Mplex IndustriesBusiness Evaluation Report

Index Jamnadas Virji Advisory

AnalysisTrend AnalysisEfficiency AnalysisPeerset AnalysisCustomer/ Vendor AnalysisInternal AnalysisLeverage AnalysisMarketing AnalysisOpportunity AnalysisManagement / Board Analysis

ValuationGoodwill

1. Average Profit Method2. Super Profit Method3. Capitalization method4. Annuity Method

Valuation as per Earnings

Liquidation Value

RecommendationOnEfficiencyEnhance ValuationInternal growthLeverage

Company performance Jamnadas Virji Advisory

Based in Nagpur, Mplex industries is is an ISO 9001 : 2015 certified manufacturing and export oriented

company, engaged in the business of manufacturing and exports of FIBC’s ,Woven Polypropylene bags, Geotextiles and Woven polypropylene Fabrics over a decade having capabilities of supplying about 5 million FIBC,s and 60 million wpp bags annually

mplex has established itself as a leader in the export of FIBC’s to North America, Central America,

Europe & Africa besides having a solid presence in Indian Market.

We have a strong customer base in U.S.A., Belgium, Netherlands, Ireland, Spain, Germany,

Italy, Sweden, Switzerland, Turkey ,Israel, Honduras, Bolivia, Argentina , Algeria, South Africa,

Tanzania ,UAE and too many more countries.60% of our Exports turnover is to USA, 30 % to

Europe and balance 10 % to other countries

The company has managed to increase sales by 21.8% for past 5 Year on CAGR basis.The PBT

growth has been at 36.9% and Profit grew at 33.84% on 5 year CAGR.

Company Efficiency Jamnadas Virji Advisory

The ROCE (Return on Capital Employed), is the return you are generating by employing your

monetary resources. At 18% Mplex has a decent ROCE, specially being in a industry with ultra low

margins. The company is run very efficiently.

The ROE (Return on Equity) is the return on shareholders equity. At 19%, Mplex has managed to provide decent returns to its shareholders, way

above the risk free rate of 8%.

The ROA ( Return on Assets) is the return generated on the total assets employed by the business. At 28%, Mplex is using its assets at

optimum levels.

Efficiency Ratios are used to generate an insight related to the earnings efficiency of a company and the kind of return the business is able to generate. The ones with good ratios, shows that the management is able to run the business very well and vice versa.

Company Efficiency Jamnadas Virji Advisory

The WCD (Working capital days) is the number of days the working

capital cycle turns. The lesser the number of days shows higher

efficiency operations. At 61 days, Mplex is able to churn its working

capital faster without any blockages.

The DD (Debtor days) is the days a company takes to receive money from

its debtors. At 74.19 days, Mplex gives approx 2.4 months of credit to

its customers.

The ID (Inventory days) is the days it takes a company to churn its entire

inventory. At 39.86, Mplex takes about 1 month and 9 days to completely

churn its entire inventory.

The CD (Creditors days) is the days of credit the company enjoys from its

creditors. At 53.02, Mplex gets approx 1.7 months of credit from its vendors.

Working capital efficiency ratios are used to generate an insight related to the working capital cycle of the company. This shows how well the company is run in terms of trade,

working capital requirement, and effects of day to day functions on the fundamentals of a company.

Sales to Working capital shows the multiple of sales generated to the working capital employed. (eg: Sales/WC = 5, and working capital employed is Rs.10,000 then company is generating

sales of Rs.50,000) At 13.2x, Mplex is able to generate a decent

sales compared to its working capital employed.

Company Valuation Jamnadas Virji Advisory

AVP method: 343,303,900Super Profit method: 289,321,242Capitalisation method: 214,298,870Annuity method: 300,814,286

Average value by Goodwill: 286,934,574 cr

Valuation as per Goodwill

The value at which existing shareholders can sell their stake. It considers the earnings capacity and

advantages attached to your business.

Liquidation Value: 177,226,450 cr

Liquidation Value

The value at which you can liquidate your business as of today. This value takes into account all outstandings and fair value of the assets.

Discounted cashflow method: 247.6Earnings Power Value method: 269.6Expected returns method: 321

Average Intrinsic Value: 279.4Market Cap: 831,317,949 cr

Valuation as per Earnings

This is the value of your business if it was a listed entity. We arrive at this value by considering many

factors that involve earnings, cash flows, growth, debt etc.

Mplex is running at a 65% discount to its average intrinsic value from its average goodwill value. Mplex can unlock upto 1.9x times value if it opts for an IPO today at a multiple of 20x PE (implied).

Peerset Jamnadas Virji Advisory

Company Name

Mplex

Chemopack Pvt.

