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2Manish Turakhia Benchmarked Investment Performance

On 14th May, 2015 Manish Turakhia & his wife Meghna Turakhia formed this LLP as Limited Partners. However its foundation was laid in 1984 while Manish started visiting Bombay Stock Exchange during lunch hours from his Chartered Accountants article ship. Mr Manish completed graduation in 1986 and completed Fund Mangers’ Course conducted by UTI Institute of Capital Markets during January 2-18,1995.

Manish Turakhia, our Principal Partner carried out many investments in his three decade presence in Indian stock markets. He is a deep value investor and has an eclectic investment style. The account goes as under for the major deals:-

Most loss making equity investments & our learnings

In 1994 we invested in Modi Champion Ltd., a spark plug manufacturing company resembling potential to gain market share from MICO (Bosch). Company wound up in 1995 making us loose about Rs.10 lacs then. Management quality and organization matter more that the product potential.

In 1995 we invested in infamous Ashoka Refinery Ltd., in greed to be part of oil drilling and refining least realizing that it was game for the multinationals conglomerates. Company could not even commence operation and had to surrender the Oil Well to Government. We lost about Rs.15 Lacs 1996. Zero revenue company with potentially very high growth often end winding up.

In 1999 we accumulated equity of Kerala Ayurveda Pharmacy Limited around Rs.20. Ayurveda, sprouted in the pristine land of India since ages, the science of life and longevity, is the oldest healthcare system in the world and it combines the profound thoughts of medicine and philosophy. Kerala possesses an unbroken tradition of Ayurveda that has surpassed the many invasions and intrusions both foreign and native. With this logic, we found this listed company through which we have spread awareness of Ayurveda in India and Abroad and while doing so create wealth for all stake owners. To our dismay the Core Promoters, Ayurvedachariya themselves, lacked methodology and consistent efforts to scale up their business. Though honest, they also lacked fiscal awareness and savvy commercial sense. For short period price did move up to Rs.100 where we sold only 15% of our equity. But later the price fall back to Rs.20. It took us whole of 2001 to exhaust our quantity averaged at Rs.14. Its not the sentiments for the culture but sound commercials that begets value at equity markets.

2000 we invested in Hindi News Channel company Jain Studios Ltd., when Hindi News Channels were insignificant. Boyed from presence of huge market potential, we invested about Rs. 1 crore only to realize back Rs.20 lacs in 2001 on account on management incapability to scale up and TV Today Hindi & Star Hindi Channel picking up. Promoter focus on wealth creation is imperative to company building and not an access to Prime Minister’s Office.

2000 Mr Manish read an article from Jack Ma and studied business model in June 1999. Based on similarity, we invested in, a Point of Presence based ecommerce then. About 54,000 franchise applications with Deposit of Rs.2 lac were received. Management could not ramp up the operations and vendor listing causing us loose over Rs.1 Crore in 2001. Fire in the belly of Promoter is the most critical ingredient for company building and not the legacy inherited bungalow & huge real estate at South Bombay.

2007 We invested in ITD Cementation, a Thai construction giant that had begged several infrastructural projects. Due to global financial meltdown in 2008 and extended delays in payment form State Governments contract, company suffered huge losses. We bought quite a quantity around August 2007 at Rs.550 in 2009 sold around Rs.210 (to buy larger quantities of VIP Industries and Shreyas Shipping which looked more promising). Never bet on the companies deriving substantial revenue for Government even if the management is excellent.

2007 We invested in Jetking Infotrain Ltd., established in 1990 is a Computer Hardware and Networking Training Institute, trains technical and non-technical students. Jetking has over 100 centers spread across India. From 1990 company had trained more than 6,00,000 students in IT and IMS training sector with first job assured. We bought moderate quantity around January 2010 at Rs.165. But due to pick up of other e-learning platforms, company could not scale up their operation leading to closure of few centres. We booked the loss during January 2011 & sold around Rs.125.

