Page 1 of 5 Company Profile Borax Morarji Ltd was incorporated on ugust 27, 1963 in Mumbai and commenced business on September 21, 1963. It was originally promoted jointly by The Bharamsi Morarji Chemical Co. Ltd., a large scale fertilizer and chemical manufacturer and Borax Holding Ltd (UK) apart of the Rio Tinto Group, US with an objective to undertake the manufacturing of various types of Heavy Inorganic Chemicals. It offers a range of quality products at a reasonable price. This has enabled the company to maintain its market share at 75% of the Indian boron chemicals market. The promoter group holds about 63.7% of the total shareholding, while the rest of the shareholding lies with institutional (0.7%) and non-institutional shareholders (36.3%). Stock Price Last Close Price 37.00 (25/01/2016) Market Cap (Cr.) 17.15 (31/12/2015) Price in Rs. 52 Wk High/Low 47.95/21.10 vg. Volume 3534.23 (1 Mo) (Rescaled to 100 for ease of comparison) Mr. L. N. Goculdas is the Chairman of the company, H T Kapadia is Chief Executive Officer and Manager, and Dilip S Nagle is the Company Secretary and Compliance Officer of the company. Business Overview Borax's operations relate to manufacture of Boron Based Chemicals and Wind Power Generation. It has been manufacturing boron based chemicals at mbernath near Mumbai, since 1964. Glass, Ceramic and Pharmaceutical Industries are the major consumers of boron chemicals. The nnual production capacity for all grades of Borax and Boric cid are 25000 Metric Tonnes and 8000 Metric Tonnes respectively. The company has setup two Windmill Farms consisting of 7 Wind Turbine Generators having a total generation capacity of 1.75 Megawatts. Power from the Windmills is used for internal consumption and for sale to the grid. The company is an active supporter of efforts to promote nonconventional energy sources. The company earns 99.4% of its total revenue from chemical division. The long-term outlook of the company s products continues to be encouraging but the shortage of working capital finance and nonavailability of raw material has adversely affected the performance of the company. With a view to overcome these difficulties, Management has now developed additional new sources of supplies for raw materials which are expected to reduce cost of raw materials and improve the supply chain efficiency. The company is also contemplating Custom manufacturing of speciality chemicals at Dahej. Financials Revenue 75.13 79.24 63.94 - - Gross Margin % 20.41 14.36 28.80 - - Operating Income 5.59-0.36-4.38 - - Operating Margin % 7.45-0.45-6.85 - - Diluted EPS 3.06-6.58-6.46 - - Book Value Per Share 37.74 37.74 31.40 24.95 24.95 Operating Cash Flow 5.05 1.75 15.71 - - Capital Expenditure -3.47-6.27-6.41 - - Free Cash Flow 1.58-4.53 9.30 - - Profitability Return on ssets % 2.00-4.00-4.00 - - Return on Equity % 8.00-19.00-23.00 - - sset Turnover 1.15 1.17 0.98 - - Net Margin % 2.00-4.00-5.00 - - Financial Leverage 3.91 4.84 5.53 - - Financial Health except Debt/Equity (Ratio) Long Term Debt 27.40 12.44 13.53-4.70 Total Equity 17.06 14.19 11.27-0.76 Debt/Equity - - - - - Working Capital 23.98 0.30-7.98 - -30.72 Report as of 25-Jan-2016. Initiative of the BSE Investors Protection Fund. 2015 Morningstar. ll Rights Reserved. Please refer to the disclaimers on the last page of this report.
