Indian Wood Products - 100 Year old company at cheap valuations?

Indian Wood Products

Dear All,

Greetings and wishing you all a happy new year in advance :slight_smile:

I see that a thread was opened by @pratikjain1310 and closed on the Indian Wood Products Company Ltd without much discussion, so I am starting a new thread again. Request the moderators to kindly edit it or merge it as they seem fit :pray:

  • Indian Wood Products Company Ltd is the largest private organized player in Katha industry and have been open since 1919 which is more than 100 years.

  • The overall size of the Katha industry is about 2000 crores p.a. with the organized segment being approx. 30%.

  • Strong player in the organized section of Katha Industry in India with a market share of approx 35%.

    CMP : 29
    Dividend Yield : 0.35%
    Book Value : 54.9

Incorporated in 1919, IWP was promoted by Mr. H.N. Gladstone, Mr. H. Bateson, Mr. E.H. Bbray, among others. The company is limited by shares under the Companies Act, 1913 with the sole objective to manufacture catechu. It has a manufacturing facility in Izatnagar, Bareilly, Uttar Pradesh. The manufacturing activities started in 1920. In 1980, Mr. K. K. Mohta acquired the controlling interest in the company by the transfer of shares. The company is listed on BSE.

Established Customer Base: IWP generates 75% of its revenue from pan masala manufacturers. The company’s customers include renowned brands such as Rajnigandha, Pan Bahar, Pan Vilas, Vimal, Goa, Dilbagh, Jayanth, Wah, Lingraj, Aashiqi, Mohini, Zafri, Nazar, JM Super, among others. The remaining 25% is generated through the retail segment. As of June 2018, the company had 15-20 distributors, spread across Delhi, Bikaner, Churu, Varanasi, Hyderabad, West Bengal, among others.

They provide Katha which is called Catechu in English to various Gutka/Pan Masala manufacturers in India.
They also sell Katha independently which is finding increasing uses as an ayurvedic medicine and also consumed with Pan.

  • Uses of Catechu: It is traditionally being used as mouth freshener with Betel quid in India. The new generation of mouth fresheners, like Pan Masala deploys Catechu as chief ingredient with Areca nuts and sometimes with chewing tobacco. Catechu is an astringent and has distinct bitterness followed by cool-sweetness. It also finds use as flavoring agent in condiments, ice-creams, candy, beverages etc. Since ages, the medicinal uses of catechu are well known. It finds major use in treatment of diarrhea, dysentery, ailments of mouth, gums, tonsils etc. Many new uses of catechins (which are the natural chief ingredients of catechu) like antioxidant, skin care, anti-diabetic, anti-inflamatory are reported.

  • Uses of Cutch : Cutch is a natural source for Tannins (for tanning of leather). It creates variety of colors with metals and are useful as dyeing agent for natural fibers. It is also used as a mouth freshener. Medicinal uses similar to catechu are also known. It has application in Oil-drilling, Printing ink-pigments, adhesives etc.

  • Uses of Catechins: Both Epicatechins & D-Catechins have demonstrated uses as Antioxidant. It has also proved efficacy in treatment of Acute viral hepatities, and as Anti-diabetic, Anti – inflamatory, Anti-Dirrhoea, Anti-dysentry, Chemo-preventor etc. It is also traditionally used for treatment of Gums & Tooth and skin ailments.

Recently they have also ventured into Spices and have been releasing new products in various masala categories. The share in revenue has been increasing.
The market size of spices business in India about Rs.1.5 Lac Crores p.a. out of which only a small portion is in the organized sector.
The growth of the organized sector has been approx. 25% CAGR over the past 5 years which is a massive opportunity going forward.

They seem to have one product on Amazon but not sure on the units sold etc. since there are only 4 reviews:

  • 2019-2020 Revenue from operations - Total revenue from operation of Rs.17812.49 Lakhs, being 91.12% of the total turnover from the sale of Katha and Rs.1685.71 Lakhs being 8.62% of the total turnover from Spices. PAT 692.39 lacs
  • 2018-2019 Revenue from operations - Total revenue from operation of Rs. 19645.22 Lakhs, being 97.98 % of the turnover from the sale of Katha and Rs.404.61 Lakhs being 2.18% of the turnover from Spices. PAT 1693.80 lacs
    ----spices contribution to revenues start —
  • 2017-2018 Revenue 21956 lacs - PAT 1586.99 lacs
  • 2016-2017 Revenue 18835 lacs - PAT 1147.77 lacs
  • 2015-2016 Revenue 12540 lacs - PAT 367.82 lacs


  1. GST impacted their top and bottom lines since the unorganized Katha industry largely evades taxes. But going forward they hope that if this is controlled and properly regulated then their share in the overall industry should improve.
  2. COVID - Pan masala/ Gutkha consumption was low and hence no demand for raw materials. Profit margins took a terrible hit.
  3. Promoter has pledged a part of their shares recently.


  1. The Spice industry seems to be of high margin and the share in operating revenues seem to be increasing. Also new spice products are being launched in Northern India steadily.
  2. The new plant opened in Kashmir Plant will add additional capacity of 1200 MT - Production might start from first half of FY2020. This will increase revenues.
  3. Company is trading below its book value.

I feel that this is a company trading at very cheap valuations even for a sin industry. Consumption of Gutkha is not something that will stop in the near future and the growth of spices vertical will just make things better in the long run :slight_smile:

Disclosure – I am not a SEBI approved advisor and this is not buy/sell recommendation. Please do your due diligence before taking investment decision :slight_smile:


I lived for a short time on the factory premises in Izatnagar as a child while my father changed it from a loss making to a profitable one…basically a lot of corporate governance being put into place and stopping theft etc. That was while Gillanders Arbuthnot were the owners (60% Kothari 40% Gladstone family…or thereabouts). Gillanders and IWP are now a part of the Kothari Group. Have subsequently followed it out of personal interest. I wouldn’t buy their shares

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Can you please elaborate on why you wouldn’t buy their shares?

When you mention it’s a 100 year old company ……and then you wonder why have they not been able to capitalise on their position, there was little competition if any from organised Kattha manufacturers . Their only competitors were the small “bhatti kattha” sellers. IWP have been well placed to do this from the mid 1970s when all the paan Masala products started coming out…you have to ask yourself what went wrong because it was going right then! I guess this is what might be referred to as biased insider views!
This is probably no basis at all for recommending a stock or not. Things change….I was tempted to share historical bias.

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From 2016-19 it performed well operating profit margin and after 2019 OPM is decreasing YOY.

hi everyone, good to see re-starting of my thread on Indian wood products ltd. by @vishwa.bhat19 n also interesting insider insights from @ishikaghose .My thread was red flagged by one of the moderator ,hence discontinued posting ny updates. Also after covid co was on rough patch ,hence lost interest.
Even though it has good market postioning in katha industry n one of the oldest co , agree with @ishikaghose argument of why it still nvr performed.Margins r still below pre-covid lvls,debt doubled,etc.
thnx @vishwa.bhat19 for restsrting the thread

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The management has plans to monetise their land which could ensure that their debt of around 7 crores is wiped off. All said and then the company’s foray in monetising land is what would be of interest as it could reduce finance cost.Now near 52 week low .wait and watch for another two quarters type of stock