 The Company was incorporated on 13th March, 1995 with the Registrar of Companies,

Maharashtra, at Mumbai. Shri Amrutbhai P. Shah and Shri Shantilal P. Shah promoted the
Company. The Company took over the partnership firm viz. Starline Industries engaged in
the manufacture of exercise note books, account books and other paper stationery
products, with its assets, bank liabilities and business and the said promoters were the
partners of this partnership firm. The purchase consideration was fixed at Rs. 42 lacs and
the same was paid by the company through the issue of 4.2 lacs Equity Shares of the
company at par. The Company made its maiden public offer of 1.8 million Equity Shares
of Rs. 10/- each for cash at par aggregating to Rs. 18 million on 23rdFebruary, 1996
which was fully subscribed and obtained the listing of its Equity Shares on Pune and
Ahmedabad Stock Exchanges. In July 2005 the Equity Shares of the Company were also
listed on BSE.
 At the start of the Company in the year 1995, the Company had a capacity of 5 tons per
day of conversion of paper into paper stationery, which was increased to 20 tons per day
in 1998 with the addition of two German made machines, to 50 tons per day in 2001
with the addition of one more unit of manufacture, and to 60 tons per day in 2003 with
the addition of one more unit of manufacture. The Company’s existing capacity of
conversion of paper into various paper stationery product stands at 15,000 tonnes of
paper per annum. Current utilisation stands at around 45%.
 Company had formed a wholly owned subsidiary, E-Class Education System Ltd in 2010.
E-Class Education System is an audio-visual educational content development company
focusing on school education. E-class, company’s first product under E-Class Education
System ltd is an audio-visual, animated content, exactly as per the syllabus of
Maharashtra State Board, Standards 1 to 10, available in English, Marathi and
Semi-English Medium. This way each school can have its own digital classroom, and this
product can also be used by coaching classes and individual students at home.
Maharashtra has around 2 crs students so there is a huge opportunity for this business.

FUTURE PLAN

To Be Debt Free

 Management has reduced its debt from Rs. 120 crs to Rs. 37cr as on 07.12.17. Company
will be almost debt free by FY18 end. Interest cost will come down by Rs. 5 crs in FY18 i.e.
reduction of around 50%.
Company has paid another 7cr recently and total debt is now 37cr—Rs 17cr long time
and 20cr working capital.

Reason for losses in past

 Due to high debt level of around Rs. 120 crs, management was not able to procure ample
amount of papers for production of exercise books and therefore the utilisation level fell
 down to 50%. Sales fell to Rs. 88 crs in FY16 from Rs. 120 crs in FY13.
High interest cost, lower sales and fixed expenses lead to loss of Rs. 3.6 crs in FY14, Rs.
23 crs in FY15 and Rs. 8 crs in FY16. Accordingly market cap of the company fell from Rs.
500 crs in Oct’13 to Rs. 50 crs in Apr’14.
 Post repayment of debt, utilisation of notebooks will ramp up gradually and accordingly
topline and profitability.

De-merger of E-Class business (Value unlocking for shareholders, not yet publicly
announced)

 Management is planning for demerger of its E-class business and to list it on exchanges
in FY18. Company may announce the same by April’17 end. This will be a value unlocking
for the shareholders. Ebitda margin from E-class business is around 40% i.e. 2x more
than Exercise books business which is around 13-18%. Sales from E-class business will be
around Rs. 6 crs in FY17. This business was doing sales of around 2 crs in past. Company
has won orders under e-class from various municipal corporations in Mumbai such as
BMC, TMC, PMC.

Expansion of Exercise Notebooks Business

 On the other side management is also planning to sell its 25 acres land (non-core) at
Nagpur valuing around Rs. 40-45 crs. The amount will be used to expand exercise
notebooks business in South, pay debt etc.

Valuation

 During FY16, Company had reported loss of Rs. 8.7 crs after considering loss on sale of
non moving inventories of Rs. 10.6 crs (exceptional item). All obsolete inventories have
been disposed upto Q1FY17.
Management is expecting topline of Rs. 130 crs from Exercise notebooks business and Rs.
10-15 crs from E-class business in FY18. PAT margin would be around 9% in notebook
business and 30% in e-class business. No tax due to carry forward losses.
 Profit will be around Rs. 14.2 crs and Eps of Rs. 0.60 in FY18.
. Considering restructuring, future announcements, expansions and improvements in
future earnings, stock will move back to its earlier level of Rs. 20-25 in 2 years.
Company has made profit of 2.6cr and top line of 32cr in 1st quarter of 2017-2018.
mIn q2 mad profit of 25 lakhs. But over all made loss of 16cr due to exceptional item.

Prediction of topline for 2019-20120 is around 200cr and profit will be around 24-25
cr.

Equity dilution
Company has allotted 2.6cr share at price of 3.01 to group of investor and collected
7cr rs.
Equity of company is now 24.56cr---- Promoter has 24% and other has 76%.

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=92521
21--FOR 18 DEBT PAYMENT

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=92826
21--NEW 8 SHARE ALLOCATION.
http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=89049
01--CREDIT 6 RATING

http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=92036
41 4
recent news on land sale/ development.—
http://www.moneycontrol.com/stocks/stock_market/corp_notices.php?autono=10198
541 6

*comparable business is Navneet publication.

*Now execution of plan if not done properly is the Risk for company.

disclosure: holding the share. So my view may be biased.

Suggestions are welcome.