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© 2010, K S Oils Limited. All Rights Reserved.
Disclaimer: The information contained herein is subject to change without notice. This material was used during an oral
presentation; it is not a complete record of the discussion. K S Oils Limited accepts no liability whatsoever with respect to the use
of this document or its content. All product names and company names and logos mentioned herein are the trademarks or
registered trademarks of their respective owners.
KSOI.BOKSO@INKSOILS526209
Delivering Health
and Prosperity
Investor Presentation
Delivering Health and Prosperity • www.ksoils.com 2
Agenda
Section Slide No.
The Company 03
Industry Dynamics 10
K S Oils Background 26
Company’s Products and Markets 38
Manufacturing 40
Markets and Distribution 48
Historical Financial Performance 50
Strategy & Growth Initiatives 56
Delivering Health and Prosperity • www.ksoils.com 3
The Company
Delivering Health and Prosperity • www.ksoils.com 4
The Company
K S Oils Limited (“KSO" or “K S Oils” or “the
Company”) is one of India’s leading integrated
edible oil company
Code: 526209
Listed Since 1994
Code: KSOILS
Listed Since 2007
Delivering Health and Prosperity • www.ksoils.com 5
The Company
Madhya Pradesh Rajasthan W. Bengal
Morena Kota Haldia
Ratlam
Guna
Integrated Manufacturing Plants
integrated capacities for crushing, refining,
solvent extraction and vanaspati.
Strong Distribution
network1,313 Distributors and
over 200,000 retailers
Strong brandsin crude mustard and
soya refined oil
Delivering Health and Prosperity • www.ksoils.com 6
Key Highlights – Indian Edible oil market
The branded edible oil segment (~ 25% of the total market) is expected to
grow by 25-30% p.a. in the next few years.
Mustard Oil
INR 130 bn.
Other Edible Oils
INR 620 bn.
Indian Edible oil market size
Estimated value: INR 750 bn.
Growth Estimate
8% p.a.
Branded edible oils
emerging as one of the
high growth segments
in Indian FMCG
industry
Delivering Health and Prosperity • www.ksoils.com 7
Key Highlights
Increasing focus on retail packs
and pouches
Strong distribution network
Strong brands
Wide product range to suit local
tastes and preferences
Largest rapeseed crusher in
IndiaAdvantageK S Oils
K S Oils is well-positioned to capture this opportunity
Delivering Health and Prosperity • www.ksoils.com 8
Key Highlights
Excellent Track Record
• Excellent sales and profit growth
• Revenues have grown at a CAGR of 46%
p.a. for the last five years while EBITDA has
grown at a CAGR of 77% p.a.
• Increase in EBITDA margins from 4.5% in
FY06 to 11.82% in FY10 on account of
shifting revenue composition in favour of
branded trade packs and consumer packs
• Successfully transitioning to an FMCG company
• Increase in branded revenue from 293 crs.
in FY06 to 2,496 crs. in FY10
• Growth in Retail packs from 10% of the total
turnover in FY06 to 35% in FY10
• Highest margin earner in the industry
Strong Distribution
Network
• Strong presence in mustard oil
consuming regions – 37 C&F
agents, 6 company depots,
1,313 Distributors and over
200,000 Retailers
• Initiated expansions into new
markets and organized retail
formats with refined edible oil
products
Delivering Health and Prosperity • www.ksoils.com 9
Key Highlights
• Largest crushing capacity in India - 4,400 MT/day
located in Madhya Pradesh and Rajasthan
• Integrated facilities at the country’s strategic raw
material and consumer belts
• Captive power generation and in–house
packaging units
• Part of an established business house belonging to
the Garg family from Morena, Madhya Pradesh
dealing in agro based products for the last 150 years
• Present management includes representatives from
the fifth and sixth generation of the family
Strong management
with decades of
experience in agri
commodities
Quality manufacturing
facilities
Delivering Health and Prosperity • www.ksoils.com 10
Industry
Dynamics
Delivering Health and Prosperity • www.ksoils.com 11
World Consumption Pattern
World consumption of 17 Oils and Fats
Source: Oilworld (www.oilworld.biz)
11
Source: Oilworld (www.oilworld.biz)
Soya Oil,
19.40%Palm Oil,
13.80%
Other
Oils/
Animal
Fats,
40.30%
Rape Oil,
10.60%
PKO &
CNO,
5.80%Sunflower
Oil,
10.10%
1990-91: 81.8 Mn. MT
Soya Oil,
22.3%Palm Oil,
27.4%
Other
Oils/
Animal
Fats,
25.0% Rape Oil,
12.8%
PKO &
CNO,
5.1% Sunflower
Oil, 7.5%
2008-09 : 163.15 Mn. MT
Delivering Health and Prosperity • www.ksoils.com 12
Macro-economic situation
Indian edible oil economy is world’s fourth
largest after USA, China and Brazil (India
accounted for 8.2% of world oilseeds, 6.53% oil
meal production and 10.26% of world
consumption of edible oils in Oil year 08-09)
2nd largest import bill item for India
zero level import duties by government to
help domestic players in sourcing raw
material at best and low prices
Increasing health consciousness
preference for packaged products (hygiene
factors and avoidance of any adulteration)
and low-saturated fat cooking mediums
Branded 30%
Unbranded 70%
Branded Mustard Edible Oils
Growth rate 40% p.a.
