Neo Corp International Ltd.

NEO CORP INTERNATIONAL LIMITED(NCIL) – BSE CODE-523820

NCIL is a Public Listed Company with an equity base of 38.02 million shares.

NCIL since its inception was dedicated towards making tailor made products under Packtech and now it has the status of one of the best and reliable suppliers in Packtech products internationally.

It has also entered two more segments of technical textiles namely Geotech and Agrotech.

It is listed only on BSE as of now. It was trading on NSE through Madhya Pradesh Stock Exchange (MPSE).MPSE is in the course of decognitiion hence NCIL permission to trade on NSE was withdrawn since 30^th January 2015. The company has filed an application for relisting and should be traded on NSE soon.

NCIL is also listed on Bourse de Luxembourg(Luxembourg Stock Exchange).

CHARTEREDINVESTOR PICK

Technical textile sector is one of the most innovative branch of the industry in the world, ranking as one of the five high tech sectors with the greatest potential for development. The success of technical textiles is primarily due to the creativity, innovation and versatility in  fibers, yarns and woven/ knitted/ nonwoven fabrics with applications spanning an enormous range of users. The ability of technical textiles to combine with each other and with others to create new functional products offer unlimited opportunities for growth.

Traditionally, North America and Europe have been the major markets for technical textiles in the past but in recent years, the sheer volume of demand from Asia Pacific has outpaced demand from North America and Europe. With better technology capabilities, ever increasing demand from different end user industries, technical textiles are expected have a huge market to cater to globally.

India’s export of technical textiles has grown from US$ 624.95 million during 2007-08 to US$ 1355.04 million in year 2012-13 with a CAGR of 17% indicates encouraging global demand for India’s technical textile products. Furthermore, the import of technical textiles has grown from US$ 835.82 million during 2007-08 to US$ 1434.97 million in year 2012-13 with a CAGR of 11% shows that Indian consumers have significant demand for technical textiles products.

These statistics highlight not only concerted domestic needs, but also India’s potential to address global demands, for technical textiles products. With advancing technology, higher integration with global markets and greater sensitization to market needs, the Indian technical textiles industry demonstrates significant potential, for the development of local industry and prospective entrepreneurs.

Technical textiles are an important part of the textile industry and its potential is still largely untapped in India.

NCIL MANAGEMENT:

Neo Corp is run by learned and highly experienced people from the related fields. Few of them are:

1.   Mr. Shrawan Kumar Patodi : Eminent Lawyer having vast experience in the field of low and 10 years of experience as export executive. Educational qualification - B. Com. M.A., LL.B. and D.H.B.

2.   Mr. Ladharam Patel : 40 years of experience in the manufacturing business.

3.   Mr. Rollande Coderre : An entrepreneur from Canada having experience in vast number of fields like packaging, construction, etc. Educational qualification - Degree in Business Administration and business accounts & finance

THE NUMBER GAME

Let us have a look at the financial results of past years.

Particulars	FY 2010-11	FY 2011-12	FY 2012-13	FY 2013-14	FY 2014-15(Trailing)
Sales	301.99	431.05	626.07	979.34	1307.57
Operating profit Margin	10.76%	11.36%	10.40%	9.91%	9.91%
Profit before interest and depreciation	36.02	55.72	71.49	101.80	128.92
Interest	14.78	22.23	27.43	42.28	54.11
Depreciation	2.72	4.45	6.28	9.67	13.12
Profit before Tax	18.53	29.05	37.77	49.85	61.69
Tax	2.62	7.84	8.81	19.95	21.74
Earnings for shareholders	15.92	21.21	21.13	30.01	39.95
EPS	10.27	5.61	5.59	7.94	10.52

The numbers speak a lot about its performance. The return on the capital employed in to company over a period of 3 years is above 16%. Also the cash flow has been improving. At current levels, NCIL is trading at 2.5 PE which is very much lower as compared to the industry PE of 22. Also the business has huge potential to grow. Trading at 60% of its book value provides huge ground for upmove.

