Vijay Shanthi Builders Ltd

BSE Code: 523724

CMP: Rs.21.60

Book Value: Rs.39.07

EPS: Rs.4.43

P/E: 4.88

Industry P/E: 14.51

Market Cap: Rs.56.57 Cr

Chartical Inferences: Buy above Rs.20.50

Target: Rs.25-29

Time: 3-4 months.

Medium Term Target: Rs.41-42 (50%-plus appreciation)

Introduction: Vijay Shanthi Builders Ltd is a Chennai based Real Estate Company, which is known to offer luxury apartments at affordable prices to discerning citizens. The Company currently has several projects under implementation and continues to explore newer opportunities. To rewind, a couple of years back; it merged High End Homes Private Limited into itself. Pursuant to this, the Company issued one equity share of Rs.10 each fully paid up, for every three equity shares held by the Shareholders in High End Homes Private Limited.

The Company runs a mineral water plant in the name of Vijay Shanthi. However, considering miniscule contribution (0.83%) of this segment to its top line, the Board of Directors had proposed to exit the Company from mineral water business from the FY11-12. As the assets deployed by the Company to this segment are very less, this decision would not involve any substantial sale / dilution in the value of assets of the Company.

Shareholding Pattern: The promoters hold 66.89% while the general public holds 33.11%. Thus the company has the controlling stake which helps in taking fast decisions.

Financials: For FY11, the company came out with wonderful set of numbers inspite of the slowdown in the real estate sector. The total income of the company for FY11 jumped to Rs.136.40 Cr as against Rs.68.18 Cr in the same period previous year. The PBT of the company for FY11 came out to be Rs.12.09 Cr as against Rs.3.25 Cr in the same period previous year. The net profit of the company for FY11 came out to be Rs.9.50 Cr as against Rs.2.66 Cr in the same period previous year. The EPS of the company on an expanded equity came out to be Rs.3.63 Cr in FY11 as against Rs.2.09 in the same period previous year.

For Q2FY12, also the company came out with good set of numbers. The total income of the company for Q3FY12 came out to be Rs.51.93 Cr as against Rs.33.61 Cr in the same period previous year. The net profit of the company came out to be Rs.3.80 Cr in Q3FY12 as against Rs.2.29 Cr in the same period previous year. The EPS of the company on an expanded equity capital came out around Rs.1.45, in Q3FY12. The net and operating margins of the company on Q-o-Q basis also improved in Q3FY11, though marginally.

Triggers:

(i) The demand for Housing continues to increase as ever, though the increase in lending rates by the Banks affected the off-take of home loans to a large extent, during the last 18 months. However, now with the RBI going in for the CRR cut and a hint towards softer interest rate regime in the coming days, the company is confident that with completion of various residential projects in the coming months, both its top and bottomlines, are set to witness a substantial increase.

(ii) Following are the on-going projects of Vijay Shanthi Builders Limited, which are expected to be revenue accretive in the coming days:

Project Name                                        Location

Lotus Pond                                                               Thaiyur

Infiniti                                                                     Mevalurkuppam

Park Avenue (Phase I)                                              Kandigai

Boulevord                                                                 Kandigai

Silent Valley                                                            Tambaram

Mystiq                                                                     Purasawalkam

The Art                                                                   Nunganbakkam

(iii) Vijay Shanthi Builders Limited has a land holding of 5507795 sq. ft (approx.) which is valued at Rs.1878 crores (approx).

(iv) The futures projects are the following:

Project	Name of the Location	Total Saleable Area
Serene	Perungudi	48000 sq. ft.
Aurum	Besant Nagar	85000 sq. ft.
Whistling Woods	NH4-Bangalore Highway	700000 sq. ft.
Calm Springs	Ratnamangalam Vandalur–             Kelambakkam	1500000 sq. ft.
Eternal Springs	Ambattur	500000 sq. ft.

Among the ongoing projects, the Lotus Pond and Infiniti are nearing completion where as the project: Park Avenue is on scheduled time. The work of other projects is going on full swing. Some of the new projects are at planning and some are at the approval stage.

