SUNDARAM MULTI -PAP ---branded name in printing and stationary


(NIRAJ PARIKH) #1

SUNDARAM MULTI -PAP —branded name in printing and stationary.

Nature of the Business:

  • The Company designs, manufactures and markets paper stationery products exercise note books, long books, note pads, scrap books, drawing books, graph books – for students of all ages, as well as office/ corporate stationery products and printing, writing & packaging paper. Company has over 190 varieties of paper stationery products under the brand “Sundaram” which are very popular among the student communities and enjoy very high reputation in the market for its superb quality and durability. Sundaram is strong Brand in Education stationary market in western India for almost 3 decades. In Maharashtra it is one of the top two brands with 15% market share.

 Business History:

  • The Company was incorporated on 13th March, 1995 with the Registrar of Companies, Maharashtra, at Mumbai. Shri Amrutbhai P. Shah and Shri Shantilal P. Shah promoted the Company. The Company took over the partnership firm viz. Starline Industries engaged in the manufacture of exercise note books, account books and other paper stationery products, with its assets, bank liabilities and business and the said promoters were the partners of this partnership firm. The purchase consideration was fixed at Rs. 42 lacs and the same was paid by the company through the issue of 4.2 lacs Equity Shares of the company at par. The Company made its maiden public offer of 1.8 million Equity Shares of Rs. 10/- each for cash at par aggregating to Rs. 18 million on 23rdFebruary, 1996 which was fully subscribed and obtained the listing of its Equity Shares on Pune and Ahmedabad Stock Exchanges. In July 2005 the Equity Shares of the Company were also listed on BSE.
  • At the start of the Company in the year 1995, the Company had a capacity of 5 tons per day of conversion of paper into paper stationery, which was increased to 20 tons per day in 1998 with the addition of two German made machines, to 50 tons per day in 2001 with the addition of one more unit of manufacture, and to 60 tons per day in 2003 with the addition of one more unit of manufacture. The Company’s existing capacity of conversion of paper into various paper stationery product stands at 15,000 tonnes of paper per annum. Current utilisation stands at around 45%.
  • Company had formed a wholly owned subsidiary, E-Class Education System Ltd in 2010. E-Class Education System is an audio-visual educational content development company focusing on school education. E-class, company’s first product under E-Class Education System ltd is an audio-visual, animated content, exactly as per the syllabus of Maharashtra State Board, Standards 1 to 10, available in English, Marathi and Semi-English Medium. This way each school can have its own digital classroom, and this product can also be used by coaching classes and individual students at home. Maharashtra has around 2 crs students so there is a huge opportunity for this business.

FUTURE PLAN

 To Be Debt Free

  • Management has reduced its debt from Rs. 120 crs to Rs. 37cr as on 07.12.17. Company will be almost debt free by FY18 end. Interest cost will come down by Rs. 5 crs in FY18 i.e. reduction of around 50%.
    Company has paid another 7cr recently and total debt is now 37cr—Rs 17cr long time and 20cr working capital.

 Reason for losses in past

  • Due to high debt level of around Rs. 120 crs, management was not able to procure ample amount of papers for production of exercise books and therefore the utilisation level fell down to 50%. Sales fell to Rs. 88 crs in FY16 from Rs. 120 crs in FY13.
    High interest cost, lower sales and fixed expenses lead to loss of Rs. 3.6 crs in FY14, Rs. 23 crs in FY15 and Rs. 8 crs in FY16. Accordingly market cap of the company fell from Rs. 500 crs in Oct’13 to Rs. 50 crs in Apr’14.
  • Post repayment of debt, utilisation of notebooks will ramp up gradually and accordingly topline and profitability.

 De-merger of E-Class business (Value unlocking for shareholders, not yet publicly announced)

  • Management is planning for demerger of its E-class business and to list it on exchanges in FY18. Company may announce the same by April’17 end. This will be a value unlocking for the shareholders. Ebitda margin from E-class business is around 40% i.e. 2x more than Exercise books business which is around 13-18%. Sales from E-class business will be around Rs. 6 crs in FY17. This business was doing sales of around 2 crs in past. Company has won orders under e-class from various municipal corporations in Mumbai such as BMC, TMC, PMC.

 Expansion of Exercise Notebooks Business

  • On the other side management is also planning to sell its 25 acres land (non-core) at Nagpur valuing around Rs. 40-45 crs. The amount will be used to expand exercise notebooks business in South, pay debt etc.

 Valuation

  • During FY16, Company had reported loss of Rs. 8.7 crs after considering loss on sale of non moving inventories of Rs. 10.6 crs (exceptional item). All obsolete inventories have been disposed upto Q1FY17.
    Management is expecting topline of Rs. 130 crs from Exercise notebooks business and Rs. 10-15 crs from E-class business in FY18. PAT margin would be around 9% in notebook business and 30% in e-class business. No tax due to carry forward losses.
  • Profit will be around Rs. 14.2 crs and Eps of Rs. 0.60 in FY18.
    . Considering restructuring, future announcements, expansions and improvements in future earnings, stock will move back to its earlier level of Rs. 20-25 in 2 years.
    Company has made profit of 2.6cr and top line of 32cr in 1st quarter of 2017-2018.
    mIn q2 mad profit of 25 lakhs. But over all made loss of 16cr due to exceptional item.

Prediction of topline for 2019-20120 is around 200cr and profit will be around 24-25 cr.

Equity dilution 

Company has allotted 2.6cr share at price of 3.01 to group of investor and collected 7cr rs.
Equity of company is now 24.56cr---- Promoter has 24% and other has 76%.

