Introduction

The purpose of this book is to make the people aware

that stock market is a device for transferring money
from the impatient to the patient. Most people
consider stocks as like lottery tickets but the reality is
that stock is a partial ownership of the company.
Behind every stock is a company. In short term
investing in stock may not give good return but in long
term as the business gains the valuation the stock
definitely perform. Many people think that they will
lose money if invested in stocks but do they know why
stock price increases or decreases?
In 2007 I lost Rs.40,000/- in a single trade of ICICI
bank then for the next 2 years I didn’t done any trade.
After that I started reading some articles and books but
due to half knowledge I invested in some Stocks
having large debt and again I could’t perform well.
Last 1 Year is the best year for me in terms of gaining
the knowledge. Now I select the stocks well and I
understood why some of my stocks increased 5-20
times within 3-4 years and why some stocks failed . I
understood the success secret of Rakesh Jhunjhunwala,
Warren Buffett and Peter Lynch. The only way to earn
a good profit is selection of stocks and buying it at the
bottom and holding it for long term so that its
valuation increases and it gives multibagger return.
While investing in a company good management is
very necessary, more than 50% holding of promotors
makes the company stable and safe for investment.
Very thanks to Mr. Peter Lynch who provided me the
best books on stocks and also very thanks to Mary
Buffett and David Clark for providing excellent books
like New Buffettology. Very thanks for Dion Global
and ICICIDIRECT for providing me data of
companies.

Contents
1. How Investors can become billionares by
simply investing
2. The Stock Market
cycle
3. Principles of investing of Rakesh
Jhunjhunwala, Peter Lynch, Warren
Buffett
4. Identification of Best Quality Stocks
5. Identification Of Average Quality stocks
6. Identification of cyclical stocks
7. Identification of stocks that may fail
8. Why zero debt of low debt company is the
best investment
9. Safest portfolio for low risk
10. High risk – high return Portfolio
11. Debt free companies in India
12. Investing in penny stocks
 1
“An important key to investing is to
remember that stocks are not lottery
Tickets.” - Peter Lynch
 How Investors can become
billionares by simply investing
Cash the crack –Investors like Rakesh
Jhunjhunwala , Peter Lynch & Warren Buffett
use stock market crash for a lifetime
investment opportunities in big companies
whose stock crashes. Risk comes when you
don’t know what you are doing. But when a
new business whose future is bright is merely
cheap due to stock market crash and old
business whose product has a constant demand
throughout the century is merely cheap
because of bad news phenomenon gives a
good investing opportunity. Investing in bad
times gives multibagger return.
VST TILLERS TRACTORS : In 2003 VST Tillers
tractors was trading at lifetime low of Rs.10.25. Those
who had invested at that time got 16 times of their
investment amount in just 2 years and 62 times in 7
years and more than 200 times in 11 years. Do you
know any traders who have made a fortune like this
growth ? But you can find a lot of big Investors who
have earned money by simply holding their investment.

MARKSANS PHARMA: During 1994-2003 (8-9

Years) Marksans pharma was trading between 12-40.
Any investors or long term traders can simply double
or triple their money in 1-2 years. In 2003 it was
trading at merely Rs. 7.05. those who had bought at
this level got more than 50 times return in next 2 years.
Your Rs. 1 Lacs investment became Rs. 50 Lacs in
just 2 years. Again opportunity came in 2012 when it
was trading at lifetime low at Rs. 1.27 again in 2014-
2015 it gave a multibagger return. Only investors buy
at low level while traders buy when it is surging high.
So traders loose money and blame stock market.
 Simple investment criteria “ search for the
opportunity ,Grab it, wait, Keep patience you will be
rewarded.” In stock market analysing financial
statement for supportive valuation is most important.

NMDC : In 2001 NMDC was in initial phases trading

low at Rs. 12.10. But it gave more than 1300 times
return in 8 years. It was trading around Rs.16,000 in
2007-2008. Then it splitted. Those who have invested
Rs. 1 Lac in 2001got more than Rs.13 Crores in just 7
Years. Isn’t a good opportunity ?

Infosys : Continueous growth and zero debt

are the reason for performance of Infosys over
the years. The stock splitted in 2006. During
1994 to 2015 it has given bonus shares many
times.
TATA STEEL :This is one of the oldest and
safest company for a common man to double
his money in 1-2 years. This is a cyclical stock
. Buy it at low level if again falls average it
and sell it at nearabout double price. One of
my best recommended stock for a common
man. See the history.
In above all examples I have mainly covered the increase and
decrease in share price. In above examples there is bonus shares,
dividends, price change after splitting is not calculated. If it is
calculated then return I mentioned will again increase. For
simplification I omitted from mentioning.
 2
“ The stock market is a device for
Transferring money from impatient
to the patient.”
-Warren Buffett

Stock Market Cycle

Market bottom/ Panic
A lot of people are not aware of stock market
cycle. When there is recession or market is at
the bottom the stock prices are at the ground
level. It is the entry point of value investors as
many businesses are below their valuations
and value investors are always in search of
these value of businesses. At this point many
short term investors sell their stocks saying
that there is not much remained in the
businesses as earning is decreased. But it is
common when there is recession.
The prices stabilizes at this level and trading is
very less. When the prices of stocks do don’t
fall and there is any good news the market
responds to it and stock increases slightly.
Over the time period the stock market picks up
again , prices start rising and investors realize :
“The Maket Surge “ phase is back.
Market Surge/ Optimism
When stock Market advances due to good
news like improvement in economy the stock
prices increases. The number of conversations
about stock trading is directly proportional to
the growth of the stock market. At this stage
the trading of a common man starts. Many
traders start getting the big profit and the stock
prices continuously rising. Financial
institutions also enters and get the profit. The
average person becomes a “ stock Market
Expert” –talking about how much money he
has made in trading the stocks. Several peoples
of different fields emerge and market
themselves as stock guru offering investing
and trading advise everywhere. On media
whether it is politics, Entertainment, business
insert segments about stock market and how a
common average person can make the money
in the stocks.
In this market surge phase everyone is
optimistic gererating consistent returns month
after month. Losses are few but returns are
more consistent. The stock prices continuous
to rise and average investor believe that he is
the expert. Many stocks and companies which
we have not heard start producing good
returns. Many people join the market because
they don’t want them to be left behind so stock
prices again rises.
Market peak/ Euphoria :
At this stage the stock prices reach
unprecedented level and stock markets achieve
all the time highs. At this level maximum
value investors sells their stocks but the old
and new short time investors are making the
money and stock prices making new 52 week
high records. Many short term investors keep
on buying because everything is going up
considering that there will still be up in the
future. But the value investors remain away
from this stage as valuations do not support the
stock prices.

Market decline/ Fear:

At this level new analysts would emerge
saying stock prices are inflated and stock
market is overvalued. Those investors that
have paid a lot for a stock that is junk start
selling to recover the money whatever they
get. Many investors who have bought stocks
on finances start selling and the stock prices
again falls. Retail investors understand that
now the game is over and keep on selling and
exiting the market so again and again stock
prices falls rapidly. There are only few people
interested in buying and a large population is
selling the stocks so the stock prices again and
again falling. At this stage many people say
that the stock market is bad and there is
nothing remained in investing.

3
“ The big money is not in buying
and selling….but in the waiting”.-
 Charlie Munger

Principles of Investing
Rakesh Jhunjhunwala
He is the legendary investor who is known as the
Warren Buffett of India. He started his investment
from merely Rs. 5000. And now his total Assett is
around 8000 crores.
He was born on 5 July 1960. His father was an
income tax officer. His father was interested in stocks
and used to discuss about it with his friends. When
Rakesh was a child he asked his father why the price of
stocks fluctuate. His father told him that the news
makes the price to fluctuate. Rakesh got fascinated by
the stocks and his interest in it increased. He told his
father his wish to get into the stock market. His father
told him to get professionaly qualified atleast and then
do whatever he want in his life. Rakesh completed his
CA in 1985. After his completion of CA he told his
father that he want to make his career by investing in
stocks.
His father told him not to ask for money to him or
his friends ; earn and trade with you money.
The Invetment started: Rakesh started investing in
stocks in 1985 when BSE sensex wad at 150.
First big profit- his first big profit was 0.5 million by
selling 5000 shares of Tata tea at a price of Rs.143
which he had bought at Rs.43 just 3 months prior.
Between 1986-1989 he earned 20-25 lakhs. After 1986
the market went into a big depression for 2-3 years but
he put his money in Tata power stocks. The Tata power
became about 1100-1200. Now he was having 50-55
lakhs.
He bought 4 lakh shares of Sesa Goa in forward
trading, worth Rs. 1 crore and sold about 2-2.5 lakh
shares at Rs 60-65 and another 1 lakh at Rs.150-175.
The price rose to Rs.2200 and he sold remaining
shares. Now his net worth was about 2-2.5 crores.
He bought 6 crores shares of titan industries and
currently holding it which makes his portfolio 34 %
valuations. Titan generated 8272% absolute returns in
past 13 years. This means long term investment always
pays.
In 2006 he bought Lupin around 150 which is now
trading aroung Rs. 2000.
Rakesh Jhunjhunwala holds around 40 lac shares of
CRISIL. CRISIL was able to touch life time high level
of 2361 Rs. Absolute return generated by CRISIL for
Rakesh Jhunjhunwala is 5588%.
Rallis India : Absolute return given by Rallis India in
Jhunjhunwala’s portfolio is 655%.
Success secret- 1. If you make an analysis of portfolio
of Rakesh Jhunjhunwala you will find his success
secret in long term. During time of recession his
portfolio was down by 70% and many of the stock
market pundit saying that he invested in speculation
but he knew what he has done. According to warren
Buffett 95% of the investors are short term motivated
and only 5% hold stocks for long term. Rakesh
Jhunjhunwala is one of that 5% investors.
2. His investment in stocks making more than 1% of
his portfolio reveals minimum average holding time
around 3.44 years. Many stocks which made him
wealthy he holded for more than 5-10 years. He has
held his stakes in nine companies, including Lupin Ltd,
Crisil Ltd, Titan Industries, for 10 years or more.
3. He buys the stock at very cheap price when the
company is in initial stages so there is chance for
growth of that company so valuation increases and also
his wealth increases..
4. He prefer small cap stocks which will be tomorrows
mid or Large cap stocks.
5. If you analyse his portfolio you will find that
majority of the companies he selected having very low
debt or some of the companies having Zero debt. This
is because whatever the company earn it directly
increases its valuations. But in companies having large
debt maximum amount goes to paying the interest so
valuations do not increase properly. Continuous
increase in debt is a sign of bankruptcy like Jaypee
Associates, Kingfisher airlines, REI Agro
6 Holding the stocks for long term have to pay low
income tax and when you sell. Selling in short time is
considered as business income and is considered for
higher taxes. So holding long term saves taxes.
Rakesh Jhunjhunwala latest Stock
Portfolio 2016

