Borosil Limited

Results
18.6% YoY Quarterly sales growth
85.2% YoY EPS growth

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Excellent results.

considering they posted loss in June quarter, still available/trading around 30-35 PE range, (Assuming around 2.5 EPS also for June quarter) reasonable for high growth consumer business.

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I am attaching my notes from their FY22 annual report.

Laboratory glassware

  • Sales: 156.2 cr. (23.4% growth)
  • 65% market share, have 2’000 SKUs. Market size is 235 cr. growing at mid-single digits
  • Had 1-day order fulfillment rate of 96%

Klasspack

  • Sales: 106.2 cr. (vs 65.19 cr. in FY21), Domestic: 92.45 cr. (vs 56.99 cr. in FY21), Exports: 13.75 cr. (vs 8.2 cr. in FY21)
  • PAT: 8.58 cr. (vs 1.22 cr. in FY21)
  • Primary packaging for pharma sector (glass vials, ampoules). Market size is 1’100 cr. and Borosil is positioning themselves as a second supplier
  • Exploring opportunities in pre-filled syringes, cartridges and siliconized vials
  • Continues to develop export of laboratory glassware products in Africa, Middle east, South east Asia and North America

Labquest

  • Sales: 21.3 cr. (vs 15.9 cr. in FY21)

Consumer Products

  • Advertising & sales promotion: 6.5% of sales
  • Network of 200 distributors, 14’000 retailers across 100 cities. Serviced by team of 100 sales personnel
  • Glassware sales (microwavable, vision glass, glass kitchen storage like lunch boxes): 146 cr. (42.3% growth)
  • Non-glassware sales (Steel Serve fresh, Hydra range, Kitchen appliances): 207.4 cr. (47% growth)
  • Opalware (Larah): 219.6 cr. (55.7% growth). Plant is running at peak revenue potential of 220 cr.
  • Market sizes:
    o Microwavable glassware products: 100 cr. (60% market share) (outsourced)
    o Vision glass (cups, tumblers, etc.): 440 cr. (manufactured in-house at Bharuch)
    o Glass storage container: 700 cr. (outsourced)
    o Kitchen appliances: 9000 cr. (outsourced)
    o Hydra bottles: 1100 cr. (outsourced)
    o Opalware: 900 cr. (growing at 15-20%)

Capex

  • Setting up India’s first borosilicate pressware capacity of 25 TPD in Jaipur for 75 cr., expected to commission in beginning of FY24. This will bring manufacturing of borosilicate pressware products in-house
  • Opalware: Doubling capacity in Jaipur from 42 TPD to 84 TPD at 175 cr. capex, expected to commission in Q3FY23
  • Klasspack: Expanding Nashik facility (300 mn to 500 mn in vials), (500 mn to 700 mn in ampoules) at 70 cr. which should be commissioned in FY24 and generate potential revenue of 200 cr.

Remuneration

  • Increased fixed remuneration of Shreevar Kheruka from 1.2 cr. to 4.8 cr.
  • Shreevar Kheruka: 6.42 cr. (vs 4.04 cr. in FY21)
  • Rajesh Kumar Chaudhary: 1.2 cr. (vs 1.79 cr. in FY21)

Technology investments

  • Focusing on usage of technology to enhance productivity
  • Borosil e-commerce platform is built on shopify
  • Adopted Salesforce CRM (will be completed by June 2022)
  • EAZY Decision Management System integrates seamlessly with distributors’ stock and accounting systems, providing visibility of secondary sales. This has improved sales forecasting inventory management

Capital employed & goodwill

  • Consumerware: 297.8 cr. vs 230.6 cr. in FY21 (excluding goodwill) + Goodwill 18.15 cr.
  • Scientific: 213.2 cr. vs 182.9 cr. in FY21 (excluding goodwill) + Goodwill: 49.52 cr.
  • Total Goodwill: 67.67 cr. (vs 67.67 cr. in FY21)

Investment into subsidiary

  • Invested 20 cr. in Klasspack (at 138 cr. valuation; 1.3x sales, 16x P/E)
  • Invested 4.63 cr. in Borosil Technologies

Miscellaneous

  • Vision to be the most consumer centric company in India
  • Struggled with supply chain issues throughout the year with availability of raw materials. Additionally, container freight rates increased dramatically
  • Real estate fund exposure: 10% of total investments
  • CSR: 1.06 cr. (2.24% of net profits for last 3 fiscals)
  • Number of employees: 753 permanent (1010 contractual employees). Contract labor charge was 30.89 cr. (3.06 lakhs vs 5.13 lakhs for normal employees)
  • Median remuneration: 5.13 lakhs (vs 4.66 cr. in FY21)
  • Share price: 164.1 (low), 498.7 (high)
  • Number of Shareholders: 74’162
  • Assets for sale: 61.38 cr. (14.2 cr. of land + 47.18 cr. of building)
  • R&D: 64.86 lakhs in Bharuch + 4 lakhs in Jaipur
  • Auditor remuneration: 81.8 lakhs (vs 81.8 lakhs in FY21)
  • Useful life for depreciation: 3 years for certain plant & equipment, 2 years for furnace (seems very low)
  • Demerger b/w consumer and scientific division will be completed in 9-12 months. There will be common legal, secretarial and HR services

Disclosure: Not invested

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