Current price at the time pf publishing this report.-1090 Rs
Voith Paper Fabrics India (VPFI) is an almost 150 Years old 100% debt free subsidiary of VP Auslandsbeteiligungen GmbH a Heidenheim, Germany Based Company. The company is engaged in supplying the paper industry with technologically sophisticated products called paper machine clothing.
Incorporated in the year 1968 in India by Porritts & Spencer UK. In 1999, the Voith Group acquired major stake in the Company. The company changed its name from Porritts & Spencer (Asia) Limited to Voith Paper Fabrics India Limited in the year 2007.
With the technical backing of Scapa, the firm began its activities with the manufacturing of woollen and cotton dryers for the pulp, paper, and board sector, and it currently operates with the help of the Voith Group.
VPFV has worked to improve its products while keeping its fundamental competencies in mind. Paper machine clothing (PMC), fiber-cement sheet manufacturing felts, and hi-tech textile processing felts are the focus of today’s research.
Paper machine clothing is used to make various grades of paper, from tissue to heavyweight container board. These tailor-made engineered textiles are constructed of synthetic materials. With the introduction into the fabric market, VPFV is now the only Indian firm capable of supplying the whole spectrum of machine clothes to paper makers.
VPFV Carries out various processes as follows
Manufacturing activities are carried out using advanced machinery in a scientifically organised manner. Raw materials, production machinery, process management, and energy conservation are all part of the manufacturing process.
Weaving is done on heavy duty contemporary broad looms capable of creating textiles of different shapes and sizes.
The fiber-locking process is carried out on technologically advanced machinery to ensure appropriate locking of the fibre layers with the base fabrics in order to obtain the required qualities.
PLC controlled precision seaming-heads are provided in the Seaming department to generate a wide range of textiles for forming and dryer applications. Intermediate operations like as heat setting, surface treatment, and product finishing are carried out on contemporary finishing equipment custom-made for the purpose. Mono Link Fabrics, a pioneer in this sector, are manufactured in a tightly regulated facility.
VPFV has extended the range of clothing for use on paper machines as the main business. Today the focus is on paper machine clothing (PMC), fibre-cement sheet making felts and hi-tech textile processing felts.
Various Products manufactured by the company includes:
- Forming Fabric -: To satisfy specific client demands, these textiles are woven on modern looms and processed under tight quality control systems. Fabrics come in a variety of drainage, fibre support, and permeability combinations.
- Press Fabric-: VPFV’s design and production skills enable it to suit every wet end application demand of the pulp, paper, and paperboard industries. This product line contains a complete line of Wet Press Felts, including single layer, double layer, laminated, and vector.
- Dryer Fabric-: VPFV design and manufactures complete range of dryer fabrics for pulp, paper and paper board industry. These dryer fabrics are preferred because of following characteristics such as Ease of seaming/joining, Fabric stability, Drying efficiency, Sheet runnability, Non-marking surface, Wear resistance, Degradation resistance hydrolysis
- Fiber Cement-: This fabric is utilised in the production of Fiber Cement sheets and pipes. VPFV’s felts are particularly designed for use in the manufacturing of fibre cement. They give the required stability and longevity, as well as ensuring machine performance.
- Roll Covers, QualiFlex sleeves for shoe press and Doctor Blades-: VPFV has entire range of roll covers and doctor blades for each and every position of different types of paper machines.
PARENT HISTORY
VP Auslandsbeteiligungen GmbH, Part of Voith Group of Companies, Germany. Voith Group was founded in 1867 and is almost 150 Years old .The Group has presence in more than 60 countries around the world and operates through its Divisions – viz., Voith Hydro, Voith Paper, Voith Turbo and a new Division, that is, Voith Digital Solutions, whose set-up began on January 1, 2016. It currently employs about 19,100 employees worldwide, generating sales revenue of € 4.3 billion for the year 2018/19 (October to September) and is a major family owned industrial conglomerates in Europe.
FINANCIAL PERFORMANCE
Q2FY22
Net Sales at Rs 37 crore in Sept 2021 up 9% from Rs. 33.65 crore in Sept 2020.
Quarterly Net Profit at Rs. 6.27 crore in Sept 2021 down 21% from Rs. 7.94 crore in Sept 2020.
EBITDA stands at Rs. 8.88 crore in Sept 2021 down 14% from Rs. 10.36 crore in Sept 2020.
Voith Paper Fab EPS has decreased to Rs. 14 in Sept 2021 from Rs. 18 in Sept 2020.
Going Forward
Management expects that the business will be positively influenced if the overall production capacity of paper is increasing in the country. So, if customers are investing into new lines, where they will produce more paper, they will need consumables which is being the product of our company. So, in that way, it will increase VPFV’s sales and overall profitability, because we can utilize the same assets.
Paper consumption in India is approximately 15 million tonnes per annum and it is expected to reach 23.5 million tonnes per annum by 2025. Some of the paper mills are existing for several decades, which make upgradation and investments into newer machinery necessary. This opens up opportunities for manufacturing companies in the sector.
Under the pandemic situation of Covid-19, the demand of medicine, dairy products, face masks, sanitizers etc. is rising rapidly. Also, the social distancing has led to an independent and convenient food and beverage mode for many people. All these products require packing, and their production has been higher than ever before. The consumers and customers around the world prefer packed products rather than initially available and sold loose products such as fruits, vegetables, etc. resulting in growth for packaging industry. Thus, traditional pulp and paper manufacturing machines are expected to be transformed, upgraded and integrated to reduce the risk associated with pandemic.
Normally paper industry follow the Indian GDP growth percentages. It’s not ahead of the GDP growth, but behind generally by 1% to 1 1⁄2 % of the GDP growth rate.
CAPACITY ENHANCEMENT-: VPFI is in the process of its capacity enhancement by around 30% over next 2 years. In the first phase, construction of building is almost complete and installation of the machinery is presently underway. This will help us to improve quality, productivity and customer satisfaction in coming years.
Conclusion
- VPFI has Cash Equivalents of 161 Cr as of March 2020.
- VPFI has Operating Profit margins of above 26% since past 5 Years.
- Compounded Sales Growth for 3 and 5 year stands at 10% (approx.)
- Compounded Profit Growth for 3 and 5 year also stands at 14% (approx.)
- VPFI has reserves of Rs 255 cr .
- VPFI is 100% debt free company.
VPFI has a very small equity base with just 43,93,559 fully paid up shares of which 74% shares are held by the promoters (VP Auslandsbeteiligungen GmbH) thereby leaving very less free float .
In case if the company wishes to buyback all the remaining shares with the cash available , based on the total cash and Equivalents it can pay at least 1440 Rs per share against current market price of 1090 Rs. (Please note that this is a hypothetical estimation based on our view which may not be the actual case because in reality company may never go for buyback.)
Additionally in the coming period management has also expressed their views of capex expansion of upto 30% of the installed capacity which will take place in the coming period.
VPFI has been suggested twice on darkhorsestocks.