Company Name Total % of Portfolio

investment in
Crores
Titan Company 2601 34%
Lupin 954 13%
CRISIL 710 9%
Aurobindo 583 8%
Pharma
NCC 431 6%
Rallis India 338 4%
Dewan Housing 200 3%
Fin. Ltd. 181 2%
TV 18 Broadcast 168 2%
MCX 162 2%
Geometric 157 2%
Karur Vysya 140 2%
Bank 123 2%
Escorts 106 1%
Delta Corp. 91 1%
VIP Industries 90 1%
Polaris 85 1%
Consultancy 85 1%
Fortis Healthcare 80 1%
Aptech 71 1%
Firstsource 57 1%
Solutions 37 0%
Agro Tech 34 0%
Foods 32 0%
Geojit BNP 25 0%
Edelweiss. 22 0%
Financial 12 0%
Orient Cement 12 0%
McNally Bharat 10 0%
Anant Raj 9 0%
ION Exchange 9 0%
DB Realty 5 0%
Man Infra
Prakash
Industries
Viceroy hotels
Bilcare
Prozone
Autoline
Industries
Source Myinvestmentideas.com

Reserve surplus , Investment and Debt analysis of

Companies (Major Holdings by Rakesh
Jhunjhunwala)
company Reserve Investment Debt
surplus(Crores) (Crores) (Crores)
Titan 3003 32.63 99.79
Company
Lupin 8937 3444 40.09
CRISIL 668 509 0
Aurobindo 5330 1012 2896
Pharma
NCC 3093 1156 1925
Rallis India 778 231 62
Dewan 4490 1006 40525
Housing Fin
TV 18 3146 3272 221
Broadcast 1338 1292 0
MCX 367 140 18.71
Geometric 4124 12773 44690
Karur Vysya 1640 383 408
Bank 838 427 82
Escorts 278 18.26 31
Delta Corp 543 156 0
VIP Industries 3216 2411 597
Polaris 977 378 0
Consultancy 962 1246 222
Fortis 289 11.68 25.86
Healthcare 316 38.27 25
Aptech
Firstsource
Solu.
Agro Tech
Foods
Geojit BNP

Peter Lynch
If there is one legendary investor who not just beat the
market but destroyed it, it is Peter Lynch.
Now retired, Lynch secured his reputation as one of the
most successful fund managers in history while in
charge of the Fidelity Magellan fund between 1977 and
1990.
Lynch only ever worked for Fidelity, the international
investment management firm based in Boston. He
started as an analyst in 1969, was promoted to director
of research in 1974, and took over the Fidelity
Magellan fund in 1977. At the time, it had $22m in
assets. By 1990, when he decided to take early
retirement in order to spend more time with his family,
its value had swollen to $14bn. No manager in history
has ever run so large a fund, so successfully, for so
long.
Long-term returns
During his tenure at Magellan, Lynch averaged 29%
compound over 13 years. This remains a record for
funds of this size.
Biggest success
The biggest successes Lynch lists in his book Beating
the Street were all small growth companies when he
bought them: Rogers Communications Inc, a 16-
bagger, Telephone Data Systems, an 11-bagger, and
plastic cutlery manufacturer Envirodyne and King
World Productions, both tenbaggers.
He has written worlds bestselling books-
1.One Up On Wall Street
2.Beating the street
3.Learn to earn
Mr. Rakesh Jhunjhunwala follow his method. For
many investors he recommended “One Up On Wall
Street “ by Peter Lynch and “ The Intelligent Investor
“ by Bejamin Graham.

He has written 25 Golden Rules for Investors

in his book Beating the street. Some rules I
have mentioned here.
-You can outperform the experts if you use
your edge by investing in companies or
industries you already understand.
-Behind every stock is a company. Find out
what it’s doing.
- Often, there is no correlation between the
success of a company’s operations and the
success of it’s stock over a few months or even
a few years. In the long term, there is 100 %
correlation between the success of the
company and the success of it’s stock. This
disparity is the key to making money; it pays
to be patient, and to own successful
companies.
-Owing stocks is like having children- don’t
get involved with more than you can handle.
The part-time stockpicker probably has time to
follow 8-12 companies, and to buy and sell
shares as conditions warrant. There don’t have
to be more than 5 companies in the portfolio at
any one time.
-If you can’t find any companies that you think
are attractive, put your money in the bank until
you discover some.
-Never invest in a company without
understanding its finances. Biggest lossess in
stocks come from companies with poor
balance sheets. Always look at the balance
sheet to see if a company is solvent before you
risk your money on it.
- If you invest $1,000 in a stock, all you can
lose is $1,000, but you stand to gain $10,000
or even $50,000 over time if you are patient.
-Nobody can predict interest rates, the future
direction of the economy, or the stock market.
Dismiss all such forecasts and concentrate on
what’s actually happening to the companies in
which you have invested.
- If you don’t study any companies, you have
the same success buying stocks as you do in a
poker game if you bet without looking at your
cards.
The Lynch Philosophy
Method and guidelines
Firstly, keep your eyes and ears open for
ideas.
Lynch's key concept is that you can spot
investment opportunities all around you, if
only you concentrate on what you already
know and are familiar with. Maybe you notice
a crowded shop or restaurant, or your
neighbours all start buying a new make of car,
or a nearby factory suddenly seems to be
expanding - all these may be pointers to
companies on the stock market that are worth
further investigation.
Secondly, categorize your ideas
Companies can be categorized into 6 main
types:
1. Fast growers - small, aggressive new
companies growing 20-25% or more.
2. Slow growers - raising earnings at about
the same rate as the economy, about 2-4%
a year. If it’s a low percentage,the
company has a cushion in hard times. It
can earn less money and still retain the
dividends. If it’s a high percentage, then
the dividend is riskier.
3. Stalwarts - good companies with solid
EPS growth of 10-12%. These are big
companies thar aren’t likely go out of
 business..
4. Cyclicals - whose earnings rise and fall as
the economy booms and busts. If you
know your cyclical, you have an advantage
in figuring out the cycle.
5. Turnarounds - companies with
temporarily depressed earnings, but good
prospects for recovery.
6. Asset plays - companies whose shares are
worth less than their assets, provided these
assets could be sold off for at least book
value. If the company is taking the new
debt it will make asset less valuable
Source: One Up on Wall Street, P Lynch, 2000
finding fast growers, if bought at the right
price, some of these can become 'tenbaggers' -
shares that multiply your investment ten times
over. Otherwise, look for turnarounds and
perhaps the occasional asset play.
Consider trying to avoid holding cash. It is
better to stay fully invested by putting any
spare money into stalwarts. That way, you will
not miss out on rising markets.
Avoid slow growers (too unprofitable) and
cyclicals (too hard to time).
Thirdly, summarize the story behind your
stock.
Write on a paper about the stocks selected
describing,
1.The reasons you are interested in it
2.What has to happen for the company to
succeed
3.The obstacles that might prevent its
success.
This is the stock's 'story'. Make sure it is
simple, accurate, convincing, and appropriate
for the category of stock in question. For
example, 'if it's a fast grower, then where and
how can it continue to grow fast?'
Fourthly, check the key numbers.
1. If you are excited by a particular product
or service, check it accounts for a
 sufficient percentage of total sales to make
a significant difference to profits.
2. Carefully consider the price-earnings
ratio.Favour companies with a forecast P/E
ratio well below their forecast EPS growth
rate (i.e. a low PEG ).
3. Favour companies with a strong cash
position.
4. Companies that have no debt can’t go
bankrupt.
5. Avoid companies with a high debt-to-
equity ratio ('gearing'), especially if the
debt takes the form of bank overdrafts,
which are repayable on demand, rather
than bonds, which are not.
6. In the case of stalwarts and fast growers,
look for a high pretax profit margin. In the
case of turnarounds, look for a low one
with the potential to rise. A lot of money
can be made when a trounled company
turns around.
 7. Look for companies with little or no
institutional ownership.
8. Look for companies that consistently
buybacks their own shares.
9. Buying stocks based on stated book value
alone is dangerous and illusory. It’s real
value that counts.
Fifthly, base your buy and sell decisions on
specifics.
Buy whenever you come across an attractive
idea, with a compelling story behind it, at an
attractive price.
fast growers: Consider selling fast growers
when there appears to be no further scope for
expansion, or expansion starts to produce only
disappointing sales and profits growth, or
when their PEGs reach around 1.5-2.0.
Stalwarts: Consider selling stalwarts when
their PEGs reach around 1.2-1.4, or when the
long-term growth rate starts to slow.
asset plays: Consider selling asset plays when
they are taken over, or when assets that are
sold off fetch lower than expected prices.
Ignore the ups and downs of the market .Your
profits and losses do not depend on the
economy as a whole. They depend on the
factors specific to the stocks you hold.

Warren Buffett
Buffett is the chairman, CEO and largest
shareholder of Berkshire Hathaway and is
consistently ranked among the world's
wealthiest people. He was ranked as the
world's wealthiest person in 2008 and as the
third wealthiest in 2015. In 2012 Time named
Buffett one of the world's most influential
people.
Buffett is often referred to as the "Oracle of
Omaha," and is noted for his adherence to
value investing and for his personal frugality
despite his immense wealth. Buffett is a
notable philanthropist, having pledged to give
away 99 percent of his fortune to philanthropic
causes, primarily via the Gates Foundation.
Warren Buffett Quotes on Investing
“It’s far better to buy a wonderful company at a
fair price than a fair company at a wonderful
price.”
“Most people get interested in stocks when
everyone else is. The time to get interested is when
no one else is. You can’t buy what is popular and
do well.”
“Only buy something that you’d be perfectly
happy to hold if the market shut down for 10
years.”
“Investors making purchases in an overheated
market need to recognize that it may often take an
extended period for the value of even an
outstanding company to catch up with the price
they paid.”
“If a business does well, the stock eventually
 follows.”
“Price is what you pay. Value is what you get.”
“Time is the friend of the wonderful company, the
enemy of the mediocre.”

Buffett was born in 1930 in Omaha, Nebraska. One of

his first business ventures, Buffett sold chewing gum,
Coca-Cola bottles, or weekly magazines door to door.
He worked in his grandfather's grocery store. While
still he was in high school, he made money delivering
newspapers to peoples, selling golf balls and stamps,
and detailing cars, among other means. On his first
income tax return in 1944, he took a $35 deduction for
the use of his bicycle and watch on his paper route. In
1945, as a high school sophomore, Buffett and his
friend spent $25 to purchase a used pinball machine,
which they placed in the local barber shop. Within
months, they owned several machines in three different
barber shops across Omaha. The business was sold
later in the year for $1,200 to a war veteran.[24]
At 11, he bought three shares of Cities Service
Preferred for himself, and three for his sister Doris
Buffett At the age of 15, Warren made more than
$175 monthly delivering Washington Post newspapers.
In high school, he invested in a business owned by his
father and bought a 40-acre farm worked by a tenant
farmer. He bought the land when he was 14 years old
with $1,200 of his savings.
In 1947, Buffett entered the Wharton School of the
University of Pennsylvania. Warren studied there for
two years and joined the Alpha Sigma Phi fraternity.
He then transferred to the University of Nebraska–
Lincoln where at 19, he graduated with a Bachelor of
Science in Business Administration. After being
rejected by Harvard Business School, Buffett enrolled
at Columbia Business School upon learning that
Benjamin Graham taught there. He earned a Master of
Science in Economics from Columbia in 1951.
He worked from 1951 to 1954 at Buffett-Falk & Co. as
an investment salesman; from 1954 to 1956 at Graham-
Newman Corp. as a securities analyst; from 1956 to
1969 at Buffett Partnership, Ltd. as a general partner
and from 1970, as Chairman and CEO of Berkshire
Hathaway Inc.
Warren Buffett Investment Method
Warren Buffett modified the investment method of
Benjamin Graham who was a a great value investor.
Big Secret : Warren Buffett got superrich not by
playing the stock market but by playing the people and
institutions who play the stock market. Warren is the
ultimate exploiter of the foolishness that results from
other investors pessimism and shortsightedness.
Warren discovered two things that few investors
appreciate. 1.Approximately 95% of the people and
investment institutions are short term motivated
2. It is the real long term economic value of a business
that ultimately levels the playing field and properly
values a company.
He came to realize that the undervalued business with
strong long term economics are eventually revalued
upward, making their shareholders richer. This means
todays stock market undesirable can turn out to be
tomorrow’s shining star.
Stock market many times overreact to bad news
about a great business and oversell its stock, making it
a bargain from a long-term economic point of view.
When this happens, he buys as many shares as he can,
knowing that over time the long-term economics of the
business will eventually correct the negative situation
and return the stock’s price to more profitable
ground.Warren’s genius lies in his ability to grasp
other peoples ignorance about the long term economic
worth of certain businesses.
Warren practices a selective contrarian investment
strategy in which investors buy shares only when a
company has a durable competitive advantage, and
only when its stock price has been beaten down by a
shortsighted market, to the extent that it makes
business sense to purchase the entire company.
Warren seperates the world of business into
two categories.
1. Price competitive industries and
2. Healthy business having durable
competitive advantages

A price competitive type of business

manufactures or sells a product or service
that many other businesses sell and
competes for customers solely on the basis
of price.
A healthy business having durable
competitive advantages sells a brand name
product or service that holds a privileged
position in the stream of commerece that
allows it to price its product or service as it
faces little or no competition creating a
kind of monopoly. This gives a company
the freedom to raise the prices and produce
higher earnings.. These business have the
greatest potential for long term economic
growth and perform well in favourable as
wel as unfavourable conditions.
A company like Coca-Cola has made
same products for the past 85 years. The
companies like this never spend billions on
research and development and it is highly
likely that it will be making the same
product for the next ten years. (Note: we
are talking about making same product or
providing same service.)
In 2000 Intel spent over $3 billions on
research and development alone and its
product line becomes completely outdated
in a few years. Warren avoids businesses
which are spending lot of money on
research and development and whose
product becomes outdated with time
period. Warren wants to invest in
businesses that produce a product or
provide a service that is so entrenched in
the consumers mind that the product never
has to change. So even an idiot could run
the business and it would still be
successful.
Suppose a company is having market
capitalzation of Rs. 100 Crores but it is
making a profit of 7 crores then you are
getting 7% annual return so it is not worth
buying because investing in bonds or
making fix deposit in bank will give more
return. When the whole company is not
worth buying then you must not buy a
single share. Warren think in this way.
Buying opportunity gives Warren the
biggest return on his investment. This is
one of the keys to his success.Warren is
always in search of opportunities to buy
stocks. The opportunities are:
-Bear/bull market cycle
-industry recessions
-individual calamities
-structural changes
-war
All can have a negative impact on a
company’s stock price ,and any
combination of the five can really slam
prices into floor, creating the perfect
buying situation.

Warren’s business of coice

-Brand name fast food restaurants-Taco
Bell, KFC, Pizza Hut
-Patented prescription drugs-Bristol-Myers
Squibb, Merck & Co., Mylan Labs etc.
-Brand- name Foods-Kellogs,Camp-
bell’s,Pepsi-cola Company, Hershey Foods
-Brand name beverages- Coca-Cola,
Pepsico, Anheuser-Busch
-Brand name house products/ Toileteries-
Colgate-Palmolive, Procter & Gamble,
Gillette
-Brand name clothing business- Levi’s
jeans, Nike
-Advertising,Telivision,
Newspaper,Magazines-Abc
telivision,Washington Post,AOL,
-Businesses providing repetitive consumer
service-American Express, Dun &
Bradstreet, InfoUSA
-Low cost producers and sellers- Geico,
Wal-Mart, Nebraska Furniture

Warren’s 10 point checklist for potential

Investments-
1. Consistent high rate of return on
sharholders equity-Companies with
durable competitive advantages have
high returns on shareholders equity-
above 12%.
Price- competitive commodity-type
business have low returns on
shareholders equity- under 12%
2. Consistent high rate of return on total
 capital 12% or above
3. Historical per share earnings must be
strong and upward trend indicate durable
competitive advantage; wildly erratic
earnings indicate a price-competitive
business
4. Low debt- Companies with durable
competitive advantage typically have
long-term debt burdens of fewer than
five times current net earnings. Banking
& financial industry is the exception
5. Company must sell brand name product
or a key service that people or businesses
are dependent on.
6. Business must not have organized labor.
7. Durable –competitive business is
inflation-proof
8. Operational cost-companies with durable
competitive advantages usually don’t
have to spend a high percentage of their
retained earnings to maintain their
operations.
9. Prefer companies which buybacks shares
to the investors advantage.
10. Company’s book value rising over
years due to addition of retained
earnings. It increases market value of
company.

Seven statistical requirements of stock to

be included in a defensive investors
portfolio
1.Adeuate size of a company (Market
Capitalization)
2.A sufficient strong financial condition
3. Continued dividends for atleast the
past 20 years
4. No earnings deficit in the past ten
years.
5. Ten year growth of atleast one-third in
per share earnings.
6. Price of stock no more than 1 ½ times
net asset value.
 7. Price no more than 15 times average
earnings of the past three years.

When to exit the business:

According to Warren the holding period of
stocks is forever if the company is continue
performing better. But when the company no
longer provides “excellent economics” or is no
longer run by “able”, honest management, and
now original investment thesis is no longer
valid consider getting out regardless the stock
price.
When the competitive positions deteriorate or
stock becomes significantly overvalued then
sell the stocks.
A good rule of thumb is to add up the expected
per share earnings of a company over the next
ten years and then compare that sum with what
you would earn if you sold the stock and
placed the proceeds in bonds instead. If owing
the bond would earn you more, you are better
off selling the stock. If owing the business
would earn you more, you should keep the
stock. The reverse is also true..
Many a times warren sold the stocks above p/e
ratio of 50 when the market was at top. He
recommends selling the stock above p/e ratio
of 60-70 and buying below p/e ratio of 20.
 4
“ If you can’t find companies that
you think are attractive, put your
money in the bank until you
discover some”- Peter Lynch

Identification of best Quality stocks:

I am not going in very details of the financial. Only basic
characteristics are mentioned to identify the different Quality of
stocks. If you want to study detail you can compare the difference
between different quality stocks.
Jubiliant foodworks
Key Financial Ratios
2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS 19.22 20.70 16.23 5.18 1.26
CEPS 30.94 29.07 22.01 9.01 4.17
Book Value 86.11 66.82 46.03 29.70 18.27
Dividend/Share 0.00 0.00 0.00 0.00 0.00
Operating
38.98 37.44 29.63 10.52 5.88
Profit / Share
Net Operating
263.37 215.61 156.33 74.74 53.97
Income / Share
Free Reserves /
0.00 0.00 36.03 8.27 -5.88
Share

Profitability Ratios
OPM 14.79 17.36 18.95 14.07 10.89
GPM 10.35 13.47 15.26 8.95 5.49
NPM 7.25 9.54 10.32 6.93 2.32
RONW 22.32 30.97 37.19 28.83 32.54

Liquidity ratios
Debt/Equity 0.00 0.00 0.00 0.07 3.44
Current Ratio 0.63 0.67 0.58 0.77 0.78
Quick Ratio 0.53 0.57 0.45 0.68 0.65
Interest Cover 0.00 3,971.08 0.00 7.33 3.87

Turn Over Ratios

Sales/Total
-15.36 -20.11 -14.05 -55.77 -28.17
Assets
Sales/Fixed
3.15 3.60 3.79 4.16 3.33
Assets
Sales/Current
8.77 9.47 9.80 7.41 8.16
Assets

Miscellaneous
No of Days of -16.02 -13.10 -23.43 -12.78 -10.41
Working
Capital
CAR 0.00 0.00 0.00 0.00 0.00
There is continuous and rapid increase in earning per
share (EPS) over the years from 2009 onwards. EPS in
2014 is less than 2013 by 1.5% it is not much
difference and 1 year less earning is not to be
considered.
There is raped increase in book value over the years.
Within 5 years the book value increased by 5 times so
it is very rapidly growing company making the
shareholders very rich.
There is continuous rise in operating Profit and net
operating income per share.
Return on newworth (RONW) is above 20
characteristics of growing company.
In balance sheet Reserve surplus is rapidly increased
over the years by a large difference this is because
company is having no debt so their earning is retained
increasing reserve & surplus rapidly.
Zero debt company will not become Bankrupt so best
investment
Investment is continually increasing over the years.
Contingent liabilities is very low around 10% of
Reserve & Surplus. It is also less than 50% of net
profit. So no trouble.
In Profit & Loss statement Net operating income is
continuously rising.
PBDIT increased 4 folds in 5 years.
Financial expense is zero due to zero debt so net profit
is good. PAT is increased 4 times over the period of 5
years.
Company is retaining earning by a large amount as it is
not paying dividends and also there is no debt.
In a few words the company’s valuations increased 4 times in
five years due to rapid expansion and having zero debt. Very
few companies perform like this. This effects the valuation of
shares. Share value increased 7-8 times in 5 years.

