Companies having multiple business interests in multiple verticals have done well in the past. Manaksia, erstwhile Hindustan Seals, is one such company already listed on Calcutta stock exchange and has planned to raise funds through the follow up public issue.

Business

The company is into manufacturing of metal products, packaging products, mosquito coils and engineering. Metal products contributed 72.5% of FY2006-2007 revenues and include aluminium alloy ingots, rolled sheets/coils, galvanised steel sheets/coils, colour-coated metal sheets and sponge iron. The packaging products accounted 13.3% of FY2006-2007 revenues and comprised ROPP caps, crown closures, plastic caps and metal containers.

The company does contract manufacturing of mosquito coils for some of the leading players, which in turn contributed 9.5% of FY2006-2007 revenues. Rest came from engineering, which include manufacturing and sales of machines, spare parts. Manaksia operates from 15 manufacturing units in India and 3 units in Nigeria and Ghana.

Financials

For FY2006-2007, the company posted total income of Rs 834.18 crore and net profit of Rs 92.06 crore. The company has been consistently paying dividend for the last five years. For the five months ended August 2007, Manaksia reported topline of Rs 453.69 crore and bottomline of Rs 50.82 crore.

Objective

Manaksia intends to invest Rs 115.5 crore to purchase equipment for its aluminium and steel business. The company also proposes to prepay high cost term loans to the tune of Rs 60 crore.

Outlook

The company is operational in business segments, where competition is fierce and margins are under pressure. Going forward, it is the ability of the company to launch new value added products and adding new customers would decide the future course for Manaksia. Rising input costs will remain a cause of concern and the ability to pass on the cost hike to the customers will determine the profitability of the company. The stock is valued at 10.57 to 12.08 times its FY2006-2007 earnings on fully diluted equity capital.