UPDATE ON LAWRESHWAR POLYMERS LTD

Click to see Lawreshwar Polymers posted on blog on 4th March 2015.

Buying Price - 34.20, Current Price - 55, High Price - 67.70.

Stock Up 97.95% in just 7 months.

Hope all enjoyed this call

MAXHEIGHTS INFRASTRUCTURE LTD - 534338

BSE 534338

MAXHEIGHTS

The changing dynamics for Maxheights limited.

Recently the stock was in the news as the company was holding a large parcel of land near North Delhi Campus worth 550 crores and few groups are interested in buying out the land parcel.

In 1991 company got alloted the land parcel adjacent to DU campus and now the company is in talks to dispose off the land as last month only they got gorest clearance and clear title of the project

Promoted by Narang group the company would like to utilize the entire amount of money in building its flagship project Aravali one and retire the debt of 102 crores from the sale proceeds.

As per latest Value the land is valued at 13 crore in the books adjusting for indexation the liability of tax is approx 110 crores . So the company will realize appx 440 crores from sale proceeds of land

On market cap of 90 crore the company is going to have 340 cr of cash after retiring debt. The aravali one project is going to fetch them approximately 300 crores of revenue and margin of 20%

http://www.maxheights.com/AravaliOne/Specification.aspx#

Over next 4 years the company is planning a total of 4 projects worth 830 crores http://www.maxheights.com    for which the land deal was hurdle. Now with the land deal getting cleared this can be multibagger for the year.

However at market cap of 90 crore and cash value of 350 crore post adjustment it do not qualifies as straight 4x winner. But given the deep discount I feel the stock should float between a market cap of 150-200 crores and its how aravali ones and other projects will come in play will interest us going forward

Given the deal going through the stock will fly going forward. The company is also going for low cost housing and doing a 800 flats project with Haryana government

NEW STOCK

Dear Friends, I will be announcing a new stock which i added into my portfolio on

Monday - 20 July 2015 at 3 PM India Time on this blog.

Hope you all like the stock....It is a landbank story which you should not miss.

GUESS THE GEM 1 ANSWER - LAWRESHWAR POLYMERS LTD

1) Lawreshwar Polymers - A footwear company marketing its products in the brand name 'Lehar Footwear' it has won national awards in the year 2005 and 2006. It is traded on the BSE stock exchange, scrip code is 532829 and symbol is Lehar. The website address of the company is - leharfootwear.com

2) Lawreshwar Polymers is trading at 34.20 and its 52 week high is 39.50 which it touched recently and current price to earning for the stock is 25.42 against industry price to earning average of 35.27, Company is having a total debt of 20.87 crores and its debt to equity is better than that of Liberty Shoes. Market cap is at 51.09 crores and the largest peer is Bata which is having a market cap of 8100 crores and trading at a p/e of 46.49.

3) Lawreshwar has recently tied up with SNAPDEAL and ASK.com to sell its products online. It also has more e-commerce tie-ups in the pipeline. The company has never ever reported annual loss, promoters hold 65.65% stake in the company and the stake has increased sharply over the quarters and years. In December the shareholding pattern shows that fiis have taken a entry into the stock.

Basic Info

Lawreshwar Polymers Ltd

CMP - 34.20

MCAP - 51.09 CRORES

P/E - 25.42

FV - 10

MCAP/SALES - 0.66

DEBT/EQ - 0.64

INTEREST COVERAGE RATIO - 2.14

UPPER CIRCUIT FOR TOMORROW - 37.60

Financials

Financial Year 2013	Financial Year 2014	Financial Year 2015 Trailing
SALES - 68.46 CRORES	SALES - 77.05 CRORES	SALES - 77.94 CRORES
OPERATING PROFIT - 4.63 CRORES	OPERATING PROFIT - 5.49 CRORES	OPERATING PROFIT - 6.24 CRORES
OPERATING P. MARGIN - 6.76%	OPERATING P. MARGIN - 7.13%	OPERATING P. MARGIN - 8.06%
NET PROFIT - 1.37 CRORES	NET PROFIT - 1.70 CRORES	NET PROFIT - 2.01 CRORES
EPS - 1.00	EPS - 1.24	EPS - 1.47

Conclusion

1) Lawreshwar is available cheaply against its peers.

