KRBL
 
  

 
 
SHARETIPSINFO >>Research Reports >>KRBL (15-10-2008)

 

LISTING
BSE
CMP
Rs 82
52 WEEK HIGH/LOW
Rs 178/Rs 68
AVG VOL
13500
DIVIDENT
20%

COMPANY OVERVIEW:

Company traces its lineage to Khushi Ram and Behari Lal - two enterprising brothers who founded KRBL (formerly known as Khushi Ram Behari Lal) in 1889 at Lyallpur (present day Faisalabad, Pakistan). After the partition of the country and a split in the family, the promoters of the company re-established themselves in Delhi as commission agents and traders of various agro products. Thereafter they started merchant export of rice in the partnership firms M/s. K.B. Overseas and M/s. Khushiram Beharilal (Export Division). The manufacturing activities i.e. processing of paddy were started in M/s. K.B. Overseas from 1st March, 1992.
KHUSHI RAM BEHARI LAL LIMITED was started as a partnership firm in the year 1988 - the partners being Mr. Anil K. Mittal, Mr. Anoop K. Gupta and Mr. Arun K. Gupta under the name and style M/s. K.B. Overseas. The partners of the firm then promoted M/s. Khushi Ram Behari Lal Ltd. with the intention to take over the operations and businesses of the partnership firm with effect from April 1, 1993. The Company was incorporated on 30th March, 1993 and the certificate of Commencement of Business was obtained on 26th April, 1993 from the Registrar of Companies, Delhi and Haryana with the object to process paddy. All the balances of the partnership firm as appearing in the books of account as on 31.03.1993 were transferred in the company's name at their book values.
Today, KRBL not only has the capacity of milling rice at 170 MT per hour, but also that of catering to nearly six per cent of the global rice trade. Though KRBL hold a staggering 11 per cent market share of India's basmati export turnover, and export performance is incomparable to others.


PROCUREMENT AND STORAGE CENTRE:

KRBL's milling and packing units, located at Ghaziabad (UP), Dhuri (Punjab), Alipur (Delhi) and Gandhidam (Kandla) enjoys the strong support of its procurement network for basmati rice that spreads across the states of Punjab, Haryana, Uttaranchal and Uttar Pradesh. In case of non-basmati rice, the company procures its products from across the country. However, for the milling purposes, it procure non-basmati paddy from North Western Indian States. Presently, the company has been sourcing 40 per cent of paddy requirements for milling by way of contract farming. With regard to product storage, the company has set up a state-of-the-art storage and warehousing facilities in its milling area. Also, since it focuses on quality of the product, the company has implemented several storage related systems and methods to retain the product quality. Besides, it continuously makes investments in new technologies with an objective of acquiring strategic business advantage. Then again, to build the capacity of the work force, the company holds several employee-training programmes to stress on the importance of storage and product safety related issues.


DEALER AND DISTRIBUTION NETWORK:

Company has a network of 26 lakh retailers, 87 distributors and 434 dealers across the country.
SALES BREAK UP: More than 70% of the sales of the company come from export.

PRODUCT LINE:

KRBL serves its consumers with 29 unique brands of rice under the processing and packing license. Some of our major brands are India Gate, Doon, Nur Jahan, Indian Farm, Bemisal, Unity and Aarati. The brands are launched along the lines of varieties and category of rice. The core formulation of the company's brands is to meet the various needs of consumers such as quality attributes, usage, economic value addition and unique culture.


INDUSTRY OUTLOOK:

India being the largest producer and exporter of basmati rice commands premium over its traditional rivals in terms of prices and quality. The total rice market in the country is estimated to be worth around Rs 1, 00,000 crore of which only 10 per cent of the rice is branded. The branded rice sales have taken off in recent years and have been growing at around 15 per cent in the domestic market compared to 5 per cent for unbranded rice. The branded rice sales growth is an impressive 25 per cent in the international market as compared to stagnant sales of unbranded rice. Added to this, of the Rs 3500 crore worth of basmati rice produced, only around Rs500 crore worth is sold in branded form. On the pricing front, Basmati rice prices are expected to increase by Rs 7-8 per kg due to steady export demand supported by lower crop. KRBL, with its strong franchisee network and a total export market share of 11% in value terms is likely to reap the benefits of growing penetration of branded rice including basmati.  


SHAREHOLDING PATTERN:

 

 

NO.OF SHARE

% OF TOTAL

PROMOTER

12950715

 

53.27

 

INSTITUTION

918377

 

3.78

 

GENERAL PUBLIC

10442102

 

42.95

 

GRAND TOTAL

24311194

 

100

 

FINANCIAL:

 

 

31-Mar-08

31-Mar-07

31-Mar-06

31-Mar-05

TOTAL INCOME

1006.78

919.88

732.31

505.96

EXPENDITURE

-852.9

-798.62

-641.79

-462.07

OPERATING PROFIT

153.88

121.26

90.52

43.89

DEPRECIATION

-24.1

-17.53

-11.89

-7.37

PBIT

 

129.78

103.73

78.63

36.52

INTEREST

 

-64.64

-45.79

-30.02

-10.91

PBT

 

65.14

57.94

48.61

25.61

TAX

 

-10.39

-8.43

-16.58

-9.33

PAT

 

54.75

49.51

32.03

16.28

CHANGE IN TOTAL INCOME
CAGR IN TOTAL INCOME IS 25.82%

CHANGE IN OPERATING PROFIT
CAGR IN OPERATING PROFIT IS 51.91%

CHANGE IN NET PROFIT
CAGR IN NET PROFIT IS 49.42%

CHANGE IN EPS OVER 3 YEAR PERIOD

RATIOS:

 

 

31-Mar-08

31-Mar-07

31-Mar-06

31-Mar-05

 

NPM

5.4381295

5.3822238

4.3738308

3.2176457

 

OPM

15.284372

13.182154

12.360885

8.6745988

INTEREST COVERAGE

2.0077351

2.2653418

2.6192538

3.3473877

Company top line and bottom line is increasing consistently over the period. Since company is working in agro based industry it has low operating and net profit margin. A significant amount of money is locked in the inventory because for good quality basmati rice it has to be kept for 10 to 12 months.
Company has NPM remained more or less stagnant but operating profit margin has shown an increase over the 3 year period. Interest coverage has slightly come down but it is not of any concern.


CONCERN:

Rice processing companies including KRBL require significantly high inventory levels, as basmati    rice has to be aged for 12-18 months before it can be processed. Also unfavorable monsoon condition could dampen rice crop as a result, margins could come under pressure due to high inventory carrying cost.  


VALUATION:

Company is currently trading at PE multiple of 4 on past years earning ,this is much below the industry average of 9.On conservative basis the PE multiple should be around 7,so there is at least an upside of 40% from the current price  on normal market condition. We maintain that company sales will grow in the next years at same rate.


CONCLUSION:

As the company is working the core sector of the economy, we expect it is not going to be affected by the global slowdown. Agro industry is the safe and secure bet at this time ,when capital appreciation has taken a back seat and capital preservation is the slogan of the investor.

 

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