Friday, 3 November 2017

Difference between Preference Shares and Equity shares

Key difference is that while Preference shareholders enjoy the benefit of receiving their dividend distribution first; the equity shareholders enjoy voting rights in major company decisions, including mergers or acquisitions. 

 A Company can issue two types of shares viz. Equity Shares and Preference Shares. Equity shares are also known as Ordinary Shares.  While Preference shareholders enjoy the benefit of receiving their dividend distribution first; the equity shareholders enjoy voting rights in major company decisions, including mergers or acquisitions. 

Preference shares have the right to receive dividend at a fixed rate before any dividend is paid on the equity shares. Further, when the company is wound up, they have a right to return of the capital before that of equity shares. The key differences between preference shares and equity shares are listed in the following table: 

Basis of Distinction
Preference SharesEquity Shares
Rate of DividendPaid at fixed rateMay vary , depending upon the profits
Arrears of DividendGet accumulated for cumulative preference sharesNo accumulation
Preferential RightsBefore Equity sharesAfter
Winding upHave a right to return of capital before equity shares . This means they are safer.Only paid when preference share capital is paid fully
Voting RightsNo voting rightsVoting rights
Right to participate in ManagementHave NO rightHave right

Apart from the above, the preference shares may carry some more rights such as the right to participate in excess profits, which a specified dividend has been paid on the equity shares or the right to receive a premium at the time of redemption.
The preference shares are safer investments than the equity shares. In case the company is wound up and its assets (land, buildings, offices, machinery, furniture, etc) are being sold, the money that comes from this sale is given to the shareholders. After all, shareholders invest in a business and own a portion of it. Please note that usually, the preference shares are most commonly issued by companies to institutions. 
That means, it is out of the reach of the retail investor. For example, banks and financial institutions may want to invest in a company but do not want to bother with the hassles of fluctuating share prices. In that case, they would prefer to invest in a company’s preference shares. Companies, on the other hand, may need money but are unwilling to take a loan. So they will issue preference shares. The banks and financial institutions will buy the shares and the company gets the money it needs. This will appear in the company’s balance sheet as ‘capital’ and not as debt (which is what would have happened if they had taken a loan). Preference Shares are NOT traded in stock exchange. This also means they are not ‘liquid’ assets; there’s little scope for the price of these shares to move up or down. On the other hand, ordinary or equity shares are traded in the markets and their prices go up and down depending on supply and demand for the stock. But, that does not mean the investor is stuck with his shares. After a fixed period, a preference shareholder can sell his/ her preference shares back to the company. This cannot be done with the ordinary shares. Ordinary shares can be only sold to another buyer in stock market. One can sell the ordinary shares back to the company only if the company announces a buyback offer.

Saturday, 7 October 2017

Reading The Balance Sheet

A balance sheet, also known as a "statement of financial position", reveals a company's assets, liabilities and owners' equity (net worth). The balance sheet, together with the income statement and cash flow statement, make up the cornerstone of any company's financial statements. If you are a shareholder of a company, it is important that you understand how the balance sheet is structured, how to analyze it and how to read it.

1. The Balance Sheet Equation

The main formula behind balance sheets is: Assets = Liabilities + Shareholders' Equity

This means that assets, or the means used to operate the company, are balanced by a company's financial obligations along with the equity investment brought into the company and its retained earnings. The total assets must equal the liabilities plus the equity of the company.

2. Know The Current Assets

Current assets have a life span of one year or less, meaning they can be converted easily into cash. Such assets classes include cash and cash equivalents, accounts receivable and inventory. Cash, the most fundamental of current assets, also includes non-restricted bank accounts and checks. Cash equivalents are very safe assets that can be readily converted into cash; U.S. Treasuries are one such example. Accounts receivables consist of the short-term obligations owed to the company by its clients. Companies often sell products or services to customers on credit; these obligations are held in the current assets account until they are paid off by the clients.

3. Know The Non-Current Assets

Non-current assets are assets that are not turned into cash easily, are expected to be turned into cash within a year and/or have a life-span of more than a year. They can refer to tangible assets such as machinery, computers, buildings and land. Non-current assets also can be intangible assets, such as goodwill, patents or copyright. While these assets are not physical in nature, they are often the resources that can make or break a company - the value of a brand name, for instance, should not be underestimated. Depreciation is calculated and deducted from most of these assets, which represents the economic cost of the asset over its useful life.

