Kothari fermentation & biochem ltd

Dear members i came across this micro cap company Kothari fermention & biochem ltd.
they are manufactures of various varities of yeast like baker’s yeast, Brewers yeast pharma yeast and industrial yeas
Some facts about yeast

It is single largest commercially produced microorganism in terms of quantity ( metric tons) in the world .

World production figure more than three million tons in 2012.

Indian story of yeast industry started with a small unit at Uran near Mumbai way back in 1974-75 by Shaw Wallace Group Co. Called Indian Yeast Co. It is no more in operation. Presently India produces around 85-90,000 tons of yeast per year at five factories directly or indirectly own by two groups. and market demand is partly met by imports mainly from China, Turkey and some other countries.

The major groups engaged in production of yeast and yeast based derivatives in the world are

Associated British foods Plc( UK),
Alletech Inc( Canada),
Angle yeast co( china),
Cher Hansen A/s( Denmark),
Lallemand Inc( Canada),
Lesaffre group( France),
Oriental yeast( Japan)
Royal DSM( Holland),
Liber GMBH( Germany)
Commercial yeast

Available as cream yeast This product has 18-20 % dry matter and used extensively in Europe, America where large automated bakery plants are operated, consuming several tons of wheat flour per shift. Cream yeast is easy to handle, can be stored, chilled and transferred using pumps saves on packing material, labour costs and ease of use in automated systems. Bio-ethanol plants also consume large quantity of yeast in cream form as they are highly automated. Yeast cream requires storage in chilled condition good hygienic storage system and has shelf life of about 5-7 days.

Compressed yeast The product has 28-33% dry matter. Available in form of 25gm/500gm/1000gm cakes resembling bricks in shape are most suitable for home baking, small and medium size bakeries. Product can be stored in refrigerator for 10-15 days without significant loss of activity

Crumbled yeast mass This yeast is sometimes also demanded by bulk users yeast cake in uneven or extruded in form of fine particles is packed in 20-25 kg bags and supplied , It is easy to weigh accurately and suitable for machine feed operations. The product has characteristics similar to compressed yeast in terms of activity and shelf life

Active dry yeast This product was developed to overcome problem of refrigerated storage and relatively short shelf life of compressed yeast The product is in form of medium to fine globules/ granules having 92-95% dry matter. Normally it is used in remote areas where fresh yeast is not available and refrigeration facility is absent. This production process involves carefully drying extruded yeast cell mass under controlled condition in roller drum dryers or fluidized bed driers , Process of drying over longer period results in some loss of activity, but the main advantage is 3-4 months of shelf life at ambient temperature ,no need of refrigeration. The product is normally paced in tins of various sizes or in poly jars of 12-15 kg.Product is suitable for bakeries using long duration fermentation process of bread making in remote areas.

Instant dry yeast It is a dry yeast with very high dry matter ( 96-97%) is produced in form of fine vermicelli dried at low temperature under controlled conditions and packed under vacuum. The activity of yeast is very good, and like fresh compressed yeast start its function in dough almost immediately and so called “ Instant Yeast “ The fine vermicelli gets dispersed easily in the dough and so acts fast on dough. It has long shelf life and can be safely store at ambient temperature for up to two years. This product has replaced large market of active dry yeast

Production of baked goods- largest and most well known world wide application

Alcoholic fermentation’s– Mainly for production of ethanol from beet and cane molasses and cane/ beet juice, using grain hydrolysates especially corn, millet’s,wheat,and rice, tubers like potato,cassava,sweet potato ,and latest substrate being cellulose.

Wine industry,- Making wine from grapes, and several other fruits like apples etc and finally many a times distilled out to make specialized branded products.

Prepared foods- Yeast hydrolysates, Yeast extracts rich in nucleotides are extensively used as natural flavoring substances replacing mono-sodium Glutamate and those flavors originating from meat and animal proteins

Food supplements,- Yeast is rich source of proteins,B group vitamin’s , and fiber and finds wide application as rich nutrient supplement in form of inactivated flaked yeast. In fact during last century yeast tablets was popular recommendation for those needing vitamins supplements when pure form of vitamin preparations were not avalible.

