NEO CORP INTERNATIONAL LIMITED(NCIL) – BSE CODE-523820
NCIL is a
Public Listed Company with an equity base of 38.02 million shares.
NCIL since
its inception was dedicated towards making tailor made products under Packtech
and now it has the status of one of the best and reliable suppliers in
Packtech products internationally.
It has also
entered two more segments of technical textiles namely Geotech and Agrotech.
It is
listed only on BSE as of now. It was trading on NSE through Madhya Pradesh
Stock Exchange (MPSE).MPSE is in the course of decognitiion hence NCIL
permission to trade on NSE was withdrawn since 30th January 2015.
The company has filed an application for relisting and should be traded on NSE
soon.
NCIL is
also listed on Bourse de Luxembourg(Luxembourg Stock Exchange).
CHARTEREDINVESTOR
PICK
Technical textile sector is one of the most innovative
branch of the industry in the world, ranking as one of the five high tech
sectors with the greatest potential for development. The success of technical
textiles is primarily due to the creativity, innovation and versatility
in fibers, yarns and woven/ knitted/ nonwoven fabrics with applications
spanning an enormous range of users. The ability of technical textiles to
combine with each other and with others to create new functional products offer
unlimited opportunities for growth.
Traditionally, North America and Europe have been the
major markets for technical textiles in the past but in recent years, the sheer
volume of demand from Asia Pacific has outpaced demand from North America and
Europe. With better technology capabilities, ever increasing demand from
different end user industries, technical textiles are expected have a huge
market to cater to globally.
India’s export of technical textiles has grown from US$ 624.95 million during 2007-08 to US$ 1355.04 million in year 2012-13 with a CAGR of 17% indicates encouraging global demand for India’s technical textile products. Furthermore, the import of technical textiles has grown from US$ 835.82 million during 2007-08 to US$ 1434.97 million in year 2012-13 with a CAGR of 11% shows that Indian consumers have significant demand for technical textiles products.
These statistics highlight not only concerted domestic needs, but also India’s potential to address global demands, for technical textiles products. With advancing technology, higher integration with global markets and greater sensitization to market needs, the Indian technical textiles industry demonstrates significant potential, for the development of local industry and prospective entrepreneurs.
India’s export of technical textiles has grown from US$ 624.95 million during 2007-08 to US$ 1355.04 million in year 2012-13 with a CAGR of 17% indicates encouraging global demand for India’s technical textile products. Furthermore, the import of technical textiles has grown from US$ 835.82 million during 2007-08 to US$ 1434.97 million in year 2012-13 with a CAGR of 11% shows that Indian consumers have significant demand for technical textiles products.
These statistics highlight not only concerted domestic needs, but also India’s potential to address global demands, for technical textiles products. With advancing technology, higher integration with global markets and greater sensitization to market needs, the Indian technical textiles industry demonstrates significant potential, for the development of local industry and prospective entrepreneurs.
Technical textiles are an important part of the textile industry
and its potential is still largely untapped in India.
NCIL
MANAGEMENT:
Neo Corp is
run by learned and highly experienced people from the related fields. Few of
them are:
1. Mr. Shrawan Kumar Patodi : Eminent
Lawyer having vast experience in the field of low and 10 years of experience as
export executive. Educational qualification - B. Com. M.A., LL.B. and D.H.B.
2. Mr. Ladharam Patel : 40 years of
experience in the manufacturing business.
3. Mr. Rollande Coderre : An
entrepreneur from Canada having experience in vast number of fields like
packaging, construction, etc. Educational qualification - Degree in Business
Administration and business accounts & finance
THE
NUMBER GAME
Let us have
a look at the financial results of past years.
Particulars
|
FY 2010-11
|
FY 2011-12
|
FY 2012-13
|
FY 2013-14
|
FY
2014-15(Trailing)
|
Sales
|
301.99
|
431.05
|
626.07
|
979.34
|
1307.57
|
Operating profit Margin
|
10.76%
|
11.36%
|
10.40%
|
9.91%
|
9.91%
|
Profit before interest and depreciation
|
36.02
|
55.72
|
71.49
|
101.80
|
128.92
|
Interest
|
14.78
|
22.23
|
27.43
|
42.28
|
54.11
|
Depreciation
|
2.72
|
4.45
|
6.28
|
9.67
|
13.12
|
Profit before Tax
|
18.53
|
29.05
|
37.77
|
49.85
|
61.69
|
Tax
|
2.62
|
7.84
|
8.81
|
19.95
|
21.74
|
Earnings for shareholders
|
15.92
|
21.21
|
21.13
|
30.01
|
39.95
|
EPS
|
10.27
|
5.61
|
5.59
|
7.94
|
10.52
|
The numbers
speak a lot about its performance. The return on the capital employed in to
company over a period of 3 years is above 16%. Also the cash flow has been improving.
