COCHIN SHIPYARD

Expanding shipbuilding footprint

The government of India-owned miniratna PSU, Cochin Shipyard, is the largest shipbuilding and ship repair facility in the country. It is the sole shipyard in the country which is managed by the Ministry of Ports. The company has built platform supply vessels and double-hulled oil tankers. It is also a well-known player on the global ship-building front and has by now exported over 45 ships to various commercial clients overseas. The company’s performance on the financial front is also heart-warming. What is more, prospects for this mid-cap company are quite promising going ahead.

Consider:

• The company has built and repaired some of the largest ships in India and also the prestigious indigenous aircraft carrier for the Indian Navy. Over the years, it has successfully responded to fluctuations in the ship-building requirements of the market and has evolved from building bulk carriers to smaller and more technically sophisticated vessels such as passenger vessels and offshore support vessels. The company has worked with several leading technology firms in the industry, including Royce Marine (Norway), GTT (France) and Yard Group (Norway). This has added to its credibility in the international markets. Its key ship-building clients in the domestic space include the Indian Navy, the Indian Coast Guard, DRDO, A&N Administration and the JSW group. The company has a robust order book with pending orders worth over Rs 10,000 crore and enquiries in addition to benefits it will get from ‘Make in India’, ‘Atmanirbhar Bharat’ and indigenous defence orders.
• The Indian ship-building industry continues to be driven by defence requirements. The Indian Navy is planning to increase its fleet from the present 137 to 200 by 2027. This is expected to provide a spurt to the indigenous ship-building segment. Besides, the Indian Navy’s indigenisation plan is expected to give a fillip to the growth of ancillaries and generally improve the ship-building environment in the country
• As per the AT Kearney report on the ship repair industry, though India’s share in global ship repair is less than 1%, the country’s location is favourable with 7-9% of global trade passing within 300 nautical miles of the coastline. According to the report, India has a market potential of Rs 2,600 crore from repairs to the domestic fleet, of which only a 15% share is currently captured. The report has further highlighted that India can grow its ship repair industry to Rs 9,000 crore in the next 10 years through infrastructure and process improvement. The report has highlighted low levels of process efficiency, lack of infrastructure to service vessels above 10,000 DWT and a weak ancillary landscape as road blocks for developing the industry. A key recommendation of the report was to lease out the repair facilities at major ports to specialists to augment revenue opportunities.
• In line with the above recommendations, one of the major initiatives under the Government of India’s ‘Sagarmala’ project was to lease out the ship repair facilities available at the major ports to specialists to generate more revenue and create a positive ship repair industry climate. Based on this, CSL was offered the first opportunity for ship repair operations and management of the Indira Dock on January 18, 2019. CSL has also signed an MoU with Kolkata Port Trust to take over their Netaji Subhas Dock on lease.
• According to research analysts of ICICI Securities, the defence PSU has remained resilient and is seen outperforming the broader market. It is performing very well with sales turnover during the last 12 years more than doubling from Rs 1,462 crore in fiscal 2011 to Rs 3,190 crore in fiscal 2022, operating profit also more than doubling from Rs 308 crore to Rs 637 crore during the same 12-year period, and the profit at net level shooting up more than two and a half times – from Rs 228 crore to Rs 587 crore. The compounded sales growth during the last 10 years works out to 9 per cent and the compounded profit growth around 14 per cent. The new fiscal year ending March 2023 has started on a highly cheerful note, with revenues in Q1 FY2023 registering a growth of 33.8 per cent yoy to Rs 440.9 crore, driven by a 31 per cent yoy growth in the shipbuilding segment and a 47 per cent yoy growth in the ship repair segment. EBITDA shot up by 50.6 per cent yoy to Rs 31.5 crore as the EBITDA margin improved to 7.1 per cent from 6.4 per cent in Q1 a year ago. Profit at the net level inched up by 47.2 per cent yoy to Rs 42.2 crore.
• The company has been paying dividends regularly and the rate for the last year was Rs 16.75 per share. Interestingly, the company has been maintaining a healthy dividend payout of 35.1 per cent. The company’s stock is trading at 1.14 times its book value, which is quite attractive.

CONSOLIDATED PERFORMANCE INDICATORS (Rs. in crore)

TIME TECHNOPLAST

Polymer solutions for varied clients

Time Technoplast is an Indian multinational conglomerate engaged in the manufacture of technology-driven innovative polymer products, with operations in India, Bahrain, Egypt, Indonesia, Malaysia, UAE, Taiwan, Thailand, Vietnam, Saudi Arabia and the US, and more than 34 production facilities across the globe. These products cater to growing industry segments like industrial packaging solutions, life style products, automotive components, healthcare products, infrastructure/ construction-related products and material handling solutions.

Promoted by qualified professionals with decades of experience – who believe in working hard for the company, its customers, its suppliers, its employees and its shareholders — the company started as a small-scale unit with a production facility in Tarapur (Maharashtra) in 1993, and the very next year entered into a technological collaboration with the Mauser group. Then it started expanding its domestic footprint by setting up a plant at Daman (in the Union Territory of Diu and Daman) Hosur (Tamil Nadu) and Baddy (Himachal Pradesh). Having established itself in all parts of the country, Time Technoplast embarked on a strategic expansion overseas in the UAE, Bahrain and Thailand in order to serve its customers in the western, southern and south eastern regions of Asia. Having covered the Asian region, the company made inroads in Europe, the US and the Middle East. It also entered into a joint venture with the Mauser group to acquire to related businesses in other Asian countries. By now, it services over 500 institutional clients and its distribution/ dealer network is spread over 345 cities and towns.

The company has been going from strength to strength on the financial front, with its consolidated sales turnover during the last 12 years expanding from Rs 1,259 crore in fiscal 2011 to Rs 3,650 crore in fiscal 2022, with operating profit inching up from Rs 236 crore to Rs 506 crore during this period. What is more, prospects ahead are all the more encouraging.

Consider:

• Time Technoplast does not have many competitors globally. Since its inception in 1992, it has set itself apart from the competition by focusing on R&D, futuristic product design and superior customer service by setting up 28 manufacturing units and 8 regional and marketing offices to meet the demand of Indian and global customers. The company focuses on longterm relationships with customers and has addressed the varied and expanding requirements of customers over a long period. By introducing new products, it has obtained additional business from existing customers and expanded into new markets.
• The company has decided to restructure its overseas business in order to capture growth in Asia, the Middle East and the US through joint ventures/special purpose vehicles by onboarding strategic/investor partners by way of sales/transfer/disposal of part of assets/investments of subsidiaries/ material subsidiaries/step-down subsidiaries. This will enable the company to utilize the process of restructuring for repayment of debt, capex for composite cylinders (LPG, CNG/hydrogen) and its core business in India to meet the huge and expanding market demand. This will ultimately benefit its shareholders substantially.
• The company has surplus land in Mumbai which it wants to dispose of. This, along with its overseas proceeds, will go a long way in wiping out its borrowings which amount to Rs 906 crore as on March 31, 2022.
• Time Technoplast is a regular dividend payer, the rate for last year being 150 per cent. The decline in its debt will enable the management to step up dividends going ahead. The company’s financial position is very strong, with reserves at the end of March 2022 standing at Rs 2,050 crore – almost 90 times its equity capital of Rs 23 crore. The company has not made any bonus issue so far, and one is due now. Discerning investors will do well to include this scrip in their portfolio. Shares are available around Rs 117.

The future outlook for the company is highly positive. Though this is a commodity stock, it is a good buy for long-term investors.

PERFORMANCE INDICATORS (Rs. in crore)