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Fenoplast


Fenoplast is in the business of manufacturing PVC Leather cloth for the automobile industry and PVC Film for the pharmaceutical industry.  It is also attempting to expand its product range to visual packaging (garments, electronic hardware etc.) and the leather footwear segments along with other areas.

The company has reported consistent growth in revenues and operating profits over the last five years – reporting almost 15cr in operating profits on revenues of almost 180cr.

However, it employed about 50cr in debt financing to generate the above results, which appears uncomfortable and puts the company in a vulnerable position – particularly in the event of a rising interest-rate environment and/or economic slowdown

The business is exposed to the risks of rising global petrol prices (raw material) and its fortunes are tied into those of the automobile and pharmaceutical industries – which are, in turn, exposed to the risks of high interest rates, excessive competition etc. among others.  It is also exposed to erratic power supplies in its operating state of Andhra Pradesh, foreign exchange rate risks (affecting export revenues), and severe competition from unorganised players as well as cheaper imports.

Management have not declared any dividend in the last five years – presumably to prioritise the payment of its somewhat high debt load.
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