Rain industry


looks cheap


Rain industries

  •  Carbon Products consist of Calcined Petroleum Coke (“CPC”), Coal Tar Pitch (“CTP”),
  • Green Petroleum Coke (“GPC”) and other derivatives of Coal Tar distillation including
  • Creosote Oil, Naphthalene, Phthalic Anhydride, CARBORES® and others. Further,
  •  Activities across the World with operating facilities spread across Belgium, Canada,
  •  Activities across the World with facilities in Germany, Canada and the Netherlands.

carbon product chemical business

priya cement

true multinational company

plants in USA Germany Canada Netherlands Poland Africa etc

What if foreign country close the plant due to pollution ?

  • The Company partnered with SunE Solar B.V. (“SunEdision”) (www.sunedison.com) to develop a 22 MW Solar Power Plant in Dharmavaram, Anantapur District, Andhra Pradesh, India (“the Solar SPV”). The Company owns 51% of the shares of the Solar SPV and the remaining 49% of the shares are owned by SunEdison.

expanding a lot

what is the requirement for cpc

dependency on crude oil

Why no job opening on website?

portland cement fly ash based

Very big company

will remain cyclic

too many fields of operation

too complex

many countries




HYDERABAD: Whenever he’s in India, N Jagan Mohan Reddy (not to be confused with his better known namesake and politician Y Jagan Mohan Reddy) prefers driving around Hyderabad in his old Maruti Zen car unlike some of his other more flamboyant Reddy counterparts who favour flashier wheels.

The father-son duo aren’t too well known in Hyderabad’s business circles. The few who do know them describe them as extremely low profile. So low profile are the Rain Commodities’ promoters, who hold 43.72% stake in the company, that neither does the annual report of the company contain the customary chairman’s speech and photograph, nor does its very sketchy website have any details of the promoters and management team.

In fact, the Reddys of Rain Commodities, who hail from Nellore district of coastal Andhra Pradesh, reside in an unostentatious building in the upper middle class locality of Srinagar Colony instead of the more posh Banjara or Jubilee Hills areas that are preferred by most business barons of Hyderabad. Instead, the Purdue University-educated and primarily US-based Rain Commodities MD seems to prefer restricting his flamboyance to business deals. In 2007, he successfully acquired US-based CII Carbon LLC, making Rain Commodities the world’s largest producer of calcined petroleum coke (CPC), a feat that also landed him and his father in the list of India’s rupee billionaires published by a business magazine this year.

Soon after the merger, Reddy hit the headlines by announcing a Rs 2,440-crore all-cash deal for the acquisition of the US-based CII Carbon Llc, which catapulted the company into the second largest producer of calcined petroleum coke (CPC) globally.

According to Rao, Rain Commodities has been making good profits for the last four years on the back of the profitability of the CPC business. For every Rs 400 crore profits in a quarter, CPC contributes Rs 300 crore and the cement business accounts for Rs 100 crore.



why no data after 2015?

wait a little bit then buy?

why is stagnant for so long and suddenly so high priced

Data doesn’t look good lot of debt

Management Plans and Interest.Rain is operated by a well-aligned management team with a track record of prudent capital allocation. Jagan Mohan Reddy is the CEO of the company co-founded by his father, and overall the Reddy family owns ~40% of Rain Industries providing significant alignment of interest. Management is well aware of its depressed valuation and plans to return capital to shareholders while de-leveraging the corporate structure. From 2007 to 2012 Rain reduced its net-debt from US$728 mln to US$413 while returning 12% of income to shareholders.

Risk of fraud. Poor corporate governance practices and high levels of corruption amongst government officials are part of emerging market investing. Several factors help Rain avoid such problems: it is an owner-operated company providing alignment of interest with minority shareholders, despite operating a ~US $2 bln revenue company the CEO takes home a salary of less than US$500,000, majority of the operations are located overseas protecting it from government officials, and all operations are audited by one of the ‘big four’ accounting firms. Further Rain has raised over US$1.3 bln from foreign investors, books that were run by Citigroup, Goldman Sachs, and Wells Fargo – three well-regarded investment banks. The acquisitions of U.S.– and European– based businesses combined with foreign debt raises have put Rain under a level of scrutiny that is rare for most emerging market companies.

The depressed valuation of this leveraged, underfollowed, niche market, stable margin, and oligopolistic natured business provides an opportunity for a serial capital compounder. Original idea sourced from a sumzero write-up posted by Luca Franza of Ausonio Fund.


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