Animal feed- yeast has shown excellent probiotic action. Feeding of selected strains of yeast have shown improved productivity in ruminants ( dairy cattle cows,buffalo’s, sheep) with increased milk yield and improvement in fat content of milk, better weight gain in animals raised exclusively for meat production purpose, In poultry it has shown beneficial effect both in broilers and layer birds. In case of broilers it helps better food conversion ( weight gain) and reduced use of antibiotics for protection. In case of layers in addition improved health and better egg production is observed. This is one of the major innovative application of yeast that has been well established in last thirty years or so. Yeast cell wall is rich in beta glucan which stimulates non specific immunity in animals and so yeast cell wall extract rich in beta-glucan is being used in feed and nutrient supplement to bust non specific immunity.

Pharma and bio-pharma Industry Yeast extract is a reach source of balanced nutrient and is extensively used as safe ingredient in media for cultivation of various microorganisms and tissue culture work importance of yeast extract increased many folds with mad cow disease scare.

In very recent years beta-glucan rich products are being marketed as part of cosmetics and in anti-aging skin preparations

Production of enzyme Invertase, glutathione , enzymatic conversion process for production of epihydrine and sudo-epihydrine

In recent times yeast isolated from Antarctica continent are being extensively explored for production of wide range of extra cellular alph amylase,lipase, xylenase, protease etc. Being able to operate at relatively low temperature is a very attractive commercial application in wide range of industries.

Other major yeast based products are yeast extract,yeast autolysate, yeast beta glucan, food supplement vitamin enriched yeast, yeast with high Selenium and chromium enrichment, in cosmetic.

For production of molecules of commercial interest e.g is in synthesis of Artemisinim- a precursor for Malaria drug.

Yeast base cancer fighting technology is in advance stage( Apolife), vaccine production ( rabies), Insulin production.

Yeast is prime target for research in similar applications as it has several advantages over other similar hosts like E. coli, CHOCELLS, Pichia yeast, due to easy secretion/separation of recombinant proteins of interest.

Yeast Genome

Proven safety for thousands of years, multipal applications, relative ease of propagation, and abundance in nature has attracted attention of yeast as a group of microorganism of choice to play with.

Bakers yeast “Saccharomyces cervisiae” is a power full research tool because of its ability to quickly map a phenotype producing gene to a part of yeast genome. In 1986 international group of scientist from 92 laboratories from countries such as UK, USA, Canada, Japan, France have successfully done gene mapping of this yeast species. The bakers yeast has 6000 genes across 16 chromosomes. Opening new opportunities to study and exploit the commercial potential of this microorganism

Challenges in front of yeast Industry

Unlike many other industries the yeast industry has so far not experienced negative growth rates and industry is expected to be five billion US dollar industry by 2016. There is increasing demand for yeast and yeast based products from all over the world. The potential for expansion in India is very large with countries own demand and export potential from neighboring countries. As one of the largest cane sugar producer country, India has sufficient supply of cane molasses which is the main raw material for yeast industry. But capital cost of setting up yeast manufacturing plant is very high as practically all equipment is made in high grade stainless steel, power requirement is also very high as large volume of liquids are handle using high power pumps auto-matted control systems, separation and packing systems. Raw molasses is produced only in three months during cane crushing season and so needs to be stored

Now about the company with the recent capacity addition this company can produce nearly 2000 mt per month the other manufacturer saf yeast has been taken over by Mnc ab mauri ltd and they are increasing the capacity.

As for the finance status fy 16 result is available in bse website http://www.bseindia.com/corporates/anndet_new.aspx?newsid=a7e2bdc5-64d9-4f47-b9ae-0aaa0092d8eb
The website http://www.kothariyeast.in/
This company went to bifr in 2008 and came out from there has shown good improvement the interesting thing is the promoter is holding 74%. Now iam not aware of the pedigree of the promoters but the product seems interesting and this year financial results are showing siguns of susutianable growth only listed player were Mnc are showing interest product serving fmcg pharma biotech industry.
The market research report sample copy pasted

SummaryRequest Sample
The market for yeast & specialty yeast products has a significant impact on food and beverage production. Yeast & specialty yeast products are gaining importance due to their usage in high demand commodities. The yeast market is projected to reach USD 4.3 Billion by 2020, at a CAGR of 9.0%, as studied from 2015 to 2020.

