usher agro limited - aceanalyser meet/132765_20100917.pdfrice-mathura rice-buxar rice-chatta...
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Executive Summary
Contents
Industry Overview
Company Overview
Key Competitive Strengths
Key Financial Highlights
Executive Summary
One of the largest agri-food processing company engaged in milling of Rice and Wheat
Founded in 1996 by Mr Vinod Kumar Chaturvedi and Mr Manoj Pathak, USHER’s success lies in well-timed expansions, uncompromised quality and profitable growth
Total rice and wheat milling capacity of 327,000 MTPA currently and an additional rice milling capacity of 291,600 MTPA expected to be on-stream in December 2010
Achieved sales of Rs 3,420 mn in FY 2010 which represents a CAGR of more than 70% in the last 3 years
Focusing on expanding its business by putting up modern processing, storage and handling facilities
Food & Grain Processing Industry
Basic Food
Value Added Food
Packed Food Juices/ Beverages
Biscuits/ Bakery Ready to Eat Food
Rice Wheat Pulses Coarse Grain
Basmati Non Basmati Atta
Maida
Suji
Bran
Industry Structure
India constitutes approx. 10% of the global food production estimated at 5,484.9
mn MTPA1
Agri-products like Grains and Fruits & Vegetables contribute majority (420 mn
MTPA) to the food produced in India, followed by Milk (108 MT). Meat contributes
2.9 mn MTPA to the food production
Source: Ministry of Agriculture, NHB, NDDB, Industry sources, *2009-10 data, **2007-08 data
Food Production in India
Indian Agri-business Industry
Source: Ministry of Agriculture, NHB, NDDB, Industry sources, *of Agriculture, NHB, NDDB, Industry sources, *of 2009 10 data, **2007 08 data
Product Annual Production, Mn MTPA (08-09)
Total Production Mn MTPA
Cereals and Pulses 210.66
Rice 99.15
Wheat 80.71*
Pulses 14.66
Bajra 8.83 Jowar 7.31
Edible oil 6.7 6.7
Fruits 73.5** 209.6
Vegetables 136.1**
Milk (MT) 108.5 108.5
Poultry – eggs 56,031 mn
Meat 2.9 2.9
538.36
1Source: FAOSTATS, Statistics Division, Food and Agriculture Organization of the UN, Statistical Yearbook 2009
Overall Scenario
Asia contributes to almost 88% of the
global rice production and consumption
India is the second largest producer
contributing 24% to global rice production
Rice plays a vital role in the national food
security being the largest staple food. It
contributes approx. 43% of total food
grain production in India
The main growing areas for Rice in India
are Northern Grain belt constituting Uttar
Pradesh, Punjab, Haryana, Bihar, West
Bengal and Andhra Pradesh in South
India’s rice production in 2008-09 was a
record 99.15 mn MT
India has traditionally been an exporter of
both non-basmati and basmati rice
Approx. 99% of the Indian Rice
production is Non-Basmati
31%
24%9%
7%
5%
5%
3%
2%
2%
12%
China
India
Indonesia
Bangaladesh
Vietnam
Thailand
Myanmar
Japan
Philippines
Brazil
Top Rice producing countries 2008-09
Rice Industry (1)
State Production of rice (% Share)
West Bengal 15.16
Andhra Pradesh 14.36
Uttar Pradesh 13.20
Punjab 11.09
Orissa 6.87
Bihar 5.64
Total 455.9 mn MT1
1Source: FAOSTATS. Data may vary from the estimates of Ministry of Agriculture in India Top Rice producing States in India (2008–09)*
*Lok Sabha Unstarred Question No. 843, dated on 24.11.2009.
Source: Ministry of Agriculture, India
Being an essential commodity, the Government of India, procures around 25 mn MT of rice for distribution through Public Distribution Scheme (PDS).
The millers are essential part of the value chain wherein either the Government gets the paddy processed by millers or procures milled rice from the millers.
Food Corporation of India undertakes an assured procurement of food grains on behalf of Government of India.
