Issue Open 26/09/2006
Issue Close 04/10/2006
Issue Size 6700000
Issue Type Book Building
Face Value Rs.10/-
Price Range Rs.49/- to Rs.58/-
Tick Size Re.1/-
Market Lot 120
Minimum Order Qty 120
Listing Stock Exchange Mumbai, NSE
Registrar To The Issue Intime Spectrum Registry Ltd.
Book Running Lead Managers UTI Bank Ltd., Centrum Capital Ltd., Bajaj Capital Ltd.
Registered Office Address Trilokpur Road, Kala Amb, Nahan, District Sirmour , Himachal Pradesh
Phone 91-1734-325128 Fax 91-1734-325130
Email arvind@svendgaard.com
Website JHS Svendgaard Laboratories Ltd.
Analysis
Background :
JHS Svendgaard Laboratories Ltd. (JHS Svendgaard) was incorporated in the year 2004 to carry out the business of manufacturing, exporting, importing and trading of oral hygiene products.
JHS Svendgaard is a dental and oral health care products manufacturing company. It's a private label manufacturer for many domestic as well as global brands. However company also exclusively manufacture and sell toothpaste under the brand name 'TAAZGI' in the local market.
Initially company started with manufacturing of only toothbrushes. Subsequently, JHS Svendgaard has also developed products such as toothpaste, whitening gel, whitening mouth rinse, denture cleaning effervescent tablet, tongue cleaners.
Company has its production facilities Unit I & II at New Delhi and a 100% Export Oriented Unit at Noida Special Economic Zone (Unit III) in the State of Uttar Pradesh.
Oral care products manufactured by the company are exported to the US, UK, France and West Asia, among other geographies. Around 50% of the company's turnover is accounted for by exports.
Post issue promoter holding will reduced to 47.93% from 94.95%.
Object of the Issue :
To raise funds for setting up the proposed Anchor free toothbrush facility and facility for other products at Kala-Amb in Sirmour, Himachal Pradesh.
To increase the installed production capacities of products at existing SEZ (Noida).
For general corporate purposes.
To meet the expenses of this issue.
Strengths :
JHS Svendgaard has a good mix of export and domestic sales roughly in a proportion of 50:50 in rupee value, which provide company a very stable growth model for future business development as well as a support in case of slow down in any of the markets.
Company's plans to set up toothbrush manufacturing plant in an excise free zone of the State of Himachal Pradesh. This would enable company to pass on the cost benefits to its existing and prospective customers.
Company has slowly and gradually graduated from being just a toothbrush manufacturer to handle moulder as well as blister former and are further adding more integrated operations into the existing system. Backward integration will lead to an overall cost saving for the company as well as improving productivity and quality through in house monitoring of stocks as well as quality. This has helped JHS Svendgaard to reduce its inventory costs and storage space.
Company's in-house designing capabilities as well as prototyping facilities allowed company to achieve turnaround for a product in 6-8 weeks as against a normal period of 10-12 weeks. This also ensures that company has a consistent portfolio of products for all customers in the domestic as well as international markets.
JHS Svendgaard capacities provide the benefit of having economies of scale with greater volume to leverage fixed costs. Higher volumes shall further fuel the economies by providing the negotiation power with suppliers leading to cost savings for the Company.
JHS Svendgaard is a contract manufacturer of oral care products for Fortune 500 companies such as Wal-Mart, Boots of the UK, and Carrefour of France. In the domestic market, JHS Svendgaard is engaged in private label business for Indian companies such as Dabur India Ltd, Balsara, Ajanta, Oral-B, and Sahara India.
Weakness :
Substantial portion of company's revenues are from a limited number of clients in domestic as well as international markets. Moreover company relies on few suppliers for meeting its raw material requirements. Loss of any customer or supplier may affect company's financial health in future.
Company is restricted in the limited segment of oral and dental care products, which do not form complete range of the industry. The Company does not have marketing strength strong enough to compete with the well-established players in the industry.
The Company has recently ventured into production of whitening mouthwash, whitening gel and mouth rinse and are currently heavily dependent on its production of toothbrushes and to some extent on production of toothpaste for its topline.
The oral and dental health care industry is marked with high penetration of new players as the sectors in principal does not require any special technical expertise and the regulation does not bar any new entrant from any eligibility.
Valuation :
Topline of the company for the year ended March 31, 2006 stood at Rs.30.03 crore. While the company reported a net profit of Rs. 4.02 crores for the same period. There is not enough operating history as company was incorporated in late 2004.
Company's net worth as on March 31, 2006 was Rs. 13.6 crores and the book value of Equity Share stood at Rs.23.45 for the same period.
Post issue EPS based on March 31, 2006 earnings comes out to be Rs. 3.22. Shares are being offered at a price band of Rs. 49 to Rs.58 at a P/E multiple of 15 to 18.
Source:-Moneycontrol
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