SVPCL Limited

Business:
Manufacturing various notebooks and commercial usage stationary items.

Segmental revenue brake up:
Educational and learning aids: 47.57%
Business aids and commercial stationary: 31.35%
Printing services: 21.08%

Financials:
Revenue:
FY2002-2003: Rs 9.89 crore
FY 2006-2007: Rs 71.42 crore
CAGR of 104%

Net Profits:
FY2002-2003: Rs 1.55 crore
FY 2006-2007: Rs 5.94
CAGR of 148%

In Q1 FY2007-2008 the company has earned revenues of Rs 24.25
crore and profits of Rs 2.02 crore.


Objectives:
The company has decided to tap the capital market to fund the expansion of existing manufacturing facilities and to augment long term working capital resources. The company will also spend some proceeds on setting up marketing infrastructure at identified locations in different parts of the country. The capacity expansion is expected to come on stream by March 2008.

Outlook:
As of now the company is a regional player. There was an issue of equity shares at par (Rs 10) in June 2006. The promoter holding will go down 35% at the lower end of the issue price. Raw material (paper) costs comprise of more than 75% of the revenue.

The paper prices are in an up cycle, and inability of the company to pass on this cost increase to the customers may mar earnings in the times to come. The stock at the higher end of the price band commands a PE of 14.5 and at the lower end it commands a PE of 13.5 on the fully diluted equity for the year FY2006-2007, leaving little headroom for investors.

Disclosure: We do not intend to bid in this initial public offer