Poona Dal and Oil - A debt free high cash generator

Poona Dal and Oil Industries Ltd. is an India-based company. The Company is engaged in the oil and food grains industry. The Company operates in two divisions: oil division and agro division. Oil division includes oil, by products and others. Agro division includes pulses, processed pulses, processed pulses flour and others. The Company had a licensed and installed capacity of 135,000 metric tons of Refinery, 90,000 metric tons of solvent, 30,000 metric tons of vanaspati and 45,625 metric tons of pulses.


The operations of the Company falls into two segments viz. oil division & agro division. The oil division consists of extraction & refinery process & the agro division consists of manufacturing of dal & processing of flour.


The group is selling all its products under its own brand name viz HIRA, TIGER, SURAJ & MOTI. The brand name is very popular in the state of Maharashtra and other neighboring states. The group is enjoying excellent relations and is commanding a prestigious reputation with the banks with whom the group companies are banking. The group is also enjoying excellent reputation in the market of Maharashtra and neighboring states.


The factories of the Company are located at E 2, Kurkumbh MIDC, Kurkumbh, Tal. Daund, Dist. Pune - 413801

With the state of art refinery having capacity of 300 MT per day and with efforts of sound technical staff Employees and Workers who are able to create their own brand image of products in the market vis.
• HIRA Refined Sunflower SOYA OIL
• TIGER and SURAJ in Refined Soyabean OIL
• MOTI in RBD Palm OIL
• 111 super Palm Oil and,These products are mainly available in two main segments one Bulk Pack having pack size of 15kg, 15ltr in Tins and Jars
• Consumer Packs available in 500 ml Poly pack, 500 ml Bottle 1000 ml Poly pack and Bottles and 5 litres jar and in this segment our products are distributed through strong network of distributors in a state of Maharashtra and Neighboring state
• TIGER is our most popular and trusted brand in soyabean oil in various pack sizes 1 ltr and 500 ml poly pack and jar 2 ltr jars
• RBD palm Oil Is available in Brand name MOTI available 1,15 kg and 15 ltr
• 111- is a super refined palm oil which is specially manufactured in our refinery in short span of time it has gained brand image because of it quality this is sold in loose form along with refined soyabean oil in tankers
• The products which are well reputed in the market for their consistent good quality and competitive pricing. The brand name enjoys a premium in the markets and well known among the masses.


Between 2008/09 to 2015/16 the domestic production decreased by 8% whereas consumption increased by 48% and to cater that import increase by 78%. So the domestic edible oil producer are in sweet spot with the rising effort from the govt in the food processing and agro sector. It has been estimated that a mere 4% increase in the per capita consumption adds around 0.8 million tonnes of demand each year.
A Debt Free Company with 35 Cr Market Cap having 70 Cr Cash in account is a big plus in this sector where lot of other it’s peers are struggling with high debt. ROE and ROCE stands at 31% and 46% respectively . Receivable days at 14-15 at average is very good with Free Cash Flow stand at 52 Cr. Although high Working Capital Cycle (27-30 days) is a cause of concern for this industry but from the industry segment perspective it is very normal with Inventory Turn Over days at 10.

  1. For the oil year 2017-18, there is scarcity in sowing and crop damage due to flooding has increased in the major growing regions. These factors have contributed towards a reduction in Soybean crop size. As compared to the last year, when the Soyabean oil output was 12 million tonnes, this year it is forecast at below 9 million tonnes. So we can see input cost will be on the higher side which will impact the margin. Also any unfavourable weather condition will impact this industry adversely.
  2. If the Govt will raise the MSP then it will be a cause of concern which is very much on the card.
  3. With the raising input cost and due to heavy domestic consumption it will be tough for the Govt to impose a high import duty on edible oil hence no protection can be given to the domestic industry. Although in the last quarter the Center has hiked the import duty on imported oil to protect the farmer so if this will be the trend then we can expect some good future for this segment.
  4. Another concern is the management push/aggression behind the growth of this company. Since I found no major capex done after FY15 hence it will be hard to determine their growth strategy behind the business. Pradip Poonamchand Parakh the MD of the company not much is known apart from is very conservative attitude towards the business. [Urging any senior VP member to shed some light on this ]
  5. Also the Promoter Group is into Real Estate business [Pdbm-poona Developers Private Limited] which is a diversified one and can be most closely compared with it’s peer like BCL. So not very sure about their intention .
    Attaching the Financial ration analysis data sheet[source screener data.]Poona Dal & Oil.xlsx (131.9 KB)

[Discloser :- Invested with a tracking position so views might be biased.]


Is it listed? Can’t see it in BSE or NSE


PS which excel template are you using for this? Looks like a mixture of pattoo and malik.

It was originally purchased from Dr. Vijay Mallik V6.0. I have added few of my specific ratio to it for ease of analysis.

Listed in BSE . I guess your BSE segment is not activated. I was having that problem earlier as well.

1 Like

@KC1986 one can also consider jvl agro industries ltd. They also in edible oil and agro sector with less debt and good cash flows.
They have approx. 40 years of experience in this sector. Their rice brand is also doing good. It has already given multibagger return.