A Minimum Support Price or MSP is declared on an Annual basis only for Common and Grade A varieties of Paddy and Milled Rice, which are subject to Levy.
Rice Industry (2)
Paddy/ Rice 2005-06 2006-07* 2007-08* 2008-09 2009-10
Paddy Common 570 580 645 850 950
Paddy Grade A 600 610 675 880 980
Rice Common 990 1074 1263 1502 1655
Rice Grade A 1035 1120 1309 1548 1701
The rice milling process results in by-product Husk, a biomass for generating green energy
Another by-product Bran, is used for extracting Edible Oil.
Minimum Support Price/ Rice Levy rate over the years (Rs/Quintal)
*does not include Bonus price. Prices of 2007-08 are before the approx. 13% revision done from 12 June 2008
Overall Scenario
World wheat production reached a
record 686.1 mn tonnes in 2008-09 and
has grown at a rate of 12.4% over the
last year
India has the largest area in the world
under wheat (about 12.5%). However,
in terms of production, India is the
second largest behind China.
India produces about 81 mn tonnes of
wheat a year, which is about 36% of
India's total food grain production in
India.
The Northern States of Uttar Pradesh,
Punjab, Haryana , Bihar, etc contribute
to more that 70% of the wheat
production in India
Top Wheat producing countries 2008-09
Wheat Industry (1)
Total 686 mn MT1
1Source: FAOSTATS. Data may vary from the estimates of Ministry of Agriculture in India
Top Wheat producing States in India (2008-09)*
Total 686 mn MT1
Source: FAOSTATS. Data may vary from the estimates
State Production of wheat (% share)
Uttar Pradesh 35.39
Punjab 19.50
Haryana 13.40
Rajasthan 9.03
Madhya Pradesh 8.08
Bihar 5.47
* Source : Lok Sabha Starred Question No. 451, dated 04.08.2009
Source: Ministry of Agriculture, India
Being an essential commodity, the Government of India, procures around 15 mn MT of
wheat for distribution through Public Distribution Scheme (PDS).
Food Corporation of India undertakes an assured procurement of food grains on behalf of
Government of India.
A Minimum Support Price or MSP is declared on an Annual basis
Wheat Industry (2)
Wheat Grade 2005-06 2006-07 2007-08 2008-09 2009-10
Wheat 650 750* 1000 1080 1100
Wheat Products
Wheat is sold after crushing or rolling as wheat products (unlike rice, where the grain is sold), commonly classified based on the fineness of grain:
‒ Suji, or semolina and used for various preparations in household
‒ Atta, or Whole Wheat Flour, is used for making Chapattis, which central to the Indian diet
‒ Maida, or Fine Flour is used to make bread, biscuits, pasta, and other products in bakery industry
‒ Bran, is used as a poultry/ cattle feed supplement.
Minimum Support Price over the years (Rs/Quintal)
*does not include Bonus price
Rice/ Wheat Supply Chain
APMC/ Mandis
Intermediaries /Agents
Customers
Farmers Mill CFA/depots
Large retailers Wholesalers
Small & medium retailers
Traders/ Stockists/ Brokers/Others
Customers
Kaccha Arahtiya
Pukka Arahtiya
Name: Usher Agro Limited
Business: Processing of agro based products
Rice and allied products, mainly Non-Basmati rice
Wheat products such as Atta, Maida, Suji, etc.