The yeast market gained popularity due to various factors such as the increasing cost of food items such as fruits and vegetables, the production of alcoholic beverages, and the growing bakery sector. A particular species of yeast used in the production of bio-ethanol is gaining popularity in the production of clean fuels. Environmental agencies are increasingly encouraging the usage of bio-ethanol as an additive as it reduces pollution levels. The specialty yeast products market has gained popularity due to products such as yeast extracts which is increasingly becoming an important ingredient for flavoring in food products such as soups and savory snacks.

This report estimates the size of the global yeast & specialty yeast products market in terms of value and volume. The market has been segmented on the basis of type, application, form, and region. In 2014, the global yeast & specialty yeast products market was led by Europe. Asia-Pacific is the second-largest region with regard to the application of yeast products. The global yeast & specialty yeast products market is divided into regions and further into key country-level markets, and projected in terms of value. Drivers, restraints, opportunities, and challenges of the market are also discussed in detail in the report.

The report provides a complete analysis of the key global players in the yeast & specialty yeast products market, with a clear insight and commentary on the developments, trends, and their product portfolio. Leading players such as Associated British Foods Plc (U.K.), Alltech Inc. (U.S.), Angel Yeast Co. Ltd. (China), Lesaffre (France), CHR Hansen A/S (Denmark), Lallemand Inc. (Canada), and Leiber GmbH (Germany) have been profiled in the report. These players are executing various strategies to grow and develop in the yeast & specialty yeast products market. Agreements, new products launches, and acquisitions have been the key strategies adopted by market players for global expansion.
Now I kindly request senior members to have a look and give some valuable feedback
Discl : invested a small amount for tracking purpose. The articles are free available in the Internet and iam not technically qualified in this field


Even this caught my eye because it is an interesting product and Indian demand has increased from 90 lac ton to more than 1.5 l tons per year and there are only this three players and 2 are Mnc and is Kothari with around 30% market share.
I do agree that product biological use is enormous but as now most of the demand is coming from baking and breweries the usage in animal feed industry and pharma is limited and expected to grow.
If we could dig a more knowledge about the promoters it will be helpful. But my doubt is what kind of pricing power the company can commanD and the potential for export. Now from the bs it is clear they have done capacity expansion and the client list is impressive includes the likes of Britannia zdus Cadilla United breweries Cargill foods etc
I think you should request Ayush to have a look at this he has a eye to find any negatives in micro cap companies
Hai Ayush if you. Happened to read this just give your feed back


Product-wise it fits into B2C consumption theory. One primary question though
From their AR2014-2015, they seem to produce 14000MT of yeast which is 1 Crore 40 Lakhs KG but their revenue is around 64Crs which is like 50Rs/Kg realization.

Now i did a google search for yeast price. I see 25Rs/25 gms which turns out like 1000Rs/Kg

Why is Kothari selling their powder for such a low price? Can someone through light.

PS: not invested.

1 Like

Nerolu thank u I also had that doubt but there are so many variety of yeast and the bulk price some website quoting as 740 usd some other like the link see below is quoting different
I have written a email to the cs asking for explanation but not yet received any reply.
At present the installed capacity is 60 tones per day as per the company info, I don’t know there capacity utilization and I posted in the forum also to get some feed back about the promoters. If you know about the pedigree of the promoters pl post

i got this from Annual Report

Presently India produces approximately around
85-90,000 tons of yeast per year out of which 15% is produced by the company which is 13.5K Tons…
122.5 L kg…1000 per kg would result in 1225 Crores…

While net revenues are 64.33 Crores…

Nerolu I got a reply emai from the cs go thru this

From: Secretarial Department
Sent: Friday, June 3, 2016 3:41 PM
Subject: Re: Fw: Investor query 3 rd reminder


We deeply regret for the delay and the time taken for answering your query.

