SRF Limited

[vivek]

@Donald

My initial observations:

FY10 was an extraordinary year for PET Packaging business. In FY10, revenue share was 13% of overall revenues growing to 25% in FY11. While profit contribution of this segment was just 7.5% in FY10, it contributed 42% of profits in FY11. In absolute terms Sales grew 159% while Profits grew 755%!!

Technical textiles business grew 22% in Sales but suffered a degrowth in profits by almost 22%

Chemicals and Polymer business grew 13% in Sales, but only 6% in Profits.

FY11 results are completely skewed by the PET Packaging performance, but that’s cyclical, Management has already admitted to an oversupply situation. Main business lines are struggling for growth.

I was intrigued by the 51% PAT growth in the latest June Qr. but now it looks like this too must be driven by the PET Packaging division on its last legs!

Vivek - please comment.

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I must appreciate that you are one of the most methodical investors I had ever come across.

See, at the end of the day, its an industrial company and as such, its fortunes are surely linked with industrial growth. And candidly speaking, I am not expecting any significant growth in the immediate period. All I want is 60 rupees as CEPS and that would be fine for me. Because, I am convinced that its sales is likely to register a significant growth because of its capital expenditure plans. It has executed its projects well in the past and I am expecting that once it reaches that level of 5000 crores turnover, profits will automatically start flowing. And by the way, how much are we paying for it…???