MILTON PLASTICS LTD BSE Scrip Code: 526143 Containers & Packaging March 14, 2013 Equity Statistics Current Market Price Rs. 9.7 52 Week High/Low Rs. 15.81/9.01 Market Capitalisation Rs. Crores 12.13 Free Float Rs. Crores 8.05 Dividend Yield % 0.00 One Year Regression Beta Times -0.03 BSE Volumes Trend - Average = 1.91 Thousand 30 25 20 15 10 5 0 Company Summary Milton Plastics Ltd (MPL) was incorporated in May 1992 by taking over the assets of the partnership firm Milton Plastics. It currently manufacturers a range of plastic household items, insulated thermo ware items, vacuum flasks etc. The company has six associate industrial business units in Maharashtra (Pune and Silvassa) which do job work for Milton Plastics. The company has a technological tie-up with German major IPV that provides know-how for its softline series of thermoware. IPV also has a buyback arrangement with Milton through which 35% of softline products are exported. MPL imports the glassware range from countries like Brazil, Mexico and Indonesia. The glassware range includes drinking glasses, dinner sets, mixing bowls that are microwave-safe and heat resistant. In FY12, MPL reported net sales of Rs.38.7 crore and net profit of Rs.5.2 crore. MPL derives 100% of its revenues from domestic market. MPL is currently trading at 2.2 times FY12 earnings per share (EPS). Relative Returns 132 112 92 72 Milton Plastics Ltd Sensex Returns 1M 3M 6M 1 Yr Absolute -12% -28% 5% -24% Rel. to Sensex -12% -29% -4% -31% Shareholding Pattern 100% 80% 60% 40% 20% 0% Mar `12 Jun `12 Sep `12 Dec `12 Promoter DII FII Others Board of Directors Person Bhansilal Vaghani Chiranjiv Vaghani Madhup Vaghani Viren Bhimani Devendra Negi Role NED, Chairman NED NED, NED, Independent NED, Independent Source: AR and CARE Research Note: MD: Managing Director, WTD: Whole time Director ED: Executive Director, NED: Non Executive Director, Source:BSE, Capitaline and CARE Research 1 Initiative of the BSE Investors Protection Fund
Background Milton Plastics Ltd (MPL) was incorporated in May 1992 by taking over the assets of the partnership firm Milton Plastics. It currently manufacturers a range of plastic household items, insulated thermoware items, vacuum flasks etc. The company has six associate industrial business units in Maharashtra (Pune and Silvassa) which do job work for Milton Plastics. The company has a technological tie-up with German major IPV that provides know-how for its softline series of thermo ware. IPV also has a buyback arrangement with Milton through which 35% of softline products are exported. It is importing the glassware range from countries like Brazil, Mexico and Indonesia. The glassware range includes drinking glasses, dinner sets, mixing bowls that are microwave-safe and heat-resistant. Business overview MPL derives its revenue primarily from only one segment i.e. thermoware products. Plastics which are the main raw material constitute bulk of the total expenditure and accounted for 81% of the total revenues in FY12. Strengths and growth drivers One of the core strengths of the company is the Milton brand name for thermostat products. The company also has wellestablished retail distribution chain in tier I cities. The company is planning to establish its presence in rural markets. The company also has plans to get into exports markets. Risk and concerns Competition from unorganized/small-scale sectors and new players getting into this industry. Future strategy and expansion plans Currently, the company has no plans of capacity expansion; however the company is planning to diversify its existing customer base by penetrating into rural markets and entering exports markets. Industry outlook The Indian Plastic & Polymers Industry is one of the fastest growing sectors. Plastics and Polymers have derived demand, and their sustained widespread usage is symbolic of tremendous growth from sectors like automobiles, electronics, telecommunications, food processing, packaging, healthcare, furniture etc. However, each of the sectors has demand for plastic and polymer in different offerings. This has led to diverse applications of plastic and polymers. Compared to global averages, the per capita consumption of plastics and polymers in India is very low. It would also require an urgent adoption of industry-wise applicable quality standards and globally benchmarked technology and manufacturing practices. The plastic industry is expected to touch Rs 1.33 lakh crores by FY16. Indian