Time Technoplast > Continuing to expand

14 Sep 2009, 0425 hrs IST, ET Bureau

The Mumbai-based plastic goods manufacturer Time Technoplast continues with its fast-track growth plans defying worries related to global economic growth as it initiated the acquisition of an LPG cylinder manufacturer in the Czech Republic. The $5.2 million deal is expected to consummate by end-October ‘09.

The company, which has been expanding its capacities relentlessly over the last two years, has added several new products to its portfolio such as plastic fuel tanks for automobiles, HDPE pipes, prefab structures, autodisable syringes, returnable packaging etc. This acquisition will help it manufacture another novel product for the Indian market viz. polymer compositebased LPG cylinders.

The acquisition cost appears reasonable; it is just 1.4 times the acquired company’s PBDIT of $3.75 million in ‘08. The company named Kompozit-Praha had net sales of $15 million and net profit of $1.8 million in ‘08.
Time Technoplast is also investing around $6 million in China for a greenfield unit to manufacture containers and drums.

Unlike India, where the company has a technology tie-up with Germany’s Mauser for these products, the company will be going solo in China that will enable it to introduce other products over a period of time.
Besides, the company is also expanding the capacity of packaging products in India at various locations.

The company’s 50:50 joint venture with Netherlandsbased Schoeller Arca Systems to manufacture special packaging and material handling products obtained its first order of Rs 20 crore. The JV is investing euro 10 million to set up four manufacturing plants across the country. Despite these developments, the Time Technoplast scrip has underperformed the broader market since the start of September ‘09 gaining 2.1%, as against a 4.6% gain in the Sensex.

The scrip has remained a laggard over the last one year, losing over 31.5%, while the Sensex gained 13.5%. The company is holding its AGM on 19 September in Mumbai, to approve the dividend of Rs 0.35 per share of Re 1 for FY09. At the current market price of Rs 47.30, the scrip is trading at a price-to-earnings multiple (P/E) of 12.5. The ongoing capacity expansions and the recent acquisition are likely to keep the company on a sustained growth track in the coming years.

via:E.T