Some notes from the Arihant Capital meeting:
- Recently acquired a company which is primarily in the business of selling mustard oil. Can scale the existing business from 130 Cr to 190 Cr. Asset value is 27-28 Cr. The entire acquisition has been done on asset value.
- As on date products are being sold in West Bengal, Assam, Jharkhand, UP, Bihar and Orissa.
- 10 categories of products and 75 SKUs. 11 if you count mustard oil after acquisition of RR Proteins.
- Total production capacity stands at 76 MTPA per day.
- Margins have expanded due to economies of scale and better utilization of logistics due to the company entering into weight heavy products.
- In the process of implementing their own ERP system.
- Plans underway to expand into central and northern India, starting with Uttar Pradesh.
- Recently acquired a 5 acre plot in Tezpur, Assam
- Why acquired an edible oil company - Preference for mustard oil in India is growing, brand loyalty in West Bengal. Will be margin acretive, as the edible oil is a heavier product, so optimized logistics will come into play. Will also benefit the company because of the better reach in the region. The acquisition has been done on asset value. The cherry on cake is the market already created by the brand. Co is expecting better uptake after revamping the packaging and pricing. Annapurna will be taking over the 20 Cr worth of debt from RR Proteins.
- Co enjoys better margins because of indigeneous machines which can be modified per requirements in a shift’s time. Plus, the pricing structure makes their products competitive. It is easy to deal with the products that are available at prices which are multiples of 5.
Annapurna Swadish & Arihant Capital MarketsLtd | Bharat Connect Conference-Rising Stars 2024
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