Other Edible Oils - 80%
Mustard Oil 18-20%
Indian Edible Oils Market – INR 750 bn.
Overall growth rate 8% p.a.
Delivering Health and Prosperity • www.ksoils.com 13
Indian Edible Oil Industry: Overview…
India accounts for 8.2% of world oilseeds output (2008-09);
6.5% of world oil meal production; 6.1% of world oil meal
export; 5.3% of world vegoil production; 13.8% of world vegoil
imports; and 10.26% of the world edible oil consumption.
“ “
Source: Oil World
The Independent Forecasting Service for Oilseeds, Oils & Meals
Hamburg / Germany (Website: www.oilworld.biz)
India has ~ 15,000 oil mills, 711 solvent extraction units and over 585
refineries employing more than one million people.
With an annual consumption of ~ 17 mn tons, the per capita consumption is at 14.5
kg p.a., which is very low as compared to the world average of 23.90 kg p.a.
• Domestic supply is estimated at 8 mn tons while the rest is imported.
• By 2015, per capita consumption is expected to be between 17-18 kg p.a.
Delivering Health and Prosperity • www.ksoils.com 14
Indian Edible Oil Industry: Overview
• Mustard, soyabean and palm oil account for over 75% of
total edible oil consumption (excluding butter).
• Only around 16% of Indian households consume
branded edible oils.
• Among branded oils, refined oil accounts for 60% of
consumption and crude oil (only filtered) accounts for the
balance.
• Branded edible oils have penetrated 31% of households
in urban areas and only 9% in rural areas.
• The edible oil sector in India is largely unorganized with
a few organized players.
Popular cooking mediums used in India include
sunflower oil, mustard oil, groundnut oil, soyabean oil, palm oil and
coconut oil
Edible oil is sold in
India either in
consumer packs
(5 lt. and less than 5 lt.
pack sizes),
bulk packs (15 kg/ lt.)
or as loose oil in
tankers or barrels.
Delivering Health and Prosperity • www.ksoils.com 15
India’s Edible Oil Consumption
Palm Oil has the highest consumption in India ~40% and is almost entirely imported. Mustard oil is the largest domestic oil and constitutes 12% of total consumption.
India’s Per capita consumption is assumed to equal current world average of 24.5 kg per person p.a. in next 10 years. India’s total consumption of edible oil is expected to double from current 16 Mn. Mt. to 32 Mn. Mt. by 2020.
0
2
4
6
8
10
12
14
16
18
20
05
20
06
20
07
20
08
20
09
Oil c
on
su
mp
tio
n (
Mn
. to
nn
es
)
Soybean Oil Groundnut Oil Sunflower Oil Mustard Oil Other Oils Palm Oil
Delivering Health and Prosperity • www.ksoils.com 16
COOIT’s Estimates of India Oilseeds Crop for 2009-10 (Nov. - Oct.)
Sr.no.
Oilseeds/ Solvent Extracted Oils
OilRecovery
%
Oil -Seeds
Marketable SurplusFor Crushing & Oil
Availability
Total Marketable
Surplus
Total OilAvailability
Kharif (Summer)
Rabi (Winter)
I. OILSEEDS
1 Groundnut (in shell) 40 5.12 3.29 1.83 1.52 0.61
2 Soybean 17 8.50 8.50 - 7.50 1.28
3 Rape/Mustard/Toria 33 6.42 0.10 6.32 6.22 2.05
4 Sunflower 35 0.99 0.32 0.67 0.98 0.34
5 Others 2.08 1.44 0.64 1.74 0.76
SUB TOTAL 23.11 13.65 9.46 17.96 5.04
II. OTHER OILSEEDS
10 Cottonseed 12.5 9.15 9.15 - 8.65 1.08
11 Copra 65 0.66 0.66 - 0.66 0.43
SUB TOTAL 9.81 9.81 - 9.31 1.51
III.SECONDARY SOURCE (Rice Bran, Oil Cakes and other Minor Oilseeds)
1.33
iv. BUTTER, as Fat (as per Oilworld) 2.16
Grand Total 32.92 23.46 9.46 27.27 10.04
Figs. in Mn. metric tonnes
Delivering Health and Prosperity • www.ksoils.com
17
Rapeseed and Soybean growing areas
Minor growing areas
Major growing areas
Soybean
Mustard/ Rapeseed
Minor growing areas
Major growing areas
Ratlam
Guna
MorenaKota
Location of KSO’s Plants
Haldia
Delivering Health and Prosperity • www.ksoils.com 18
India’s Edible Oil Consumption
Consumption in India
during Nov.09 to Oct.10
is estimated to be
~17 Mn. MT
Consumption
Imports
India will have to import ~9 Mn. MT to meet the
shortfall and increased demand.
