KALSHA
Sharp India Ltd (Rs 18) - BSE CODE: 523449
Vikram Solanki
July 29, 2005
In present bull run, some of the loss making or BIFR companies are quoted above
par and even at higher prices. Investor should be very careful while dealing with
such company shares. We would request Investors to invest in fundamentally sound
group or companies which can give ideal returns in short and long term. This week
we are recommending a company, which would give super gains to investors in very
short time.
Subsidiary companies of Multinational Groups listed in Indian stock market always
perform better and command higher premium compared to Indian companies, this is
due to good support from their parent company in Technology Transfer, Buy Back of
Production, Aggressive selling/marketing policy, Monetary support etc.
Such FERA companies due to strong parental support even in losses command good
valuation in the Indian stock market, as the future prospect is always very bright. A
nice example is Tudor India, this company is in losses since inception and still it is
quoted at Rs 35 as it has very good support from Exide Corporation-USA. There are
many such FERA stock available in the stock market.
This week we are recommending a FERA company, Sharp India Ltd, which would
give super duper profit to all the investors. It is a Subsidiary Company of a Sharp
Corporation Ltd-Japan, which is listed in Fortune 500 companies and has its Global
sales placed at Rs 70,000 Crore with worldwide network.
Sharp Corporation Japan was founded in the year 1912 and since than it never
looked back, Sharp's business is pointed at the electronics market. Best known for its
consumer electronics, the company is a leading maker of electronic components and
computer hardware and peripherals. Its flagship components business includes liquid
crystal displays (LCDs, used in everything from airplane cockpits to PCs to pinball
machines), flash memory, integrated circuits, and laser diodes used in optical data
drives. Sharp also makes PCs, printers, and cell phones; consumer audio and video
products, such as CD and DVD players and video cameras; and a variety of
appliances, such as air conditioners, refrigerators, and vacuum cleaners. It has a
sales of USD13 Billion i.e Rs 70,000 Crore and rank 305 in fortune 500 list.
Recently, Sharp-Japan has created a product that combines transparent thin-film
solar cells and low power consumption, long-life, highly bright LEDs (light emitting
diodes) into an illuminating solar panel that provides electricity, natural light, and
artificial light. This product can be installed on windows and walls-something not
possible with conventional monocrystalline and polycrystalline panels. Sharp's solar
cell production has been rising rapidly in recent years; sharp has the world's No. 1
market share in production volume of solar cells for four years in a row.
Indian Venture, Sharp India Ltd was incorporated on July 5,1985 under the name of
Kalyani Sharp Ltd, Sharp Corporation- Japan ("Sharp") initially held 51% of the
equity of the company and 29% with Kalyani Group. Bharat Forge (BFL), the flagship
of the Kalyani House of Industries, promoted the company.
It entered into a joint venture with Sharp Corporation, Japan - a leading
manufacturer of consumer electronic worldwide to manufacture VCRs/VCPs/VTDMs.
Sharp's VCR technical know-how was transferred to the company, it also started
manufacturing and sale of Televisions, Video Cassettes recorders (VCR's), video
cassette players (VCP's) & audio systems. Further it converted one of the
manufacturing unit into a 100% exports division for VCR's & VCP's.
In the latest development i.e In the month of March, 2005, Kalyani group has sold its
29% stake of Kalyani Sharp India Ltd to Sharp Corporation-Japan at Undisclosed
price, after the sell off Sharp-Japan immediately change the name of Kalyani Sharp
to Sharp India Ltd. At present 80% of the Total Equity is held by Sharp CorporationJapan.
The company is presently engaged in the manufacturing and sale of colour
televisions (CTV's), audio systems, fax machines, LCD's, VCP's, VCR's etc. and has a
100% export oriented unit which exports VCP's & VCR's to USA, its product are well
received in U.S. and Middle east market. In the domestic market it has introduced
several models of colour televisions and is widening its CTV model range from
premium to economy models.
Sharp India Ltd has set up a CTV manufacturing facility in Pune, it has capacity to
produce 20000 CTV's per month and the company has also another CTV
manufacturing facility at its existing one with additional capacity of 10000 CTV's per
month, as such it has a total capacity of 30000 CTV's per month.