Missed (?) Opportunities

May 2003 Infosys bottomed out to the lowest points in most bearish phase of Indian stock market. However we felt its time is over despite strong belief of India Software Story. We also had funds realized from sale of Infotech Enterprises. But we deployed in the old economy stock Tata Coffee. Till May 2004 Infosys and Tata Coffee doubled. But then Infosys started rising faster but we could not liquidate Tata Coffee then. By December 2004 when we sold Tata Coffee, Infosys was three times May 2003 levels and we couldn’t buy it. Though we churned the funds (realized from Tata Coffee) in few other stocks but the merit of the stock were certainly less than Infosys. That means we took greater risk to produce same returns that stable equity of Infosys could have also given. Well but that could have been approach of a Proprietary Investors that we were not. In Indian market, except promoters we haven’t heard of any investors holding on to Infosys for such a long. Back then, may be, inability of even the best of Indian companies to demonstrate investment confidence such as demonstrated from The Coca-Cola Company. In hindsight some dedicated funds should have kept invested in Infosys form IPO in 1993.

June 2005 Tasty Bites Eatables Ltd., a company promoted by Mr Ashok Vasudeva and Mrs. Meera Vasudevan with their 74.22% holding held under Preferred Brands International Inc. The Tasty Bite brand was launched in the US in 1995 with 5 all-natural, ready-to-eat Indian entrees. Mr. Sohel Shikari, Indian Director, provided enough inputs on the company’s area of operation. When we bought around June 2005 at Rs.40 the market capitalisation was just Rs.10.5 Cr with only 25.78% of equity with public. On January 03, 2008 when Indian equity markets were peaking, we sold it at Rs.105 along with other equities sold in that period. We should have bought it back during January – March 2009 when price was hovering below Rs.20.

Preferred Brands International Inc (PBI), the parent company entered into a strategic global alliance with Kagome Co Ltd (Kagome), a leading Japanese food company on April 14, 2015. As per the transaction, Kagome would acquire a major stake in PBI. Kagome is made''Open Tender Offer'' to shareholders of the Company at Rs.662.40. Market forces raised the price to Rs.1,400 in October 2015 valuing company at Market capitalisation of Rs.350 Crs.

Major successful equity investments 1

1987 Applied Electronics & Devices Ltd (Aplab) immediately after passing Graduation, Mr Manish Turakhia, aged 21 then, applied for IPO of Aplab that was at Rs.25. On listing, he started to mop up as much quantity of shares as was available from Bombay Stock Exchange bourse. The price rose to Rs.55. He sold only few shares that were necessary to buy 2 Bed Room Hall Kitchen apartment for his family at Rs.9 Lac. He fell in love with the company. Despite advise from his mentor and maverick investor Mr Nemish Shah, founder of ENAM Financial, he did not sell. Naturally the price fell and he lost a fortune of about Rs. 40 lac that time. This was the beginning of his journey as Equity Man.

Then Mr Manish pursued his journey as Sub-Broker, Analyst, Investment Manager and Investment Banker.

1992 Rights Issue Subscription of Bannari Amman Sugar Ltd. @ Rs.100/- on 30.09.1992 at the instance of his mentor Mr Nemish Shah (ENAM). The market price was Ra.95/-. At Rs.100 as many shares were available as the investor asked for. We applied from Right Issue Renouncements from existing shareholders.

Company was setting up Second Sugar Unit, near Nanjangud in Mysore District of Karnataka State, with an initial cane crushing capacity of 2500 TCD. India was in huge demand for sugar for captive consumption & Government was giving every required support to the benefit of Sugar Cane growers.

Nemishbhai explained him that if we subscribe to Rights Issue, the funds go inside the company. With the Rights Issue Capital, company can balance their Debt Equity Ratio and avail Bank Loan that in turn enhances the Returns on Equity.

However, we sold off around Rs.150 within six months. Nemishbhai still owns it, current price being Rs.1850 with uninterrupted Dividend Payout of 25% to 125% (1992 -2016). This incidence saw seeds of Investment Banking in Mr Manish.

1996 Titan Industries Ltd., a Tata Group company focused on Wrist Watches & Gold Jewelry manufacturing and retailing. We have been tracking the company since its IPO in 1990. We bought at about Rs.40 and sold to realize profit for investors in 1999 at about Rs.300. Later it found fancy of the celebrity investors in Indian stock market. This was Peter Lynch style of stock picking.

1997 Nirma Ltd., a soda ash and detergent manufacturer was built for very humble beginning form its promoter 25 years ago. We bought decent quantities around March 1997 at Rs.400 and sold off at Rs.1,400 around January 1999. This was Peter Lynch style of stock picking.

