GARWARE WALL ROPE

Garware-Wall Ropes (GWRL) offers a range of products and solutions for fishing, shipping and manufacturing industries. The company manufactures synthetic yarn, cordage, twine, fishnet webbings & polypropylene multi-filament yarn. It has a technical collaboration with Toyo Kogyo, Japan, to manufacture fishnet webbing machines. GWRL overwhelmingly dominates the Indian market and is one of the largest manufacturers and exporters of Synthetic Cordages, Fishnets and Sports Nets in the world. GWRL is in the process of spreading its operations across the globe and currently exports to over fifty countries worldwide. The company’s products find usage in many applications such as coastal protection and river training, ground improvements, reinforced soil walls, road repair and construction, rockfall protection, scour protection, soil slope stabilisation, trackbed stabilisation and waste containment. Notably, while the demand for the company’s products across the user industries are increasing due to increased infrastructure and construction activities in the country, the tsunami effect will give additional boost to the sales of its fishnets, in which it is a leader. Besides Tamilnadu, the major rise in demand is likely to come from Sri Lanka, which was severely affected by tsunami and which is also a big fishing base. The company has established a dominant presence in the domestic market by building a strong network of dealers and marketing a wide range of high quality products to a loyal customer base, The brand image has been built by efficiently servicing the needs of the user segments with quality products and solutions thus establishing a leadership position in each segment of the market. The well established brand equity has minimized the impact of competition from a number of regional suppliers. GWRL has strengthened its presence in the international market by offering superior quality products and solutions to the global market. The company has developed and introduced several innovative new products, which have been well received by the fishing industry in US, Europe and Australia. The company has opened several new markets in the current year in Europe and America to expand the customer base for growth in the coming years. Notably, exports accounted for about 37% of the company’s total revenues. For the first six months ended September 2004, while sales grew by 27% (to Rs 114.87 crore), PAT was up by 26% to (Rs 5.97 crore). Fir the September 2004 quarter, sales have grown by 19% to Rs 60.99 crore and PAT has grown by 10% to Rs 4.11 crore. Besides the benefits of increased demand post tsunami, GWRL will also be a beneficiary of fall in its raw material price. Polypropylene and high density polyethylene, are its main raw materials and the price of them have started falling. The price of polyethylene has fallen from Rs 63.20 per Kg in September 2004 to 59.70 per Kg in December 2004 and further to Rs 54.20 in January 2004. At the same time, the price of polypropylene has fallen from Rs 63.70 per Kg to Rs 61.00 per Kg to Rs 54.00 per Kg levels. While the prices of PE and PP had risen by 28% and 32% respectively from April 2004 to September 2004, the company was able to maintain its margins (OPM was down by just 60 basis points to 11.4%), the fall in raw material price will hence boost its profitability in future. For the FY ending March 2005, we expect the company to register sales and net profit of Rs 238.32 crore and Rs 12.27 crore. On an equity of Rs 19.71 crore and face value of Rs 10 per share, EPS works out to Rs 6.2.