4. Learn The Different Liabilities

On the other side of the balance sheet are the liabilities. These are the financial obligations a company owes to outside parties. Like assets, they can be both current and long-term. Long-term liabilities are debts and other non-debt financial obligations, which are due after a period of at least one year from the date of the balance sheet. Current liabilities are the company's liabilities which will come due, or must be paid, within one year. This is includes both shorter term borrowings, such as accounts payables, along with the current portion of longer term borrowing, such as the latest interest payment on a 10-year loan.

5. Learn about Shareholders' Equity

Shareholders' equity is the initial amount of money invested into a business. If, at the end of the fiscal year, a company decides to reinvest its net earnings into the company (after taxes), these retained earnings will be transferred from the income statement onto the balance sheet into the shareholder's equity account. This account represents a company's total net worth. In order for the balance sheet to balance, total assets on one side have to equal total liabilities plus shareholders' equity on the other.

6. Analyze With Ratios

Financial ratio analysis uses formulas to gain insight into the company and its operations. For the balance sheet, using financial ratios (like the debt-to-equity ratio) can show you a better idea of the company's financial condition along with its operational efficiency. It is important to note that some ratios will need information from more than one financial statement, such as from the balance sheet and the income statement

Friday, 15 September 2017

OK PLAY Financial Results For 30 June, 2017 Play India consolidated net profit rises 166.67% in the June 2017 quarter
Net profit of OK Play India rose 166.67% to Rs 1.12 crore in the quarter ended June 2017 as against Rs 0.42 crore during the previous quarter ended June 2016. 
Sales rose 32.39% to Rs 27.06 crore in the quarter ended June 2017 as against Rs 20.44 crore during the previous quarter ended June 2016

Here are some more key Update form OK PLAY

Huge opportunity in EV space; will produce 250,000 vehicles next year: OK Play India

OK Play India reported a steady of numbers with revenues jumping 36 percent. In an interview to CNBC-TV18, Rajan Handa, MD of OK Play India decoded the earnings fine-print and also spoke about opportunities in the electric vehicle (EV) space.

OK Play India reported a steady of numbers with revenues jumping 36 percent. In an interview to CNBC-TV18, Rajan Handa, MD of OK Play India decoded the earnings fine-print and also spoke about opportunities in the electric vehicle (EV) space.
We have set up manufacturing facilities in conjunction with our manufacturing partners across the country. We have seven facilities up and running and all of them are producing the same products with the same equipment using the same components. These are all dedicated EV facilities, he said.
We have done test marketing on EV and we have about 46 showrooms operating which deal only with OK Play EVs, he added.
The average price per vehicle is Rs 1,25,000, when I am talking about an e-rickshaw. There is a lot of opportunity also in the retail market because this is a natural upgradation from cycle-rickshaw or using a petrol/diesel alternative, said Handa.
We are being conservative about numbers because the opportunity is humongous, the capacities that we have created now would allow us to produce in the next year 250,000 vehicles. We have also tied up with one of the leading non-banking financial companies (NBFCs) to get these vehicles financed for the end-user, he further mentioned.
I would look at 10,000 units coming on a monthly basis down the line, Handa said.
To watch the full interview , click on the below link :

Friday, 28 July 2017

OK PLAY INDIA LTD , BSE Code - 526415

 OK PLAY INDIA LTD - BSE Code - 526415

The company is primarily a toy maker. It has a product portfolio of school furniture, playground equipment, signage boards and automotive fuel tanks along with toys. In the toys market, ‘OK Play’ is an unmatched brand. it has developed 100% plastic parts for electric vehicles and marketing them under the ‘e-Raaja’ brand. The company which has already been in the e-vehicles market with eight unconventional electric products that include e-rickshaws, e-vending carts, e-mobile shops, e-loaders, e-garbage collectors, e-school buses, e-scooters, has launched six variants of electric two-wheelers in the first quarter of 2017-18. These two wheelers, with one single charge, can ply 80 Km distance with 40 KMPH speed. 

Rajan Handa, founder-managing director of OK Play Electric Vehicles, believes the three-wheeled platform will be the low-hanging fruit since it will be the most cost-effective of all vehicles.

