Ajanta Soya Ltd.
ASL was incorporated on 13th January 1992 under companies Act, 1956. The Company is engaged in the primary business of manufacturing of Vanaspati and various kinds of refined oil with shortening products for bakery like biscuits, puffs, pastries and other applications. Company is selling it’s products under three brands DHRUV, ANCHAL and PARV. Company has Vanaspati plant and refinery located in Alwar, Rajasthan.
Listed on Bombay Stock Exchange Ltd., the company went Public with the Initial Public Offering in the year 1993 with 162% shares fully subscribed. The company also issued Preferential equity shares in year 2012.
Market Cap = Rs. 56 cr.
For F.Y. 2016, Sales = Rs. 579.12 cr., PAT = Rs. 5.09 cr.
5 year CAGR in
PAT = 61.73 % (From Rs. 0.46 cr in FY2011 to Rs. 5.09 cr in FY2016)
Sales = 13.93 % (From Rs. 301.74 cr in FY2011 to Rs. 579.12 cr in FY2016)
Company has a very strong balance sheet, cash and short term investment as on 30.09.2016 are Rs. 50 cr. and short term borrowings of Rs. 2 cr.
Company has seen steady volume growth of it’s product in past three years.
2014 2015 2016
Prod.(Mt) 75441.978 89472.406 106271.921``
Sale (MT) 75411.978 89472.406 106725.205
- Very low ebitda margins. Though it looks like a norm across the industry, edible oil industry works on thin margins (Overcapacity and Competition).
- No dividend payment in spite of cash rich balance sheet.
- Corporate guarantee given of Rs. 70 cr. to bank for a non-listed promoter group company.
- Promoters have various other business interests in reality, textiles and construction.
- Contingent Liabilities totaling Rs. 130 cr.
- Oil is extracted from Oil Seeds, MSP of seeds is decided by government. Slightly government regulated which may have effect on cost front.
It is a balance sheet play as the market cap is equal to the free cash in the company, negative working capital seems to be the source of cash. Core business is doing reasonably well and has shown good growth in the past 3 years and is likely to do well in the future as the company works in an import substitute sector (As per Annual Report 2016, India imports nearly 67% of its edible oil requirements). Will be interesting to see how the cash is utilised in the future. Will it be used for growth or will it be siphoned off from the company, remains to be seen.
Disclosure: Invested, less than 1%.