RAVI KUMAR DISTILLERIES LTD.(RKDL) Date :19 th October, 212 Stock Performance Details Background Current Price : Rs. 11.42** Face Value : Rs. 1 per share 52 wk High / Low : Rs. 19.45 / Rs. 8.69 Total Traded Volumes : 46,75 shares** Market Cap : Rs. 27 crore** Sector : Breweries & Distilleries EPS (FY212) : Rs..58 per share P/E (TTM) :. (x)^ P/BV (TTM) :.3 (x)^ Financial Year End : 1 st April 31 st March BSE Scrip Name : RKDL BSE Scrip Code : 533294 **as on18 th October, 212; ^ as on June 212 Shareholding Details June 212 The Puducherry based Ravi Kumar Distilleries (RKDL), is engaged in the business of manufacturing and trading of Indian made Foreign Liquor (IMFL) with presence in all segments viz: Rum, Whisky, Brandy, Gin and Vodka. RKDLs product portfolio includes brands like Capricon, Chevalier, 2 Barrels, Konark and Green Magic amongst others. RKDLs manufacturing facility is located in Puducherry with an installed capacity of 1.43 million cases per annum. Particulars Shareholding Nos. (%) Promoter & Promoter Group Holding 55,3,65 23.4 Total Institutional Holdings (FIIs & DIIs).. Public Holdings 1,84,69,935 76.96 Total 2,4,, 1. Strategy Focus The company acquired a 1% stake in Hyderabad based Liquor India Ltd for a total consideration of Rs. 28 million. This acquisition has been in line with the strategic focus of the company to expand its business operations. This acquisition will also add to the topline and bottomline of the company as Liquor India the acquired company has a five year contract with Tilaknagar Industries, to bottle its (Tilaknagar Industries) Indian Made Foreign Liquor (IMFL) During the last fiscal, the company had acquired Karnataka based, SV Distilleries at a total cost of Rs. 86 million. An Initiative of the BSE Investors Protection Fund 1
Financial Snapshot Particulars From the Research Desk of LKW s Gurukshetra.com Standalone Financials (Rs. In Million) Income Statement FY12 FY11 FY1 Net Sales / Income from Operations 568.9 493.4 483.5 Expenses Cost of material consumed 32.8 278.1 255.5 Change in Inventories -19.6-26.7-9.6 Employee Benefit Expenses 13.9 11.5 1.8 Administrative & Other Expenses 218.5 178.4 174. EBIDTA 52.9 56.4 52.7 Depreciation & Amortization 6.7 6.4 7.1 Finance Costs / Interest Expense 99.9 44.5 27.7 Other Income 74. 7.7 9.7 Profit After Tax (PAT) 13.8 5.8 17.5 Key Ratios Income Statement EBIDTA Margins (%) 9.3 11.4 1.9 PAT Margins (%) 2.4 1.8 3.7 Balance Sheet Networth 91.9 888.1 15.3 Non Current Liabilities / Loan Funds 588.7 664.2 283. Non Current Assets / Fixed Assets 57.6 59.6 63.1 Inventories 28.4 163.3 99. Debtors 154.5 169.2 25.7 Key Ratios Balance Sheet Debt : Equity (x).7.9 1.9 Book Value (BV) (in. Rs.) 37.5 37. 12. Return on Capital Employed (ROCE) (%) 7.8 5.4 13.6 Return on Equity (ROE) (%) 1.5 1.1 12.8 Debtors Turnover (x) 6.6 5.3 4.9 Inventory Turnover (x) 5.7 7.5 1.5 Valuation Ratios P/E (x) 19.8 16.2. P/BV (x).3.9. EV / EBITDA (x) 5.1 16.9. Source : Capitaline.com; as on year ended 31 st March, 212; Company Annual Report; For FY212, the turnover of the company increased by 15% on a y-o-y basis and stood at Rs. 568.9 million. As a percentage of sales the cost of raw material and purchase of finished goods together formed 78% of costs in FY212, which, as compared to FY211 was marginally higher. However, An Initiative of the BSE Investors Protection Fund 2