As India eyes an all-electric car fleet by 2030, Rajan Handa, founder-managing director of OK Play Electric Vehicles, believes the three-wheeled platform will be the low-hanging fruit since it will be the most cost-effective of all vehicles. "We decided to exploit our skills and experience in engineering and plastic moulding to design and develop technically and commercially viable electric vehicles," says Handa. OK Play's e-rickshaw under the brand E-Raaja is priced at Rs 1.25-1.5 lakh and indigenously developed. The company's other products include e-vending carts, e-mobile shops, e-loaders, e-garbage collectors, e-school buses and e-scooters. The e-rickshaw weighs 320 kg and can carry a load of 700 kg. It has a maximum speed of 24 km/ hr and the battery lasts 80 km with each charge. The company can produce 20,000 vehicles every month. "We have set up manufacturing facilities in eight locations in the country. With two more coming up, OK Play will be able to cater to national requirements in real time," says Handa.

"We are in the process of covering the entire geography of our huge country. We are also working towards becoming a global supplier of electric vehicles."

OK Play EV : A New Definition of E- Rickshaw

Designed to Rule the Roads

OK Play Electric Vehicles, one of the most recognised manufacturers in India, has combined innovative design with unparalleled quality to develop e-Raaja, India’s first plastic body e-rickshaw. Robust build and unique features of e-Raaja makes it far superior to any other e-rickshaw in the market. With its seamless, sturdy body, rounded edges and impact resistant plastic, e-Raaja is built to endure rough roads and provide a safe ride with maximum comfort. All this, along with striking aesthetics, makes it a viable option for last mile commute on difficult Indian roads.

Here are their clients in the automative sector 
  • POP, Signage &Display Stands

  • OK Play India Ltd has an annual production capacity of 96,000 electric two-wheelers. The government aims to develop India an e-mobility nation by 2030. To achieve the target, it has chalked out ambitious policies like FAME (Faster Adaption and Manufacturing of Hybrid and Electric vehicles), National Electric Mobility Mission, etc. The Indian e-two-wheelers market has been expanding at a 30% per annum growth rate. The company may garner a 10% market share. It is going to distribute world renowned toy brands in India. As the Supreme Court gave its verdict banning the fresh sales of BS-3 vehicles from April 1, 2017, the company will benefit mostly with the expected demand surge for its Plastic Fuel Tank which strictly adheres to Bharat-4 standards. OK Play has entered an agreement with an Israel firm for developing and marketing of ‘inspection chambers’ which find usage in the sewerage and drainage systems management.
    The promoters and non-promoters pumped in fresh capital by subscribing to its equity shares and warrants at a price of Rs 140.47. It caused a surge in the net worth of the company by about Rs 21 crore. With the implementation of BS-4 ecological norms and with the SC final verdict banning the BS-3 sales from this April 1st itself, now there will be an explosive demand for the next generation eco-friendly auto components. OK Play India Ltd, the maker of these parts, is attracting the market players. Currently priced at 164 rs

    Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

    Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

    Disclosure: It is safe to assume that i might have Ok Play India Ltd in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.

    Friday, 21 July 2017

    Reliance Jio Phone 4G mobile launched - Bad days ahead for Airtel and idea ?

    Reliance Jio Phone 4G mobile launched. Bad days ahead for  Airtel , Dish Tv or do they have something up their sleeve ?
    Reliance Jio today announced the launch of its much rumoured 4G feature phone, which is named as JioPhone. Along with that it has announced its cable TV device. The JioPhone will be available for free but buyers will have to deposit a fee of Rs 1500 which will be refundable after three years on returning the phone. This means the phone will be available at an effective price of zero. JioPhone will be available for beta testing this 15th August, while pre booking will start from 24th August; physically it will available from September this year.


    Price and data plans:

    1. Reliance Industries Limited chairman Mukesh Ambani on Friday announced the JioPhone, a 4G VoLTE feature phone which he called ‘India ka Smartphone’.
    2. The JioPhone’s effective price is Rs 0. This means, you can buy the phone at Rs 1500, which will be refunded after 3 years.
    3. The phone is a feature phone, but with a larger screen, access to apps and of course 4G data and 4G VoLTE calls and will effectively cost the customer Rs 0 for the device.
    4. JioPhone users will have to pay just Rs 153 a month, including the cost of the phone. There will be a weekly plan of Rs 54 and a two-day plan of Rs 24 with all the same features.
    5. The highlight of this phone is the 4G VoLTE, it has a voice command interface, and comes pre-loaded with Jio’s apps loaded on it.
    6. JioPhone has 2.4-inch display, and can play the JioCinema app as well. So users can watch movies on this feature/smartphone smash.
    7. It has an SOS feature as well, which can be activated by pressing 5. There is support for NFC that enables quick payments, and the ability to cast content.
    Availability and date of sale:
    8. The phone will be available for beta testing from August 15 and for prebooking from August 24.
    9. The phones will be available for sale at a first come, first serve basis from the last quarter of 2017. The target is to make 5 million phones available every week.
    10. The JioPhone will always have free voice calls. From August 15, the JioPhone will come with free unlimited data.

