Barak Valley Cement (BVCL)
Call: Avoid
Business:
BVCL is in the business of manufacturing ordinary portland cement (OPC-53 and 43 grade) and portland pozzolana cement (PPC) in north eastern India.
Three subsidiaries - Badarpur Energy, Cement International, Meghalaya Minerals & Mines.
Installed capacity of 760 TPD of cement manufacturing.
Due to location, it enjoys many fiscal benefits.
Standalone Financials
Revenue:
FY2002-2003: Rs 30.77 crore
FY2006-2007: Rs 74.33 crore
CAGR of 24.66%.
Net Profits:
FY2002-2003: Rs 2.89 crore
FY2006-2007: Rs 14.30 crore
CAGR of 49%.
Q1 FY2007-2008
Sales: Rs 19.30 crore
Net profits: Rs 3.47 crore
Objectives:
Increase clinkerisation capacity from 420 TPD to 600 TPD
Increase the cement grinding capacity from 460 TPD to 750 TPD, thus making the total capacity for cement to 1050 TPD.
Captive biomass power project
Outlook:
Total fiscal benefits: Rs 14.83 crore
Net profits: Rs 14.26 crore
In other words, if there were no fiscal benefits, the company would land in to losses.
When all other cement companies are registering record profits, BVCL is dependent on government aid for SURVIVAL. AVOID.
Disclosure: We do not intend to bid in the initial public offer of the company.
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