Business Overview
Company produces Modified Engineering thermoplastics based on Polypropylene (PP), Polybutylene terephthalate (used as an insulator in the electrical and electronics industries), Polyamide
(PA) and Thermoplastics Elastomers
Products & Usages - Primarily Automotive & Consumer Durables
Polypropylene - Bumpers, Instrument Panel, Door Trims, A,B, C Pillar Trims, Horn Pads, Grab Handle, Fans, Washing Machine TUBS
Engineering Plastics Compounds - Home Appliances (CFL Housings, LED light
housings, MCB’s etc), Home Appliances (CFL Housings and Connectors), Home Appliances Molded Circuit Breakers
Contactors and Switches), Automotive, Home Appliances (Televisions), Electronic Appliances and Automotive, Connectors and Telecom industry
Thermoplastic Elastomers - Pen Grips, Bushes, Bellows for 2 wheelers, pads etc, Seals, strips , washers etc
Investment Rationale
Huge growth potential - BRIC automotive market to grow by 15% CAGR from FY2015-20E. Out of which PP leads in terms of expected consumption at 31% CAGR
Rapid growth in production - To meet the demand from India & for exports company recently trippled production & is going to more than double capacity again. Form current 40,000 TPA in 3 plants in Pondicherry, Pune & Manesar, company to add new plant in Chakan & add 70,000 TPA. There are reports of taking India production to over 200,000TPA
Huge potential in non-automotive business - Company plans to take its share to 40% from current 15%. China produces 20,000TPA material for power tools compared to 300TPA in India
Parentage - Parent is a massive Chinese giant with excellent technical know how
Rising Income & Interest rates coming down
Housing for all - This should increase demands for consumer durables like Washing machines, Electrical fittings like LED, MCBs etc
Capacity & Capacity Utilisation
Top ten customers for the Financial Year 2015-16
• Bright Auto Plast Ltd.
• Plastic Omnium Exterior (India) Pvt Ltd.
• Motherson Automotive Technologies & Engineering
• Renault Nissan Automotive India Pvt Ltd
• Hanil Automotive India Pvt Ltd.
• Mutual Industries Ltd.
• Sundaram Auto Components Limited
• Reydel Automotive India Pvt Ltd.
• Yanfeng India Automotive Interiors Systems Pvt Ltd.
• Tractors and Farm Equipment Ltd.
Financials
Improving numbers: 3 years Sales growth of 26%, Turned profitable this year, ROE improving from 8.23% to 17%
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