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Saturday, November 26, 2016

Dubai Workshop and the amazing small cap multibagger

Finally our first International ShareBazaar Workshop comes in Dubai in 2nd week of December. Register folks here:- Guess the stock folks:- · In 1991 the company graduated from the traditional business of Iron & Steel trading with investment of Rs 30 lakhs and than ventured into manufacturing of bead wire for tyres. · Current annual capacity is at 30000 MT each both in India and Thailand plants. Both can go up to 48000 MT each if required. Currently they are operating at 82% utilization levels. · Currently 85% sales are contributed to Tyre Sector and rest is attributed to value added products. · For tyre companies its products constitute around 3% of total expense hence they always prefer to go with superior quality products since it very important component of tyres . · The company had a technical collaboration and joint venture agreement with Gustav Wolf, Seil-Und Drahtwerke GmbH & Co of Germany, which was terminated in the first week of October 2003.They had 25% stake in company and promoters bought that stake in 2003. · Currently in India company's market share is 39%, Tata Steel is 25% and Aarti steel is 12%.Aarti steel is a Ludhiana based company and is much bigger in size compared to My today's pick. But they have other business also hence this business is small part of their total sales. · All major tyre companies are clients for the company. · Current Thailand market is of 5000 Mt size and company’s market share is 20%. Till now company was supplying on to small players in thailand market since they were in process of getting approval from big players. They plan to get 50% market share on ASAP basis. · A high carbon wire is their major raw material. · Entry barriers in this business are big since approval from Indian tyre companies take 4 years and Japanese companies take 5 years for approval. · Thailand Plant was set up in 2008 and took 8 years for break even. They invested $13 million at that point of time. · Company is only player in Thailand Market for bead wires business. · But recently company has got approvals from Sumitomo and Bridgestone hence their sales have shoot up in Thailand markets. In last year they did sales of 17000 tonnes in Thailand with gross profit margins of 50%.Sales realization was at Rs 60000/tones. · In last financial year Company did sales of Rs 180 crores of sales from Indian markets and Rs 100 crores sales from Thailand markets. · In Indian Market company has done EBITDA margins of 12% and Pat margins of 5% in bad times and EBITDA margins of 17% and PAT margins of 9% in good times. · Company expects improvement in sales for 40% in Thailand 12% in Indian markets. · In Thailand they have accumulated losses of last 8 years hence they don’t have to pay taxes for next 2 years. · Company is trying to get Michelin tyres as a client for their business in Indian Markets. · Sumitomo currently consumes 9600 tonnes/ year of Thailand capacity which is good part of sales generated from Thailand plant. Sumitomo’s 50% business requirement is fulfilled by the company in Thailand. · Bridgestone consumes 2040 tonnes/year in Indian market and more than 8000 tonnes/ year in Thailand Markets. · Over next 3 years capex required is Rs 20 crores in Thailand market. · Overall Industry size is 1.2 MT and Company constitutes only 5% of overall Industry hence there is big scope of improvement. Kisewires from Korea and Bekert from Belgium are the Global giants in this business. · Thailand business have become profitable from this year hence company is going to approach local Thai banks for restructuring existing loans which is currently services by ICICI bank. These restructuring will help to reduce interest cost by 7%-8% for debts taken related to Thailand plants. · Overall capex required is $1 million for installing 1000 tones plant. · Working Capital requirement is 120 days in India and 90 days in Thailand Plant.

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This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.

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