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Vishwaraj Sugar Industries Limited

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ABOUT THE COMPANY

  • Company deals in manufacturing of sugar and other related products employed in Belgaum District in Karnataka. It is assigned a status of “ High Recovery Zone “ for sugar production by government of India.
  • Company has five business segments namely Sugar, Co-Generation, Distillery, Indian Made Liquor (IML) and Vinegar.
  • Company began its operation in 2001 starting  from 2001 mainly concentrating on distillation and manufacturing of products such as Ethanol, Rectified spirit etc.
  • Major technological and commercial upgrades took place during 2006 and 2008 such as backward integration, Cogeneration and bottling of the Indian made liquor.
  • Company has expanded significantly over last few years and currently it is holding 950 employees as of May 31,2019.

 

BUSINESS STRATEGIES

  • ENHANCING THE OVERALL EFFICIENCY

The products processed in the company are interconnected so the efficiency of one product depends upon its parent product’s efficiency. Thus the company focuses on improving the overall as well as part wise efficiency of the whole production chain.

  • GEOGRAPHICAL EXPANSION OF THE COMPANY

Company focusing on the geographical expansion at the places with high sugarcane cultivation and the areas where the yield is most compatible with the processing of the final and other by products.

  • FOCUS ON INCREASING MORE IML PRODUCTS

Currently the company is only manufacturing bottled whisky but it plans to expand this segment of the industry by launching more IML products like Rum, Gin and Vodka. In order to increase the revenue percentage of IML products in the overall annual revenue.

  • ESCALATING THE FUND BASED CAPACITIES FOR FURTHER EXPANSION

To increase the liquidity in the balance sheets company aims to raise funds through this issue because the sugarcane industry is highly affected by the fund based factors such as high debts and advanced payments to farmers and harvesting and transportation agents.

INITIAL PUBLIC OFFERING

BID/OFFER OPENS ON Sept 30,2019
ISSUE TYPE Book Built Issue
BID/OFFER CLOSES ON Oct 4,2019
ISSUE SIZE Rs 60 Cr.
ISSUE PRICE Rs55-Rs60 per Eq. Share
FACE VALUE Rs 10 per Eq. Share
MARKET LOT 240 Shares
LISTING AT BSE, NSE

LIST OF PROMOTERS

  • Umesh Katti
  • Sheela Katti
  • Ramesh Katti
  • Jayashree Katti
  • Nikhil Katti
  • Lava Katti
  • Kush Katti
  • Mrs. Sneha Nithin Dev

SHAREHOLDING PATTERN

Top 10 Shareholder of the Company as on the date of this Red Herring Prospectus:

Name of Shareholder No. of Equity Shares Percentage of pre-offer capital (%)
Umesh Katti 14,18,575 4.11%
Ramesh Katti 13,28,950 3.85%
Sheela Katti 11,41,000 3.30%
Jayashree Katti 12,58,800 3.64%
Nikhil Katti 36,92,875 10.69%
Lava Katti 12,00,275 3.47%
Kush Katti 12,45,075 3.60%
Ashok Utture 10,29,300 2.98%
Kashinath Utture 6,81,000 1.97%
Kadayya Pujar 6,43,550 1.86%

 

INDUSTRY ANALYSIS

INDIAN SUGAR INDUSTRY

India is going to record a bump in the Sugar production industry with 32-34 MMT production VS the consumption of 25-26 MMT in the very next season.

There is an expected rise of 4.2% in the production with Uttar Pradesh leading as the largest producer nationwide.

PRODUCTION

Statistics as on 15th December 2018, 462 sugar mills were crushing sugarcane all over the country. 70.52 lakh tons of Sugar produced which is 2.1% higher than that of the last sugar season. Also at the same time last year 476 mills were operating.

Forecast predicting the rise of 4.3% making a record production of 33.8 MMT which includes 0.56 MMT of a local type of low recovery sugar.

 

BAGASSE CO-GENERATION INDUSTRY IN INDIA

States which have taken leadership position in implementation of bagasse cogeneration projects are Andhra Pradesh, Tamil Nadu, Karnataka, Maharashtra and Uttar Pradesh.

 

INDIAN MADE FOREIGN LIQUOR (IMFC)

The Indian Liquor industry comprises the Indian made Foreign Liquor (IMFL), country liquor, foreign liquor bottled in origin (BIO), illicit alcohol, beer and wine segments.

The overall IML market is increasing at the rate of 9 to 10%.

The Indian liquor market is mainly concentrated in the southern part got the country. With the region accounting for about 60% of total IML sales and 45% of total beer sales. Andhra Pradesh is the largest consumer of the both while Karnataka and Maharashtra are second largest consumers of IML and beer respectively.

 

SUGAR BASED DISTILLERY/ETHANOL INDUSTRY

The most prominent key by-product of the sugar mill industry. India has almost 330 distilleries which can produce over 4 billion litres of rectified spirit (alcohole) per year, of these almost 162 distilleries have the capacity to distil over 200 Cr litres of conventional bio-ethanol. India produces conventional bio-ethanol mostly from sugar molasses & partly from grains.

 

FINANCIAL OVERVIEW

Revenue Model

 

(Amount in Rs.lakhs)

As at March 31 Total Income  Total Expenses Profit/(Loss) After Tax Total Assets Total Non Current Liabilities
2015(Proforma) 34,936.75 34,949.14 (57.68) 60,501.20 3,873.33
2016(Proforma) 40,864.55 40,136.83 83.35 58,898.53 3,130.06
2017(Proforma) 32,289.84 31,242.78 606.25 54,319.99 2,266.75
2018 26,893.11 26,979.30 (426.67) 62,418.63 5,260.69
2019 30,787.55 33,176.27 (1,761.99) 71,954.96 7,489.29

Total Income & Total Expenses

 

Profit/(Loss) After Tax

 

Total Assets

 

Total Non Current Liabilities

 

Statistical Overview

Year Earning/Loss per share"EPS"(In Rs.) Return on Networth"RoNW"(In %)
31 March,2017 1.75 2.61
31 March,2018 (1.23) (1.86)
31 March,2019 (5.10) (8.33)

Earning/Loss per share"EPS"(In Rs.)

 

Return on Networth"RoNW"(In %)

 

MAJOR INDUSTRY PLAYERS & COMPARISON
(WITH LISTED PEER)

Name of Company

Peer Group

EPS [Rs.] P/E ratio RoNW [%] NAV Per Share [Rs.]
Ugar Sugar Works Ltd. 0.39 33.08 8.05 4.54
Dwarikesh Sugar Industries Ltd. 5.05 4.45 20.51 24.62
Balrampur Chini Mills Ltd. 24.98 5.67 27.40 91.19
Dhampur Sugar Mill Ltd. 38.40 4.17 20.51 187.07
Vishwaraj Sugar Industries Ltd. (5.10) N.A (8.33) 61.20

EPS [Rs.]

 

P/E ratio

 

RoNW [%]

 

NAV Per Share [Rs.]

 

REFERENCES

  • VISHWARAJ SUGAR INDUSTRIES LIMITED. Red Herring Prospectus.
  • www.vsil.co.in

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