CARE

Independent Equity Research

EQUITY
RESEARCH RASOI LTD
RASOI LTD
EDIBLE OIL
BSE Scrip Code: 507649 CMP Rs. 370 1 March 1, 2012

Rasoi Ltd (Rasoi) was incorporated in 1905 by Mr Raghu Mody

of the Rasoi Group under the name of The Doyapore Tea Co.
Ltd., with the main objective of the company to be in the
business of tea. However, Rasoi is now primarily in the business
of manufacturing and marketing of vanaspati and edible oil as
well as other cooking mediums and processed food items such as
salt, pickles, sauces, etc. Rasoi has four manufacturing units
located at Silchar, Assam; Jalgaon, Maharashtra; Kundli,
Haryana; and Banganagar, West Bengal. The Banganagar plant
which was commissioned in FY03 is the key plant for Rasoi. The
plant has a present capacity of 150 Tonnes Per Day (TPD) of
Vanaspati and 100 TPD of Refined Palm or Soya oil. The
company also has two subsidiaries, Alipore Consultants and
Rasoi Finance, under its fold.

Key concerns
• Extreme volatility in raw oil prices
• Unfavourable monsoon may affect business

Valuations
Rasoi is currently trading at trailing P/E and EV/EBITDA
multiples of 7.8x and 5.7x, respectively.

1 www.careratings.com
 CARE
EQUITY
RASOI LTD RESEARCH

HISTORY AND BACKGROUND

Background
Rasoi Ltd (Rasoi) was incorporated in 1905 by Mr Raghu Mody of the Rasoi Group under the name of The
Doyapore Tea Co. Ltd. The main object of the company was to be in the business of tea. After almost a century,
Rasoi has completely transformed its product lines. Currently, the company is primarily in the business of
manufacturing and marketing of vanaspati and edible oil as well as other cooking mediums and food-related items
such as salt, pickles, sauces, etc. The company also has two subsidiaries, Alipore Consultants and Rasoi Finance

Operations
Rasoi has four manufacturing units located at Silchar, Assam; Jalgaon, Maharashtra; Kundli, Haryana; and
Banganagar, West Bengal. The Banganagar plant which was commissioned in FY03 is the key plant for Rasoi. The
plant has a present capacity of 150 Tonnes Per Day (TPD) of Vanaspati and 100 TPD of Refined Palm or Soya oil.
This capacity is scalable to an interchangeable mix of at least 250 TPD of Refined Palm Oil or Soya Oil. The
company also has a 75 TPD of de-odourising unit for vanaspati.

Industry Segments
The company reported the revenues from two segments –
1. Edible Products
2. Investments and Treasury
The edible products segment formed around 92 per cent of the revenues in FY11 as against around 96 per cent of
the revenue in FY10.
Rasoi: Segmental Break-up
FY11 FY10

Source: Company and CARE Equity Research

www.careratings.com 2
 CARE
EQUITY
RESEARCH RASOI LTD

Within the edible products segment the sales mix was tilted towards Vanaspati & fatty acids, which together
contributed to around 80 per cent of revenue in FY11, while edible oils contributed to around 20 per cent.
Contribution from sale of edible salts was insignificant.

Rasoi: Edible Products Sub-segment Break up

FY11 FY10

Source: Company and CARE Equity Research

The company is primarily a domestic player in processed foods space. The company had no exports in FY11.

Rasoi: Peer comparison

(FY11) Units Rasoi Gujarat

Anik Agro Tech
Ambuja
Industries Foods Ltd
Exports
Net operating income Rs. Crores 140 1,333 2,086 739
EBITDA Rs. Crores 14 57 156 52
PAT Rs. Crores 9 10 91 21
Growth in net operating income % 32.5% 5.2% 45.7% 11.4%
EBITDA Margin % 10.2% 4.3% 7.5% 7.0%
PAT Margin % 6.8% 0.8% 4.4% 2.8%
RoCE % 10.3% 9.9% 18.2% 29.3%
RoE % 9.3% 4.9% 19.6% 12.6%
Price/Earnings (P/E) Ratio times 7.8 7.7 3.3 33.6
Price/Book Value(P/BV) times 0.7 0.4 0.6 5.9
Enterprise Value (EV)/EBITDA times 5.7 3.8 3.3 19.3

Source: Capitaline and CARE Research

3 www.careratings.com
 CARE
EQUITY
RASOI LTD RESEARCH

CONSOLIDATED FINANCIAL PERFORMANCE AND ANALYSIS

Top line grows 32.5 per cent

Rasoi reported a turnover of Rs.140 crore in FY11 as against Rs.105 crore in the previous financial year, -a growth of
around 32.5 per cent.

