Alfred Herbert (India) Ltd- Twinkle Twinkle Little Star !

Year of operation : 91^st

Promoter group : R.S.Lodha group ( Kolkata)

Promoter holding (as of Sept 30, 2010): 62.39 %

Alfred Herbert (India) Ltd is a holding company and has 2 subsidiaries-both 100% owned, namely:

1)      Alfred Herbert Ltd:

·         Manufactures machinery  for Tyre & Rubber industry.

·         Main products are Tyre curing presses,Tyre Building machines, Tube presses,Mixers

·         This factory was established  in 1973 and is located at Whitefield Bangalore –opposite ITPL.

·         The plant is built on 11 acres of land.The manufacturing workshop is located on approx  2.5 acres of this 11 acre plot.

·         The company has sales and service offices in Kolkata, Mumbai, Delhi, Chennai & Bangalore.

·         Major customers: Apollo Tyres, Dunlop Tyres, JK Tyres,Goodyear,Birla Tyres,Ceat Tyres, Balkrishna Tyres, ATC

·         In 2009-10 earned Profit after tax of Rs.1.71 cr on a revenue of Rs.21 cr

2)      Herbert Holdings Ltd:

Small company which hold some equity in Lodha Capital Markets and nominal holdings in a few listed companies and MF . The total realizable value is approx Rs.1 cr

Consolidated Financial Details of Alfred Herbert (India) Ltd ( as of March 31, 2010):

Balance sheet:

Equity : 0.77 cr

Debt : Nil

Investments (as of March 31, 2010)

Company /MF	Number of shares/units	Approx Market Value
Graphite India Ltd	350000	32550000
Reliance Indsutries Ltd	67000	67000000
HDFC Bank Ltd	500	11750000
Sterlite Industries Ltd	2505	330000
India Glycol Ltd	18000	3000000
Aditya Birla Nuvo	105	80000
Reliance Capital Ltd	1175	700000
Reliance Natural Resources	23500	100000 ( approx value on the basis of merger price)
Reliance Communications	23500	3200000
Reliance Infrastructure	1762	130000
IDFC	50000	9000000
Hindalco	75750	16300000
ITC	30000	5100000
Mangalore Refineries	400	30000
6.85% IIFCL 2014 bonds	285	28628250
HSBC Floating rate fund	1356401	15249044
Reliance Medium Term fund	1195940	20450460
HDFC Cash Management fund	4250262	42602862

Total Value approx : Rs.26 cr

P&L ( March 31, 2010):

Total income :Rs. 23.8 cr

PBT : Rs.2.94 cr

PAT: Rs.2.25 cr

EPS:Rs.29.22

The company declares consolidated results on a Annual basis only and hence the 6-months standalone results  do not reflect any meaningful picture of the company’s working.

Future prospects:

The company has spent about Rs.41 lakhs on  lease renewal premium for workshop last year and totally about Rs.70 lakhs last year and this year(first 6months) towards repairing the same comprehensively. The company is exploring various opportunities  including the better utilization of its properties to increase its sustainable income significantly in the future.

The tyre/rubber manufacturing subsidiary is also expected to perform much better on the basis of increased demand from Tyre manufacturers and also extension of product line  to include the LCV tyre segment.

Valuation:

At the current market price of Rs.195, the company is available at a Market Cap of about Rs.15 crores.

One needs to bear in mind that the company is a zero debt company with a liquid investment portfolio which is about 80% greater than its current market cap , a subsidiary catering to a growing industry and the possibility of the ample real estate assets sleeping till now on the balance sheet  providing sustainable income going ahead.

An investment in the company at the current valuation with a 12-18 month time frame may present  a favourable outcome for investors.

 At the time of writing this report, the author /his family have an investment interest in the stock mentioned above. Under no circumstance does the information in this report represent a recommendation to buy or sell the above-mentioned stock.  This report has been prepared and issued on the basis of publicly available information, internally developed data & other sources believed to be reliable. This is just a suggestion solely for information purposes and does not constitute a solicitation to any person to buy or sell a security. While the information contained therein has been obtained from sources believed to be reliable, no responsibility (or liability) is accepted for the accuracy of its contents. Readers using the information contained herein are solely responsible for their actions and are advised to satisfy themselves before making any investments.