I bought KPR Mills for myself and suggested publicly to my Facebook friends…. At that time, KPR Mills was trading at 123…. It hit the price of 1800 (Taking 1:1 split into factor) in 2018…. So it multiplied 17 times in 4 years…. KPR Mills was an unknown name at that time and nobody even heard this name…..So the Billion dollar question is what I saw in KPR Mills which was not present in other famous stocks that I preferred it above others…. Answer of this question lies in secrets of Value Investing to which legends like Warren Buffet belongs to…. KPR Mills was grossly undervalued in my opinion compared to its financial position and its future prospects…..Below are some positives I found before investing in it in 2014–
- It had some advantage over its competitors in its power costs…. Textile industry is power intensive industry and power cost is big component of their total cost… KPR Mills has its its own wind energy set up…. Its competitors have high power cost compared to KPR Mills.
- When I studied the company before making investment in it, I spoke to Company Secretary of KPR Mills to gain further insight about operation of the company…. I was told that currently manufacturing plant is sealed by government because in an unfortunate accident involving poisonous gas, 7 workers died in the plant…. Obviously, it was not a small incident and regulators made a through investigation as who was at fault in that accident… But it came out that in spite of such a big incident, not a single flaw was found in the internal security and operating procedure of the company and later plant was opened again for operation….. So instead of taking that incident negatively, I rather became more bullish on KPR Mills because if such a small company is having complete safety procedure and no action was taken by regulators against it, it was a proof in itself that company is being managed efficiently…. I took that incident positively while many would have taken that incident negatively.
- Company has significant presence in Domestic as well as Global Markets.
- Future prospects of Textile Sector as a whole were also strong
- Management is transparent and books are clean…. I was also impressed by the willingness of the Company Secretary to share details about company to a shareholder…. There are many companies in India whose management do not want to engage with shareholders… They treat the company as their own…. But KPR was different.
- Next day after talking to company secretary, I invested 15% of my portfolio in KPR Mills