The imported oils mainly constitute crude and
refined Palm oils from South-East Asia and Soya
Degummed oil from South America.
ProductionThe Local Oil production
in India as per Trade
estimates will be around
7.88 Mn. MT
Delivering Health and Prosperity • www.ksoils.com 19
Imports of Edible & Non-Edible Oil by India
Nov. 07 to Oct. 08 – 5.61 Mn. MT Nov. 08 to Oct. 09 – 8.18 Mn. MT
Palm oil imports accounted for ~80% in the last oil year – global sourcing at best prices helping Indian edible
oil companies fulfil the increased per capita consumption.
Soyabean Oil (Degummed)
12%
Crude Palm Oil 64%
Ref ined Palm Oil 15%
Sun Flower Oil 8%
Delivering Health and Prosperity • www.ksoils.com 20
Regional Consumer Preferences
Mustardnorth-east, central,
north and east
Groundnut west
Palm central and south
Soyaben north and central
Sunflower
largely consumed
in urban India, in
relatively small
quantityStrategic Location of KS
Oils to address mustard
cultivating / consuming
belts
Delivering Health and Prosperity • www.ksoils.com 21
Key Players and Brands: Mustard Edible Oil
Company Brand Remarks
K S OilsDouble Sher, Kalash,
KS Gold
Largest player in the mustard edible oil market (crushing
capacity of 4,400 MT/ day)
NDDB DharaGCMMF (Amul) is the sole selling agent for Dhara and
markets this brand through its wide distribution network
Agro Tech SudhamRefined mustard oil which is marketed in the Eastern
market
Bunge DaldaRecently launched refined mustard/soyabean edible oil
in Eastern market
Gokul Refoils Gokul Capacity of 690 MT/ day for mustard crushing
Shri Hari
Industries Engine Established brand in Rajasthan
Vijay Solvex ScooterAcquired the brand 5 years ago; crushing capacity of
325 MT/day
Adani Wilmar Fortune Kachi GhaniRecent entrant in crude mustard oil (third party
manufacturing)
Ruchi SoyaMandap and Ruchi
Gold
Presence in crude and refined mustard oil (third party
manufacturing)
Delivering Health and Prosperity • www.ksoils.com 22
Outlook
The demand for edible oils is expected to increase from current levels of 16.6
million tonnes in 2009 to 22.5 million tonnes by 2015.
-- The Solvent Extractors' Association of India
“
India’s dependence on imports is expected to increase to the extent of ~44% of its consumption
requirement. The improvement in yields and the increase in area under cultivation are expected to
ensure that domestic oilseed production is sufficient to meet only ~56% of consumption requirement.
Particulars 2015
Total Demand (Million Tonnes) 22.5
Total area under Oil seeds (Million Hectares) 30
Yield (Tonnes/ hectare) 1.3
Production of Oil seeds (Million Tonnes) 42
Domestic supply of edible oils (Million Tonnes) 12.5
Total edible oil imports (Million Tonnes) 10
Imports as share of demand 44%
Delivering Health and Prosperity • www.ksoils.com 23
Mustard Oil Industry: Mustard Seeds
• The uniqueness of
mustard lies in the fact that
it has a very high oil
content (~40-42% by
weight) and that it is a
hardy short duration crop
requiring nominal amount
of water and fertilizers
• Mustard seeds have a
shelf life of 3-4 years and
mustard oil is a natural
preservative with
antioxidants, which makes
it the preferred oil for
pickles
• Rajasthan (~42%), Uttar
Pradesh(~15%), Madhya
Pradesh & Chhattisgarh
(~14%) contribute 71%
of the total Indian
production
• The balance 32% is
cultivated in Punjab &
Haryana, Gujarat, West
Bengal, Assam, Bihar,
Himachal Pradesh &
Orissa
• Mustard is a winter crop,
it requires a temperate
climate to prosper. The
sowing period in India is
during the early Rabi
season i.e. October to
November
• The crop starts flowering
in the months of
December, January and
February. The harvesting
period is from February
to May
Mustard Seed Cultivation Cropping Pattern
Delivering Health and Prosperity • www.ksoils.com 24
Mustard Oil: ‘The Heart-friendly Oil’
91
51
43
27
19
18
15
15
13
12
9
8
7
7
39
47
19
48
44
75
23
29
16
16
77
61
1
1
8
1
1
57
1
11
2
10
9
54
33
38
9
54
57
18
14
21
71
Coconut Oil
Palm Oil
Lard
Cottonseed Oil
Peanut Oil
Rice barn Oil
Olive Oil
Soybean Oil
Corn Oil
Sunflower Oil
Flaxseed Oil
Safflower Oil
Mustard Oil
Saturated Fat Monounsaturated Fat Polyunsaturated Fat
Alpha-Linolenic Acid – Omega 3
Linolenic Acid – Omega 6
Comparison of Dietary fatsMustard Oil has
the least amount
of saturated fat
as compared to
all other edible
oils
Delivering Health and Prosperity • www.ksoils.com 2525
Mustard Oil: ‘The Heart-friendly Oil’
A study was conducted among 350 cases of heart attack in eight hospitals and 700
normal people in Delhi and Bangalore by a team comprising experts from
All India Institute of Medical
Sciences, New Delhi
Boston
St. John’s Medical College
Bangalore
Dr K Srinath Reddy from AIIMS, renowned
scientists involved in the study, says
Use of mustard oil was associated
with a two-fold lower risk than was
use of sunflower or other oils,
Similarly, those who use mustard oil
for frying foods lower their risk for
heart attack by 71 per cent.
