Results     05-Feb-22
Analysis
Gulshan Polyols
Higher RM prices and coal cost impacted profitability
Gulshan Polyols standalone net sales increased 39.94% to Rs 292.66 crore in Q3FY22 compared to Q3FY21.  Sales of Mineral Processing segment has gone down 15.11% to Rs 23.32 crore (accounting for 7.97% of total sales). Sales of Grain Processing segment has gone up 52.30% to Rs 220.96 crore (accounting for 75.50% of total sales).  Sales of Ethanoi (Bio-Fuel) Distillery segment rose 32.29% to Rs 48.38 crore (accounting for 16.53% of total sales). 

Operating profit margin has declined from 17.38% to 12.03%, leading to 3.16% decline in operating profit to Rs 35.20 crore.  Raw material cost as a % of total sales (net of stock adjustments) increased from 46.31% to 52.91%.   Purchase of finished goods cost fell from 1.23% to 0.92%.   Employee cost decreased from 3.01% to 2.63%.   Other expenses fell from 32.57% to 31.68%.  

Other income fell 23.08% to Rs 0.1 crore.  PBIDT fell 3.23% to Rs 35.3 crore.  Profit before interest, tax and other unallocable items (PBIT) has slumped 5.41% to Rs 26.63 crore.  PBIT of Mineral Processing segment fell 50.73% to Rs 2.75 crore (accounting for 10.32% of total PBIT).  PBIT of Grain Processing segment rose 21.62% to Rs 19.44 crore (accounting for 72.99% of total PBIT).  PBIT of Ethanoi (Bio-Fuel) Distillery segment fell 32.58% to Rs 4.44 crore (accounting for 16.69% of total PBIT). 

PBIT margin of Mineral Processing segment fell from 20.31% to 11.79%.  PBIT margin of Grain Processing segment fell from 11.02% to 8.80%.  PBIT margin of Ethanoi (Bio-Fuel) Distillery segment fell from 18.03% to 9.19%.  Overall PBIT margin fell from 13.46% to 9.10%. 

Provision for interest up 90.48% to Rs 1.6 crore.  PBDT fell 5.44% to Rs 33.7 crore.  Provision for depreciation rose 1.46% to Rs 8.35 crore. 

Profit before tax down 7.52% to Rs 25.35 crore.  Provision for tax was expense of Rs 6.22 crore, compared to Rs 8.81 crore.  Effective tax rate was 24.54% compared to 32.14%. Profit after tax rose 2.85% to Rs 19.13 crore. 

Promoters’ stake was 68.20% as of 31 December 2021 compared to 68.20% as of 31 December 2020. 

For year-to-date (YTD) results analysis

Net sales of Gulshan Polyols have increased 50.09% to Rs 808.50 crore.  Sales of Mineral Processing segment has gone down 1.12% to Rs 67.04 crore (accounting for 8.29% of total sales).  Sales of Grain Processing segment has gone up 55.22% to Rs 596.50 crore (accounting for 73.80% of total sales).  Sales of Ethanoi (Bio-Fuel) Distillery segment rose 67.48% to Rs 144.78 crore (accounting for 17.91% of total sales). 

Operating profit margin has declined from 16.30% to 15.51%, leading to 42.80% rise in operating profit to Rs 125.42 crore.  Raw material cost as a % of total sales (net of stock adjustments) increased from 47.89% to 50.88%.   Purchase of finished goods cost fell from 0.90% to 0.71%.   Employee cost decreased from 3.08% to 2.94%.   Other expenses fell from 31.77% to 29.93%.  

Other income was up 64.91% to Rs 0.94 crore.  PBIDT rose 42.94% to Rs 126.36 crore. Profit before interest, tax and other unallocable items (PBIT) have jumped 57.77% to Rs 101.33 crore.  PBIT of Mineral Processing segment fell 33.36% to Rs 8.99 crore (accounting for 8.87% of total PBIT).  PBIT of Grain Processing segment rose 66.58% to Rs 69.49 crore (accounting for 68.58% of total PBIT).  PBIT of Ethanoi (Bio-Fuel) Distillery segment rose 153.16% to Rs 22.85 crore (accounting for 22.55% of total PBIT). 