Operating profit declined by 12.1 per cent; margins shrink

Rasoi’s operating profit declined by 12.1 per cent to Rs.14 crore in FY11 from Rs.16 crore reported in the previous
financial year. Rasoi’s raw material cost increased by 46 per cent as compared to a 32.5 per cent increase in the top
line. This lead to a decline in the operating profit for Rasoi and consequently operating margins also shrinked by
more than 500 bps from 15.3 per cent in FY10 to 10.2 per cent in FY11.

Profits at PAT level after two continuous years of losses

Rasoi reported a net profit of Rs.9 crore for FY11 as against a loss of Rs.2 crore reported last financial year. Rasoi
exhibited profits after two continuous years of losses.

Rasoi: Consolidated Financial Performance (FY07-11)

(Rs Crore) FY07 FY08 FY09 FY10 FY11

Net operating income 151.6 158.5 160.3 105.4 139.6
EBITDA 4.7 5.3 (6.9) 16.2 14.2
PAT 0.1 0.8 (6.6) (1.6) 9.5
Fully Diluted EPS* (Rs.) 4.2 3.7 - 9.5 47.3

EBITDA margins 3.1% 3.3% -4.3% 15.3% 10.2%

PAT margins 0.1% 0.5% -4.1% -1.5% 6.8%

Source: Capitaline and CARE Research

www.careratings.com 4
 CARE
EQUITY
RESEARCH RASOI LTD

EXPANSIONS, NEW INITIATIVES AND CONCERNS

Expansion plans and initiatives

 During FY05, Rasoi launched its other food products range comprising of Rasoi salt, Rasoi pickles and Rasoi
sauces.
 During FY07, Rasoi launched rice bran oil to further expand its product offerings.
 Rasoi successfully established the Rasoi Gold Vanaspati, which has been tailor-made to suit the requirements of the
industrial consumers.

Key concerns
 Volatility in raw oil prices is major concern for all the oil companies.
 Unfavourable monsoon may affect the raw material availability and the company may not get raw material up-to
installed capacity and demand.
 High level of competition from other organised and unorganised players in the industry.

5 www.careratings.com
 CARE
EQUITY
RASOI LTD RESEARCH

SECTOR OUTLOOK

Vegetable oil and oil seeds are two of the essential commodities for the consumer’s daily needs. India is one of the largest
producers of oilseeds in the world with an area of 26.11 million hectares under cultivation in 2009-10 (Government of
India) producing 23.1 million tonnes of oil seeds in 2009-10 (Solvent Extractors Association). The production varies
between 23-28 million tonnes per annum depending on the monsoons. It produces nine types of oil seeds namely,
Groundnut, Soybean, Rape/Mustard seed, Sunflower seed, Sesame seed, Castor seed, Niger seed, Safflower seed,
Linseed. It also enjoys the position of being the third largest consumer of edible oil in the world next only to the US and
China owing to its large population, rising income levels and changing eating habits. India is expected to consume
approximately 15-16 million tonnes of vegetable oil domestically in 2010-11. The per capita consumption has grown by
6.6 per cent over the last five years. However, when compared to the world average of 24.5 kg/annum, it was low at 14
kg/person per annum in 2008-09. Developed countries like EU-27, Brazil and USA consume around 61.9 kg/annum,
35.1 kg/annum and 49.9 kg/annum per capita respectively in 2009-10 (Oil World 2010).

