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KEW Industries


KEW Industries is in the business of manufacturing shell body, auto components and other steel products for the defence and automobile industries.

The company reported stable operating profits on similarly stable revenue over the last five years with a spurt in revenues in the last financial year – reporting about 11cr of operating profits on about 100cr of revenues.  It employed moderate debt in relation to accounting net worth to accomplish the performance.

The company has, however, generated negative free cash flows in the last five years (a combination of operating cash outflows and capital expenditure)  requiring additional equity and debt financing – thereby diluting former minority shareholders and increasing the financial risk of their investments.

The business is primarily exposed to price rises in steel (principal raw material).  It is also exposed to significant power shortages and persistent labour wage rises.

Predictably, management haven’t declared dividends in any of the last five years as a result of the cash outflows – there doesn’t appear to be any immediate prospect of management remedying this situation.
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