DIMO Numbers - Another Perspective!

duke · 1 DIMO Numbers - Another Perspective! Sun May 22, 2011 8:31 am

duke

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2 points. hope i got the numbers correct.

(1) comparing with last years number it looks impressive.
but if we compare with the immediate quarter,

__3 months: (last)31-12-2010 (this)31-03-2011
gross profit: ______2,249,344 ______1,844,172

profit has gone down by around 20% compared to last quarter.

so there was a sudden windfall last quarter. i don't think vehicle business has a seasonal element to it. nobody buys commercial and high-priced vehicle because it's the festive season. it's just the need. i may be wrong.

(2) core business is vehicles. if we compare with other lighting, machines etc. profit, non-vehicle profit is only 20%. 80% is on vehicle business.

there's also the uncertainty of laws changing while you're in the bathroom.
also how much growth can we expect in this business. from last quarter it has gone down by about 20%. i think it'll remain level.
i think that's why big investors are in the selling mood, securing the profit they got.

anyway compared to other companies this is undervalued.

smallville · 2 Re: DIMO Numbers - Another Perspective! Sun May 22, 2011 10:11 am

smallville

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Qtr drop seems to to be the lesser no of demand for vehicles compared with last qrt.. As soon as the tax cut was announced, ppl may've bought so much in last qrr thinking that the tax cut could be a temporary bate..

Then again.. their revenue increase for the whole year has been a massive amount where they were compelled to give a sound dividend as well..

we cannot exactly expect an increase or the same level of revenue growth to be continued for the next qtr as well but DIMO now has Tata Nano in their hands.. look at the demand it will have compared to maruti as the only affordable car for average household.. Simply its not the beautiest, low engine capacity but its gonna be affordable..

If tax is increased again, all motor companies may suffer from their new shipments which is inevitable..

Fresher · 3 Re: DIMO Numbers - Another Perspective! Sun May 22, 2011 11:13 am

Fresher

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My opinion,

DIMO has Tata nano alright bt even marketing expense for it is not worth for the price at which they hav to sell the car.

One reason for the decline could be the massive influx of hybrids. It must be noted that normal hybrids and DIMO's vehicle range do not have the same target market but people might tend to get attracted to them. (there are luxurious hybrids too)

On the other hand, I don't think a person who wants a Mercedes will not go for a Japanese vehicle so the demand will still be there.

The dividends announced is equivalent to approx 50/- per share. That speaks volumes of the past year's performance and the confidence of the management.

ipoguru · 4 Re: DIMO Numbers - Another Perspective! Sun May 22, 2011 12:13 pm

ipoguru

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smallville wrote:Qtr drop seems to to be the lesser no of demand for vehicles compared with last qrt.. As soon as the tax cut was announced, ppl may've bought so much in last qrr thinking that the tax cut could be a temporary bate..

Then again.. their revenue increase for the whole year has been a massive amount where they were compelled to give a sound dividend as well..

we cannot exactly expect an increase or the same level of revenue growth to be continued for the next qtr as well but DIMO now has Tata Nano in their hands.. look at the demand it will have compared to maruti as the only affordable car for average household.. Simply its not the beautiest, low engine capacity but its gonna be affordable..

If tax is increased again, all motor companies may suffer from their new shipments which is inevitable..

Please check their annual reports 31st December 2010 and 31st March 2011 under notes they have mentioned

The Contingent Liabilities as at 31st December 2010, on guarantees given by the Company in respect of bid bonds, performance bonds and advance
payments amounted to Rs.1,144,917,549/- (Rs.588,578,269/- at 31st March 2010)

and for 31st March 2011

The Contingent Liabilities as at 31st March 2011,on guarantees given by the Company in respect of bid bonds,performance bonds and
advance payments amounted to Rs.672,317,020/- (Rs.588,578,269/- as at March 2010).

I am not an expert in reading these reports. I think smallville is. Can you check on above two comments and explain them?
Is that they have had more advance payments in 31st December and did that effect to higher EPS.

smallville · 5 Re: DIMO Numbers - Another Perspective! Sun May 22, 2011 3:33 pm

smallville

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I'm no expert in Accounts, what I'm stating here was what I've found regarding the topic;

A contingent liability is a potential liability…it depends on a future event occurring or not occurring. I.E. a court case; a company ex-employee suing the company over 1M for charges against the discriminatory termination..
Now the company may win the law suit or lose it and pay the ex-employee amount sated which ever is deemed to decide in future by the court..

These liabilities are recorded in a company's accounts and shown in the balance sheet when both probable and reasonably estimable.

Also I found that; The accounting rules for these contingencies are as follows:
If the contingent loss is probable and the amount of the loss can be estimated, the company needs to record a liability on its balance sheet and a loss on its income statement. If the contingent loss is remote, no liability or loss is recorded and there is no need to include this in the notes to the financial statements. If the contingent loss lies somewhere in between, it should be disclosed in the notes to the financial statements.

It says guarantees given by the Company in respect of bid bonds, performance bonds and advance payments..
Now do we have more information on DIMO's case to evaluate based on what criteria those have been mentioned?

Antonym · 6 Re: DIMO Numbers - Another Perspective! Sun May 22, 2011 5:09 pm

Antonym

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"Guarantees given by the Company in respect of (1) bid bonds, (2) performance bonds and (3) advance payments":
These are bank guarantees issued on behalf of DIMO, which could have been encashed by the beneficiary if DIMO had defaulted on its commitments.

(1) Bid bonds are provided as a security (to show sincerity and financial capability) when a company is bidding for an order.
(2) Performance bonds are typically given at the commencement of a contract to guarantee performance of that contract.
(3) Advance payment guarantees are like a security given when DIMO receives advance payment from a customer.

My guess is that, in terms of value, most of these would be Performance bonds. If so, the reduction in contingent liability indicates that during the Jan-Mar-2011 quarter, many contracts were completed and closed.

It is positive that contingent liabilities have reduced... The negative angle is that these contracts (and the resultant profits) might or might not repeat.