Page 2 of 5 Income Statement Total Revenue 75.13 79.24 63.94 - - Cost of Revenue 59.79 67.86 45.53 - - Gross Profit 15.33 11.38 18.41 - - Operating Expense 9.76 11.74 22.94 - - Operating Income 5.59-0.36-4.38 - - Pre-tax Income 2.09-3.82-4.38 - - Tax Provision 0.70-0.85-1.46 - - Minority Interests - - - - - Balance Sheet Stock Holders Equity 17.06 14.19 11.27-0.76 Long Term Debt 27.40 12.44 13.53-4.70 Total Non-Current Liabilities 29.80 14.90 14.47-5.94 Payables 12.24 12.02 15.02-21.32 Total Liabilities 49.59 54.45 51.08-58.01 Net PPE 22.50 26.70 31.06-30.14 Goodwill and other Intangible ssets 0.12 0.13 0.15-0.11 Total Investments 0.25 0.24 0.24-0.01 Total Non-current ssets 22.88 28.79 33.72-37.42 Trading and Other Receivables 12.39 16.61 8.05-10.55 Inventory 29.90 21.25 18.18-8.59 Cash and Cash Equivalents 1.48 1.99 2.40-2.20 Total ssets 66.65 68.64 62.35-58.76 Cash Flows Depreciation and mortization 2.01 2.06 2.01 - - Change in Working Capital -0.66 0.71 14.80 - - Operating Cash Flow 5.05 1.75 15.71 - - Capital Expenditure -3.47-6.27-6.41 - - Investing Cash Flow -3.42-6.01-6.31 - - Net Common Stock Issuance - - - - - Net Issuance Payments of Debt 1.32 9.08-5.51 - - Cash Dividends Paid -1.12-0.67-0.01 - - Financing Cash Flow -2.32 4.77-8.99 - - Changes in Cash -0.69 0.50 0.41 - - Report as of 25-Jan-2016. Initiative of the BSE Investors Protection Fund. 2015 Morningstar. ll Rights Reserved. Please refer to the disclaimers on the last page of this report.
Page 3 of 5 Financial Performance Borax's total revenues dropped by 19.3% to INR 63.94 crores in FY 2013 as compared to a year ago. The main reason for the lower turnover during the year is uneven availability of raw material as also the increased cost of imported raw material and resultant pressure on cash-flow. Though the company has been able to transfer the major increase in the cost of raw material to the customers, this has an adverse effect on the total sales of the company. The company's net loss stood at INR 2.92 crore in FY 2013, registering a decline of 1.7% as compared to the previous year. Revenue Growth Key Risks Borax's risks include fluctuations in the Indian Rupee rates versus other currencies, fluctuation in commodity prices, shortage of working capital finance, non-availability of raw material and slowdown in domestic and global economy. It s most significant exposure relates to the US Dollar, since the key raw material, Fluorspar is imported. Gross Margin Competitors Tata Chemicals Ltd and Diamines nd Chemicals Ltd are two of the competitors of the company. Tata Chemicals Ltd is a global company with interests in businesses that focus on life: living, industry and farm essentials. It is the world s second largest producer of soda ash with manufacturing facilities in sia, Europe, frica and North merica. The company s industry essentials product range provides key ingredients to some of the world s largest manufacturers of glass, detergents and other industrial products. Tata Chemicals revenue rose by 8.23% in FY 2015 to INR 17202.94 crores versus last year. DCL has been the pioneer and the only one in manufacturing of a range of Ethyleneamines (Es) in India. It has evolved products manufactured 'first time' in India and also pioneered to 'develop' a market for the same. Over the years, the company has established its own presence in the market and is successfully catering to the needs of Industries. The company's revenue fell by 11.01% to INR 39.09 crores in FY 2015 versus last year. Operating Margin Report as of 25-Jan-2016. Initiative of the BSE Investors Protection Fund. 2015 Morningstar. ll Rights Reserved. Please refer to the disclaimers on the last page of this report.
