Industry Covered – Starch & Starch Derivatives

Industry Players Covered – 8 [ All SE-Listed Players (Constituting 80 % of the Industry Size) ]

Name of Companies Covered – Riddhi Siddhi Gluco Biols Ltd.

Anil Products Ltd.

Sukhjit Starch & Chemicals Ltd.

Gujarat Ambuja Exports Ltd. (Maize-Processing Division)

English Indian Clays Ltd. (Starch Division)

Universal Starch-Chem Allied Ltd.

Gayatri Bioorganics Ltd.

Tirupati Starch & Chemicals Ltd.

Contents - Last Fives Years' Performance of Starch Industry as a whole

Percentage Contribution by each of the Listed Player to industry Sales & EBIDTA over last
5 Years

Q1'FY11 Performance of Starch Industry as a whole

Percentage Contribution by each of the Listed Player to industry Sales & EBIDTA
(Q1'FY11 over Q1'FY10)

Current Valuation Commanded by each of the Listed Company (execept GAEL & EICL)
based on price as on 13th August 2010

Last 10 Years' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Last 10 Years' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Last 10 Years' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Last 10 Years' Margin Scenario of Top 3 Listed Companies

Last 9 Quarters' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Last 9 Quarters' Sales, EBIDTA, OP & NP Growth % of Top 3 Listed Companies

Last 9 Quarters' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Last 9 Quarters' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Last 9 Quarters' Margin Scenario of Top 3 Listed Companies

Brief Textual Overview & Analysis of the Industry asto Why It will Start Carving its Place in
Every Portfolio meant for Growth

Brief Textual Overview of All Listed Players

Riddhi Siddhi Gluco Biols Ltd. - An Industry Outperformer
Anil Products Ltd. - An Industry Performer
Sukhjit Starch & Chemicals Ltd. - A Consistent Performer
Gujarat Ambuja Exports Ltd. - A Dark Horse
English Indian Clays Ltd. - A Sell-off Story
Universal Starch-Chem Allied Ltd. - A Possible Risky Winner
Gayatri Bioorganics & Tirupati Starch – A Complete Avoid
----------------------------------------------------------------------------------------------------------------------
 Yearly Performance of Starch Industry (Organised -Listed Players)

FY10 FY09 FY'08 FY'07 FY'06

Sales (in ` cr.) 2082.17 1544.19 1180.78 1123.42 880.99

Growth in Sales 34.84% 30.78% 5.11% 27.51% 10.83%

EBIDTA (in ` cr.) 273.67 143.04 144.88 146.79 79.42

Growth in 91.32% -1.27% -1.30% 84.82% 31.46%

EBIDTA
 % Contribution of Each Player to Yearly Sales & EBIDTA of Starch Industry
(Organised -Listed Players)

FY10 FY09 FY'08 FY'07 FY'06

Sales 35.83% 34.61% 28.26% 31.71% 28.16%

Riddhi Siddhi EBIDTA 43.85% 43.02% 37.74% 37.05% 41.66%

Sales 16.51% 13.99% 11.25% 10.99% 11.39%

Guj. Ambuja
EBIDTA 16.26% 11.08% 8.21% 13.91% 10.10%
Exports

Sales 17.99% 18.06% 19.51% 18.04% 19.47%

Anil Products
EBIDTA 19.16% 21.02% 17.85% 12.73% 15.89%

Sales 12.45% 13.19% 15.36% 14.50% 13.94%

Sukhjit Starch
EBIDTA 11.67% 17.35% 21.49% 21.45% 17.12%

Sales 7.65% 9.21% 11.46% 11.03% 11.79%

English Indian
EBIDTA 3.13% 3.98% 7.12% 5.64% 4.89%
Clays

Sales 4.34% 5.13% 7.03% 7.08% 8.32%

Universal
EBIDTA 2.71% 1.48% 3.69% 5.75% 8.95%
Starch

Sales 2.99% 3.09% 3.49% 3.04% 3.18%

Gayatri
EBIDTA 1.92% 0.03% 0.59% 0.71% 0.45%
Bioorganics

Sales 2.24% 2.72% 3.64% 3.61% 3.75%

Tirupati Starch
EBIDTA 1.30% 2.04% 3.31% 2.76% 0.94%
 Q1FY11 Performance of Starch Industry (Organised -Listed Players)

Q1FY11 Q1FY10

Sales (in ` cr.) 580.09 462.76

Growth in Sales 25.35% 29.39%

(YoY)

