Worth peripherals- manufacturer of corrugated boxes

[inder_stocks]

Hello.

I found tis micro cap interesting.
But I have some doubts regarding corporate governance and financial health of the company.

Management

1. The company avails transport sevices from one versatile translink p Ltd in which one of the directors MAHESH CHANDRA MAHESHWARI is director. Every year it is paying this company around 1.7-2 cr for transport services.

2. For the year 2017-2020 the company could not spent CSR amount citing company could not find suitable areas to spend csr money. This argument does not sound good to me.

3. Not much information available about need and future plan of YASH PACKERS.

4. Promoters have given loan to the company and getting yearly interest income from it. Some are get rents also.

**I am not sure whether these transactions are at arms length prices.

Also, the company does not seem to convert it’s profit into cash flow. Every year they have to write off some receivables.

Disc - not invested but surely interested.

[jatinsehgal]

[kk82]

Looks like a breakout on the weekly charts.Good volumes too.
This will hold true if it sustains above 130 by the end of the week

[harsh.beria93]

I had written a few questions to the company and am sharing the answers.

1. We had incorporated Worth Wellness Private Limited in 2020 with an object to manufacture Diapers. However, business hasn’t yet started. Can you please update progress in the business?
Worth: We have dropped the Diaper Project.

2. Similarly, can you also update about progress in Worth India Pack, which is supposed to manufacture corrugated boxes? What will be the main difference between their business and our standalone business, and why did we need to incorporate this subsidiary?
Worth: Worth India Pack was originally incorporated for expansion of the Company in the existing line of Business of Corrugated Boxes. Moving forward, any expansion will be done in Worth Wellness Pvt. Ltd.

3. In all our subsidiaries or partnerships, why is Worth’s shareholding less than 100%? Especially given how much cash we have on our balance sheet
Worth: We plan to take the ownership higher for Worth Wellness Pvt. Ltd.

4. We were adversely impacted by kraft paper prices in the past, how are the prices now and when can we expect to get back to 13-14% margin levels?
Worth: Prices are very Volatile and moreover competition has increased manifold. Also a lot depends on the market conditions and the competitive landscape.

5. In the last couple of years, we have added lease hold land of close to 5 cr. (including 2 Cr. in FY23). Where have been bought land and what is our capex plans for this year?
Worth: We had acquired land for Worth Wellness Pvt. Ltd. Capex plan depend on market condition.

6. We also see capital commitments of 11.6 cr. in the contingent liability items. What is this capex related to?
Worth: Expansion under process in our Vapi Unit (Yash Packers).

7. With reduction in freight rates, why have we not seen an improvement in margins?
Worth: We primarily use paper that is domestically manufactured.

8. What is the expected growth in FY24 and our growth plans in next 2-3 years?
Worth: It depends on market conditions and raw materials price. However, we are always looking out for increasing business with existing and new customers.

9. Why did we see a 29% decline in our sales in Q1FY24? Are we seeing soft demand?
Worth: It is due to reduction in Raw materials prices. Change in raw materials prices are passed on the our customers.

Disclosure: Invested (position size here, no transactions in last-30 days)

[ramhegde123]

Worth not able to show any growth !! Last three quarters are way below okay