Ricoh India - Still some value left

I liked the way this author thought about this. Even though it is not as compelling at 26 compared to 32 now. Read this article and make your own judgement. Couple of things I liked about this is it is recurring revenue and dependent on Indian Economy. What I don't like it is importing most of the stuff from Japan. China can kill in the long term.

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.



But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have raised for the "hamburgers" they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.


The above paragraph is from the “letters to the shareholder” in 2005 by Mr Warren Buffet to the shareholders of his holding company Berkshire Hathway.


As an investor, our sole intention is to find a well-run and sensibly-priced business with fine economics …… and stay invested ignoring the gyrations of the market. But if a stock appreciates rapidly to the point where it no longer represents excellent in absolute terms or reasonable value relative to prospective purchases, or if new information comes to light that causes us to revaluate , it may be sold quite quickly. In this respect, I can’t resist the temptation of quoting Mr. Buffet from his “letter to the shareholders – 2003 ”. “…. We own pieces of excellent businesses – all of which had good gains in intrinsic value last year – but their current price, reflect their excellence. The unpleasant corollary to this conclusion is that I made a big mistake in not selling several of our large holdings during the great babble. If these stocks are fully priced now, you may wonder what I was thinking four years ago when their intrinsic value was lower and their prices far higher. So do I ”

Ricoh India Limited (RIL) is one of India’s leading sellers of office automation equipment like copiers, printers and multifunctional devices. It is the subsidiary of Ricoh, Japan, one of the world’s leading players in the office automation industry. The parent company owns 73.9% of the equity of Rs 39.7 crore.


The Indian office automation market is one of the fastest growing in the world and being driven mostly by BFSI sector (banking/financial service/insurance etc). The Industry in all likelihood will continue to grow in foreseeable future.

Ricoh (Japan) used to operate two units in India , Ricoh India and Gestetner India ( manufacturer of duplicating machines). Few years back, Gestetner India was merged into Ricoh India. The duplicating division was closed and all the employees were given VRS. The cost of closure was charged in the accounts of Ricoh India already. The goodwill arised out of merger was written off in the accounts and as on 31.3.09, entire Goodwill amount was already written off in the accounts.

http://www.capitalideasonline.com/articles/index.php?id=3217