“
• The reason for the protective effect of
mustard oil is that it is rich in alpha
Linolenic acid which is a source of
omega-3 polyunsaturated fatty acids,
known for giving protection to heart.
• Alpha Linolenic acid reduces the
adhesion-aggregation tendency of blood
platelet which should decrease the risk
of heart attack.
Published in
“
Delivering Health and Prosperity • www.ksoils.com 26
K S Oils
Background
Delivering Health and Prosperity • www.ksoils.com 27
The Company
K S Oils is in the business of manufacturing and marketing of branded crude
mustard (rapeseed) oil and refined mustard/other edible oils
The Company is the largest processor
of rapeseed in India
• Largest player in the crude
mustard oil market
• Largest exporter of rapeseed
deoiled Cake (200-09)
• Significant presence in the
refined oil market (soyabean/
palm)
• Other products include vanaspati,
Soya deoiled cake, solvent oils,
fatty acids and other oils
Manufacturing and Distribution
Manufacturing facilities are located
in Madhya Pradesh, Rajasthan
and West Bengal.
Strong distribution network with 37
C&F agents, 1,313 Distributors
and over 200,000 Retailers.
Code: 526209
Listed Since 1994
Code: KSOILS
Listed Since 2007
Estd: 1985
Delivering Health and Prosperity • www.ksoils.com 28
The promoters
The Company is part of an old established business house belonging to the
Garg family from Morena, Madhya Pradesh dealing in agro based
products for the last 150 years
The Promoters are currently engaged in the edible oils business only
Mr. Ramesh Chand Garg Chairman
• belongs to the fifth generation of
the Garg family.
• has vast experience in business
of agriculture commodities,
project expansion, sales and
distribution
Mr. Sourabh Garg Executive Director
• is from the promoter family
• is actively involved in green field
project activation and new
infrastructure initiatives
• also looks after the product
expansion initiatives
Delivering Health and Prosperity • www.ksoils.com 29
Management Team
Name Designation Profile
Sanjay
Agarwal Managing Director
He has over 20 years of experience in this
sector and is the main driver in the Company’s
expansion & growth; key person driving
backward integration.
Sunil AlaghHead - Marketing
Advisory Committee
Ex-CEO of Britannia and one of the most
celebrated Marketing Guru’s in India. He
formulates the Marketing and Brand strategies
of the company.
Himanshu
Gandhi
Global Head-
Business Strategy
He has experience in edible oils international
trade. He drives strategic new business
initiatives and international foray of the
company.
R Ganesh Executive Director
He has been a strategic advisor to top
companies on policy issues. He is in charge of
the K S Oil’s HRD policies.
Delivering Health and Prosperity • www.ksoils.com 30
Board of Directors
Name Designation Profile
Rajeev Kalra Director He is nominee of the Citi Venture Capital group.
Jimmy Mahtani DirectorHe is nominee of Baring Private Equity Asia III
Mauritius.
Vivek Sett Director He is nominee of New Silk Route Advisors.
P K Mandloi Independent
Director
He has extensive experience in the banking sector
and guides the Company in financial matters.
Dr. R S SisodiaIndependent
Director
He is a Doctorate in agriculture and looks after
quality control areas R&D.
Delivering Health and Prosperity • www.ksoils.com 3131
Corporate Social Responsibility
• The Garg family are founders of a school teaching
1,200 students from nearby rural areas.
• A not-for-profit organization, it is the only school in
Morena that has high education standards, state of
the art computers and recreational facility like horse
riding and ample greenery.
• The Company has been instrumental in promoting
local brick industry using Company’s coal ash
remnants from boiler
• The Company employs about 3,500 people, directly &
indirectly.
