AGM Note: This hidden gem from last decade has something big up its sleeve

By Arun Mukherjee and Soumya Malani

(Kolkata’s Arun Mukherjee, a college dropout by choice, and Soumya Malani, a London School of Economics passout, have come to be known as smallcap aficionados in India’s investor community. They would show up at most AGMs, visit the remotest factories of a company and go chasing end-users to understand their experiences with a product in their passionate hunt for good smallcaps. Soumya and Arun would be sharing their experiences with companies and from the ground in this space every now and then. Keep watching.. )

1. Manav Poddar (son of promoter Suresh K Poddar) is not involved in the business of Mayur Uniquoters anymore. He holds about 16 per cent stake in the company and according to the management, he would continue to hold the same. The management said prices of finished products are driven more by demand and supply than changes in costing.


2. Currently, in the footwear segment the company doesn’t see much potential to increase prices. So, margins may come under pressure in the near term. Not much headway has been made in Mysore project; land acquisition is still not complete. The management did not give any timeline for the same.

3. Gwalior/PU project: Things are going as per the plan. The management hopes to start first line with 3.5 lakh metres capacity per month by March/April 2019. This can take 6-8 months to stabilise and second line would be planned only after assessing the demand scenario.

4. Also, the company is planning to bring Gwalior facility into production of PU resin. Capex required for that is Rs 10-15 crore. The company’s total capex guidance is for Rs 60 crore at company level for FY19. It may look at foreign acquisitions selectively for technology knowhow/ forward integration/ market access.

5. New clients: The company management has been guiding for addition of new clients in auto OEM for past 2-3 years, but it accepted that the same is taking longer than anticipated. It has secured approval for their products with Ford - though hasn’t received final order as yet.

6. The company has been following up with Mercedes for a few years now. But, finally things seem to be going Mayur’s way as currently almost 80 per cent of Merc’s requirement is being supplied by a single vendor, which Merc is not comfortable with. Hence, they are responding well now. Mayur has spent almost Rs 20 crore to upgrade its facility according to Merc’s specification. The Merc team is expected to audit & approve Mayur’s plant in January 2019.

7. The company has recruited one senior HR person and is looking to hire a couple of personnel in operations for Gwalior plant. The management refused to give any guidance on volume growth/margins.

Our take:
Ankit Sharda, one of our coolest smallcap predator attended the AGM of one of his favourite bet and forwarded us the AGM snippets. From the investor’s point of view, this company has always been among the top picks of many ace investors and it has been a hidden gem throughout the decade. It is a wealth creator in true sense and has been consistent at that. The stock has probably been one of the top performers of the 21st century, multiplying nearly 2000 times from Rs 0.20 in June, 2003 to Rs 400 recently. Every thousand rupees invested back then would have now become Rs 20 lakh now. The beauty is that this does not include the handsome dividends that the company has paid all these years. The addressable market size for the company is around Rs 5,000-7000 crore, which broadly has nearly a dozen players, excluding the unorganized sector, which is of equal size.

Over the next five years, the industry is likely to double on account of rising demand from footwear, automobile, furnishings and other sectors which require artificial leather. Happy days seem to be ahead for the shareholders.