(v) The Company’s projects are currently located in Chennai, Tamil Nadu only. Since Chennai has a lot of scope and potential, the Company plans to exploit all the opportunities provided by the city to the fullest. In the future the company might think of moving to other locations.

(vi) The expected annual turnover for FY12 could be between: Rs.200-210 Cr, with an expected EPS of Rs.5-6. The company is taking serious steps to reduce the debts, which as on 31.03.2011, stands at Rs.61.19 Cr.

(vii) The Company is consistently paying dividend to its shareholders, since the last 7 years. Due to the Company’s superb performance it has been ranked among the TOP 400 SMALL CAP CORPORATES OF INDIA in Dalal Street Journal's widely circulated and read "SMALLCAP 400, 2011".  Vijay Shanthi builders are the leaders of the High end segment projects and have been conferred  with the prestigious “ACCOLADES OF EXCELLENCE” – India’s Best Residential Project  award for their Unique project  “PATIO” from CNBC & CRISIL. A rare Honour reserved for a select few in the real estate industry. It’s the first and only home in Chennai to have been bestowed with this special privilege.

Conclusion: From the charts it has been found that the scrip has given a major breakout on last Friday (27th January, 2012), which if sustains in the coming days, could take the scrip to around Rs.24-26, in the short term. Considering all the factors mentioned above, investors can go in for the scrip, at the CMP of Rs.21.60, for a price target of Rs.35-37, in the next 3-6 months time frame. Moreover, a decent P/E rating of 10 can take the scrip to around Rs.41-42 in the coming days. The worst is over for the sector, as the rate cut by the RBI is imminent in the next 3-4 months.The investors with a slightly longer time view should hold the scrip in their portfolio.

Disclaimer: Though due care has been taken while preparing this report but no responsibility will be assumed by the author for the consequences what so ever, resulting out of acting on the recommendation or after reading the report.

The call made herein is for informational purposes and is not a recommendation to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness is not guaranteed. The author does not accept any liability for the use of this column for buying and selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his acquaintances, his company or his family members may or may not have positions in the Scrip mentioned in this column. Investors should take their own decisions while buying and  selling the shares/securities

Jupiter Bioscience: On a high growth trajectory??!!

CMP: Rs.13.18

Short term target-Rs.18-21

Incorporated in 1992, JBL’s plants are located at Medak District and in Bidar, Karnataka. It is one of the few companies in the world with competency in the synthesis of peptides starting from the basic stage to finished peptides. JBL’s 100% subsidiary, Sven Genetech, has made rapid strides in synthesis of specialty peptides, launch of new formulations and development of its capabilities in diagnostics and enzymes.

Another subsidiary in USA, Jupiter Bioscience Inc., is gearing up for manufacture of custom peptides and generic peptide APIs by the solid phase peptide synthesis. Incorporated in the State of Virginia, USA, to service customers in USA and Canada it provides a wide range of products in Synthetic Peptides, Fmoc, Boc and Z-protected L- and D-Amino Acid, Derivatives, Reagents for Peptide Synthesis, Chiral Intermediates and Speciality and Fine Chemicals.

Jupiter Biosciences AG, Switzerland, is located at Laufelfingen in Switzerland. The focus of manufacturing here includes High value peptide building blocks, Generic peptide APIs, APIs under clinical trials and Custom Peptides.

JBL’s product portfolio further includes speciality and fine chemicals, drug intermediates, bulk drugs and nutraceuticals. Its drugs are used to treat AIDS, cardio vascular diseases and cancer and to make vaccines.

JBL is positioned globally to manufacture quality products for the domestic and overseas markets. It has obtained an ISO:9001-2000 certification for its manufacturing facility located in Andhra Pradesh.

The manufacturing operations in USA are being set up to focus on solid phase peptide synthesis while the operations in Switzerland are directed towards building capabilities on solution phase synthesis. The manufacturing facilities in India focus on manufacturing the reagents and the building blocks. It also manufactures generic peptide and non-peptide APIs for the unregulated markets.

