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Sep 12, 2005, 10.52 AM IST | Source: Moneycontrol.com

Hidden gems: Attractive picks below Rs 20

Investment analyst and author of 'Hidden Gems,' Ashish Chugh expresses his opinion on the stocks that are below Rs 20. Investment advisor, S P Tulsian joins him in picking out attractive buys.

Investment analyst and author of 'Hidden Gems,' Ashish Chugh expresses his opinion on the stocks that are below Rs 20. Investment advisor, S P Tulsian joins him in picking out attractive buys.

Chugh commented on scrips like Integrated Finance , Ecoboard Industries Limited and Devaki Hospitals . Whereas, Tulsian discussed - Ambalal Sarabhai and  Bhageria Dyechem .

Excerpts from an exclusive CNBC-TV18 interview with S P Tulsian and Ashish Chugh:

On Integrated Finance:

Chugh: Basically, this company had started long time back. It had its set of problems after the fall of the Non Banking Finance Companies, NBFCs. This company had borrowed at a very high cost in the mid-nineties, and also lent at very high rates. After that the economy went into a downturn, and we saw a lot of those foreign banks coming in, who were able to offer their products at much lower costs.

This company had lent to a lot of small and mid-sized companies. It was not able to recover its money from those companies and was not able to pay the depositors. This company had a deposit base of about Rs 125 crore. A recent development, in the company is that, it has been able to secure the consent of the depositors for restructuring this deposit. Therefore, the company is converting that Rs 125 crore of deposit which it had, into covertible debentures. That means that, it is carrying a coupon rate of 6%. These deposits were having a coupon rate of 15% earlier.

So for one year, the company is able to save a 9% cost on Rs 125 crore, which comes to about Rs 10 crore. Next year, the whole debt in the balance sheet of the company will get wiped off. These debentures will come off for coversion into equity share at Sebi determined formula, in July-August of next year. As soon as the conversion takes place, it will lead to a bloating of the equity of the company. The company will become a debt free company from next year onwards. The good thing about this company is that, they have got a very good network in the south, and they are doing a lot of BPO operations for financial services companies. Integrated Finance is working with UTI Bank, Tata AIG and ICICI Bank.

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However, the company's BPO is not the BPO as it is understood normally. It is not a call centre operation. Integrated Finance uses its network to source business for those companies, and also provides process outsourcing to those companies. It will make a lot of sense for any of these financial services companies to tie up with Integrated Finance, and have a network in the south. It is after the RBI's and the High Court's approval, that they have been able to structure these fixed deposits into covertible debentures. I own investments in this company.     

 

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