PBIT margin of Mineral Processing segment fell from 19.89% to 13.40%.  PBIT margin of Grain Processing segment rose from 10.86% to 11.65%.  PBIT margin of Ethanoi (Bio-Fuel)Distillery segment rose from 10.44% to 15.79%.  Overall PBIT margin rose from 11.93% to 12.54%. 

Provision for interest fell 25.88% to Rs 3.58 crore.  PBDT rose 46.92% to Rs 122.78 crore.  Provision for depreciation down 0.08% to Rs 23.91 crore. 

Profit before tax grew 65.78% to Rs 98.87 crore.  Provision for tax was expense of Rs 25.07 crore, compared to Rs 18.73 crore.  Effective tax rate was 25.36% compared to 31.41%.Profit after tax rose 80.40% to Rs 73.80 crore. 

Promoters’ stake was 68.20% as of 31 December 2021,compared to 68.20% as of 31 December 2020. 

Commenting on the quarterly results, Dr. Chandra Kumar Jain, Chairman & Managing Director of Gulshan Polyols, said,

It is really appreciable that your Company is emerging stronger and healthier and is scaling new heights. During the quarter, we worked diligently by assuring employees safety while continiuing to serve our customers by running our operations successfully. The 9 months results demonstrate that our business strategy is working well which is evident by revenue growth of 50% in 9MFY22 . I am glad to say that we are setting new precedents and marking higher from our own performance and financial numbers and moving ahead quarter on quarter.

Among other segments; the Grain Processing business has grown significantly as it has contributed to a revenue growth by Rs 21220.82 lakh in 9MFY22 vs 9MFY11, up by 55% of comparative total revenue growth, due to good and continuous demand.

Furhther the ethanol and distillery segment is doing well in producing and supply of ethanol to oil marketing companies and other public sector companies. It has contributed into revenue growth by Rs 5833.64 lakhs in 9MFY22 vs 9MFY21 which is at 67%.

Growth continues accelerating in Q3 with resilient operating margins. Your company is combatting the global coal crisis which has led to increase in power and fuel cost by 70%, and in addition to this, a rise in raw material price by 33% in Q3FY22 (YOY) has affected the profitability and hence the bottomline. Despite that, Company is continuously focusing on achieving its targets by constantly improving its sales volumes, sales price realization and optimizing cost wherever possible.  A sequential growth in  revenues and a consistent demand in the Grain processing and Ethanol segment, is driving growth for  the Company.

Simultaneously, we continue to strengthen employees value proposition including health and wellness measures, re-skilling programs, appropriate compensation interventions, ESOPs and enhanced career growth opportunities. Our recent priority has been to vaccinate our employees with agility and we have been holding various vaccination drives at our plants across the country, towards this endeavor. I am happy to report that at  present  more  than 70%  of our employees are  vaccinated across the organization with at least one shot of the Vaccine.

I feel overjoyed to reiterate and announce that the Company has signed and executed a Long Term Offtake Agreement on January 8, 2022, for our upcoming Standalone dedicated ethanol plant of 500 KLPD at M P A K V N Industrial Area, Boregaon, Madhya Pradesh and 250 KLPD Ethanol Plant at Industrial Growth Centre, Matia, District Goalpara, Assam for supply of 8.91 Crores Liters and 3.96 Crores Liters per annum  "Indigenous Denatured Anhydrous Ethanol", respectively to Oil Marketing Companies (OMCs) under Ethanol Blending Petroleum Program to meet ethanol requirements for 20 % blending by year 2025 by using corn/maize and rice combination. This is achievable due to constant conviction and faith of all Stakeholders in the Company.

We are proud, that our strengthened Boardroom and Executive team have demonstrated expert leadership, and our employees are demonstrating commitment in delivering higher volumes. We are setting up and expanding your company for its next phase of growth as construction is going on in full swing in Madhya Pradesh 500 KLPD Ethanol plant. The orders for major plant and machinery have already  been  placed.  Additional  land  has  been  purchased  around  surrounding  areas  to  fulfill operational requirements and to support expansion.  Company has also started the land and site development work at its Assam Location for setting up a 250 KLPD Ethanol plant.

The recovery in demand is getting better Quarter on Quarter, credible resumption of supply chain and logistics, cost & cash management and a vigorous boost in production has helped us to deliver strong performance. The three quarters or say 3/4 of FY22, already delivered desired results, reflecting a sequential growth, signaling an awe-inspiring year ahead for the company which would definitely built us in achieving our targeted vision

I wish to extend my gratitude to all employees, customers, suppliers, bankers, investors and other stakeholders who have equally contributed in the exceptional growth of your Company. 

