"Visaka Industries Grab & Hold it tight " : Sokhi Scrip Scan !

VIL was incorporated on 18th June, 1981 as 'Visaka Asbestos Cement Products Limited'. With effect from 9th August 1990, the name of the Company was changed to Visaka Industries Limited. The Company is a Rs. 500 cr. turnover, multi product/location establishment, presently engaged in the manufacture of Building Products, Synthetic Blended Yarn. The Company's Building Product Plants (Asbestos Cement Sheets) are located at 7 different places. The Synthetic Blended Yarn factory is located at Nagpur in Maharashtra.

Product Profile :- Asbestos Cement Sheets: It is a 70 years old industry with a total annual production capacity in India being 2.70 mn tonnes. There are mainly 4 major players in this industry cumulating to 59% of the total production capacity.During the year 2006-2007 the ACS Industry has grown at 16% p.a. ACS is mainly used as roofing materials in rural, semi urban areas and by Industrial sector. The company presently has production facilities. The company has recently set a factory to make a new product 'Reinforced Building Boards' new age multi-purpose cement board with a wide range of applications. The project cost was Rs. 40 cr. for setting up 60,000 MT production facility, funded through fund raised areas and by Industrial sector. The company presently has production facilities. The company has recently set a factory to make a new product 'Reinforced Building Boards' new age multi-purpose cement board with awide range of applications.

The project cost was Rs. 40 cr. for setting up 60,000 MT production facility, funded through fund raised by shares through QIP route on 24.01.07. Textile Division :- VIL diversified in 1992, to manufacture Synthetic Blended Yarns, using Twin Air Jet technology of Murata, Japan. Its manufacturing plant at Nagpur, Maharashtra, has 28 Murata Twin air jet machines, with a total of 1816 spindle position. The yarn produced, range from 100% Polyester to Polyester-Viscose blends (85/15). The plant produced 6619 tonnes of yarn after the capacity was increased by 50%. Visaka's production facility at Nagpur is the single largest Twin Air Jet Spinning Installation in the world. Visaka's Yarns are used by leading textile mills to manufacture a wide range of fabrics including shirtings, suitings, fashion fabrics, upholstery and embroidery laces. The company exports 40% of Yarn production to Europe.

RAW MATERIALS :- The main raw materials for Building Products are Asbestos Fibre and Cement. The former is imported amongst others from lab Crysotile INC., of Canada and Sama Fibres of Brazil, whereas the latter is manufactured indigenously and is procured amongst others from Orient Cement, Rajashree Cements and India Cements Ltd.

In 2007-08 VIL acquired Shakti Roofing, a Pune based Rs. 50 cr. revenue & Rs. 5 cr. PAT company during 2006- 2007, which has made VIL a market leader with an installed capacity of 6,30,000 tonnes by the end of 2006-2007, it has set up its plants in multiple locations which enable it to reduce its cost component incurred due to transportation of raw materials and finished goods. It has its plants strategically placed which helps its marketing network to work efficiently.

Reinforced Building Board is a new age multi-purpose cement board with a wide range of applications. These boards have gained wide market acceptance and is widely preferred over wood/gypsum based products. The unique composition of manufacturing process makes this wood free eco friendly board the 'preferred' choice amongst Architects and Interior Designers. Boards are very economical when compared to the similar boards. They are resistant to environmental corrosion and are more durable and hence affordable. Urbanization is leading to high rise apartments where Reinforced Building Boards are used for Internal walls to reduce weight and increase in floor area. The demand for false roofing and partition board is increasing by 15% to 20% per annum due to increased construction activities whereas availability of wood based material is dwindling by around 10% every year. Reinforced Building Boards has been slotted to capture this gap-in demand supply situation. Through the company's extensive network the product is marketed very efficiently, thereby increasing the demand for the product. RBB has a large market acceptance and is a synergy to the ACS division of Visaka, boosting up its revenues and profits.

In 07-08, its PAT came down heavily, mainly due to increased cost of cement and losses suffered by garment division (finally, company sold its garment factory at a loss). However, company has maintained 30% dividend. It allotted 2007995 shares to Shakti Roofing.

Valuations: - Stock is trading at: 1) 2.08 x FY09E EPS., 2) 1.87 X FY10E EPS. Needless to say that scrip is a screaming buy. Pays 30% dividend. Book value is Rs. 100/-. May pay interim dividend in current year. Promoters are investor friendly and aggressive. Turnover has grown from 5 crs. to 500 crs. in 15 years. Just Grab & Hold it tight guys at Cmp Rs 39/-.