Ltd.

Industry

Average

Dalmia

Laminators Ltd.

Emmbi

Industries Ltd.

Jumbo Bag

Ltd.

Kanpur

Plastipack Ltd.

Overseas

Polymers Pvt

Ltd.

Plasti Surge

Industries Pvt

Ltd.

Shri Jagdamba

Polymers Ltd.

Sri Balmukund

Polyplast Pvt

Ltd

Tokyo Plast

International

Ltd.

Rank

FR_Tax Rate(%) 36.01 29.40 37.64 25.60 24.45 33.25 34.49 24.04 30.28 36.13 18.69 -

FR_EBITM (%) 5.21 9.85 7.16 10.75 5.89 10.89 10.20 14.16 9.89 11

FR_PATM (%) 2.77 5.12 1.31 5.47 1.02 5.80 6.85 9.14 6.24 8

FR_ROA (%) 28.11 6.55 1.30 6.88 1.05 8.02 6.30 6.66 22.32 1.60 4.85 1

FR_ROE (%) 19.20 16.31 4.29 16.71 7.40 18.09 30.60 9.05 46.20 7.48 6.97 3

FR_ROCE (%) 18.07 17.12 8.14 16.75 9.52 17.68 27.68 11.24 44.50 9.72 8.81 2

FR_Receivable days 74.19 73.69 50.64 49.31 107.71 68.71 89.87 35.95 113.64 5

FR_Inventory Days 39.86 63.94 85.67 86.97 87.15 50.16 88.86 18.25 30.55 6

FR_Payable days 53.02 26.19 26.69 33.57 63.78 10.11 0.00 24.56 15.91 34.89 1

WC Cycle Days 61.03 111.44 109.62 102.70 131.08 108.76 - 154.16 38.28 - 109.29 10

FR_Net Sales Growth(%) 22.63 8.87 0.97 20.14 9.64 15.71 3.45 21.68 -9.46 1

FR_PAT Growth(%) 104.60 52.96 4.80 22.73 77.52 16.98 154.02 188.23 2.66 -43.29 1

FR_Total Debt/Equity(x) 1.00 1.22 1.92 0.99 3.08 0.85 0.91 0.24 0.33 2.45 0.24 5

Margins and working capital cycle days needs drastic improvement. Above average sales and pat growth indicates aggressive selling strategies as margins are lower than industry average. Margin improvement should be prioritised following with efficient

operational management to reduce working capital requirements.

Product Jamnadas Virji AdvisoryProduct Export Sales Local Sales Part of Total Sales

WOVEN SACK BAGS 94% 6% 75.27%

FIBRILLATED YARN / THREAD 7% 93% 0.00%

FABRIC ROLL 84% 16% 20.45%

WASTAGE & SCRAPS 0% 100% 0.55%

POLYTHENE BAGS 0% 100% 0.04%

SALE OF BALE COVER 29% 71% 0.89%

SALE OF GUSSET BAGS 0% 100% 0.00%

LAMINATED BAGS 63% 37% 0.15%

FABRIC SHEET 0% 100% 0.01%

WOVEN BAG WITH LINER 31% 69% 1.93%

PRINTED FILM SALES 100% 0% 0.70%

Sales price per unit is declining for woven sack bags which is the major contributor to total sales (about 75%). Whereas thread yarn is consistently increasing in trend

compared to the rest of the products, it has doubled in 5 years. Rest of the products are constant. The company should look further into this category as it may give a

large opportunity in the future.

Customer Analysis Jamnadas Virji Advisory

Top 10 Customers Value of Sales % of Sales

RAFIA INDUSTRIAL S.A. 183,640,721.00 12.66%

ABC POLYMER INDUSTRIES 107,449,743.00 7.40%

INDORAMA SYNTHETIC (I)LTD 60,307,624.00 4.16%

BULK CONTAINERS INDIA PVT. LTD. 51,005,798.00 3.52%

KSP INTERNATIONAL 48,135,256.00 3.32%

CONITEX SONOCO USA 45,051,366.00 3.10%

INFOTEX S.R.L 39,517,313.00 2.72%

VERCOM INTERNATIONAL 38,331,054.00 2.64%

ABIS EXPORT (I) PVT. LTD. 26,621,137.00 1.83%

ACC LIMITED 25,623,402.00 1.77%

Others 825,397,656.00 56.88%

Total Sales 1,451,081,070.00 100.00%

With 56.9% of customer diversification, Mplex has a diversified cash flow, reducing the risk of dependency by half. The concentration level is high

within 2 companies, which can pose as a threat on an industrial level and margin levels.