Page 4 of 5 Industry Overview The chemical industry in India is a key constituent of Indian economy, accounting for about 2.11% of the Gross Domestic Product. In terms of volume of production, Indian chemical industry is the third largest producer in sia and sixth largest in the world. Indian chemical industry generated business worth INR 77891.15 crores in 2014. Bulk chemicals account for 39% of the Indian chemical industry, followed by agrochemicals (20.3%) and specialty chemicals (19.5%). The wind power industry is involved in the design, manufacture, construction, and maintenance of wind turbines. lthough the industry is small compared to those of the conventional power generation technologies including hydro, coal, natural gas, and nuclear, it is growing at a much faster rate. Price/Earnings Trailing Returns Quarterly Results except EPS (Rs.) 9-2014 12-2014 3-2015 6-2015 9-2015 Revenue 1.41 2.11 1.16 0.97 0.96 Other Income 0.01 0.01 0.05 0.01 - Total Income 1.42 2.11 1.20 0.97 0.96 Expenditure -1.58-2.58-1.36-1.11-1.02 Interest -0.09-0.08-0.08-0.08-0.08 PBDT -0.25-0.55-0.23-0.22-0.13 Depreciation -0.05-0.05-0.01-0.03-0.03 PBT -0.29-0.60-0.24-0.25-0.17 Tax - - 0.16 - - Net Profit -0.29-0.60-0.08-0.25-0.17 Equity 0.45 0.45 0.45 0.45 0.45 EPS -6.46-13.25-1.84-5.94-4.08 CEPS -5.44-12.10-1.67-4.83-2.93 OPM (%) -11.40-21.97-13.10-14.19-5.85 NPM (%) -20.79-28.42-7.17-25.97-17.31 *Standalone figures Return on Invested Capital (ROIC) Report as of 25-Jan-2016. Initiative of the BSE Investors Protection Fund. 2015 Morningstar. ll Rights Reserved. Please refer to the disclaimers on the last page of this report.
Page 5 of 5 Important Disclaimers This Research Report is current as of the date on the report until it is replaced, updated or withdrawn. This report may be withdrawn or changed at any time as other information becomes available to us. This report will be updated if events affecting the report materially change. This research on securities [as defined in clause (h) of Section 2 of the Securities Contracts (Regulation) ct, 1956], such research being referred to for the purpose of this document as Investment Research, is issued by Morningstar Investment dviser India Private Limited ( MI ). Please note that this Investment Research is intended for educational purposes only; it is not intended to be a legal, tax, securities or investment advice or offer or solicitation or call-to-action for the purchase or sale of or otherwise any dealing in a security. You should seek the advice of a financial professional and your legal, tax, business or other consultant, and read all relevant issue documents pertaining to the security concerned, including without limitation, the detailed risk factors involved in the investment, before making an investment decision, so as to ensure, among other things, that the security is suitable based on your particular needs and circumstances. Please note further that this Investment Research may not be construed as a representation with respect to a security, regarding the legality of investing in the said security, under the applicable investment or similar laws or regulations of any person or entity accessing this Investment Research. Please note that investments in securities are subject to market and other risks and there is no assurance or guarantee that your intended investment objectives will be achieved. Past performance of a security may or may not be sustained in future and is no indication of future performance. s the price / value / interest rate of a security fluctuates, the value of your investments in the said security and in the income, if any, derived therefrom may go up or down. It is to be distinctly understood that MI, its affiliates, and its officers, directors and employees (i) are not responsible for any trading decisions, damages or other losses related to the Investment Research or its use and also that (ii) they do not take any responsibility for the accuracy, timeliness and/or completeness of the Investment Research, or for the financial soundness of any security. MI is registered with the Securities and Exchange Board of India under the SEBI (Investment dvisers) Regulations, 2013, vide Registration number IN000001357, dated March 27, 2014, and in compliance of the aforesaid regulations and the SEBI (Research nalysts) Regulations, 2014, it carries on the business activities of investment advice and research. MI has not been the subject of any disciplinary action by SEBI or any other legal/regulatory body. MI is a wholly owned subsidiary of Morningstar ssociates LLC, which is a part of the Morningstar Investment Management group of Morningstar, Inc., and Morningstar, Inc. is a leading provider of independent investment research that offers an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. In India, MI has only one associate, viz., Morningstar India Private Limited, and this company predominantly carries on the business activities of providing data input, data transmission and other data related services, financial data analysis, software development etc. The author/creator of this Investment Research ( Research nalyst ) or his associates or his relatives does/do not have (i) any financial interest in the subject company; (ii) any actual/beneficial ownership of one per cent or more securities of the subject company, at the end of the month immediately preceding the date of publication of this Investment Research; and (iii) any other material conflict of interest at the time of publication of this Investment Research. The Research nalyst or his associates or his relatives has/have not received any (i) compensation from the subject company in the past twelve months; (ii) compensation for products or services from the subject company in the past twelve months; and (iii) compensation or other benefits from the subject company or third party in connection with this Investment Research. The terms and conditions on which MI offers Investment Research to clients, varies from client to client, and are spelt out in detail in the client agreement.