I think they should disclose this …since the order is pretty big …above 40 crores
Is there any information regarding names and credentials of the JV partners?
Being the largest company in the African region looks a tall claim.
Dividends from the Overseas partnerships to the company have been increasing, but not much of it is coming our way (those who have invested in Prima). Payout ratio continues to remain below 20%.
Tax computations are also a mystery to me.
The only information on international operations is available once a year, and that too from the company.
These doubts make me a little skeptical about the international operations. However, considering the other positives, there is only some discomfort, but not entire disbelief. Hence my allocation is also low.
Discl - invested from earlier, added recently.
which 40cr order are you talking about?
Please read the idbi capital report…in page 3 of the report under the point Indian operations…it says that the company has received an order of 440 million rupees recently from Hyderabad state govt to supply dustbins and chairs
Great discussion on Prima Plastic.
I would like to understand the sustainability of the super normal margins in Africa a bit better.
As per this note,
According to industry reports, during the past six years the use of plastics in Africa has grown by an astounding 150%, at a compound average growth rate (CAGR) of approximately 8.7 per cent. Imports of plastic hangersplastics into Africa have grown between 23% and 41% during this time. In a recent conference presentation, analysts predicted that the use of plastics in East Africa alone is expected to treble in the next five years. And there is potential for much more growth. Plastics consumption per capita in Kenya, for instance was just 10 kg in 2004 and it is expected to increase to 30 kg by 2020, which is still very low compared to many other countries in other parts of Africa.
The article goes on to provide inputs on key markets like Kenya, Uganda, Ethiopia, Mozambique.
Why is Cameroon the chose country for Prima in Africa ? What distinct advantages does it have compared to other African countries ? What stops a Nilkamal or Supreme to set up a plant in Cameroon ?
Another strong plastics player based out of Africa is “Arkay Plastics” which is rapidly expanding. Link
1997 – Started Arkay Plastics Ltd in Blantyre, Malawi
2005 - Started Arkay Plastics Ltd in Maputo, Mozambique
2008 - Started PET plant at Makata, Blantyre
2011 - Started Arkay Plastics Zimbabwe Ltd
2013 - Started Arkay Plastics Zambia Ltd
This company has a comprehensive product portfolio. What stops such local players to venture to Cameroon and eat into Prima’s market share ?
This link has the details of import and export of most African countries.
Exports: $4.816 billion (2008 est.)
Exports - commodities: crude oil and petroleum products, lumber, cocoa beans, aluminum, coffee, cotton
Exports - partners: Spain 18.7%, Italy 12.7%, US 10%, South Korea 9.3%, France 7.7%, Netherlands 7.6%, China 5.3% (2008)
Imports: $4.303 billion (2008 est.)
Imports - commodities: machinery, electrical equipment, transport equipment, fuel, food
Imports - partners: France 21.6%, Nigeria 14.2%, China 9.2%, Belgium 6.2% (2008)
Does easy availability of crude derivatives in Cameroon gives the Prima JV the low cost advantage from low RM prices ? Again if it is only country specific, any other major company too can exploit that.
oh ok. Actually no company in such sectors give details of such orders. Even wimplast and nilkamal has never given such order details. Wimplast and nilkamal as you might be knowing counts various muncipalities as their clients. Even a lot of other companies from other sectors do not disclose such details, though i am not saying they should or should not. Basically i am pretty happy with the transparency of the company and whenever i have had a word with them they have disclosed everything “correctly”, probably that’s why a little bias. You know, i think its not a bad idea for you to tell this to the CS. Just shoot an email and let’s see what happens.
Actually I have been sending several mails to company cs from several months but they have mostly ignored my mails and not replied to most of them…and whenever they did it’s mostly very brief replies…coming back to the order thing …if a company like nilkamal or wimplast gets such orders it’s not a big deal as we know these companies are already large caps and proven players and information bout such companies are easier to obtain but for company like prima which is trading at 150 crore market cap disclosure of such orders can bring the stock to limelight and also give shareholders confidence
then my experience with the CS has been totally opposite. They have replied to emails (ofcourse concise like most CS) and i have also had several calls with the CS. I agree that they should disclose but most small caps dont unfortunately but let’s hope they evolve faster.
Cameroon was choosen because the competition was very limited there and also they were able to forge a JV with a strong Cameroon player. When i had asked about the sustainability of OPM and topline growth, company maintained that in the near and intermediate term they do not see any issues in maintaining it. Also, one distinct thing that i found with my discussion with them was that they are not interested in getting into a crowded market but instead play on markets which has had lower penetration with not too many players. I thought that time that probably the management is not confident and aggressive but in introspect this strategy do make sense - mind you at that time there was no mention of the Central america expansion. With their central america entry i think they are walking the talk and the fact that they are able to identify such location increases my confidence on the personal level.
Good info and good observations too. Do you have any thing to say about current year margin contraction of Cameroon JV? as if you notice their EBIT remains same at Rs.7 crs for JV while their Topline increased from Rs.31 crs to Rs.35 crs.
Do you have any numbers regarding capacity utilization of Indian as well as cameroon plant?
actually topline increased to around 70cr, but since its a 50:50 JV, prima gets a share of 35cr (dont mind, not sure if you were referring to the entire topline or just prima’s share therefore, thought of clarifying).Cameroon was running at almost full capacity as i had mentioned earlier and it looks the doubled capacity is coming by this time around. Also, EBIT margins could be lower due to various factors and i think it was relatively higher raw material cost and higher other expenses which could be marketing expenses.
Many thanks for your kind update.
Please note my queries:
- Domestic Plastic Moulded Furniture business -
Update about - new plant in Andhra Pradesh - will it be operational by July 2016?
Any capex envisioned at Daman / Kerala?
Which states in India are they focusing on for current domestic sales / future growth?
Will there be expansion of number of current domestic distributors (200) / dealers (2000)?
What is their view / forecast growth rate for both domestic / export sales of their products?
Overall demand outlook for the next 2 to 3 years?
- Prima Dee-Lite Plastics (50:50 Cameroon J.V.)
Breakup of Percentage of sales Plastic Moulded Furniture and HDPE woven sacs.
Ref. the 1 million USD expansion plan: is it completed as per estimate - end Q1 FY 17- are one or both product lines expanded?
Are sales currently made by this J.V. only focused on Cameroon or are they considering addressing exports too? Any additional products envisaged to be manufactured and / or traded by this JV?
What is the growth outlook over the coming 2 to 3 years for this J.V.?
- New Latin American JV:
Will it be operational by August 2016?
Thanks again and best regards,
heard they dont talk much ??
also pl ask about their products range in domestic market are they coming out any new products …
More interested in their international subsidiaries, plans for expansion, current stage of operations.
what is strategy for competition Like wimplast, supreme, or nilkamal?
Any innovation in product?
when company go to premium product? and how?
Heyy thanks…ask them if they have received any other orders from the government apart from the 40 crore one from Hyderabad ?
And update on new plant in AP and capex of Cameroon and also the situation of jv in central America
this one just keeps moving higher. today on a fresh high on good volumes. look like investors meetings have gone well …any other update anyone might want to share?