Buy Ambika Cotton Mills - Call closed - 90% returns as on 18-12-09

CALL CLOSED (LONG TERM INVESTORS - HOLD IT) Buy Ambika Cotton mills. Current market price: 74.90. Long term target: 149.80. Book value: 189.30. P/E ratio: 3.57

The Company’s principal activity is to manufacture and market cotton yarn. Its cotton yarns are used for manufacturing of shirts and T Shirts. Its plant is located in Kanniyapuram, Dindigul district of Tamil Nadu. The Company operates only in India.

The company has been working on value added products which yield better margins. To reduce power costs, Ambika has planned to increase the present installed capacity for wind energy from 13.8MW to 17.8MW by installing five windmills of 800kW each at an estimated cost of Rs21.48 crore.

Dividend
Year      Month Dividend (%)
2008     Jun             20
2007     Jun             25
2006     Jun             20
2005     Jun             20
2004     Jun             16
2003     Jun             16
2002     Jun             12
2001     Jun             12
2000     Jun             12
1999     Jul              18
1998     Jul              18
1997     Jul              18

YEAR EVENTS 1988 - The Company was originally incorporated as Ambika Cotton Mills Private Ltd as a Private Limited Company on 6th October , in the State of Tamil Nadu, and subsequently converted into a Public Limited Company on 5th September, 1994.

- The Company was promoted by Shri P K Ganeshwar, Shri M Rathanasamy and Shri P V Chandran, for setting up a cotton spinning mill. The mill, located in Dindigul, Tamil Nadu, commenced operations in January 1990. The project, with an initial capacity of 6048 spindles was part-financed by a term loan from State Bank of India. The Company carried out an expansion scheme to add certain back-process machinery in February 1991, which was also funded by the State Bank of India.

1992 - The company began implementation of an expansion project to double its spindlage to 12096 spindles by the addition of 6048 spindles. This project which was financed by means of a medium term loan from State Bank of India and the State Bank of Mysore on a consortium and through a Deferred Payment Guarantee limit from IDBI. The project was successfully completed in March 1993.

1994 - The Company added Comber machines to its production line and humidification system. This was funded by SIPCOT through a term loan of Rs. 90.86 lacs.

- The Company currently manufactures combed and carded cotton yarn of counts ranging from 30’s to 40’s. These are used by hosiery manufacturers to convert the same into fabric or garments.

2000 - The Company has chalked out a Rs 14-crore expansion-cum-modenrisation programe.