JubInd Update 121211

8/3/2019 JubInd Update 121211

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Jubilant Industries Ltd.[ NSE JUBLINDS ; BSE 533320 ]

Event Update -- 12th December 2011

Retail Business Merger Approval


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Contents :Retail Business Merger Approval

Consolidated Structure of JIL post Merger & DemergerOverview of each of the Operational SegmentsPast 3 Years' Revenue of Each Segment - IP

- ACP- Retail- ConsolidatedRetail Business EBITDAR & EBITDA Loss Marginssince InceptionCritical Financial & Valuation Ratios of JIL as ConsolidatedEntity (post merger) as at FY11Scenario post-merger of Retail Business


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Retail Business Merger ApprovalA court-directed Meeting of Shareholers of Jubilant Industries Ltd. (JIL) was held on 2nd

December 2011 in which shareholders approved the demerger of Agri & Consumer Products

(ACP) business of JIL into its wholly-owned subsidiary, Jubilant Agri & Consumer Products Ltd.

(JACPL) for a consideration of Rs. 164.88 cr. which will be received in the form of preferenceshares (of JACPL) by JIL. Simultaneously, Jubilant Bhartia group's Retail Mall-cum-

Hypermarket business is being merged into JACPL for a consideration of 3.835 mn. equity

shares of JIL.

Court approval is expected to be received before 31st December 2011 post which the

entire demerger (of ACP business) and merger (of Retail business) process is expected to be

completed within a fortnight.

Post this entire scheme of arrangement coming into effect, JIL will have three distinct

business lines viz., :

Industrial Products (IP) which will be directly under listed entity JIL

Agri & Consumer Products (ACP) which will be under listed JIL's wholly-owned subsidiary

JACPL.

Retail (Mall-cum-Hypermarket) which will also be under listed JIL's wholly-ownedsubsidiary JACPL.


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Jubilant Industries Ltd.(JIL)

IndustrialProducts

(IP)

Jubilant Agri

& Consumer

Products Ltd.(JACPL)

100 % owned

Subsidiary

Agri &

Consumer

Products

(ACP)

RetailMall cum

Hypermarket

Details of each of the Businesses ( IP, ACP & Retail ) are given in subsequent pages

FY11 Revenues =

`141.5 cr.

FY11 Revenues =

`378.8 cr.

FY11 Revenues =

`314.4 cr.

Consolidated FY11 Revenues=` 834.7 cr.


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Industrial Products (IP)Industrial Products (IP) business will be directly under listed JIL's fold and it comprises of

two sub-segments viz., :

Food Polymers (3rd

Largest Supplier Globally & Largest in India)

Latex (4th Largest Supplier Globally & Largest in India for VP Latex)

Food Polymer :

Under this segment, company manufactures and markets solid poly vinyl acetate

(SPVA), which is usedas an ingredient in making gum base for chewing gum and bubble

gum. Synthetic polymers, of which solid PVA is but one type, are the main gum base

constituent in 90% of the gum base manufactured worldwide.

Latex :

Under this segment, company manufactures and markets three kinds of latex namely,

Vinyl Pyridine (VP), Styrene Butadiene Rubber (SBR) and Nitrile Butadiene (NBR).

Vinyl Pyridine and SBR are used in dipping of tyre cord and conveyor belt fabric by tyre

manufacturers who have in-house dipping facilities and also by tyre cord fabric dippers.

In addition, they are also used to manufacture SBR Latex tyre carcasses, V-belts and

conveyor belts. NBRs are used in automotive gasket binding applications.


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Agri & Consumer Products (ACP)Agri & Consumer Products (ACP) business will be under listed JIL's 100 % owned

subsidiary JACPL's fold and it comprises of two sub-segments viz., :

Agri-Inputs (4th

Largest Producer of SSP fertilizer in India with established brand 'Ramban')

Consumer Products (2nd Largest Brand 'Jivanjor' in India next to Pidilite)

Agri-Inputs :

Under this segment, company manufactures and markets four broad categories of

products namely, crop nutrition, plant growth regulators, crop protection and industrialchemicals. All of the company's products under this segment are sold under the brand

name, Ramban and sales are primarily to the North and Central part of India and the

brand is well known in these markets by the farming community for its quality,

consistency and reliability. Company is the fourth largest producer of SSP fertilizer in

India next to Khaitan Chemicals, Liberty Phosphate and Rama Phosphate.

Consumer Products :

Under this segment, company produces a range of products for woodworking adhesives,

wood finishes, footwear adhesives and epoxy sealants. The products under this segment

are sold under the umbrella brand called Jivanjor and it occupies 2nd Largest Brand

status in Indian Consumer Adhesives & Polish market after Pidilite.


