Me and some friends visited the company today
- I was amazed to see the factory setup and thought process of the promoter Dharmesh Desai
- Currently operating from 40k sq ft. Can go up to 3-4x fy17 revenues on exisitng facilities...ie upto 50 cr revenue.
- Can double capacity by additional capex of 10 cr (already has vacant land land for that at the existing location)
- Major competition from European oems
- European machines cost 6 cr per machine. Meeras will cost substantially lower. To be fair, European machine will have some higher automation.
- Meera operates in the gap between the costlier European (high end) machines and low cost low end jugaad machines.
- Dharmesh Desai used to work with Garden Silk for 6 years. Used to work in yarn twisting divn there. Wanted to do something of own. Started with only 8000. Very hands on promoter who was able to answer all questions about the company and the industry. Found him very level headed and sorted. Thinks big and seems to have the ability to scale up.
- Very well maintained facilities for a 15 cr revenue company. Has implemented SAP and automated storage systems...punching way above his weight
- Meera is mainly into machinery in filament yarn sector. Lakshmi machines more into spinning sector.
- Only one sales agent in the US. Will ramp up as scale improves.
- Asia africa Europe are major exports markets.
- Technical textiles, carpets, stitch yarn (quilt yarn, footwear) are the major application segments.
- also makes machines which can make niche items like medical sutures, bandages, parachutes, nets, bullet proof jackets and harnesses
- 50-60% repeat customers. Every 2-2.5 years the existing customer will come back for more machines. 5-7 years is obsolescence cycle.
- US subsidiary should breakeven in fy18 itself on full year basis.
- Yarn mfg divn is more to showcase their machine capabilities..but will be run as an independent profit centre. Focus will be to improve profitability through high end yarn sales. Scale will come later. Will keep yarn up to a certain extent of revenue.
- Craftsman storage systems - storage machines - this has halved the inventory
- All overseas invoicing in $. Usually they build in forex risk into the price. No separate hedging policy.
- 100 employees
- all machines are made only against confirmed orders and on receipt of full payment/ lc. Receivables shiwn as lc date not due. Yarn will have 60 days credit period
- to give u an idea of the quality of the co...they use 3d printers to develop prototypes for future launches. Design team looked capable to deliver innovative products
- many new processes developed by co which will soon be patented
- unique promoter who is keen to share with his shareholders . For example he gave 1 rupee dividend to post ipo shareholders based on pre ipo results. Unheard of. Also exemplary is giving consol results in half yearly numbers ( not mandatory ) and that too by 10th of the month, with an interim dividend amounting to 40% payout thrown in for good measure.
If I had made this visit when price was 40 (16cr mcap)...i would have picked up high % of equity in the co. Big Big miss for me
Stock is 4x for me in 3 months. This is in no way a buy call and shouldn't be interpreted as one.
Disclosure : own . Since my holding amount is in public domain...not giving % of pf details.