Detailed recearch will be posted by me soon, this is only a rough comparison between 2.

Disclosure:- not invested but watching it like a hungry wolf.

Thanks @nt12345 . I am infact very bullish on this Agro sector. Any good company is very much welcome and we can study them with combined effort.

1 Like

Is there any one from Pune who can give a scuttlebutt about the Brand value of their product. Since it is a very small company hence I am not able to find any proper information about their brand value.

What could be the reason why the company has stopped paying dividend after 2013, the fact being that the profit has gone from 2.5cr to 10 cr and no dividends was paid, nor was there any capex also during this period. Any views on it?

Also a 35cr market cap company, having 70cr investments? why dont they share the profits with the investors.

HMVL is also having this issue where too much money is kept within the company and not paying out to investors.

Yes Vivek this is definitely a cause of concern. I have already dropped a mail to the company with the below questions. Infact if you see from my excel sheet the value creation for the shareholder is very less.

  1. Why dividend paying has been stopped after 2013 although the company is making profit?
  2. What is their plan to use the cash in near future?
  3. What is the growth rate they are expecting in coming years ? What kind of growth model they are targeting to follow ? Retail or Wholesale based ? Distributor or Sales personnel based ?
  4. How much is their brand value ?
  5. How many distributes they are having in their network ? What is the plan for expanding it?

In my opinion they might plan to use the cash for capacity expansion and sales and marketing . Like any other corporate does.

Thanks Krishnendu for posting the analysis.

Any reason why OPM is so low ? Is the industry standard ?

I’m just sharing my thoughts. The intention is to learn from the discussion and make better investment decisions.
Poona Dal and Oils seems to be a food processor. Such businesses seldom enjoy good margins. The sole reason being lack of value addition. It’s amply clear from its results. It’s net profit margins have hovered in the range of 3-5 percent. It’s consistent with its peers like Sanwaria Agro.
Also, its sales have been erratic.
It may seem cheap because of its book value. However, making investment decisions on the basis of book value is fraught with its own risks. The margins will be in this range unless they graduate up the value chain which is in itself a difficult task.Also, what’s important is how they utilise the cash of around 69 crores the company has. A lot of companies siphon off the funds making unwarranted acquisitions.
Is anyone aware of their plans for utilisation of funds?
Also, I’m wondering why their earnings jumped significantly in March, 17.

Hi Shreys,

Thanks for sharing your view on this and about two of your question below is my explanation.

  1. What is the capacity expansion plan and how they are going to utilize the cash they are holding I have already dropped a mail to them and waiting for their response. One thing which I have found out from the balance sheet is that this cash and cash equivalent of 69 cr they are not holding in any bank. Rather they are only having 1.25 cr in bank deposit. So how this cash or cash equivalent they are going to use is a big question to everyone .
  2. About the 2nd question if you see their growth is mostly consistent from FY2016 at around 12-15% level although last year March quarter they have grown their sales exponentially but on yearly basis it was mostly stable. And the growth in profit comes with mainly two factor :- 1) With low interest cost and 2) Less Operating Expense. Since the top line growth remain consistent so I guess this is a less concern factor for us.

Krishnendu ji, Many thanks for responding to my message. I’ve been trying to access their financial results on Moneycontrol as well as their website. However, I haven’t been able to find it yet. Could you please guide me where I can read their quarterly results of the past 4-5 years?

Hi Shreys,

You can find the result from the below Links:-

  1. [AR2017]https://www.bseindia.com/bseplus/AnnualReport/519359/5193590317.pdf
  2. [Q3]https://www.bseindia.com/xml-data/corpfiling/AttachHis/3fb3cc5b-e0b2-41e1-91b1-4266b0158884.pdf
  3. Any other announcement by the company . https://www.bseindia.com/corporates/ann.aspx?scrip=519359%20&dur=A

Many thanks for sharing the links.

Why this sudden spurt in sales growth of march 2017?

Hi @jvpatel87,

The exceptional growth in the last year March quarter is mainly driven by their mass order execution in that quarter even the June Quarter sales is very high followed by March. But if you see the year on year growth it is mostly consistent. As I have already explained before in replying to Shreys.

1 Like


I have yet to receive any reply from the management for the below question. Can any VP member help me to get this ?

  1. Why dividend paying has been stopped after 2013 although the company is making profit?
  2. What is their plan to use the cash in near future?
  3. What is the growth rate they are expecting in coming years ? What kind of growth model they are targeting to follow ? Retail or Wholesale based ? Distributor or Sales personnel based ?
  4. How much is the brand value of your product ?
  5. How many distributors you are having in their network ? What is the plan for expanding it?
  6. What is the plan for Capex in near term ? Will there be any brown field , white field or green field expansion is on the card ?
  7. What is the current capacity utilization level ?
  8. Is there any fixed supplier network attached to your company like farmer cooperation , direct farming person or from mandi ?
  9. What is the reason behind exceptional increase in sales in March 2017 Quarter?
  10. What is the expected future Sales CAGR your company is expecting ?

The most obvious explanation for sudden increase in cash flows in FY17 that were previously unheard of in a company’s history, is demonetisation. Funds siphoned off in the past might be coming back into books.

1 Like