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Thursday, Aug 17, 2006

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Khaitan India: Quiet accumulation

Khaitan India Ltd (KIL), a member of the hardly tracked Kolkata-based Khaitan Group, is a new small-cap find for certain investors.

Though the company had not announced it, Business Line learnt that an investment company - CD Equifinance - and four persons acting in concert have acquired 5.06 per cent (2,40,198 shares) in KIL from the open market in the past three months.

On Wednesday, the stock closed at Rs 27.85, up 2 per cent, with a traded quantity of 20,400 shares (21-day average volume 3,422 shares) on the NSE.

Primarily a sugar play, the company's agriculture division has 8,000 acres of land near its sugar unit in West Bengal, where 36,000 new trees were planted and a total of about 3,02,699 trees have been planted in the last 15 years.

The plantations include litchi, mango, teak and kadam. It is estimated that after 10 years, the plantations might be valued anywhere between Rs 300 crore and Rs 500 crore.

Till last year, the company used to market Khaitan Electricals products.

From this year, the marketing division has been discontinued and transferred to Khaitan Electricals (KEL). But KIL still owns the Khaitan brand and derives royalty income from it.

KIL also holds around 35 per cent stake in KEL and the market price movement of KEL generally influences KIL value. On May 16, KIL stock had hit its 52-week high of Rs 33.35, when KEL prices soared.

KIL, now giving more focus on the sugar unit at Plassey in Murshidabad district of West Bengal, which currently boasts a capacity of 1,200 tonnes crushed per day (TCD).

The capacity is planned to go up to 1,500 TCD by 2007 and to 2000 TCD by 2008.

The company is installing a turbine to reduce fuel cost.

Jayanta Mallick

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