Ravikumar Distilleries Ltd. 31 st May, 2016 TABLE 1 MARKET DATA (STANDALONE) (As on 31 st May, 2016) NSE Code RKDL NSE Market Price ( ) 8.15 NSE Market Cap. ( Cr.) 19.54 Sector Alcoholic Beverages Face Value ( ) 10.00 Equity ( Cr.) 24.00 52 week High/Low ( ) 17.00/ 3.65 Net worth ( Cr.) 76.28 Business Group Indian Private TTM P/E N.A. Traded Volume (Shares) 14,521 Year of Incorporation 1993 TTM P/BV 0.11 Traded Volume (lacs) 1.18 Corporate Office: Ameen Manors S1 & S2, 2 nd Floor, B Block, 138, Nungambakkam High Road, Chennai 600 034, Tamil Nadu Company Website: TABLE 2 PRICE PERFORMANCE Source Capitaline COMPANY BACKGROUND Ravikumar Distilleries Ltd is engaged in the business of manufacturing Indian Made Foreign Liquor (IMFL) under their brand portfolio as well as under tie up arrangements with other companies. The IMFL comprises of Whisky, Brandy, Rum, Gin and Vodka. They operate through their manufacturing unit located at Puducherry and are equipped with State of art infrastructure facilities & technology. The Company has established several brands successfully across segments and flavours thereby enjoying brand recall from customers. They are having their market presence in Puducherry. They are having 30 different brands under their portfolio like namely Capricorn Super Brandy, Capricorn Super White Rum, Capricorn Super XXX Rum, Chevalier Brandy, Chevalier XXX Rum, Chevalier Whisky, Capricorn Super Vodka, Capricorn Super Gin, Konark Grape Brandy, 2 Barrels Blended Whisky etc. They are also having approximately 65 brands under tie up arrangements. In the year 2000, the Company launched their first brand namely, Capricorn Super Brandy. Also, they made a strategic tie up with Radico Khaitan Ltd for bottling of their premium brands. Ravikumar Distilleries Ltd was incorporated on October 11, 1993. In the year 1999, the Company entered into the Distillery Industry and started manufacture of IMFL products by means of setting up a distillery unit at Puducherry with an installed capacity of 7,20,000 cases per annum with initial production running on two (2) semi auto lines. 30 th May, 2016 29 th May, 2015 30 th May, 2014 % Change CAGR for 2016 vs 2015 2015 vs 2014 2 years Price ( ) 8.25 4.45 6.90 85.39% 35.51% 9.35% Trading Volume (Shares) (yearly avg.) 28,300 12,606 21,003 124.49% 39.98% NSE Market Cap. (in Cr.) 19.80 10.68 16.56 85.39% 35.51% 9.35% Source Money Control 1 P AGE
TABLE 3 FINANCIALS ( Cr.) 2015 2014 2013 % Change CAGR for 2 2015 vs 2014 2014 vs 2013 years Net Worth 76.28 82.45 88.25 7.48% 6.57% 7.03% Current Assets 91.62 63.07 67.26 45.27% 6.23% 16.71% Non Current Assets 47.49 73.07 74.35 35.01% 1.72% 20.08% Total Assets 139.11 136.14 141.61 2.18% 3.86% 0.89% Investments 94.40 94.55 93.77 0.16% 0.83% 0.34% Finance Cost 3.24 4.63 5.32 30.02% 12.97% 21.96% Long Term Liabilities 4.79 6.24 8.37 23.24% 25.45% 24.35% Current Liabilities 58.04 47.45 44.99 22.32% 5.47% 13.58% Turnover 45.76 38.19 40.76 19.82% 6.31% 5.96% Profit After Tax (PAT, Cr.) 5.90 5.80 1.94 N.A. N.A. N.A. EPS ( ) 2.00 2.00 1.00 N.A. N.A. N.A. Source Money Control/Annual Report Discussion as per Company: During the FY 2014 15, the total Income from operations was 45.76 crores compared to 38.19 crore in the previous year recording a loss of 5.90 crore. The net loss was 5.90 crores as against the loss 5.8 crores in the previous year. Reasons for Loss during the year: 2014 15 The Board of Directors discussed on the Loss of the company to the tune of 5.90 crores and attribute following main reasons for non growth of the Company: 1. Change in Excise Law: The increase of Excise Duty implemented two years back has severely affected the sales this year also. However, the Company is working on other avenues and areas for increasing the sales and the turnover has increased from 38.19 crores to 45.76 crores. 2. Legal Cases pertaining to the Company: The Company s performance was also severely affected due to various issues and fraudulence committed by Mr. Anil Agarwal, Managing Director of M/s. Comfort Securities Ltd., M/s. Comfort Intech Ltd. and his associates against the Company. The Company has filed complaints against Mr. Anil Agarwal, M/s. Comfort Securities Ltd., Merchant Bankers, M/s. Comfort Intech Ltd. and its other group companies. (For detailed discussion see page no. 2 of the AR 2014 15). Reasons for Loss during the year: 2013 14 The Board of Directors discussed on the Loss of the company to the tune of 5.80 crores and attribute following main reasons for non growth of the Company: 1. Labour Strike: The Company has faced illegal labour strike in the month of July 2013 and August 2013 which affected the performance and outlook of the company very badly. However, the issue was resolved in August 2013. 2. Change in Excise Law: The increase of Excise Duty implemented last year has severely affected the sales this year also. However, the company is working on other avenues and areas for increasing the sales and has already tied up with M/s. Radico Khaitan Limited for sale of IMFL to Andhra Pradesh and is also looking forward for other tie ups. 3. Legal Cases pertaining to the Company: The Company s performance was also severely affected due to various issues and fraudulence committed by Mr. Anil Agrawal, Managing Director of M/s. Comfort Securities Limited and M/s. Comfort Intech Limited and his associates against the Company. AUDIT QUALIFICATIONS 2 P AGE