We would like to state that we manufacture different varieties of Yeast. They are called Yeast Derivatives. These are manufactured to suit the different needs of various clients namely

  1. Bakeries,
  2. Pharmaceutical Industry,
  3. Poultry Feed Segment
  4. Breweries
  5. For other Industrial purposes, etc.

The selling price of these derivatives ranges from as low as Rs.45/- per Kg. to as high as Rs.500/- per kg.

The products which sells at higher prices are the most complex types of yeast derivatives. Their production is barely 4-5% of our total production.

Also, our turnover is the total sale of all types of Yeast Derivatives and does not relate to only one type of yeast.

Hope the above resolves the query raised by you.

Thanking You,



Guys I think you are confused with the retail price of instant dried yeast with bulk non active yeast which is being sold on bulk basis to pharma vetinary and breweries companies. The bulk buying price is in range of usd 725 to 775 per mt on fob basis.
I came across this company when we trying to substitute bulk yeast from import to local. Earlier they were having financial problem now they are ready for supplying upto more than 22000 tons a year and they are the only listed company in this space and the promoters have some 20 years expericience in this field
I think with the capex done and profit margin improving we can look for a better performance in the bottom line and top line in coming fy.
Yeast market is expanding even abmaurie which bought saf yeast is increasing capacity.
This guys are located in sikandarabad the good thing is they have a very good effluent treatment which is important from environment angle.
This product does command an entry barrier and huge capex. Hope for good times
Disc . Still not invested under watch.

1 Like

@prakash123 What are the key financial projections for next two year?

Gaurav I am not the kind who give future projections but an idea see the company running at 95% utlisation should be able to clock around 100 cr here the raw material cost is generally less than 50% the power cost is very huge for yeast manufacture if you notice the power cost is increased this year a clear indication of capex and higher utlisation so around 20 % to power 5% employee coast 10% other so 15 to 13 % Opm is possible which will give 6/7 cr bottom line with yeast price and uses firm up this could go up also the debt is less than10 cr 74% promoter holding anD B2C sector with some entry moat
What kind of valuation market will give I don’t know
Also gaurav I likeD your Sandesh ltd what will be growth potential in that can you just outline it please.

I would like to bring this to the notice I enquire the price range of yeast in the Indian market and yes it is at the higher side earlier I thought this guys are selling at lower price because of the bulk qty selling but when I sent a enquire to there sales dept for the prices of various yeast none were quoted at the rate of rs.45 / kg as mentioned by them everything they quoted were above rs.100 /kg and when I asked them then why your fy 15/16 pl statement shows as rs45/kg there is no reply for that and the sales dept even blamed me that iam trying to get some trade secrets when actually I just enquire about the price and they are unwilling to give any price list for the products.
All other unlisted players are selling the same product at much higher price than Kfbl and market cap is wrongly mentioned in BSE website as 19 cr whereas the market cap is above 45 cr which the investors should be aware of and why the BSE website shows a lower market cap I don’t know.
Secondly the income tax demand on this company is also in this regard about the mismatch in the selling price and recently also income tax has raised demands in this regard.
Since I have given some postive feed back about this company I am highlighting the negative points so please dig a little deeper.
Disl sold my holdings.

1 Like

But if the prices are higher… then its good right? sometime in future they will have to come and declare that… they cannot keep hiding… i don’t understand the agenda of hiding here…

Yes Paresh even I thought so why would somebody lower the selling price but even I found that all the variety of yeast sold by saf yeast, ab mauri golden yeast Titan bio everybody is quoting at higher price at least above 100/kg and as mentioned by Prakash the company is not giving a reply in writing about the price whereas when I called them in the phone given in the website there is no variety they quoted less than 200/kg. Since I have started the thread even now iam having some doubts in this regard if some seniors can help it will be fine until we clarify this point it is better to avoid it also Prakash has pointed that the BSE website mentions the full market cap as 19 cr whereas it should be 45 cr may be that is making people think it is undervalued.
Secondly I even checked with the demand made by the income tax they are contesting I think from the price angle and demand is given with price calculated at higher side.
Better to clarify
Disl. No holding as of now.

