Thread by @ValueEducator

Long thread on #Mayur Uniquoters 🚗🚗

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1. Introduction
Mayur Uniquoters is primarily engaged in the business of manufacturing and sale of PU (Polyurethane) / PVC (Poly Vinyl Chloride) synthetic leather which is widely used in different segments

such as Footwear, Furnishings, Automotive OEM, Automotive replacement market, and Automotive Exports.
Mayur Uniquoters Ltd is the largest manufacturer of artificial leather, using the 'Release Paper Transfer Coating Technology' in India.

Mayur has the largest installed capacity for manufacturing of synthetic leather in the domestic organized segment with a capacity of 4.05 million linear meters per month (LMPM) of PVC coated fabric having Italian coating lines.

They have now started their PU coating plant with a current capacity of 6 lacs linear meter per month.

2. Revenue contribution

3. Geographical Mix

4. Clientele
Mayur, has a diversified clientele across various industries and caters to the synthetic leather requirements of reputed players like MG Hector, Maruti Suzuki, Tata, Mahindra, Volkswagen, Hero, Bajaj,etc. among automotives and Bata, Paragon, Action, Relaxo,

VKC Group etc. among footwear segment.
Recently Mayur also got a product approval from BMW and material supply is expected from April 2022.

5. Manufacturing Facilities
The company has three manufacturing plants- Two PVC synthetic leather plants in Rajasthan (one at Jaitpura & one at Dhodhsar) and one PU synthetic leather plant in Morena, Madhya Pradesh.
Capacities of PVC and PU plant:

Currently the PU plant has only one coating line. The Company has constructed building and other peripheral infrastructure for 4 coating lines considering the future expansion (brownfield expansion) plans.

6. High Quality provided by Mayur
No other manufacturer of PVC synthetic leather in India provides the same quality as Mayur because they have Italian lines whereas most of the manufacturers in India have put in Chinese lines. Even though their product is more expensive,

their product finds increasing usage in automotives. E.g., Mayur has got a contract from MG motors because they wanted high quality PVC synthetic leather & Mayur Uniquoters is providing it

7. Delay in setting up PU plant
In 2014, Mayur decided to set up a PU plant in Rajasthan. But they did not get the allotment of the land from the Rajasthan government. The main problem with the PU plant is that it requires a large amount of water and the industrial zones of

Rajasthan come under dark zones which means there is scarcity of water. Therefore they didn't get approval from the Rajasthan government to set up the plant. In 2017 Mayur set up a PU plant in Madhya Pradesh which finally got commissioned in 2020.

8. Why PU?
The biggest problem with PVC is that there is a very big competition and there are many manufacturers and they are increasing every year. So, therefore Mayur is now focussing more on PU so that they can catch hold of the extra market of footwear. They are also working

on using PU in automotives. The difference between PVC & PU is that PU is less harmful and much lighter as compared to PVC. PU is a more technical and a high margin product. The realization in PVC is around $7 - $8 per meter whereas in PU it starts with $20 per meter.

In some cases it is even $24 since it is replacing genuine leather.

9. Value Chain

10. Milestones

11. Synthetic Leather Industry
Synthetic leather is a man made fabric made using PVC or polyurethane (PU) that is treated and dyed to resemble real leather. Synthetic Leather is intended to substitute natural leather in fields where a leather-like finish is required but the

actual material is cost-prohibitive, unsuitable, or unusable for ethical reasons. Synthetic leather is a cheaper, more versatile and an ethically friendly alternative to real leather, which is made from tanned animal hides.

The synthetic leather industry is growing significantly and offers opportunities. The synthetic leather market size is estimated to be USD 63.3 billion in 2020 and is projected to reach USD 78.5 billion by 2025, at a CAGR of 4.4% between 2020 and 2025.

12. Key Competitors
Mayur Uniquoters has the best in class operating margins among all the competitors given below.

13. Backward Integration
In 2012 it started its own knitted fabric unit which helped the company to bring down fabric cost by 23-25%. Earlier when they imported the rejection rates were high due to quality issues.

After the backward integration the rejection rates reduced drastically. Since knitted fabrics were manufactured in house, the product development cycle also went down from 4 months to 2 months. This also led to gross margins expansion.

In 2012 the gross margins were 26% whereas in 2021 the gross margins are 44%. (Continued)

In 2011, Mayur started supplying to global auto OEM companies like Ford and Chrysler. So a similar trend can be seen in their EBITDA margins which improved from 16% in 2010 to its peak of 27% in 2016.

14. The consolidation phase (2016-2021)
From 2016-2021 there was a stagnation in the revenues and profitability of the company. Auto industry was not doing well at that time. There was huge pressure to cut down costs. Demonetisation & GST implementation had a huge impact on the

unorganized footwear industry. Mayur was a quality supplier to the unorganized footwear industry at that time and that industry shrunk which impacted their sales volume during this period. Because of the hit to the footwear unorganized sector, a lot of footwear units closed in

India and the demand was met out of imports from China and Vietnam. Crude oil was on boil at that time and the PVC resins prices are linked to crude oil so this created cost pressures on their raw materials.

15. Effect of global semiconductor chip shortage on the business
The global shortage of semiconductors began in the first half of 2020, driven by pandemic-fueled demand for consumer technology and vehicles. Chip industry executives have cautioned that

some customers will struggle to get enough supply until 2023. Automakers are facing production problems at their plant due to semiconductor chips shortage globally and that is why the OEM sale of Mayur is also impacted.

Mercedes has given Mayur a requirement of 40,000 meters per month but now they are buying not more than 15,000 to 20,000 because of this chip problem.

16. Tie-ups with Auto OEM companies

17. Buyback History

18. Risks

19. Growth Triggers
PU plant is capitalized after six years of long wait & if the company does brownfield expansion of the PU plant in the future then it has the potential to grow its sales faster.

With the revival of the Auto industry PVC sales will also grow and then Mayur will get a massive operating leverage opportunity.

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