Industry: Agriculture – Food Processing
Key Highlights: An ISO 9001:2000 and HACCP certified company with automated and modern processing facilities
‘Rasoi Raaja’ registered umbrella brand for all our products
Strong promoter background and professional management supported by a team of highly qualified and dedicated people
Listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE)
Promoter Directors
Mr. Vinod Kumar Chaturvedi
Mr. Manoj Pathak
Usher in a Glimpse
Incorporation of USHER
Second rice milling plant at Mathura
Initial Public Offer
New Rice Milling at Chhata (under implementation)
First rice milling plant at Mathura
First rice milling plant in Bihar
Wheat flourmill at Mathura
Rice Milling at Chhata
Jun 96 Nov 96 Dec 99 Nov 03 Sep 06 Nov 06 Feb 09 Dec 10
Key Milestones
Rice Products
Raw Rice 1121
DB
Sugandha
Masauri/ Sonam
Parmal/ PR-11/ Common IR-8
Sharbati
Basmati
Pusa Basmati
Part Boiled/ Steamed Rice
1121
DB
Sugandha
Masauri/ Sonam
Parmal/ PR-11/ Common IR-8
Sharbati
Basmati
Pusa Basmati
Brown Rice 1121
Parmal PR - 106
Basmati
Pusa Basmati
Wheat Products
Whole Meal Atta (Chakki Fresh Atta)
R-Atta
Semolina Premium (Rawa/ Suji)
Fine & Superfine Wheat flour (Maida)
Bran (Choker)
Products
Wheat
Rice
Unit-wise Cumulative Capacity (MTPA)
291,600 MTPA additional rice milling capacity at Chhata is expected to commission by Dec 2010
Manufacturing Facilities
10,800 10,800 10,800 10,800 10,800 -
46,800 46,800 46,800 46,800
1,94,400 1,94,400
- -
75,000 75,000 75,000
-
50,000
1,00,000
1,50,000
2,00,000
2,50,000
Yr 1996 Yr 2003 Yr 2006 Yr 2009 Yr 2010
Rice-Mathura Rice-Buxar Rice-Chatta Wheat-Mathura
Board of Directors
Name Age Profile Mr. Vinod Kumar Chaturvedi Managing Director
45 Qualified Chartered Accountant with over 19 years of experience in finance,
projects and food processing. He drives the growth strategy of the company and oversees the entire business of the Company
Mr. Manoj Pathak Whole Time Director
36 Graduate in Commerce and law. He has more than 14 years of experience in
food processing. He is responsible for growth and development of marketing network and managing the interface with farmers and operating personnel.
Mr. Ajay Prakash Arora Non Executive and Independent Director
69 Holds a Master Degree in Commerce and is a Certified Associate of Indian
Institute of Bankers (CAIIB). Has worked for over 37 years with Central Bank of India in various capacities incl. as the Senior Internal Auditor
Mr. Shri Prakash Arora Non Executive and Independent Director
70 Graduate in Animal Science and was responsible for sales, technical, marketing,
budgeting, training and business development at Pfizer Animal Health and launched their Agro chemical business in western India
Mr. Vijay Ranchan Non Executive and Independent Director
68
Holds a Master degree in Arts and has retired from Indian Administrative Service (IAS). He has held senior positions of secretary/principal secretary/ additional chief secretary in the Department of Revenue, Industry, Labour and Health of Government of Gujarat.
Mr. Narayanan Krishnan Non Executive and Independent Director, (Nominee Director of IDBI Bank Limited)
51 Holds a Master degree in Commerce and is associated with IDBI Bank Limited
for over 3 decades. He has expertise in corporate finance, rehabilitation & recovery, internal audit and agri business.
Large Rice Milling Capacity
Locational advantage
Experienced Promoters with
proven execution capability
Automated and modernised plant
and storage facilities
1
3
2
4
Key Competitive Strengths
Strong Procurement network across 60
mandis
5
USHER is amongst the largest producer and processor of non-basmati rice in India, which helps us achieve better economies of scale in procurement, processing, logistics and other areas
With Commissioning of the Chhata facility in Dec 2010, our total installed capacity will be 618,600 MTPA for Rice and Wheat together
Key Competitive Strengths
1 Large Rice Milling Capacity
PLANT LOCATION EXISTING INSTALLED
CAPACITY (IN MTPA)
UNDER IMPLEMENTATIO
N (IN MTPA)
TOTAL
Rice
Rice milling
Mathura, U.P. 10,800 - 10,800
Buxar, Bihar 46,800 - 46,800
Chhata, U.P 194,400 291,600 4,86,000
Subtotal 5,43,600
Wheat
Wheat roller flourmill Mathura, U.P. 75,000
- 75,000
Subtotal 75,000
Total 6,18,600
Our mills are present in Uttar
Pradesh and Bihar and our plants
have proximity to Haryana state.
