JAGATJIT INDUSTRIES LTD.(JIL) Date : 13 th September, 212 Particulars Promoter & Promoter Group Holding Total Institutional Holdings (FIIs & DIIs) Stock Performance Details Current Price : Rs. 52.15** Face Value : Rs. 1 per share 52 wk High / Low : Rs. 79. / Rs. 49.6 Total Traded Volumes : 1,799 shares** Market Cap : Rs. 257 crore Sector : Breweries & Distilleries P/E (TTM) : NA (x)^ P/BV (TTM) : 1.2 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : JAGATJITIND BSE Scrip Code : 57155 **as on13 th September, 212; ^ as on June 212 Shareholding Details June 212 Shareholding Nos. (%) 1,74,34,28 37.78 3,72.1 Public Holdings 35,3,94 7.59 Shares Held by Custodians against which Depository Receipts have been issued 2,52,1, 54.63 Total 4,61,48,112 1. Source : Company website as on 13 th September, 212 Strategy Focus Background Jagatjit Industries Limited has presence in the Indian Made Foreign Liquor (IMFL) space and was set up in the year 1944, in the erstwhile State of Kapurthala. JIL manufactures the entire range of alcoholic beverages i.e. Whisky, Rum, Gin and Vodka. The Company's market share was around 8% (as per Annual Report 21-11) of IMFL industry with ARISTOCRAT, ARISTOCRAT PREMIUM, AC BLACK, BONNIE SPECIAL, BINNIES and AC SEKC as the leading brands available across the country. Besides manufacturing and marketing alcoholic beverages, the company is also into manufacturing of malt, malt extract, malted milk foods, milk powder, ghee, glass and pet containers. The company sold brands Viva and Maltova to Smithkline Beecham Consumer Healthcare for Rs. 826.5 million in fiscal year 2. The company has in-house glass container manufacturing facilities for its product line. The Company has an integrated distillery manufacturing process. It has in-house facilities to produce molasses and non-molasses based potable alcohol from fully automated Distillation Plants. The manufacturing facilities are located in Kapurthala, Punjab and the other units of the company and its associate companies are located across India. The Company's mainstay continues to be the Liquor business as majority of the revenues accrues from the same. The Glass Division basically caters to the internal demand of the Company, and has also contributed to revenue generation. The company is also expecting the malted milk food division to grow and that could lead to an improvement in the overall margins of the company. JIL had launched Ice Freeze Vodka in December 211 in the domestic market and it targeted the young Indian drinker An Initiative of the BSE Investors Protection Fund 1
Financial Snapshot Particulars Standalone Financials (Rs. In Million) Income Statement FY12 FY11 FY1 Net Sales / Income from Operations 1,786.1 9,741.2 6,8.4 Expenses Cost of material consumed 5,287.8 4,735.6 3,128.2 Change in Inventories -153.4-5.4 59.5 Employee Benefit Expenses 796.1 728.5 545.9 Administrative & Other Expenses 4,938.9 4,112.4 2,871.5 EBIDTA -83.3 215.1 194.5 Depreciation & Amortization 246.3 287.5 193.4 Finance Costs / Interest Expense 221. 217. 229.4 Other Income 835.3 64.1 274.7 Profit After Tax (PAT) 351. 252.6 64.6 Key Ratios Income Statement EBIDTA Margin (%) -.8 2.2 2.9 PAT Margins (%) 3.3 2.6.9 Balance Sheet Networth 3,648.5 3,415.1 3,234.9 Non Current Liabilities / Loan Funds 68.4 1,788. 1,575.7 Non Current Assets / Fixed Assets 3,234.8 3,437.9 3,67.7 Inventories 1,441.5 1,177.5 1,69.9 Debtors 1,99.4 1,76.1 1,452.6 Key Ratios Balance Sheet Debt : Equity (x).3.9.7 Book Value (BV) (in Rs.) 79.1 43.7 38.2 Return on Capital Employed (ROCE) (%) 11.9 7.4 7.4 Return on Equity (ROE) (%) 9.6 2.2 2.2 Debtors Turnover Ratio (x) 8.1 8.6 7.1 Inventory Turnover Ratio (x) 11.4 12.1 8.2 Valuation Ratios P/E (x) NA 13. 44.3 P/BV (x).7 1.6 1.6 EV / EBDITA (x) NM 5.5 8.9 Source : Capitaline Database, as on 31 st March, 212; NA = Not Applicable; Not Meaningful From the Research Desk of LKW s Gurukshetra.com For the year ended 31st March, 212, the company reported Net Sales or Income from Operations of Rs. 1,786.1 million compared to net sales or income from operations of INR 9,741.2 million last year. Loss from operations before other income, depreciation, finance costs and exceptional items was Rs. 83.3 million compared to profit of Rs. 215.1 million last year. This could be attributed to the increase in inventories and other expenses which has resulted in poor operational performance. Further, the increase in overall cost of manufacturing was to the extent of 24% which resulted in pressure on the margins as well. An Initiative of the BSE Investors Protection Fund 2
