Business of Sree Sakthi Paper Mills Ltd.
Sree Sakthi was incorporated in the year 1991 and is in the business of manufacturing kraft paper and duplex board. The applications of these is in the box making, paper cones, files, folding boxes etc. Some example of consumers are shoe boxes, garment inserts, match boxes, sweet boxes, garment boxes, notebook covers and bulk material handling like drugs and dyes.
The company has got a capacity of 41600 MT currently and started with a capacity of 5000 tonnes. The plan is to increase the capacity by another 30000 MT at its Edayar unit in Kerala. The point to note here is that most of the other paper manufacturers like BILT, ITC Bhadrachalam, TNPL etc have also announced their intention to expand capacity. Also one must take into account that the fortunes of the paper industry are linked to that of the economy in general and the economy is expected to do well in the next 3–4 years at least. Some of the prominent customers include Hindustan Lever Ltd., Britannia Industries Ltd., Hindustan Newsprint Ltd., Tamilnadu Newsprint and Papers Ltd., Murudeswar Ceramics Ltd., Marico Industries Ltd., Mc Dowell, Godrej.
Financials
The company has seen its revenues grow sedately from Rs. 36.64 crores in 2001 to Rs.50.55 crores last fiscal. The profit growth has not been consistent and has fluctuated over the past few years. It was as high as Rs.1.05 crores in 2002 and came down to Rs.53 lakhs in fiscal 2004 and now in the last fiscal stands at Rs.1.09 crores. The EPS last fiscal has been Rs.3.68. and the P/E based on that is 10.38 however this does not take into account the issue of new shares.
Conclusion
The company is offering its share at a price of Rs.30 per share and the offer opens at 17th January and closes on 21st January.
While the issue is not completely convincing the company is one, which is in an unglamorous industry and has stuck to its core business for very long and grown and done well for more than a decade and the promoters understand the business. So while this may not be the best IPOs to invest in it certainly looks like a decent one.
The following table shows the upcoming IPO that have been covered under this
section and their status. You can click on any of these to read more about them.