companies recycle nearly 60% of plastics in India, yet, national consumption of plastics will climb to 15 million tonnes by 2015 and the country will become the third largest consumer of plastics in the world. The highly fragmented downstream industry comprises segments like injection moulding, blow moulding and extrusion and caters to applications like packaging, industrial, irrigation, construction, consumer durables and healthcare. The Indian plastic industry is estimated to reach a value of INR 1.33 lakh crores by 2015. The demand potential is expected to shoot to approximately 14 million tons (MMT). Currently, nearly 3.05 million people are directly or indirectly dependent on the sector, however, with the increase in manufacturing companies and capacity expected to grow, the employment potential of the sector is likely to rise to close to 6 million by 2015. 2 Initiative of the BSE Investors Protection Fund
Peer comparison Year ended March 31, 2012 Income statement (Rs. Crore) MPL Nilkamal PIL Total income 38.9 1,437.1 25.3 Net sales 38.7 1,434.6 24.5 EBITDA (3.3) 148.7 (0.3) Ordinary PAT 5.2 55.6 (1.0) Adjusted PAT 5.2 55.6 (1.0) Per share data (Rs.) Adjusted BVPS (178.5) 271.0 (30.6) Diluted EPS 4.2 37.3 (0.7) Growth (Y-o-Y) (%) Growth in total income (15.4) 14.5 21.1 Growth in net sales 3.1 14.6 17.3 Growth in EBITDA 45.2 15.1 (429.7) Growth in adjusted PAT (22.1) 6.0 (103.6) Growth in EPS* (5.9) 6.0 (103.6) Profitability ratio (%) EBITDA margin (8.5) 10.4 (1.3) Adjusted PAT margin 13.4 3.9 (4.0) Valuation ratios (Times) Price/EPS (P/E) 2.2 3.2 (5.3) Price/Book value (P/BV) NM 0.4 (0.1) Enterprise value (EV)/EBITDA NM 3.5 (41.2) Note: Nilkamal: Nilkamal Ltd., PIL: Peacock Industries Ltd. Quarterly financials Income statement (Rs. crore) Q3FY13 Q2FY13 Q1FY13 Q4FY12 Q3FY12 Total income 10.3 9.0 8.8 12.1 10.4 Net sales 10.3 9.0 8.8 12.1 10.3 EBITDA (0.3) (0.3) (0.4) (1.1) (0.5) Ordinary PAT (0.4) (0.5) (0.6) (2.3) (1.6) Adjusted PAT (0.4) (0.5) (0.6) (24.1) (1.6) Growth (Q-o-Q) (%) Growth in net sales 14.3 2.4 (27.3) 17.6 Profitability ratio (%) EBITDA margin (2.9) (3.3) (4.1) (8.9) (4.4) Adjusted PAT margin (3.9) (5.1) (6.8) (198.8) (15.3) 3 Initiative of the BSE Investors Protection Fund
Financial analysis In FY12, MPL reported net sales of Rs.38.7crores up 3.1% y-o-y. Total income witnessed a decline of 15.4% during the same period. Raw materials form the largest portion of cost for MPL. In FY12, raw materials cost as a percentage of net sales was at around 81%. The company reported PAT margin of 13.4% in FY12. The total debt as on March 31, 2012 was at Rs.246.9 crores compared to accumulated losses of Rs.223.2 crores. MPL exhibited a cash conversion cycle of around 80 days in FY12. The company has not paid a dividend last five years. Annual financial statistics FY08 FY09 FY10 FY11 FY12 Income statement (Rs. crore) Total income 56.7 48.9 39.1 45.9 38.9 Net sales 43.8 37.3 33.3 37.6 38.7 EBITDA (3.1) (4.9) (3.5) (2.3) (3.3) Depreciation and amortisation 0.8 0.8 0.7 0.5 0.4 EBIT (3.9) (5.7) (4.2) (2.8) (3.7) Interest 36.8 32.1 25.7 25.3 11.0 PBT (27.3) (36.0) (29.9) 5.5 5.2 Ordinary PAT (27.4) (35.1) (29.9) 5.5 5.2 Adjusted PAT (27.4) (35.1) (29.9) 6.7 5.2 Balance sheet (Rs. crore) Adjusted networth (170.0) (205.2) (235.1) (228.4) (223.2) Total debt 248.8 276.8 296.7 266.3 246.9 Cash and bank 1.2 1.1 1.2 1.0 0.3 Investments 4.1 4.1 4.1 4.1 1.5 Net fixed assets (incl. CWIP) 8.4 7.9 7.2 6.9 4.4 Net current assets (excl. cash, cash equivalents) 65.1 58.5 49.2 (4.1) (10.5) Per share data (Rs.) Adjusted BVPS (136.0) (164.2) (188.1) (182.7) (178.5) Diluted EPS* (21.9) (28.1) (23.9) 4.4 4.2 DPS - - - - - Growth (Y-o-Y) (%) Growth in total income (13.7) (20.1) 17.5 (15.4) Growth in net sales (14.8) (10.8) 12.8 3.1 Growth in EBITDA 55.9 (27.7) (35.9) 45.2 Growth in adjusted PAT 28.4 (14.9) (122.4) (22.1) Growth in EPS* 28.4 (14.9) (118.5) (5.9) Key financial ratio EBITDA margin (%) (7.1) (13.0) (10.6) (6.0) (8.5) Adjusted PAT margin (%) (48.3) (71.8) (76.5) 14.5 13.4 RoCE (%) NM NM NM NM RoE (%) NM NM NM NM Gross debt - equity (times) NM NM NM NM NM Net debt - equity (times) NM NM NM NM NM Interest coverage (times) (0.1) (0.2) (0.2) (0.1) (0.3) Current ratio (times) 3.6 3.8 3.3 0.9 0.8 Inventory days 43.8 53.2 63.7 69.5 Receivable days 258.9 203.2 123.3 82.2 Note: Financial Year (FY) refers to period from April, 1 to March, 31 4 Initiative of the BSE Investors Protection Fund
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