2) Company has tied up with snapdeal to scale up its business. It has not yet listed its entire product range on snapdeal and is making progress to tie up with other e-commerce platforms too. So, very soon Lehar footwear products can be on flipkart and amazon too! The e-commerce sector is attracting huge private equity investments and lot of stocks are buzzing due to the e-commerce boom and perfect example for the same is Intrasoft Technologies which is a e-commerce company now trading at a price to earning of over 60.

3)In the footwear sector lawreshwar is growing very fast and with online sales it can easily compete with the giants since the demand of apparels and footwear is at all time high on e-commerce websites. 

4)The fast growing company that Lawreshwar is also makes it a probable takeover target, I have read rumors on social media that suggest relaxo footwear and liberty shoes are looking to takeover lawreshwar polymers. However, there has not been any official word from any of the companies about the same and lawreshwar company secretary keeps saying that if there is any such news it will be reported to exchange when finalized and is declining to even deny the rumor. 

5)It is clear that lawreshwar is a multibagger candidate available at significant discount to other footwear companies with a great business scalability opportunity.

Disc : It is safe to assume that i have vested interest in this stock and hence my point of view can be biased.

Names of people who guessed it right

01- Deepak kumar prasad

02 - Vijay grower

03 - Nishit parikh

04 - Raman singh

05 - Romil mehta

06 - Vihan jain

07 - Goutham vaidya

08 - Nilesh jani

09 - Brajesh sharma

10 - Sambit

11 - Rahul gupta

12 - Jaychand

13 - Ravi vakayil

14 - Shiva

15 - Mayur gala

16 - Saravanan

17 - Aditya

18 - Dharmesh jhaveri

19 - Vivek

20 - Manoj agarwal

21 - Diptesh p

22 - Naskar das

23 - Ranjan

25 - Sk gupta

26 - Dhananjay

27 - Shiv kumar
28 - Mayank arya
29 - Ravichandran dhaya

Congratulations to all for your time and effort.

GUESS THE GEM - 1

It is the Series of 'GUESS THE GEM', this is the first one.Try to identify the stock from the given clues and send the answer to my mail id valuepick.mitul@gmail.com. Name of winners, name of stock and detailed summary will be posted on 5 march 2015 before market hours.

I would like to thank highly respected value-pick ji from value-picks.blogspot.in for introducing this idea of guess the stock to increase the analytical capability of the average indian investor.

- CLUES -

# The national award winning company is listed on one of the two stock exchanges bse/nse.

# Company's website is not on the company's name but on the brand's name.

# Company is trading at over 30% discounted price to earning vs industry average on screener.in

# In the 13-14 annual report balance sheet, company has long-term borrowings more than 2 crores.

# Stock price is trading very near 52 week high which it touched last month.

# Company's symbol on the exchange is it's brand name.

# Market cap of the company is under 300 crores.

# One of the peer large company's stock in this sector is trading above Rs 1000 per share.

# Company is looking to scale up its business with new tie-ups including a tie-up with a company which has attracted investment from a prominent industrialist of our country.

# The company has never ever reported annual loss right from financial year 2005.

# Financial year 2014 eps of the company was above Rs 1.

# Promoter holding is above 55%

# As per dec-2014 shareholding pattern the promoter stake has increased and there is fresh (fii/dii) stake addition.

I am expecting to continue this format of guess the gem for all next stocks but request readers not to leak answers on web portals otherwise it gets boring and also unfair to people who are searching for the stock to get their name published.

Do not expect confirmations whether the guess is right or wrong by e-mail or any other medium.

Taxation Highlights of Budget 2015-16 - by CA Animesh Singi

Taxation Highlights of Budget 2015-16.

BUDGET DECODED!!

