Which Indian Stock Listed Company has Monopoly of its Products?
The other company Zenith Fibres Ltd. they are the only people who are involved in the manufacturing of a different range of Polypropylene Staple Fibre (PPSF) used as a raw material in 100% PP Yarn. Fabrics (clothes) as you know are made from threads (yarns) and yarns are made from fibers.
There are natural fibers (obtained from sheep, goat, plants, etc) and man-made (synthetic) fibers. Zenith Fibre is involved in the manufacturing of man-made fibers called the Polypropylene Staple Fibre (PPSF) and they are the only manufacturer of this product in India with 100% market share.
The company was started by the Rungta Group in the year 1989 and so it's a very old company with an ISO 9001:2000 certification. Among all the synthetic fibers in the world, the market share of PPSF has grown from 5% in 1985 to 28% in 1991 and still growing. This is the major benefit this company has in terms of growth.
Their product is used in different industries like PPSF is used in the manufacturing of floor coverings, shawls, blankets, carpet backings, wall coverings, sanitary towels, geo-textiles, Hygiene products, knitted materials and much more. To know more visit the official website of Zenith Fibres. The use of the Polypropylene Staple Fibre (PPSF) is growing in the world in view of its being a lightweight fiber with high insulation properties and good resistance to abrasion.
They have 60% of their sales in the domestic market and 40% sales come from exporting to countries like Nepal, Australia, Iran, Japan, Italy, Malaysia, Saudi Arabia and UAE. So the scope for the expansion is huge as their business is on an international level and they are the original manufacturer. It won't be easy for any new player to compete them now. They have also increased their production capacity in the past from 1000 MT to 4500 MT to cope up with the heavy demand. The technology used by the company in manufacturing PPSF was obtained from Germany and so it's not a local technology which anyone can start with.
The net profit of the company has grown from 2.88cr in 2009-10 to 3.39cr in the year 2013-14 and sales of the company have grown from 36cr in 2009-10 to 56cr in 2013-14. However in the year 2014-2015 the net profit has jumped to 5.5cr which is a significant jump as compared to a 2013-14 net profit of 3.39cr.
The sales also jumped to 65cr in the year 2014-15 as compared to 55cr in 2013-14. So the company's growth didn't pick up much from 2009-10 to 2013-14 but suddenly it spurt up in 2014-15 and this is a sign that the company's products have captured the market and it's likely growing at a good pace from here on.
If you have plans to buy the stock of Zenith Fibres for long term investment it won't be a better idea than that. The company's business is growing at a good pace and they have a debt of only 3cr in their books with debt to equity of only 0.12. Low equity of only 4.42cr and a yearly EPS of Rs. 14 makes it an attractive buy at current price of Rs.63. As a matter of disclosure, I own this stock and I bought at levels of Rs.53.
Check out the interview of a person on this youtube video who is holding this stock since long and telling everything about this company.
To know more about the demand-supply indicators for PPSF visit this page from the ministry of textiles, the government of India. This is a PDF file so may take the time to load if your internet connection is slow. After visiting the PDF click "control F" on the keyboard and search PPSF to go at the exact location in the PDF where it is mentioned about PPSF.
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