For FY11, JBL’s consolidated sales/income came out to be Rs.331.3 Cr, as against Rs.232.6 Cr in FY10.  The consolidated net profit of the company for FY11 came out to be Rs.48.8 Cr as against Rs.40.2 Cr in the same period previous year.The Book Value of the shares of the company is whopping Rs.120.73. It  has an absurd market cap of Rs.82.29 Cr (When FY11 turnover is Rs.331.3 Cr how can Rs.82.29 be the current market cap, unless there is fierce bear hammering on this scrip??!). The current EPS is Rs.3.04 and the P/E is 4.34 against the industry average of 10.71. A decent P/E of 7-8 can take the scrip to around Rs.21.

JBL had acquired a facility of Merck in Switzerland in June 2008 and forged a 5-year agreement for its peptide products with the pharma giant’s biosciences company. The acquisition of the CGMP facility of Merck would give JBL a faster entry into the regulated markets of Europe and USA.

It has also upgraded its analytical facilities and R&D infrastructure systems in line with the growth in business. It also undertook a major revamp of the unit, which it acquired from Aurobindo Pharma in FY07 to make it suitable for manufacturing peptide group of products and spent Rs.9 Cr in FY09 towards R&D.

A couple of years back, JBL had raised Rs.100 Cr through the QIP route at Rs.153 per share for meeting the cost of expansion in USA and India and for part repayment of debt. At that time the promoters also contributed Rs.25.5  (equity + premium) at a price of Rs.146 per share. The amount so raised was used for the acquisition of the Merck facility in Switzerland.

Its overseas facilities have attained critical mass and will be the key components of its business model in the years to come.
The peptide market, estimated at around $7 billion, represents a significant opportunity for generic players. It is estimated that peptide drugs worth $3 billion (at innovator’s price) will go off patent in the next 3-4 years.

Besides, at a time when the US and European generic markets continue to reel under increasing pressure and ever-rising competition, price erosion for generic peptide drugs remains relatively low.

The global peptide market is expected to continue to grow significantly in the next few years. Currently, there are 270 new peptide drugs under clinical development and 400 in pre-clinical studies globally. The global market for peptide drugs could reach $10 billion in the next three years.

JBL’s focus on business development, R&D on new products, dedicated efforts in reducing production costs, flexibility in product mix with further addition of value added (high margin, low volume) products coupled with further expansion gives visibility to future revenue & profitability.

JBL is also its expanding its business and technological focus on non-peptide generic drugs and intermediates based on organic and chiral chemistry. The non-peptide generic drug market is currently estimated at US $80 billion and is expanding rapidly with many drugs coming out of patent till 2012.

This provides opportunities for growth for Indian companies given their lower cost structure and ability to undertake process development and optimization to compete in the business. This is a good stock to buy at the current market  price of Rs.13.18.

Note: This report is adopted from a write  up in a business weekly.

Allied Digital Services Ltd: Trading at Ridiculous Price!!

BSE Code: BSE: 532875 

Ridiculous CMP: Rs.27.65 
Target: Rs.95-100
Allied Digital Services Ltd. expected to report Q3 2012 results on February 9, 2012: Take Positions in Bulk before that........

It is an IT Infrastructure Management and Technical Support  Services Outsourcing Company with an objective to provide end to end IT  Solutions, outcomes of which have always resulted into a positive  change in the organization. Allied Digital Services Ltd (ADSL) is an experienced entity  having sufficient knowledge of the local market which assists them in  organizing manpower for diverse tasks and contractual works. It has over  more than two decades of experience in enterprise IT Infrastructure,  Management and Implementation and Consulting on complex IT Solutions  for different Business Verticals.

The Company provides credible, high class and customer oriented  services and solutions to clients, actively participate to fulfill the  needs and preferences of the customers, their requirements in a  dedicated manner. Its centric approach has  resulted in high levels of client satisfaction and retention.

The Company''s Net worth as on  March 31st 2011, stood at Rs. 686.06 Cr (as against Rs. 635.13 crore  last year)--against this the market cap of the company is only Rs. 127.82 Cr (CAN YOU BELIEVE??!!). 

The CMP of the shares of ADSL is Rs.27.65, against the Book Value of Rs.148.37. The EPS of the company is Rs.7.32. Its P/E is 3.78, against the Industry  P/E of 20.76. The Company maintains sufficient cash to meet its strategic  objectives. As on March 31st 2011, it has liquid assets  including investment in mutual funds of Rs. 82.09 Cr.

