Wednesday, March 31, 2010

Cronimet Alloy Ltd....cmp 38.80...my old call..

Friends,
I gave a call on GMR Ferro Alloy Ltd at 34...it is still around that level .I didn't write on length why I like this stock...
I am doing it now....One of the reader has written that he read on moneycontrol site in news section that there will be a delisting offer at 34.90....I tried to find that link and ended up seeing a boader at mmb writing personally that he is the guy who knows that there will be an open offer for delisting of Cronimet Alloy Ltd at Rs 34.90....well, these are mere talks and with eps of 6 for 6 months.....even if the promoters give delisting open offer no one will sell it.......




My Rationale on GMR Ferro Alloy Ltd:


GMR Ferro Alloy Ltd was demerged from GMR Ind .....and promoters of GMR were holding 70% stake in it.The Co was making loss due to the Co not able to get Chrome Mines rights in Orissa and Tisco stopped selling Chrome Ore to Co as they need for themselves to make steel.




The Co was making loss and hence GMR promoters decided to sell their entire stake to conglomarate of Cronimet(Germany) and Mecron (of Dubai), Cronimet Mecron.


Cronimet holds Chrome Ore mines world over and hence the new management will have no problem in having raw material for the Co.Now Cronimet Mecron holds all 70% stake in GMR Ferro Alloy and the Co name is also going to get changed from GMR Ferro Alloy to Cronimet Alloy Ltd.


Moreover the Chrome Ore will also be at cheaper rate then other peers Co and that is showing in the bottomline since last 2 qr.With new promoters holding 70% stake in GMR Ferro , I feel this is a value buy and going dirt cheap while comparing it with Ferro Alloy Ltd which is quoting at 24 -1 fv, means 240-10 fv......so at 36-10 fv , GMR Ferro looks excellent pick for MT to LT.It seems that Cronimet Alloy is almost a debtfree co as I am seeing interest outgoing at almost "NIL"..in results section...if someone can write me about the debts I will be glad to read it and will give much more confidence to readers as well....


With Ferro Chrome prices going up due to demand in steel sector as Chrome Alloy is essential ingrediant for producing steel , I feel GMR Ferro is a buy at this rate....

Open Offer:

Keynote Corporate Services Ltd ("Manager to the Offer"), on behalf of Atlanta Natural Resources Pte Ltd ("Acquirer"), along with Mynah Industries Ltd (Formerly known as Rama Qualitex Ltd ("Person Acting in Concert" or "PAC"), has issued this Public Announcement ("PA") to the Equity Shareholders of Cronimet Alloys India Ltd (Formerly known as GMR Ferro Alloys & Industries Ltd) ("Target Company"), pursuant to Regulation 10 read with Regulation 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 & subsequent amendments thereto ("Regulations" or "SEBI (SAST) Regulations").


The Offer:

The Acquirer is making an Open Offer to the shareholders of the Target Company to acquire 24,57,059 fully paid up equity shares of the face value of Rs 10 each ("Share"), representing 20% of the paid up equity share capital of the Target Company, from the public shareholders of the Target Company, at a price of Rs 39.40 per share ("Offer Price") payable in cash.

Schedule of Activities:

Specified Date - April 29, 2010

Date of Opening of the Offer - May 24, 2010

Date of Closing of the Offer - June 12, 2010

Comments:
I just read the open offer on bse which I have pasted here and Atlanta Natural Resources Ltd has made an open offer for 20% stake at 39.40.....
Now as Cronimet Mecron Ltd is taken over by Atlanta Natural the stake of GMR Ferro automatically comes under the new management, Atlanta Natural.
So with the open offer of 20%, the new management will have a stake of 70+20= 90% and hence all chances that they will go for delisting.
The offer closes on June 12, 2010 and hence if the price goes up then the open offer in market they can revise the open offer at higher price 7 days before the closing of open offer.
Now let us see, how the market reacts with this open offer.The offer is damn cheap as eps for 2 qrs is 6 and all chances it can end at 10 eps and they wants to purchase shares at 40....wherein the fair value can be atleast 80-100 giving an p/e ratio of 8 or 10....as the peers Co also have the same discounting.
I hope the market sees this and take the stock higher so that Atlanta Natural Resources Ltd has to revise the open offer...as it seems that the new management wants to delist this Co .
Let them pay the correct value for Cronimet for the REST OF THE 20% WHICH WILL TAKE THEIR HOLDING TO 90% FROM WHERE THEY CAN APPLY TO DELIST THE Co....
But I again reiterate that the fair value is not less then 80.......let us see how market reacts to this offer.....



 CRONIMET press releases

Current press releases of the CRONIMET Group
[ 28/04/2008 ] > Germany / Karlsruhe


CRONIMET Mining GmbH announces a substantial investment in South Africa
Effective April 1, 2008, a consortium of German and South African companies, headed by the majority shareholder CRONIMET Mining GmbH, has acquired the mining rights to a substantial chrome ore deposit in South Africa.


The areal is located in the Western Limb of the Bushfeld Complex near the town of Northam. The Bushfeld Complex is home of some of the most substantial chrome ore deposits in the world with an average content of 48% of chromite in its ores. Purchasing price and other contractual information is withheld. The new venture has already been checked by the cartel authorities and has been granted.


