decorative glass by tomsgreathits

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									SEJAL ARCHITECTURAL GLASS LIMITED                                                             SMC RANKING

OVERVIEW                                                                    ISSUE HIGHLIGHTS
Incorporated in the year 1998, Sejal Architectural Glass Limited is an      Industry                              Architectural Glass
India-based company engaged in the business of processing glass. The        Issue Size                    Rs.96.53 Cr – Rs.105.73 Cr
company has processing facilities for insulating, toughened, laminated      No. of Shares                          91,94,155 Shares
glasses, as well as for decorative glass. It operates in three divisions:   Price Band                              Rs.105 – Rs.115
architectural and decorative division, proposed float glass division and
                                                                            Offer Date                                 09th June l’08
trading division. Company’s existing plant is located at Village Dadra,
                                                                            Close Date                                  12th June ’08
Union Territory of Dadra & Nagar Haveli, District Silvassa. Company
                                                                            Listing                                       NSE, BSE
started its commercial operations in the year 2000-01 by setting up a
processing facility for insulating glass. Going forward, Avon started       Face Value                                      Rs.10.00
another process for toughened glass in the year 2001. Since then, the       IPO Grading                        CRISIL IPO “Grade 1”
company has been constantly expanding its operations by adding an                                                     (Indicates poor
automated lamination line in January 2007.                                                                             fundamentals)

                                                         Estimated
Use of proceeds                                             Amt.            ISSUE COMPOSITION
                                                         (In Lacs)          Net Issue to Public                     91,94,155 Shares
Setting up of new manufacturing facility for the                            QIBs                                    45,97,078 Shares
                                                          40948.60
production of float glass.                                                  NIBs                                    13,79,123 Shares
                                                          1500.00           RETAIL                                  32,17,954 Shares
Preliminary and pre- operative Expenses
                                                                            Lot Size                                       60 Shares
Margin Money for Working Capital Requirements             1037.50

General corporate purposes and issue expenses*                -             BOOK RUNNING LEAD MANAGER
                                                                            SAFFRON CAPITAL ADVISORS PVT LTD
Total*                                                        -
*Will be incorporated on finalisation of issue price                        REGISTRAR TO THE ISSUE:
                                                                            INTIME SPECTRUM REGISTRY LTD
INDUSTRY OVERVIEW
For the last few years, the domestic demand for Indian flat (float/sheet)
glass has been registering a noteworthy increase of 10 -12 per cent per
annum and this increase is likely to be sustained in the coming years as
well since the two main consuming sectors of Glass- Construction and        SHAREHOLDING PATTERN
Automotive have been both maintaining a consistently high rate of
                                                                                                          Pre-issue      Post issue
growth.
The global market for flat glass in 2006 was approximately 44 million       Promoters                      37.63%         25.27%
tonnes. At the level of primary manufacture this represents a value of      Promoter Group                 39.95%         26.83%
around USD 23 billion. Of this tonnage, around 70 per cent is consumed
in windows for buildings, 10 per cent in glazing products for automotive    Friends, Relatives & Others    22.25%           14.94
applications and 20 per cent used in furniture and other interior           QIBs                               -           16.42%
applications. Over the long term, the market is growing in volume terms     NIBs                               -            4.93%
at around 4 per cent a year. Europe, China and North America together
                                                                            RETAIL                             -           11.49%
account for 75 per cent of global demand for glass. Europe is the most
mature glass market and has the highest proportion of value-added           Total                          100.00%        100.00%
products.
INVESTMENT RATIONALE

  Sejal offers a wide range of glass products and has established           Sales over 3 financial years
  state of art pre-processing facilities (cutting, edging, drilling and
  washing) and processing facilities (lamination, insulation and
  tempering). All the key machineries at the existing as well as the          5000                                4166.17
  proposed facility are bought from various well-established suppliers.                                3824.05
                                                                              4000
                                                                                                2950.28
  Company’s proposed project for the float glass is located at                        2429.65
                                                                              3000
  Jhagadia, District Bharuch, Gujarat, which is 8 Kms from NH-8 and
  has the entire necessary infrastructure facilities required for the         2000
  plant. The site is also well connected to the railway station.
                                                                              1000
  Sejal’s existing manufacturing facility at Silvassa, is within 200
  kms from the proposed backward integration project at Bharuch,                 0
  ensuring the logistical benefits and cost savings. Both the                        Mar '05 Mar '06 Mar '07 Dec '07
  locations enjoy easy availability to required raw materials and skilled
  labour.                                                                                     SALES (In Lacs)
  Company also operates in trading division from its premises named
  ‘Sejal Encasa’, which is located at Kandivali, Mumbai. This division
  was started in April 2007, which trades in various in-house brands as
  well as other manufacturers’ products. The products traded include
  residential and commercial interior products covering tiles,
  sanitaryware, mirrors, glass, bathing products, paintings, art and
  artifacts, sculptures, lights, chandeliers, mirrors and luminaries,       Profit over 3 financial years
  amongst others.
                                                                               500                              469.58
  Company’s wide range of glass products are mainly used for
                                                                               400
  interior applications, including bowls, basins, mirrors, partitions
  and doors, etc. Sejal markets these products under the brand ‘Décor                262.46            278.22
                                                                               300            222.87
  Glass’ and ‘Oyster’. This range offers exquisite mirrors, panels,
  partitions and other custom designed decorative items.                       200