1998 Hindustan Motors Ltd., a old fashioned Kolkata base car - Ambassador maker had entered in to Joint Venture with Mitsubishi and set up new plant at Chennai that was to launch their most famous Lancer. Lancer launch really clicked and our bet paid off. We bought in March 1998 around Rs.3 and sold off around Rs.18 in June 1999. We made good profit and Mr Manish bought Lancer car for himself then. This was Warren Buffet style of stock picking.

1998 Gramophone (Saregama India) Ltd., holding treasure of Indian music. We first purchased at Rs.33 in September 1997 then at Rs.25 realizing that an FII named ELF Mauritius Ltd was liquidating its entire portfolio that had over 2,00,000 shares of Gramophone left. As we were the only buyers of the stock we waited and we closed the balance lot at share price of Rs.8.50 in 13th January 1998. The equity price peaked at Rs.2,300 in January 2000. The equity quantities were decent and gave us highest amount of gain that we earned till that time. The percentage return on investment is still the highest. Mr Manish bought a apartment for himself from the gains and was left with substantial funds to survive for the bearish phase from 2000 to 2003. This was Peter Lynch style of stock picking.

1998 Crest Communications Ltd., a digital animation and special effect company of technocrat. We bought few shares at Rs.50 and sold in early 2000 at Rs.1250. This was our own self studied style of investing in IQ based business with highest return of capital. However we found that substance of such companies depends upon its IPR building capabilities and organization building ability. Our learnings helped us to advise Arrow Coated Products Ltd in 2007 on organization building.

1999 TTK Prestige, a kitchen appliance company run by conservative TTK Family. It had never missed Dividend in last decade and had marquee real estate on Balance Sheet at the heart of Bangalore city. We bought huge quantities around Rs. 35 in November 1999 based on Value & Safety Criterion of Warren Buffett. Company had planned to lunch entire kitchenware range from just pressure cooker so far, but took long to ramp up their operations. We held on till August 2006 when frustrated investors compelled us to sell Rs.100. We realized that being too early has its own nuances. It started moving up for Rs.100 (April 2009) to achieve its pinnacle at Rs.4,650 (August 2014) but we missed the entire rally.

1999 Infotech Enterprises (Cyient) Ltd., a Geographical Information Systems Digital conversion and Geographical Mapping services company. We bought few shares at Rs.250 in June 1999 and booked profit at Rs.1250 in January 2000.

2001 Infotech Enterprises (Cyient) Ltd., a Geographical Information Systems Digital conversion and Geographical Mapping services company at Rs.60 at P/E of 1.5 in June 2001. Victim of bearish view of software sectors post Y2K crash of 2000 had excellent promoter quality and focused business scale up planning. Infotech Enterprises allotted 12 lakh equity shares and 3 lakh convertible warrants totaling to 18% stake to Pratt & Whitney, a division of the US-based United Technologies Corporation. The company raised around Rs 48 crore through the issues. This resulted in capturing investors attention around Rs.600 in November 2002 unlocking the value for us. This was Peter Lynch style of stock picking.

2001 Cadila Healthcare Ltd., a pharmaceutical company of PHD in medicine - Mr Pankaj Patel. Mr Patel was humble enough in taking our advise on allotment and distribution in multiple geography among different categories of Foreign Institutional Investors despite the celebrated Lead Managers to Cadila IPO in mid 2000. Post IPO due to bearish phase in stock market, the price had fallen to Rs.30 in June 2001 where we bought quite a few shares and sold in April 2004 at around Rs.175. This was Peter Lynch style of stock picking.

2002 Bharti Tele Ventures Ltd ( Bharti Airtel Ltd.), a cellular airtime service provider, as Mr Sunil Mittal describe to us during IPO Fund Managers meet in January 2002. Mr Mittal provided vital insight to us that once Telecom Tower infrastructure is rolled out, every additional sales is straight addition to bottom line. We subscribed its IPO at Rs.45. We got firm allotment and stock got listed on 18th February, 2002 at Rs.54 closed at Rs. 42. With our conviction on India’s Cellular Story and keen desire to participate in the ensuing wealth formation, we bought, almost equal quantity of stock as much we were allotted in IPO, at Rs. 25 during November 2002 bring our average cost to Rs.35. The stock price hit bottom during January 2003 to Rs.21 when management declared completion of their roll out and last quarter of EBIDTA loss. We sold half of our quantity at Rs.90 during November 2003 and balance half during September 2005 around Rs. 350.

