K S Oils Ltd. (KSOL) is a 23-year old Morena (Madhya Pradesh) based company established in 1985. It is a leading integrated edible oil manufacturing company with its product range constituting mustard and soya bean oils. The company has five manufacturing plants with marketing offices and plantations in India, Malaysia, Indonesia and Singapore. Its business can be broadly classified into five divisions viz. Oil, Refinery, Vanaspati, Solvent and Power. Mr. Ramesh Chand Garg is the chairman while Mr. Sanjay Agarwal is the managing director of the company. KSOL has renowned brands like Kalash, Double Sher and K. S. Gold, which comprise a range of healthy cooking oil brands in mustard, refined oil and vanaspati. All its manufacturing plants are located in the rich mustard growing belt of Madhya Pradesh and Rajasthan in India.
Beginning operations in 1989 the company ventured into mustard oil with an oil mill having a crushing capacity of 150 tonnes per day (TPD). In 1992-93, it undertook its first major expansion with a building and commissioning its Solvent Extraction Unit (SEU). In 1995, it expanded its refinery operations as a development module. During 2001, a vanaspati unit of the company with a capacity of 150 TPD production was set up and also commissioned in the same year. To improve its packaging system, a High Density Polythylene Jar manufacturing unit was started in 2002. In 2006, the company acquired oil mills on lease with production capacities of 225 TPD. Further, it has received in-principle approval for allotment of 2000 hectares of waste land in Morena District from the Government of Madhya Pradesh for cultivation of Jatropha for the production of Bio-diesel. During 2007, it acquired an edible oil plant at Jodhpur, Rajasthan and made a strategic tie-up with a plant in Alwar, Rajasthan, to enhance production. KSOL ventured in the power sector by commissioning wind turbines of 2.5 MW. Also it added 28 windmills with capacity of 24 MWs in 2008. The company’s journey as a global player began in 2008 when it became the first Indian company to acquire palm plantations abroad. Its plantation in Indonesia occupies 50,000 acres (20,000 ha) is estimated to supply 80,000 tonnes of oil to its manufacturing and refining plants in India.
Beginning operations in 1989 the company ventured into mustard oil with an oil mill having a crushing capacity of 150 tonnes per day (TPD). In 1992-93, it undertook its first major expansion with a building and commissioning its Solvent Extraction Unit (SEU). In 1995, it expanded its refinery operations as a development module. During 2001, a vanaspati unit of the company with a capacity of 150 TPD production was set up and also commissioned in the same year. To improve its packaging system, a High Density Polythylene Jar manufacturing unit was started in 2002. In 2006, the company acquired oil mills on lease with production capacities of 225 TPD. Further, it has received in-principle approval for allotment of 2000 hectares of waste land in Morena District from the Government of Madhya Pradesh for cultivation of Jatropha for the production of Bio-diesel. During 2007, it acquired an edible oil plant at Jodhpur, Rajasthan and made a strategic tie-up with a plant in Alwar, Rajasthan, to enhance production. KSOL ventured in the power sector by commissioning wind turbines of 2.5 MW. Also it added 28 windmills with capacity of 24 MWs in 2008. The company’s journey as a global player began in 2008 when it became the first Indian company to acquire palm plantations abroad. Its plantation in Indonesia occupies 50,000 acres (20,000 ha) is estimated to supply 80,000 tonnes of oil to its manufacturing and refining plants in India.
KSOL, today, is a leading supplier of edible oils to the Indian defence forces and this tradition has been maintained for the past few years. The company has made concerted efforts to move up from a mustard oil producing company to a market focused FMCG brand company. The opportunity in the Indian markets is huge. Statistics reveal that the 6 northern states consume 90% of the mustard oil produced in the country, which throws up a market opportunity of over 50 crore customers.
Performance: The company has been posting consistently improved results quarter after quarter. During FY08, it clocked a net sales income of Rs.2044.30 cr. with a net profit of Rs.120.70 cr. posting an EPS of Rs.4.48 per share with a face value of Re.1.
Financial Highlights: (Rs. in lakh) Latest Results: In tune with its earlier performances, the company has reported encouraging Q2FY09 results registering a net sales income of Rs.733.60 cr. with net profit of Rs.42.22 cr. recording a basic EPS of Rs.1.27 and a diluted EPS of Rs.1.25. The annualised basic EPS works out to Rs.5.08 and diluted EPS of Rs.5 (FV: Re.1).
