Sky Industries Ltd - Footwear,Automobile manufacturer Major customers

[sanjay12354]

Sky Industries Limited is one of India’s leading player in narrow woven fabrics, (technical textiles). As one of the country’s most trusted suppliers of narrow woven fabrics, particularly hook and loop tape fasteners, we have gained recognition as specialists in providing fastening solutions.

Sky has worked closely with some of the most reputed companies spread across various industry segments in footwear, orthopaedic, defence, textiles, automotive, etc., and now offers customers an unmatched array of fastening solutions and products – we cater to every need and deliver fast, reliable and quality solutions.

Our dedicated and experienced sales staff is primed to listen to our client’s every request and tailor the best possible solution/product offering at the quickest turn around. Our goal for our clients is not just maximizing revenue but also expanding their customer base and consequently their business, leading to long-term sustainable growth.

Trust, reliability and quality is our credo and customer-satisfaction is a way of life at Sky.

Achievements:

Nominated in the Committee for setting standards for Hook and Loop Tape Fasteners in BIS.
Only Listed entity in this sector/industry.
Awarded the largest exporter award by SRTEPC, under aegis of Ministry of Textiles, in past, for 7 years.

(Source of above information company website www.skycorp.in)

Major Products

Industries serve

Footwear
Automotive
Defence
Orthopedic
Packaging
Industrial Use

Why i am tracking this stock?

• Tremendous growth opportunities in technical textile space.

• promoters raising stakes via Preferential issuance.

• Pawane plant ( Navi Mumbai) restarted in june 2017 after four years.plant was close for four years due to labour strikes…issue now resloved succesfully.This plant will boost topline at least 50% and accordingly boost bottomline…Big Positve.

• low debt

• Very Low competition.No easy entry for new player in this space.

• Market cap just Rs 17 crore.

• Book Value Rs.38

• Turnover Rs.49 crore.

Sky Industries Ltd (SIL) has been in the business of narrow fabrics for more than 20 years specifically in Hook & Loop manufacturing, in fact SIL is the largest player of Premium Hook and Loop Tape Fastener (Velcro) in India. Company enjoys its leadership position by Velcro brand association with Bata, Relaxo & Liberty footwear manufactures currently. These technical textile products are used mostly in all the industries such as Footwear, Orthopaedic, Aviation, Home furnishing, Food packaging, Automobile, engineering, Medical accessories and sports etc.

The main reasons which attracted me to this company other than its leadership position in India is its recent association with APLIX. APLIX is a world leader providing hook and loop fastening solutions for over 50 years and operates six plants in the U.S, France, Brazil and China and sales offices around the world with revenues of 205million euros.Aplix have very interesting product portfolio in packaging space.if both companies synergize well then it will definatly reflect in Topline and bottomline of sky industries ltd.

Company Brands
Sky Magic: Sky Magic FR is a fire retardant hooks and loop tape fastener. It is nylon hook and loop which is chemically treated to slow the material burn speed.

Sky SAT is that it provides an alternative to nails, screws and staples and the adhesion is strong and reliable. Easy to use and saves time during application.

Sky Printee is a unique product offered to fulfill your branding need. It comes with customized print options on hook tape to avoid any duplication of your product in the market.

Sky Net: A noted use of hook & loop tape fasteners is to secure anti-mosquito netting or insect screens to window frames. SIL proactively built on this idea and pioneered a top quality, premium fibre glass insect screen – SkyNet Insect Shield. It is the best of world class technology brought to secure from all kind of diseases caused by mosquitoes and other insects.

Velvet: SIL manufacture premium quality velvet ribbons under the brand name Skelvet. Skelvet is largely preferred in upholstery, home furnishings, garments, home décor, gifting material, soft toys etc. Skelvet touches the lives of people as a fashion and comfort statement and is already gaining symbol in the fashion industry.

EASY-LOCK by APLIX® is a hook-to-hook closure made from food-grade, heat-sealable polyethylene material. Hooks engage on multiple levels making it easy to open and re-close. Unlike other systems, precise alignment is not required for sealing and its resistance to particulates keeps freshness locked in.

Conclusion.

At cmp of Rs 40 quoting market cap of 17 crore not reflecting true worth of future tremendous growth of company.

Disclosure

I am holding few shares of sky industries ltd.

Disclaimer

I am not a sebi regestered research analyst.above write-up is just for information purpose and not an advise to investment.

[Alphin]

Good company and good product but still the sales have been on decline. Any competitor who is selling at cheaper rates perhaps…

[sanjay12354]

Once Pawane (Navi Mumbai) Plant Fully operational we will see uptick in topline and bottomline.products of aplix will also contribute in future.