Balance Sheet
Rs. CR.
Period & Months 2014/03 2013/03 2012/03 2011/03 2010/03
SOURCES OF FUNDS
Owned Funds
Equity Share Capital 65.44 65.28 65.08 64.53 63.62
Share Application
0.02 0.00 0.00 0.00 1.20
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 498.03 370.93 234.47 127.16 52.61
Loan Funds
Secured Loans 0.00 0.00 0.00 0.00 8.59
Unsecured Loans 0.00 0.00 0.00 0.00 0.00
TOTAL 563.49 436.22 299.55 191.69 126.03

USES OF FUNDS
Fixed Assets
Gross Block 773.30 557.78 389.59 290.43 227.55
Accumulated
244.55 175.06 139.05 110.28 87.23
Depreciation
Less: Revaluation
0.00 0.00 0.00 0.00 0.00
Reserve
Net Block 528.75 382.72 250.54 180.15 140.32
Capital Work-in-
18.33 8.44 18.25 3.62 2.56
progress

Investments 128.59 115.04 103.19 21.64 0.03

Net Current Assets

Current Assets,
196.42 148.70 103.82 103.34 58.29
Loans & Advances
Less: Current
Liabilities & 308.61 218.68 176.25 117.06 75.17
Provisions
Total Net Current
-112.19 -69.98 -72.42 -13.72 -16.88
Assets
Miscellaneous
Expenses not written 0.00 0.00 0.00 0.00 0.00
off
TOTAL 563.49 436.22 299.55 191.69 126.03
Number of Equity
shares outstanding 6.54 6.53 6.51 6.45 6.36
(Cr.)
Bonus component in
0.00 0.00 0.00 0.00 0.00
Equity Capital
Notes:
Book Value of
Unquoted 128.59 115.04 10.93 1.15 0.00
Investments
Market Value of
0.00 0.00 92.27 20.51 0.03
Quoted Investments
Contingent liabilities 43.47 22.18 24.07 7.17 4.16

Profit and Loss

Rs. CR.
Period &
2014/03 2013/03 2012/03 2011/03 2010/03
months
INCOME
Net Operating
1,723.50 1,407.57 1,017.36 765.24 475.52
Income
EXPENSES
Material
533.52 443.64 316.43 207.13 127.04
Consumption
Manufacturing
102.33 72.67 51.68 37.34 25.70
Expenses
Personel
Expenses 336.90 269.16 196.22 135.53 80.46

Selling Expenses 0.00 0.00 73.97 137.32 83.08

Adminstrative
495.70 495.70 495.70 495.70 495.70
Expenses
Capitalised
0.00 0.00 0.00 0.00 0.00
Expenses

Cost of Sales 1,468.44 1,163.18 824.51 644.69 408.59

Reported PBDIT 255.06 244.39 192.85 120.55 66.94

Other Recuring
9.33 7.77 5.92 2.10 9.15
Income
Adjusted PBDIT 264.39 252.16 198.77 122.65 67.08

Depreciation 76.67 54.67 37.57 29.34 24.35

Other Write-offs 0.00 0.00 0.00 0.00 0.00

Adjusted PBIT 187.72 197.49 161.20 93.31 42.73

Finanical
0.00 0.06 0.00 0.34 9.15
Expenses

Adjusted PBT 187.72 197.43 161.20 92.97 33.59

Tax Charges 61.93 62.32 49.79 20.43 0.08

Adjusted PAT 125.80 135.11 111.41 72.54 33.51

Non-recurring
0.00 0.00 -6.54 -0.54 -0.32
Items
Other Non-cash
Adjustments 0.00 0.00 0.77 0.00 -0.22

REPORTED PAT 125.80 135.11 105.64 72.00 32.97

APPROPRIATIONS
Equity Dividend 0.00 0.00 0.00 0.00 0.00
Preference
0.00 0.00 0.00 0.00 0.00
Dividend
Retained
398.25 272.45 137.34 31.70 -40.30
Earnings

Yearly High Lows

Year High Low
2010 670.70 161.60
2011 1,021.80 461.00
2012 1,397.00 732.00
2013 1,389.95 928.00
2014 1,497.95 938.60
2015 1,436.95 1,296.70
Asian Paints
Study yourself the data of Asian paints and compare with
Jubiliant food. This is also a rapidly growing company.
In 2014 the stock splitted so EPS, Book Value And other
factors are very less compared to previous years.
Key Financial Ratios
2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS 12.19 109.47 99.92 80.74 37.78
CEPS 14.40 122.70 110.29 87.08 43.74
Book Value 37.54 315.08 259.36 205.93 162.35
Dividend/Share 5.30 46.00 40.00 27.00 17.50
Operating Profit /
18.53 161.31 145.94 107.69 61.92
Share
Net Operating
108.62 935.33 868.13 559.61 470.20
Income / Share
Free Reserves /
0.00 0.00 249.31 152.29 104.05
Share

Profitability Ratios
OPM 17.05 17.24 16.81 19.24 13.16
GPM 15.02 15.83 15.61 18.11 11.90
NPM 11.03 11.54 11.38 14.29 7.97
RONW 32.74 34.74 38.30 42.79 33.85

Liquidity ratios
Debt/Equity 0.01 0.01 0.06 0.04 0.05
Current Ratio 1.18 1.18 1.12 0.89 1.13
Quick Ratio 0.63 0.60 0.56 0.37 0.58
Interest Cover 74.81 54.76 53.34 56.68 39.57

Turn Over Ratios

Sales/Total
18.60 19.30 30.01 -55.13 -31.88
Assets
Sales/Fixed
5.08 4.16 4.53 5.87 4.93
Assets
Sales/Current
2.89 2.95 3.17 3.82 3.93
Assets
Miscellaneous
No of Days of
19.42 20.44 15.00 -11.29 10.97
Working Capital
CAR 0.00 0.00 0.00 0.00 0.00

Balance Sheet
Rs. CR.
Period & Months 2014/03 2013/03 2012/03 2011/03 2010/03
SOURCES OF FUNDS
Owned Funds
Equity Share Capital 95.92 95.92 95.92 95.92 95.92
Share Application
0.00 0.00 0.00 0.00 0.00
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 3,505.01 2,926.34 2,391.86 1,879.40 1,461.30
Loan Funds
Secured Loans 6.65 9.28 17.01 23.43 25.59
Unsecured Loans 32.86 37.48 151.21 40.70 40.70
TOTAL 3,640.44 3,069.02 2,656.00 2,039.45 1,623.51

USES OF FUNDS
Fixed Assets
Gross Block 2,908.10 2,803.73 1,659.51 1,611.22 1,194.39
Accumulated
895.90 701.84 650.47 554.03 486.93
Depreciation
Less: Revaluation 0.00 0.00 0.00 0.00 0.00
Reserve
Net Block 2,012.20 2,101.89 1,009.04 1,057.19 707.46
Capital Work-in-
37.95 52.55 827.30 67.32 380.72
progress

Investments 1,030.19 449.70 542.22 1,034.76 703.69

Net Current Assets

Current Assets,
3,601.37 3,044.14 2,626.85 1,729.79 1,364.85
Loans & Advances
Less: Current
Liabilities & 3,041.27 2,579.26 2,349.41 1,849.61 1,533.21
Provisions
Total Net Current
560.10 464.88 277.44 -119.82 -168.36
Assets

Miscellaneous
Expenses not written 0.00 0.00 0.00 0.00 0.00
off
TOTAL 3,640.44 3,069.02 2,656.00 2,039.45 1,623.51
Number of Equity
shares outstanding 95.92 9.59 9.59 9.59 9.59
(Cr.)
Bonus component in
93.99 93.99 93.99 93.99 93.99
Equity Capital
Notes:
Book Value of
Unquoted 362.12 235.63 222.79 632.33 155.31
Investments
Market Value of
870.91 391.03 210.08 568.57 186.79
Quoted Investments
Contingent liabilities 447.75 464.28 414.71 505.87 223.80
 Profit and Loss
Rs. CR.
Period &
2014/03 2013/03 2012/03 2011/03 2010/03
months
INCOME
Net Operating
10,418.78 8,971.70 8,327.08 6,606.02 5,367.72
Income
EXPENSES
Material
5,969.32 5,185.09 4,722.85 3,654.93 2,835.40
Consumption
Manufacturing
114.65 101.65 151.34 127.44 99.33
Expenses
Personel
482.43 404.59 343.51 302.34 262.73
Expenses
Selling Expenses 0.00 0.00 1,425.28 1,128.32 940.34
Adminstrative
2,075.11 2,075.11 2,075.11 2,075.11 2,075.11
Expenses
Capitalised
0.00 0.00 0.00 0.00 0.00
Expenses

Cost of Sales 8,641.51 7,424.43 6,927.21 5,444.75 4,334.76

Reported PBDIT 1,777.27 1,547.27 1,399.87 1,161.27 1,032.96

Other Recuring
173.66 126.15 87.33 69.85 19.10
Income
Adjusted PBDIT 1,950.93 1,673.42 1,487.20 1,231.12 1,082.65

Depreciation 212.32 126.98 99.49 94.48 60.74

Other Write-offs 0.00 0.00 0.00 0.00 0.00
Adjusted PBIT 1,738.61 1,546.44 1,387.71 1,136.64 1,021.91

Finanical
26.08 30.56 27.88 16.34 19.10
Expenses

Adjusted PBT 1,712.53 1,515.88 1,359.83 1,120.30 1,002.81

Tax Charges 533.51 465.88 406.92 351.90 336.46

Adjusted PAT 1,179.02 1,050.00 952.91 768.40 666.35

Non-recurring
-9.96 0.00 3.10 2.53 100.92
Items
Other Non-cash
0.00 0.00 2.38 4.22 7.23
Adjustments

REPORTED PAT 1,169.06 1,050.00 958.39 775.15 774.50

APPROPRIATIONS
Equity Dividend 426.35 366.94 321.45 256.83 258.98
Preference
0.00 0.00 0.00 0.00 0.00
Dividend
Retained
1,660.69 1,308.77 1,174.70 1,068.21 702.19
Earnings

Yearly High Lows

Year High Low
1990 305.00 207.50
1991 325.00 210.00
1992 515.00 255.00
1993 420.00 245.00
1994 640.00 350.00
1995 690.00 256.00
1996 480.00 250.00
1997 378.50 265.00
1998 370.00 217.50
1999 451.25 195.00
2000 501.00 255.00
2001 289.95 229.00
2002 399.00 250.10
2003 472.35 257.00
2004 352.00 245.00
2005 583.90 302.60
2006 790.00 501.10
2007 1,125.00 642.00
2008 1,319.95 830.00
2009 1,811.00 680.90
2010 3,027.00 1,715.20
2011 3,365.95 2,395.05
2012 4,494.00 2,555.90
2013 5,246.60 376.35
2014 809.25 461.00
2015 922.80 747.25
Infosys
This in another good growing company having zero debt.
Key Financial Ratios
2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS 178.40 158.75 147.50 101.13 101.58
CEPS 197.67 175.40 161.33 115.19 113.70
Book Value 736.64 627.95 518.21 426.73 384.02
Dividend/Share 63.00 42.00 47.00 25.00 23.50
Operating Profit
219.23 191.82 175.21 128.30 120.59
/ Share
Net Operating
776.00 640.24 544.28 368.40 353.75
Income / Share
Free Reserves /
0.00 0.00 0.00 378.08 305.80
Share

Profitability Ratios
OPM 28.25 29.96 32.19 34.82 34.09
GPM 25.76 27.36 29.65 31.00 30.66
NPM 21.72 23.38 25.60 26.36 27.52
RONW 24.21 25.05 26.83 25.89 34.76

Liquidity ratios
Debt/Equity 0.00 0.00 0.00 0.00 0.00
Current Ratio 3.70 4.75 4.91 4.28 4.71
Quick Ratio 3.65 4.69 4.88 4.20 4.67
Interest Cover 0.00 0.00 0.00 4,116.50 3,891.00

