Thanks for bringing it to notice.
I think it seems to be a routine matter in case funds are needed for expansion.
I expect them to stick to their conservative (low debt expansion) expansion plans.
Some had got in touch with Management on this issue. The ânewsâ appears pretty routine in nature.
Hereâs the gist of the response from Management:
We are going ahead with the Textile manufacturing plant, which is required as a backing material for the PVC Leather Cloth as the quality of the fabricwhich we are buying at the moment is not very good for theproduction of USA material. We are also going for the 5th line for which we are placing the order immediately. Both these projects are in TUFF.__
Although our requirement is not more than 50 crores for these two projects, we are planning to borrow close to 30-35 crores only. I appreciate your anxiety of asking for the approval of 200 crores. This was done because it is mandatory to take a ballot approval from the share holders and avoid the process again and again, but in fact we will be borrowing 30-35 crores only for the present projects. Within a yearâs time if we have to expand further, we need more money and this has been done just to avoid repeated permissions.__
The sanctioned limit from share holders is 50 crores. Our bank limit is98 crores including Working Capital, LCs and Capital Goods out of which we are availing 33-34 crores (approx.). The one time cost of getting the borrowing limit sanctioned is more than Rs.2.00 lacs since we have to send the letter to each and every share holder and moreover the whole process of postal ballot is very much time consuming requiring a time of at least 45-60 days. Therefore, to avoid this cost the sanction has been taken. The actual borrowing will be made strictly as per requirement only.
_
Thanks Donald, good job. This kind of talk gives instills confidence in the mgmt (if they really walk-this-talk)âŚsomeone who is concerned at that level to care about a 2 lac Rs cost gives minority shareholders like us added peace of mind.
âŚ[T]he only.
_
Slightly dated articles, but good ones explaining the different facets of Synthetic Leather.
http://dare.co.in/opportunities/manufacturing/the-business-of-artificial-leather.htm
A rough calculation. 310 cr sales (Mayur probably will do a 325 cr), Net profit of 31 cr. Net Forex outgo of 35 cr. With currency appreciation of 10% (full impact being felt in this quarter), on a conservative basis, we are looking at close to 4cr being shaved off net profits. Net profit for FY12 would be 27 cr. Essentially a EPS of 50.
Markets might see this forex loss, and may lead to a correction after release of the Q3 results.
Also, I did read somewhere that RBI is targeting a 51-55 exchange rate now. If this is correct, and assuming Mayur does a 30% sales increase in FY13, that would take us to 400 cr in sales, 40 cr in Net profits (probably?). If exports increase to 30% of sales and the rupee stays in this range, we can expect a better NPM overall.
In case anyoneâs interested in Mayurâs Forex policy, itâs clean and simple. Simple hedging and account for it in P&L.
Disc: Invested.
I donât think the Company can continue to generate 10% NPM. Probably 8% is more reasonable. Depreciation charges are bound to increase and the fall in the rupee is still to be reflected. Overall Iâm happy with the argument that this could be a good time to enter.
But Iâm still not convinced about the competition. Considering that it is a commoditized product, why would a client choose Mayur over the Canadian company which Prabhakar diligently pointed out.
Anybody want to clarify? Assuming oil prices are trending higher General Tower has a clear advantage as its products are made from using soy and recycled water bottles!! Europe will also go the green way and choose General Tower. As most of the automakers operating in India are global players, I cannot say for sure that they will not move to General Tower products.
Subbu
Subbu,
In response to your query about competition from the canadian company and its impact on Mayur, I think Mayur is targetting a small market share of the US auto market for its products.
And overall each segment that Mayur caters to contributes almost equally to its revenues. The hue and cry is more about exports because they entail a higher margin as compared to domestic market.
Mayur is a small company in a boring industry quietly going about its business without too much undue attention from the markets. Looking at the market price and valuations accorded to this company it seems not much is expected out of Mayur in terms of growth and that is where any positive surprise might create sharp run ups.
HDFC update on Mayur Uniquoters
I know all of you are sitting pretty on Mayur Uniquoters. Hereâs an update for your eyes.
If it corrects at any time 375+, I will again be accummulating in bulk.
Disc: I remain invested in Mayur for the long-term
Mayur Uniquoter has significant tailwind as there is slow and steady adoption of synthetic leather. As and when quality and finish of synthetic leather improves its adoption will improve. The problem is many people struggle to recognize the trend that move slowly i.e.not longbackPuritans thought that digital camera will never be able to produce the quality of manual camera, grdually everyone move to digital camera. I will not be surprisedif 3-5 years down % of synthetic leather inleather seat increases to something like 50%.
Ireally like the focus on Mayur Uniquitorsbecause they are trying to make surefirst they gets the things right and then grow.Unlike many players in niche industry with significant upside they are not trying to grow very aggressively. Will they lose out to some upstart who has aggressive plan? time will tell, as of now no one seems on horizon.
UP, UP and OVER! 475/- now.
No really, whatâs happening?
Has the market suddenly realized the immense potential of synthetic leather? 
No complaints:). Our conviction getting transferred to the wider investment marketplace is a good thing. While Fund houses are not able to take positions because of the low float availability, many PMS wings of the fund houses have taken positions. Increasing quarterly dividend payouts have attracted much attention, lately.
If you have watched the trajectory over the past 1 year, every time the market has rallied with some confidence, Mayur has been one of the first to catch the uptrend, among others like Balkrishna Industries, Ajanta Pharma, and Gujarat Reclaim in ValuePickr Portfolio.
No wonder, as Mayur boasts of one of the best metrics among companies of its size. I have always challenged Institutional analyst friends to show us another small business with similar characteristics, and potential, and valuation!!
Yes, its not expensive for those with a 2-3 year+ view. And I always look to accummulate more in every major correction. and I always buy more with the generous dividends, thatâs a must for long term capital building - regularly Re-invest the dividends in companies in your portfolio. Always good to read Professor Jeremy Sigelâs Future for Investors, if only for the Dividend Re-investment perspective
Disc: I have significant holdings in Mayur Uniquoters, and my views are biased. Allocation over 25%
Dear Donald,
Its time we should really thank Hitesh bhai, for his wonderfull acumen in bringing this company to our notice.
. Hi Donald,
My thanks for bringing those detailed management discussions. Donât you believe that growth is some what slowing down recently. And from high growth, this company is moving to moderate growth ( i consider 30% plus as high growth and 10- 20 percent as moderate).
Looking at the liquidity at the counter a bonus or split is strongly needed. Your guess on this!
What is the holding period you will suggest.
My conviction is Mayur is a combo of value and growth together.
Dis: believe in concentrated investment and constitutes 60% of portfolio.
We are in the process of freshly reviewing all stocks on the portfolio. So please wait for an update on the immediate growth prospects.
If you have read the Management Q&A in detail, you cant help notice the company is slowly preparing for a scale change. That scale will come form marquee export customers - who are on the waiting line - as Mayur stabilises production and ups Quality adherence standards. Export rejects come at very high cost, the company is moving very cautiously, step-by-step here. They have inducted seasoned professionals in the team to lead this internal organisational step-ups.
Medium to long term, this is a pretty good story unfolding. No reason why the company cannot execute - the huge opportunities before it - Financial metrics have never been better, Management Bandwidth has been scaled up, processes and standards are being created, I am betting heavily that this Management will deliver - and scale the business to the next level. Mayur is in our Long-Term portfolio (See ValuePickr Scorecard thread)âŚso we recommend atleast a 2-5 year holding period. I am hopeful of continuing to hold it for 5-10 years:)
But, Your conviction, will come from the homework that you do on the stock. and compare with other opportunities in the basket.
Disc: My views are biased, as it occupies a very significant stake of my portfolio
Hello all,
Congratulations to the team for excellent work.
The management interaction was really nice and gave a lot of visibility.
I am particularly interested in the Knitted fabrics facility and revenue visibility from that part.
Some new points to add on this, came to know from fellow investors, some of whom interacted with the management.
The new plant has space for approx. 50-55 knitting machines but initially only around 13 machines have been ordered whose output will be used captively. ( mostly export standard requirements)
If the co. is able to master this trade then additional machines will be put and whose output will be sold to other synthetic leather manufacturers.
Mayur is enjoying interest subvention under Textile Up gradation Fund (TUF) on the Plant & Machinery.
How much of a revenue and bottomline contribution can we expect from this division going forward say by FY15 ?
I recall from the management Q&A Mr Poddar mentioned this alone as a 50,000 Cr market in India, so opportunities will be huge.
Views invited.
thanks for the update.
yes mayur is going to be looked in a totally different light by the markets 2-3 years down the line. I expect significant PE rerating in the stock due to excellent business prospects and high dividend payout.
regarding revenue and bottomline contribution from knitting fabric division, I think more than the contribution, it is likely to improve margins for mayur going forward.
Regarding your query, I think one needs to see how their experience in the knitted fabric for captive use goes and then they can ramp up the business to supply to other players.
But the way the management is going forward in a calibrated manner is very good and comforting to shareholders.
regards
hitesh.
Guys,
Promoters are buying on the counter. Promoter stake is already 74.96%. So with the sebi regulation, actually very little room is there for them to increase stake.
Views are invitedâŚ
It seems that currency appreciation has caused panic in investors. Is there any other reason for constant fall in prices?
It seems some sort of promoter holding rejig with Dolly Bagaria selling and manav poddar buying. Nothing much to read into it.
Often difficult to predict short term gyrations in stock prices. As long as the business prospects for the longer term remain robust, I think one can keep adding on declines or else if fully loaded up, then be ready to bear some short term pain.