KN Agri IPO

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About KN Agri IPO

Incorporated in 1987, K N Agri is an agro-based Company, involved primarily in the business of (a) solvent extraction & oil refining and (b) trading of various agro-commodities. The wide range of processed and manufactured products includes soya de-oiled cake (soya meal), Hipro Soya Meal, soya refined oil, soya crude oil, degummed oil, soya lecithin, acid oil, soya husk, cotton seed oil, refined rapeseed oil and rapeseed de-oiled cake.

Under the agro-commodities business, K N Agri trade in various agro commodities such as maize, gram, pulses, sugar, soyabean, wheat etc.

Manufacturing Units

They have three strategically located plants in the state of Madhya Pradesh comprising of three solvent extraction plants, two oil refineries and one flour mill. The location of the plants gives them the competitive edge over other players in terms of procurement and availability of major raw material (i.e. soyabean seeds).As on the date of this Draft Red Herring Prospectus, they have cumulative solvent extraction capacity of 3,75,000 TPA, edible oil refining capacity of 60,000 TPA and flour milling capacity of 24,000 TPA.

The two manufacturing units, namely, Khandwa Oils – Unit I and Unit II situated in Khandwa, M.P., are spread in the wide area of around 20 acres, while the another unit located in Kheda, Itarsi, M.P. is spread around an area of 10 acres. All the units have a well-equipped laboratory, modern technology and testing equipments with supporting environment and facilities, to ensure that the products conforms with the pre-determined food standards.

Certification and Awards

The Company has received 2nd highest processor award for the F.Y. 2017-18 from SOPA. We possess ISO 9001: 2015 and ISO 22000:2018 certificate in respect of our Khandwa Oils Unit I, certifying that the Quality Management System and Food & Safety Management System are in accordance with the requirements of ISO 9001:2008 and ISO 22000:2018 respectively in regards to manufacture, supply and export of our soyabean products. Similarly, they possess ISO 22000:2018 certificate for the unit situated in Kheda, Itarsi.

They also possess Halal India Certificate for Kheda unit and Khandwa Oils Unit I, certifying that certain of our soya products are in accordance with Shariah (Islamic) Board Guidelines.

Distribution

Presently, they market the products to around 15 states in India of which majority portion of the revenue comes from the state of Madhya Pradesh, Gujarat, West Bengal and Maharashtra.

Clients

Some of the esteemed customers includes names such as Adani Wilmar Limited, Cargill India, Bunge India and Ruchi Soya. The major customers include agri-commodities dealers, trade houses, export houses and FMCG Companies.

Export Business

They also export the products to countries such as Netherlands, Singapore, Bangladesh and Nepal. They market refined oil primarily under our registered brands “CLASSIC” and “KHAN-PAN”.

Other Businesses

They also have four wind energy power plants of combined capacity of 4.60 MW in the state of Madhya Pradesh, Maharashtra and Rajasthan. They have entered into agreements with respective state government entities for exclusive sale of power, which is generated from the three windturbine generators located in the district of Sangli and Nandurbar (Maharashtra) and Jaisalmer (Rajasthan). The power generated from the wind mill situated in Dewas, Madhya Pradesh is taken in use for captive purpose. The Company has outsourced all operations and maintenance activities relating to windturbines to third parties.

Objects of the KN Agri IPO:

The Issue includes a fresh Issue of upto 65,84,000 Equity Shares of the Company at an Issue Price of Rs. 75 per Equity Share. They intend to utilize the proceeds of the Issue to meet the following objects:- 1. To meet Working Capital requirements 2. General Corporate Purpose 3. To meet issue expenses
DRHP of KN Agri IPO

KN Agri IPO Details:

Open Date: Mar 15 2022
Close Date: Mar 17 2022
Total Shares: 6,584,00
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Building
Issue Size: 49.38 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 71-75 Per Equity Share
Listing At: NSE Emerge
Listing Date: Mar 28 2022

Promoters And Management:

1. Mr. Vijay Shrishrimal is the Chairman and Managing Director of the Company. He has been on the Board since 1987. He has completed his Bachelor of Commerce from University of Bombay in 1987. He has a work experience of around 33 years in the agri-commodities industry. He is a visionary entrepreneur and has played a pivotal role in setting up business of our Company. He primarily looks after the overall business operations of the Company including international trade, finance and formulation of policies for the business development. 2. Mr. Sanjay Shrishrimal is the Whole Time Director of the Company. He has been on the Board since 1998. He has completed his Bachelor of Commerce and has an experience of around 29 years in the agri-commodities industry. He currently overseas and controls the manufacturing operations of Khandwa units and retail marketing operations of our Company. 3. Mr. Dhirendra Shrishrimal is the Whole Time Director & CFO of the Company. He has been on the Board since 1992. He has completed his Bachelor of Commerce from University of Bombay in 1992. He has an experience of around 26 years in the agri-commodities industry. He currently overseas and controls the banking & finance operations of the Company as well as domestic trading operations. He also looks after the manufacturing operations of Itarsi unit.

Financials of KN Agri IPO:

Particulars (in Cr.) Sep-21 Mar-21 Mar-20 Mar-19
Sales 594 1,299 850 1,285
Cost of Material Consumed 123 678 428 864
Purchases of Stock-In-Trade 418 496 353 203
Changes in Inventories -2 -6 -24 63
Employee Benefits Expense 3 7 7 6
Other Expenses 27 82 62 114
Operating Profit 25 42 24 35
OPM % 4.21% 3.23% 2.82% 2.72%
Other Income 1 2 3 7
Interest 1 5 5 7
Depreciation 2 4 4 4
Profit before tax 22 35 18 31
Total Tax Exps 5 8 4 9
Net Profit 17 27 13 21
NPM % 2.86% 2.08% 1.53% 1.63%
No. of shares 2.50 2.50 2.50 2.50
EPS in Rs 9.14 14.22 7.17 11.62

Comparison With Peers:

 
Name of the Company Face Value EPS PE RoNW Book Value
KN Agri Resources Ltd 10 17.6 4.3 9.66% 70.4
Ruchi Soya Industries Ltd 2 30 26.8 17.60% 149
Gujarat Ambuja Exports Ltd 1 19.2 12.4 22.70% 81.5
Gokul Agro Resources Ltd 2 6.2 12.2 13.80% 26.7
Kriti Nutrients Ltd 1 2.05 23.4 15.90% 20.7
 

Recommendation on KN Agri IPO:

Review and Recommendation of  K N Agri IPO by InvestorZone is 5/10 The company is mainly into solvent extraction & oil refining and trading of various agro-commodities. KN Agri has good clients like Adani Wilmar Limited, Cargill India, Bunge India and Ruchi Soya. The pricing also looks reasonable. However, the business is not growing in the last 3 years. And, without growth getting good valuation is very difficult.

Lead Manager of KN Agri IPO:

  1. Hem Securities Limited

Registrar of KN Agri IPO:

  1. Link Intime India Private Limited

Discussion on KN Agri IPO:

3 Comments

    Let us see Cash-flow Statements

    If you see the PAT growth of the company from Fy20 to Fy21, it has grown from 13 Crores to 26 Crores. However, if you see the cash generated from operation, it was 37 Crores in Fy20 and -3.34 Crores in FY21. So, what went wrong that despite doubling PAT, company is not generating positive cash.

    If you see cash flow statement carefully, in FY21, money got stuck in Trade Receivables. Receivables has increased from 3 Crores in FY20 to 35 Crores in FY21. This shows that company is not able to get their money back from their clients.

    Reply

    In the last 4 years, there is no growth in the company. Revenue is flat. In FY18-19, the company had a revenue of 1290 Crores and if we annualise the FY21-22 numbers, the revenue would be ~1200 Crores. That means the revenue is not growing.

    Reply

    Valuation

    1. Total Shares Outstanding before IPO = 18414910
    2. Total shares to be issued in IPO = 65,84,000
    3. Total Shares outstanding after IPO = 24,998,910
    4. PAT (FY21) = 26 Crores
    5. EPS = 10.83
    6. P/E = 7x ( looks fairly priced).

    Reply

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