employee benefit expenses have increased by 21% on a y-o-y basis and stood at Rs. 13.9 million for the period under review as against Rs. 11.5 million in the previous fiscal. Resultantly, the EBIDTA decreased by 6.3% in FY212 to Rs. 52.9 million from Rs. 56.4 million in FY211. However, EBIDTA Margins which were 1.5% in FY211 declined by 12 basis points in FY212 and stood at 9.3%. The decline in operating margins prior to other income was on account of increase in overall cost of production especially driven by employee expenses and other manufacturing expenses. However, it would be prudent to note the jump of over Rs. 66.3 million in Other Income over 211-12 period which led to sharp increase in bottomline. The PAT as recorded by the company stood at Rs. 13.8 million as against Rs. 8.7 million in FY211 marking an increase of over 59% on a y-o-y basis. Resultantly, its margins too improved from 1.8% to 2.4% during period ended March 212. The company has appointed a new Company Secretary and Compliance Officer in August 212. For the same it had approached SEBI for an extension to conduct the AGM and has been granted extension for the same. There are certain key concerns which merit watching, given that the company has a small scale of business operations as against well established large players in the alcoholic beverages market. Further, concentration of business activities in Puducherry pose a threat to its revenues in the event there are any regulatory changes such as any directive to convert the region into a dry state, taxes imposed by the state Government, cultural issues etc. Nevertheless, the company is expanding its business operations in other geographies in the Southern Indian region through the inorganic route which will de-risk its business operations and profitability. During Q1 FY13, the net sales reported stood at Rs.115.1 million a decrease of 23% as compared to Rs. 149.5 million during the corresponding period in the previous year. Consequently, the EBIDTA and EBIDTA margins declined and stood at Rs. 6 million and 5.2% respectively during Q1 FY13 as compared to Rs. 17.1 million and 11.4% in Q1 FY12. Further, on account of lower operating profit and higher interest charges, company reported a loss of Rs. 1.5 million in Q1 FY13. Performance on the Bourses % 12 1 8 6 4 2 Stock Performance RKDL BSE Small Cap as on 18th October, 212 An Initiative of the BSE Investors Protection Fund 3
Peer Comparison The below mentioned table provides a snapshot of the financial performance of RKDLL alongside well established peers in the Breweries & Distilleries Industry. Standalone Financials (Rs. in Million) Particulars Ravi Kumar Distilleries Empee Distilleries Tilaknagar Industries Net Sales 568.9 11,438.7 4,572.6 EBIDTA 51. 1,65. 1,319.8 PAT 13.7 636.6 387.5 EBIDTA Margins (%) 9. 14. 28.9 PAT Margins (%) 2.4 5.6 8.5 P/E (x)^. 2.6 13.7 P/BV (x)^.25 2.3 1.7 Debt : Equity (x).7.9 1.1 EV / EBITDA (x)^ 4.6 11.7 7.6 Source : Capitaline Database, ^TTM as on June 212; About the Industry The Alcoholic Beverages Industry in India comprises Indian Made Foreign Liquor (IMFL) and Country Liquor. IMFL comprises Whisky, Rum, Brandy, Gin and Vodka etc. Whisky accounts for a large portion of the 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 growth rate is much higher in the low priced segment as compared to the upper segment. The 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 on an uptrend over the past few years and is expected to improve further. The 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. 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 the 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 remain, though the demand scenario is sound, making its prospects satisfactory. An Initiative of the BSE Investors Protection Fund 4
Financial Graphs Net Sales 6 Rs. in Million 55 5 45 483.5 493.4 568.9 4 FY21 FY211 FY212 EBIDTA & EBIDTA Margins 58 15 Rs. in Million 56 54 52 5 1.9 11.4 9.3 52.7 56.4 52.9 FY21 FY211 FY212 1 5 % EBIDTA EBIDTA Margins 2 PAT & PAT Margins 3.7 4 Rs. in Million 15 1 5 18. 8.7 1.8 2.4 13.8 3 2 1 % FY21 FY211 FY212 PAT PAT Margins An Initiative of the BSE Investors Protection Fund 5
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