Together, the three states
contribute about 19.41% and
53.2% of total rice and wheat
production in India respectively
The presence ensures a
continuous access to the rice and
wheat crop
Our presence in Mathura and
Chhata brings us closer to the
rice deficit states such as
Rajasthan, Gujarat and
Maharashtra. This gives us a
logistic advantage to supply
products to the consumers in
these states
Key Competitive Strengths
2 Locational Advantage
Grain belt of India Grain belt of India
Chhata , Mathura
Buxar
Grain Deficit Area
Our Promoters, Mr. Vinod Kumar Chaturvedi and Mr. Manoj Pathak have more than 14 years of experience in food
processing industry
Under their leadership, the capacity increased from 10,800 MTPA to 327,000 MTPA and has achieved a turnover of Rs
3420 mn in FY 2010
The team has set up three rice milling plants and a wheat milling plant in Mathura and Chhata in Uttar Pradesh and in
Buxar in Bihar
Mr. Pathak has played a significant role in the development of strong procurement and marketing
A strong senior management team has also assisted the growth and expansion of the Company
Key Competitive Strengths
3 Experienced Promoters with proven execution capability
All plants of the Company at Mathura, Chhata and Buxar are fully automated and modernized. The processes of drying, storing, grading and finishing are fully automated which results on savings in cost and optimum utilization of the capacity.
We also have adequate infrastructure with regards to land, utilities and space for storage of our finished products. We have set up modernized silos at our Chhata plant with a capacity of 2,500 MT to store the raw materials and processed rice
Currently expanding the Silo capacity by another 30,000 MT is being carried out at Chhata
Large Par boiling capacity
Key Competitive Strengths
4 Automated and modernised plant and storage facilities
Our Plants have been awarded:-
ISO 9001:2000 certification for Quality Management System and
Hazard Analysis and Critical Control Point (HACCP) Management System certificate from International Industrial Certification Company Limited, Korea
The presence of our rice and wheat milling plants at Mathura, Chhata and Buxar brings us closer to the mandis which enables us to procure raw materials to our plant and lower transportation costs.
The mandi situated in Mathura is one of the largest in the area where are plants are situated.
We have a strong procurement network present in over 60 mandis.
Further we have exclusive agents (pukka arahtiyas) in each of the mandis who procure the raw materials for our plants at competitive rates.
Key Competitive Strengths
5 Strong Procurement network across 60 mandis
Sales CAGR at 70% between FY07 and FY10
EBITDA Margin of about 14% in FY10
PAT margin of about 7% in FY 10
Key Ratios (FY10)
LT Debt/ Networth 0.89
Current Ratio 1.93
Dividend payout 9.0%
ROE 22.8%
ROCE 17.6%
0%
5%
10%
15%
20%
25%
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
FY06 FY07 FY08 FY09 FY10
EBITDA % Net Margin Revenues (INR mln)
Key Financials
USHER has is a consistent fast growing profit making company since inception
Key Share Market Parameters
Shareholding Pattern (June 2010)
7.35% 2%
23%
39%
28%
Foreign Institutions
Domestic
Institutions
Non Promoter Corp.
