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Wednesday, May 11, 2005

Donear Industries - share your opinion

Donear Industries

It seems to be HIGHLY undervalued and not at all under the scanner of
the marketman.

Donear is one of the pioneer fabric producers in the country, manufacturing perhaps the widest range of blended suitings, trousering fabrics and shirtings... in skin friendly blends of viscose polyester, cotton polyester, wool polyester and in varying widths in contemporary designs and colours.

SUITING AND TROUSERING FABRICS: In this category Donear manufactures blends like P/V, P/C, P/V/L, P/W/L, P/W gsm ranging from 150 to 350 in plains and designs in variety of finishes.

SHIRTING FABRICS: In this category, high quality fabrics in the width of 44" & 58"/60" in P/C & 100% cotton upto 160 gsm in regular and special finishes like 'calendered' & 'wrinkle free'. These are manufactured in range of plains and yarn dyed checks.

DRESS MATERIAL: In this category high quality dress material fabrics in the width of 44" & 58"/60" in various blends and combinations weighing upto 400 gsm can be manufactured; with the best possible product mix of weaves, textures in all feels and colours.

Financials & valuations:
1) CMP 206. Very low volume. Did not get the fancy of the market and secondly low floating equity.
2) Consistently paying dividends - last two 100% earlier 20, 100, 120% respectively (2004-200). Besides bonus (1:1) at two occasions (2004 & 1998)
3) Established name. in business since 1987. www.donear.com/
4) Low equity base of Rs 2.60 cr (now 5.2 cr post bonus) but 82% with director and relatives.
5) Revenue and profitability increasing consistently (WITHOUT A single exception). 2004 revenue 122 cr and profit after tax 17.52)
6) Reserves of Rs 52.89 crs (has been increasing consistently over a period of time, in last 5 years there was not a single drop)
7) Book value of 213+ rs in FY'04
8) Net Current Assets rs 54.43 cr over Current Liabilities 11.91 cr. Net is 42.52 cr divided among .52 cr shares then 81 rs cash available for each share.
9) Secured Loans Rs 17.52 Cr & Unsecured Loans Rs 1.15 cr. very low compared to Total Shareholders Funds of Rs 55.49 cr. Even company has brought this figure down over a period. The interest component in the P&L is negligible just Rs 0.87 cr in FY04 (1.43 1.84 2.18 1.44 crs in previous years).
10) Lastly, Donear Industries to begin a Rs. 150-crore Greenfield textile project - this is the news item of Sep'04, as pasted below for info.

India: Donear Industries to begin a Rs. 150-crore Greenfield textile project
Donear Industries Ltd. plans to set up a Greenfield textile project worth Rs 150 crore approximately, in the coming 6-12 months...
by Textile Excellence
Wednesday, 15th September 2004

Donear Industries Ltd is next in line, to pump heavy investments with a view to intensify its operations. At the recent launch of international quality fabric range under the its brand `Royal Classico’, Mr Ajay Agarwal, the Executive Director of Donear Industries Ltd., unveiled the company’s plans to set up a greenfield textile project worth Rs 150 crore approximately, in the coming 6-12 months. Letting out more information about this proposed move, Mr Agarwal said that machinery requirements for the proposed project had been identified and the orders were placed. Also, with a view to complement the rise in demand for cotton fabrics, this
project would exclusively undertake this activity, the Executive Director asserted.

Though the exact project location is still under discussion, it has been reported that the company was considering either Gujarat or Maharashtra for this project. Mr Agarwal was, however, quick to note that the finalisation of place would take form only after careful weighing of incentives currently being offered by these states.

In addition to this developmental move, other strategies of Donear Industries include investment of Rs 20 crore towards capacity expansion of its Silvassa factory. From its present capacity of 1.2 million metres per month for terry wool and polyester viscose, the company aims to achieve the 1.6 million meters target by adding another 0.4 million metres to the monthly capacity.

Continuing with the growth viewpoint, it could be noted Donear Industries Ltd. has been registering high growth rates in the range of 35 to 40 per cent annually over the last six years. Further, the company hopes to sustain this growth trend and has an internal target of reaching Rs 500-crore turnover mark set for next four years. This, it hopes to achieve by expanding its distributors network for various brands. It is also contemplating to set up exclusive showrooms in key cities across the country.

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