Rossel India Ltd. - A tea diversification play!
http://www.screener.in/company/?q=533168
Market Cap: 206.99 Crores
Current Price: 56.40
Website: http://www.rossellindia.com/
Business Summary:
)- Rossel India Ltd. was fully concentrating on tea and diversifying from fy2012 onwards into defence, aerospace oem and QSR (Quick Service restaurants)
)- FY2013-14 – Revenue break-up – Tea (87%) - defence, aerospace oem (10%) - QSR (3%)
)- Promotors are having 75% share holiding and general pulic (floats) are around ~10.8%
Tea Business:
)- Cash cow of Rossel India. It has been transformed with lots of changes in last 30+ years.
)- Producing 5.5 million kgs of tea in FY13-14. Having seven estates to produce them (2 bought in last year)
)- Per kg price is 30-40% higher than other players for last several years; Per kg price is doubled almost in 8 years.
)- It is a monsoon, heavy asset and labour intensive business.
Defence & Aerospace oem:
)- They are already having india based customers like DRDO, and last year they’ve got aerospace oem contract from Boeing
)- This division is having almost experienced with 20+ years and retired from services to run (All the provision and utilities are ready)
)- This division is expected to do a lot from current 10% revenue contribution considering FDI in Defence (More than 300cr project, requires 30% contribution from indian based company to tie-up)
)- Were investing with JV with CAE for simulation and training on defence projects before (not seeing much updates in last year AR)
QSR:
)- It was started around FY2012-2013 with own brand called Kebab Xpress in New Delhi/NCR region.
)- Currently having 7 shops opened and eyeing to get around 20 shops opened before end of FY15.
)- Future plan is to spread into bangalore and calcutta (their HQ)
)- It is not break-even yet and it will be possible in this fiscal when crossing 15 shops
)- Following standard QSR chains like center hub to make most of the foods and distribute to other shops
)- Q1FY15 – With 7 shops, they’ve contributed 2crores as revenue; FY2015 may have 14 crores possibly as revenue from this division
)- Read the food ratings and comments section – Almost all are good; Cost seems to be also normal
Valuation:
)- It is having 70 crores as short + long term debt; having investments in MF around 55 crores + 12 crores invested in JV called Rossel Enterprises pte (26% by Rossel:74% by devyani international) – Investments are done in taco bell franchise in an african country.
)- There was a old report that in Assam tea estate would be valued at ~Rs. 500/kg if the yield is average; which gives Rs. 275 crore for tea estate (mcap is 210 cr) then.
)- Last 5+ years - They are paying dividends.
Overall the business on defence, aerospace OEM and QSR will give the differentiation in growth and value unlocking while tea business to be the cash cow!
Disclaimer: Already having a tracking position and please do the related analysis and take a call. It is a low volume scrip again.
Hi Hitesh, Ayush, Have asked your inputs in a thread and did my study from AR reports and other news items here. All VP’s, Please share your valuable comments about this business and queries/views to learn more. Thanks.
Tea and
