DARK HORSE: TRIVENI GLASS LTD 

Promoters of Triveni Glass Ltd are amongst pioneers in glass industry in India. TGL has commenced its operations in 1976 for manufacture of Float Glass. Subsequently, company had also set up plant in Meerut and 2 plants in Rajamundry for manufacture of Figures/Patterned Glass. Due to various expansions , TGL was suffering from large debt and simulataneously, float glass manufacturing had become loss making business. Hence, TGL had decided to close down its Allahabad factory and Meerut plant. Currently, 2 plants of Rajamundry are operating ( at

low capacity) where Figured/Wired/Patterned glasses are being produced.

Figured/Patterned glasses are decorative glasses with pattern on one side/surface. Patterned glasses offer decorative benefits to Architects, Builders, Interior designers giving exciting designs for Homes, Offices, Restaurants, Hotels etc

Patterned glasses are used for:

*Office Partitions

* Glass doors and Windows

*Glass tables

*Shower cubicles

*Shelves in fridges/Shops

*Upmarket homes

OUT OF DEBT TRAP:  In order to rid of large debt, TGL had gone for One Time Settlement with all lenders and decided to sell its Meerut plant and Allahabad plant to pay off OTS amounts.

TGL had sold its Meerut Plant to a Japanese co for Rs 20 crores in 2012 and used the proceeds to pay off HSBC, SBI and IDBI.

Allahabad plant is closed since 7 years which is one of the biggest in India in Gloat glass. This plant is spread over 72 acres of land, is touching new highway. At that time, TGL had enjoyed the distinction of second best float glass manufacturer in India with 400 TPD plant. Its rival Saint Gobain had installed capacity of 1000 tonnes and had spent 995 crores for its Chennai plant.

TGL had outstanding loan of Rs 110 crores as on 313/03/2014 . Same came down to Rs 49 crores as on 30th September 2014. Break up of the debt as under:

Canara Bank  Rs 5.90 crores

SBI               Rs 3.27 crores

IDBI              Rs 35.50 crores

Others           Rs 4.33 crores

TGL has written back amounts benefitted from OTS in Q3 results of FY15. Hence, Book Value of TGL has BECOME POSITIVE due to write back of interest (waived, no more payable)

FINANCIAL PERFORMANCE:

                                  Y E A R       Y/ENDED

                                31.03.2014      31.03.2015

                                   Rs/Cr              Rs/Cr

Sales                          49.11             45.30

Net Profit/Loss               6.67             -3.86

Equity                                               12.62

EPS Rs                       5.28             -3.06

For FY14, TGL has reported sales of Rs 49 crores and PAT was 6.67 crores. Eps stood at Rs 5.28. During the year, company had one-time write off for 2.23 crores. But for the same, Eps would have been still  higher

For FY15, TGL slipped into losses as co reported NET LOSS of 3.86 crores on SALES OF 45.30 crores. Main reason for sharp deterioration in profit margins was due to temporary slackness (a new co in U.P. had commenced production of similar product range) due to new competition from a fresh entrant  AND TGL stopped receiving gas from KG Basin. As a result, its production cost shot up as TGL has been running its plant on diesel

FUTURE OUTLOOK/BREAKING NEWS:

It is reliably learnt that company has FINALISED sale of its Allahabad plant for Rs 85 crores. Announcement in this regard is expected by August-end 2015 itself. And TGL has already RECEIVED advance/part payment against sale of this surplus land. Out of 85 crores, TGL will use Rs 49 crores to pay off its entire debt. It shall leave TGL with cash in hand of around Rs 36 crores. It works out to Rs 30 PER SHARE CASH IN HAND.

Against the same, share is quoting only at Rs 15/.

Patterned glass is a profitable business and has good future due to increased useage of same in offices/homes/hotels/restaurants etc.Presently, its Rajamundry plant is working at LOW capacity due to paucity of funds. Rajamundry plant is in Godavari basin where ample gas and electricity is available which are major input costs for glass manufacturing. In FY14, TGL has achieved Eps of Rs 5.28 (although company had written down some bad debts and old inventory). Although not sure, as and when KG Basin gas supply resumes, TGL can achieve excellent profit margins

SHAREHOLDING;  As per Bse website, promoter holding is 6.6%. However, we believe that 8.54% shown in name of 3 entities as Public category BELONG TO PROMOTERS. We also believe that another 10% in different

names (less than 1%, hence not visible in shareholding) also belongs to promoters. Finally, IDBI holds 28% shares under pledge which have refusal of first right with promoters. Thus the collectived holding of promoters should be around 53%.

Once TGL pays off its lenders and surplus cash in hand (payment to be received from sale of Allahabad land), performance of Rajamundry plants will witness huge improvement. Firstly TGL will be in a position to incur some capex for modernisation of the plant. Secondly, TGL may also go for capacity expansion. Thirdly, profit margins will also improve (after OTS is buried).

LATEST RESULTS:

                          Q1/FY16        Q4/FY15

                          Rs/Cr             Rs/Cr

Sales                  14.70             15.26

NP/Loss                1.12             -3.95

Eps Rs                  0.89

QoQ basis, TGL has reported vast improvement in Q1 of current year. As against loss of 3.95 crores in Q4 of previous year, TGL has achieved NP of 1.12 crores in Q1 of current year.  TGL is importing some equipment from China. This equipment will be ready installed by October 2015 and operational from November 2015. It will help reduce fuel consumption considerably and TGL will make substancial savings on fuel consumption. Hence, TGL can report big improvement in profit margins from Q4 of current year

TGL CAN REPORT EPS of Rs 6 for FY16 and Rs 9 for FY17.

Current market cap of TGL is only 19 crores (against expected CASH IN HAND of Rs 30 per share)  is a steal, dirt cheap. Scrip is lying low because it is in T group with 5% circuit filter. Small quantity of promoter holding is in physical form . If promoters can demat these physical shares,scrip will come out of T group. Then scrip can make sharp gains. Worst is over TGL. Upon receipt of full considation of land

sale, Scrip should be re-rated. Investment in TGL at current levels has very low downside (worst case scenario). Stock price can double (under normal market circumstances) in next 3-4 months  and can be Rs 80 in 24 months