At current levels, NCIL is trading at 2.5 PE which is very much lower as
compared to the industry PE of 22. Also the business has huge potential to
grow. Trading at 60% of its book value provides huge ground for upmove.
CONTROL
MEASURES:
The company
has hired world class professionals for proper control over the business activities.
This has helped to improve productivity, provide better services, reduced cost
and increased returns especially on human capital. The company’s internal control
systems are commensurate with the nature of its business and the size and
complexity of its operations.
STRENGTHS:
·
NCIL
products are of ISO quality standards and the BRC & Astho will enable NCIL
to enter rich e markets.
·
Worldwide
ever increasing demand.
·
It
is also into business of Geotech and Packteck. Thus agricultural and
infrastructural activities will give impetus to the growth.
·
It
has a large domestic market which helps to spread the risk.
·
New
acquisitions will add further to increase in proximity and develop new and
better customer relations.
·
NCIL
has the highest production capacity of technical textiles in India.
WEAKNESS:
· The market is price sensitive and thus is susceptible to pricing pressure.
· Competition
from other countries.
With a view
to take on the competitors in the global markets, NCIL has been increasing its
business and developing client relations. It had its business spread across 20+
nations and has been serving 550+ clients.
It has 6 subsidies namely
1. Europlast Ltd
2. Sacos Indigo Pvt Ltd
3. Netflex Infracon Ltd
4. Polybase Ltd
5. Polylogic International Pvt Ltd
6. IPC Packaging Co Ltd
Europlast Ltd was incorporated in UK in 1988 and was engaged in sourcing and
distribution technical textiles. The acquisition of Europlast was very crucial.
Europlast Ltd was operating for over a decade and established itself as the
leading player in its business in Europe. Acquisition of Europlast has proved
to be very much advantageous in the form of better customer services, reduction
of risk on account of credit sales and also reaching out to more clients.
In the
previous financial year NCIL made a big strategic more by acquiring IPC Packaging Co Pvt Ltd. IPC was
acquired in November 2014. IPC Packaging Co. Pvt Ltd
is based in Bangalore, the IT hub of India for the past 6 years and leading
manufacturer of PP / HDPE woven FIBC, Jumbo Bags, sacks, Tarpaulins, Box Bags,
PE Liner etc.. IPC has
a huge hi-tech production plant spread over 2.6 million sq ft which is located
very close to the Industrial sector. IPC was and is being run by veterans with
experience of over two decades. This acquisition puts NCIL at the top in its
business with highest production capacity in india.
In addition to the technical
textile business, Neo Corp also
represents Indian Oil Corporation Ltd as Del Credre Associate cum stockiest for
the state of Madhya Pradesh. There are two production lines of 300 KTA each
for Polypropylene (PP) with Spheripol technology license from Basell, Italy.
The product portfolio includes entire range of Homopolymers, Block Copolymers
and Random Copolymers.
There is a dedicated HDPE
plant of 300 KTA using Basell (Hostalen) slurry process. The product portfolio
includes Unimodal as well as Bimodal HDPE grades for various application
segments such as Film, Blow Moulding and Pressure Pipes.
The low petroleum prices will
benefit to a great extent the company’s polymer business.
AWARDS
AND RECOGNITIONS:
· Neo
Corp enjoys the Star Export House status recognized by the Government of India
for the Company’s excellent export performance.
· It
has a Trading House Certificate which is valid for a period of 5 years which
ends in 2019. A trading house is an exporter,
importer and also a trader that purchases and sells products for other
businesses.
· On
22nd September 2014 its Inhouse R&D Units recognization was
renewed upto 31st March 2017.
· NCIL
is also a member of the Flexible Intermediate Bulk Container
Association(FIBCA).
Some
industry related links
All the above
discussions depict Neo Corp has a huge potential for a great upmove and will
prove its mettle in the coming times.
Disclosure: It is safe to assume that I have vested
interest in Neo Corp International Ltd and my opinion may be biased. Viewers
must consult their financial advisors before any investment.
Happy
investing.