 it has earned net profit of Rs. 31.92 cr. on a turnover of Rs. 1231.19 cr. If we annualized these earnings and attribute to the fully diluted equity post IPO then asking price is at a P/E of 44 plus at the higher price band. This augurs well against listed peers that are quoting at a P/E of 56 plus.

Positive

32% share in High growth cheese market.

Revenues and EBITDA have increased at a compounded annual growth rate (CAGR) of 22 per cent and 21 per cent.

GOVT. inventives for organised players in the dairy sector like VAT and Tax benefits.

Negative

There are outstanding criminal proceedings pending against the company, its promoters and one of its directors.

Aggressive pricing by exisitng dairy co-operatives like Amul and Mother Dairy.

Lack of free cash flows

Limited pricing power in highly competitive fresh products

Margins are very low 2% to 2.4 % from last 3 years.

Bhagyalaxmi Dairy farm ( 100% SUB ) is making losses and its unable to sell the full production at premium pricing.

It’s operations are dependent on supply of large amounts of cow’s row milk, and its inability to procure adequate amount of good quality row milk, at competitive prices,may have an adverse effect on its business.

They do not have long term agreement with suppliers for other row materials or products.

Potential increase in VAT rate and Tax rate on expiery of Incentives.

Possible interruption in availability of quality milk at reasonable prices and rising competition are some of the key risks for the company.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here