Yes, thats what matters.

 

By the way Nitin bhai, have you looked at Glaxo Pharma. Its cash and investment balance is simply mindblowing.

 

Vivek,

  Glaxos investment balance is truely mindblowing, but their net current assets is negative. This is not bad at all...infact I love companies that can run their business on negative net current assets. They are virtually running their day-to-day business of others cash!! An extreme case of this is Moody's corp in which Buffet is the biggest shareholder. They have been maintaining a negative equity for a long long time and yet they generate amazing cash flows. On a -780 million equity they generated 710 million free cash flow!! They are virtually running their whole business on other's cash!! But they can afford to, since they have such a bullet proof moat. Glaxo also is a great business, as they are able to generate increasing amounts of earnings on virtuatually very little reinvestment in gross block!! This is truely amazing.

 

These companies thrive like this only. Perhaps the best way to increase RoE is get finance at zero cost from suppliers, sell your wares for cash to your customers and if possible get all sort of safety deposits from your CFAs, stockists and squeeze them hard for cash. In short, milk your brand to the maximum. Devote a decent percentage to keep the brand hit and fit, pay a very decent percentage back to the owners and repeat this process over and over again. Absolute ruthless and no brain style of working.........

Thats why you have to cherry-pick among those as well.

 

Thats why I am not going for timken india, avery india, bata india( although liked that it has at last declared a dividend).rayban sun optics etc. thats why I have curtailed my plans for Procter and Gamble though at one point of time I wanted to convert all my levers and ITCs into procter.

 

The difference between your thought process and my thought process is quite simple. You think at CMP, most of the strengths are in-built, whereas I believe at CMPs most of the fears are in-built.

 

Also, these concerns which you have enumerated, dont grip all and sundry MNCs. The reason why prices wont move fast, and scope of capital gains may appear to be limited, is that these managements dont want them to. Go through Foseco's Annual Report and read their policy on disclosure norms. They clearly state that they will not say anything to the analyst community what they have not told to the exchanges. tell me, why shall an analyst bother to go to a company if he is not provided information thats not available with general investors. their concern for price-sensitive information is so tremendous that they have thoroughly inked their policy regarding it and has disclosed it in their annual report. But then, at 14 times its reported EPS for year ended december 2007, it is a no brainer. When I look at it, I feel its better to have this rather than a SAIL or a TISCO. SAIL and TISCO will move and down with steel prices whereas Foseco will behave normally without such aberrations. TISCOs and SAILs need Foundry chemicals for their foundries and hence demand for Foseco is not likely to dampen until and unless 2001 happens again. And in that case, forget Foseco, most of the blue chips we are talking about will fall on their faces. the same thing goes for a vesuvius india.  

 

The reason why I post my views on them here is to know what is drastically wrong with them that people dont want to get them. I reiterate that I have no intention to indulge in making a persuasive case for them. People are free to question and express their concerns. Any negative feedback is more welcome than a positive one.