2002 Sterling Holidays Resorts (I) Ltd., under abysmal scenario with wiped out net worth and humongous debt. We captured at share price of Rs.3 principally because Mr Manish had become Premium Time Share Member in 1993 at Rs.29,000 for 7 days of annual vacation for 99 years. (Indeed Value Investing). Every year he enjoyed Time Share week and gifted it to analysts. Company had over 100,000 timeshare members and embedded property value at splendid locations at about 20 resorts. We accumulated sizable quantity around November 2002 around Rs.3 sold off at Rs.18 to 22 in December 2003. Thomas Cook took over Sterling in 2015 at valuation of Rs.2000 Crores. This was Warren Buffet style of stock picking.

2002 Forbes Gokak Ltd., a established cotton yarn maker owned by Shapoorji Pallonji & Co Ltd had subsidiary named Campbell Knitwear Ltd had state-of-the-art factory located near Belgaum, Karnataka State combining under one roof, all operations from knitting to garment making. Established in 1995, Campbell Knitwear Ltd. Produced top quality Polo Shirts and T-shirts for men and women. It was designed as a downstream integration to add value to the yarn of their most modern spinning mill - Gokak Mills, operating almost continuously since 1887. Company also had retailing division where it used to market DAKS of LONDON from select outlets. Purly on gross undervaluation we accumulated sizable from August – December 2002 around Rs.65 and sold off during January 2005 around Rs.270. This was Warren Buffet style of stock picking.

2003 Tata Coffee Ltd., a Tata Group company focused on Coffee Plantation and had started setting up Barista – the Coffee Café across metros in India. We bough at Rs.70 in March 2003 and could sell large part of our holding till Rs.270 in December 2004. This was Warren Buffet style of stock picking.

2003 Blue Dart Express Ltd., a integrated logistics company with own hub near domestic airport. Importance of private logistic companies had started gaining stock market attention since 2001 as they captured incremental logistic business in India and I started pursuing the company since then. During August 2003, we bought sizable stock around Rs.90 and could sell entire in January 2007 around Rs.650. This was our own evolved style of stocking picking.

2004 Hatsun Agro Products Ltd. a neglected dairy company form Chennai. Impressed by the humbleness in the Promoter’s company operation, recovering cost to fullest per liter of milk processed and negative working capital. We bought at Rs. 72 around January 2004 and again in September 2004 large quantities based on Value & Safety Criterion of Warren Buffett and could sell it till Rs.345 in December 2007.

2005 Greaves Cotton Ltd., a manufacturer of highly fuel efficient, lightweight diesel / gasoline engines, ideal for Automotive Engines having applications like 3-wheelers and small 4-wheeled commercial vehicles. These engines with high power-to-weight ratio were also used extensively for portable agricultural pump sets, generator sets, small boats, construction equipment and host of other applications. We bought sizeable quantity purely as valuation arbitrage in February 2005 at about Rs.115 and sold off in August 2005 at about Rs.215. This was our own evolved style of stocking picking.

2005 Modern Dairies Ltd., a casein manufacturing company form North India that had immense corporate governance. At Rs.7 we were getting Dairy Business free as the under lying investments from cash reserves were about Rs.11 per share. We bought huge quantities on and around 20th April 2005 and could sell partly in October 2007 at Rs.180 and balance at Rs.70 (Ex-bonus 1:1) in December 2009. Percentage wise its second highest return so far. It was our own evolved style of stock picking.

2005 Kamla Dials & Devices Ltd. (KDDL), a watch hand, watch dial and watch index manufacturing company. Impressed by neatness in company operations and growth potential, we bought at Rs.40 quite a good quantity. We had to sell around Rs.100 in June 2007 due to scale up challenges witnessed by the company.

2005 Godrej Industries Ltd., a demerged company form Godrej Soap Ltd that we were tracking from 1998. Undervalued conglomerate with Agri Chemicals & Real Estate Development found found fancy of market in 2006 end and gave us return of 4.5 times on substantial equity holding. September 2005 around Rs.44 we bought and sold off in November 2006 around Rs.170. This is our third largest investment gain. It was our own evolved style of stock picking.

