BRAND is manifestation of corporate thinking.
It requires (1) vision - long term thinking AND (2) day-to-day execution to achieve that thinking. Relentlessly!
BRAND is not just a logo, tag or symbol or advertisements. Its trust with customer, trust with business partners, availability of product (which means, company needs to have financial strength to procure and manufacture and distribute), honor with the bankers and hustle 24x7x365 for decades.
One can clearly observe across leaders in different industries that there is CONSISTENCY OF CONDUCT - which means - If the management is excelling in one practice, it wont be corrupt in other practices. One cant expect management to "fool" around with investors, when they are dealing - exceedingly well - with farmers, distributors, bankers, government and other partners.
AND the ULTIMATE JUDGES ARE THE COMPETITORS - Its difficult to GAIN RESPECT OF COMPETITORS again and again. ChamanLal guys gave plenty of time on THEIR own concall to appreciate the KRBL management.
AND the ULTIMATE JUDGES ARE THE COMPETITORS - Its difficult to GAIN RESPECT OF COMPETITORS again and again. ChamanLal guys gave plenty of time on THEIR own concall to appreciate the KRBL management.
And NIELSON has been rating IndiaGate as top/dominant/progressing brand every year. For many years!
There are 3-4 main pain points in investment community against KRBL -
1) Allegations by news article - Yes! They are "allegations" using unproved narrative when there is no charge against company and case is subjudice - lets not flow in downward spiral with just the allegations. The channel didnt mention about sub-judice nature of the case, or evidences involved. The best persuasive stock to be added to the story was to link the narrative with a BIG NUCLEAR-BOMB WORD - "augu****" - narrative was made to stick in the minds of the readers. The channel doesn't have any downside and the story may be a planted one.
Historically, had there been identical cases against other reputed corporates? The answer is Yes!! -
ITC was raked in by ED in 1995 - there were direct allegations against the company, directors and US partners. The case dragged on for years, but DIDNT affect the operations of the company. If history is any guide....
ITC was raked in by ED in 1995 - there were direct allegations against the company, directors and US partners. The case dragged on for years, but DIDNT affect the operations of the company. If history is any guide....
DABUR's director assets were seized recently by ED.
Net net, my take on event is - keep thinking and revising the thesis, with additional information.
2) Poor crisis management - I expected mgmt to handle it well, with written disclosures to the exchange. But usually, corporates find themselves as deer-in-the-headlight during such situations. Remember, Uber's cases and responses in India?
Net net, my take on event is - keep thinking and revising the thesis, with additional information.
2) Poor crisis management - I expected mgmt to handle it well, with written disclosures to the exchange. But usually, corporates find themselves as deer-in-the-headlight during such situations. Remember, Uber's cases and responses in India?
3) Auditors - were on track to be replaced last year and it was discussed in AGM. I hope they will be replaced this year. With so much floodlights on the management, expect good work ahead!!
4) Pabrai deal fallout - Pabrai was hard working enough to do his through due diligence, despite a non-resident and gutsy enough to PUT IN BIG MONEY ON THE TABLE. However, ED thing was a black swan - YET unproved/subjudice. Let the case play its course in the courts before handing over a guilty verdict to the management. We know what happened to ITC's operations from the history!
5) No Sales growth - It is the EASIEST industry to show sales growth at the expense of profits - its not difficult to generate volumes and sales. However, if one listens to the concalls, the focus is on perpetuity, premierization, and growth of profits. PERIOD.
With the guidance of 12-15% volume growth + new varieties of regional rice + new health products, the company's vision is clear to move towards creating HEALTH PLATFORM. With that in mind, the company has (1) moved to increased branded portfolio (2) high priced, new varieties of rice (3) new and high value products like Chia/Flax/Qunioa/Sprouted rice etc which dont require aging, are FMCG in-nature. The work put in by the company to launch new products and conduct events/shows over past 6 months are commendable - all of which is available on social media. The changes in advertisement/product placement are evident (change in advertisements from social value, towards health benefits can be seen on packs/ads).
Brand is a cumulative affect of last 2 decades of efforts - No one else is moving in that direction, as there is no money+vision in the industry. Industry players are facing defaults from iran and banks are enforcing criminal proceedings against NPA accounts.
The supply chain is unreplicable - HUL, marico, cargil, etc tried and failed. Its looks simple, but not easy!! Plus the supply chain from India to mid-east is unique to them- long presence of IG as high priced brand + cheap sourcing advantage of high valued items like Qunioa from India, where marketing/supply-chain/brand is the biggest pain point for the farmers. Totally un-replicable!
15% vols, 10% pricing growth and new businesses - I expect a moonshot. The business should do well.
With the guidance of 12-15% volume growth + new varieties of regional rice + new health products, the company's vision is clear to move towards creating HEALTH PLATFORM. With that in mind, the company has (1) moved to increased branded portfolio (2) high priced, new varieties of rice (3) new and high value products like Chia/Flax/Qunioa/Sprouted rice etc which dont require aging, are FMCG in-nature. The work put in by the company to launch new products and conduct events/shows over past 6 months are commendable - all of which is available on social media. The changes in advertisement/product placement are evident (change in advertisements from social value, towards health benefits can be seen on packs/ads).
Brand is a cumulative affect of last 2 decades of efforts - No one else is moving in that direction, as there is no money+vision in the industry. Industry players are facing defaults from iran and banks are enforcing criminal proceedings against NPA accounts.
The supply chain is unreplicable - HUL, marico, cargil, etc tried and failed. Its looks simple, but not easy!! Plus the supply chain from India to mid-east is unique to them- long presence of IG as high priced brand + cheap sourcing advantage of high valued items like Qunioa from India, where marketing/supply-chain/brand is the biggest pain point for the farmers. Totally un-replicable!
15% vols, 10% pricing growth and new businesses - I expect a moonshot. The business should do well.
----Not an investment advise----
