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Sujana Universal

Sujana Universal is in the business of manufacturing steel castings, bearings, appliances etc. with other divisions operating in the fields of infrastructure, share trading and other activities.


The company has shown high growth in revenues, which haven’t translated to similar increases in operating profits.  It reported 70cr of operating profits on revenues of about 3000cr in the twelve months ending 31st March, 2011.  It operated with a relatively high net debt of about 200cr.

The business, however, generates weak operating cash flows as a result of heavy investment in its working capital.

The primary risk with this business is the lack of focus in its business activities – with management time devoted to activities seemingly unrelated to their primary business (steel castings) such as real-estate, share trading etc. and a host of unquoted subsidiaries engaged in unknown activities.  In its steel castings business, it is blighted by the cyclicality of the industry with periods of overcapacity causing havoc to profits.  It is also subject to heavy competition from secondary steel manufacturers throughout the country – causing constant pressure on its profit margins.

Management has not, however, declared dividends at any time in the last five years presumably to ‘conserve resources for the future’.  This is inexplicable due to the unwarranted diversification of activities and relatively unsatisfactory returns on incremental capital deployed in the business.
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