Analysis of Rallis

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Part of our submission for STAMP to a Hedge Fund

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Analysis of Rallis

  1. 1. Analysis of Rallis Performance<br />Team Pinnacle<br />XLRI GMP 2009-10<br />Misha Jain<br />SumeetKhanduja<br />VaqarNusrat<br />
  2. 2. Sales Trend<br />From 2000 to 2004 there has been a rapid decline in sales<br />From 2004 to 2009 there has been a steady increase in sales<br />
  3. 3. Restructuring at Rallis<br />GOI imposes restriction on sale of urea <br />Rallis exits out of distribution of Tata Chemicals Urea <br />Rallis exits out of Pharma business<br />Gellatine business sold to Sterling Biotech<br />Chemical Factories shutdown & assets liquidated<br />Rallis stops Farm Mgmt Services<br />Rallis exits out of Textile and Garments business<br />
  4. 4. Restructuring at Rallis<br />Rallis has taken a strategic decision of divesting other business and concentrating on its core competence of AgriBusiness (excluding urea)<br />
  5. 5. Restructuring at Rallis<br />Decline in total sales from 2000 to 2004 has been due to Rallis moving out of diverse business<br />
  6. 6. Removing the effect of Restructuring<br />Adjusted sales (removing the contribution from the divested business) has shown a marginal decline from 2000 to 2004 and then a steady increase from 2004 to 2009.<br />
  7. 7. Removing the effect of Restructuring<br />Adjusted EBIDTA (removing the contribution from the divested business) has been less volatile as compared to EBIDTA from 2000 to 2004.<br />
  8. 8. Removing the effect of Restructuring<br />Adjusted PAT (removing the contribution from the divested business) has always been greater than PAT from 2000 to 2004.<br />
  9. 9. Assumptions<br />Sales has been adjusted taking into account Sales pertaining to Pesticides, Plant growth nutrients, seeds and tanning material for all the years<br />Expenses viz. operating expenses, interest charges and depreciation have been adjusted in proportion to the adjustment made in sales<br />There is a slight difference in raw material cost as per your figures and our figures during 2004 and 2006<br />Effective tax rate has been assumed to be constant<br />
  10. 10. Other Observations<br />In 2004 and 2005 major capital restructuring was done as given below:<br />Issue of preference shares of 88 cr. & sale of assets of 120 cr. and repayment of debt of 117 cr. (2004) & 110 cr. (2005)<br />A major reconciliation exercise of debtors and creditors was done in 2005 leading to release of 46 cr. from working capital.<br />In 2002 sale of assets (Pharma & other assets) was worth 122 cr.<br />

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