In the LCD segment Sharp corporation has a 45% market share globally which is
also likely to help the Indian Company Sharp to market its product and to increase
its market share in the coming years thereby adding to its overall profitability .The
company plans to launch 5 inches thin & light weight liquid crystal display (LCD)
televisions sets which has high picture clarity.
Sharp is likely to show very good performance in the current year and also in the
future years to come with the support of its parent "Sharp Corporation of
Japan"/which has eyed India as a booming market for CTV's and audio/video
systems.
The company is also expanding its sales network and introduce a series of new CTV
models from 14` to 29` including Pure Flat type. It is also planning to add new
category of Audio/Video products like LCD TV, MP 3 Player, D-Combos and household
appliances into the product range.
Shareholding pattern of Sharp India Ltd is as follows:
A
1
2
No.
Shares
Promoter's Holding
Indian Promoters
0
Foreign Promoters (Sharp Corporation-Japan)
20755200
Persons acting in Concert
0
Sub Total
B
Non-Promoters
3
Institutional Investors
a
Mutual Funds and UTI
b
c
FIIs
Sub Total
4
20755200
1700
Banks,
Financial
Inst.,
(Central/State Govt.Inst./Non-Govt.Inst.)
of
Insurance Company
0
% of
Shares
0
80
0
80
0.01
0
2800
0.01
4500
0.02
2.92
Others
a
Private Corporate Bodies
756882
b
Indian Public
4058300
15.64
c
NRIs/OCBs
369118
d
Any Other(Please specify)
0
Sub Total
Grand Total
5184300
25944000
1.42
0
19.98
100
Out of the total equity of Rs 25.94 Crore Sharp Corporation-Japan hold 80% of the
total equity of the company, while Indian public is holding only 15.64% of the equity.
On Performance basis Sharp India Ltd for the financial year ending 2004-2005 has
posted a sales of Rs 101 Crore and a net loss of Rs 9 Crore, since Sharp-Japan has
taken total control of the company in the month of March, 2005 and hence the result
does not reflect true value of the company.
In last financial year Sharp Corporation, Japan has given Rs 4.26 Crore towards sales
promotion expenses for selling and general administrative expenses incurred during
the quarter / Nine months ended December 31, 2004.also the Company in the
previous year has declared a Voluntary Retirement Scheme ('VRS') for its
employees, towards which the Company has incurred an expenditure of Rs.302.44
lacs. There was no impact on the profit and loss account, since the same had been
reimbursed by Sharp Corporation, Japan. This suggests that Sharp-Japan has wider
interest in it subsidiary company and started funding its subsidiary company so that
Sharp India can become profitable venture at the earliest.
In recent years many joint venture after takeover by parent company has become a
profitable venture a good example is Ricoh India ltd, this company was making huge
losses since inception and after takeover of the company by Ricoh-Japan the fortune
of the company has changed, Ricoh-Japan has launched various international product
in Indian market through Ricoh-India and it's fortune changed within couple of year.
Stock price which was quoted below par before Ricoh-Japan takeover is now quoted
at Rs 70, same way the share price of Amtrex Hitachi after sell off by Lalbhai group
to Hitachi have appreciated 400% within a year time.
Sharp Corporation-Japan has number of products, which are launched, in the global
market for more information on Sharp-Japan product range log on to
http://sharp-world.com/index.html, all the product displayed on the website site are
not yet available in Indian market, shortly we will be able to see wide variety of
household and office automation products in Indian market through Sharp India Ltd.
The Japanese giant has wider interest in Indian market as the company management
has decided to focus in European and Asian market through its Indian Subsidiary
Sharp India Ltd i.e making company as global sourcing hub.
New Investment and products, would change the face of Sharp India Ltd within next
two years time, the share price quoted at Rs 18 can quote at Rs 50 within next sixmonth time. It is fundamentally a very strong company. Leading mutual funds are
cornering the stock at lower level?
Our target for the week is Rs 32. Buy Buy Buy
viksolanki@yahoo.com