Business/Future Outlook by company

 §  Construction and other related activities are at full swing for Madhya Pradesh 500 KLPD Ethanol Plant. The company believe to commence production soon in 2023.

 §  The company has also started the land and site development work at its Assam Location for setting up a 250 KLPD Ethanol plant.

 §  Recently, Finance minister, Nirmala Sitharaman said in her Budget speech that blended  fuel is a priority for government. To encourage the efforts for blending of fuel, unblended  fuel shall attract an additional differential excise duty with effect from 1st day of October  2022. Petrol not blended with ethanol will be costlier from October, which would prompt retailers, especially private oil companies, to switch to blended fuel across the country.

 §  The company is on track with its expansion plans at Grain Processing Units located at Muzaffarnagar and Bharuch.

 §  The company is seeing improvement in demand quarter by quarter including Q3 22. Overall, it expects strong and positive performance in all its segments in last quarter too.

 

The scrip is currently trading at Rs 422.

  

Gulshan Polyols : Standalone Results

Particulars

2112 (03)

2012 (03)

Var.(%)

2112 (09)

2012 (09)

Var.(%)

2103 (12)

2003 (12)

Var.(%)

Net Sales

292.66

209.13

40

808.5

538.69

50

766.03

620.8

23

OPM (%)

12.0

17.4

 

15.5

16.3

 

17.1

11.1

 

OP

35.2

36.35

-3

125.42

87.83

43

130.73

68.87

90

Other Inc.

0.1

0.13

-23

0.94

0.57

65

1.87

0.95

97

PBIDT

35.3

36.48

-3

126.36

88.4

43

132.6

69.82

90

Interest

1.6

0.84

90

3.58

4.83

-26

6.55

11.38

-42

PBDT

33.7

35.64

-5

122.78

83.57

47

126.05

58.44

116

Depreciation

8.35

8.23

1

23.91

23.93

0

32.55

31.02

5

PBT

25.35

27.41

-8

98.87

59.64

66

93.5

27.42

241

Taxation

6.22

8.81

-29

25.07

18.73

34

31.04

6.84

354

PAT

19.13

18.6

3

73.80

40.91

80

62.46

20.58

204

EPS (Rs)*

#

#

 

#

#

 

13.3

4.4

 

Notes

* EPS is on current equity of Rs 4.69 crore, Face value of Rs 1, Excluding extraordinary items.

# EPS is not annualised

bps : Basis points

EO : Extraordinary items

Figures in Rs crore

Source: Capitaline Corporate Database

 

 

Gulshan Polyols : Standalone Segment Results

 

% of (Total)

2112 (03)

2012 (03)

Var.(%)

% of (Total)

2112 (09)

2012 (09)

Var.(%)

% of (Total)

2103 (12)

2003 (12)

Var.(%)

Sales

 

 

 

 

Mineral Processing

8

23.32

27.48

-15

8

67.04

67.8

-1

12

92.37

131.45

-30

Grain Processing

76

220.96

145.08

52

74

596.5

384.29

55

71

540.81

484.31

12

Ethanoi (Bio-Fuel)Distillery

17

48.38

36.57

32

18

144.78

86.44

67

17

132.7

5.04

2530

Total Reported Sales

100

292.66

209.13

40

100

808.32

538.53

50

100

765.88

620.8

23

PBIT

 

 

 

 

Mineral Processing

10

2.75

5.58

-51

9

8.99

13.48

-33

17

17.29

32.91

-47

Grain Processing

73

19.44

15.98

22

69

69.49

41.72

67

67

66.31

10.92

507

Ethanoi (Bio-Fuel)Distillery

17

4.44

6.59

-33

23

22.85

9.03

153

16

15.79

-4.73

LP

Total PBIT

100

26.63

28.16

-5

100

101.33

64.23

58

100

99.39

39.1

154

Less : Interest

 

1.6

0.84

90

 

3.58

4.83

-26

 

6.55

11.38

-42

Add: Other un-allcoable

 

0.32

0.1

232

 

1.12

0.24

369

 

0.65

-0.3

LP

PBT

 

25.35

27.41

-8

 

98.87

59.64

66

 

93.5

27.42

241

 

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