Turn Over Ratios

Sales/Total
1.55 1.41 1.32 1.35 1.60
Assets
Sales/Fixed
6.63 6.58 6.72 5.90 5.05
Assets
Sales/Current
1.13 1.11 1.05 1.09 1.23
Assets

Miscellaneous
No of Days of
Working 231.26 255.87 256.89 224.99 220.11
Capital
CAR 0.00 0.00 0.00 0.00 0.00

Yearly High Lows

Year High Low
1992 160.00 157.50
1993 440.00 145.00
1994 1,300.00 400.00
1995 540.00 400.00
1996 765.00 390.00
1997 2,525.00 783.00
1998 3,079.00 1,077.00
1999 14,649.00 2,300.00
2000 16,931.65 5,600.00
2001 6,988.00 2,156.00
2002 4,861.20 2,935.10
2003 5,675.00 2,420.00
2004 6,129.00 1,281.00
2005 3,039.70 1,850.00
2006 3,400.00 1,572.10
2007 2,439.00 1,511.15
2008 2,017.00 1,040.00
2009 2,614.90 1,101.00
2010 3,454.00 2,333.00
2011 3,493.95 2,169.00
2012 2,990.00 2,101.65
2013 3,575.00 2,190.00
2014 4,401.00 1,898.00
2015 2,222.00 1,914.10
Sanofi India
Key Financial Ratios
2013/12 2012/12 2010/12 2009/12 2008/12
Per Share
EPS 115.14 76.71 100.19 68.35 72.16
CEPS 155.20 115.73 108.76 75.88 80.07
Book Value 584.74 522.83 479.65 434.79 398.67
Dividend/Share 45.00 33.00 55.00 20.00 16.00
Operating Profit /
172.77 135.39 88.99 87.17 96.48
Share
Net Operating
785.42 683.02 495.82 446.04 447.81
Income / Share
Free Reserves /
0.00 0.00 423.28 387.16 342.20
Share

Profitability Ratios
OPM 21.99 19.82 17.94 19.54 21.54
GPM 16.89 14.10 16.22 17.85 19.77
NPM 14.20 10.94 19.32 14.64 15.33
RONW 17.80 14.67 16.77 16.11 19.94

Liquidity ratios
Debt/Equity 0.00 0.00 0.00 0.00 0.00
Current Ratio 2.03 2.08 3.02 3.61 3.71
Quick Ratio 1.34 1.44 2.37 2.71 2.90
Interest Cover 1,085.14 252.13 89.03 3,337.75 805.99

Turn Over Ratios

Sales/Total
3.53 3.41 3.70 1.38 1.36
Assets
Sales/Fixed
2.17 2.12 1.71 6.66 6.48
Assets
Sales/Current
1.79 1.77 1.71 0.92 0.98
Assets

Miscellaneous
No of Days of
109.35 110.30 261.49 264.44 235.56
Working Capital
CAR 0.00 0.00 0.00 0.00 0.00

Balance Sheet
Rs. CR.
Period & Months 2013/12 2012/12 2011/12 2010/12 2009/12
SOURCES OF FUNDS
Owned Funds
Equity Share Capital 23.03 23.03 23.03 23.03 23.03
Share Application
0.00 0.00 0.00 0.00 0.00
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 1,323.67 1,181.09 1,081.64 978.33 895.14
Loan Funds
Secured Loans 0.00 0.00 0.00 0.00 0.00
Unsecured Loans 0.00 0.00 0.00 0.00 0.00
TOTAL 1,346.70 1,204.12 1,104.67 1,001.36 918.17

USES OF FUNDS
Fixed Assets
Gross Block 933.14 908.88 967.92 375.50 334.57
Accumulated
234.59 209.52 230.95 204.45 189.68
Depreciation
Less: Revaluation
0.00 0.00 11.96 12.79 13.63
Reserve
Net Block 698.55 699.36 725.02 158.26 131.26
Capital Work-in-
136.20 43.47 30.23 13.30 27.14
progress

Investments 0.24 0.36 0.36 0.36 5.19

Net Current Assets

Current Assets,
1,009.80 888.12 757.81 1,239.17 1,043.35
Loans & Advances
Less: Current
Liabilities & 498.09 427.19 408.74 409.73 288.78
Provisions
Total Net Current
511.71 460.93 349.06 829.44 754.57
Assets
Miscellaneous
Expenses not written 0.00 0.00 0.00 0.00 0.00
off
TOTAL 1,346.70 1,204.12 1,104.67 1,001.36 918.17
Number of Equity
shares outstanding 2.30 2.30 2.30 2.30 2.30
(Cr.)
Bonus component in
18.38 18.38 18.38 18.38 18.38
Equity Capital
Notes:
Book Value of
Unquoted 0.24 0.24 0.24 0.24 5.06
Investments
Market Value of
0.00 32.08 13.36 19.84 8.76
Quoted Investments
Contingent liabilities 296.19 143.32 169.27 135.38 157.67

Profit and Loss

Rs. CR.
Period &
2013/12 2012/12 2011/12 2010/12 2009/12
months
INCOME
Net Operating
1,808.86 1,573.04 1,293.09 1,141.91 1,027.27
Income
EXPENSES
Material
822.21 738.19 619.15 540.34 484.90
Consumption
Manufacturing
41.83 34.15 59.76 57.52 49.83
Expenses
Personel 242.13 213.60 176.42 163.25 143.95
Expenses

Selling Expenses 0.00 0.00 141.74 124.81 96.19

Adminstrative
304.79 304.79 304.79 304.79 304.79
Expenses
Capitalised
0.00 0.00 0.00 0.00 0.00
Expenses

Cost of Sales 1,410.96 1,261.23 1,050.71 936.95 826.52

Reported PBDIT 397.90 311.81 242.38 204.96 200.75

Other Recuring
57.86 41.17 68.60 52.36 0.07
Income
Adjusted PBDIT 455.76 352.98 310.99 257.32 247.99

Depreciation 92.26 89.87 31.15 19.74 17.34

Other Write-offs 0.00 0.00 0.00 0.00 0.00

Adjusted PBIT 363.50 263.11 279.84 237.58 230.65

Finanical
0.42 1.40 0.42 2.89 0.07
Expenses

Adjusted PBT 363.08 261.71 279.42 234.69 230.58

Tax Charges 123.28 85.05 92.80 66.72 82.59

Adjusted PAT 239.80 176.66 186.63 167.97 147.99

Non-recurring
25.38 0.00 -0.24 73.06 1.93
Items
Other Non-cash
0.00 0.00 4.79 -10.28 7.50
Adjustments

REPORTED PAT 265.18 176.66 191.19 230.75 157.41

APPROPRIATIONS
Equity Dividend 85.52 63.68 64.13 126.67 46.06
Preference
0.00 0.00 0.00 0.00 0.00
Dividend
Retained
1,074.86 943.31 873.64 781.53 714.08
Earnings

Yearly High Lows

Year High Low
1990 2,375.00 2,050.00
1991 3,500.00 1,790.00
1992 800.00 280.00
1993 475.00 150.00
1994 1,100.00 360.00
1995 400.00 236.00
1996 360.00 218.00
1997 462.50 285.75
1998 530.00 290.00
1999 1,340.00 386.25
2000 1,302.25 357.00
2001 534.00 362.30
2002 451.00 266.00
2003 710.00 235.05
2004 1,400.00 625.00
2005 1,725.00 1,175.00
2006 2,140.00 1,241.00
2007 1,500.00 960.00
2008 1,190.00 662.00
2009 1,735.00 803.15
2010 2,059.00 1,530.00
2011 2,424.00 1,770.00
2012 2,429.95 2,002.10
2013 2,940.00 2,180.00
2014 3,800.00 2,500.00
2015 3,648.95 3,397.25

5
“A great business at a fair price is
superior to a fair business at a great
price”- Carlie Munger
Identification of Average quality
Stocks
Crompton Greaves
EPS is erratic due to competition in industry
Book value is increased by only 2 fold in 5 years
Reported net profit is erratic not increased over the years though
there is no increase in debt
RONW is continually decreasing
Contingent liabilities is increased and it is about 50% of reserve &
Surplus and thrice that of net profit.
So erratic share price like cyclical stocks.
Key Financial Ratios
 2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS 8.31 6.95 7.87 9.62 10.83
CEPS 9.74 8.07 9.28 10.43 12.07
Book Value 53.55 47.65 42.10 35.70 27.28
Dividend/Share 1.20 1.20 1.40 2.20 2.00
Operating Profit / Share 10.62 9.27 11.23 13.38 20.60
Net Operating Income /
119.50 111.23 101.10 84.11 127.64
Share
Free Reserves / Share 0.00 0.00 0.00 24.98 30.95

Profitability Ratios
OPM 8.89 8.33 11.11 15.90 16.14
GPM 7.69 7.32 9.71 14.94 15.17
NPM 6.79 6.16 7.69 11.32 8.40
RONW 15.52 14.58 18.69 31.37 41.60

Liquidity ratios
Debt/Equity 0.01 0.00 0.00 0.01 0.04
Current Ratio 1.79 1.56 1.52 1.28 1.28
Quick Ratio 1.54 1.31 1.28 1.12 1.12
Interest Cover 21.17 27.28 28.74 45.72 28.07

Turn Over Ratios

Sales/Total Assets 4.31 5.75 6.65 9.93 10.06
Sales/Fixed Assets 9.10 9.20 9.60 6.70 9.77
Sales/Current Assets 1.90 2.07 2.28 2.29 2.19

Miscellaneous
No of Days of Working
84.97 63.44 54.49 35.80 38.96
Capital
CAR 0.00 0.00 0.00 0.00 0.00

Balance Sheet
Rs. CR.
Period & Months 2014/03 2013/03 2012/03 2011/03 2010/03
SOURCES OF FUNDS
Owned Funds
Equity Share Capital 125.35 128.30 128.30 128.30 128.30
Share Application
0.00 0.00 0.00 0.00 0.00
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 3,230.72 2,928.55 2,572.58 2,161.51 1,622.00
Loan Funds
Secured Loans 29.99 12.93 0.20 8.23 13.82
Unsecured Loans 0.54 0.75 2.06 5.17 12.96
TOTAL 3,386.60 3,070.53 2,703.14 2,303.21 1,777.08

USES OF FUNDS
Fixed Assets
Gross Block 1,521.55 1,395.37 1,310.32 1,604.18 1,171.40
Accumulated
766.65 734.88 714.16 728.88 637.59
Depreciation
Less: Revaluation
0.00 0.00 0.00 14.27 14.42
Reserve
Net Block 754.90 660.49 596.16 861.03 519.39
Capital Work-in-
67.73 114.77 79.32 47.69 33.03
progress

Investments 826.34 1,055.04 1,052.50 781.64 688.06

Net Current Assets

Current Assets,
3,937.48 3,439.32 2,842.51 2,654.34 2,467.13
Loans & Advances
Less: Current
Liabilities & 2,199.85 2,199.09 1,867.35 2,041.49 1,930.53
Provisions
Total Net Current 1,737.63 1,240.23 975.16 612.85 536.60
Assets

