Narsingh Equity-Sita Shree Products Ltd IPO Detailed Analysis

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·Sita Shree Food Products Ltd (SSFPL) was incorporated in April 1996 as ‘Sitashree Foods Products Pvt Ltd’ and was subsequently converted into a public limited company named ‘Sitashree Foods Products Ltd’ in Feburary1997. The name was changed to ‘Sita Shree Food Products Ltd’ in April 2006.
·SSFPL is in the business of wheat and pulse processing and is a supplier of products to major players in retail industry with its manufacturing unit located at Palda an Industrial Area in Indore.
·The product range of SSFPL consists of wheat flour, maida, rawa, suji, gramdal, upma, chiroti pasta, daliya, chic peas etc which are marketed under its own brands like Sita Shree Regular and Sita Shree Gold.
·The installed capacity of Wheat Flour Mill was 43,200 MT with capacity utilization of 64.15% in FY07.
·The installed capacity of Dall Mill was 3,500 MT with capacity utilization of 95.34% in FY07.
·SSFPL supplies its products to Pantaloon Foods, Reliance Retail and other retail players.
·SSFPL has entered into exporting to Middle East countries such as Saudi Arabia recently and it proposes to expand its export portfolio.
·Post issue promoter and promoter group shareholding will reduce from 100% to 50% if shares are issued at the lower price band and will reduce from 100% to 52% if shares are issued at the upper price band.

·To finance following capital expenditure program:
o Setting up of a Solvent Extraction Plant having 500TPD capacity
oSetting up of an oil refinery for Solvent Extraction Plant having 100TPD capacity
oSetting up of a Lecithin plant for processing the by products of Solvent Extraction Plant having 5TPD capacity at Badia Kima (M.P.).
oSetting up of a Flour Mill of 275TPD.
· To meet the working capital margin requirement of their business
·To meet issue related expenses and general corporate purpose.

·Net sales increased to Rs 80.75 crores in FY 07 from Rs 4.8 crores in FY 03. For seven months ending October 31, 2007 sales stands at Rs 50 crores.
·PAT increased from a negative return of Rs 0.9 crores in FY 03 to Rs 0.9 crores in FY 07. Net Profit for the seven months ending October 31, 2007 was Rs 0.6 crores.
·ROCE increased from 5% in FY 03 to 14% in FY 07.
·OPM has decreased from 4.2% in FY 04 to 3% in FY 07. For the period ending October 31, 2007 OPM was 3.4%.
·NPM increased to 1.1% in FY 07 from 0.7% in FY 04. For the period ending on October 31, 2007 NPM was 1.2%.
·Inventory turnover of the company increased from 7.22 in FY 04 to 12.69 in FY 07.
·Debtors’ turnover increased from 12 in FY 04 to 15.46 in FY 07.
·Book value per share for FY 07 stood at Rs 10.8. BV per share as on October 31, 2007 was Rs 11.
·EPS of the company was Rs 1.30 in FY 07. Annualized EPS for FY 08(based on October 31, 2007 PAT) is Rs 0.50.
·Post issue EPS is Rs 0.44 at lower band and Rs 0.46 at upper band (based on annualized PAT for FY 08). Post issue PE at lower price band is 62 and at the upper price band is 65. The shares are being offered at a price band of Rs 27/- to Rs 30/- per share.