Borosil :Market cap : 250 crBook Value: 2100CMP: 850p/e : 6.5Equity: 3cr
The company has cash over twice of it’s market cap. The glass industry is currently a morose lot but even with the cash in hand, the company quotes cheaper than the competition and the brand comes for free. They are actively looking for acquisitions and spending more on advertising so there may be newsflow which can get the attention of bigger players. CMP looks to be the rock bottom price as it’s been here for a year now and company is buying back shares below this price.
Need opinions from seniors and fellow boarders if it’s worth a bet. Given the current mad rush for consumption stocks, a story can be easily woven around the Marquee brand.
Below is copied verbatim from the AR.
Last year, the Company sold its property at Marol, Mumbai for a sum of Rs.830 crores.After meeting all expenses , repaying loans and payment of Interim Dividend of the Company has nearly Rs.600 crores fund. The Company is onthe look out for new business opportunities both in India and abroad. Till such time that an opportunity arises, the Company has invested the funds which envisages a reasonable return with a low degree of risk.The Company hasappointed three well known Wealth Managers to advise the Company in the matter.
The Company has invested its investible funds of around
467 crores as on 31st March, 2012 in a mixture of Debt markets, Equity/Equity Linked Instruments, Bonds/Debentures, Convertible Preference Shares, Real Estate Funds,Opportunity based Funds and Commodity Funds as well as in Mutual Funds. This includes 90 crores invested by subscribing in 90,00,000- 9 % Cumulative Non-Convertible Redeemable Preference Shares of Gujarat Borosil Limitedon private placement basis, as a Promoter Company. Further, during the year under reference, the Company spent nearly
43 crores for its new corporate office and 70.53 crores for buy-back of its equity shares.
The Company started buy back of its equity shares with effect from 19th December, 2011 at a maximum price of ` 850/- per share and till 31st March, 2012, 8,28,577 equity shares were bought back and duly extinguished, therebythe issued and paid-up share capital of the Company comprised of 31,35,351 equity shares as on the said date. The said buy back continues.
During the course of the year, the Company has further consolidated its leadership position in both the laboratory glassware as well as the microwavable glassware segments. This has been owing to enhanced focus on key customercoverage, new product introductions as well as distribution enhancements. Moreover, the Company has invested approximately
4.00 Crores on an advertising campaign in order to increase awareness of its product across thecountry. All the above activities have led to an enhancement of sales made by the Company of the higher margin products by about 20% from 100 crores to
120 crores. However, sales of low margin items have continued to bestrategically discontinued resulting in a reduction of their sale from 19 crores to ` 6 crores.
Scientific & Industrial Products Division (SIP)
The SIP division has seen a growth of 15% over the last financial year. During the year, market reports suggest that sales made by our main competitors de-grown or stayed flat. The Company had employed a strategy consulting firmto examine areas for prospective growth in the laboratory consumables industry. This study has been finalized and the Company is taking steps to ensure the implementation of the same strategy.
These steps should yield positive results in the future for this division depending on improvement in the economic climate of the country and allocation of fund(s) by the Government for scientific and industrial research.
Consumer Products Division
The consumer products division has seen a growth of 26% over the last financial year. Owing to the large presence of unorganized players in the segment, the Company has been unable to determine an accurate growth rate for thisindustry.However, when compared to the growth rates of organized peers, the Company has shown a favorable performance.The Company has taken various steps to enhance its leadership position in the microwaveable glasswaresegment. These steps include:
)- enhancement of product portfolio
)- enhancement of distribution network in south and east India
)- increased consumer awareness campaign through a marketing budget of roughly ` 4 Crores.
The outlook for the consumer products division is somewhat muted as compared to last year due to a reduction in consumer spending across all segments owing to macro-economic reasons and inflationary pressure.
Exports during the year were higher at
4.63 crores as compared to 3.16 crores in the previous year. This represents an increase of 47%.The Company feels that further substantial improvement can be made in exports. TheCompany is already in touch with a number of potential large customers for its products and expects to do well in this division for the current year.
Your Company explored the possibility of acquiring some companies in the last financial year in Europe as well as in India.These could not materialize owing to a large difference in valuation offered and demanded. However, theCompany is continuing its endeavor of looking out for other such prospects in India and overseas and some proposal(s) may materialize during the current year.
The Company is constructing a modern warehouse at Village: Dumala Boridra in Bharuch District of Gujarat for its own use as well as for leasing out a portion to others.