Great work Rajeev. So the story is on !!
Dear Rajeev ji,
Thanks for sharing your feedback on your visit to Guntur & meeting with the MD.
This surely helps in bringing a far more clearer picture than reading whatever data is available on the net.
We get to learn a lot from you.
Did you get any clarity on the following 2 points
- Any political link of management.
- Mention of chit fund investments in the balance sheet.
Has anyone looked at its competitor- Anik Industries which is also shaping up well??
Very good numbers from Virat Crane.
Net Profit at Rs 2.12cr …89% and 77% jump in net profit qoq & yoy respectively.
EBIDTA % spikes to 18.7% (compared to 14.9% and 12.9% qoq and yoy respectively)
yeah. it’s a very good result.
Just an observation. Durga Ghee has recently ramped up its brand building activities. It’s strategically advertising during mythological serials and employed a famous TV anchor (she is the most well-known anchor in Andhra) to advertise its products.
I believe these activities would help VCIL build its brand equity.
Recent ads by Virat Crane Industries. Trying to establish themselves in all regions…
Found a 1 yr old comparative analysis of Ghee brands sold in various southern states.
Note: MRP figures are 2014 based.
Group A overall opinion about Ghee
· 41% of the consumers look for Best before date while 29% give preference to manufactured date.
· 74% of the consumers prefer only branded ghee while the 24% non-brand items.
· 39% purchase 200gram pack while 18% go for 100 grams packet.
· 84% of the consumers did not prefer homemade ghee while 13% give purity to homemade items.
· 76% have the knowledge of adulteration of Ghee with vanaspathy.
· 55% of the users have the knowledge about the impact of Vanaspathy on human health.
· 52% of the users have no idea about the vegetable ghee, (i.e) Vanaspathy sold in the name of ghee.
· 81% have the knowledge of quality mark and 77% preferred Agmark graded ghee while 3% looked for ISO.
· 47% informed that they judged the quality by smell, while 16% by taste.
· While 45% complain to authority 39% to the shopkeeper.
Also, one needs to be mindful of the possible impact from Patanjali Cow Ghee.
Disc: Not invested. But will put it into my watchlist.
Excellent comparitive information, Vishnu ji.
Thanks for sharing.
Does anyone have any observations about the impact of Patanjali ghee on Durga ghee?On a preliminary understanding basis,it seems Patanjali can make Virat Crane’s expansion into newer markets less attractive.Would it also reduce the future cashflows from the existing markets?
I like the Patanjali Cow Ghee good in taste and I am using it.
I had also got Durga Ghee via a friend who visited Tirupati. I did not like the taste and I made few of my maharashtrian friends to taste it and they also did not find it great.
On a lighter note…stay away from Andhra based companies. to much political involvement in businesses.also look at some of these highly debt ridden companies…GVK,GMR,lanco…politics and debt is a lethal combination and a lot of it comes from AP.
Sir, please share the details if you find fishy in Virat and we are happy to highlight the same in the forum instead of giving open statement.
There are many good companies from AP like Avanti Feeds, Dr Reddy’s, Granules etc…
Admin please can you review this,
I gather from a few friends based out of Andhra that Virat Crane has been test marketing its yogurt. This could potentially be very good news as so far it was seen only as a ghee manufacturer. With more value added products in its basket it could become a serious player in the dairy segment. As it is, it is probably amongst the most profitable players there. The Co. is on record saying that it is looking to augment its product basket with yogurt, paneer etc.
There is also a good possibility of the Co. giving a decent final dividend in addition to the interim dividend given earlier.
Thanks for the update Rajeev ji…
@RajeevJ Apparently its a good news.
The market of Yogurt was around INR 200 crores (FY 2014) and its expected to reach 1200 crores in FY 2020 (CAGR of 32%) as per the IMARC stats.
Also the normal Gross Margin In Ghee business (buffalo) is around 7-8% while it has been close to 29-30% for Virat Crane (may be due to the premium it commands in the market).
Disc : Invested
@Apandey Yes, the Co.'s foray into value added products if true will be good news, but there is also the possibility of higher ad spends & higher product launch expenses in the initial period. I am eagerly awaiting the results, & expect the Co. to at least maintain the dividend levels, if not improve upon it. Companies looking for rapid expansion tend to keep an eye on their market cap as well! After consolidating in 15-16, I feel the Co. could go to the next level in 16-17, but we will have to wait & see how this story unfolds.
Virat Crane result out:
Net Sales - 1.8% YoY (adjusting for one off trading last year)
EBITDA margins - 4.7% as compared to 18.1% last year.
PAT has declined by almost 80% (adjusted)
Final Dividend - 0.5 per share (its a relief and good sign)
Total for the year - Re.1 per share
Virat Crane has put up an Investor Presentation on the BSE website giving some idea about future growth & reasons for a tepid Q4.
@RajeevJ Launch of curd and buttermilk is a positive news. Advertisement expenditure shouldn’t be a problem as its for brand building. Especially for a B2C player it makes sense to spend on brand awareness.
One important thing I noted from the balance sheet is the decrease in debtors & inventory while increase in trade payables numbers. It shows the positive alignment in the working capital management.
PS: Prabhat dairy and Parag milk have high working capital requirements due to their B2B sales and foray into cheese (where 3-6 months inventory lag exists). They are highly levered too.
Please refer the above link for complete details on Adhik Masa. This occurs after every 32 months and 16 days…So if it has occured in 2015, it will again occur in 2018-19. This is one extra month which is a difference between lunar and solar calendar. This year Adhik Masa was during the month of June-July.
1). Its hard to believe that the entire year sales was impacted just because of this Adhik Masa of one month.
2). Marketing expense has increased by 53% !! If its a positive news on one hand, please be skeptic equally. It can be siphoning of money.
3). Check this link - http://www.rathyatra.net/rath-yatra/nabakalebar-festival-puri.html
Its about Nambakalebara festival which mgmt has claimed to be one of the reason for low performance. Check the date of this festival. Its 6th of July 2016. I am not convinced with what mgmt has claimed here for low performance - an event which has not yet occurred.
This business might be having a good brand. But I doubt the management. No proven history of some good performance and huge swings in performance.
Disc - Was invested initially. Sold at 60. No more interested.