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=9252121--FOR DEBT PAYMENT

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=9282621--NEW SHARE ALLOCATION.
http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=8904901--CREDIT RATING

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=9203641
recent news on land sale/ development.— http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=10198541

*comparable business is Navneet publication.
*Now execution of plan if not done properly is the Risk for company.

disclosure: holding the share. So my view may be biased.
Suggestions are welcome.


(NIRAJ PARIKH) #2

Sundeream multo pap
Our Product Range
A4/A5/A3 Book
Long Book
College Book
Hard Bound Book
Note Book
Sketch Book
Lekhan Book
Drawing Book
Practical Book
Laboratory Book
Graph Book
Scrap Book
Pocket Book
Six Subject Book
Graph & Map Sheet
Answer Book
Answer Sheet
Origami Paper Sheet
Tinted Sheet
Duplicate Book
Cash Memo Book
Challan Book
Conference Pad
Voucher Book

Sundaram has entered the 2 trillion $ Indian Digital Education Industry with its new subsidiary E-Class Education System Ltd.

Providing Digital content and products offline and online.

Download The Lates

With a wide range of over 200 products today Sundaram sells more than 5 lakhbooks everyday through its strong distribution network of 15000 dealers and distributors.
We design, manufacture and market paper stationery products – exercise note books, long books, note pads, scrap books, drawing books, graph books – for students of all ages, as well as office/ corporate stationery products and printing, writing & packaging paper.
With the strong brand and market penetration we are present in pan Maharashtra and have a strong brand recall among consumers. The brand Sundaram stands for trust, quality products and for a legacy. As its rightly said, “ education is the strongest weapon” we want to deliver quality products at the best rates to the entire country.
The times have changed, people don’t take the risk of buying substandard products any more. The market for branded products is very huge today, and it can demand a premium. The extended products and high quality paper premium products can be introduced under the same brand. The brand will be used for other stationery products in the market in the near future.


(nkabra) #3

THANK YOU FOR THE VALUABLE INPUTS AND DETAILS YOU PROVIDED.
Made a very interesting reading.
Some moot points which you can probably help with:

  1. the education business - which is considered as value unlock-what is the strategy to grow this business
  2. Who are the current customers for education and how long has this business been in existence
  3. What turnover and profit is expected from this business
  4. Why is the company management bullish on this business

Have you spoken to the management or any concall which you can share would be great to understand their growth strategy and value unlocking feature


(NIRAJ PARIKH) #4

E EDUCATION: is for almost 10 years.
5 LAKH STUDANTS
1000 SCHOOLS.
10000 VIDEOS.
52000/- MEMORY CARDS.

E-Class – Digital Education for Maharashtra Board
E-class is a revolutionary product by our company, developed to help the students ease the burden of studies and score more marks. E-class is an innovative educational content for the students of Maharashtra State Board’s 1st to 10th standards for all subjects, available in English, Marathi, Semi English, Hindi and Urdu medium as per the syllabus.
With the stress and difficulties in education arising every day, we have created content which will help the students learn in a better and a new way. It is said what we see (visuals) is often remembered more than what we simply just read. Keeping that concept in mind, we have converted the black and white textbook into audio-video animated content explaining each chapter and subject in detail.
Not spoken to management.
very limited information about E educations.


(nkabra) #5

THANKS A TON NIRAJ for your detailed response.

I think what you mentioned is the market size in general. Do you have any details on the company’s actual market size. - meaning how many customers they have in the education business from 1 to 10. What is each of them paying. Is this a recurring revenue or they have provided this educational online free of cost on a trial basis.

I would highly appreciate if you or the knowledgeable esteemed members on this forum can share Sundaram multi-pap info related to the education business.

Thanks again.
Nitin


#6

Few questions:

  1. Issue of 3 cr shares to qip at what price n to whom?
  2. I didnt find consolidated quarterly statment , plz upload here ?
  3. Issue of 2.6 cr shares to qip at what price n to whom?
  4. what went wrong in March 2011 after achieving 194 cr sales , der is decline in sales from 2011 onwards?
  5. sale of land @ 40-45 cr? From wer u got the figure…means soure of info?

Few concerns.
1.Receivable days stands at 128 days of Sundaram Multi pap ltd…n of Navneet Edu 72 days
2. Promoter holding app 24 %.n that too 41 % pledged.


(NIRAJ PARIKH) #7
  1. OUT OF 3 CR OF qip 2.6cr shares alloted to aviator flobal investment fund -1.3cr and LTS investment fund -1.3cr at prices of 3.05/ to each. 40 lakh not issue yet.
    2 company has not decalred consolidated result. subsidies result mentioned on wedsite of 2015-16 only.
    3 referance to ans 1.
    4 i think i have mentioned in story about this fact. what happened in 2011 to 2015–reason for losses in past. please read it.
    5 land value is my calculation as a 4000/ sq foot.
  2. company has high receiables but management is now planning business strategy and try to bring down.
  3. promoter has to dilute equity to brink back the company to track.

#8



promoters selling shares n invokation of pledged shares.


(Kuldeepjadeja) #9

4000 per sq ft means 36000 per sq yard how can you assume that!!


(NIRAJ PARIKH) #10

price in nagpur city range from 2500/sq foot to 6000/-rs per sq. foot. if you have some information you can post it.
. sundaram has more than 1,09,000-square meters–which will be used for affordable housing development. you can have your calcualtion. Thanks for querry.


(NIRAJ PARIKH) #11

this is a land value for for flats. but for plots