• It supports 50,000 families like farmers supplying
their produce and dependent downstream industries
like transporters, brick factories, farmers, distributors,
etc.
Delivering Health and Prosperity • www.ksoils.com 32
Awards & Recognition
KS Oils is one of the fastest
growing companies in India.
The Economic Times
ET500
sound companies
BW REAL 500
Best Value Creator
(small cap)2008
Business Today
5th Most Investor Friendly Company
Oilman of
the year
a Premier Association of Vegetable Oil Industry & Trade
Highest Processor of Rapeseed Oilcake
2004-05 | 2005-06
2006-07 | 2007-08
2008-09
Delivering Health and Prosperity • www.ksoils.com
Shareholding Pattern
Note: The Company had allotted 62,247,230 equity shares of Re. 1 each in favour of the Custodian
underlying three GDR's Issues of total USD 64 Million.
As on 30th June, 2010
33
Delivering Health and Prosperity • www.ksoils.com 34
K S Oils Operations
• Sourcing: mustard seeds from Rajasthan, M.P., U.P. and Delhi
• The Company also does bulk sourcing of seeds from NAFED
• Bulk crude oil is either imported or sourced from Madhya Pradesh and Delhi
• Facilities located in Madhya Pradesh, Rajasthan & West Bengal
• Total installed capacity
• Solvent Extraction – 4,200 MT/ day
• Vanaspati – 250 MT/ day
• Crushing Capacity – 4,400 MT/ day
• Refinery – 1,600 MT/ day
• Sales through C&F Agents and Company Depots
• North-East and Eastern Region: goods dispatched to branches and
depots via. Railway racks and sold directly to Distributors.
• Mustard oil (Double Sher & Kalash brands)
• Refined oils (Kalash, KS Refined & KS Gold brands)
• Vanaspati (KS Gold & KS Gold Plus brands)
Products and Brands
Sourcing
Manufacturing
Distribution
Delivering Health and Prosperity • www.ksoils.com 35
Financial Performance Summary
INR
in
mill
ion
s
Marg
in
Delivering Health and Prosperity • www.ksoils.com 36
SWOT Analysis
• Management experience of decades in this business
• Largest integrated solvent/ rapeseed crushing capacity in India
• Established brands in crude mustard oil, refined oil and vanaspati
• Efficient and flexible manufacturing facilities
• Captive power production (92 windmills - 78 MW)
• Loyal customer base
• Secure raw material supply
• Extensive distribution network
• Among the highest margin earners in the Indian Edible Oils sector
Str
eng
ths
Delivering Health and Prosperity • www.ksoils.com 37
SWOT Analysis
Wea
kn
ess
• Currently limited presence in
West India and no presence
in South India
• Ongoing consolidation in the
mustard/ domestic oilseed sector
and conversion of unorganized
(70%) to organized market (30%)
• Continued growth in the Indian
edible oil industry fuelling need
for organic growth through
greenfield projects to tap other
cultivating regions
• Backward integration
(plantations and power
generation) and forward
integration (value added products
for personal care and oleo
chemicals)
Op
po
rtu
nit
y
Th
reat
s
• Competition from substitutes
(refined edible oil brands) for
KSOL’s refined oil products
• Weak regulatory environment in
India – spurious and adulterated
oil being available in the market
Delivering Health and Prosperity • www.ksoils.com 38
Company’s Products
and Markets
Delivering Health and Prosperity • www.ksoils.com 39
Company’s Brands
Kalash is the flagship brand for mustard oil well
known for purity, pungency and colour
Double Sher has 30% market share in North
East India and enjoys a premium over other
brands. It has high penetration and acceptance
in the rural areas
The Company has established brands with high brand recall in their respective segments:
Brand extensions for refined oil with high
customer recall for purity
KS and KS Gold are well accepted brands in the
refined oil as well as Vanaspati segments.
Mustard Oil
(Kalash and Double Sher)
Refined Oils
(Kalash, KS and
KS Gold)
Vanaspati
(KS Gold and
KS Gold Plus)
Delivering Health and Prosperity • www.ksoils.com 40
Manufacturing
Delivering Health and Prosperity • www.ksoils.com 41
ManufacturingStrategic LocationsThe manufacturing units are located in
Morena, Ratlam, Guna in Madhya Pradesh
and Kota in Rajasthan and a Port based
Refinery in Haldia, West Bengal
Integrated Packaging
The operations of the Company are fully integrated with in-
house packaging department which completely meets the
Company’s requirements of tin, HDPE jars, pouches and
PET bottles
The integrated nature of the manufacturing units of the
Company’s divisions is a very important source of KSOL’s high
profitability. Significant operational efficiencies by reducing power
and fuel costs, chemical costs and increasing automation have
been achieved
Ability to process
varied oilseeds and
any crude edible oil
The facility is well
equipped to switch to
processing of any
crude edible oilOperationally efficient
Delivering Health and Prosperity • www.ksoils.com 42
Manufacturing
DivisionTotal Current
Capacity
Crushing 4,400 MT/day
Solvent Extraction 4,200 MT/day
Refinery 1,600 MT/day
Vanaspati 250 MT/day
Factories
One of the most modern and integrated state-of-the-art
edible oil manufacturing plants in India
Current Capacity
Delivering Health and Prosperity • www.ksoils.com 43
Manufacturing – Integrated Process Flow Chart
Delivering Health and Prosperity • www.ksoils.com 44
Mustard Kachchi Ghani (Crude) Oil
• Kohllu has been traditionally used in the
manufacture of mustard oil; in the process the
seeds are broken in open air, during the process
certain enzyme is released. This enzyme provides
the pungency to the oil.
