>MAYUR UNIQUOTERS LIMITED

Recent Financial Performance – Q3FY12
MUL came out with decent Q3FY12 results. The company reported net sales of Rs 81.09 crs in Q3FY12 as against Rs 68.84crs in Q3FY11 and Rs 76.19 crs in Q2FY12. The company has been witnessing consistent growth in its sales over the past 3 quarters. The operating profit of the company stood at Rs 13.76 crs in Q3FY12 as against Rs 11.79 crs in Q3FY11 and Rs 12.17 crs in Q2FY12. The Profit Before Tax of the company stood at Rs 12.45 crs in Q3FY12 as against Rs 10.88 crs in Q3FY11 and Rs 11.10 crs in Q2FY12. The PAT of the company for Q3FY12 stood at Rs 8.65 crs as against Rs 7.32 crs and Rs 7.45 crs in Q2FY12. The EPS of the company stood at Rs 15.77 in Q3FY12 as against Rs 13.53 in Q3FY11 and Rs 13.77 in Q2FY12. During the quarter the company earned a duty drawback on part of exports of Rs 0.47 crs, which was reported under the other operating income and interest on FD was reflected under other income for a total amount of Rs 0.58 crs. 


Depreciation and interest costs rose as a consequence of the capitalization of expansion plans. MUL reported a forex loss of Rs.1.52 crs in Q3FY12 vs. a gain of Rs.0.36 crs in Q3FY11.


Capacity expansions to help MUL in growing its business
Exactly a year ago, MUL had overall capacity of 1.4 mn mtrs with 3 lines installed at a plant near Jaipur. The company installed the 4th line, which has enhanced the overall capacity to 1.9 mn mtrs. The 4th line started its production from December 2011 onwards and started functioning full fledged from the 1st week of February 2012. The company is also planning to start a 5th line of production and for the same purpose it has purchased land about 15 kms away from the current location. Post the completion of this line (which is expected to be completed by December 2012), the company expects its capacity to be enhanced to 2.5 mn mtrs per month. The 5th line is expected to be completed at a capex of Rs.22 crs while the 4th line was completed at a capex of 10-12 crs. The higher cost of the 5th line is mainly due to the fact that the line is being implemented at a new site.


With the demand for synthetic leather rising consistently, capacity expansion of the company could be handy and could augur well for the smooth growth of its business in the coming years.


Backward integration through production of fabrics
As mentioned earlier, the company has purchased a new plot of land, about 15 kms away from the current plant near Jaipur. The company along with planning a 5th line of production is also in the process of starting a fabric production unit which will manufacture raw material for the synthetic leather unit of MUL and hence is a backward integration initiative. The company has already started work and could start trial runs from Sept 2012. The capex incurred for this is about Rs.25 crs for production of Rs.45 crs worth fabric (at full capacity). The fabric plant will go into production in two phases (in terms of processes). This will help the company to register an increase in its margins and also help in reducing the rejection rate of its final products in export markets as it will have total control over the quality of a key raw material.


To finance these two initiatives, MUL could borrow about Rs.20 crs worth loans (including a large portion from Textile up gradation fund which is available with 5% interest subsidy). The rest could be raised from internal accruals.


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