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PG Foils


PG Foils is in the business of manufacturing aluminium foils and supplying to the retail and pharmaceutical sectors for packaging as well as long shelf-life benefits.

The company has reported reasonably stable revenues and operating profits over the last four years – generating about 14cr in operating profits on revenues of about 140cr. It employed negligible net debt as at 31st March, 2010.

The business is exposed to the risks of aluminium price spikes, cyclicality (incl periods of excess capacity) and adverse movements on currency rates.

Management appears to employ a niggardly policy towards declaring dividends considering the amount of net profits it generates - presumably for retaining profits for business expansion.  The problem, however, is that management have not employed capital efficiently in the last few years as reflected in poor profitability ratios – shareholders ought to demand an accounting by management for this inefficiency with their money and ought to extract far more generous dividends considering the comfortable financial position and liquid assets of the company.
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