Holding
Promoters
Public & Others
Share Price Rs 89.05
Market Cap Rs 1,982 mn
BSE Code 532765
NSE Code USHERAGRO
As at 14th Sep 2010
USHER has outperformed the Sensex since listing
-
500.0
1,000.0
1,500.0
2,000.0
0
500
1,000
1,500
2,000
02-01-2007 02-07-2007 02-01-2008 02-07-2008 02-01-2009 02-07-2009 02-01-2010 02-07-2010
Usher
Sensex
*Graph indicates the relative movement of Usher price and Sensex on a common base of 100 at the beginning
Year Ended 30th Jun (Rs mn) 2010 2009 2008
Income Sales 3420.0 2089.5 1412.4
Other Income 6.7 5.3 3.0
Inc / (Dec) in Stocks 133.9 163.6 58.3
Total 3560.6 2258.5 1473.8
Expenditure
Cost of Materials Consumed 2924.0 1901.4 1227.7
Manufacturing, Admin & Other Expenses 151.2 82.9 54.9
Financial Expenses 140.6 53.7 19.5
Depreciation 53.4 23.2 15.8
Total 3269.4 2061.3 1318.1
Profit for the Year 291.2 197.2 155.6
Less: Provision s 54.2 47.2 29.1
Profit after Tax 235.1 148.5 126.4
Historical P&L Statement
Year Ended 30th Jun (Rs mn) 2010 2009 2008
Share Capital 254.5 235.0 256.1
Reserves & Surplus 778.0 442.2 244.4
TOTAL NET WORTH 1,032.5 677.2 500.5
Secured Loans 1,845.1 844.2 397.7
Unsecured Loans 300.0 103.4 9.0
Deferred Tax Liability 56.1 42.6 16.8
Total 3,233.8 1,667.6 924.1
Gross Block 895.7 818.8 284.9
Less – Depreciation 116.3 62.9 39.6
Capital work in Progress 268.7 62.4 2.7
Net Block 1,048.1 818.4 518.0
Inventories 1,348.4 640.5 245.4
Sundry Debtors 655.2 369.8 244.4
Cash & Bank Balance 247.8 8.2 8.2
Loans & Advances 36.5 26.0 6.5
Total Current Assets 2,288.1 1,044.6 504.6
Liabilities 234.4 216.3 94.7
Provisions 21.3 28.2 25.1
TOTAL CURRENT LIABILITIES 255.8 244.6 119.9
Net Current Assets 2,032.2 800.0 384.7
Misc Expenditure 3.2 6.4 10.5
Total 3,233.8 1,667.6 924.1
Historical Balance Sheet
Receptions and storage
Parboiling
Drying
Cleaning
Paddy is dried through vertical dryers and stored
Paddy is circulated in the drier till the moisture content reduces 13-15%. The paddy is further tempered for six to ten hours. Finally, its again dried for an approx two hours to reduce the moisture to 11-12%
Paddy is pre-cleaned for degreasing. Hot water laden paddy is circulated in closed system for four hours after which hot paddy is steamed for an approx. ten minutes. Finally, paddy is discharged into the dryer elevators
Paddy with acceptable moisture content is fed to paddy cleaner to clean it of dust contents
Hulling and separation
Whitening and polishing
Grading
Auto weighing and packing
Paddy is shelled and entire husk blown out. A separator then separates shelled and unshelled paddy . Unshelled paddy is automatically sent back to the sheller with fresh paddy feed
Rice passes through two polishes, which remove rice bran from the rice at this stage. A final polisher polishes and shines the rice
Broken rice is separated from head rice and sorted by length. A further sequence of indent cylinders are used to further separate the product into fractions of different broken size
Cooled rice is packed in bags, which are individually weighed and stitched. The rice bags are ready for dispatch or storage
*For production of raw rice, the process and sequence of milling remain same, except the parboiling process, which is skipped
Manufacturing Process: Par Boiled Rice
Intake and pre-cleaning
Storage silos
First cleaning
Second cleaning
Wheat is cleaned before processing to remove coarse impurities, thus improving its storability
Further processing undertaken to remove foreign ingredients. Wheat tempering is also undertaken at this stage
Cleaned wheat is stored in silos for the continuous process and for making a proper blend of wheat according to end product mix requirements
Wheat is further tempered to have constant moisture
Grinding
Purification
Bran finisher
Packaging
A gradual reduction system of break is used to separate the bran and endosperm
Semolina and Middling produced at grinding stage are separated from bran
Flour which remains in bran is cleansed and the remaining bran packed
The process followed is of gradual reduction thus at each stage, end products are produced and sent pneumatically after sieving and the finished product is packed for delivery
Manufacturing Process: Wheat products