From the number of Annual reports that I have been reading these days, it is quite clear that many small and medium sized industries based in Tamil Nadu suffered during 2008-09 , on account of frequent power cuts. Many companies could not achieve the desired sales and margins because of the reason mentioned above. Well, it is not surprising at all, considering the fact that the power situation is grim across the whole of India, and the Govt. is most definitely going to fall short of adding another 78,000 MW power generation capacity by 2012.
Many companies are resorting to different measures to overcome the problem of power cuts. The bigger companies are going for captive power generation (mostly in the metal space), while the smaller ones are changing the product mix and manufacturing products that are less power intensive. One such company in the penny stock space is Interfit Techno Products Ltd.
Interfit Techno Products ltd is subsidiary to Interfit India Limited, a Government of India recognized Export House and an ISO 9001 certified manufacturer, producer of economic piping products. The product profile of the company includes Screwed & Socket-weld Fittings, Couplings & Fittings for grooved piping system, Ball Valves and Butterfly Valves in Carbon Steel, Stainless Steel and Alloy Steel etc.
Earlier the thrust area for the company was overseas market, however off-late it has started catering to the local needs. During the year 2008-09 the company issued 500000 9% Non-Convertible, Non-Cumulative Redeemable Preference Shares of Rs 100/- each to its holding company, Interfit India Limited. Also, they have added 3.75 lacs redeemable preference shares of Rs 100 each to the authorized capital of the company, however the same have not been allotted. So, the management is basically infusing money into the company and has been making conscious efforts to revive the company, and they seem to be paying off.
I said earlier that the company is changing the product mix and is diversifying into new products. This is because the company has started manufacturing the new products, S.G. Iron Cost Fittings and Ball valves in additions to existing stainless steel Fittings and Ball valves. Also, they are outsourcing power intensive components from other manufacturers and concentrating on finishing and assembly operation requiring lesser power.
So, have these new developments transformed into better numbers for the company ? Well, actually they have especially with respect to sales, and if one is to consider the Sep'09 quarter alone, then on net profit front as well. In the last 4-5 years the company could never achieve a turnover in excess of Rs 9 crores and the bottom-line was abysmally low at around 10-20 lakhs. However, in the first two quarters alone of FY2009-10, it has achieved a turnover in excess of Rs 17.1 crore and a bottom-line of Rs 1.3 crore.
Although it would be too early to term the current situation as a turnaround for the company, but the good signs are definitely there. I say this, because one can see an increase in employee cost for the company QOQ (a rather good indicator of the growth in the company). The current market cap of the company stands at just around Rs 14 crore and an annualized earning of Rs 2.6 crore makes it available at a multiple of 5.5. One should definitely keep a tab on the fututre performance of the company, because as I said, it could be one of those rare turnaround case.
Many companies are resorting to different measures to overcome the problem of power cuts. The bigger companies are going for captive power generation (mostly in the metal space), while the smaller ones are changing the product mix and manufacturing products that are less power intensive. One such company in the penny stock space is Interfit Techno Products Ltd.
Interfit Techno Products ltd is subsidiary to Interfit India Limited, a Government of India recognized Export House and an ISO 9001 certified manufacturer, producer of economic piping products. The product profile of the company includes Screwed & Socket-weld Fittings, Couplings & Fittings for grooved piping system, Ball Valves and Butterfly Valves in Carbon Steel, Stainless Steel and Alloy Steel etc.
Earlier the thrust area for the company was overseas market, however off-late it has started catering to the local needs. During the year 2008-09 the company issued 500000 9% Non-Convertible, Non-Cumulative Redeemable Preference Shares of Rs 100/- each to its holding company, Interfit India Limited. Also, they have added 3.75 lacs redeemable preference shares of Rs 100 each to the authorized capital of the company, however the same have not been allotted. So, the management is basically infusing money into the company and has been making conscious efforts to revive the company, and they seem to be paying off.
I said earlier that the company is changing the product mix and is diversifying into new products. This is because the company has started manufacturing the new products, S.G. Iron Cost Fittings and Ball valves in additions to existing stainless steel Fittings and Ball valves. Also, they are outsourcing power intensive components from other manufacturers and concentrating on finishing and assembly operation requiring lesser power.
So, have these new developments transformed into better numbers for the company ? Well, actually they have especially with respect to sales, and if one is to consider the Sep'09 quarter alone, then on net profit front as well. In the last 4-5 years the company could never achieve a turnover in excess of Rs 9 crores and the bottom-line was abysmally low at around 10-20 lakhs. However, in the first two quarters alone of FY2009-10, it has achieved a turnover in excess of Rs 17.1 crore and a bottom-line of Rs 1.3 crore.
Although it would be too early to term the current situation as a turnaround for the company, but the good signs are definitely there. I say this, because one can see an increase in employee cost for the company QOQ (a rather good indicator of the growth in the company). The current market cap of the company stands at just around Rs 14 crore and an annualized earning of Rs 2.6 crore makes it available at a multiple of 5.5. One should definitely keep a tab on the fututre performance of the company, because as I said, it could be one of those rare turnaround case.
Note: The stocks discussed at MPS thru blog postings are neither a part of “Business Insights” issue nor a “Penny Stocks” which we reco/publish for paid subscribers. These are just stock specific views by MPS team; one MUST do the due diligence before doing any investment based on our reco.
To contact the Lead associate on this story: Ekansh Mittal in Noida (New Delhi) at Ekansh@hbjcapital.com
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