 Mold-Tek Technologies was established in 1987 by technocrats J. Lakshmana Rao (PGDM - IIMB) & A. Subrahmanyam (BE - REC) as a packaging company. In 2004 the company diversified into KPO by providing Structural Engineering services to clients in US. In April 2007, Mold-Tek acquired Cross Road Detailing Inc. an engineering services KPO, located at Indiana, USA, In Sep 2008, Mold-Tek signed an agreement to acquire Ohio based engineering KPO company RMM Global and its India-based associate Technet Engineering Services.
Financially the company has been doing well. In FY08 net sales was Rs 102.9 crores while the net profit was Rs 13.4 crores (Un-audited results). The KPO division has been growing from strength to strength, the only negative was the Rs 6.4 crore Forex losses in the year 2007-08.
The plastic division has 2 manufacturing units at AP & 1 at Daman. They manufacture products for leading brands of Paints, Lubricants, Pharmaceuticals, Cosmetics, FMCGs etc. Some of the clients are Castrol, A.P,Nerolac, ICI, IOCL, Mobil & Procter & Gamble. The KPO division has manpower of 400 after the 2 acquisitions.
As a move to enhance value, Mold-Tek has merged M/s. Teck Men Tools Private limited, a small container manufacturing company, and de-merged the divisions into two companies. The listing of both the plastics packaging and KPO Divisions into two separate public listed entities will happen in the next few months.
The record date for the de-merger was Sept 25th 2008. As per the scheme for 100 shares in the company the shareholder would get 28 shares of Mold-Tek Technologies (KPO) and 72 share of Mold-Tek Plastics. The equity capital after the de-merger would be Rs 3.59 crores for the KPO and Rs 7.95 crores for the plastic division.
Q) What are the sales and net profit projections for the KPO and packaging divisions for the next 3 years?
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| 2008-2009 | 32 Cr | 9 Cr |
| 2009-2010 | 48 Cr | 14 Cr |
| 2010-2011 | 70 Cr | 20 Cr |
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| 2008-2009 | 130 Cr | 6 Cr |
| 2009-2010 | 155 Cr | 10 Cr |
| 2010-2011 | 185 Cr | 14 Cr |
Q) Can you brief us about some of your main clients in both the divisions?
In Plastics division the main clients are ICI, Castrol, A.P,Nerolac, ICI, IOCL, Etc.
In KPO division the main clients are Steelway, Sunward, Schuff Steel, Etc.
Q) Do you see a slowdown affecting you, especially since your KPO clients are mainly from US? How do you plan to tackle the same?
Yes, partially affecting us. But, we presently cater to less than 0.01 % of the demand. Hence even a dip due to slowdown would not affect our market size. Entering into Europe, Australia and diversifying into RCC Design/Detailing are steps taken to keep up a 50% annual growth in sales of Structural Engineering KPO (MTL).
Q) How long will it take for both the companies to be listed?
KPO (MTTL) will be getting listed very soon may be by mid October 08.
MPL (Moldtek Plastics) has more formalities, hence may take 2 Months for listing.
Q) Any plans of listing in NSE?
Once relisting is completed in BSE, we may seek NSE listing.
Q) How will the acquisitions of Cross Road Detailing, RMM Global & Technet fit into the overall strategy of the KPO business?
CRD & RMM being US companies they fill in the important role of "Frontend" for Marketing, QC and client interaction. Technet adds experienced staff in High Rise Building work.
Q) Are there any more acquisitions in the offing? Will the equity capital be diluted to fund the acquisitions?
No Plans immediately. But, open to acquire US based Designing Companies for better synergy. Internal Accruals can take care of smaller acquisitions. No Dilutions.
Q) Any updates on KPO campus building in Jubilee Hills, Hyderabad? How many people can it accommodate?
We have already moved in recently. It can accommodate 600 resources.
Q) Any plans of opening more KPO centers?
Not presently. Through Technet we got a centre in Mumbai.
Q) What is your roadmap for the plastics division?
We have plans to set up two more production unis, one in the West and one in the South by 2010.
Q) Any message to the shareholders?
Both the companies of our group are performing well and profitability in Plastics is also improving. They will be benefitted in future with better dividends and returns if the trend continues.
Disclosure: Forward-Looking Statements
Some of the information on this interview may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. We wish to caution you that these statements are only predictions by the company and that actual events or results may differ materially. The company, its employees, EquityBulls.com, AARUDHRA FINANCIAL SERVICES and its employees assumes no obligation, and does not intend, to update these forward-looking statements.
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Union Budget