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Indian Toners


Indian Toners is in the business of manufacturing toners and developers for laser printers, photocopiers, and digital machines.

The company obtained the status of an ‘Export House’ in the previous year, which brings with it export benefits and the like.  It is also diversifying and expanding its product range through a pilot plant, which appears to have met good market success in the prior year.

The company reported stable performance over the last five years – reporting about 10cr of operating profits on revenues of 63cr in the last financial year.  It operated with a net cash position of about 4cr in the last financial year.

The company’s strategy appears to be to build its brand image by providing quality products at reasonable prices in an industry where customers are implacably cost-conscious.

The generic product is a commodity with multiple suppliers providing intense competition including clandestine importing of cheap toners.

The business is exposed to increases in oil prices and international freight costs.  The company has limited pricing power in passing on these costs to customers as a result of the factors discussed above.

It is also somewhat unique in that it exports practically 100% of its production while importing about 97% of its requirements.  Being a net exporter, it is exposed to a strengthening INR.  However, volatile exchange rates (as witnessed over the last year) are bound to make business relatively more difficult for this company than others.

Management haven’t paid any dividend in the past preferring instead to reinvest in the business (at modest rates of return) and pay down debt.  Now that debt is fully repaid, it will be interesting to view management action – whether it will pay out a reasonable portion of its earnings or reinvest in sub-par opportunities.

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