EBIDTA (in ` cr.) 104.23 47.55

Growth in 119.20% 9.66%

EBIDTA
(YoY)
 % Contribution of Each Player to Quarterly Sales & EBIDTA of Starch Industry
(Organised -Listed Players)

Q1FY11 Q1FY10

Sales 34.99% 33.81%

Riddhi Siddhi EBIDTA 43.18% 39.36%

Sales 16.10% 17.02%

Guj. Ambuja
EBIDTA 16.06% 17.05%
Exports

Sales 18.34% 18.48%

Anil Products
EBIDTA 18.48% 19.47%

Sales 13.59% 12.50%

Sukhjit Starch
EBIDTA 13.09% 10.09%

Sales 6.96% 8.45%

English Indian
EBIDTA 2.85% 4.29%
Clays

Sales 4.63% 4.57%

Universal
EBIDTA 3.27% 4.85%
Starch

Sales 3.27% 2.68%

Gayatri
EBIDTA 1.79% 1.61%
Bioorganics

Sales 2.07% 2.49%

Tirupati Starch
EBIDTA 1.28% 3.28%
 Current Valuation of Pure Listed Players based on Price as on 13th August 2010

P/E P/E P/E Marketcap/Sales Marketcap/Sales

{ TTM EPS { Q1FY11 EPS { FY11 { TTM Sales {FY11 Expected
(FY10) } Annualised } Expected EPS } (FY10) } Sales}

Riddhi Siddhi 11.26 3.51 5.04 0.58 0.41

Anil Products 8.01 5.44 5.21 0.52 0.43

Sukhjit Starch 12.32 5.29 6.02 0.7 0.57

Universal Starch 70.16 3.49 8.83 0.21 0.17

Gayatri Bioorganics 35.91 17.96 13.27 0.86 0.64

Tirupati Starch 5.86 2.21 3.56 0.19 0.17

 Last 10 Years' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Yearly Performance of Riddhi Siddhi

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02

(in ` cr.)

Sales 745.61 533.99 333.15 355.87 248.15 198.87 158.81 115.48 92.83
EBIDTA 119.91 61.5 54.62 54.33 33.09 25.28 22.5 18.5 11.66
Operatin 95.69 46.78 42.01 43.46 24.88 17.56 15.24 12.67 8.5
g Profit
Net 39.21 13.98 19.93 26.76 11.34 3.95 1.5 1.26 2.33
Profit

Yearly Performance of Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in ` cr.)

Sales 374.59 279.03 230.42 202.74 171.56 181.34 140.32

EBIDTA 52.44 30.08 25.87 18.69 12.62 11.36 10.01
Operating 47.26 25.86 22.21 16.03 10.25 9.4 8.13
Profit
Net Profit 23.99 10.52 7.24 5.47 2.03 1.77 0.65

Yearly Performance of Sukhjit Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02 FY'01

(in ` cr.)

Sales 259.27 203.69 181.48 162.96 122.88 91.83 80.12 68.74 61.14 61.73
EBIDTA 31.95 24.82 31.14 31.5 13.6 8.64 8.03 8.54 7.91 8.01
Operatin 26.01 19.71 27.89 28.64 11.2 6.63 6.13 6.99 6.56 6.81
g Profit
Net 14.67 11.6 20.15 20.7 6.46 2.66 2.47 3.56 3.48 3.31
Profit

Yearly Performance of Guj. Ambuja Exports (Maize Processing Division)

FY10 FY09 FY'08 FY'07

(in ` cr.)

Sales 343.84 216.07 132.88 123.48

EBIDTA 44.51 15.85 11.9 20.42
Operating Profit NA NA NA NA
Net Profit NA NA NA NA
 Yearly Performance of English Indian Clays (Starch Division)

FY10 FY09 FY'08 FY'07 FY'06

(in ` cr.)

Sales 159.34 142.24 135.42 123.92 103.92

EBIDTA NA NA NA NA NA
Operating Profit 8.57 5.7 10.32 8.29 3.89
Net Profit NA NA NA NA NA

Yearly Performance of Universal Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Sales 90.57 79.3 83.08 79.59 73.36 67.26 69.46 70.96

EBIDTA 7.44 2.12 5.36 8.45 7.11 5.13 6.17 6.18
Operating
4.28 -1.08 2.38 5.65 4.51 3.09 4.35 4.45
Profit
Net Profit 0.71 -3.46 -0.8 1.65 0.61 0.68 1.44 2

Yearly Performance of Gayatri Bioorganics

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Sales 62.27 47.81 41.3 34.25 28.04 15.44 16.29 21.4

