I started this thread just because some high profile investors has invested in this co. Comments invited from TEDies. Thanks....

 

 

 

Basantji has said this could be a dark horse in Bilcare thread.

What is the story for the small cap Ess Dee Aluminium?

It is a stock in packaging business, basically in the aluminium, aluminium foils and blister packaging, i.e aluminium and PVC and almost 90% of their customers are in domestic pharmaceutical companies.

They are also expanding their capacity to 18,000 tonnes, which was earlier 6,000-8,000 tonnes. They are also trying to enter the FMCG space and they have a strong supply to domestic pharma companies. The margins come in because of the draw down in terms of thickness that happens.

They manufacture foils of various layers from 3-7 layers used for packaging of most of the pharmaceutical capsules. The stock looks cheap at the current level although we have not initiated the coverage but we are likely to do that in a short span of time.

Overall, we like the story in terms of earnings growth, valuation and the niche business they are in but at the same time one should remember that in this particular business, there is not a great pricing power because it is a cost plus business both for FMCG and Pharma because the buyers are extremely large corporations.

At the same time, on the raw material side, the raw material suppliers are bit multinational companies and so on that side there may not be much levy in terms of credit and so it's a highly working capital intensive business but at the same time with capacity expansion and existing client base looks an interesting story at this point in time.

 

Also if youc ould tell where ESS Dee and Bilcare are exactly inot the same line of business. If yes, r the margins enjoyed by Ess Dee are better compared to Bilcare and what about the management?  

 

Why not bilcare ? (BIG BULL RJ-is bullish on it since long time )

 

 

 

 

 

Vishalji,.Source of information is ET. If such investors are betting on this company then that means they have faith in the management.

                         Bilcare                Ess Dee Aluminium

ROE                   31.84%                      105.22%

ROCE                 18.80%                        56.51%

Debt-Equity        1.67%                           1.94%

 

Meeting Sudip Dutta, the chairman and managing director of Ess Dee Aluminium, can be a surreal experience. Here he was, on a typically wet monsoon evening in Mumbai, sitting at a corner table in Copper Chimney, a restaurant that draws the reasonably well-heeled.

 

His Toyota Prado was parked outside, while a Mitsubishi Pajero, a Mercedes Benz and a fourth car he could not recall were at home. Clad in a tailored suit, he looked well groomed, and well fed. But when he spoke, it was of pantha bhat, which is the previous day’s fermented rice, flavoured with salt, chopped onions and pickles. It is something the poor in the eastern states survive on.

 

Sipping Chivas Regal, Dutta said: “Often, our family would have pantha bhat for breakfast, and we didn’t know where the next meal would come from.” That was 1988, in Durgapur. His father, a former army man, had just died.

 

Preparing for his higher secondary examinations, all Dutta knew was that Mumbai was the land of opportunity. Finally, the day the practical exams ended, Dutta bought the ticket. “I have everything now. But there is one thing I know. You can control everything but hunger. If you are hungry, you have to do something about it.

 

When Dutta came to Mumbai at the age of 17, he joined a company that made pouches to package medicines on a salary of Rs 15 a day. He packed medicines, loaded them on trucks and was also the delivery boy. He wouldn’t go home for weeks and slept in the factory.

 

Opportunity knocked in 1991, after two years of toil, when the company’s owners wanted to sell it. By that time Dutta had accumulated Rs 16,000 through savings and Diwali bonuses. The cost of the pouch making machine was Rs 2.5 lakh. He offered to take charge of the company. As payment, he would give the owners all the profit after paying workers’ salaries and keeping Rs 5,000 for himself every month. In two years, he had settled the debt.

 

In 1994, he managed to get distributorship from Indal, which supplied the basic aluminium foil. The first printing unit was bought in 1997. Sometime later, Dutta noticed that Hindalco, which had acquired Indal, was losing interest in foils. That was the time to integrate backwards and start aluminium foil rolling.

 

The initial public offer of his company was floated last year, during which Dutta admits to an inability to sleep until he heard that the qualified institutional portion had been subscribed 52 times. The first television interview, preceded by frenzied smoking, made him a nervous wreck.

 

Today, Dutta betrays a touch of pride when he says that of his 700 employees, at least 450 are MBAs, engineers or chartered accountants. “Education only teaches you how to respect people,” he says.