MIC Electronics Limited (MIC): The Company is a global leader (who made them global leader?) in the design, development, and manufacturing of LED Video Displays, LED lighting solutions, and Embedded Systems/Telecom Software. Most of its revenue come from LED Video Displays, that have become an integral part of sports stadiums, transportation hubs, digital theatres and theme parks, advertisements and public information displays.

• Operating Cash flow (consistently negative)
• Debt (higher than cash flow)
• Dividends (yes, but less than 10% payout)
• Reported Net Profit (positive)
• Margins (positive, and all increasing)
• Here is what I do not understand. The company has negative operating cash flow, meanings it is sucking in cash consistently for last four years. But it is still showing profits. How is it making profit?
• Approximately 40% to 45% of its revenue is in sundry debt. Meaning, its customers are not paying them for their services or products. This could likely explain why its cash flow is less.
• On the positive side, it has more than enough working capital.
• These observations keep me away from MIC Electronics.

Nava Bharat Ventures Limited (NBVENTURE): Originally, this company was manufacturer of ferro silicon and was one of the largest Indian exporter of ferro alloys. It also has sugar production facilities and sugar by-product (rectified spirit and extra neutral alcohol). Over time, this company has started venturing out in power generation and infrastructure projects (e.g. special economic zones and real estate development). It also started a fully owned subsidiary for trading activities (mineral resources and ferro alloys).

• Operating Cash flow (positive, increasing, but less than net profit)
• Debt (high, higher than cash flow, almost same has net profit)
• Dividends (yes)
• Reported Net Profit (positive)
• Margins (positive, and all increasing)
• Capital usage (good, more than 30%)
• My observation is; other than debt and cash flow, it seems to have good balance sheet.
• If I have to hold it for long time, then I need to understand what the company wants to do. It seems to keep venturing into next hot market, first sugar, then power generation, then real estate, and now material trading. Trading is an activity that has less investment and tends to increase margins and returns.
• I am on the border line about this company vis-a-vis its role in my portfolio. I already have exposure to power generation industry. I will continue to wait, watch, and keeping reading more to understand its future direction, and how it is able to keep good dividends.

Cords Cable Industries Limited (CORDSCABLE): It manufactures LV Power & Control cables, Instrumentation cables, Thermocouple Extension cables, Compensating cables, telephone cables, panel wires & Customized cables.

• Operating Cash flow (increasing cash flow, in 2009 it is higher than net profit)
• Debt (higher than cash flow and net profits)
• Dividends (yes)
• Reported Net Profit (positive, overall increasing)
• Margins (positive, improving until 2008, dropped to single digits in 2009)
• Capital usage (reducing trend)
• In 2008, it was listed as a part of Asia’s best company under one billion dollar.
• The Company has made efforts to diversify its revenue and market. Considering the expenditure in infrastructure, this company is in the right sector. It does not have a great history in past, but management seems to remain focused on its domain of cables.
• I would read more about Cords Cable and review this in the context of my long term buy and hold portfolio.

Dai Ichi Karkaria (DAICHI): This Company is focused on manufacturing of high performance specialty chemicals such as surfactants, additives, and specialty polymers for different types of applications. Such chemicals are used on variety of industries such as Textiles, Metal Treatments, Pesticides, Rayons, Oil Industry, and water treatment plants. I personally like companies that have niche positions.

• Operating Cash flow (very inconsistent)
• Debt (low)
• Dividends (yes, but very high payout factor of 70%+)
• Reported Net Profit (positive )
• Margins (negative OM/GM, very low NPM)
• Capital usage (TBD)
• It has very low institutional holdings, and owners take away almost 70% of EPS as dividends! The question is; if owners think that valuation is likely to increase, then what motivates them to take away most of the profits.
• These observations keep me away from Dai Ichi Karkaria.

I would like to reiterate that I am saying these companies are good or bad in itself. The fact that they are in business and keep growing suggests that they are profitability run by their management. The observations I made here are in context of my objective for my long term buy and hold portfolio.

What are you thoughts? Do you agree? What is your observation?