[dd1474]

While the company appear to be in good business and tie up with international player also increase competitive strength, I am just wandering why growth rate for the company is so less in last decade? As per screener data, in last 10 years, Sales declined by -2.68%, Net profit shown lower than inflation growth of 6.6% and ROE of 4.08%. Even assuming debt cost of around 7(10%-3% tax benefit) and equity cost of around 14% with debt equity, Total netwroth 16 Cr and Debt of Rs 9.6 Cr give WACC of 11%. The company tax rate is not even 30%, but still giving that benefit, the company is generating ROE of only 4%. Even if company growth business 5 times, unless ROE improved susbstantially from 5% to 15-20%, the business is unlikely to generate any wealth for the Minority shareholder.

Also, look at good amount of interest paid and remunneration paid to the management. During FY2015, the company sold other plant and partially repaid the loan. However, operating margin does not give strength of international tie-up. Garment exports and other end use industry have shown more than 12-15% growth during last decade while company did not manage to grow in two digit.

FY2015 annual report also indicate some issue in New Mumbai facility with labour.Refer to Page 37 in annual report which state “the company faced external pressure as well as managed to overcome mini-crisis in form of Labour unrest at its Vashi Plant. However, the company able to services its customer and prevent loss of market shar by alternative arrangement”. On same page, total employee strength of the company indicated as 86. With such small labour force if the company face issues, how it would scale up operations?

No exports by the company.
The company purchased plant of Rs 3 Cr from subsidiary while sold plant of 8 crore duing FY15. One need to get more details about same.

While initial commnetary was very insightful, more detailed working raise major concern about scalability of business model and management capablity. More importantly, what has changed that would take the company in different league of high growth is not coming up properly. I would suggest one may work on that side to get more insight.

Discl: Not holding and hence limited time to work on this company. I would not be keen to invest unless get clear insight about changes which would take business to newer horizon.

[sanjay12354]

Thank you very much dhiraj sir for your analysis. past performance of management is questionable i fully agree with you.
But recent developments like promoter preferencial issue,pawane (navi mumbai )plant restart (already hired 150 employee /labour on contractual basis),tie up with Aplix. indicate management eager to grow henceforth.

Thank you

[sumitjain0014]

At what price promoters r issuing Pref. Shares?
Year of association of sky industries ltd wiyh Aplix?
Source of news of Navi mumbai plant restart?

[cool_gaurav]

As per the notes mentioned in June quarterly results, 210000 warrants converted into equity shares at face value only ie.Rs.10 per share and current share price 41. In my view, it will further dilute the eps which is apparent from June quarter result and Company need to improve topline significantly to improve ROE/ROCE.

[harini_dedhia]

The allotment happened at 23/- per share according to the Feb 10 2017 filing. Don’t think the SEBI rule for preferential allotment pricing would have allowed them to do it at 10/-

[Muralikrishn]

Volume is very less. Can you through some light on it?

[sanjay12354]

Low volume indicates promoters are busy in doing business and not involve in day to day stock price movement…and hence its a good sign that promoter concentrating more on routine business.

[sanjay12354]

Sky industries Ltd.Reported good half yearly numbers.half yearly reported EPS of Rs.2 compare to last years half yearly EPS of Rs.0.03.half yearly revenue reported Rs.25.69 crore and net profit of Rs.65 Lakh.

Thank you

Screenshot_2017-12-06-19-14-39|690x388

[Kuldeepjadeja]

When navi mumbai plant being operational? Aplix products they starts selling?

[sanjay12354]

Navi mumbai plant operational as on today. it will take two months to streamline the operation.they started trading in aplix products in india (i personally visited the plant)

Thank you

[pandi.rao]

Hi Sanjay, Since you have visited the plant, did you enquire or know the current utilization capacity in the existing plant which is operational and how much of revenue is expected from the new Navi mumbai plant, any inputs on that?

[Kuldeepjadeja]

@sanjay12354 If you can quantify the revenue from inflix products? Is this agreement is exclusive for india or they can go with others also?

[sanjay12354]

Agreement for Aplix product is not exclusive.

[Kuldeepjadeja]

@suru27 @kunal28parikh
if you spare some time please track this company… …

[Kuldeepjadeja]

Hi Sanjay, Since you have visited the plant, did you enquire or know the current utilization capacity in the existing plant which is operational and how much of revenue is expected from the new Navi mumbai plant, any inputs on that?

[Kuldeepjadeja]

Promotors unlocked their holding and big investors increased their stake …!!!

1)Promotors releases 870793 shares .
2)Anil Janardan gokhle increases his stake from 60500 shares to 71444.
3)Dhiraj kumar Lohia increases from 73044 to 78044.
4)Kailashben A Patel increases from 49000 to 55000.

[Kuldeepjadeja]

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