Midfield Industries

Midfield Industries:


Consistent 5year CAGR of 20% in Sales, 28% in PAT, 26.5% in EBIDTA.

EBIDTA Margins over 20% for last 3 years, Net Profit Margin near 9%,

debt equity ratio 0.47

Trading at a p/e near 3 and dividend yield over 6.5 %

Operates in Niche segment of industrial packaging. Moved from a specialised player in steel strapping in 1993 to a supplier of a range of industrial packaging consumables to one stop shop packaging solutions ( Operational contracts) provider in 2012.

There are no comparable companies having a range of industrial packaging consumables i.e. steel strappings; Polyester Strapping & PP strapping; Corner Boards; VCI Paper and collated nails. Industrial Packaging is part of the packaging industry that primarily deals with bulk and industrial packaging and primarily caters to manufacturing sector.

Amongst the few players in the organized segment of packaging industry catering to the growing demand for Industrial packaging consumables in India. Cater to companies across wide spectrum of industries like steel, aluminum, glass, copper, paper, automobile, white goods and refractory to name a few. over 500 customers located in India as well as internationally

High Tensile Steel Strapping: Midfield Industriesâ flagship product High Tensile Steel Strapping is used to ensure that the material is strapped well and it does not shift during transit.Used for heavy-duty packaging. Well known Brands: Supreme and Mega Supreme.Steel strapping uses cold rolled steel as raw material, fluctuation in raw material prices can adversely impact profitability.

Operational contracts: Midfield Industries provides end-to end packaging solutions (men, materials and equipment) to enable customers to focus on their core business.

Undertaking an operational contract entails capital outlay wherein an adequate inventory has to be built at the clientâs site. Company is focusing on more operational contracts to widen the product offerings, and create a ready market for their products. Essar Steel, NALCO, Vizag Steel Plant, and Bhilai Steel Plant represent some of the key clients for whom they have undertaken operational contracts. It seems ITW Signode (not listed) is their competitor in this area. Mgt used to work with ITW signode previously.


Tend to have negative operating cash flows due to increased working capital investments, primarily in inventories and receivables and in operational contracts.Huge debtor days - not easy to wrest payments out of steel plants


Came up with an overpriced IPO around Rs 130 in 2010 at 20x earnings. It seems this was oversubscribed 13x ! After the IPO, operators took over the stock and it went to 440 after which it came down on continous circuit filters. It does not look like the management was involved in the rigging.

Inviting opinion from seniors… does anyone see value at this point?

Disclosure : awaiting blessings to invest

I havent looked at the stock in details but two negatives emerge from the fy 12 results posted on bse.

first is high promoter pledging to the tune of 44% of their total holding.

Second is in auditor’s report written in dark black --“provision for doubtful debts has not been made and the amount has not been ascertained.”

Plus it has a horrible chart to go with it wherein there were a lot of fun and games at the time of listing after which nobody doesnt seem to be willing to touch it at even 10% of the peak price.

Many Thanks Hitesh for looking into this. I’m sure the chart sucks big time. ‘Scam’ ridden shares dont recover that easy if at all. Since the promoter holding hasn’t changed since the IPO and I could not find anything against them it seems they are clean. The cash flow stmt in the AR does have provision for bad debt (19.5L) down from 28L in 2011. Not sure if it’s the same thing you’re referring to.

They have a plant under implementation in Orissa â Expected tocommence commercial production during thirdquarter.


I have had a look at this stock due to some attractive things like - low PE & high div but if you look at their balance sheet closely, they have a very high working capital.

They are having a huge working capital requirement - debtors are more than 50% of turnover and this leaves a lot of scope for manipulation etc. Hence I would be cautious here.



Thanks Ayush. No blessing = no investment. I came upon this on using the screener. just want to throw ideas -which I might have considered -for senior’s opinion in an effort to pick their brains and eliminate companies going forward.

They do mention in the AR that operational contractsentails capital outlay wherein an adequate inventory has to be built at the clientâs site. And you cannot even arm twist huge steel plants into coughing up money which is due. Since they are focusing on operational contracts ( better margins and backward integration), I guess the huge working capital and debtor days is here to stay.

( btw I eliminated Acropetal technologies ( good growth record, p/e under 2, div yield over 8%, building IP in education sector - they say exponential growth starting next year) because I was previously advised to stay away from acquisition based growth . The website, AR etc is pretty glossy though :wink: