National Fittings Limited

CMP = 69

National Fittings Limited is an export oriented company and an ISO 9001 certified manufacturer of quality piping components and pumps for industrial and non-industrial applications. Pipe couplings are used to connect pipes of various pipe materials and across multiple fire protection, industrial and commercial applications. National Fittings manufactures a complete range of Ductile Iron Grooved Couplings & Fittings, Screwed Fittings, Stainless Steel Threaded Fittings & Ball Valves and an extensive range of Pumps. 

National has been a manufacturer known for its innovative designs, economical production practices, acceptable quality controls and service oriented marketing to International markets. The 'National' brand is well accepted in many countries across the world. The company exports these products mainly to Middle East and also to United States of America, Europe, South America and Australia.

National Fittings operates multiple ISO 9001 certified foundries including an investment casting foundry utilising lost wax process and an exclusive supply source for its entire casting requirements. The company maintains edge over its competitors through technical competence, reliability, and rigorous adherence to Quality Standards and process discipline. Striving for continual improvement and working towards total customer satisfaction has carved a niche for company.

National Fittings is managed by a team of experienced professionals with deep domain expertise and knowledge across departments. The work force has been well trained to produce as per approved standards and specifications. The manufacturing process is streamlined with an organised process flow through its 150,000 Sq.ft of manufacturing space. Over the last 35 years, its prompt services, delivery schedule & most competitive pricing has brought in substantial profit and  won the trust and appreciation of clients all over the world. All these make it the most preferred business associate in this Industry.

Grooved Pipe Fittings

National Fittings is pioneer manufacturer in India for grooved piping system with innovative design, economical production practices, acceptable quality controls and service oriented marketing to the international markets. ‘National’ brand grooved products are well accepted in most countries.

National Grooved piping system is reliable and is faster to install than welding, threading or flanging, resulting in lowest installed cost. It can be adopted to suit standard pipe with cut grooves or standard and light wall pipe with rolled grooves. Triple sealing of the C-shaped pressure responsive gasket is made from specially compounded rubbers with low compression set property. Couplings perform equally well under pressure and vacuum. Couplings with Tri-seal gaskets are highly suitable for higher vacuum service and dry systems subject to freezing. Couplings are available for flexible and rigid system. Grooved end fitting are machined to AWWA c606 cut groove standard Products are offered with RAL 3000 alkyl enamel rust preventive paint as standard and hot dipped galvanised coating is available optionally.

The grooved pipe fittings consist of ductile iron and stainless steel, which includes Rigid Coupling Style 5, Flexible Coupling Style 11, Mechanical Branchlets Style 13, Concentric Reducer Style 140, Rigid Coupling Style 05S, Flexible Coupling Style 12S. National also manufactures grooved fittings in stainless steel using investment casting or lost wax process. National stainless steel grooved fittings are used in a variety of applications across industries.

National Fitting is a growing force in the International field of Ductile Iron grooved fittings. National fittings are used for fire fighting and HVAC lines in Middle East, USA, Canada, Western Europe, Australia, Japan and Asia.

Screwed Pipe Fittings

The National Brand pipe fittings threads are machined according to the highly accurate American or British standards. It is difficult to label either type thread for fittings as more desirable in practice. The National Brand can deliver fittings with either parallel or taper threading upon client specifications or requirements. Elaborate chamfering of the threaded end allows the pipe fitting to be attached to the pipe easily and smoothly. Breakage around the joint is exceedingly rare.

The screwed pipe fitting consists of ductile iron and stainless steel, which includes Elbow 90 - Style 61, Elbow 45 - Style 62, Reducing Tee - Style 65, Tee - Style 64, and Square Plug - Style 72. In addition to threaded fittings, company also offer fittings for socket weld applications in 90 O Elbow, 45 O Elbow, Tee, Crossed, Caps, Reducing Tee, Reducing Elbow, Union and Couplings.

Valves 

National Fittings offers Ball Valves with innovative features and a reliable production engineering to meet the demanding requirements of the intended applications. All wetted parts are produced from investment castings through in house lost wax process foundry. All valves are tested under pressure.

Pumps

The Company offers various pumps, including centrifugal, mini mono-block, open well, booster, submersible, dewatering, sewage dry vacuum and vacuum pumps. National pumps and motor bodies are made of Durable High Strength Ductile Iron to ASTMA536 standards. The Impellers used in National Pumps are made of Stainless Steel 304 Grade, gun metal or brass impellers can be offered optionally.

Quality Assurance

All the National brand products are individually tested. Periodic testing of angularity is also done to ensure conformance to standards. The National Brand pipe fittings are manufactured by a fully mechanised mass production system. Strict quality control governs every stage of the manufacturing process. The manufacturing facilities include induction melting, mechanised sand conditioning, moulding & setting and highly reliable quality assurance equipments and methods.

Investment Rationale

Scheme of Amalgamation of Interfit India Ltd and Merit Industries Limited (Transferor Companies) with National Fittings Limited (Transferee Company) is completed in 2019. This merger is highly beneficial for National Fittings Limited and its shareholders. 

https://www.bseindia.com/xml-data/corpfiling/AttachHis/232ae495-7a9a-4813-9f53-7e9ebadf9581.pdf

Prior to the merger all three group companies were in similar business activity with overlapping of work and  it was resulting in higher cost. Their related party transaction were too high  almost half their sales.  The most of the asset were owned by Interfit India Limited and Merit Industries. These unlisted companies were  getting  lease / rental income from listed company National Fittings Limited. 

There were several promoters from different business group had shareholding in National Fitting through its holding company Interfit India Ltd. Now after merger there is only one promoter A. V. Palanisamy with 34% share holding and other promoter transferred to public shareholders category.

https://www.nationalfitting.com/wp-content/uploads/2019/02/03-scheme.pdf

In this merger National Fittings has received around 30 acres of land along with manufacturing facility. Please refer page no 23, 30, 31, 32 and 33 for details on asset and shareholding changes after merger.

During the Scheme of Amalgamation of lnterfit India Limited and Merit Industries Limited with National Fittings Limited. The company have allotted 4,00,000  9% Redeemable Non-Cumulative Non-Convertible Preference Shares of Rs 100/- each fully paid up to the preference shareholders of Merit Industries Limited, as per the Share Exchange Ratio in terms of the Scheme.

The company has redeemed preference shares and it is a positive sign that National Fittings Ltd is reducing its debt quickly. Now the company is left with small long term debt and remaining is short term working capital debt.

https://www.bseindia.com/xml-data/corpfiling/AttachHis/4991a0e7-80ea-4ee4-b6d9-547744aae955.pdf

With merger and promoter restructuring National Fittings Ltd appears to be  improving profitability margins & operating efficiency. It will help the company to grow at a fast pace in future. National Fittings has been able generate enough free cash flows which can ensure its growth without further debt funding 

Globally grooved fittings is largely dominated by 'Victaulic' USA. Victaulic is the originator and world’s leading producer of grooved mechanical pipe joining and flow control solutions. National Fittings product quality is par with any world class manufacturer. It is equally safe and certified products but cost wise it is much economical. Even though Victaulic has major market share but on cost front National Fittings has low cost manufacturing benefit in India. 

National Fittings is pioneer in grooved fittings and well established player in its segment. For long time it is only manufacturer of grooved fittings in India. In the past margins were much better in exports business but from last two quarters margins of domestic business are higher. It give huge opportunity to expand it business in domestic market.  

The primary driver for grooved fittings is the construction industry as it is used in MEP, Civil works, Fire fighting equipments etc.  Fire fighting system is now basic requirement in any multi story buildings. Now industries prefer grooved fittings as a substitute for welded or threaded pipe joint. Welding is time & labour intensive and as a result it is not preferred choice.

The company is taking steps to increase the selling price for the products and proposes to utilise the balance capacity for manufacturing of components for the pump, valve and automotive segments of the market. New product introduction which they expect to contribute decently in future

The company has diversified the product range of pipe fittings, valves and pump which find wide application in different industry. The company manufacture Stainless Steel Ball valves, a value added product related to the existing product. Ball valves are used extensively in process industries, air conditioning, drug formulation industries, breweries and potable water services.

National Fittings is committed to innovative product design, state of the art production engineering and continuous monitoring of product and process quality. National Fittings, manufactures products with recognised International standards and most of the products are approved by various international testing agencies for specific application.

Mr. A. V. Palaniswamy is the managing director and the promoter of National Fittings Ltd. He is engineering graduate with more than 40 years of experience in this industry. He has brought all the asset under National Fittings in share transfer deal with other ex-promoters and redeemed the preference shares. The company seems to be shareholder-friendly and paying dividend.

Conclusion

Pipe fittings, valves and pump market is ever-green and ever-growing. It is backbone of any type industrial growth and domestic market gives decent growth potential. National Fittings is well established manufacturer in this field with over 30 years experience. The sales of company is growing and  profitability is improving. National Fittings  is strong fundamental company and  benefit of merger has just started reflecting in results. 

National Fittings Limited at cmp Rs 69 is excellent investment opportunity for both short term and long term. It can be bought  within 15% from cmp with 10 %  allocation.