AMRIT BANASPATI COMPANY LTD

 

Amrit Banaspati is a 40 year old vegetable oil company based in Rajpura ,Punjab.

Company is selling edible  oil from Groundnut, Cottonseed, Rice Bran, Soyabean, Mustard, and Sunflower . Company’s different products are marketed under the  brands ‘GINNI’ ,‘GAGAN’and  ‘ MERRIGOLD’ .Company is mainly operating with three products categories, viz – Lifestyle Products, Premium Products and Consumer Products. Under the lifestyle products category  ,company selling GINNI NUTRI DELIGHT NUGGETS, MERRIGOLD TABLE MARGARINE and MERRILITE vegetable fat. Under the premium products category ,it is offering GINNI GOLD REFINED SUNFLOWER OIL, REFINED GROUNDNUT OIL, REFINED COTTONSEED OIL and REFINED RICEBRAN OIL  . Its offering under Consumer products category includes GAGAN VANASPATI, GAGAN GOLD VANASPATI , GINNI PLUS REFINED OIL , GINNI REFINED PALM OIL , and GINNI REFINED SOYABEAN OIL.  Company having a good dealer network of 1400 dealers  in 850 cities across India .Its products are well established and having good brand loyalty . Since major part of its raw material ( Crude Palm Oil) is imported from foreign countries, considering the current  exchange rate scenario, company is in a good position . Company posted a turnover of Rs.235 Cr in latest qtr with a net profit of  Rs.4 Cr . It is expected to close the full year with an EPS close to Rs.18/- .One may consider buying in small lot at CMP of Rs.114/-

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ROTO PUMPS - REPEAT

Earlier Recommended as a BUY @ Rs.80 and BOOK PROFIT above  Rs.125/-

Reiterating BUY @ CMP of Rs.99/-
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Roto Pumps started its operations in 1968 as a

producer of progressive cavity pumps , whose

demand met by import till then.

Company  also producing Twin Screw pumps and

Centrifugal pumps in its two most modern facilities

located at Noida.Roto distributing its products

around the globe and it has marketing offices in

Australia and UK. Company also having

strong marketing network in India.Progressive

cavity pumps are used to pump liquids with high

solid content and flow needs to be controlled .These

type of pumps are generally used in industries like

Beverages,Pharma,Food processing,dairy,Effluent and

sewage treatment and mining etc..Other type of

pumps made by the company are used in sectors

like irrigation,agriculture..etc. Half of its sales

coming from export and this itself is a testimony

for the quality of Roto’s products.Roto is going

through a capacity expansion programme and the

benefits of it will reflect in the near future.

Now company’s customers are posting good business

which will help the company too.This is one of the

cheaply valued listed player in this sector compared

with KSB Pumps,WPIL,Kirloskar Brothers,Sakthi Pumps

..etc . Roto has  a tiny equity base of 3 crore where

promoters are holding almost 70%.Last year company

posted a turnover of Rs.52 crore and a net profit

of Rs.3.3 crore and an EPS of RS.10.7 .On a continuous

basis ,for the past four years company increasing

its sales and net profit.For the Six month ended

September 2010 ,Roto posted an EPS of Rs.8.80/- 

A good Buy for long term at CMP below Rs.100/-

Raw material price is a major factor to watch.

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WALL STREET JOURNAL ON ARIES AGRO

Aries agro is one of my earlier recommendation @ Rs.108/- .After touching a high of Rs.203/- ,now it is quoting around Rs.159/- .In the latest September qtr ,company posted healthy growth in top and bottom line.The good monsoon we got in this season is also expected to boost company's prospects.Long term investors can still BUY it at current rate . In my previous report ,I have mentioned the efforts taken by the company to introduce their products to farmers from remote rural areas by using Krishi Vigyan Vahan (KVV).Below is a small write up published by WALL STREET JOURNAL about this initiative:



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Fertilizers on Wheels

By POH SI TENG

It's a few hours before sundown when a white and lime green truck rolls into Vanukuru village, located in the south eastern Indian state of Andhra Pradesh. The squeaky clean vehicle, equipped with a flat screen television and a loud speaker, stands out among old, grimy shops at the town center where it's parked. The truck, named "Krishi Vigyan Vahan," which means farmer's knowledge carrier, soon draws a crowd of about 40 farmers who have just returned from the fields. Before long, a shaded booth displaying a colorful array of fertilizer products is set up. Then, a video starring local film stars promoting fertilizers is screened on the television and blasted through the loud speaker.