As selling and marketing is an important aspect of the breweries and distilleries industry the same as a per cent of sales increased by nearly 2 basis points from 15.9% in FY211 to 17.8% in FY212. Net Profit as reported was Rs. 351. million compared to INR 252.6 million last year. The increase in profit after tax has been on account of the sharp rise in other income by over 3% which resulted in a 38% increase in Net Profits thereby leading to an improvement in the margins. However, if the Net Profit as reported is adjusted for extraordinary items which include profit from sale of property, the company has made a loss of Rs. 36.8 million for the period under review. The Other income which stood at Rs. 835.3 million for FY212 inclusive of the gain made by the company from sale of property. In terms of segment revenues, the Beverages segment which remains the core business activity contributed nearly 8% followed by Packaging segment 11%, Food about 7% and the others contributed to the balance revenues generated from operations. The long term borrowings of the company as per the revised Schedule VI accounting methodology indicates a decline from Rs. 1,788 million in FY211 to Rs. 688 million in FY212. Resultantly, the Debt: Equity Ratio has improved from.7 (x) in FY211 to.3 (x) in FY212. The cash and bank balance stood at Rs. 551.6 million in FY212 as compared to Rs. 385.6 million last year and appears to be on account of the profit made by the company on sale of properties. The company has issued GDR s which include shares to the extent of 2,52,1, and excluded this while computing the total paid up equity capital as these GDR s do not carry voting rights. During Q1 FY13, JIL reported sales of Rs. 2,489.1 million as against Rs. 2,591.9 million in Q1 FY12 which marked a decline of 4% on a y-o-y basis. Despite this the EBIDTA increased by 3.5% from Rs. 142.8 million to Rs. 147.9 million in Q1 FY12 on account of an overall reduction in total expenditure that was led by decline in inventory costs and selling and marketing costs. Resultantly, the Reported Net Profit was Rs. 46.3 million for Q1 FY13 higher by 5% on account of lower tax outflows. Performance on the Bourses Stock Performance as on 13th September 212 % 12 1 8 6 4 2 - Jagatjit Industries BSE Small Cap An Initiative of the BSE Investors Protection Fund 3
Peer Comparison The company is a leading player in the alcoholic business segment, the following tables provides a snapshot of its operational performance in FY 212 compared to some of its peers in the industry. (Rs. In Million) Standalone Financial Particulars Jagatjit Industries Radico Khaitan Tilaknagar Industries Net Sales 1,786.1 11,438.7 4,572.6 EBIDTA -83.3 1,595.5 1,319.8 PAT 351. 636.6 387.5 EBIDTA Margins (%) -.8 13.9 28.9 PAT Margins (%) 3.3 5.6 8.5 P/E (x) **. 2.6 13.7 P/BV (x) **.7 2.3 1.7 Debt : Equity (x).3.3.2 EV / EBIDTA (x)** NM 1.9 5. Source : Capitaline Database; ** TTM as on June 212; NM Not Meaningful About the Industry Alcoholic Beverage industry in India comprises Indian Made Foreign Liquor (IMFL) and Country Liquor. IMFL consists of Whisky, Rum, Brandy, Gin and Vodka etc. Whisky comprises of large portion of IMFL market and accounts for nearly 6% of the market followed by Rum at around 2% and Brandy at around 15%. White spirits viz. Vodka, Gin and white Rum account for the balance of 5% only. The total IMFL industry in India is presently estimated at around 18 million cases growing @ 12-15% per annum. The increase rate is much higher in the low priced segment as compared to the upper segment. Country Liquor segment is about 17 million cases per annum in the state of Punjab. The industry is growing @ 12-15% per annum and the growth is likely to continue