Bharat Fertiliser Industries Ltd BSE Code : 531862 ( listed since 1963)
Core Business : Production of Single Super Phosphate (SSP) in Granulated and Powder form along with Alum in Liquid and
Plant location :Village Kharivali, Taluka : Wada ,Thane district, Maharashtra ( This is close to Pen)
Installed capacity : 132000 TPA (SSP) and 99000 TPA (GSSP)
Paid up Equity Capital: 5.29 cr
Debt : Nil
Market price : Rs.48
Market Cap: Rs.25 cr
Revenue : 22.8 cr
NP : 5.41 cr
9-months ended Dec 2010:
Revenue : 16.78 cr
NP : 4.64 cr
Reasons for poor performance of the fertilizer business:
Difficulties in arranging Imported Raw Material namely Rock Phosphate and Sulphur.
Working capital constraints due to delay in receipt of Fertilizer subsidy.
Future of the Fertilizer business:
1)The Company is exploring the possibility of a Marketing Tie-up arrangements with Rashtriya Chemicals & Fertilisers,Ltdand Deepak Fertilisers & Petrochemicals Corporation Limited during 2010-2011 for manufacture of SSP/GSSP Fertilizers.
2) The company plants to utilize surplus funds from the Real Estate business for working capital for its fertilizer plant and
also for replairs / maintaneance /modernization of fertilizer plant and equipment.
Due to erosion in net worth ( accumulated losses exceeded 50% of the net worth ) the company was declared a BIFR case.
Subsequently as the Net Worth turned positive at Rs. 193.03 Lacs as on 31/12/2009, the company had approached BIFR and
prayed for discharge from purview Sick industrial Companies (Special provisions Act) 1985.
The Bench III of Board for Industrial and Financial Reconstruction at its hearing held on 29/03/2010, dismissed the reference of the company
as non-maintainable. The company is pursuing the matter with BIFR.
The company owned 6.25 acres of land at Majiwada in Thane. This plot is adjacent to Lake City Mall, just about 1 km from
Jupiter Hospital,3.5 km from Thane station and 0.5 km from the Mumbai-Nashik highway.
The company is developing a self sufficient purely Residential complex called ‘ Shiv Sai Paradise’ at this location
Amenities : Club house with swimming pool,Health Club, Library, Indoor/outdoor games, Multi purpose hall, garden with
jogging track, chidrens play area, Seniors area, Podium parking, paved internal roads.
Number of proposed buildings : Total 10 ( 1st phase: 5, 2nd phase:3, 3rd phase:2)
Total approx saleable area :
1st phase: 3.35 lakh sq.ft
2nd phase: 2 lakh sq.ft
3rd phase: 0.85 lakh sq.ft
This includes 2 towers of 17 floors , 1 tower of 12 floors ( all ready ) and 2 towers of 21 floors ( expected possession between
Dec 2011 and March 2012)
Ready for possession: approx 1.90 lakh sq.ft
Of the above, already sold : approx 1 lakh sq ft
Total proceeds realized since launch of project from the 1 lakh sq ft: approx 40 cr
Available for sale now with immediate possession : 90,000 sq ft ( rate quoted is Rs.6700 psf excluding floor rise, parking,
Expected to be ready for possession by March 2012: 1.45 lakh sq ft ( rate quoted for bookings is Rs.5800 psf excluding floor
rise, parking, other charges)
2nd phase :
Work expected to commence anytime. This involves 2 towers of 17 floors each. Possesion expected end 2013
Dates not announced.
Cash flow probability:
Income already booked in 2009-10 and 2010 till Dec : approx 40 cr
Expected to be booked between Jan 2011 and June 2012 ( i.e 6 quarters): approx 130 cr ( this is based on the conservative
assumption that the company is able to sell about 7500 sq ft per month @ 5500 psf).
Balance expenses pertaining to the 1st phase should in most probablity get booked between Jan 2011 and Dec 2011
( i.e 4 quarters): approx 14.5 cr ( 145000 sq ft X Rs.1000 psf )
Expected revenue per quarter between Jan 2011 to June 2010 ( may not be spread evenly) : approx 21.50 cr
Expected expense per quarter between Jan 2011 and Dec 2011 : approx 3.62cr
It is too early to look into the positive cash flows from the 2nd phase.
We will restrict ourselves to the expense flows on this.
Assumption : work commences from April 2011 and carries on for 10-12 quarters. We’ll be conservative and expense out
the amount over 5 quarters i.e April 2011 to June 2012 ( i.e 5 quarters): approx 30 cr ( 200000 sq ft X Rs.1500 psf ) i.e: 6 cr per
Expected inflows / quarter: 21.50 cr
Expected outflows / quarter : 3.62 cr + 6 cr + 2 cr ( miscellaneous) : 11.62 cr
Assuming they pay tax @ 33%, PAT / quarter should not be less than 6 cr.
The same cycle will play out thereafter with 2nd phase earnings kicking in and 3rd phase expenses moving out.Here it should
play out better as expected 2nd phase earnings are around 110 cr and 3rd phase expenses and others not more than 20 cr
All numbers above in the cash flow are not based on Management data and are based on reasonable assumptions made
by the author and may not be accurate. Kindly do your own due dilegence before investing.
1) Development of an SEZ in partnership with a Foreign partner at its 120 acres of free hold land at Kharivali.
2) Redevelopment of its building at Flora Fountain in Mumbai. Expected area post redevelopment is about
12,000 sq ft.
Negatives & risks:
The company has said that it intends to use free cash flows from real estate business to augment its fertilizer operations.
The company has not been disclosing segment related data in its results
The company primarily uses income from inventory sale to fund development costs and hence any delay in inventory sales can have a severe negative cascading effect.
Valuation & concluding summary:
Notwithstanding the above, the entire valuation argument gets summed up in the current Enterprise Value of 25 cr
High risk with a possibility of high return.