As the crowd begins to grow, a marketing agent from a fertilizer company starts talking about the importance of zinc, iron, boron and other micronutrients to plant growth, plugging his products in the process. He is flanked by two other company representatives, a loyal customer and a village sarpanch – elected head of the village – who lends his legitimacy to the promotional event.
This scene has been replicated in more than 2,600 villages and satellite towns across India. It is part of a marketing strategy by the Mumbai-based fertilizer company Aries Agro Ltd. to tap into new markets which are the remote rural areas that do not have fertilizer retail stores and where there are improved irrigation systems.
Since its launch in June, Aries Agro, which focuses on micronutrients but also produces secondary nutrients and packaged water-soluble primary fertilizers, has rolled out more than 70 such trucks across the country. The trucks are tracked via satellite and the data -- net weight, distance covered, time spent at each stop – is compiled daily at the Mumbai headquarters.
"By actually going on the mobile format, which is basically my rural retail vehicles, I'm covering six to seven villages a day. So my cost is getting spread over six or seven villages, rather than an entire investment on physical infrastructure in one village," says Rahul Mirchandani, executive director of Aries Agro. The company has so far invested 48.80 million rupees ($1.05 million) into the vehicles and has forked out another 34,000 rupees towards operational costs per vehicle each month.
Aries Agro, a medium-sized fertilizer company, has a production capacity of 84,000 tons of micronutrients and 60,000 tons of secondary nutrients and water-soluble primary fertilizers per year. Last year, the company made a net profit of 57.12 million rupees.
Primary fertilizers consist of nutrients such as nitrogen, phosphorus and potassium that are needed in large quantities for plant growth, while secondary nutrients such as calcium, magnesium and sulphur and micronutrients such as zinc, boron, iron and manganese are used in smaller quantities.
India is one of the largest producers of primary fertilizers in the world –second largest producer of nitrogen after China and third largest producer of phosphate after China and the U.S., according to the Fertiliser Association of India or FAI. From 2008 to 2009, the country produced 33 million tons of primary fertilizer products. The estimated total consumption of primary fertilizer products in the country increased from 45.96 million tons in 2007-2008 to 50.8 million tons in the last fiscal year. There is more demand than domestic supply of primary fertilizers.
As for micronutrients, the annual production of zinc sulphate alone was about 88,000 tons in 2008-2009, according to FAI.

"I used to travel (to the fields) during the agricultural season and I see the demand (for micronutrients) is increasing," says Kanak M. Sarkar, president of the Indian Micro Fertilizers Manufacturers Association, adding the increase in demand stems from years of product demonstrations by fertilizer companies.
According to Mr. Sarkar, in the recent years, large primary fertilizer companies have noticed this and are also entering the market, competing with 400 to 450 smaller micronutrient companies in the country.
"We have to fight this problem. I cannot foresee what will happen in the future. (But) we cannot just leave this field open for them," says Mr. Sarkar.
But for Mr. Mirchandani from Aries, larger companies entering the micronutrient production business would only expand the market and create more demand. Smaller companies, he says, would however, have to provide value-added bonuses to their products in order to compete. For Aries, it's letting farmers book for products off the truck and providing accident and health insurance coverage for purchases -- a 50,000 rupees coverage for a purchase worth 1,000 rupees.
"It's useful to buy (from the truck), because we are getting a receipt, insurance coverage and the product for 1,000 rupees. It's worth it," says Nellore Chandramouli, a 52-year-old farmer in Vinjanampadu village in Andhra Pradesh.
But the vehicles are still a substantial investment -- more than eight times the cost of outsourcing promotional programs through an external company. Aries spent about a million dollars on the trucks this year and $122,508 while outsourcing promotions last year. Company executives say promotions when outsourced, were smaller in scale and had less reach to remote rural areas.
Coromandel Fertilisers Ltd., one of the big players in fertilizer production in India, spent about 500 million rupees in setting up 412 retail outlets in Andhra Pradesh, selling fertilizers, pesticides, veterinary products and household items. The venture has since brought home 2 billion rupees in revenue in the last fiscal year. Company representatives say they expect the retail stores to break even in 2010.
"The breadth of Andhra Pradesh is being covered by these centers now. We're moving now into Tamil Nadu, Maharashtra and Karnataka in the years to come. So the idea is to get direct retailing to the farmer," says V. Ravichandran, managing director of Coromandel Fertilisers.
In addition to its retail stores, Coromandel Fertilisers, which has a manufacturing capacity of 3.1 million tons per year of fertilizers, has also been marketing its products by sending vehicles to remote parts of Andhra Pradesh. The company has a ground staff of 1,200 individuals connected to villages throughout the state.
But be it via retail stores, trucks, farmers meetings or media advertising, fertilizer companies, big and small, primary, secondary and micronutrient producers, agree that having product demonstrations is the key to selling new products and expanding the market.
"We believe in approaching the farmers directly," says Mahesh Gopal Shetty, director of the Karnataka-based Multiplex Group of Companies, which produces micronutrients, bio fertilizers, organic manure, pesticides and bio pesticides. "Seeing is believing for these guys."

