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Mahalaxmi Seamless


Mahalaxmi Seamless manufactures steel seamless pipes and tubes used in iron and steel products for industrial as well as domestic use.

It is expanding capacity with a new plant and intends to focus on higher margin stainless steel tube products in the future, which constitutes <15% of current sales mix.

The company reported declining performance on a somewhat stable revenue base over the last five years – reporting operating losses on revenues of about 32cr in the last financial year.  It operated with a moderate debt load.

The business is exposed to rises in raw material costs, petrol prices, etc. as well as a weakening INR increasing its import bill.

The company has been plagued by employee strikes in the recent past indicating unsatisfactory management-labour relations.

Moreover, the auditor qualifications point to unauthorised related party transactions, lack of shareholder resolution for the appointment of a relative as a company director, lack of adequate inventory records, lack of employee benefit provisioning etc.  Management claim that they are salvaging the invoice/inventory records, which were apparently destroyed during the strikes.

All of this smacks of bad management – both in terms of incompetence in managing operations and labour relations as well as lack of satisfactory stewardship towards minority shareholders.  Further, the lack of adequate inventory records should cause the investor to view this amount with a healthy dose of scepticism until greater clarity is achieved.

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