Was going thro Mayur Q3 call some time back too see how business is going.
YTD sales down -5.19%, profit up 6% ytd
Footwear was down this year mainly due to demonetisation.
demon impact for mayur - nov -10%, dec -35%,jan -10%, feb is ok.
exports increased 11% 9mfy17
Get a feeling scaling up of auto OEM exports is taking much more time than expected.
Further growth triggers:
PU plant: selected land in MP. 10-12cr for land. Will take 18 months for setting up of plant
Already customers waiting for this PU plant primarily in footwear like bata. Even Zara waiting for this
Jasch industries is a small company in this segment otherwise mainly PU is imported from china. There is no organised player from india here.
The site has capacity for 6 lines. Initially starting with 2 lines. Initial sales/profits will come in H2FY19.
Total investment will be close to 100cr in next two to three years.
Realisation is 25% more than PU. however the cost is more due to water treatment etc.
Capex in mysore: Currently two lines in jaipur is dedicated for footwear manufacturers in south. Plan is to move these lines to mysore which will save transportation costs and faster access.
Land is procured in mysore. Business will grow 20% due to this. Lines will be freed up in jaipur due to this. Totally 30cr investment for 1 line (due to higher land cost).
Auto OEM exports:
Europe: appointed a dedicated marketing person for europe for talking to merc bmw and volkswagen. Hoping to crack in a year.
MD and R&D head are continuously travelling to europe. Some positive developments in a year.
US: no major progress. in 9m sales were up 14%.
chrysler, ford, GM are inviting quotes for new programs. will know in next 2-3 months.
Furnishing: Fy17 11 distributors appointed. Plan to have 50 distributores in fy18
Domestic auto OEM: 8 new programs from mahindra and tata have been approved. expecting good growth in fy18.
Raw material price has increased (PVC resins price increase 15%, plasticizer 10%). Talking to customers for price increase will decide by March.
There seems lot of competition in footwear industry given by newer brands to vkc, paregon , bata and relaxo. It is easier for smaller suppliers to start footwear plants by getting cheap machinery from china.
( I could not understand this. Relaxo, bata sales have not fallen in dec qtr or ytd). But mayur sales to footwear down 22%.
There was big impact due to demonetisation in footwear industry.
Capex: 100cr for next two years. currently running at 75-80% utilisation
Overall My summary:
Company is focusing on cracking export (mainly Euro) auto OEM market. This will help scale up operations.
Meanwhile they are investing in PU plant in a big way where they have clients (footwear companies) waiting ( will be ready by H2Fy19)
Disc: No investments.