2006 Rajshree Sugar and Chemicals Ltd., a Coimbatore base sugar mill will excellent management. We bought purely to capture the rising sugar price on the back of low sugarcane produced previous year and company gaining on its inventories and its resulting exponential positive effect on EPS. We bought in September 2005 around Rs.72 and sold off around Rs.150 in January 2006. Fastest gain so far on sizable quantity. This was Peter Lynch style of stock picking.

2006 Zuari Industries Ltd., an efficient fertilizer company with many subsidiaries with embedded value doubled our investment exactly on completion of 12 months. Bought during November 2006 around Rs.200 and sold off in December 2007 around Rs.410. It was our own evolved style of stock picking.

2007 Gammon India Ltd.,(BUY March 2007 @ Rs.300 SELL December 2007 @ Rs.610) & Hindustan Construction Company Ltd., (BUY March 2007 @ Rs.100 SELL December 2007 @ Rs.190). We made reasonable short term profits on moderate stock quantity from 2007 euphoria of infrastructure boom in India. This was Peter Lynch style of stock picking. 2007 Emkay Global Financial Services Ltd., a financial service company had impeccable promoters and immense growth potential pan India. We bought fairly large quantity of shares around Rs.66 in April 2007 and sold in December 2007 from Rs.280 till Rs.320. This was Peter Lynch style of stock picking.

2007 Arrow Coated Products Ltd., a patent ownership company on water soluble & embedded film, much to sarcastic from our peers. We got convinced on monetization potential of their IPRs. We bought in private placement at Rs.50. in 2011 we advised Rights Issue at Rs.10 with Convertible Warrants such that Promoter Holding increased from 52% to 74%. Promoter & His son’s commitment lead the business performance over the years and their equity valuation currently is testimony of our foresight and conviction. By January 2015 our investments have grown 10 times. It was our own evolved style of stock picking.

2007 VIP Industries Ltd., a soft luggage company with three major brands under its fold was sure to scale high. We bought around Rs.100 by June 2007 only to see in met down in global financial crisis to Rs.25 in January 2009 when we bought large quantities taking our average cost to Rs.40. We could sell it till Rs.460 in August 2010 which had caught fancy of celebrity investors. It was our own evolved style of stock picking.

2007 Shreyas Shipping & Logistics Ltd., a logistic and inland shipping company offering Sea & Road combo logistics service with its warehouses across India. We bought at Rs.110 in late 2007 only to see it fall to Rs.20 in 2009 where we bought large quantities taking our average cost to RS.30. We could sell all of which at median price of Rs.300 in January 2015 offering us largest quantum gain so far. It was our own evolved style of stock picking.

2009 Hindustan Dorr-Oliver Ltd., an Engineering EPC and Mineral Bifurcation Plant specialists with higher margins caught our attention. We bought at Rs.55 in May 2008 and sold off in February 2009 around Rs.170. This was Peter Lynch style of stock picking.

2009 Bliss GVS Pharma Ltd., a principally malaria medicine manufacturing company with dedicated clients in Africa demonstrated excellent financial discipline. We bought first at Rs.27 in November 2009 and sold at Rs.47 in April 2010. Again bought at Rs.30 in late 2011 much larger quantity and sold at Rs.70 in January 2015. It was our own evolved style of stock picking.

2010 COSCO (India) Ltd., a sports goods, exercise and body training equipment manufacture & marketer with long presence. Relatively small company at stock market but we lines its beauty. Ethical and committed management, business growth potential and actual foot print of Cosco Fitness Centers, we bought as much equity as was available around Rs.50 (Accumulated form August 2010 to February 2011). Its hovering around Rs.200 in 2015. We will remain for long haul in this company. Its combined Peter Lynch and our evolved style of stock picking.

2016 K P Energy Ltd., a Wind Power Developer with focus on high wind sites procurement, access & ground infrastructure building, setting up sub-stations, power evacuation high tensions cable lines grid laying & erection of Wind Turbine. We have recently invested in K P Energy Ltd. IPO on BSE SME. The IPO (February 15 – 17, 2016) came out for 9,20,000 shares (27% Post IPO Equity) @ Rs.70 per share amounting to Rs. 6.44 Crores. Listed @ Rs.72 on February 25, 2016, quotes Rs.270/- on 7th November, 2016. Veer Value Ventures LLP holds 2,00,000 (5.85%) shares as on 7th November, 2016. This is our own evolved style of stock picking.

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