SUBSIDIARIES:
Allied Digital Services Ltd has Seven subsidiaries and one Joint Venture:
  1.  Allied Digital Services, LLC. (USA)
  2.  Allied Digital, INC. (USA)
  3.  Allied Digital Singapore Pte. Limited
  4.  Allied Digital Asia Pacific Pty Limited (Australia)
  5.  Digicomp Complete Solutions Limited
  6.  En Pointe Technologies India Private Limited.
  7.  E-cop surveillance (India) Private Limited.
  8.  Digicomp Electronics Testing Services (Dets) Pte. Ltd. (50:50 Joint  venture of Digicomp Complete Solutions Limited and TES-AMR PTE. LTD.)

INVESTMENTS: The investments of the Company as on March 31st 2011 were to the tune  of Rs. 171.94 crore.  The Book value of the quoted investments for FY11 was Rs. 42.71 crore and the realizable value as at March 31st 2011 for this investments was same as book value.
Moreover, as per NASSCOM-Mckinsey, global offshore IMS market would grow to US$26-28bn by 2013. India’s share of the above opportunity is projected to reach US$13-15bn. Domestically, system integration and infrastructure outsourcing segments are expected to grow at 15% pa each. 
ADSL is an IT infrastructure management and technical support service outsourcing company which has  been mentioned earlier. The company operates across a network of 132 locations across India with a team of ~2,700 employees from different managerial and engineering backgrounds. ADSL has a wholly owned subsidiary in the state of Delaware, USA, by the name of Allied Digital Inc and liasioning offices in sydney, Australia and New Jersey, USA. EPGS, LLC USA and Digicomp Complete Solutions Ltd are two newly acquired subsidiaries of ADSL. EPGS operates out of 27 locations in the US with ~340 employees. ADSL enables large and medium enterprises and service providers to reduce their total cost of ownership of IT infrastructure by using a combination of onsite and remote services. The company has been a preferred choice for outsourced technical support for large corporate customers in India. The experience and expertise in system integration (SI), wide onsite reach, sizeable remote infrastructure and technological depth make ADSL a very competitive IMS player. Company’s IMS clientele includes large domestic corporates. The IMS offering of the company comprises FMS (onsite proactive management), AMC (need-based reactive management) and RIMS (remote proactive management). Company typically signs three-year contracts with customers for providing IMS services. ADSL provides SLA-based IMS services. Key elements of a SLA are the infrastructure/assets to be managed (network, servers, desktops, storage, security, applications, etc) and the required uptime (availability) of these assets/applications. ADSL commits to a particular uptime level based on its own assessment of the client’s infrastructure. Company then decides on the onsite: remote mix of resources to provide the committed uptime level. The customers are less concerned about the number of resources deployed by ADSL and its onsite: remote mix but are more concerned about the availability of their IT infrastructure.
ADSL’s IMS services are significantly cost-competitive than some of the large Indian offshore vendors who provide onsite IMS services based on people-billing model. By shifting infrastructure maintenance to ADSL from these vendors, clients could save 20-40% for a similar or higher uptime service levels. For IMS contracts, company has a technology–process–people approach unlike competitors which have a reverse approach.
ADSL has entered into a deal with Lenovo to service all its client’s laptops and desktops for 3 years in the US. There are 3 levels of services involved from zero human intervention in Level 1 to onsite service engineer support in Level 3. Level 1 has automated resolution where issues are automatically sent to NOC in India and are resolved by pushing solutions through the network without any human intervention. Level 2 consists of relatively heavier updates and in Level 3 a service engineer is sent for onsite support. Though the deal is not exclusive with ADSL, its experience and knowledge base due to long incumbency in this field gives it a strong competitive advantage. The company is currently in negotiations to enter into a similar tie-up with Lenovo in Europe.
Advantage to consumers: The costs of servicing laptops are quite high in the US markets as a result such a provision helps to save on these costs for the length of the maintenance period.
The experience of ADSL in solving such issues has led to an automatic resolution of majority of the issues thus saving a lot of time and increasing uptime.
Advantage to ADSL:
The technology leveraged approach of ADSL effectively leads to non–linear revenue stream (most issues being resolved automatically ie without human intervention) ADSL accrues 30-35% margins per device per customer from the revenues emanating out of such services.
Possibility of similar deals with other OEM manufacturers will help ADSL scale-up non-linear revenue component. Revenues from this arrangement are expected to trickle from the current quarter. As per the company, full-year revenues could be  US$15mn in FY12. 