Key Highlights of Budget from the Taxation point of view:

Direct Tax:

1.      Few news channels are showing up that there is no change in Slab rates. But there is still one amendment in slab rate for the Senior citizen (60-79 years) their basic exemption limit increased to Rs.3 Lakhs from Rs.2.5 Lakhs. Well no enhancement in slab limit for other common peoples.

2.    Surcharge was already hiked up in previous budget so additional change made other than that one has to deduct TDS with surcharge in all Section now onwards. Further Cooperative society, firms & local authority also cover by surcharge (@12%) now if there income exceeds one crore rupees. One must have to note the fact that marginal relief would not be given in case of cess.

3.      Yoga is the proud for our nation & our PM Modi Ji already proposed to make it International during US visit with Mr. Obama. Now Jaitley ji proposed to add the Yoga services under charitable services under section 2(15).

4.      Charitable institution always plays an important supplementary role apart from government for uplifting poor peoples. This budget tries to improvise the existing provision so that only genuine trust may claim exemptions. New provision narrow the 6^th limb of Section 2(15) by replacing monetary limit, it will attract now genuine trusts only to claim exemption. The institutions which, as part of genuine charitable activities, undertake activities like publishing books or holding program on yoga or other programs as part of actual carrying out of the objects which are of charitable nature are being put to hardship due to first and second proviso to section 2(15). Existing 2 provisos are replaced with single proviso now which says that Trust which is register with the object of advancement of any other object of general public utility can claim exemption now only if following two conditions are satisfied:

a.     Such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and

b.    The aggregate receipts from such activity or activities during the previous year, do not exceed 20%. of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year . (Previously it has a monetary limit of 25 Lakhs yearly).

5.    Residential Status of Companies would be determined in new way from  April 2016. Previously company is said to be resident in India if during the year the control and management of affairs is situated wholly in India. But now this clause is replaced with another condition which says company is resident in India if its place of effective management in India during anytime in a year. Place of effective management means a place where Key & commercial decisions in substance made. This clause brings in here to cover more company as a resident.

6.  After Vodaphone Judgement government introduced 2 explanations to Section 9(1) to tax such kind of transactions which are deriving substantial value from India. Now in this budget session 2 more explanations are introduced to determine when would be the share of interest is assumed to derive its value. Few new monetary limits are introduced.

7.    New Section 9A introduced which lists out certain activities not to be considered as business connection in India. I would like to remind you first that business connection in India this word has a wider scope in terms of section 9 regarding taxation. Prima Facie it includes activities of eligible investment fund invested carried out through an eligible fund manager. Certain Conditions are also prescribed which I don’t think relevant to discuss here.

8.    Few items are listed in Section-10 Exempt Income. Amount received from maturity of Sukanya Scheme, Swacch Bharat abhiyan, Clean Ganga fund are not liable to tax.

9.    Previously under Section-11 trust has to make declaration in writing before filing of return under section 139(1) if funds are not applied fully but now that condition for writing is replaced with another prescribed manner which may be in online mode. Another clause has been inserted in this section which specifies thatStatement of purpose for which income is being accumulated or set apart for 5 years should be submitted before the due date of filing under 139(1).

This clause has been introduced to reverse the existing judgement of High court “Nagpur Hotels & Loadging” which was saying that requirement of giving notice to AO is directory & therefore such notice can be given before completion of assessment also.

10. New subsection introduced in Section 13 according to which if statement is not filed before due date of 139(1) or return in not filed within due time than Exemption under section 11 would get denied. In simple words now trust has to file return timely mandatorily to claim the deductions.

11. Section 32 i.e. Depreciation amended so that balance of 50% of additional depreciation @ 20% for new plant and machinery installed and used for less than 6 months is to be allowed immediately in the next year.

Benefit provided to corporate so that they may save more tax by claiming excess depreciation which previously they were unable to claim if asset purchased in second half of the year.

12.Another good news regarding depreciation is that now additional investment allowance (@15%) & additional depreciation (@35%) can be claimed by new manufacturing units setup during the period 01-04-2015 to 31-03-2020 in notified backward areas of Andhra Pradesh & telagana.

Step taken towards to promote economic growth & increase the employment opportunities in the state which were ignored from long time.  