Miscellaneous
Expenses not written 0.00 0.00 0.00 0.00 0.00
off
TOTAL 3,386.60 3,070.53 2,703.14 2,303.21 1,777.08
Number of Equity
shares outstanding 62.67 64.15 64.15 64.15 64.15
(Cr.)
Bonus component in
90.01 92.13 92.13 92.13 92.13
Equity Capital
Notes:
Book Value of
Unquoted 805.27 554.12 551.10 378.53 387.54
Investments
Market Value of
21.16 500.92 502.04 405.13 302.97
Quoted Investments
Contingent liabilities 1,676.17 1,422.59 326.08 278.74 362.56

Profit and Loss

Rs. CR.
Period &
2014/03 2013/03 2012/03 2011/03 2010/03
months
INCOME
Net Operating
7,489.57 7,135.30 6,485.38 6,086.13 5,395.59
Income
EXPENSES
Material
5,425.39 5,377.83 4,764.49 4,026.55 3,485.15
Consumption
Manufacturing 268.63 47.30 42.66 281.16 231.39
Expenses
Personel
476.36 411.17 363.59 310.17 255.79
Expenses
Selling Expenses 0.00 0.00 0.00 312.74 318.50
Adminstrative
653.35 653.35 653.35 653.35 653.35
Expenses
Capitalised
0.00 0.00 0.00 -6.20 -0.04
Expenses

Cost of Sales 6,823.73 6,540.69 5,764.70 5,153.22 4,537.23

Reported PBDIT 665.84 594.61 720.68 932.91 858.36

Other Recuring
175.72 98.68 74.39 36.73 20.00
Income
Adjusted PBDIT 841.56 693.29 795.07 969.64 914.35

Depreciation 89.35 71.86 90.71 80.89 51.90

Other Write-offs 0.00 0.00 0.00 0.00 0.00

Adjusted PBIT 752.21 621.43 704.36 888.75 862.45

Finanical
39.76 25.41 27.66 20.69 20.00
Expenses

Adjusted PBT 712.45 596.02 676.70 868.06 842.45

Tax Charges 191.36 150.18 171.84 232.68 293.30

Adjusted PAT 521.09 445.84 504.86 635.38 549.15

Non-recurring
0.00 0.00 0.00 58.95 68.19
Items
Other Non-cash
Adjustments 0.00 0.00 0.00 0.00 0.00

REPORTED PAT 521.09 445.84 504.86 694.33 617.34

APPROPRIATIONS
Equity Dividend 62.53 64.29 75.24 117.84 80.65
Preference
0.00 0.00 0.00 0.00 0.00
Dividend
Retained
2,816.14 2,428.07 2,141.78 1,833.45 1,334.41
Earnings

Yearly High Lows

Year High Low
1990 1,800.00 900.00
1991 1,450.00 650.00
1992 3,250.00 900.00
1993 1,500.00 650.00
1994 2,200.00 140.00
1995 220.00 140.00
1996 262.50 96.00
1997 130.00 16.50
1998 63.50 22.00
1999 93.00 25.00
2000 60.45 20.30
2001 37.40 18.00
2002 60.40 19.60
2003 183.00 44.10
2004 303.00 128.30
2005 816.90 265.00
2006 1,225.00 180.00
2007 454.00 172.05
2008 409.80 106.25
2009 428.00 99.70
2010 458.35 219.10
2011 314.15 107.15
2012 167.00 102.40
2013 136.80 71.70
2014 231.00 101.65
2015 197.35 174.05

6
“Going into debt usually isn’t
caused by a lack of money, it’s
 caused by a lack of vision”
-someone

Identification of cyclical stocks

Tata Steel
EPS is erratic due to changes in economy and competition.
Book value is only slightly increasing.
Dividends is erratic
Reserve & surplus is only two fold increased over a period of 5
years.
Debt is constant not deteriorating the company.
Investment is only slightly increased.
Contingent liabilities is slightly increasing , it is twice the net profit
but much less than reserve & surplus.
The graph of Net Profit is near about flat. It is neither improving
nor deteriorating.
The result of all this is erratic share price moving with economic
ups and downs.

key Financial Ratios

2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS 66.02 52.13 68.95 56.37 69.70
CEPS 85.88 69.02 80.80 68.58 83.02
Book Value 629.60 568.46 541.81 487.55 418.94
Dividend/Share 10.00 8.00 12.00 8.00 16.00
Operating Profit /
131.97 114.56 118.79 100.38 125.60
Share
Net Operating
429.47 393.32 349.39 281.11 333.27
Income / Share
Free Reserves /
0.00 0.00 0.00 392.98 309.18
Share

Profitability Ratios
OPM 30.72 29.12 33.99 35.70 37.68
GPM 26.10 24.83 30.60 31.36 33.69
NPM 15.08 12.94 19.23 19.96 21.09
RONW 10.71 10.39 11.75 11.00 19.87

Liquidity ratios
Debt/Equity 0.42 0.46 0.45 0.67 1.34
Current Ratio 0.57 0.86 0.92 1.12 0.97
Quick Ratio 0.31 0.60 0.68 0.76 0.57
Interest Cover 7.47 6.41 6.45 5.00 6.37

Turn Over Ratios

Sales/Total
-4.10 -13.20 -24.38 3.23 17.54
Assets
Sales/Fixed
0.98 1.14 1.24 1.69 1.56
Assets
Sales/Current
3.07 2.14 1.84 1.15 1.86
Assets

Miscellaneous
No of Days of
-75.30 -17.74 -10.22 20.53 -4.56
Working Capital
CAR 0.00 0.00 0.00 0.00 0.00

Balance Sheet
Rs. CR.
Period & Months 2014/03 2013/03 2012/03 2011/03 2010/03
SOURCES OF FUNDS
Owned Funds
Equity Share
971.41 971.41 971.41 959.41 887.41
Capital
Share Application
0.00 0.00 0.00 178.20 0.00
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves &
60,176.58 54,238.27 51,649.95 45,807.02 36,281.34
Surplus
Loan Funds
Secured Loans 4,400.55 4,311.02 4,190.47 3,509.18 2,259.32
Unsecured Loans 21,726.23 21,600.49 19,503.35 22,639.00 22,979.88
TOTAL 87,274.77 81,121.19 76,315.18 73,092.81 62,407.95

USES OF FUNDS
Fixed Assets
Gross Block 39,019.72 38,056.28 23,081.58 22,497.83 22,306.07
Accumulated
14,753.97 13,181.23 11,715.32 10,692.73 10,143.63
Depreciation
Less: Revaluation
0.00 0.00 0.00 0.00 0.00
Reserve
Net Block 24,265.75 24,875.05 11,366.26 11,805.10 12,162.44
Capital Work-in-
18,509.40 8,722.29 16,058.49 5,612.28 3,843.59
progress

Investments 54,661.80 50,418.80 50,282.52 46,564.94 44,979.67

Net Current Assets

Current Assets,
13,603.46 17,860.79 18,483.79 25,569.40 13,425.27
Loans & Advances
Less: Current
Liabilities & 23,765.64 20,755.74 19,875.88 16,458.91 12,003.02
Provisions
Total Net Current
-10,162.18 -2,894.95 -1,392.09 9,110.49 1,422.25
Assets

Miscellaneous
Expenses not 0.00 0.00 0.00 0.00 0.00
written off
TOTAL 87,274.77 81,121.19 76,315.18 73,092.81 62,407.95
Number of Equity
shares outstanding 97.12 97.12 97.12 95.92 88.72
(Cr.)
Bonus component
252.97 252.97 252.97 252.97 252.97
in Equity Capital
Notes:
Book Value of
Unquoted 53,615.18 49,434.56 49,617.55 45,899.97 44,243.24
Investments
Market Value of
Quoted 8,390.72 4,904.96 4,911.43 4,914.95 4,397.79
Investments
Contingent
17,398.71 18,999.02 18,039.57 14,288.41 13,184.61
liabilities

Profit and Loss

Rs. CR.
Period &
2014/03 2013/03 2012/03 2011/03 2010/03
months
INCOME
Net Operating
41,711.03 38,199.43 33,933.46 29,396.35 24,940.65
Income
EXPENSES
Material
12,486.39 12,017.03 9,696.65 7,667.82 8,491.42
Consumption
Manufacturing
2,772.31 2,510.17 1,990.16 1,558.49 3,803.33
Expenses
Personel
3,673.08 3,608.52 3,047.26 2,837.46 2,361.48
Expenses
Selling Expenses 0.00 0.00 0.00 0.00 82.17
Adminstrative
9,962.35 9,962.35 9,962.35 9,962.35 9,962.35
Expenses
Capitalised
0.00 0.00 0.00 0.00 -326.11
Expenses

Cost of Sales 28,894.13 27,073.19 22,396.69 17,914.06 16,035.06

Reported PBDIT 12,816.90 11,126.24 11,536.77 11,482.29 8,905.59

Other Recuring 787.64 902.04 886.43 528.36 1,848.19
Income
Adjusted PBDIT 13,604.54 12,028.28 12,423.20 12,010.65 9,237.18

Depreciation 1,928.70 1,640.38 1,151.44 1,146.19 1,083.18

Other Write-offs 0.00 0.00 0.00 0.00 0.00

Adjusted PBIT 11,675.84 10,387.90 11,271.76 10,864.46 8,154.00

Finanical
1,820.58 1,876.77 1,925.42 1,735.70 1,848.19
Expenses

Adjusted PBT 9,855.26 8,511.13 9,346.34 9,128.76 6,305.81

Tax Charges 3,301.31 2,773.63 3,160.93 2,911.16 2,168.50

Adjusted PAT 6,553.95 5,737.50 6,185.41 6,217.60 4,137.31

Non-recurring
-141.76 -674.53 511.01 648.09 909.49
Items
Other Non-cash
0.00 0.00 0.00 0.00 0.00
Adjustments

REPORTED PAT 6,412.19 5,062.97 6,696.42 6,865.69 5,046.80

APPROPRIATIONS
Equity Dividend 905.02 648.24 983.89 994.35 709.77
Preference
0.00 0.00 0.00 0.00 45.88
Dividend
Retained
30,430.41 25,431.04 22,169.55 18,487.28 13,677.33
Earnings
 Yearly High Lows
Year High Low
1990 275.00 103.25
1991 256.00 107.00
1992 692.50 202.50
1993 342.50 123.75
1994 338.75 185.00
1995 263.00 196.50
1996 267.75 145.75
1997 230.50 116.50
1998 168.50 68.50
1999 175.50 74.50
2000 183.35 89.00
2001 168.90 66.90
2002 147.60 85.50
2003 445.35 125.65
2004 466.45 231.20
2005 446.50 329.05
2006 679.00 341.35
2007 1,048.80 399.00
2008 952.00 146.35
2009 627.60 148.65
2010 737.00 448.65
2011 713.80 334.05
2012 500.90 332.35
2013 448.10 195.40
2014 578.60 332.20
2015 421.20 372.55
 7
“If stock market experts were so
expert, they would be buying stocks,
not selling advice”
-Norman Augustine
Identification od Stocks that may
fail
MTNL
EPS & Book value deteriorating.
Debt is continually increasing and is more than reserve & surplus.
Increased contingent liabilities, it is more than reserve & surplus.
No Value remained in company.
Negligible chance of recovery.
Share value is continually decreasing
Key Financial Ratios
2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS 124.21 -84.46 -65.23 -48.63 2.67
CEPS 142.71 -61.02 -41.49 -20.70 13.76
Book Value 80.01 -44.20 40.27 105.50 149.97
Dividend/Share 0.00 0.00 0.00 0.00 1.00
Operating Profit / Share -14.65 -46.51 -29.37 -46.66 5.87
Net Operating Income /
53.84 54.42 53.54 58.06 70.75
Share
Free Reserves / Share 0.00 0.00 0.00 129.13 164.94

