Date: 24th May 2017
Tinplate Company of India (“Tinplate Company” or the “Company”) is one of the largest producers of tin coated and tin free steel sheets in India having more than 45% market share. The Company exports about 20-25% of its production directly to end-users (can-makers) and its products are well accepted in the markets of SE Asia, Middle East and some developed countries in Europe.
Tata Steel Holds 74.96 % in Tinplate Company.
End User: the Company’s product mix has continued to serve end users like edible oils, paints, pesticides, battery jackets, aerosol cans, processed foods and crown corks.
What is Tinplate?
Tinplate, a downstream flat steel product, is a packaging material which is used across a wide array of applications – food (edible oil, processed fruits & vegetables), non-food (paints & chemicals, aerosol sprays, battery) and beverages. Think of cans of aerated drinks.
Everything I like in a stock – Tinplate Company of India.
— Rajat Sharma (@SanaSecurities) July 3, 2017
Growth Prospects of Indian Tinplate Industry
The total domestic consumption of tinplate in India is approx 3.5-4 lakh tons per annum of which around 40 % is met through imports and the rest through domestic supplies. The per capita consumption of tinplate in India is relatively very low at 0.3-0.4 kg vis-à-vis the developed economies average of 8-12 kg.
Approx 60-70% of tinplate consumption is for Edible Oil, processed foods and beverages.
The Indian tinplate industry is expected to grow at 10% p.a. over next 5 years period. Changing consumption habits/preferences and increasing consumer preferences for eco-friendly materials are expected to drive the demand for tinplate-based packaging segment. Tinplate Company being market leader in India is expected to gain from this growth in the coming years.
Strong Financial Position
Tinplate Company has shown consistent growth over the last 5 years (i.e. 2012-13 to 2016-17). The Company has reserves in excess of Rs. 622.29 Cr and operates with ZERO debt on its books. The Company’s zero debt position augers well for the company as the Company is in the expansion phase and can leverage its balance sheet if needed.
Tinplate’s current dividend yield is around 2.26% (CMP = Rs. 89.95 as on May 24, 2017).
At CMP of Rs. 89.95 (24th May, 2017), Tinplate is trading at a P/E of 33.61x.
Particulars (in Rs. Cr.)
Income from operations
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Total Shareholders’ funds
EBITDA Margin (In %)
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Tinplate Company has installed capacity of 379,000 tones/year at its manufacturing facility located at Jamshedpur, Jharkhand. The Company is currently running at 83% of installed capacity. For 2016, company produced 3, 13,552 tons in terms of volumes.
Packaging Industry – Main Growth Driver & Huge Future Potential
A boom in the retail sector and consumer awareness on recycling and environmental benefits of tinplate packaging will be growth driver for the tinplate industry in the coming years. The tinplate packaging industry sales volume is expected to go up to 7.81 lakh tonnes in 2019 from 6.11 lakh tonnes in 2014.
Increasing consumer consciousness on health and safety-related issues has necessitated use of high-technology packaging material such as tinplate. Evolving consumer preferences and government initiatives such as enforcement of hygiene norms in the food industry, tinplate packaging market will make further headway in the coming years.
The Company is continuously launching new products/variants to sustain its leadership position. In FY 2016, Tinplate Company launched “TATA PAXEL”, a branding initiative for edible oil.
Major Concern – Import of Low-Priced Tinplate
Substantial imports of low-priced tinplate – namely secondary grade and defective products – especially from Japan, South Korea and China is dampening the prospects of Indian manufacturers like Tinplate Company as end users prefer cheap procurement to reduce raw material cost.
Currently there is no duty differential between prime and non-prime tinplate. The customs duty for tinplate continues to be relatively low and is not a significant barrier to the dumping of non-prime tin products into India mainly from USA, Europe and South America. Further the free trade agreement with Japan & Korea has led to considerable increase in import of good quality prime tinplate from these countries.
Threat from Substitutes
The Company faces challenge from the use of plastic and tetra packages in food and non-food packaging applications. Although to overcome this situation, the Company has started developing light-weight products. Nevertheless, unorganised market for similar and replaceable packaging material in India remains a big threat for the potential expansionary growth of the Company.