Saturday, October 27, 2007

Lotus India AGILE Fund - NFO

We generally do not give updates on mutual funds. However, this new fund from Lotus India AMC just took up my attention. What is so different about it???
It is India’s 1st Quant based Mutual Fund scheme. A quant fund is one where the investing decisions are taken by computer based models which are developed using quantitative techniques. How does this benefit the investor???.

•The investing strategy used is back tested and has a proven track record.
•The buy and sell decisions are made by the computer model and hence it eliminates human and emotional bias of the fund manager.
•It follows a consistent investment strategy and does not deviate from the same resulting in higher long term returns.

Quant fund have been in countries like USA and Australia for quite some time. However, this fund is first of its kind in India. The Lotus India AGILE fund’s returns that are available in the presentation on the link provided below are far superior to other index funds currently in the market. The fund seems to be worth investing in if you are looking to invest in large cap stocks.

Objective of the Fund:

The investment objective of the scheme is to generate capital appreciation by investing in passive portfolio of stocks (equity and equity related instruments) selected from the industry leaders on the basis of a mathematical model.

What is AGILE?

AGILE means Alpha Generated from Industry Leaders Fund. Alpha is the measure of a fund`s performance with respect to the performance of the index against which the fund is benchmarked. Here in case of Lotus India AGILE Fund, alpha refers to the excess returns of the portfolio over the returns of its benchmark index, the S&P CNX Nifty (Nifty/Index).

The presentation and the offer document of the fund are available on the following links:

The scheme opens for subscription on Oct. 25, 2007 and closes on Nov. 23, 2007. Continuous offer will be open for repurchase on or before Dec. 20, 2007. The units of the scheme will be available at Rs 10 per unit plus applicable entry load during the new fund offer period.

The fund aims to generate capital appreciation by investing in a passive portfolio of stocks selected from industry leaders on the basis of a mathematical model and offers growth, dividend payout and dividend reinvestment options.
The fund will invest in 11 stocks determined by a mathematical model and the portfolio will be reviewed and reset every month. Out of the total corpus, 9 per cent will be invested in each of the 11 stocks and one per cent will be kept in money market instruments.

The benchmark index for the fund is the S&P CNX Nifty.

The minimum application amount is Rs 5,000 and in multiples of Rs 1 thereafter, and in case of additional purchase the application amount is Rs 1,000 and in multiples of Rs 1 thereafter, and the minimum redemption fee is Rs 1,000 or 100 units.
The entry load is 2.25 per cent where the purchase amount is less than Rs 5 crore, whereas the exit load in case of redemption on or before expiry of six months from the date of allotment is one per cent and if redeemed after six months and on or before the expiry of one year from the date of allotment it is 0.60 per cent.

Sunday, October 21, 2007


Type of Issue : Book Built
Issue Opens: 22 October, 2007
Issue Closes: 26 October, 2007
Expected Refund Date: 13 November, 2007
Issue Size : 7,666,666 (No. of Shares)

Lower Price Band: Rs.40
Upper Price Band: Rs.45
Total Issue Size: Rs.34 Crores

Application Multiple: 125 and in multiples there off starting with at least 125 shares.

Maximum Shares: 2125(for Retail)

Information URL :
Prospectus URL :

Company Details :

Email :
Contact Details: 914066369058 /914023730839 /914023757472 (fax)

ISSUE Description:

SVPCL Ltd. is entering the capital market on 22nd October, 07 with a public issue of Rs.34.50 crores by issue of equity shares of Rs.10 each in the band of Rs.40 to Rs.45 per share.

The company is a small player in manufacturing paper products like note-book, work-books and other educational stationery and catering to educational sector. Topline for FY 07 was placed at Rs.71.50 crores with PBT of Rs.7.87 crores and PAT of Rs.5.94 crores resulting in an EPS of Rs.5.13 on equity of Rs.11.57 crores.

The present capacity of three plants located at Hyderabad, Vijayawada and Viszag is 19,500 TPA which is operating at about 65% utilization. Inspite of this, the capacity is being expanded to 34,000 TPA with a capex of Rs.37.10 crores which is largely financed by proposed issue.

Blue Bird a large size paper product manufacturer, went public in December 06 and issued shares at Rs.105 per share, and now the share is ruling at Rs.60. This is inspite of the fact that, the company had topline of Rs.454 crores with EBITDA margin of 12.7% and an EPS of Rs.7.50. This company had EBITDA margin of 16.5% with EPS of Rs.5.13 for FY 07.

Post issue, equity of the company may rise to Rs.19.30 crores, and since, the existing capacity is already underutilized, we are skeptical about how much would get added by new capacity additions, to the topline of the company. Working capital requirement of the industry is also very high, which would be an obstacle in improvement of the turnover. Hence, not much increase in financial performance of the company can be expected in FY 08, hence maybe EPS decretive.

Not much can be expected from this company and share at the upper band of Rs.45, looks fully priced, leaving no scope for capital appreciation.

A mediocre company, fully priced.