Business of the Company
The company has been recently incorporated on January 7 2005 with the objective of running the entire business of three partnership firms Metro Poly Prints, Radha Madhav Industries and Mayura Industries. Radha Madhav is engaged in the business of packaging and printing activities. The manufacturing activities can be divided into two categories primary packaging and secondary packaging.
Primary packaging means material is in direct contact of the product and sold as a single saleable unit like soap wrapper. Primary Packaging business of the company constitutes of flexible packaging, specialty films and folded cartons.
Secondary packaging business of the company includes bags, liners, stretch films, shrink films, overwrap films, paper tubes, cartons etc. Presently Radha Madhav has got three production facilities, all located in Daman which is approximately 160 kms from Mumbai.
Financials
The financials that follow are just for a period of 26 days from 6th March till the 31st March. Over this period there were sales of 2.27 crores resulting in a net profit after tax of 8.07 lakhs. At the same time there was an interest charge of 6.12 lakhs. The company has got a debt component of 803 lakhs out of a total balance sheet size of 1759 lakhs.
The IPO is a fresh issue of shares by the company 1 million shares by the company of the face value Rs. 10 at a premium of Rs.10, so the share is being offered at Rs.20 and 5.5 million shares are reserved for the public.
Objects of the Issue
The issue is being floated to raise money for setting up a new manufacturing unit as well as expansion of the existing manufacturing unit. All the existing / proposed products are used in the packaging of primary and secondary nature. The project has been appraised by SBI and the total cost of the project is coming out to be Rs. 50.06 crores out of which Rs. 20 crores is being raised by this issue. Rs. 14.8 crores is being loaned from SBI and Rs. 9.20 in the form of a term loan from Bank of Baroda. The production date is estimated to be February and March 2006.
Key Risk
The company has only recently been incorporated and to that extent the shareholders will not have the comfort of a proven track record.
Radha Madhav corporation carries a large portion of debt on its books which it has taken for expansion purposes and the interest charges are likely to cause strain on the bottom line especially in the current fiscal when production is estimated to commence only towards the end of the fiscal itself.
Other than this there has been a plethora of new issues and with the market at dizzying heights there is bound to be some correction in the present future and in times of these corrections it is the smaller stocks which fall at a greater pace and therefore cause greater risk to one’s portfolio.
The following table shows the upcoming IPO that have been covered under this section and their status. You can click on any of these to read more about them.
