Analyst Meet / AGM     12-Dec-07
Analyst Meet
Gokul Refoils and Solvent
The company is likely to raise Rs 150 crore through initial public offering
Gokul Refoils have started its business in 1982 and is primarily engaged in the business of solvent extraction, refining of edible oils and vanaspati manufacturing. The group’s interest also includes power generation, commodity trading in the domestic and international markets.

The company markets its products under the brand name "Gokul" in the states of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh and Punjab. The company wants to increase its presence throughout the country and has adopted an aggressive plan for marketing its products in the northern, eastern and northeastern states of the country. This has resulted in increasing its retail sales approximately from 18% to 30%, which has significantly helped in improving margins.

The Gokul brand enjoys a national recognition and the products are packed and sold include mustard oil, sunflower oil, groundnut oil, cottonseed oil, palmolein oil, vanaspati oil and soya bean oil. These are not only sold in bulk quantities but also in consumer retail packs of 15 kg, 15 litre, 10 litre, 5 litre, 1 litre and 500 ml. Pan India distribution network is spread across 19 states catered by 18 C&F agents and 802 distributors, 3 depots, 15 brokers and 295 resellers, distributing Gokul products through a total 1133 bulk points.

Gokul Refoils has setup a solvent extraction plant and an oil refinery at Sidhpur, Gujarat, a refinery of 800 tonne per day (TPD) and Vanaspati plant of 100 TPD at Gandhidham, four environment friendly wind mills of 1.25 MW each in Kutch for captive power consumption and a 100 TPD operational refinery in Surat. It has also set up a co-generation power plant of 500 KWH at its Gandhidham unit. At present the company has 680 TPD of seed processing, 600 TPD of solvent extraction, 1200 TPD of refining and 200 TPD of vanaspati manufacturing.

Towards expanding the scale of operations and having global presence, Gokul Refoils has setup two wholly owned subsidiaries in Mauritius and Singapore under the name Maurigo Pte Limited and propose to invest approximately Rs 25 crore for enhancing the resources of the subsidiary.

Mauritius subsidiary is involved in hedging of commodity whereas Singapore subsidiary is involved into procurement of raw material and trading of commodity. Its strategic presence in Singapore enables it to locally negotiate and deal with the small and fragmented oil suppliers of Malaysia and Indonesia, which will further enable the company to procure the raw materials at reasonable terms. The company intends to invest more in foreign subsidiaries to penetrate in overseas markets. Also increasing the footprint in global markets will help the company to reduce involvement of intermediaries and source raw material from the producers. This shall further strengthen its procurement base and ensure continuous supply of raw material for its refining mills in India.

The company proposes to setup a soya processing plant at Gandhidham with installed capacity of 1500 TDP and capital investment of Rs 51 crore. The plant is expected to be operational by December 2007. The company is also in the process of expanding the existing unit at Surat with an estimated outlay of Rs 12.31 crore. The company also plans to invest Rs 15 crore in its brand building activities. The company also wants to invest Rs 10 crore in increasing its warehousing capacity and other capital expenditure at existing units. As such, the company is going to come out with its initial public offering of Rs 150 crore.

The company’s consolidated total income for the period April - July 2007 and financial year March 2007 is Rs 657.91 crore and Rs 1566.90 crore respectively, and profit after tax is Rs 20.70 crore and Rs 25.42 crore respectively. The company’s sales have grown at a compounded annual growth rate (CAGR) of 39 % over the last 5 financial years and its PAT has increased at a CAGR of 39% over the last 5 financial years.

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