    Made in India JioPhone:

    11. The phone has been created by Indian engineers for an Indian audience.

    Other things to know:

    12. The phone will offer an innovative cable link to television to help users view content on a big screen at home. Users will need to buy the Jio Dhan Dhana Dhan package of Rs 309 to get the extra data needed for this.
    13. The phone also responds to voice commands, which is unprecedented for a feature phone anywhere in the world.
    14. Jio will be the greatest accelerator of the Bharat-India connectivity, said Mukesh Ambani.
    15. Mukesh Ambani declared 15th August 2017, as ‘DIGITAL FREEDOM’ for all feature phone users with JioPhone.

    JioPhone is bad news for Bharti Airtel, Idea Cellular , Dish TV , Hathway cable and shilpi cable 


    Thursday, 29 June 2017


    Meaning of GST
    GST is abbreviation for Goods and Service Tax. GST is also known as Value Added Tax (VAT) in few countries.
    GST / VAT is a consumption based tax wherein the basic principle is to tax the value addition at the each business stage. To achieve this, tax paid on purchases is allowed as a set off/ credit against liability on output/income.
    GST is levied on all transaction of goods and services. Thus, in principle, GST should not differentiate between ‘goods’ and ‘services’.
    For Example:
    Stage 1 (Manufacturer)
    Imagine a manufacturer of Trouser . He buys raw material or inputs — cloth, thread, buttons, tailoring equipment — worth Rs 100 a sum that includes a tax of Rs 10. With these raw materials, he manufactures a trouser
    In the process of creating the trouser, the manufacturer adds value to the materials he started out with. Let us take this value added by him to be Rs 30. The gross value of his good would, then, be Rs 100 + 30, or Rs 130.
    At a tax rate of 10%, the tax on output (trouser) will then be Rs 13. But under GST, he can set off this tax (Rs 13) against the tax he has already paid on raw material/inputs (Rs 10). Therefore, the effective GST incidence on the manufacturer is only Rs 3 (13 – 10).
    Stage 2 (Manufacturer to Wholesaler)
    The next stage is that of the good passing from the manufacturer to the wholesaler. The wholesaler purchases it for Rs 130, and adds on value (which is basically his ‘margin’) of, say, Rs 20. The gross value of the good he sells would then be Rs 130 + 20 — or a total of Rs 150.
    A 10% tax on this amount will be Rs 15. But again, under GST, he can set off the tax on his output (Rs 15) against the tax on his purchased good from the manufacturer (Rs 13). Thus, the effective GST incidence on the wholesaler is only Rs 2 (15 – 13).
    Stage 3 (Wholesaler to Retailer)
    In the final stage, a retailer buys the trouser from the wholesaler. To his purchase price of Rs 150, he adds value, or margin, of, say, Rs 10. The gross value of what he sells, therefore, goes up to Rs 150 + 10, or Rs 160. The tax on this, at 10%, will be Rs 16. But by setting off this tax (Rs 16) against the tax on his purchase from the wholesaler (Rs 15), the retailer brings down the effective GST incidence on himself to Re 1 (16 –15).
    Thus, the total GST on the entire value chain from the raw material/input suppliers (who can claim no tax credit since they haven’t purchased anything themselves) through the manufacturer, wholesaler and retailer is, Rs 10 + 3 +2 + 1, or Rs 16.
    To conclude in GST regime there will be “NO TAX ON TAX and there will be seamless credit of tax available at each value addition of business stage

    Tax Rates Before And After GST

    Toothpaste, Branded Cereals May Cost More

    Rates Up For Mobile Phones, Refrigerators

    Shampoos, Perfumes May Cost More

    Higher Rate On Electric Hot Plates

    Wallpaper, Paints In Highest Slab

    Fresh Milk, Vegetables Exempt

    No Tax On Condoms

    Lower Tax On Kerosene

    Plastic Products To Cost More

    Eating Out, Phone Calls Costlier