                                                                               100

                                                                                 0
                                                                                     Mar '05 Mar '06 Mar '07 Dec '07

                                                                                              PROFIT (In Lacs)
ABOUT THE PROMOTERS                                                       BUSINESS STRATEGY

                                                                              Capitalising on the demand forecast of the
MR. AMRUT S. GADA, Chairman & Managing Director -                             architectural glass industry, Sejal has invested in the
After completing Intermediate Education he started his career in              existing pre processing and processing facilities at
1989 as a working partner in M/s Taskant Glass Centre which                   Silvassa. As a backward integration measure, the
traded in Glass and Glass Products till 1991. From 1991                       company now plans to set up a project for
onwards, Mr. Gada started his own retail glass Proprietary firm               manufacturing float glass at Bharuch with an installed
M/s Sejal Glass House, which traded in indigenous and                         capacity of 2,00,750 MT per annum. It will enhance the
imported Glass and Glass Products. In 1993, he incorporated                   quality of glass used for its value added products and
Sejal Glass Craft Private Limited, which is into the business of              brands like Kool Glass, Armor Glass, Fort Glass, Tone
manufacturing Interior, Decorative and Designing Glasses.                     Glass, etc
MR. DHIRAJ S. GADA, Joint Managing Director- He has                           Company has invested in state of the art technologies
done his F-MBA (Family Management Business Administration)                    for glass processing by installing imported
from NMIMS, Mumbai. After his graduation in 1996, he joined                   machineries. It shall further continue to follow the same
Mr. Amrut Gada in his venture. He has been involved with Sejal                by upgrading the technology from time to time thereby
since incorporation and handles all marketing aspects of all the              keeping itself abreast of the latest trends and
group concerns. He is also Director of other Group Companies                  advancements.
i.e. Sejal Glass Craft Private Limited, Sejal International
Limited, Sejal Insurance Broking Limited, Sejal Float Glass                   Company exports to countries like Sri Lanka,
Limited, Sejal Finance Limited.                                               Bangladesh, Mauritius Uganda, Tanzania etc., and
                                                                              plans to focus on the same as these are growing markets.
                                                                              Further, it plans to grow the existing business through
                                                                              market expansion and product offering enlargement.

                                                                              Company has the vision of creating brand image in the
                                                                              market that evokes a sense of awe and faith in the
                                                                              market. Towards this, the company intends to continue
                                                                              to enrich the basket of products offered, backed by
                                                                              aggressive marketing, which will be through the print and
                                                                              broadcast media, as well as direct marketing to consumers
                                                                              through presentations, seminars, billboards, event
                                                                              sponsorships,    special event advertisements and
                                                                              advertisements in selected glass periodicals.




INVESTMENT CONCERNS

    Since Sejal is a glass processing company, it does not has a manufacturing history from which future performance can be
    evaluated. It will be a new entrant in the segment of manufacturing float glass; hence, the revenues and profitability estimates may
    not be indicative of the future results of operations. The promoters, also, do not have any manufacturing background. Moreover, it
    intends to commence the production of float glass in Jhagadia, Gujarat, by March 2009. Therefore its prospects must be considered
    in light of the risks and uncertainties encountered in evolving markets and changing trends where demand and supply for float glass
    may vary.

    Company has entered into major supply contracts with Fives Stein India Projects Private Limited (formerly known as Stein Heurtey)
    and Stein Heurtey, (France & China) Grenzebach Maschinenbau GmbH, Germany and Zippe Industrieanlagen GmbH for supply of
    major Plant & Machinery required for the float glass project. This contract is enforceable in jurisdictions outside India, which may
    expose Sejal to higher legal and other costs in case of any disputes with Stein Heurtey, France and/or Grenzebach Maschinenbau
    GmbH, Germany and affect enforceability of judgments obtained against counterparties.

