Gujarat Ambuja Exports

Stock Opportunities
91

Here are my notes from FY2019-20 AR:

Major Financials

  1. The Company recorded operational revenue of 3816.59 crores as compared to ` 4021.44 crores during the previous financial year.
  2. The Company achieved EBIDTA margin of 7.63% in F.Y. 2019-2020 against 9.55% in F.Y. 2018-2019.
  3. The Company achieved Earnings before Interest, Depreciation and Tax (EBIDTA) of 291.23 crores for the F.Y. 2019-2020 against that of 384.02 crores for the F.Y. 2018-2019. The EPS for the year reduced to 12.72 per share as compared to 17.28 of last year.
  4. Debt to equity ratio improved from 0.17 to 0.11 and interest coverage ratio improved from 20.4 to 32 due to reduced debt and lower utilization of working capital limits.

Capex

  1. During the year, the Company has invested about 60.43 crores in the ongoing projects. Out of this, the Company has spent 36.81 crores as routine capital expenditures in modifications of existing projects.
  2. This investment was for its maize processing units at all locations and agro processing segments. Execution of various derivative products manufacturing facility at Chalisgaon is completed except for DAH and it has commenced commercial operations. The Company has so far spent 62.68 crores on this.
  3. The execution work on the green field project of 750 TPD Maize processing facility at Malda in West Bengal has also commenced.

Client Mix

  1. It competes in the domestic and global markets and caters to food, pharmaceutical and feed industries.
  2. Export Sales for the F.Y. 2019-2020 was 569.02 crores as compared to 1206.46 crores for the F.Y. 2018-2019 mainly due to availability of more remunerative prices in the domestic market.
  3. The export revenue has taken a dip since due to higher prices of corn and soyabean, the prices of finished products were not competitive in the overseas market.

Loan and Liabilities

  1. The year started with moderate use of WC limits of about 190 crores in April 2019. It peaked to around 226 crores in May and ended with lower use of WC limits of around 146 crores in March 2020. The fall in use of WC limits was largely due to lower procurement of oil seeds and deployment of internal accruals.
  2. During the F.Y. 2019-2020, the Company has not raised any funds through Commercial Paper (“CP”).
  3. The Company has a rating of A+ with positive outlook for long term working capital facilities from CRISIL as per the applicable regulatory norms.

Miscellaneous

  1. Disclosure on commodity price risks and commodity hedging activities. 16% of soybean seed exposure is hedged and 7% of soybean oil exposure is hedged through commodity derivatives.
  2. Crop of soybean and maize was also affected negatively due to prolonged monsoon. Due to this availability of good quality material at particular market price was a serious concern during the year. The prices of maize reached a high of 24 per kg. This adversely affected the off take of finished products since beyond a point the market could not absorb the high prices. This in turn affected the grinding quantity and hence weakened the performance of the industry
  3. Massachusetts Institute of Technology increased shareholding from 0.19% to 0.87%.

Covid-related:

  1. Being a leading manufacturer of Maize Starch, Starch Derivatives and Edible Oils we had been bestowed upon with a great sense of responsibility to operate amidst these difficult times to supply these essential commodities across the globe.
  2. since the Company is a major supplier of food, feed and nutritional ingredients, the demand is estimated to get its normal levels sooner than Industry in general.

Product mix:

Bakery Shortening, Corn/Maize Starch, Corn Gluten meal, Dextrose Anhydrous, Cotton Yarn, Dextrose Monohydrate, Soya Flour, Maize Fiber, High maltose Cyrup, Indian Compound Cattle feed, Liquid glucose, Liquid Sorbitol, Liquid soya lecithin, Malto Dextrin, Soya granules and Soya nuggets, Cotton Seed refined oil, Soya Flakes, Soyabean refined oil

My Observations

As per the AR, the great monsoon season turned out to be ‘too good’, reducing crop yields, reducing maize qualities, disrupting the maize market, increasing the maize prices to Rs 24/KG and thereby reducing the company’s sales volumes. This demonstrates the importance of weather on the company’s fortunes. The capex plans for the malda plant are going as per plans. The company reduced debt due to lower WC utilization and also using internal accruals.

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