The new South Africa company is working under the name of CRONIMET Chrome South Africa (PTY) Ltd. (CCSA). CCSA will develop to a reliable future supply source for chrome products required in steel production. Chrome is a product necessary for stainless steel production.


It is expected that the geological model of the deposit will become available in the third quarter 2008. It will be the basis for the mine plan. Mining will start as soon as the mine plan has been developed. The reserves will ensure a continuous supply of ores for the next 30 years. The first investments of the CCSA have been set aside for the machinery and production equipment for mining.


CCSA is pleased to report that the company fully complies with the legal requirements of the BEE laws through the participation of a Broad Based BEE as partner in the company. The Black Economic Empowerment Program is an important step for the domestic political stability and establishment of longterm economic and social development in South Africa. First goal of this legislation is to insure the active participation of the formerly disadvantaged population in the economy of South Africa. Through the shareholding of trusts in CCSA, representing the population living near the mining area, it is ensured that they take part in the economic success of the company.


Parallel to the investment in mining, CCSA guarantees on a longterm basis to assist financially in social and educational as well as infrastructural development in the region.

13 comments:

  1. Hi Rajeev,

    Here is news link

    http://www.moneycontrol.com/news/stocksnews/stocksnews-bharti-tata-motors-chola-dbs-spicejet_449364-1.html

    ReplyDelete
  2. Hi Rajeev,
    The announcement for open offer is on BSE site now. The offer price is Rs 39.40; not Rs 34.90 as previously mentioned by someone to you. Now, what will happen? Why are they thinking of delisting the scrip?

    ReplyDelete
  3. Dear Mr Rajeev

    Your favourite ennore coke hit 98.30, your really great

    Ennore Coke hits 20% upper circuit on block deal

    India Infoline News Service / 12:29 , Mar 31, 2010
    ~450,000 shares, or 3% of its equity, changed hands in two block deals on the BSE.

    Shares of Ennore Coke have Ennore Coke are locked to its maximum permissible limit (20%) to Rs98.30 after ~450,000 shares, or 3% of its equity, changed hands in two block deals on the BSE.

    The scrip opened at Rs82.40 it touched an intra-day high of Rs98.3 and a low of Rs74.9 and has recorded volumes of over 1mn shares on BSE.

    ReplyDelete
  4. Hi Rajeev,
    Would you advise buying Navin Fluro @ CMP- Rs.300/- ?
    Regards,
    Sajith

    ReplyDelete
  5. Sajith,
    Navin looks good still......

    ReplyDelete
  6. the debt is consitently going down
    it stands @ 13.24 cr for fy mar 09
    :)

    ReplyDelete
  7. you remember i asked you about abc industry some time back, it has more than doubled in few weeks as it is cont in upper freeze since last 10 days or may b more.

    ennore coke, kirloskar ferrro, jayaswal nico ,yashraj, deep ind n many others were seen firing

    simply great
    tum khate kya ho yaar.....heheheeeeeee

    ReplyDelete
  8. Dear Rajeev,

    You are collecting so much useful information from all sources and putting here for the benefit of the average investors. This is really nice of you. Hats off to your patience and your good nature!

    ReplyDelete
  9. Hi,

    Have you looked at a company called G S auto international.They design and manufacture suspension and fastening components for passenger cars and other vehicles.Their clients include telco,maruti,M&M,Ashok leyland and almost all other important companies. They have a eps of almost 6 Rs and is available for CMP 41.45. The promoters hold hold only 28% while 50% is held by private corporate bodies.But a slight risk and very important thing to consider right now is that though the company is available cheap.there is lot of sms spreading around that the share is going to double with in the coming one month.This is making me cautious.What is your opinion about the company and its future prospects.

    Regards,

    ReplyDelete
  10. Astro,
    I do not track G S Auto so no view........

    ReplyDelete
  11. Dear Rajeev Desai,

    Here is the complete story about GMR Ferro. How promoters have demerged it from GMR and made it a family owned private company (almost close to doing it). Can you smell something??

    The promoters of GMR Ferro sold it to Cronimet Mercon at Rs 26+. Cronimet Mercon then sold it to Atlanta Natural or Mynah Industries which is a GER group company at Rs 39+ (50% profit). Smartly, they have NOT mentioned the name of GER anywhere in the public announcement to avoid people figuring out the loop that I have decoded here.

    GER & GMR belong to the same family.

    GER = Grandhi Eswara Rao
    GMR = Grandhi Mallikarjuna Rao

    So, in essence, the GMR promoters have managed to COMPLETELY own the company (GMR Ferro) by first cheaply selling it to Cronimet Mercon and then buying back and fooling the investors!!!

    I wont be surprised if the promoters going forward delist GMR Ferro and integrate it with Sri Vasavi Industries

    Here are some links that I have used to research this.

    www.atlantaturkey.com/
    www.srivasavi.com/
    www.icdachromium.com/pdf/FECR/Sri_Vasavi.pdf
    www.aboutus.org/MetalBulletin.com
    mynah.co.in/
    www.gergroup.net/index_files/slide0001.htm
    gergroup.net/profile/profile.pdf

    I would LOVE to know your opinion on this whole story.

    Shock!

    ReplyDelete