13.    Now directly moving toward the amendments in most favourite section for individuals & HUF’s investments i.e. 80C. Vision of increasing investments by finance minister is not appeared anywhere in this section. Only one new investment avenue opened i.e. Sukanya Samriddhi Scheme which was already announced in Feb-2015. Contribution to this scheme is eligible for deduction under 80C & its maturity proceeds are also exempt from taxation under section 10(11A).

14. Exemption limit for Contribution to Pension Funds & National Pension Scheme under section 80CCC has been increased to 1.5 Lakhs from 1 Lakhs.  Dear common man you have to spend more for your pension to get tax saving today. Government is much concerned about retirement of peoples.

15.   Additional deduction of Rs. 50000 for contribution to the new pension scheme u/s 80CCD.

16. Section 80D i.e. Health Insurance premium increased to Rs. 25000 (Previously it was Rs.15000). In case of Senior citizen limit increased to Rs.30000 (Previously it was Rs.20000). One good thing is that most of the very senior citizen who are above 80 years was unable to get benefit of this section because Insurance Company not cover their insurance so for those Senior Citizen who are not covered by health insurance to be allowed deduction of Rs.30000 towards medical expenditures.

17. Deduction in respect of medical treatment under 80DDB has been increased to Rs.80000 from  Rs.40000.The assessee will be required to obtain prescription from a special doctor to avail deduction. In my view now government is realising that how much it is costly for a common man to bear hospital expenses. Good going!

18. Our PM is much concern about cleanliness we can see this concern in budget also because from now onwards contribution towards “Swacch bharat Kosh” & “Clean Ganga Fund” are eligible for deduction under Section 80G i.e. donation to charitable trust.

19.Scope for deduction under section 80JJAA in respect of employment of new workman has been widened by opening path for all companies, previously this deduction was limited to Indian Company only.

20.  Additional deduction of Rs.25000 allowed for differently abled persons under section 80U. Old Limits were Rs.50000 for normal peoples & Rs.1Lakhs for Severely disabled dependent now new limits is RS.75000 & Rs. 125000 respectively. Another motive to provide benefit to middle class tax payers.

21. Amendment in section 92BA i.e. Domestic Transfer pricing. Monetary limit for applicability of Domestic Transfer pricing increased to Rs.20 Crore from Rs.5 Crore. I think they are focusing to grab big elephants. In order to address the issue of compliance cost in case of small businesses on account of low threshold this amendment is made.

22. Applicability of most awaited GAAR rules deferred again to April 2018. On one node government is making law stringent for black money holders & on another node they are deferring GAAR rules, GST & DTC. Slow implementation of new tax reforms breaking the speed of success wheels of Indian Wagon.

23. In some cases company is also the member of AOP which income is exempted from taxation. So Section 115JB amended to provide that the share of member share of a member of an AOP in    the income of the AOP, on which no income–tax is payable in accordance with the provisions of    section 86 of the Act, should be excluded while computing the MAT liability of the member under 115JB of the Act. The expenditures, if any, debited to the profit loss account, corresponding to such income (which is being proposed to be excluded from the MAT liability) are also proposed to be added back to the book profit for the purpose of computation of MAT.

24. Another consecutive reduction in rate of taxation made to non resident who received Royalty or technical fee under agreement with CG after 01.04.1976. In last budget of 2014 Slab was removed with single rate of 25% and now in current budget this single rate is reduced to 10%. This rates are reduced because agreement made after 01.06.2005 was taxable at 10% before amendment made in Finance act 2014 but after amendment of 25% these agreements are bearing unnecessary losses due to sudden hike of tax rates. So our finance minister reduced the tax rate again to make these agreements profitable.

25.  To bring simplicity, it is proposed to provide that no notice under section 148 shall be issued by an assessing officer upto four years from the end of relevant assessment year without the approval of Joint Commissioner. Previously AO can directly order reassessment.

26.   Some minor amendments made in section 154 & 156 to cover collector of tax for rectification also. Previously only deductors were covered.

