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Tuesday, April 10, 2018

Eastern Silk: Discounted stock.. Exporter of Silk

Eastern Silk Industries
MCap: 27.08cr
March 2017: Sales:63.42cr, Net Profit: 45.06Cr

ESIL a Kolkata based company incorporated in April 9, 1946 before Independence and it got its current name in 1975. The chairman is Mr. Shyam Sunder Shah. The company is engaged in various multifaceted activities like manufacture of silk yarn, fabrics and made ups, home furnishings, fashion fabrics, double width fabric, scarves, laces, melts and embroidered fabrics.

The company has been recognized as a Golden Star Export House by the Government of India. Sales are mainly from export markets. US and Europe account for about two – third of the company’s exports. Other export destinations comprise Australia, Middle East, Canada, Japan, New Zealand and Scandinavian & EFFTA countries. Its equity shares are traded on the Bombay Stock Exchange and National Stock Exchange.

ESIL is one of the largest high – end fabric manufactures in the World. Facilities at ESIL’s factory and design center are constantly upgraded as new technology is developed, to keep it on the cutting edge of industry. A wealth of technical and designing expertise accumulated over the years is put to work in developing new designs/blends.

The engineers, technicians and Supervisors in the production units are experienced and well qualified. The production is done round the clock. The whole production units are humidity and temperature controlled. The highly automated production facilities and through control systems are both highly efficient and environmentally friendly.

Manufacturing Facility
ESIL is a composite unit having the entire operations from softening, widening, doubling, twisting, dyeing, weaving and embroidery to finishing under one roof. Sophisticated processes from design to weaving are performed by the latest computerized systems,. The result is a co oriented and continuous operation that provides maximum efficiency and productivity. These steps have boosted ESIL’s reputation as a producer that can respond to customer demands for unique and sophisticated products.

Design Studio
ESIL has made an impact on global decorative fabrics industry with its world class designs and technology as well as diverse product lines, ranging from pure silk to blends from decorative furnishings to bridal wears. ESIL is constantly expanding its line up of value – added products and extending global distribution network to improve the quality of services it provides to their worldwide customers.

unit 1: 
411, Telugarahalli Road, Anekal
Bangalore – 562 106

unit 2:
No.39, Kammasandra Agrahara,
Kasaba Hobli, Anekal,
Bangalore – 562 106

unit 3:
Plot No. 209, Phase 3
Bommasandra Village,
Attibele Hobli
Bangalore - 560099

unit 4:
Falta Special Economic Zone,
24 Paraganas (South)
West Bengal

The company was referred to BIFR (Board for Industrial & Financial Reconstruction) but in Dec 2016 the company was removed from under BIFR. The company has been paying back its dues to banks/financial instutions and ARC (Asset Reconstruction Companies) on a one time settlement basis.. all these One time settlement done with ARC & Lenders by the company has resulted in 119.96Cr Waivers (last year: 58.24Cr)

Another point worth mentioning is that the company has Preferential capital of 14Cr while Equity capital is: 15.79Cr.. Preferential capital is supposed to receive preferential dividend which the company has not distributed so most likely the equity shares will not receive any dividend in the near future (preferential capital has first right over dividend distribution..)

Looking at the stock price the stock has been in dumps and it seems to be just turning around.. at current prices there is not much to loose..

if you look at the cash flows from operation
March 2017 Cash Flows from Operations before Exceptional Items: 29.19Cr
March 2016 Cash Flows from Operations before Exceptional Items: 30.38Cr
March 2015 Cash Flows from Operations before Exceptional Items: 7.92Cr
March 2014 Cash Flows from Operations before Exceptional Items: 47.74Cr
March 2013 Cash Flows from Operations before Exceptional Items: 6.41Cr
 5 yrs avg cash flow from operations: 24.32Cr

Forgot to add export data.. (latest that I have .. pls dont ask how i got it.. :-))

Conclusion: Eastern Silk is a well established company.. with regular exports from Bangalore and Calcutta.. Preferential equity means most likely no dividend payout by the company to equity shareholders .. The company as such seems to be well established and has positive cash flows.. With the change in govt attitude and banks lending to only solvent companies we can expect companies to start reporting profits... in year 2011 Eastern silk had sales of 600cr @ Mcap of just 27Cr when 5 yrs avg cash flow from operations is:24.32Cr I think its highly undervalued and we can expect market to give it a better capitalization in the future as the company fortunes turn for the better... Stock price seems to be just rising above its lows breaking above the 5 yrs EMA: 3.88.

PN: this is a blog of my thought process.. pls do your own deep dive before investing.


a g said...

Why it fell so much ? where they going through some DEBT problem is that resolved now ?

What'sUp Prahalad said...

yes.. they had debt problem and they are paying back their loans.. and getting interest waiver.. in year ending march 2017 they got interest waiver of some 119.96Cr..(as mentioned in the blog above..) last year it was some 58.24Cr.. so definitely they are paying back loans and banks and lending agencies are giving interest waiver benefits..

=happy investing

ttthakur said...

The Co. has not declared quarterly results for qe December 17. This is cause of concern.

What'sUp Prahalad said...

exports are still
.. calcutta exports are larger in size..

ttthakur said...

Thanks for immediate response. Regards

Divyanshi Sharma said...

This post gives Deep knowledge about investment, Keep it Up nice work.
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wealth buildup said...

Thanks for sharing. Your blog is really help for us.

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