Gujarat Reclaim & Rubber Products - Rs.250.00

Established in 1974, Gujarat Reclaim and Rubber Products Ltd (GRRP) is the largest manufacturer and exporter of reclaimed rubber in India. K. M. Philip, founder director of MRF Ltd and the president of the Indian Rubber Manufacturers' Research Association (IRMRA) is the Chairman of the company. Apart from producing a range of natural reclaimed rubber grades, it also produces synthetic rubber reclaims such as Butyl reclaim, Nitrile reclaim, EPDM reclaim, Latex reclaim, Fluro-elastomer reclaim, etc. Reclaimed rubber is produced from used tyres and waste rubber and is considered to be the third source of rubber after natural and synthetic rubber. 'Reclaiming' is a process of de-polymerization wherein vulcanized waste rubber is ground, then treated with heat, chemicals and is then intensely worked mechanically. Reclaim Rubber has established its worth and versatility by use in automobile tyres, butyl tubes, cycle tyres & tubes, battery containers, tread rubber, belts & hoses, moulded & extruded products etc.

GRRP has put up units in Ankleshwar and Solapur for the manufacture of surface treated crumb and for manufacture of commodities punched and split from waste tyres for use in engineering, civil construction and ground surfacing applications. In fact, GRRP is the first to offer technical collaboration (named Rubplast SDN BHD) for supply of machinery and technical knowhow to manufacture reclaimed rubber and was also the first to introduce a surface treated crumb rubber manufacturing facility in India, with technical knowhow from an American company. With electrical power being a major input, the company has installed a captive power generating capacity to ensure continuous production at its Ankleshwar unit. Starting with a modest capacity of 2400 MTA, it has grown leaps and bounds to the present capacity of 27000 MT. Further capital expenditure to step up production capacity has been planned. With a variety of grades of reclaimed rubber under its belt, the company caters to some of the largest tyre manufacturers in India and abroad including USA, Australia, France, Japan, Korea, Spain and UK among others. Its products are approved by 7 of the Top 10 to 12 out of the Top 20 tyre companies in the world and 4 of the Top 10 non-tyre rubber companies in the world. Importantly, GRRP has a distributor presence in 18 countries offering 'just in time' inventory management, logistics planning and local administration support. It has also been conferred the 'Export House' status by the Government of India for its steady export growth and performance. For future growth, it is focusing on sales of synthetic rubber reclaims which find more uses compared with the Natural rubber reclaims.

The need to counter the potential hazard of environmental degradation caused by waste tyres has led to the increasing popularity of the reclaim process and its use in rubber products. With the prices of natural rubber and synthetic rubber showing an increasing trend, the demand potential for reclaim rubber continues to be promising. Considering all these factors, the company is estimated to end FY06 with Sales of Rs.60 cr. and NP of Rs.6 cr. This works out to an EPS of Rs.45 on its tiny equity of Rs.1.33 cr. Being a consistent dividend paying company for more than a decade, it seems to be good bet for a target price of Rs.360 in 9~12 months.