The Background

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The Indian Wood Products Co. Ltd. (IWP) boasts extensive experience and an established track record in the kattha industry, guided by its current promoters who have around four decades of expertise. Mr. KK Mohta, Chairman and Managing Director of IWP, along with his son, Mr. Bharat Mohta, and other professional directors, have long been associated with the company, which has been in the kattha manufacturing business since 1920.

IWP serves a reputed clientele in the paan masala industry, including well-known companies like Dharampal Satyapal Ltd. These clients own recognized brands such as ‘Rajnigandha’, ‘Vimal’, and ‘Dilbag’. The company is continually adding new clients and focusing on premium products. IWP has experienced moderate revenue growth in FY2023 and the first half of FY2024, a trend expected to continue in the medium term through a mix of volume and price improvements.

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Challenges:

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IWP has faced significant challenges due to high working capital intensity, which has ranged between 50-60% in recent years. This is largely attributed to the seasonality of raw material crops, necessitating substantial inventory stocking, and extended receivable days. Additionally, onboarding new clients often requires offering liberal credit terms, further straining working capital. Consequently, the company relies heavily on working capital debt, and when combined with modest profit margins, this results in modest coverage metrics. Managing the expectations of bankers has also posed a challenge, with compliance requiring considerable personal attention and time, further complicating the company's financial operations. 

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Solutions:

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Bankkeeping provided a comprehensive solution to IWP's banking challenges. By utilizing Bankkeeping’s services, IWP significantly reduced its interest costs and facilitated the easy renewal of credit limits. A key feature, the Banking Compliance Calendar, played a crucial role by ensuring timely adherence to all banking compliance requirements, greatly assisting IWP in maintaining its financial obligations. This feature, along with other services, effectively alleviated the burden of banking management for IWP. As a result, the company could redirect its focus and resources towards its core business operations, leading to improved overall efficiency and growth.

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