Low margins, few customers may impede Texmo’s future

The company’s top 10 customers accounted for 43.88% of its sales for 2008-09

Texmo Pipes & Products Limited’s over-dependency on its small customer base and concentration on two sectors could limit the company’s profitability. Texmo makes a variety of PVC and HDPE pipes. According to the prospectus filed with the Securities and Exchange Board of India (SEBI), the company’s top ten customers accounted for 43.88% of its sales for the year 2008-09.

The telecommunication and agriculture sectors contributed 24.89% and 53.02% respectively of its total revenues. IDEA Cellular Limited itself accounted for 16.26% of revenues during 2008-09. Besides, Shree Padmavati Irrigations Private Ltd, a promoter group firm, is in the same line of business, thus creating a chance of conflict of interest.

Texmo’s Initial Public Offering (IPO) opens on 16th February and closes on 19th February. The issue size is pegged at Rs42.50 crore-Rs45 crore with a price band of Rs85-Rs90 per share. Almondz Global Securities Ltd is the lead banker running the issue. Credit Analysis & Research Ltd (CARE) has assigned ‘IPO Grade 2’, to the issue indicating ‘below average’ fundamentals.

Texmo’s net sales have inched up from Rs57 crore during 2007-08 to Rs61 crore during 2008-09 showing an increase of just 6.93%. The company posted a negative cash flow of Rs37.10 lakh and Rs44.06 lakh for the period between 1 April 2009 to 31 October 2009, and 3 July 2008 to 31 March 2009 respectively. It has not declared any dividends in the past.

 

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L&T to invest $400 million to expand shipbuilding

L&T has lined up investment of around $400 million which will be spent on shipbuilding capacities mostly dedicated to the Navy, near Ennore port

Engineering and construction major Larsen & Toubro Ltd on Tuesday said that it will invest $400 million in ramping up its ship manufacturing capacity, reports PTI.

"We have lined up investment of around $400 million which will be spent on shipbuilding capacities mostly dedicated to (the) Navy near Ennore port," L&T's senior executive vice president and member of the board MV Kotwal said on the sidelines of the Defence Expo 2010.
“Over the next four-five years, we are targeting a revenue of Rs2,500 crore from the defence, nuclear and avionic segments,” he said.

Mr Kotwal said that the company had identified four core areas—radar, electronic warfare, avionics and mobiles—for co-operation with EADS to provide services to the Indian defence sector.

When asked about the revenue projection, he said that the company is targeting a turnover of around Rs2,500 crore from the defence, nuclear and avionics segments.

The company is particularly bullish on the nuclear segment as the sector has a business potential of over Rs6,000 crore for private firms.
 

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COMMENTS

ghanshyam

6 years ago

account 12 years exp.

Euro collapse inevitable, says French bank

Société Générale strategist Albert Edwards has warned investors that any help given to Greece merely “delays the inevitable break-up of the euro-zone,” while former European Central Bank chief economist Otmar Issing has said that bailing out Greece would be a “major blow” to the currency.

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