A decent P/E of 15 for the scrip (Allied Digital Services Ltd) gives the target as Rs.95-100, after giving suitable discounts. At the CMP of Rs.27.65, it is just a steal. Buy as much as  you can at the CMP of Rs.27.65 and make merry.....

Why should one buy Northgate Technologies Ltd at Rs.8.40-8.45....??!!

Please Click on the Image to Expand

There are lot of reasons why one should invest in the shares of Northgate Technologies Ltd. Let me first give a little description of the infrastructure of the company:

• World-class State of the Art Infrastructure with inbuilt redundancy;
• Established server farms at Bournemouth, UK;
• Capacity of the server farm includes Peta Bytes of storage, Tera Bytes of data transfer, Tera Flops of computation speeds;
• Server farms have been developed on a modular architecture bases, allowing us to expand them as demand and new technologies require;

The company believes that a successful internet businesses must have capacity to handle, process and track millions of information inflows and outflows on cost efficient, reliable and scalable bases. The company has such capacity in the form of its server farms in United Kingdom and Hong Kong. Its remote monitoring capabilities of level1 and 2 from India ensures lower operating expenses.  The company's server farm infrastructure is a core pillar of all its existing businesses.  
Also, I have given one of the newspaper reports above; some more points, will be briefly described here: 

(i) During the FY11, the Company achieved revenues of Rs.129.67 Cr as against Rs.74.46 Cr Lakhs in FY10, on consolidated basis. The Company''s consolidated Net Profit for FY11 was Rs.1.05 Cr (Net Profit--Minority Interest) as against a loss of Rs.14,6. 98 Cr the same period previous year.

(ii) The revenues of the group derived from its online advertising segment increased to Rs.48.75 Cr during the FY11, as compared to Rs.33.05 Cr in the same period previous year. 
(iii) Further, the group has commenced new business segment of Commodity Trading from September 20, 2010 by acquiring 51% shareholding of Green Fire Agri Commodities private limited. Within six months of acquisition, the commodities trading business has shaped very well and the company expects that in coming years 'Green Fire" will become a prominent player in commodities trading. Hence,  the company decided to list both businesses of the Company i.e. Commodities Trading and Internet Business separately to unlock the value for all the stakeholders of the Company. Post restructuring, shareholders of Northgate Technologies Ltd will hold the same number of shares as they hold in Northgate in both the Companies i.e. Green Fire and Northgate Com Tech. The face value of Northgate Com Tech will be Rs.10 and Green Fire will be Re.1. The revenues from commodities trading segment was Rs. 80.41 Cr for the FY ended March 31, 2011.
(iv) Northgate Technologies Ltd recently informed BSE that Ziddu.com, a well known and leading file sharing site has come up with innovative development, with which people can upload photos / videos / recorded audio files to Ziddu.com and can email to their friends from mobile itself. Ziddu Mobile App is available for Android and iPhone users.  This feature is unique and not available in any file sharing site. This feature allows users to share files instantly since it is from mobile. Ziddu.com is in the top 500 websites of the world according to Alexa and with these mobile apps it will be in top 200 websites of the world very soon! Ziddu.com is owned by Social Media India Ltd which is a wholly owned subsidiary of the Company.
(v) The group has as part of its restructuring envisaged the segregation of its internet and commodity trading operations. The group believes that the restructuring will result benefits of:
(a) Effcient and focused management on each segment; 
(b) Unlocking value for the shareholders of Northgate; and (c) Operating and Administrative effciencies.
Northgate Technologies Ltd has recently informed BSE that at the Court convened Meeting of Members of the Company held on September 30, 2011, they have unanimously approved the Composite Scheme of Arrangement and Amalgamation between M/s. Northgate Technologies Ltd. and M/s. Northgate Com Tech Ltd. and M/s. Green Fire Agri Commodities Pvt. Ltd. and their respective Shareholders.
(v) The Salient features of the Scheme are:
 a) The appointed date of the Scheme is 1 April, 2011.
 b) The Scheme involves the demerger of the Internet Business Undertaking of Northgate Technologies Ltd (NTL) into Northgate Com and Merger of Green Fire into
 NTL. This is expected to give a booster of revenues for the company in the standalone basis too, as most of the company's revenues are coming from the trading activity. In the meantime, as the advertising market improves, the valuation of Northgate Com would also rise. This gives double benefits for the shareholders of Northgate Technologies. 
 c) Based on Independent Valuation and fairness opinion, the Board approved and recommended the share entitle ratio as follows:

