If one travels in the parts of northern n central India one common thing comes in habit of eating is PAN MASALA.Based on this i found an intersting proxy player to pan masala manufacturing .The significant raw material used in manufacturing pan masala is Katha.This Kolkata based katha co. came into existence on bse from direct listing window hence unknown n hidden to retails.Co is The indian wood products company ltd (IWP).
Promoter Experience: The company has around 100 years of operational track record in manufacturing catechu. The company’s promoter has more than 35 years of experience in the same line of business.
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.
The company has a production capacity of 4626 metric tonne per annum (MTPA) of katha and 2,000 MTPA of cutch, a
by-product of katha manufacture. The company sells its products under the brand name, IWP.
IWP’s operating margins improved in FY18 to 14.6% (FY17: 12.9%) on account of a shift in the focus towards producing timber-based catechu which is more profitable than traditional catechu.
IWP’s credit metrics remain strong on back of the growth in top line and healthy profitability. Net financial leverage (net debt/EBITDA) was 1.2x in FY18 (FY17: 2.0x) and interest coverage was 6.2x (7.5x). The net leverage improved in FY18 because of a rise in the operating EBITDA margin along with scheduled term loan repayments. However, the interest coverage declined marginally in FY18 due to an increase in short-term borrowings, availed to fund its increased working capital requirements, leading to an increase in the financial expenses.
The company has acquired an industrial plot for
Rs. 2.5-crore in Kathua, Jammu & Kashmir to establish a new katha manufacturing unit. This project would require an
additional Rs. 5-6 crore in the medium term.
This is just a intial basic analysis to keep a tracking of Co’s performance.I m not a sebi registered advisor.Hence this is not to be construed as buy/sell recommendation.
Anyone interested can analyse complete financial on bse site.
Co is thinly traded as it has tiny equity n listed only on bse
all kinds of comments r welcomed
disclosure: holding some qty
all the data has been compiled from publicly avlbl resources such as AR,co site,rating agency reports,etc