in the near future. The consumption of liquor in India has been in an uptrend in the past few years and is expected to improve further. Alcoholic Beverage industry in India is highly regulated. The State Governments control the production, Excise Duty structures and the distribution. Some State Governments also control the prices. The incidence of duties is very high and there is no unanimity of policies amongst various States. The advertising of alcoholic beverages is not permitted in India. (source : Company Annual Report ) Despite this, rising disposable incomes, increased exposure coupled with a large youth population, the prospects of the sector appear to be promising. In the premium segment, the major player is United Spirits while the other players include Radico Khaitan, Empee Distilleries and Tilaknagar Industries. Outlook The company is well positioned to tap the trend of increasing alcohol consumption. It had planned to enter the premium segment, but with the dominance of already well established brands the company's prospects therein remain uncertain. Increase in contribution from the glass and food segment should provide satisfactory diversification to its revenue model which augurs well over the longer term. However, even within the food segment, the company competes with well established players which merits noting. Threats from higher taxes and increasing regulation thus remain, though the demand scenario is also positive and hence the prospects appear satisfactory. Disclaimer All information contained in the document has been obtained by LKW s Gurukshetra.com from sources believed to be accurate and reliable. Although reasonable care has been taken to ensure that the information herein is true, such information is provided as is without any warranty of any kind, and LKW s Gurukshetra.com in particular makes no representation or warranty express or implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and LKW s Gurukshetra.com shall not be liable for any losses incurred by users from any use of this document or its contents in any manner. Opinions expressed in this document are not the opinions of our company and should not be construed as any indication of our recommendation to buy, sell or invest in the company under coverage. An Initiative of the BSE Investors Protection Fund 4
Financial Graphs Net Income from Operations 12, Rs. in Millions 1, 8, 6, 4, 2, Net Sales / Income from Operations 9,741 1,786 6,8 FY 21 FY 211 FY 212 6,8 9,741 1,786 EBITDA & EBITDA Margins Rs. in Millions 3 2 1-1 FY 21 FY 211 FY 212 EBIDTA 194.5 215.1-83.3 EBIDTA Margin (%) 2.9 2.2 -.8 4 2-2 % PAT & PAT Margins Rs. in Millions 4 3 2 1 FY 21 FY 211 FY 212 PAT 65 253 351 PAT Margins (%).9 2.6 3.3 4 2 % An Initiative of the BSE Investors Protection Fund 5
Disclosure Each member of the team involved in the preparation of this report, hereby affirms that there exists no conflict of interest. The report has been sponsored and published as part of Initiative of BSE s Investors Protection Fund About Us LOTUS KNOWLWEALTH (LKW), commenced business in 199 and is currently engaged in providing WEALTH ADVISORY, CORPORATE ADVISORY and ECONOMIC & FINANCIAL RESEARCH & CONTENT services. LKW s ECONOMIC & FINANCIAL RESEARCH & CONTENT division currently generates Reports on Economic & Industry Trends, Global & Indian Equity Markets, Fundamental Analysis of IPOs, Companies & Industries, Management Meeting Reports, Balance Sheet & Financial Analysis Reports and an Economic Political and Sentiment Barometer. LKW also conducts Capital Market related Training Programs and has cutting edge expertise in Mutual Fund Analysis and specializes in Grading of Mutual Fund Schemes and IPOs. GURUKSHETRA.com is an online initiative of LKW that focuses on Personal Finance while theipoguru.com is India s Premier Primary Market (IPO) Portal. Contact Us LOTUS KNOWLWEALTH Pvt. Ltd. Regd.Office : B Wing, 55-56, Fairlink Centre, Off Andheri Link Road, Andheri (W), Mumbai 4 53 Email : consulting@lotusknowlwealth.com Tel : 22-41 5482 41 5483 Website : www.lkwindia.com www.gurukshetra.com An Initiative of the BSE Investors Protection Fund 6