Wednesday, September 28, 2011

Suspended stock

Teknomin Aqua Exports (India) Ltd is suspended by the Bombay Stock Exchange for 'penal reasons'. No clarifications on what these reasons might be, but a cursory look at the company's annual report does raise some obvious questions.

The auditors report states that the accumulated losses account for 82% of the company's net worth. Teknomin made no sales during the financial year ended Mar-2011, against sales of INR 2.9 million in the previous year. In FY2011, income of INR 9.3 million (PY: INR 4.7 million) was mostly due to profit on sale of agricultural land of INR 6.2 million (PY: 1.2 million) with the balance of INR 3.1 million (PY: INR 0.5 million) from lease rentals of ponds.

Hatchery expenses incurred declined to INR 0.2 million in FY2011 as compared with INR 2.3 million incurred in FY2010. Most of the reduction in expenses has been due a significant decline in expenses on farm maintenance from INR 2.1 million in the previous year to Nil in FY2011. Not a very encouraging sign and indicative of likely lower revenue generation in the future.

Resulting profit in FY2011 amounted to INR 6.1 million (PY: loss of INR 0.6 million). Though there are no plans of making dividend payments or capital expenditures in the near future.

The company holds equity capital of INR 55.7 million, with no reserves or surplus and net fixed assets of INR 14.7 million. The accumulated losses are at INR 45.7 million (PY: INR 51.8 million).

Teknomin has no access to credit lines from banks and the unsecured loans of INR 8.4 million (PY: INR 14.9 million) are due to associate companies. However, the company does have cash and bank balances of INR 1.1 million (PY: INR 1.0 million). The company has dues to creditors for expenses of INR 1.2 million and no dues to creditors for materials and stores.

I wouldn't have much confidence in the company's ability to continue as a going concern, at least in the manner of a functioning business organisation. Revenues and profits are due to exceptional items and do not seem to be sustainable, while net worth is likely to erode going further as Teknomin does not appear to be conducting regular business / trade transactions. Any shareholders stuck holding this equity are to be commiserated with, as they are unlikely to see any returns either in the form of dividend payments / capital appreciation. It would be unsurprising if the BSE continues to maintain the suspended status of the company's stock on the bourse.

Tuesday, September 27, 2011

Killer apps

Niall Ferguson makes an impressive presentation about the structures on which the prosperity of civilisation is built. For a touch of 'cool effect', he calls them the required 6 killer apps.

Saturday, September 24, 2011

Pumas v/s Scots

Rugby World Cup 2011 - Argentina to win against Scotland @ 1.72

Finally a satisfactory price at this tournament, considering the single digit returns on offer so far. The only result that wouldn't have gone according to forecast was the Irish beating the Aussies. The spreads have been so thin since Sept 9th that if you had called for the favourites at every test so far, the Irish upset alone would have resulted in a net loss to the portfolio.

Update: that went well! :) Thanks to a missed drop goal attempt by the Scots in the closing minutes of the game.

Saturday, September 17, 2011

The fall guy

It would be farcical if Kweku Adoboli goes on to become more infamous than Asamoah Gyan. He doesn't deserve the grief, definitely not in his native Ghana, and surely not in the world of financial services. He was likely just being rational (in the broadest possible sense) and ensuring that his bonus checks kept coming. If he was indeed getting away with it for the last 3 years, one must insist the authorities also jail the clowns who were his superiors. Bottomline - this is a colossal management failure.