Vendor Analysis Jamnadas Virji Advisory

Reliance is a largest vendor with 4.5% of Mplex’s overall raw material requirement. The dependency as per vendor is quite diversified, as

any changes within any of the vendors prices or internal policies won’t affect Mplex’s product prices to a large extent and hence the damage is within controllable range. Only about 12% of overall raw material is

vendor concentrated.

Top 10 Suppliers Value of Purchases % of Sales

RELIANCE INDUSTRIES LTD. 47,988,278.00 4.46%

MODY RESINS PVT. LTD. 14,960,842.00 1.39%

OMAN POLYPROPYLENE LLC OMAN 10,120,275.00 0.94%

MRPL 9,050,739.00 0.84%

V SQUARE DMCC 8,734,213.00 0.81%

PETRO GOLD INTERNATIONAL LLC 8,009,485.00 0.74%

FAIRDEAL JUMBO PACKAGING PVT.LTD. 7,791,603.00 0.72%

CENTRAL INDIA POLYSACK PVT. LTD. 7,775,026.00 0.72%

OMAN POLYPROPYLENE LLC OMAN 7,172,550.00 0.67%

MODY RESINS PVT. LTD. 7,134,284.00 0.66%

Others 946,810,353.00 88.03%

Total Purchases 1,075,547,648.00 100.00%

Quantitative Analysis Jamnadas Virji Advisory

The DD (Debtor days) is the days a company takes to receive money from

its debtors. At 74.19 days, Mplex gives approx 2.4 months of credit to

its customers.

The ID (Inventory days) is the days it takes a company to churn its entire

inventory. At 39.86, Mplex takes about 1 month and 9 days to completely

churn its entire inventory.

Working capital efficiency ratios are used to generate an insight related to the working capital cycle of the company. This shows how well the company is run in terms of trade, working capital requirement, and effects of day to day functions on the fundamentals of a company.

Confidential

Quantitative Analysis Jamnadas Virji Advisory

Top 10 Customers Value of Sales % of Sales

RAFIA INDUSTRIAL S.A. 183,640,721.00 12.66%

ABC POLYMER INDUSTRIES 107,449,743.00 7.40%

INDORAMA SYNTHETIC (I)LTD 60,307,624.00 4.16%

BULK CONTAINERS INDIA PVT. LTD. 51,005,798.00 3.52%

KSP INTERNATIONAL 48,135,256.00 3.32%

CONITEX SONOCO USA 45,051,366.00 3.10%

INFOTEX S.R.L 39,517,313.00 2.72%

VERCOM INTERNATIONAL 38,331,054.00 2.64%

ABIS EXPORT (I) PVT. LTD. 26,621,137.00 1.83%

ACC LIMITED 25,623,402.00 1.77%

Others 825,397,656.00 56.88%

Total Sales 1,451,081,070.00 100.00%

With 56.9% of customer diversification, Mplex has a diversified cash flow, reducing the risk of dependency by half. The concentration level is high

within 2 companies, which can pose as a threat on an industrial level and margin levels.

Confidential

Internal Analysis Jamnadas Virji Advisory

Product Export Local Total

WOVEN SACK BAGS 94% 6% 75.27%

FIBRILLATED YARN /

THREAD 7% 93% 0.00%

FABRIC ROLL 84% 16% 20.45%

WASTAGE & SCRAPS 0% 100% 0.55%

POLYTHENE BAGS 0% 100% 0.04%

SALE OF BALE COVER 29% 71% 0.89%

SALE OF GUSSET BAGS 0% 100% 0.00%

LAMINATED BAGS 63% 37% 0.15%

FABRIC SHEET 0% 100% 0.01%

WOVEN BAG WITH LINER 31% 69% 1.93%

PRINTED FILM SALES 100% 0% 0.70%

Confidential

Internal Analysis Jamnadas Virji Advisory

Reliance is a largest vendor with 4.5% of Mplex’s overall raw material requirement. The dependency as per vendor is quite diversified, as

any changes within any of the vendors prices or internal policies won’t affect Mplex’s product prices to a large extent and hence the damage is within controllable range. Only about 12% of overall raw material is

vendor concentrated.

Sales price per unit is declining for woven sack bags which is the major contributor to total sales (about 75%). Whereas thread yarn is consistently increasing in trend compared to the rest of the products, it has doubled in 5 years. Rest of the products are constant. The company should look further

into this category as it may give a large opportunity in the future.

Confidential

Level Up! Jamnadas Virji Advisory

Business evaluation, is an essential exercise for any business that aspires to grow multifold. The secret sauce to success for every business is Insight. Insight will help transform every opportunity to reality. With Business Evaluation Report, We offer you professional analysis of your business, which will

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