Sicagen: Indian Equities
Sicagen is a trading outfit based out of Chennai.
It is primarily engaged in trading commercial vehicles and construction materials. It is a distributor for Tata Motors.
It reported marginal operating profits on growing revenues over the last five years – reporting over 25cr in operating profits on revenues of 900cr in the year ended 31st March, 2012. It operated with a moderate debt load relative to its current assets as at that date.
The company reported 38cr in market value of quoted investments as at 2011 year-end – this would be lower as at 2012 year-end but not by too much.
The reported assets on the balance sheet are largely comprised of sundry receivables and other loans and advances – their recoverability is unknown from publicly available information.
The business is totally dependent on the interest-rate environment – being adversely exposed to high interest rates, crimping demand for its products.
It is also impacted by the cyclical factors from the supply side – including those affecting the steel industry.
Government regulations on fuel, duties, and taxes play a large role in impacting demand for the company’s automobiles.
Being a trading outfit, the company is exposed to significant competition resulting in low profit margins. Entry of new players could put the existing margins at risk.