SVPCL Limited is entering Indian primary market with a Public issue of * equity shares of Rs.10 each. The issue is a 100% Book Built. Below are the salient features of this issue:
Business of the Company
Company is presently one of the largest paper product manufacturers in Southern India with production facilities spread strategically across Andhra Pradesh at Hyderabad, Vijayawada and Visakhapatnam Special Economic Zone. It manufactures the entire range of educational stationery like books, Computer Stationery, Paper products, General stationery and printing services.
Company is promoted by the Mr. K. Mallikarjuna Reddy, Managing Director of the company who has a Commerce Degree. Other promoter is Mr. K. Sudhakar Reddy, Whole time Director, who has around 15 years of experience in manufacturing and marketing paper products.
SVPCL Limited is a profit making company. For the FY ended March 31, 2006, the company clocked a turnover of Rs. 41 crores. The net profit for the same period was about Rs.1.73 crores. For FY 2007, till Dec’2006, company had clocked a turnover of Rs. 57 crores and a net profit of Rs. 4.44 crores. For FY 2005 and FY 2004, the top line was Rs. 28 and Rs. 14 crores approximately. The net profit for FY 2005 was Rs. 0.31 crores and for FY 2004 net profit was Rs. 0.19 crores.
Particulars of the Issue
SVPCL Limited IPO is a fresh 100% Book Building issue of * Equity Shares of Rs. 10 each. Out of these * shares are reserved for retail investors.
Basis for Issue price
SVPCL Limited claims that it has integrated content design, process and printing capabilities. It has capacity to provide high quality printing services at competitive costs. It is one of the prominent educational stationery providers in South India. Also it is a consistently profit making company. Its weighted average RONW is 6.37%.
Objects of the Issue
The main object is to modernize and expand the existing manufacturing facilities at Hyderabad, Vijayawada and Visakhapatnam. Another objective is to set up marketing infrastructure at identified locations in different parts of the country. Augmenting long term working capital resources is the third main objective. Like any other company going public, getting listing gains is also one of the motives of the issue.
Following are the key risks which can impact company’s performance:
a. Company faces intense competition in the student books, Computer Stationery, Paper products, General stationery and printing industry, our business, results of operations and financial condition will be adversely affected.
b. Company sales are on payment terms averaging approximately 60 days. This may cause it to encounter cash flow difficulties.
c. Company is yet to fully utilize the existing installed capacity and the capacity utilization has been 40.64% and 55.72% of the installed capacity during the year ended March 2006 and 9 months period ended December 2006 respectively.
d. For execution of its commercial printing projects, it may be using certain essential intellectual property for which it may not have obtained prior permission.
e. Company has allotted shares at par during the past one year though the present issue of equity shares is proposed at a premium.