• Pungent mustard oil/ Kachchi Ghani is very popular
in the northern, eastern and north-eastern states of
India
• The process of extracting oil using only expellers
results in high temperatures thus losing its
pungency. In the Kohllu process, temperatures are
controlled to maintain the pungency and hence, the
Kohllu process is critical from consumers need and
preference for pungency in mustard oil
• The process begins with the cleaning of the
mustard seeds which are then loaded through
conveyor belts in to the Kohllus (cold press
crushers)
Rapeseed
Delivering Health and Prosperity • www.ksoils.com 45
Mustard Kachchi Ghani (Crude) Oil
• The Company has skilled labour trained in the
art of manufacturing pungent oil through this
method
• Manufacturing Kachchi Ghani oil from Kohllu is
relatively less scalable, thus creating significant
entry barriers for new players.
• 22% oil is obtained in the Kohllu, which is
extremely pungent and inedible (pungency
factor of ~0.38). The residue oil cake is further
processed in the expellers. This results in 13%
oil which has pungency of ~0.12.
• Both the oils obtained (i.e. from Kohllus and the
expellers) are blended to obtain the perfect
blend of edible oil with pungency of ~0.27 to
0.28
• The mustard Oil cake is then fed into solvent
extractor via conveyors to extract the remaining
oil .
Kohllu – Cold press crusher for high
pungency Mustard Oil
Delivering Health and Prosperity • www.ksoils.com 46
Other facilities
Solvent Extraction
The mustard oil cake in the solvent extractor is sprayed
with Hexane, which extracts the remaining 7% oil.
Through the distillation method, the hexane is separated
completely to yield solvented oil. The deoiled cake is
exported as cattle feed to south-east Asia, South Korea &
China. The solvented oil is sent for refining
This solvent extraction process is used for soyabean
seeds as well, from which ~ 18% oil is extracted
Solvent Extractor
Refinery
Refining of oil refers to neutralised, bleached and de-odorised oil. The process is carried out in
vacuum at high temperatures
Vanaspati
The process involves hydrogenation of refined oil. Vanaspati obtained is filled into containers
and taken for cold room treatment where the temperature is reduced in a controlled manner
which facilitates the final finishing required for the grainy texture
Delivering Health and Prosperity • www.ksoils.com 47
Other Facilities
Packaging
In-house packaging department completely meets the
Company's requirements of tin, HDPE jars, pouches and
PET bottles. The equipment includes offset printers,
pouch filling machines, tin automatic filling machine and
automatic bottle filling plant
Power
Captive Power production capacity of over
92 Windmills (78 MW)
Effluent Treatment
The effluent treatment plant handles the
entire effluents of K S Oils. The effluent
treated water is completely recycled in-house
resulting in zero release of effluents
Quality Control (“QC”)
The QC lab does standardization as per
AGMARK, V.Q.P and P.F.A. parameters
The Company was awarded the ISO 9001:2000
certification for Quality Management Systems for
Manufacturing and Supply of Edible Oils
Delivering Health and Prosperity • www.ksoils.com 48
Markets and
Distribution
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Markets and Distribution
The company has 1,313 Distributors and over 200,000 retailers serviced by the
company’s 275 member strong marketing team
Company’s markets are classified
as:
• North East region (NE) & East
(West Bengal & Bihar) where
the Company is the market
leader and which contributes ~
28% of Company’s oil revenues;
• Central & North India - Uttar
Pradesh, Madhya Pradesh,
Delhi, Rajasthan, Himachal,
Haryana, Punjab and Jammu &
Kashmir.
For each market mentioned, the Company
has a distribution network:
• For the East and NE Region, goods are
transported through railway racks. Kolkata,
Guwahati and Dimapur are the major
railway arrival points for the Company’s
goods in this region. The Company has its
own depots in these stations.
• For the rest of India, the Company has set
up a network of C&Fs and Depots to cater
to Distributors and Wholesalers.
Markets Distribution Network
Delivering Health and Prosperity • www.ksoils.com 50
Historical Financial
Performance
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Historical Profit & Loss StatementINR. Mn.