Profitability Ratios
OPM -27.20 -85.45 -54.85 -80.36 8.29
GPM -61.57 -128.53 -99.21 -128.47 -7.38
NPM 206.61 -143.26 -113.39 -61.40 3.23
RONW -71.02 0.00 -159.45 -31.99 2.57

Liquidity ratios
Debt/Equity 2.80 0.00 3.80 0.00 0.00
Current Ratio 1.89 0.58 0.66 0.65 1.34
Quick Ratio 1.88 0.58 0.65 0.64 1.25
Interest Cover -0.37 -2.24 -1.69 -145.72 101.50

Turn Over Ratios

Sales/Total Assets 0.46 -0.47 -0.68 -0.95 -0.42
Sales/Fixed Assets 0.29 0.22 0.20 0.21 0.21
Sales/Current Assets 0.22 0.33 0.35 0.35 0.22

Miscellaneous
No of Days of Working
298.50 -1,205.45 -916.00 -865.52 343.12
Capital
CAR 0.00 0.00 0.00 0.00 0.00

Balance Sheet
Rs. CR.
Period & Months 2014/03 2013/03 2012/03 2011/03 2010/03
SOURCES OF FUNDS
Owned Funds
Equity Share
630.00 630.00 630.00 630.00 630.00
Capital
Share Application
0.00 0.00 0.00 0.00 0.00
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 4,410.71 -3,414.43 1,906.70 6,016.48 8,818.40
Loan Funds
Secured Loans 4,365.00 5,932.35 7,000.00 2,553.97 0.00
Unsecured Loans 9,755.44 5,606.34 2,647.49 4,901.71 0.00
TOTAL 19,161.15 8,754.26 12,184.19 14,102.16 9,448.40

USES OF FUNDS
Fixed Assets
Gross Block 24,808.97 27,700.62 27,784.86 29,377.98 28,275.77
Accumulated
13,588.02 12,801.43 12,024.68 13,054.95 11,720.79
Depreciation
Less: Revaluation
0.00 0.00 0.00 0.00 0.00
Reserve
Net Block 11,220.95 14,899.18 15,760.18 16,323.03 16,554.98
Capital Work-in-
382.57 932.24 897.00 1,170.25 1,177.96
progress

Investments 201.98 221.98 491.98 494.66 509.54

Net Current Assets

Current Assets,
15,630.79 10,297.10 9,757.99 10,366.61 16,565.54
Loans & Advances
Less: Current
Liabilities & 8,275.14 17,596.25 14,722.95 14,252.38 25,359.61
Provisions
Total Net Current
7,355.65 -7,299.14 -4,964.96 -3,885.78 -8,794.08
Assets

Miscellaneous
Expenses not 0.00 0.00 0.00 0.00 0.00
written off
TOTAL 19,161.15 8,754.26 12,184.19 14,102.16 9,448.40
Number of Equity
shares outstanding 63.00 63.00 63.00 63.00 63.00
(Cr.)
Bonus component 0.00 0.00 0.00 0.00 0.00
in Equity Capital
Notes:
Book Value of
Unquoted 201.98 221.98 491.98 394.66 509.54
Investments
Market Value of
0.00 0.00 0.00 0.00 0.00
Quoted Investments
Contingent
6,288.82 6,808.10 3,393.68 3,378.52 4,607.59
liabilities

Profit and Loss

Rs. CR.
Period &
2014/03 2013/03 2012/03 2011/03 2010/03
months
INCOME
Net Operating
3,391.74 3,428.66 3,373.25 3,675.51 3,657.75
Income
EXPENSES
Material
0.00 0.00 0.00 0.00 0.00
Consumption
Manufacturing
262.74 244.71 213.53 322.35 322.01
Expenses
Personel
2,615.40 4,901.37 3,711.56 3,258.55 4,869.48
Expenses
Selling Expenses 0.00 0.00 0.00 76.75 120.66
Adminstrative
1,436.38 1,436.38 1,436.38 1,436.38 1,436.38
Expenses
Capitalised
0.00 0.00 0.00 -38.41 -36.61
Expenses
Cost of Sales 4,314.52 6,358.62 5,223.81 4,831.42 6,597.44

Reported PBDIT -922.78 -2,929.96 -1,850.55 -1,155.91 -2,939.69

Other Recuring
395.64 285.42 251.16 259.62 11.03
Income
Adjusted PBDIT -527.15 -2,644.54 -1,599.39 -896.29 -1,607.87

Depreciation 1,165.74 1,476.94 1,496.22 1,410.15 1,759.49

Other Write-offs 0.00 0.00 0.00 0.00 0.00

Adjusted PBIT -1,692.89 -4,121.48 -3,095.61 -2,306.44 -3,367.36

Finanical
1,390.15 1,180.26 949.16 494.56 11.03
Expenses

Adjusted PBT -3,083.04 -5,301.74 -4,044.77 -2,800.99 -3,378.40

Tax Charges 497.18 0.00 0.00 0.19 -355.11

Adjusted PAT -3,580.22 -5,301.74 -4,044.77 -2,801.19 -3,023.29

Non-recurring
11,620.93 0.00 0.00 -27.31 -97.27
Items
Other Non-cash
-215.58 -19.38 -65.02 26.58 509.58
Adjustments

REPORTED PAT 7,825.13 -5,321.12 -4,109.78 -2,801.92 -3,063.79

APPROPRIATIONS
Equity Dividend 0.00 0.00 0.00 0.00 0.00
Preference
Dividend 0.00 0.00 0.00 0.00 0.00
Retained
-6,453.80 -14,328.06 -9,025.92 -2,801.92 -2,610.97
Earnings

Yearly High Lows

Year High Low
1992 100.00 100.00
1993 265.00 60.00
1994 330.00 160.00
1995 198.00 143.00
1996 274.00 156.00
1997 322.00 210.00
1998 284.00 163.50
1999 245.90 134.10
2000 390.00 156.25
2001 213.15 99.25
2002 177.00 89.20
2003 141.00 81.05
2004 166.45 92.90
2005 170.05 108.00
2006 225.75 124.00
2007 199.80 129.00
2008 219.45 51.75
2009 123.70 59.25
2010 92.80 49.55
2011 58.45 22.50
2012 45.25 20.70
2013 28.70 9.71
2014 39.10 13.76
2015 29.10 26.50

National Fertilizers
Key Financial Ratios
2014/03 2013/03 2012/03 2010/03 2009/03
Per Share
EPS -1.83 -3.48 2.58 3.50 1.99
CEPS 0.80 -1.08 4.44 5.50 4.12
Book Value 30.45 32.28 35.76 34.09 32.25
Dividend/Share 0.00 0.00 0.78 1.05 0.60
Operating Profit /
2.58 0.76 6.20 6.51 5.32
Share
Net Operating
163.42 136.99 148.91 103.78 104.51
Income / Share
Free Reserves /
0.00 0.00 0.00 22.20 19.93
Share
Profitability Ratios
OPM 1.57 0.55 4.16 6.27 5.09
GPM -0.03 -1.19 2.91 4.43 3.21
NPM -1.11 -2.52 1.72 3.33 1.87
RONW -6.00 -7.15 7.22 10.76 8.85

Liquidity ratios
Debt/Equity 6.83 4.57 1.70 0.25 0.18
Current Ratio 4.42 2.75 1.92 2.22 1.49
Quick Ratio 4.18 2.57 1.61 1.81 1.10
Interest Cover 0.84 0.57 5.16 25.89 7.49

Turn Over Ratios

Sales/Total
1.14 1.69 4.76 5.60 4.36
Assets
Sales/Fixed
1.71 1.38 2.28 4.63 7.33
Assets
Sales/Current
0.89 1.08 2.28 2.67 2.39
Assets

Miscellaneous
No of Days of
144.69 81.58 80.19 82.62 36.74
Working Capital
CAR 0.00 0.00 0.00 0.00 0.00
 Balance Sheet
Rs. CR.
Period & Months 2014/03 2013/03 2012/03 2011/03 2010/03
SOURCES OF FUNDS
Owned Funds
Equity Share Capital 490.58 490.58 490.58 490.58 490.58
Share Application
0.00 0.00 0.00 0.00 0.00
Money
Preferential Share
0.00 0.00 0.00 0.00 0.00
Capital
Reserves & Surplus 1,003.41 1,093.12 1,263.85 1,181.60 1,091.56
Loan Funds
Secured Loans 9,933.15 6,911.87 2,603.67 493.84 233.16
Unsecured Loans 275.06 328.21 380.96 119.22 170.00
TOTAL 11,702.20 8,823.78 4,739.06 2,285.24 1,985.30

USES OF FUNDS
Fixed Assets
Gross Block 7,158.91 5,700.66 2,943.01 2,928.19 2,924.04
Accumulated
2,476.67 2,200.14 2,393.39 2,330.53 2,258.24
Depreciation
Less: Revaluation
0.00 0.00 0.00 0.00 0.00
Reserve
Net Block 4,682.24 3,500.52 549.62 597.66 665.80
Capital Work-in-
13.88 1,358.45 2,653.38 654.15 29.20
progress

Investments 0.03 0.03 0.03 0.00 121.80

Net Current Assets
Current Assets,
9,056.10 6,226.40 3,206.63 2,171.05 2,129.62
Loans & Advances
Less: Current
Liabilities & 2,050.05 2,261.62 1,670.60 1,137.62 961.12
Provisions
Total Net Current
7,006.05 3,964.78 1,536.03 1,033.43 1,168.50
Assets

Miscellaneous
Expenses not written 0.00 0.00 0.00 0.00 0.00
off
TOTAL 11,702.20 8,823.78 4,739.06 2,285.24 1,985.30
Number of Equity
shares outstanding 49.06 49.06 49.06 49.06 49.06
(Cr.)
Bonus component in
0.00 0.00 0.00 0.00 0.00
Equity Capital
Notes:
Book Value of
Unquoted 0.18 0.03 0.18 0.00 121.80
Investments
Market Value of
0.00 0.00 0.00 0.00 0.00
Quoted Investments
Contingent liabilities 544.67 736.09 2,270.23 3,477.87 3,739.76