CONTROL MEASURES:

The company has hired world class professionals for proper control over the business activities. This has helped to improve productivity, provide better services, reduced cost and increased returns especially on human capital. The company’s internal control systems are commensurate with the nature of its business and the size and complexity of its operations.

STRENGTHS:

·         NCIL products are of ISO quality standards and the BRC & Astho will enable NCIL to enter rich e markets.

·         Worldwide ever increasing demand.

·         It is also into business of Geotech and Packteck. Thus agricultural and infrastructural activities will give impetus to the growth.

·         It has a large domestic market which helps to spread the risk.

·         New acquisitions will add further to increase in proximity and develop new and better customer relations.

·         NCIL has the highest production capacity of technical textiles in India.

 
WEAKNESS:

·         The market is price sensitive and thus is susceptible to pricing pressure.

·       Competition from other countries.

With a view to take on the competitors in the global markets, NCIL has been increasing its business and developing client relations. It had its business spread across 20+ nations and has been serving 550+ clients.

It has 6 subsidies namely

1.   Europlast Ltd

2.   Sacos Indigo Pvt Ltd

3.   Netflex Infracon Ltd

4.   Polybase Ltd

5.   Polylogic International Pvt Ltd

6.   IPC Packaging Co Ltd

Europlast Ltd was incorporated in UK in 1988 and was engaged in sourcing and distribution technical textiles. The acquisition of Europlast was very crucial. Europlast Ltd was operating for over a decade and established itself as the leading player in its business in Europe. Acquisition of Europlast has proved to be very much advantageous in the form of better customer services, reduction of risk on account of credit sales and also reaching out to more clients.

In the previous financial year NCIL made a big strategic more by acquiring IPC Packaging Co Pvt Ltd. IPC was acquired in November 2014. IPC Packaging Co. Pvt Ltd is based in Bangalore, the IT hub of India for the past 6 years and leading manufacturer of PP / HDPE woven FIBC, Jumbo Bags, sacks, Tarpaulins, Box Bags, PE Liner etc.. IPC has a huge hi-tech production plant spread over 2.6 million sq ft which is located very close to the Industrial sector. IPC was and is being run by veterans with experience of over two decades. This acquisition puts NCIL at the top in its business with highest production capacity in india.

In addition to the technical textile business, Neo Corp also represents Indian Oil Corporation Ltd as Del Credre Associate cum stockiest for the state of Madhya Pradesh. There are two production lines of 300 KTA each for Polypropylene (PP) with Spheripol technology license from Basell, Italy. The product portfolio includes entire range of Homopolymers, Block Copolymers and Random Copolymers.

There is a dedicated HDPE plant of 300 KTA using Basell (Hostalen) slurry process. The product portfolio includes Unimodal as well as Bimodal HDPE grades for various application segments such as Film, Blow Moulding and Pressure Pipes.

The low petroleum prices will benefit to a great extent the company’s polymer business.

http://www.business-standard.com/content/b2b-plastics-polymers/india-china-driving-global-specialty-polymers-market-114100800842_1.html
 

AWARDS AND RECOGNITIONS:

·          Neo Corp enjoys the Star Export House status recognized by the Government of India for the Company’s excellent export performance.

·        It has a Trading House Certificate which is valid for a period of 5 years which ends in 2019. A trading house is an exporter, importer and also a trader that purchases and sells products for other businesses.

·        On 22^nd September 2014 its Inhouse R&D Units recognization was renewed upto 31^st March 2017.

·         NCIL is also a member of the Flexible Intermediate Bulk Container Association(FIBCA).

Some industry related links

http://www.business-standard.com/article/economy-policy/india-s-technical-textile-market-may-touch-32-billion-by-2023-study-114070400796_1.html

http://articles.economictimes.indiatimes.com/keyword/technical-textiles

All the above discussions depict Neo Corp has a huge potential for a great upmove and will prove its mettle in the coming times.

Disclosure: It is safe to assume that I have vested interest in Neo Corp International Ltd and my opinion may be biased. Viewers must consult their financial advisors before any investment.

Happy investing.