Particulars 2005-06
(A)
2006-07
(A)
2007-08
(A)
2008-09
(A)
2009-10
(A)
Total Income 6,082 10,716 20,572 31,782 40,997
Less: Raw Materials 5,290 9,073 16,874 25,625 33,454
Manufacturing Exps. – Direct 251 313 526 633 946
Gross Profit 541 1,330 3,172 5,494 6,597
Expenditure
Selling Expenses 138 238 499 771 884
Administration Expenses 131 154 354 1,102 953
Operating EBITA 272 938 2,319 3,621 4,760
Depreciation 29 45 122 268 529
EBIT 243 893 2,197 3,353 4,231
Interest and Finance Charges 72 154 375 743 1,564
PBT 172 739 1,822 2,610 2,668
Provision for Taxation 24 166 615 916 423
PAT 148 573 1,207 1,694 2,245
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Analysis
Company’s revenues touched INR
40,00o mn. in FY10, growing over 6
times in last 5 years from INR 6,082
mn. in FY 2006
This growth was on account of high growth in
revenues of the Mustard and Refined oils, new
capacity additions and geographical expansion
into newer markets.
Overall EBITDA increased by 17.5
times from INR 272 mn. in FY 2006
to 4,760 mn. in FY 2009
This leap was driven by increase in sales of
branded products and increase in sale of
small SKUs.
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Historical Balance sheetINR Mn.
Particulars+Mar-06
(A)Mar-07 (A) Mar-08 (A) Mar-09 (A) Mar-09 (A)
Sources of Funds:
Shareholders Funds
Share Capital 85 221 332 356 409
Equity Share Entitlement Warrants 0 238 500 0 713
Deferred Government Grants 11 10 9 9 8
Reserves and Surplus 373 1,434 6101 8,707 13,395
468 1,903 6,942 9,072 14,525
Loan Funds:
Secured Loans 788 852 2,847 9,319 14,773
Unsecured Loans 86 150 0 0 0
874 1,002 2,847 9,319 14,773
Deferred Tax Liability 0 155 415 1,051 999
Total 1,341 3,060 10,204 19,442 30,297
Application of Funds
Fixed Assets
Gross Block 597 1,378 2,904 6,920 11,738
Less: Accumulated Depreciation 159 203 324 589 1,118
Net Block 438 1,175 2,580 6,331 10,620
Capital WIP 0 169 1,837 3,535 787
Investments 185 779 1,960
Current Assets, Loans and Advances
Inventories 1,552 2,477 4,414 9,747 17,174
Sundry Debtors 154 139 1,064 1,208 2,310
Cash and Bank 61 131 1,496 666 1,236
Loans and Advances + Deposits + other Current
Assets57 454 2,068 1,905 3,795
Total Current Assets 1,824 3,201 9,042 13,526 24,515
Less: Current Liabilities and Provisions
Current Liabilities 875 1,273 2,826 3,818 6,712
Provisions 46 235 614 911 873
921 1,508 3,440 4,729 7,585
Net Current Assets 903 1,693 5,602 8,797 16,930
Misc. Expenditure 0 23 0 0 0
Total 1,341 3,060 10,204 19,442 30,297
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1st Qtr. - FY 11 (Unaudited)
Particulars Amount
Total Revenue 10,324
EBIDTA 1,173
Interest 437
Depreciation 155
PBT 581
Current Tax 57
Deferred Tax 19
Net Profit after Tax 505
in INR Mn.
