IPO Monitor

DIVYESH SUKHADIA, CMD

How did you enter this business?

See, this if our forefathers business. This company was started in 1937 by my grandfather and later on my father took it over from him. And then we have taken over.

What is the core business?

Our core business is Manufacturing & Supply of Printed Duplex Board Packaging.

What are the unique strengths of your company?

As on today we are manufacturing Duplex Board Packaging of different sizes and all types of cartons.

What have been the major achievements of your company in the last one year?

In the last one year we got ISO 9001 and 2008 from a German company and we also got PSFC award.

What is your agenda now?

We are concentrating on value added products and the types of cartons we will be manufacturing are not being manufactured by every body. We are bringing the latest technology.

What infrastructure and marketing set up you have?

As on date we ourselves are marketing. We, six brothers are attending to this company. Marketing Department is headed by my brother Mr. Dharmesh Sukhadiya. We do not have any canvassers as on today.

What is your revenue model?

Last year the turnover was Rs.62 crores with a net profit margin before tax 4.20% and depreciation of around Rs.3 crores. So cash Earning Per Share (EPS) is more compared to net EPS.

How is the capacity utilization?

As on today, this unit is having 100% capacity utilization though it is written that it is being utilized at approximately 68% because we are manufacturing various sizes of cartons

What are your views on the industry?

Industry as a whole is growing @ 25% and due to urbanization taking place fast in India there will always be good demand for packaging industry.

Who are your blue chip clients?

As on today we have lot of multinational companies like Eskaf,Siemens, Aventis Pharma, and Indian companies like Pidilite Industries, Emami etc.. We are also catering to contract manufacturers. We are into all type of segments of Pharma, Food Products etc.

How much is your repeat business?

Every month, we are getting repeat orders.

What was the object of the issue?

Object of the issue was to set up entire facilities at new plant coming up at Bhilad.

What will be its capacity?

There are three kinds of products that we are going to manufacture with varying capacities.

What are the locational advantages?

There is no locational advantage. We wanted to have a bigger place and Gujarat is very upcoming State in India.

How has been your IPO experience?

IPO experience has been very good. In fact we received a very good response from the public. Issue was oversubscribed by 4 times and Retail was oversubscribed by 7 to 8 times.

When do you expect this project to start showing profits?

We expect this new project to commence by January’2012. We will be able to achieve 3 months capacity utilization in the current year.

What is your competitive edge?

Our competitive edge is that as on today we have the latest machinery and equipment with latest technology. And all the jobs which are to be carried out in producing a carton is available at one place. We are in this business for the last 73 years and we have the experience of managing the manpower and to develop the contacts with the customers. This is our strength.

How do you source the raw material?

Raw material is sourced from India only. There are many companies in India and we are sourcing from them only.

What is your strategy for growth?

Since we are going to manufacture value added products we are very much hopeful to get the orders in future.

What are the challenges?

Challenges are there of competition but we do not see it as a challenge because the market itself is growing at a very high speed so there is room for everybody.

How do you look at the opportunities?

Opportunities are immense in this industry as packaging is going to grow at a very good speed and because of the urbanization taking place in India but we should have proper machinery and proper manpower to get the work done.

What is promoters’ stake after the issue?

After the issue it is around 41% but with relatives and friends share it will be around 55%.

Any other listed company which can be compared to your company?

We are the only company with a unique product portfolio that we cannot be compared to any listed company. There is no other company which is actually comparable to us.

What is your business philosophy?

Business philosophy is to grow as fast as possible because there are markets waiting for us to enter.

What is your message for shareholders?

Our message for shareholders is that do not look at day to day pricing of the share. Just concentrate on the fundamentals. We are definitely going to grow in two years time and you will feel then that you have invested in a good company.

How do you visualize your company three years from now?

As far as our sales are concerned we expect our turnover to rise to Rs.150 crores to Rs. 180 crores in next three years.

Any other important highlight of the company?

Do not see the net profit after the tax because our company is a capital intensive unit by nature so maximum amount is going for depreciation. Our EBITDA margin is around 20 to 22 percent but due to depreciation it is less on the net side. If you add back the depreciation to the EPS you will get the cash EPS which is sustainable to this price.