•  1 (one) fully paid equity shares of Rs. 10 each of Northgate Com shall be issued and allotted for every 1 (one) equity share of Rs. 10 each held in NTL.

•  158 (One hundred and ffity eight) fully paid equity shares of Rs. 10 each of NTL shall be issued and allotted for every 1 (one) fully paid equity shares of Rs. 10 each held in Green Fire (except in respect of shares held by NTL in Green Fire).

•  Consequent to the demerger of the Internet business of NTL into Northgate Com, the equity shares of the Northgate Com will be listed on the National Stock Exchange of India ; and

•  Consequent to the Merger of Green Fire into NTL, the name of the NTL will be Changed to Green Fire Agri Commodities Limited and the face value and the paid up value of the equity shares of the NTL together with the new shares issued and allotted on merger will be reduced by Rs. 9 without payment to the holders of such equity shares of NTL. The shares of NTL will continue to list on National Stock exchange of India.

(vi) Some of the company's subsidiaries are doing well. Some of them are mentioned below:
(a) Social Media India Limited (SMIL) is a India based wholly owned subsidiary of  Globe7 Pte Limited (GPL). For the FY11,  SMIl recorded revenues of Rs. 32.60 Cr and achieved net profit of Rs. 5.76 Cr.
(b) Globe 7 UK Limited (Globe 7 UK)  was incorporated on April 8, 2010.  It owns group server farm located at Bournemoth, UK. Globe 7 UK recorded revenues of Rs. 1.57 Cr for the year ended March 31, 2011. 
(vii) On 14 March 2011, Bharatstudent.com, India's largest student and youth community platform announced their integration with Facebook to leverage the synergies between the two companies. The integration allows for people to login to Bharatstudent with their Facebook account, includes social plugins that enables Facebook users to comment, 'Like' all articles, videos, photos, movie reviews, informative articles and other exclusive content, and enables discovery and sharing of relevant educational and entertainment content through their friends.
Using Artificial Intelligence, India based Bharatstudent.com tailored a feature to match to the relevant new updates (viz; Articles, Photos, videos and reviews) for Facebook users and will be carried in Bharat Student "Like Box" as per the specific user interest. With over 15 million plus users in India, Facebook has gained a cult status in the Indian market. This integration is expected to further enhance the user experience for the subscribers. With this integration the company looks forward to reach out to double its user base  within a couple of years.
Facebook users can:
* get recommendations for videos, photos and articles @ 'BS Like Box'
* check his daily horoscope
* make free online international calls
* get access to Indian and Study Abroad information
* find Mock Tests for various competitive examinations
* know Examination Results
* access to Live Cricket Score Boards
* read Film News and Reviews of 6 regional languages
* listen to Live Radio
* avail other features and services
Just by logging in with his /her Facebook id and password in Bharatstudent.com. 
Bharatstudent.com is focused on providing comprehensive solutions for any personal and professional issues of young Indians, including issues related to study aboard, friendships and individual talent promotions. It is a portal run by Social Media India Ltd., a 100% owned subsidiary of Northgate Technologies Ltd. Over the last 4 years, Bharatstudent.com has emerged as India's largest student and youth community platform with more than 7 million Visitors every month and is ranked by Comscore.com (ComScore Reports – 2008, 2009, 2010) as the 3rd most frequently visited website after Facebook and Orkut. It has also been listed as among the Top 50 Digital Brands in India by the Economic Times Survey 2010. The company Internet Business is progressing very well. All the web properties are attracting more than 10 million audiences every month led by bharathstudent.com.
(viii) For Q2FY12 on a consolidated basis, the total income of the company came out to be Rs.153.62 Cr as against Rs.14.72 Cr in the same period previous year. For Q2FY12, the net profit of the company on a consolidated basis came out to be Rs. 89.10 lakhs as against Rs.32.8 lakhs in the same period previous  year.  This shows a gradual improvements in the fundamentals of the company. 

