I have taken a small position in Shri Bajrang Alliance Ltd.
The company has two main divisions – Steel Manufacturing and Agro Division.
The Steel Manufacturing unit has an annual rolling capacity of 60,000 MT. The company is engaged in manufacturing of structural steel products such as Angles, Beams, Channels, Flats, H-Beams, and Rounds.
The agro division incorporated in 2020, this marks the group’s first foray into foods business through 100% vegetarian frozen food products under the brand name GOELD. The company sells frozen food packets in the domestic and export markets through various retailers, wholesalers and overseas channel partners. Their manufacturing facility located at Raipur has an installed capacity of 6600 tons per annum with a cold storage facility which has a capacity of 500 tons below -18 degrees Celsius.
Currently Agro products form 44% of revenue.
The Company had also forayed into Natural oils, Oleoresins and Natural Food Supplements domains. In the course of time, GOELD intends to advance into supercritical oils, nutraceuticals and straddle the entire gamut of retail foods.
Risks
Large contingent liabilities
The company has a sizable amount of contingent liability, majority of which pertains to corporate guarantee given by the company to one of its associate companies – Shri Bajrang Power & Ispat Ltd at the time of its inception.
High competition and cyclicality in the steel industry
The company faces stiff competition from both established players in the region as well as from the unorganized sector players due to low level of product differentiation. Also, the steel industry is cyclical in nature and witnessed prolonged periods where it faced a downturn due to excess capacity leading to a downturn in the prices.
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