ValuePickr Forum

Gujarat Ambuja Exports

In my view very good results. The only concern in the past so many years has been cyclicality of business. Ethanol production from crops other than sugar cane can be one more set back (not sure how this will play out) as Maize availability and pricing drives the profitability for GAEL.

Company should organize quarterly con calls as very little information is available outside the ARs or few brokerage reports. Annual report for FY21 is still not uploaded on website. The website itself needs new age designing.

I am invested in company since last 4 years…

My rough notes of AGM for FY21 (there may be some mistakes!):

  • Maize processing Capacity – 3000 TPD; after Malda – 4000 TPD. Current Market share – 22%; After Malda, expected Market Share – 28%.
  • Current installed capacity for Sorbitol – 100,000 TPA; CUF = 75%.
  • Exports
    • Exports not led by a specific product but generally from a large array of products.
    • Low RM Prices – Corn prices have been moving in India against the international market due to pandemic and because of bumper crop. Generally, India corn prices are higher than internationally; in the last year, it has been in tandem.
    • Rupee depreciation has also helped in better realization.
    • GAEL is the largest exports of corn and derivatives from India. Competitors in International markets for exports – Cargill, Rocket, ADL, etc
    • International corn prices have increased significantly and now India is at par on FOB basis with all other countries.
    • Why are other countries cost competitive in edible oil - India is a net importer of edible oil (15 MT) and climatic conditions better in Brazil, Argentina, US for oil seed production.
    • Don’t expect any stoppage of exports (while there can be volatility) – we are well spread out internationally for exports market and are supplying to 75 countries.
  • Value added Products form 25% of the Maize division sales.
  • Margins
    • Maize spread increase – a) unprecedented demand from overseas leading to higher margin b) share of value added products has increased.
    • Maize EBITDA have varied between Rs 3.6 to Rs 6.3/kg and can be expected to be at mean of these numbers.
  • ROCE /IRR for Greenfield capex – Generally consider 20% return on capital for implementation of new projects.
  • Maize outlook – Had a good Rabi crop and expect good Kharif crop also. India should harvest good crop inspite of lower monsoon as corn is spread across in many states.
  • Production of derivatives has started in Chalisgaon.
  • Maize division – 85% operational efficiency (scope to increase to 95%)
  • Update on HFCS – We are in the last stage of approval from FSSAI. With sugar mills’ more emphasis on Ethanol, HFCS looks very promising product and expect to start production in first half of 2022.
  • Guidance for next 3 Quarters – poised to increase CUF.
  • Soya bean crop is good – Sales and profitability to increase. Demand for Soya bean (no-GMO) meal is very high.
  • Quarterly concalls – few investors have requested. Will look into this.
  • Ethanol – Company has already applied for 3 licenses for Ethanol; it would be much cheaper cost compared to grass-root ethanol manufacturer (and therefore competition would be less). It would be a forward integration for us. Company has applied for licenses (Chalisgaon license expected in Q2 and other two in FY22). Three plants of 420 KL (120, 180, 120) in next two years.
  • Malda project delayed due to pandemic – expected commissioning in first half of 2022. No further delays expected.
  • Expansion
    • Aim to reach to 6000 TPD in maize in next three year (2024) through Brownfield and Greenfield projects.
    • Adding two more sorbitol plants in next one year – Hoogli and Sitarganj, which will take the capacity to 160,000 TPA and will be sufficient for next 5 years.
    • HFCS
    • Ethanol
  • Pollution issues – there is no problem (some news articles had cropped up in the past due to vested interests).
  • We will look to absorb all the incremental growth till 2025.
  • Raising equity capital is only an enabling provision for expansion (6000 TPD maize, Three ethanol plant, HFCS at one location initially and then at other locations) and there are no concrete plans to raise capital. We would try to remain debt free and try to grow through internal accruals.

Disclosure: Invested

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Will you be able to share the transcript / link to AGM

I have not seen them releasing the recording of AGM…

Any idea on the rise in promoter salary for FY21 - is it linked to profits?

A major part of Promotor salary is commission . It is linked to profits .