Therefore, the investors should buy the scrip of the company at Rs.8.40--8.45, for a target of Rs.18-22 in the medium term. In the long term the scrip can touch Rs.32-35.

~:SEL Manufacturing Company Ltd's expansion plans are on track:~

Ludhiana-based integrated textile conglomerate, SEL Manufacturing Company Ltd., has achieved a turnover of Rs. 1,071.67 crores for the half-year ended September 30, 2011, against Rs. 812.79 crores in the corresponding period last year, an increase of 31.85 per cent. Earnings before depreciation, interest and tax increased from Rs. 137.18 crores in the first half of 2010-11 to Rs. 182.45 crores during the half-year ended September 30, 2011, recording an increase of 33 per cent. Profit after tax during the half-year ended September 30 stood at Rs. 39.06 crores (Rs. 52.79 crores).
While increase in EBIDTA is attributable to operational efficiencies, the company is going through a lot of expansion and the full contribution thereof is yet to be captured in its financial results.
The Indian economy has been witnessing increasing interest rates. Yarn prices had an uncertain and declining trend. Further, the uncertainty in the Government policies with regard to cotton and cotton yarn exports have also added to the woes of the textile sector.
The early part of the current fiscal was marked by a high volatility in cotton prices. The trend of spiralling raw material prices was reversed, followed by a steep fall in the prices of cotton by the end of the last season. Still cotton prices were very high as compared to the previous years. Indian textile companies, which were carrying stocks of cotton of high cost had to face a very tough situation as yarn prices had fallen steeply and demand was sluggish. This unprecedented phenomenon in cotton prices, high inventory carrying costs followed by devaluation of stocks has been quite challenging for the textile sector and has been greatly responsible for erosion in profitability.
SEL Manufacturing, however, continues moving forward on the expansion front. The company is implementing another integrated textile project for setting up a spinning unit with a capacity of about two lakh spindles, 40 million metres in denim fabric and 8 million pieces in denim garments per annum. The project is coming up in Muktsar district of Punjab.
Earlier, during the current fiscal, the company had partly made operational its spinning unit in Sehore district of Madhya Pradesh. Its implementation is in full swing.
Out of the total capacity of 4,00,000 spindles, 50,000 spindles are already operational. By January, 2012, a total of one lakh spindles will be operational. The products manufactured in this unit have already started catering to the Indian as well as overseas markets. The company is hopeful that the full capacity will be attained within one year. 
It is also increasing the capacity of its spinning units at Neemrana in Rajasthan and at Hansi in Haryana by addition of about 60,000 spindles, which would be operational by February-March 2012.
SEL is also increasing its annual capacity in terry towels and knitted garments from 45 TPD to 100 TPD and from 20 million to 50 million pieces respectively. With this expansion and capacity augmentation, SEL offers a promising future for its stakeholders.
The company is emerging a leading textile manufacturer over the last few years. From the setting up of its first spinning unit in 2005 and its first loom in 2008, the company is building up its capacities with ultra-modern technologies. The plant and machinery deployed by the group is relatively young.
On the CSR front, SEL’s model outlines various development activities in education, sports, environment and medical facilities. SEL’s CSR efforts echo values for a progressive state, promoting and practicing action beyond mere statutory compliance.
With adequate utilization of the available technology and human capital and driven by a systems and forward-looking approach, the group is carving out a niche for itself not only in the Indian textile sector but also on the global map.
 

Courtesy: Indian Textile Magazine