    Company’s top three customers account for 54% of the turnover for the nine months ended December 31, 2007. Further the top 10
    customerd constitutes 73.81% of the turnover. The loss of any one or more of our customers would have a material adverse effect
    on our business operations and profitability.

    About 50% of the revenues for the nine months period ended December 31, 2007 is derived from the sale of Kool Glass. In case of
    any decrease in the demand of Kool Glass, the sales revenue and business profitability may be adversely affected.
 FINANCIAL PERFORMANCE

PROFIT & LOSS STATEMENT                                        (In Lacs)   BALANCE SHEET                                           (In Lacs)
                        For nine                                                                  For nine
                         months                                                                    months
Particulars                               March ‘07       March ‘06        Particulars                          March ‘07      March ‘06
                        ended on                                                                  ended on
                         Dec ‘07                                                                   Dec ‘07
Net Sales                4166.17           3824.05         2950.28         Shareholder’s Fund
OPM (%)                   17.57             14.86           11.58          as represented by:
Operating Profit         732.00            568.17          341.71          Share capital           1829.64       1033.50         300.00
Total Expenditure        3434.17           3255.88         2608.57         Share application
                                                                                                     5.00        2967.00            -
                                                                           money
Other Income              289.22            145.60          107.05
                                                                           Reserves & surplus      3167.10       310.47          560.56
PBIDT                    1068.59            679.80          463.59
                                                                           Shareholders fund       5001.74       4310.97          860.56
PBIT                      908.30            557.49          398.84
                                                                           Net Block               5156.84       4057.84         2371.22
PBT                       624.55            400.28          306.09
                                                                           Investments               6.00         1.00             12.00
PAT                       469.58            278.22          222.87
                                                                           Current Assets,         9051.82       3566.19         1507.48
                                                                           Loans and advances
                                                                           Secured loans           7242.00       2468.68         1511.01
                                                                           Unsecured loans         1702.10        581.70          443.24
PEER GROUP COMPARISON RATIOS                                               Current liabilities     3176.30       2415.48         2084.77
                                                                           Deferred tax liab       282.11        205.08          133.78
Particulars                        Sejal*            Asahi India
                                                                           Net Worth               5001.74       4310.97          860.56
Face value                         10.00                1.00
Latest Equity                        28                15.99
                th
Mkt. Price (04 June ’08)              -                56.95
                                                                           DU PONT ANALYSIS
Book Value                         52.34               18.41                                   For nine
EPS                                 2.24                0.82               Particulars       months ended        March ‘07       March ‘06
P/E                                51.57               69.45                                  on Dec ‘07
P/B                                 2.19                3.09               Net Profit
                                                                                                 11.27              7.28            7.55
                                                                           Margin
M.Cap/Sales                         7.73                0.92
                                                                           Asset Turnover         0.24              0.38            0.59
PAT/Sales                          11.26                1.34
                                                                           Equity
PBDIT/Sales                        25.64               20.62                                      3.47              2.31            5.84
                                                                           Multiplier
M.Cap                              322.00              910.63              ROE                    9.39              6.39           26.01
*Figures for Sejal include post issue equity and share premium and         ROA                    2.70              2.77            4.45
are for period ended Dec 2007. M.cap is based on the price band.
Note – P/E, P/B and M.cap for Asahi India is as on 04th June ’08. The
remaining figures are calculated on TTM basis for FY 08.



  VALUATIONS –         Net Sales of the company has grown from Rs.2429.65 lacs in fiscal 2005 to Rs.3824.05 lacs in fiscal 2007
  growing at a CAGR of 25.45% and for the nine months ended December 31, 2007 was Rs.4166.17 lacs. PAT increased at a CAGR
  of 3% from Rs.262.46 lacs in fiscal 2005 to Rs.278.22 lacs in fiscal 2007 and was Rs.469.58 lacs in period ended December 31,
  2007.

  At a price band of Rs.105 to Rs.115, the issue is priced at 22.10x at the lower band and 24.21x at the higher band of its annualized
  EPS of Rs.4.75 for December 31, 2007. However looking at the post issue valuation, at the post issue annualized EPS of Rs.2.24,
  Sejal will be trading at a PE of 47.08x at the lower end and 51.57x at the higher end.
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