Today I shuffled through several companies trading at their multi-year lows. Some businesses were pure cyclical and some were too complex to understand. In the end International Conveyors Ltd. looked interesting. Its market capitalization has been on a down-slide from 250 crore levels to 67 crores, while the top-line has shown a consistent growth.
Company is "one of the country’s largest PVC Belting exporters to USA and Canada. Company enjoys India’s leading 40% share in the PVC Conveyor Belting market for underground mines. The company’s manufacturing facilities are located in Aurangabad, Maharashtra that has the largest manufacturing facility in the world."
I began with the company's 2007 annual report. That year the top-line had grown by 39% and the bottom-line had more than doubled. Company had an impressive order-book of over 20 crores (40% of 2007s sales) and it expected "to report two years of straight growth: a 40 per cent revenue increase in 2007-08 followed by 40 per cent in 2008-09."
The balance sheet reported an increase in loan from 13 crores to 30 crores. Simultaneously, there was an increase in the gross block from 7 crores to 26 crores. That year, the company had added 19 crores of windmills funded out of debt.
The results were seen in over the next couple of years. While the topline did grow over 30% in 2008, the bottom-line decreased by half under the interest pressure. Subsequently, in 2009, the company raised money through warrants to pay back the loan.
As per the 2012 annual report, the loan has again risen to 39 crores (from 19 crores in 2010) and another windmill of 8.74 crores has been added to the gross block.