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Particulars Date No. of Equity Shares Amount (INR)
Equity Share Capital as on 31.03.2006 8,392,900 83,929,000
107,100 forefited shares allotted on reissuance 12.08.2006 107,100 1,071,000
Equity shares allotted on Pref. basis (INR 225 per share) 19.08.2006 900,000 9,000,000
Bonus in Ratio of 1:1 11.09.2006 9,400,000 94,000,000
Equity Shares Allotted to CVC at INR180 per share 23.12.2006 3,291,656 32,916,560
Warrants issued to CVC – 1,708,344* & Promoters – 2,300,000** at INR 180
per warrant 23.12.2006
Equity Share Capital as on 31.03.2007 22,091,656 220,916,560
Shares Split in Ratio of 1:10 25.07.2007 220,916,560 220,916,560
Equity Shares Allotted to Baring Pvt. Equity Asia III at INR 41.9 per share 22.08.2007 21,479,710 21,479,710
Equity Shares Allotted to CVC Trustees at INR 41.9 per share 22.08.2007 90,720 90,720
Warrants issued to Promoters – 23,866,350*** at INR 41.9 per warrant
30,744,610 equity shares of Re. 1/- each (at INR41.9 per share) underlying
the GDR's Issue of USD 31.42 Mn. 07.09.2007 30,744,610 30,744,610
273,231,600 273,231,600
Warrants converted by Promoters** 22.10.2007 23,000,000 23,000,000
19,093,100 equity shares of Re. 1/- each (at INR41.9 per share) underlying
the GDR's Issue of USD 20.53 Mn. 08.11.2007 19,093,100 19,093,100
Warrants converted by CVC* 26.03.2008 17,083,440 17,083,440
Warrants converted by Promoters*** 25.10.2008 23,866,350 23,866,350
Equity Shares Allotted to New Silk Route Advisors at INR 48.43 per share 01.07.2009 27,921,406 27,921,406
12,409,520 equity shares of Re. 1/- each (at INR 48.43 per share) underlying
the GDR's Issue of ~ USD 12.5 Mn to New Silk Route Advisors 15.07.2009 12,409,520 12,409,520
396,605,416 396,605,416
Warrants issued to Promoters – 28,807,339 at INR 54.5 per warrant**** 01.07.2009
Warrants to be issued to CVC – 8,672,566 at INR 56.5 per warrant**** 01.07.2009
Warrants issued to Baring Pvt. Equity , Asia III – 8,672,566 at INR 56.5 per
warrant**** 01.07.2009
Warrants converted by Promoters**** 29.01.2010 12,346,002 12,346,002
Total issued Equity 408,951,418 408,951,418
Total diluted Equity 442,757,887 442,757,887
Changes in Capital Structure
**,*** Promoters paid 50% money upfront at the time of subscription of warrants.
**** Paid 25% money upfront at the time of subscription of warrants.
Delivering Health and Prosperity • www.ksoils.com 56
Strategy &
Growth Initiatives
Delivering Health and Prosperity • www.ksoils.com 57
K S Oils – Where does it stand today!
Largest rapeseed crushing capacity in
India 4,400 MT/day
• Four times more than the nearest
competitor (Gokul Refoils – 690 MT/
day)
• Integrated manufacturing facilities
across 5 locations in oilseeds belt.
Market leader ~ 12.5% market share
of mustard oil market (INR 130 Bn.)
25% share of the organized mustard
oil market.
Dominant market share in mustard oil
in 7 north east states with nearly
30% market share – brands include
Double Sher and Kalash.
11
Delivering Health and Prosperity • www.ksoils.com 58
Vision
To deliver Health and Prosperity
To achieve a turnover of INR 8 bn by 2013
To consolidate market leadership position by achieving
20% market share in mustard oil
To accelerate the conversion of the loose unbranded
edible oil market to the branded retail market
Delivering Health and Prosperity • www.ksoils.com 59
Key Objectives
Distribution • extend reach to Tier II and Tier III towns and rural India
• strengthen existing presence in Central, Northern and Eastern
India
• create distribution network in Western India
Increase• brand power and obtain better pricing power
• market share from the current 12.5% to 20% in the Mustard
segment
• proportion of retail packs
Improve utilization levels of its inland
oilseeds crushing facilities and port based
refinery
Lead in improving yields
of rapeseed and
soyabean farmers
Delivering Health and Prosperity • www.ksoils.com 60
Strategy – Way ahead
Global and Domestic Growth options
Backward and Forward integration
Plantation
Crude Oil
Production
Refining
Processing &
Products
Final Distribution
Secure raw material supply globally & source it
from best yield geographies
Farms
Delivering Health and Prosperity • www.ksoils.com 61
De-risking strategy
Global de-risking strategy for raw material supply
- owning palm plantations across the globe
• Proof of concept Aug. 2007
364 hect. of palm plantation in Malaysia
• Fortifying strategy Mar. 2008
20,000 hect. of palm plantation land in Indonesia
• New acquisitions in 2009
35,500 hect. of palm plantation lands in Indonesia
Self sufficiency by global agri-companies in raw
material sourcing will help insulate against short
supplies and spiraling prices.
REPORT
“ “
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Indonesia
Delivering Health and Prosperity • www.ksoils.com 63
Oil Palm Cycle
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Nursery
Several factors are taken into
consideration when deciding the
location of pre-nurseries to grow
seedlings, including a nearby source of
water, flat land, good drainage and
proximity to sources of labor.
On each plantation, the Company
intends to build the appropriate
infrastructure to bring water sources to
seedlings and allow smooth drainage.
Delivering Health and Prosperity • www.ksoils.com 65
Immature Plantation
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Immature Plantation
Delivering Health and Prosperity • www.ksoils.com 67
Palm Tree
Delivering Health and Prosperity • www.ksoils.com 68
Palm Seed and Fruit
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Mature Plantation
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FFB harvesting
Delivering Health and Prosperity • www.ksoils.com 7171
Thank You
K S Oils Limited
Registered and Corporate Office -
Jiwaji Ganj, Morena 476 001, Madhya Pradesh - India.
Phone: +91 7532 300000 • Fax: +91 7532 405060
email: [email protected]