27.   New section 158AA inserted which prescribes about procedure when in an appeal by revenue is to be made when question of law is pending before Supreme Court for the same assessee for another year.

28. An amendment made in section 192 that while deducting TDS of employee, employer has to obtain the proof or evidence regarding claims made by employee to arrive at estimated income. Previously in the case law of L&T ltd. It was held that employer is not responsible to take proofs of travels if employee is claiming Leave Travel allowance. This amendment is made to reverse this case law & stopping forge claims by salaried employee.

29.  Government has a keen eye to the every money going to the pockets of salaried employees. Most of the employees after leaving job withdraw funds from Provident fund without following rules & do not pay taxes on breaking rules like withdrawing fund before end up of the 5year of employment etc. Government was unable to catch these small tax evaders so they introduced new provision for deducting tax @ 10% on payment of accumulated balance due to an employee at the time of payment under section 192A subject to the basic limit of Rs. 30000. If employee was unable to furnish PAN no. For deduction than it would attract deduction at Maximum Marginal Rate i.e. now 28.25% assuming corporate tax rate of 25%. (Previously MMR was 33.99%)

30. Crucial amendment made in Section 194C i.e. deduction of tax on payment to work contractor. Previously if contractor during the course of business of plying, hiring or leasing goods carriages if submit PAN no. Than no TDS can be deducted. But now if such contractor owns more than 10 carriages at any time during the year than tax should be deducted from the payment made to them.

31. Minor amendment made in 194I to align it with the exemption of rental income from REiTS which were introduced in last budget. No TDS should be deducted on rental income to a real estate investment trust.

32. Some time minor amendments leads to tedious job which is made in section 195 i.e. reporting about every payment to Non residents. The person responsible for paying to a non resident or to a foreign company shall furnish information relating to payment of such sum in prescribed manner whether sum is chargeable under the act or not. Non compliance of this section would attract penalty of Rs. 1 Lakh under section 271I.

33. Now onwards order passed by settlement commission can be amend to rectify any mistake apparent from the record within 6 months from the end of the month order passed.

34.  Now here comes the one of the dangerous amendment of this budget in order to curb generation of black money by way of dealing in cash in immovable property transaction. Section 269SS (Accepting loans & deposits in cash) & Section 269T (Repayment of Loans/deposits in cash) now amended with an additional word inserted there in i.e. “specified sum” & “specified advance” respectively. Here specified sum assigned with the meaning of sum relating to transfer of immovable property whether o not the transfer takes place.

 Without going in deep I would like to share my clear cut interpretation from amendment which says that now assessee cannot advance or accept the amount in cash exceeding Rs.20000 for the transfer for immovable property. One should note that even you cannot make an excuse that transfer does not take place to avoid application of section. This amendment is made with the aim to make cashless transaction more popular. I would like to remind you the penalty levied under these sections is equal to the amount of loan accepted or repaid as the case may be.

35.  Wealth tax is abolished now onwards & replaced with a super rich tax i.e. 2% extra surcharge on persons who are earning more i.e.  above Rs. 1 Crore. Government is planning to yields extra 9000 Crore by this practise. Well the core reason behind to remove WT is that for collecting revenue of Rs.844 crores a significant amount of administrative burden for compliances were facing by department. As modi ji also said in speech at US that he believes in less laws & taxes so now one more tax/law is removed but how can we forgot that additional act regarding Black money & other laws also introduced in this budget.

36.  It is proposed to amend section 288 of the Act to provide that an auditor who is not eligible to be appointed as auditor of a company as per the provisions of sub-section (3) of section 141 of the Companies Act, 2013 shall not be eligible for carrying out any audit or furnishing of any report/certificate under any provisions of the Act in respect of that company.

37.  Transport allowance limit finally enhanced after 1996 from Rs. 800 p.m. to Rs. 1600 p.m. Heartily thanks to finance minister for looking towards these old limits but this joy would be complete only if they revised all limits i.e. Children education allowance, Uniform allowance, Hostel allowance etc. May be this items will be considered in next budget.

