Query: Fiberweb India- this quarter there was a turnaround results & the co. is gradually turning into green, is there a chance of big breakout???Our response...
FIBERWEB, incorporated in 1985, it was an ailing Partnership firm managed by the Kanakias and it was acquired by Pravin Seth. Fiberweb is engaged in manufacturing and marketing high quality spun bond nonwoven roll goods, Formerly known as PVD Plast Mould Industries, it got its present name on 12 May 2004.
The ISO 9001:2000 certified company (Fiberweb) main business is Polymer Processing and all other activities of the company revolve around this main business like manufacturing mono-layer and multi-layer packaging, lamination, and masking films; plastic films; garbage bags; carrier bags; and polypropylene spun bond nonwoven fabrics. These products are used in the hygiene industry, agriculture crop cover, medical and industrial clothing and other innovative uses. Manufacturing facilities are located in the Union Territory of Daman, of which, two are 100% export oriented units. Reeifenhauser Gmbh of Troisdorf, Germany has supplied plastic extrusion machinery. The manufactured products are exported to more than 15 countries across the globe.
In December 1992 the company has allotted bonus in the ratio of two fully paid equity shares for every five shares held. Immediately after one year the Company has allotted 35,00,000 No. of equity shares of Rs.10 each at a premium of Rs.15 per share aggregating to Rs.8.75 crores as Rights shares & during that period production was affected by the shift of the plant from Vapi to the new site in Daman. In 1994 the Company has privately placed 40 Lakhs No. of Equity Shares of Rs. 10/- at a premium of Rs. 20/- per share aggregating to Rs. 12 Crores to institutions, and other bodies Corporate & in the same year the Company had established 100% E.O.U. for packaging products like Garbage and Carrier Bags. The profitability in the operations was adversely affected during the year because of increase in the cost of raw materials, especially, the polymers which are being used in bulk quantities, severe liquidity crunch in the financial market and paucity of demand for certain products of the Company.
One of the units of the Company manufacturing blow moulded, roto moulded and injection-moulded products was closed down in 1997 due to extreme liquidity problem. Pursuant to an Order dated 18 jan 2007 of the Honble Bench of BIFR, the Company was declared as a sick industry and IDBI was appointed as the operating agency, a rehabilitation Scheme has been prepared and submitted. Under the Scheme One Time Settlement of Dues with financial institutions and bankers were envisaged. The Company has settled and paid the dues of IDBI, Corporation Bank and BOI Mutual Fund. The BHF Bank has agreed to accept the One Time Settlement amount offered by the Company. Efforts are being made by the company to get the approval of other financial institutions and bankers to accept the OTS offer.
In the period of deep economic recession in all the countries especially in the developed countries where the company products are widely exported. Company recorded a turnover of Rs. 40.15 crores in march 2009 compared to Rs.33.55 crores during the previous year, during this period it has reported a loss of Rs. 4.08 crores & company is continuously making loss from 2006, Book value is negative. However Fiberweb India reported net profit of Rs 0.35 crore in this quarter ended December 2009 as against net loss of Rs 3.41 crore during the previous quarter ended December 2008. Company Sales rose 20.86% to Rs 8.17 crore in the quarter ended December 2009 as against Rs 6.76 crore during the previous quarter ended December 2008. As I have already mentioned in my previous post that it takes time to remove the dust completely, similarly the company share price to appreciate or to give big breakout it requires more positive news from the company side, like approval of other financial institutions and bankers to accept the OTS offer, one positive quarter won’t be enough, company should post qoq growth in, keep a watch on the company going forward but at present seeing all the aspect it should be avoided because there are many stocks in this sector which has potential to grow going forward & are available at cheaper valuation.
- Hitesh, Equity Research Analyst, HBJ Capital Services Pvt. Ltd [Hitesh@hbjcapital.com]
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