Profit and Loss

Rs. CR.
Period &
2014/03 2013/03 2012/03 2011/03 2010/03
months
INCOME
Net Operating 8,017.03 6,720.23 7,305.29 5,790.40 5,091.34
Income
EXPENSES
Material
4,456.87 4,274.72 4,491.72 3,467.41 2,952.64
Consumption
Manufacturing
2,801.69 1,773.63 1,973.24 1,310.14 1,139.08
Expenses
Personel
417.42 417.89 407.83 386.96 349.52
Expenses
Selling Expenses 0.00 0.00 0.00 251.62 236.92
Adminstrative
214.44 214.44 214.44 214.44 214.44
Expenses
Capitalised
0.00 0.00 0.00 0.00 0.00
Expenses

Cost of Sales 7,890.42 6,682.66 7,001.00 5,524.77 4,772.01

Reported PBDIT 126.61 37.57 304.29 265.63 319.33

Other Recuring
45.29 36.62 37.37 40.36 14.36
Income
Adjusted PBDIT 171.90 74.19 341.66 305.99 371.75

Depreciation 129.17 117.67 91.22 88.90 93.75

Other Write-offs 0.00 0.00 0.00 0.00 4.62

Adjusted PBIT 42.73 -43.48 250.44 217.09 273.38

Finanical
203.89 129.73 66.24 12.58 14.36
Expenses

Adjusted PBT -161.16 -173.21 184.20 204.51 259.02

Tax Charges -71.45 -59.89 57.47 65.35 88.65

Adjusted PAT -89.71 -113.32 126.73 139.16 170.37

Non-recurring
0.00 -57.41 0.00 -4.37 -1.66
Items
Other Non-cash
0.00 0.00 0.00 3.71 2.80
Adjustments

REPORTED PAT -89.71 -170.73 126.73 138.50 171.51

APPROPRIATIONS
Equity Dividend 0.00 0.00 32.06 34.94 51.51
Preference
0.00 0.00 0.00 0.00 0.00
Dividend
Retained
653.01 742.72 957.43 889.58 809.93
Earnings

Yearly High Lows

Year High Low
1997 13.00 10.00
1998 27.25 27.25
1999 24.00 18.00
2000 17.00 5.50
2001 11.70 3.30
2002 47.00 6.10
2003 83.50 26.00
2004 70.00 28.40
2005 52.80 30.15
2006 50.50 27.00
2007 100.00 26.10
2008 112.55 21.10
2009 86.40 23.25
2010 149.25 60.00
2011 121.70 43.00
2012 96.50 51.50
2013 79.75 17.80
2014 48.00 21.80
2015 40.70 36.25

8
“Investing is important but get debt –
free first,That’s what frees up your
 income so you can win”

Why zero debt or low debt company

is the best investment
Debt is necessary for a lot of companies for
its business operations and expansion but too
much debt is harmful as maximum earnings
goes towards paying the interest and it harms
the growth of the company.
There are many business having a large debt
and gone towards bankruptcy. While there are
few business having less than 20 % debt of
there asset and performing excellently. Few
business having zero debt are performing very
well and there is no danger of interest rate hike
by federal reserve. And also these business
can’t go towards bankruptcy so very safe.
NMDC, Cairn India, Infosys and much more
zero debt companies are performing very nice
business and also gives a good dividend.
Instead of making fix deposit in banks
investing in such companies at very low price
is a good option for people who wants safety.
Investing in small cap and penny stocks
having very low debt gives multibagger return
over long term.
 9
“The person who risks nothing does
nothing”

Safest portfolio for Low Risk People

Considering normal life of a person 100 years
whatever his age he should invest that percent
amount in bank and remaining in stocks.
Suppose a person having age of 25 he should
invest 25% in bank deposit and 75 % in stocks.
As age increases risk taking to be decreased.
A common man who want maximum safety
should invest like this:
40% in Cyclical stock (Debt free companies)
40% in midcap (very low debt)
20% in small cap ( very strong balance sheet)
Within a period of three years cyclical stock
can double the money so the amount invested
by him/her easily recovered and investment in
midcap and smallcap will give him good return
over the long term.
 10
“Great achievements involve great
risks”
 High-risk, High return portfolio
Young man like me want high risk high return
portfolio so as to take good growth over the
years. I recommend investment in
20% in Cyclical stock (Debt free companies)
20% in midcap (strong balance sheet)
50% in Small cap (Growing companies with
strong balance sheet)
10% in penny stocks (Growing companies
whose stock has fallen due to problems but the
problem is solvable)
This 40% investment in cyclical stocks and
mid cap will give me growth over short term
and the profit will be utilized for rebalancing
small cap and penny stocks when these stocks
fall again. Holding the 60% small cap and
penny stocks will ge me a large growth over
the years.
In short term, this type of portfolio may lose
near about 70% market capitalization in
recession but over the years (about 10 years) it
will give me more than 10-20 fold returns.
When I select 20 smallcap companies with
strong balance sheet atleast 1 company will
give me 20 times return over a period of 10
years and the initial investment amount will
be recovered and 19 companies will be free of
cost to me. This is billionare investors secret
(Ex- Rakesh jhunjhunwala, Peter Lynch)
I am not saying that all the stocks to be hold
for more than 10 years. If the business is going
well and there is addition of value then hold it
tight. But when the current stock price is not
supported by fundamentals book the profit and
reinvest in another good stock or rebalance the
portfolio. Also when there is excellent
opportunity in another stock for buying it a
stock with good profit and having less growth
rate can be sold.
You must make a separate file for it
mentioning the detail note about rebalancing ,
selling and expected growth.
 11
“Being in control of your finances is
a great stress reliever”
Debt- Free Companies in India
CRISIL Ltd.
Vardhman Holdings Limited
NESCO Ltd.
Colgate-Palmolive (India) Limited
IST Ltd.
Maharashtra Scooters Ltd.
SQS India BFSI Ltd
Oracle Financial Services Software Ltd.
Wabco India Ltd
CMC Limited (Parent)
Nahar Capital & Financial Services Ltd.
Balmer Lawrie Investments Ltd.
Coral India Finance & Housing Ltd
Cummins India Ltd (Parent)
Tata Elxsi Limited
Gillette India Limited
Zydus Wellness Ltd
Sanofi India Ltd
WIM Plast Ltd
Bajrang Finance Ltd
BAMPSL Securities Ltd
Bayer CropScience Ltd
Akzo Nobel India Ltd
Atul Auto Ltd
Gujarat Mineral Development Corporation
Castrol India Limited
TTK Prestige Limited (Parent)
Satkar Finlease Ltd
National Aluminium Company Limited
FAG Bearings India Limited
De Nora India Ltd
ABM Knowledgeware Ltd
Atlanta Infrastructure and Finance Ltd
VST Tillers Tractors Limited
Goldcrest Corporation Ltd
Standard Batteries Limited
G M Breweries Ltd
Ingersoll Rand India Limited
Balaji Telefilms Limited (Parent)
Swagruha Infrastructure Ltd
Monsanto India Limited
Entertainment Network (India) Limited
Multibase India Ltd
iGate Computer Systems Ltd
Vesuvius India Ltd
IL & FS Investment Managers Ltd
Honda Siel Power Products Limited
National Building Construction Corp
Summit Securities Ltd
Whirlpool Of India Ltd.
Novartis India Limited
Panasonic Carbon India Co Ltd
Divyashakti Granites Ltd
Sinclairs Hotels Limited
Yantra Natural Resources Ltd
Rubfila International Ltd
Tavernier Resources Ltd
Sandur Manganese & Iron Ores Ltd.
Indian Toners and Developers Ltd
Selan Exploration Technology Ltd.
ACC Ltd
Ultramarine & Pigments Ltd.
Anuh Pharma Ltd
Trigyn Technologies Ltd
Danlaw Technologies India Limited
Ifb Agro Industries Ltd
Polaris Consulting & Services Ltd
Gandhi Special Tubes Ltd
Cni Research Ltd
Integrated Financial Services Ltd
Wallfort Financial Services Ltd
Hercules Hoists Ltd.
ALSTOM India Ltd
Vedvaag Systems Ltd
Kennametal India Limited
Anand Projects Ltd
Elegant Marbles & Granite Industries Ltd
Sawaca Business Machines Ltd
Patidar Buildcon Ltd
Jmd Telefilms Industries Ltd
Mount Everest Mineral Water Ltd.
Hasti Finance Ltd
Tainwala Chemicals&Plastics (India) Ltd
Mindteck India Ltd
Shree Hari Chemicals Export Ltd
Polychem Ltd
Tinplate Company of India Ltd
Ador Welding Ltd.
Fortis Malar Hospitals Ltd
Panasonic Energy India Co Ltd
Kirloskar Pneumatic Company Ltd
Caprihans India Limited
UP Hotels Ltd.
Bimetal Bearings Limited
India Gelatine & Chemicals Ltd.
Dolat Investments Ltd
Tyroon Tea Co Ltd
Chandni Textiles Engineering Indstrs Ltd
DB International Stock Brokers Ltd
ECE Industries Ltd
JSW Holdings Ltd
Info Edge India Ltd
Just Dial Ltd
Eclerx Services Ltd
NMDC Limited
Kalyani Investment Co Ltd
Zee Entertainment Enterprises Limited
Procter & Gamble Hygiene & Health Care
 12
“I think you have to learn that there’s
a company behind every stock, and
there’s only one real reason why
stocks go up. Companies go from
doing poorly to doing well or small
companies grow to large companies”
-Peter Lynch
 Investing in Penny stocks
A penny stock trades at a very low price,
usually below Rs 5-20, or is issued by a
company whose market capitalisation is less
than Rs 100 crore. The term originated in the
US and was used for stocks below $5. About
25 per cent stocks on the Bombay Stock
Exchange, or BSE, trade below Rs 10
The criteria to be used for choosing best
penny stocks are
1.make sure that they’re not companies that
vanish overnight. They must have been around
a few years
2.There must be consistent profit and growth
3. The balance sheet must be sufficiently
strong . Debt must be low
4.Their products/services must be real and
visible
5.Must have some downside protection in
short-term
6.Promoter holding must be 40% minimum
Examples of some penny stocks
stock 52 week high 52 week low
Syncom Rs. 10.03 Rs. 2.0
Formulations
Neo Corp Rs. 58.40 Rs. 9.80
International
JVL Agro Rs. 27.80 Rs. 13.0
Industries
Aksh Optifibre Rs. 22.25 Rs. 12.15

VST Tillers tractors: During 1998-2003

VST Tillers tractors was trading between 10-
15 but in some years it gave multibagger
return.
Marksans Pharma : Many times Marksans pharma
was trading below Rs. 20 but in long term it gave a
good return.
Once Future Retail was trading below Rs.2 and within
7 years the stock was above Rs. 2000. It surged more
than thousand time in 7 years.

References:
1. Beating the street-Peter Lynch
2. One Up On Wall Street- Peter Lynch
3. The New Buffettology- Mary Buffett & David
Clark
4. The Intelligent Investor

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