Share Profile: The shares of KSOL are listed and traded on the BSE under the B group. Its share touched a 52-week high/low of Rs.142/38. At its current market price of Rs.38.90, it has a market capitalisation of Rs.1333 cr. Dividends: The company has been paying dividends as shown below: FY08 - 18%, FY07 - 15%, FY06 - 12%, FY05 - 10%.
Shareholding Pattern: The promoter holding in the company is 33.31% while the balance 66.69% is held by non-corporate promoters, institutions, others and the Indian public. Among mutual funds, Kotak has added the company’s shares to its various schemes.
Prospects: Today, India accounts for 7% of the global oilseeds and oil meal production and 10% of the global consumption of edible oil. With the edible oil market size placed at Rs.67,500 cr. and the branded segment commanding 15% market share, the market opportunity is huge. Also, with modern retail formats limited to just 3%, the penetration opportunity is mind boggling. Lastly, with the improvement in the lifestyle of the Indian consumer, healthy living will be a priority, which will create an immense opportunity for the edible oil sector. The latest report from FICCI suggests that the branded edible oils market is 5 expected to grow by 20% per annum, which will not only spur the demand for edible oils but will also drive the demand towards branded and organised edible oil players. India is also witnessing an increase in lifestyle diseases like heart ailments and cardio vascular illness, which is said to be much higher than other nations. This calls for healthy edible oil and mustard being among the world's most heart friendly oil, consumers will be eager to adapt to qualitative mustard oil brands.
Conclusion: KSOIL is one of the top five edible oil companies in India. Moreover, with its global foray, changing lifestyles and health consciousness among the vast middle class is expected to have a beneficial impact on the company. At its current market price of Rs.39, its share price is discounted less than 8 times its estimated earnings. It is worth mentioning that the company has been able to post much better results in the present economic downtrend. Moreover, with the shortage of food expected worldwide, the prospects for companies like KSOL is extremely good. This share may be picked up in small parcels. The share offers a good investment opportunity to discerning investors with a medium-to long- term outlook.
Performance: The company has been posting consistently improved results quarter after quarter. During FY08, it clocked a net sales income of Rs.2044.30 cr. with a net profit of Rs.120.70 cr. posting an EPS of Rs.4.48 per share with a face value of Re.1.
Financial Highlights: (Rs. in lakh) Latest Results: In tune with its earlier performances, the company has reported encouraging Q2FY09 results registering a net sales income of Rs.733.60 cr. with net profit of Rs.42.22 cr. recording a basic EPS of Rs.1.27 and a diluted EPS of Rs.1.25. The annualised basic EPS works out to Rs.5.08 and diluted EPS of Rs.5 (FV: Re.1).
Share Profile: The shares of KSOL are listed and traded on the BSE under the B group. Its share touched a 52-week high/low of Rs.142/38. At its current market price of Rs.38.90, it has a market capitalisation of Rs.1333 cr. Dividends: The company has been paying dividends as shown below: FY08 - 18%, FY07 - 15%, FY06 - 12%, FY05 - 10%.
Shareholding Pattern: The promoter holding in the company is 33.31% while the balance 66.69% is held by non-corporate promoters, institutions, others and the Indian public. Among mutual funds, Kotak has added the company’s shares to its various schemes.
Prospects: Today, India accounts for 7% of the global oilseeds and oil meal production and 10% of the global consumption of edible oil. With the edible oil market size placed at Rs.67,500 cr. and the branded segment commanding 15% market share, the market opportunity is huge. Also, with modern retail formats limited to just 3%, the penetration opportunity is mind boggling. Lastly, with the improvement in the lifestyle of the Indian consumer, healthy living will be a priority, which will create an immense opportunity for the edible oil sector. The latest report from FICCI suggests that the branded edible oils market is 5 expected to grow by 20% per annum, which will not only spur the demand for edible oils but will also drive the demand towards branded and organised edible oil players. India is also witnessing an increase in lifestyle diseases like heart ailments and cardio vascular illness, which is said to be much higher than other nations. This calls for healthy edible oil and mustard being among the world's most heart friendly oil, consumers will be eager to adapt to qualitative mustard oil brands.
Conclusion: KSOIL is one of the top five edible oil companies in India. Moreover, with its global foray, changing lifestyles and health consciousness among the vast middle class is expected to have a beneficial impact on the company. At its current market price of Rs.39, its share price is discounted less than 8 times its estimated earnings. It is worth mentioning that the company has been able to post much better results in the present economic downtrend. Moreover, with the shortage of food expected worldwide, the prospects for companies like KSOL is extremely good. This share may be picked up in small parcels. The share offers a good investment opportunity to discerning investors with a medium-to long- term outlook.
Source: Internet (moneytimes)
