Jhaveri Flexo India Ltd.

by Manshu on November 5, 2007

in IPO/NFO

Business of Jhaveri Flexo India Ltd 

Jhaveri Flexo is coming out with an IPO and is in the business of packaging. Jhaveri Flexo has two manufacturing plants in Aurangabad and Silvassa and produces Laminated Packaging material, PVC Cling Film, Surface Protection tapes, Lamination Film and LLDPE Stretch Film. 

This material is used for packaging and some of the better known clients of Jhaveri Flexo are Hindustan Unilever, PepsiCo, Nestle, Pillsbury, ITC, Tata,Marico, Dabur India, Perfetti, Jet Airways, Taj Group, Oberoi’s. 

Financials of Jhaveri Flexo India Ltd. 

The company had total income of Rs.105.92 crores in the fort the fiscal ended 31.03.07 of which the profit after tax and extra ordinary items was Rs.2.61 crores, which is slightly greater than 2% of revenue. The company had incurred a loss to the tune of Rs.92.7 lakhs in the fiscal before that. In the latest fiscal Jhaveri Flexo India is in a negative cash flow situation for its operations and financing. 

Risks faced by Jhaveri Flexo India Ltd. 

There are certain risks faced by Jhaveri Flexo India Ltd. which an investor must keep in mind while investing in the IPO. 

The company is in a negative cash flow situation for the period ending 31/03/07 for its operations and investment activities. This means that the cash generated by the company has not been sufficient to finance its day to day operations and it had to borrow more money. 

The company had made certain projection of revenues in a rights offer in 1996, but Jhaveri Flexo has been off target for most of its revenue and profits projection for made at that time 

The promoter company Wellworth Securities limited is also a loss making company therefore eliminating any chance of a bail out by the promoter company in case anything goes wrong with this one. 

The company has been referred to BIFR in the past. BIFR had declared Jhavaeri Flexo as a sick industrial company and had appointed ICICI as the operating agency. 

Jhaveri Flexo has an export obligation upwards of US$3.7 million which pertains to various EPCG councils. If these obligations are not discharged as per the scheme then the profitability will be hit as Jhaveri flexo will have to pay duty and interest as applicable. 

Object of the IPO 

Jhaveri Expo is coming out with the IPO to comply with the guidelines of SEBI according to which the promoter holding should be less than 75% which at present stands at some 84%. 

Another reason for that is to finance a few projects which it is planning to set up. This involves increasing capacity in the existing plants and setting up a new manufacturing plant in Silvassa. 

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