Edible Oils: Overall and Per-capita consumption in India

Source: Department of Food & Public Distribution, Business Beacon and CARE Research,

Approximately 45 per cent of the domestic demand for vegetable oil is expected to be met by the imports from other
countries during 2009-10. The imports mainly comprise Palm oil, Soybean oil and Sunflower oil. Indonesia,
Argentina and Malaysia are the key exporters of oil to India.

www.careratings.com 6
 CARE
EQUITY
RESEARCH RASOI LTD

CONSOLIDATED FINANCIAL SUMMARY

Rs. Crores FY07 FY08 FY09 FY10 FY11

Income Statement
Net operating income 151.6 158.5 160.3 105.4 139.6
EBITDA 4.7 5.3 (6.9) 16.2 14.2
Depreciation and amortisation 2.0 2.0 2.0 2.0 2.0
EBIT 2.7 3.3 (8.9) 14.2 12.2
Interest 1.8 1.5 2.2 0.9 0.9
PBT 0.9 1.8 (11.1) 13.3 11.3
Ordinary PAT (After minority interest) 0.1 0.8 (6.6) (1.6) 9.5
PAT (After minority interest) 0.1 0.8 (6.6) (1.6) 9.5
Fully Diluted Earnings Per Share* (Rs.) 4.2 3.7 - 9.5 47.3
Dividend, including tax 0.2 0.2 - 0.2 0.5
* Calculated based on ordinary PAT on Current Face Value of Rs. 10/- per share

Balance sheet
Net worth (incl. Minority Interest) 24.3 24.7 18.0 97.5 106.1
Debt 11.8 9.5 12.2 11.9 10.1
Deferred Liabilities / (Assets) 3.7 4.5 - 5.8 6.0
Capital Employed 39.8 38.7 30.2 115.2 122.2
Net Fixed Assets (incl. Capital WIP) 35.7 33.6 31.8 37.7 37.6
Investments 3.6 3.7 3.7 20.6 51.1
Loans and Advances 8.5 11.4 12.2 16.4 55.5
Inventory 17.7 31.5 17.5 12.8 10.8
Receivables 4.2 6.1 8.3 3.4 4.9
Cash and Cash Equivalents 2.2 3.3 1.7 53.8 1.3
Current Assets, Loans and Advances 32.6 52.3 39.7 86.4 72.5
Less: Current Liabilities and Provisions 32.1 50.9 44.9 29.4 39.0
Total Assets 39.8 38.7 30.2 115.2 122.2

Ratios
Growth in Operating Income 4.6% 1.1% -34.3% 32.5%
Growth in EBITDA 13.1% NM NM -12.1%
Growth in PAT 464.3% NM NM NM
Growth in EPS -11.2% NM NM NM
EBITDA Margin 3.3% NM 15.3% 10.2%
PAT Margin 0.5% NM NM 6.8%
RoCE 8.3% NM 19.5% 10.3%
RoE 3.2% NM NM 9.3%
Debt-Equity (times) 0.4 0.7 0.1 0.1
Interest Coverage (times) 2.2 NM 15.8 13.4
Current Ratio (times) 1.0 0.9 2.9 1.9
Inventory Days 73 40 44 28
Receivable Days 14 19 12 13
Price / Earnings (P/E) Ratio 7.8
Price / Book Value(P/BV) Ratio 0.7
Enterprise Value (EV)/EBITDA 5.7
Source: Capitaline, CARE Equity Research

7 www.careratings.com
 CARE
EQUITY
RASOI LTD RESEARCH

DISCLAIMER

DISCLOSURES

 Each member of the team involved in the preparation report, hereby affirms that there exists no conflict
of interest.

 This report has been sponsored by the Bombay Stock Exchange (BSE).

DISCLAIMER

This BSE sponsored report is prepared by CARE Research, a division of Credit Analysis & REsearch Limited
[CARE]. CARE Research has taken utmost care to ensure accuracy and objectivity while developing this
report based on information available in public domain or from sources considered reliable. However, neither
the accuracy nor completeness of information contained in this report is guaranteed. Opinions expressed
herein are our current opinions as on the date of this report. Nothing in this report can be construed as either
investment or any other advice or any solicitation, whatsoever. The subscriber / user assumes the entire risk of
any use made of this report or data herein. CARE specifically states that it or any of its divisions or employees
do not have any financial liabilities whatsoever to the subscribers / users of this report. This report is for
personal information only of the authorised recipient in India only. This report or part of it should not be
reproduced or redistributed or communicated directly or indirectly in any form to any other person or
published or copied for any purpose.