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DFM FOODS - RESULT UPDATE

DFM FOODS POSTED A TURNOVER OF Rs.29 cr V/S Rs.16 Cr AND A NET PROFIT OF Rs 2.13 Cr V/S Rs.1 Cr IN SEPTEMBER QTR .HALF YEAR EPS IS Rs 3.41 v/s Rs.2.19 .ONE CAN HOLD IT FOR LONG TERM

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VIMAL OIL AND FOODS - RESULT UPDATE

VIMAL OIL AND FOODS POSTED A TURNOVER OF Rs.248 cr V/S Rs.148 Cr AND A NET PROFIT OF Rs 2.5 Cr V/S Rs.1 Cr IN SEPTEMBER QTR.ONE CAN HOLD IT FOR LONG TERM

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SPICE JET - MOVING TO THE NEXT ORBIT

Spicejet is one of the big success stories in aviation industry of India in recent past.This best low cost airline in South Asia was originally promoted by Ajay Singh and the Kansagra family . Currently Spicejet claims a 12 % market share in Indian aviation industry. Recent entry of Kalanidhi Maran as the main promoter is expected to take the company to the next level. Financial muscle and other influence of the new promoters are expected to help the company which operates in a highly regulated industry. Aviation Industry is showing some early signs of revival worldwide . When we take it in Indian perspective,there are two positive factors .First one is the comparatively better situation of growth in Indian industry as a whole, which will ensure higher business travels . On the other side , since the world economy is still under stress, the price of ATF  is not going beyond affordable  level. Company recently started its international operations with the launch of Chennai-Colombo and Delhi-Kathmandu routes  and the new management is expected to pay much attention in this line .  Mr Neil Mill has recently appointed as the new CEO of  Spiceject. He is coming to the company with a 12 year experience with ' easyJet'  one of  the Europe’s  most successful low cost carriers.He  also worked with  'Fly Dubai' , the state-run low cost carrier of Dubai. Spiceject has taken various efforts in recent past to cut cost  and improve load factor .Even if its equity will be increased after the conversion of warrants ,Spicejet is  expected to generate higher profit and scale the business to new levels which will justify the increase in equity. In last September quarter, company posted a loss of Rs.101 Cr ,but this time it is expected to post profit at net level.

One may hold at current level and take any correction as an opportunity to BUY for long term. Keep an eye on the movement of the price of ATF which is one of the crucial factor affecting the profitability of airline industry. CMP is Rs.86/-

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DFM FOODS - UPDATE

Earlier Recommended @ Rs.48/-
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In a country like India with huge population and increasing

disposable income , scope of companies from food processing

sector is very vast,especially those with good brands.But,

unfortunately many such brands are owned by unlisted

players or high priced MNC’s . Only very few companies

developed niche market and established their own brands

and growing handsomely. DFM Foods is one of such company

which is a dominant regional market player in snacks foods

sector. DFM is promoted by Delhi Flour Mills and had two

divisions till last year – Wheat storage Business and Snack

Foods Business. From last year onwards DFM discontinued

the low margin wheat storage business and now concentrating

only in snack foods division.Its brands  CRAX,NATKHAT,

WIZZ ..etc are popular in northern part of India.Last year

company expanded its capacity at a cost of Rs.13 Crore and

due to huge demand for its products now again planning to

expand the capacity further. Company is also taking steps to

make it a Pan India brand in few years from now.In last

financial year DFM’s snack foods division shows a growth

of 35% in turnover(Total turnover was less due to

discontinuation of wheat storage business).Net profit also

sharply improved from Rs.1.99 Cr to Rs.4.21 Cr backed by

better margins from snack foods division. In the first

qtr of this financial year(June qtr) company shows an increase

of 50% in its sales from Rs.13 Cr to Rs.20 Cr .With increasing

urbanization and changing life styles,demand for snacks

foods are expected to rise sharply and on the other side the

expected record production of wheat will reduce the pressure

of raw material cost which will help the company to record

better performance going forward. Earlier, company had an

image of a wheat trader and enjoyed only low valuation due

to the image of a trading company. But now it is a pure

FMCG/food processing like play and it should be re-rated

accordingly. There is good scope for appreciation from

current level of Rs.54/- 

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