Burnpur Cement Limited (BCL)

Business

Cement manufacturer based near Asansol in West Bengal.
Installed capacity: 1,000 TPD
Capacity utilisation: 28.77% as on June 30, 2007, due to non-availability of clinker.

Financials

Net sales
FY2003-04 = Rs 7.97 crore
FY2006-07 = Rs 23.66 crore
CAGR of 43%.

Net profit
FY2003-04 = Rs 0.15 crore
FY2006-07 = Rs 1.14 crore
CAGR of 65%.

RONW = 8%

Pathetic RONW and ‘healthy’ CAGR on a low base indicate poor fundamentals.

Objective

Setting up an integrated clinkerisation and cement grinding plant of 800 TPD capacity expandable to 1600 TPD in Jharkhand for manufacturing of clinker, ordinary portland cement (OPC) and portland pozzolona cement (PPC) and portland slag cement (PSC).

Project cost = Rs 120 crore
Promoters’ contribution = equity capital Rs 14.02 crore.
Rs 80.60 crore will be financed through term loan advanced by State Bank of India led consortium of 9 banks.
IPO = Rs 26 crore
The project is expected to go on stream in October 2008.

Outlook

PE = 45
Stretched valuations both on P/E front and EV/tone.
Highly leveraged balance sheet makes 9 banks to come together for a paltry sum of Rs 80 crore.

Investors should consider this risky nature of the business.
There are better options available in the market.

Disclosure: We are not bidding in this IPO