Audit Qualifications in last 3 years: The Auditors have not raised any qualification in last three years. However, they have emphasized on the following matters: Emphasis of Matters (FY 2014 15 and FY2013 14): Without qualifying the opinion, the Auditors have drawn attention to the following: a. Reference is invited to Note No. 17 regarding pending confirmations and reconciliations with sundry debtors and sundry creditors; Note No. 5.3 regarding balances of tie up parties and Note No. 14.1 regarding advances to suppliers which might require adjustments in the financial statements. Further, in case of Advances to Suppliers which have been classified as Long Term Advances ; though the company has filed various cases against the parties and initiated action for recovery, we are unable to comment on realisability/ recoverability of these debts and advances given and no provision for doubtful debts is considered necessary by the company. The impact on the loss for the year and current assets, if any, is unascertainable. b. Reference is invited to Note No. 13 regarding Investment in Liquor India Limited and Advance received from Lemonade Shares & Securities Private Limited (Refer Note No. 10.1) which is considered as disputed and no adjustment for sale thereof have been incorporated in the financial statements by the Company. The sale agreement entered into with Lemonade Shares & Securities Private Limited for sale of entire undertaking has been challenged and civil suit has been filed before II nd Additional District Judge, Ranga Reddy District, L B Nagar, Hyderabad, with prayers inter alia to rescind the agreement as being void and restore the parties back to the position prior to MOU Dated 05 09 2012. Management does not anticipate any liability on this account. However, since the matter is pending before court, we are unable to comment whether, any adjustments are needed for the recoverability of investment thereof. Accordingly, impact on loss for the year and Investments thereof, if any, is unascertainable c. The Company has not complied with the provisions of Section 203 of the Companies Act, 2013 in respect of appointment of Chief Financial Officer and Company Secretary. Response Comment Frequency of Qualifications The Auditors have not raised any qualification in last three years. Have the Auditors made any adverse remark in last 3 years? No TABLE 4: BOARD PROFILE (As on 31 st March, 2015) Regulatory Norms Company % of Independent Directors on the Board 50% 50% % of Promoter Directors on the Board 17% Number of Women Directors on the Board At least 1 1 Classification of Chairman of the Board Not Disclosed Is the post of Chairman and MD/CEO held by the same person? No Average attendance of Directors in the Board meetings (%) 73% Source Money Control/Annual Report Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 50% Independent Directors as the Chairman of the Board is not disclosed. The Company has 50% of Independent Directors and hence, it meets the regulatory requirements. Board Diversity: The Company has 6 directors out of which 5 are male and 1 is female. The Company is Compliant as per Clause 17 of the Listing Regulations, 2015 regarding the requirement of at least one woman director. 3 P AGE
TABLE 5 FINANCIAL RATIOS Ratios 2015 2014 2013 % Change 2015 vs 2014 2014 vs 2013 Inventory Turnover 2.12 1.82 1.77 16.27% 2.63% Debtors Turnover 2.50 2.73 2.41 8.38% 13.30% Fixed asset Turnover 0.96 0.52 0.55 84.36% 4.66% Current Asset Turnover 0.50 0.61 0.61 17.52% 0.08% Turnover Ratios Return Ratios Liquidity Ratios Operating Profit Margin 10.80% 14.74% 4.93% N.A. N.A. Net Profit Margin 12.89% 15.19% 4.76% N.A. N.A. Return on Assets (ROA) 4.24% 4.26% 1.37% N.A. N.A. Return on Equity (ROE) 7.73% 7.03% 2.20% N.A. N.A. Return on Capital Employed (ROCE) N.A. N.A. 5.81% N.A. N.A. Current Ratio 1.58 1.33 1.49 18.76% 11.09% Quick Ratio 1.21 0.89 0.98 35.97% 9.87% Cash Ratio 0.89 0.59 0.61 50.44% 2.62% Working Capital Turnover ratio 1.36 2.44 1.83 44.26% 33.58% Solvency Ratios Debt to equity ratio 0.49 0.40 0.37 22.58% 7.62% Interest Coverage Ratio N.A. N.A. 0.62 N.A. N.A. Trading Ratios Market Cap / Sales 0.45 0.53 0.50 16.54% 6.73% Market Cap/ Net Worth 0.27 0.25 0.23 8.09% 7.03% Market Cap/PAT N.A. N.A. N.A. N.A. N.A. Market Cap/EBITDA N.A. N.A. 9.46 N.A. N.A. Trading Volume (shares) (avg. of 1 year) 24,501 16,026 19,426 52.88% 17.50% Trading Volume (shares) (high in 1 year) 3,24,247 2,55,462 2,15,599 26.93% 18.49% Trading Volume (shares) (low in 1 year) 40 411 567 90.27% 27.51% Ratio High/low trading volume 8,106.18 621.56 380.25 1,204.16% 63.46% Ratio High/average trading volume 13.23 15.94 11.10 16.98% 43.63% Source Money Control 4 P AGE
TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS Dec' 2015 Dec' 2014 Dec' 2013 Comments Shareholding Promoter shareholding 23.55% 23.55% 23.48% Public Institutional shareholding Public Others shareholding 76.45% 76.45% 76.52% Non Promoter Non Public Shareholding TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters Preferential issue to promoters Preferential issue to others GDRs issued by the Company Issue of ESOPs/Issue of shares other than Preferential allotment Source Annual Report The promoters have not sold/bought any shares in last one year No new equity shares were issued by the Company during the two year period from Dec 2013 to Dec 2015. The promoter shareholding increased from 23.48% as on Dec 13 to 23.55% as on Dec 15 due to market purchase of shares. No other major change was observed in the shareholding pattern during the said period. The promoters have not pledged any shares. No preferential issue of shares was made to the promoters in last three years No preferential issue of shares was made to other shareholders in last three years The Company did not issue and GDRs during in last three years The Company did not issue any shares to the employees under ESOP Scheme. Further, no new equity shares were issued by the Company in last three years 5 P AGE
Glossary Equity: The equity shares capital of the Company Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders funds of the Company Turnover: The revenue earned from the operations of the Company EPS: Earning Per Share is net profit earned by the Company per share Profit After Tax Number of outstanding shares P/E ratio: It is the ratio of the Company s share price to earnings per share of the Company / Price of each share Earnings per share Current Assets: Cash and other assets that are expected to be converted to cash in one year Fixed Assets: assets which are purchased for long term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment Total Assets: Current Assets + Fixed Assets Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future. Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges incurred during the year in relation to borrowed money. Long Term Liabilities: Long term liabilities are liabilities with a maturity period of over one year. Current Liabilities: A company's debts or obligations that are due within one year. Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over a period. Inventory Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business can turn its accounts receivable into cash during a period Accounts recievables Fixed Asset Turnover: The fixed asset turnover ratio is a financial ratio of net sales to fixed assets Fixed Assets Current Asset Turnover: The current asset turnover ratio is a financial ratio of net sales to fixed assets Current Assets 6 P AGE
Operating Profit Margin: Operating margin is a measurement of what proportion of a Company s revenue is left over after paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company s operating income (also known as operating profit ) during a given period by its sales during the same period. Operating profit Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales Net profit Return on Assets: ROA tells you what earnings were generated from invested capital (assets) Net profit Total Assets Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity. Net profit Net worth Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Net profit Total Debt Equity share capital Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. Current Assets Current Liabilities Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities. Current Assets Inventories Current Liabilities Cash ratio: The ratio of the liquid assets of a Company to its current liabilities. Current Assets Inventories Account Recievables Current Liabilities Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a Company's effectiveness in using its working capital. Current Assets Current Liabilities Debt to Equity ratio: The debt to equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a Company can pay interest on outstanding debt. 7 P AGE
Market Cap/Sales ratio: Market Cap/sales ratio, Price sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per share stock price by the per share revenue. / Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company s market cap to net worth. / Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company s market cap to net profit. / Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company s market cap to EBITDA. / Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year 8 P AGE
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