“Credit Analysis and Research Limited proposes, subject to receipt of requisite approvals, market conditions
and other considerations, to make an initial public offer of its equity shares and has filed a draft red herring
prospectus (“DRHP”) with the Securities and Exchange Board of India (the “SEBI”). The DRHP is available
on the website of SEBI at www.sebi.gov.in as well as on the websites of the Book Running Lead Managers at
www.investmentbank.kotak.com, www.dspml.com, www.edelcap.com, www.icicisecurities.com,
www.idbicapital.com, and www.sbicaps.com. Investors should note that investment in equity shares involves a
high degree of risk and for details relating to the same, see the section titled “Risk Factors” of the DRHP.”

[“This press release is not for publication or distribution to persons in the United States, and is not an offer
for sale within the United States of any equity shares or any other security of Credit Analysis and Research
Limited. Securities of Credit Analysis and Research Limited, including its equity shares, may not be offered or
sold in the United States absent registration under U.S. securities laws or unless exempt from registration
under such laws.”]

Published by Credit Analysis & REsearch Ltd., 4th Floor Godrej Coliseum, Off Eastern Express Highway,
Somaiya Hospital Road, Sion East, Mumbai – 400 022.

CARE Research is not responsible for any errors or omissions in analysis/inferences/views or for results
obtained from the use of information contained in this report and especially states that CARE (including all
divisions) has no financial liability whatsoever to the user of this product. This report is for the information of
the intended recipients only and no part of this report may be published or reproduced in any form or
manner without prior written permission of CARE Research.

www.careratings.com 8
 CARE
EQUITY
RESEARCH RASOI LTD

ABOUT US

Credit Analysis & REsearch Ltd. (CARE) is a full service rating company that offers a wide range of rating and grading services
across sectors. CARE has an unparallel depth of expertise. CARE Ratings methodologies are in line with the best international
practices.

CARE Research
CARE Research is an independent research division of CARE Ratings, a full-service rating company. CARE Research is involved
in preparing detailed industry research reports with 5-year demand and 2-year profitability outlook on the industry besides
providing comprehensive trend analysis and the current state of the industry. CARE Research currently offers reports on more
than 26 industries which are updated on a monthly/quarterly basis. Subscribers can access CARE Research reports online. CARE
Research also offers research that is customized to client requirements. Customized Research involves business analysis and
position in the market, financial analysis and market sizing etc.

HEAD OFFICE

Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai – 400 022

Tel: +91-22-67543456, Fax: +91-22-67543457.

NEW DELHI AHMEDABAD

3rd Floor, B -47, Inner Circle, Near Plaza Cinema, 32, Titanium, Prahaladnagar Corporate Road, Satellite,
Connaught Place, New Delhi – 110 001 Ahmedabad - 380 015
Tel: +91-11-23318701 / 23716199. Tel: +91-79-40265656.

KOLKATA HYDERABAD
3rd Floor, Prasad Chambers (Shagun Mall Building), 10A, 401, Ashoka Scintilla, 3-6-520, Himayat Nagar,
Shakespeare Sarani, Kolkata - 700 0717 Hyderabad - 500 029
Tel: +91-33-40181600 / 40181602 / 40181621. Tel: +91-040 40102030

CHENNAI BENGALURU
Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Unit No. 8, I floor, Commander's Place,
Anna Salai, Chennai 600 002 No. 6, Raja Ram Mohan Roy Road, (Opp. P F Office),
Tel: +91-44-28497812/28490811 Richmond Circle, Bangalore - 560 025
Tel: +91-80-22117140

Published on behalf of The Stock Exchange Investors' Protection Fund

Bombay Stock Exchange Ltd.

P J Towers, Dalal Street, Mumbai. Tel: 22721233/34 www.bseindia.com

9 www.careratings.com