1 Like

Kothari Fermentation & Biochem has received a demand order from the Income Tax Department for the Assessment year 2008-09 of Rs 6.66 crore including interest of Rs 2.90 crore. The assessment was conducted by the Department during the year u/s 148 of the Income Tax Act, 1961 and the same relates to the reliefs granted by BIFR in its sanctioned scheme dated March 26, 2008.

The company would be appealing against the said order of Income Tax Department before the Commissioner of Income tax Appeals, New Delhi within prescribed time limit.

The company’s management including its tax advisors, believes that its position will likely be upheld in the appellate process whereby it is expected that the matter will be decided in favour of the company and the said demand will be dropped by the Appellate Authorities.

Dated - April 2016

Please refer to my earlier post were in they have replied to my mail saying the various varieties of yeast price range is 45 to 500 rs per kg and 98% of there production is at 42 rs per kg but now they claim that there major production is live yeast for distellery which is quoting at 150 rs per kg.
And as far the demand notice it is pertaining to the Ay 2007/08 it is related to a wrongful claim under BIFR now what is yet to be disclosed is the the show cause notices issued in subsequent years by the income tax dept and the sales tax commissioner as regards the under invoicing of the product which has to be thoroughly verified this is not reported because it is not mandatory to report show cause notice I feel it is better to be on the safer side when it comes to corporate governance issue IMHO
This I have clarified because I felt responsible since I have started this thread.
Disl. No holdings.


Here is some data I collected about the company.

FY Capacity (MT) Production (MT) Sales (Rs Cr) Realization (Rs/T) RM Costs (Rs Cr) RM Costs Rs/T Power Costs Power Cost Rs/T PAT
2008 10,000 2,627 10 38,028 5 19,604 2 5,976 3.5
2009 10,000 5,185 23 44,879 12 22,951 5 9,489 0.8
2010 10,000 4,304 19 44,308 10 22,653 4 8,666 0.8
2011 10,000 6,530 25 37,979 10 14,900 6 9,188 1.4
2012 18,000 8,481 35 41,563 14 16,260 7 8,454 2.2
2013 18,000 9,702 44 45,248 20 20,449 10 10,183 1.6
2014 18,000 11,462 51 44,172 24 21,113 12 10,557 0.4
2015 18,000 14,026 64 45,865 31 22,394 15 10,958 0.9
2016 18,000 15,230 77 50,676 35 23,086 22 14,169 1.9
2017 25,000 14,968 79 52,839 36 24,085 19 12,961 3.2
2018 25,000 16,465** 88 53,447 37 22,187 19 11,783 5.3

** 2018 production figure is my own estimate.

Source - Company annual reports from 2009 to 2017.

Company’s margins are highly linked to cost of its raw material which is cane molasses and power costs. These two cost components make up bulk of the costs. Sales realizations have been growing for some time but RM costs and power costs have been volatile. company is unable to pass on these costs to customers.

In FY 2014, sales realization dropped while both RM costs and power costs jumped causing margins to nose dive. Company barely made some profits despite 20% rise in production.

In FY 2018, RM costs and power costs have dropped while realizations have increased resulting in big jump in profits. Whether this is cyclical high or sustainable is still an outstanding question to me.

Company has good working capital management as receivables and inventory days are low. Being a capital intensive operation, most of its assets are fixed assets funded by debt. Low margin is causing overall ROE to be a low of 15% in spite of strong jump in margins over last 4 years.


Hi @Yogesh_s
Their earnings are very volatile historically.
Do you find any pattern in terms of cycle here?

Only observation I have is second half has always been better. Any idea why?

And yes their Cs doesn’t reply investor query properly. That’s fact

Trading volumes have started increasing in this counter. It seems that somebody is ready to buy good quantity @ 65.