38. Our finance minister announced in budget speech that corporate tax would be reduced to 25% from 30% in next 4 years. The amendment is not found in Finance Bill yet. His logic behind this is that corporate taxes forms only 23% part of the direct taxes so it’s better to cut it down more. I think his key idea behind is to cut the corporate tax collection & recover the revenue lost by direct tax from increasing indirect taxes. So common man now is ready to suffer heavy taxation in upcoming years. Government intentions are so much clear to cut down your pockets.

39.  Though budget was lacking the key goal of “Make in India” but it has covered one crucial thing i.e. “Black Money”.  New bill for black money is proposed which has rigorous imprisonment from 7 years to 10years that too non compoundable. Further this money would be taxed at MMR & levy heavy penalty of 100% to 300%.

40.  PAN card is mandatory to furnish on any sale or purchase exceeding more than Rs. 1 Lakhs.

41. This is how Figure of FM Rs.4,44,200 benefits to common man came out:
80C: Rs.1.5 Lakhs
80CCD: Rs.50000
Housing loan Interest: Rs. 2 lakhs
80D: Rs.25000
Transport Allowance: Rs.19200
Total: Rs.4,44,200.

Indirect Taxes:

1.      Basic Custom duty on certain inputs, raw materials & components in 22 items, reduced to minimise the impact of duty inversion.

2.      Excise duty on chassis for ambulance reduced from 24% to 12.5%.

3.      Excise duty on footwear with leather uppers and having retail price of more than Rs.1000 per pair reduced to 6%.

4.      Online central excise and service tax registration to be done in two working days. This is most needed amendment. I hope it will save the bribe which we pay to get our self register for ST.

5.      Time limit for taking CENVAT credit on inputs and input services increased from 6 months to 1 year.

6.      Service-tax plus education cesses increased from 12.36% to 14% to facilitate transition to GST. It will have a huge impact on pocket of common people. As we all know that Indirect taxes are having burden on consumers. This was really unexpected from government when people were enjoying little relief from inflation.

7.      Clean energy cess increased from Rs.100 to Rs.200 per metric tonne of coal, etc. To finance clean environment initiatives.

8.      Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12% to 15%.

9.      Enabling provision to levy Swachh Bharat cess at a rate of 2% or less on all or certain services, if need arises.

10.  Services by common affluent treatment plant exempt from Service-tax.

11.  Concessions on custom and excise duty available to electrically operated vehicles and hybrid vehicles extended upto 31.03.2016.

12.  Service-tax exemption on Varishtha Bima Yojana

13.  Conversion of existing excise duty on petrol and diesel to the extent of Rs.4 per litre into Road Cess to fund investment

14.  Service Tax exemption extended to certain pre cold storage services in relation to fruits and vegetables so as to incentivise value addition in crucial sector

15.  Basic custom duty on digital still image video camera with certain specification reduced to nil.

16.  Service-tax to be levied on service provided by way of access to amusement facility, entertainment events or concerts, pageants, non recognised sporting events etc.

17.  Exclude all services provided by the Government or local authority to a business entity from the negative list.

18.  Service-tax exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port withdrawn.

19.  Transportation of agricultural produce to remain exempt from Service-tax.

20.  Artificial heart exempt from basic custom duty of 5% and CVD.

21.  Service-tax exemption:

♦ Services of pre-conditioning, pre-cooling, ripening etc. of fruits and vegetables.

♦ Life insurance service provided by way of Varishtha Pension Bima Yojana.

♦ All ambulance services provided to patients.

♦ Admission to museum, zoo, national park, wile life sanctuary and tiger reserve.

♦ Transport of goods for export by road from factory to land customs station.

Conclusion:

So over all it’s a good budget from the point of view of government. It will provide strength to government to recover its losses & fiscal deficit. Without getting suffer no one ever got a success. So these stringent amendments are necessary to recover our economy.

Few irrelevant amendments are not discussed here. Any relevant amendments which I missed to discuss or wrongly interpreted are invited in comment box. Thanks for having patience & reading my thorough analysis.

Analysis By:

CA. Animesh Singi

animeshsingi@gmail.com

www.animeshsingi.blogpsot.com