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Retail Mall-cum-Hypermarket (Retail)Retail Mall-cum-Hypermarket (Retail) business will be under listed JIL's 100 % owned

subsidiary JACPL's fold and it comprises of a chain of state-of-the-art hypermarkets and malls

in Bangalore. The chain is run under the brand name 'Total' and it occupies 2 nd Largest

position in Bangalore with an overall 20 % marketshare. The chain currently has 5 storesunder operation in the mall-cum-hypermarket format with over 8 lakh square feet under

operation serving over 10 lakh customers.

Stores Under Operation

@ Mysore Road

Area =1,33,094sq.ft.@ Madiwala Road

Area =1,69,034sq.ft.

@ Sarjapur RoadArea =2,09,588sq.ft. @ Old Airport RoadArea =1,71,590sq.ft.

@ Outer Ring Road

Area =1,42,000sq.ft.

Stores Under Operation

5

Area Under Operation

8,25,306 sq.ft.


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Past 3 Years' Revenue of Each Segment - IP

(fig. In` cr.) FY11 FY10 FY09

Industrial Products(IP)

of which

Food Polymers

Latex

141.5

60.8

80.7

121.4

48.1

73.3

113.5

47.4

66.1

Industrial Products (IP)


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Past 3 Years' Revenue of Each Segment - ACP


Agri & ConsumerProducts (ACP)

of which

Agri-Input

Consumer Products

378.8

261.3

117.5

251.3

146.7

104.6

355.2

260

95.2

Agri & Consumer Products (ACP)


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Past 3 Years' Revenue of Each Segment - Retail


Retail Mall-cum-Hypermarket

(Retail)

314.4 281.8 166.3

Retail Mall-cum-Hypermarket (Retail)


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Retail Business EBITDAR & EBITDA Loss Margins since InceptionJubilant Bhartia Group's Retail Mall-cum-Hypermarket business started with the launch

of first store under the brand 'Total' of 1,33,094 sq.ft. area in the year 2006 (December 2006)

at Mysore Road, Bangalore. After that 2nd store was launched in July 2007, 3rd in February

2008, 4th

in November 2008 and the latest 5th

store in July 2011.

Since Retail businesses are marred by the presence of operational losses, it is prudent to

assess a retail business by its EBITDAR Margins (R = Rent) as well as EBITDA level (Loss)

margins wherein a break-even can be gauged by the extent of reduction in loss margins w.r.t.

revenues. On this count, given below are the EBITDAR as well as EBITDA loss margins

achieved by JIL's Retail business since inception. Since the first store was opened in

December 2006, the inception financial year is FY08.

FY11 FY10 FY09 FY08

EBITDARMargin

(+) 6.8 % (+)4.1 % (-) 3.8 % (-) 15.4 %EBITDA

LossMargin

12.3 % 17.2 % 35.2 % 35.7 %


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Critical Financial & Valuation Ratios of JIL as ConsolidatedEntity (post merger) as at FY11Consolidated Equity

Capital 11.84 cr.

Consolidated Book Value

per share ` 77Consolidated Enterprise

Value 375.28 cr.

Consolidated

Debt-to-Equity (D/E) 1.9

Consolidated Revenues834.7 cr.

Current Marketcap 238 cr.

Marketcap-to-Sales 0.28

EV/Sales 0.44

Price-to-Book 2.6


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Scenario post-merger of Retail Business(1) Demerger of ACP business into a wholly owned subsidiary will allow residual IP business

to pursue its independent growth path in a more proper way. Residual IP business has strong

growth prospects, especially, Food Polymer business, in which JIL is the 3rd largest global

supplier of SPVA. IP business is expected to considerably improve margins going forwardbecause of better capacity utilisation of enhanced capacities which are already booked for

supply.

(2) JACPL, a 100 % owned subsidiary of JIL, is created to act as an umbrella of all well

established brands of JIL. JACPL will have three strong brands under its fold viz.,

Jivanjor (2nd largest brand in Indian Consumer Adhesives & Polish market), Ramban (4th largest brand in Indian SSP fertilizer market), Total (2nd largest brand in Bangalore Retail market with 20 % share).

(3) Retail (Total) business is close to break-even because of investment-phase in back-end

having got concluded with only capex required for expansion in front-end which itself will

drive break-even. Management expects Retail business to break-even at EBITDA-level in FY13.

(4) Jivanjor & Ramban brands will act as cash-cow because of tremendous growth

anticipated, especially in SSP fertilizer segment.

(5) Each of the three brands, viz., Jivanjor, Ramban & Total, are expected to be scaled upto aconsiderable level by FY14 so as to make each an independent profit-generating Unit.

Documents

JubInd Update 121211