EBIDTA 5.28 0.05 0.86 1.05 0.36 -1.4 -2.65 -2.5
Operating
2.34 -2.81 -1.89 -1.69 -2.39 -4.14 -5.38 -5.26
Profit
Net Profit 1.49 -3.35 -1.99 -2.59 -5.41 -9.29 -10.57 -10.55

Yearly Performance of Tirupati Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Sales 46.68 42.06 43.05 40.61 33.08 35.57 38.6 42.1

EBIDTA 3.57 2.92 4.81 4.06 0.75 0.86 1.6 1.94
Operating
2.77 2.11 4.03 3.31 -0.09 0.06 0.82 1.17
Profit
Net Profit 1.51 0.96 2.56 1.99 -1.08 -0.92 -0.36 0.27
 Last 10 Years' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Yearly Expenditure Trend of Riddhi Siddhi

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02

(in ` cr.)

Deprec. 24.22 14.72 12.61 10.87 8.21 7.72 7.26 5.83 3.16
Finan. 20.82 27.17 12.49 10.91 11.89 12.19 12.37 10.37 5.96
Expenses
Tax 37.21 7.17 9.58 5.52 1.57 1.32 1.34 0.99 0.21

Yearly Expenditure Trend of Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in ` cr.)

Deprec. 5.18 4.22 3.66 2.66 2.37 1.96 1.88

Finan. 15.94 10.41 9.96 6.9 5.49 6.15 6.61
Expenses
Tax 7.3 4.92 5.01 3.34 2.27 1.48 0.77

Yearly Expenditure Trend of Sukhjit Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02 FY'01

(in ` cr.)

Deprec. 5.94 5.11 3.25 2.86 2.4 2.01 1.9 1.55 1.35 1.2
Finan. 7.09 5.39 4.63 3.18 3.23 2.86 2.66 2.23 2.02 2.6
Expenses
Tax 4.23 2.71 3.1 4.75 1.5 1.1 1 1.2 1.05 0.9

Yearly Expenditure Trend of Universal Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Deprec. 3.16 3.2 2.98 2.8 2.6 2.04 1.82 1.73

Finan.
2.34 2.91 3.6 3.57 3.46 2.15 2.12 1.81
Expenses
Tax 1.23 -0.53 -0.42 0.43 0.44 0.26 0.8 0.64
 Yearly Expenditure Trend of Gayatri

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Deprec. 2.94 2.86 2.75 2.74 2.75 2.74 2.73 2.76

Finan.
0.84 0.52 0.09 0.84 3 5.14 5.18 5.27
Expenses
Tax 0 0.01 0.01 0.01 0.01 0 0 0

Yearly Expenditure Trend of Tirupati Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03

(in ` cr.)

Deprec. 0.8 0.81 0.78 0.75 0.84 0.8 0.78 0.77

Finan.
0.84 1.14 1.3 1.06 0.99 0.98 1.18 0.87
Expenses
Tax 0.35 0.01 0.16 0.25 0 0 0 0.02
 Last 10 Years' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Yearly Expenditure viewed with respect to Sales and EBIDTA of Riddhi Siddhi

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02

(in %)

Deprec. 3.24 2.75 3.78 3.05 3.3 3.88 4.57 5.04 3.4
(% Sales)
Fin. Exp. 17.36 44.17 22.86 20 35.93 48.21 54.97 56.05 51.11
(%
EBIDTA)
Tax 31.03 11.65 17.53 10.16 4.74 5.22 5.95 5.35 1.8
(%
EBIDTA)

Yearly Expenditure viewed with respect to Sales and EBIDTA of Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in %)

Deprec. 1.38 1.51 1.58 1.31 1.38 1.08 1.33

(% Sales)
Fin. Exp. 30.39 34.6 38.5 36.91 43.5 54.13 66.03
(%
EBIDTA)
Tax 13.92 16.35 19.36 17.87 17.98 13.02 7.69
(%
EBIDTA)

Yearly Expenditure viewed with respect to Sales and EBIDTA of Sukhjit Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02 FY'01
(in %)

Deprec. 2.29 2.5 1.79 1.75 1.95 2.18 2.37 2.25 2.2 1.94
(% Sales)
Fin. Exp. 22.19 21.71 14.86 10.09 23.75 33.1 33.12 26.11 25.53 32.45
(%
EBIDTA)
Tax 13.23 10.91 9.95 15.07 11.02 12.73 12.45 14 13.27 11.23
(%
EBIDTA)
 Last 10 Years' Margin Scenario of Top 3 Listed Companies

Yearly Margin Scenario for Riddhi Siddhi

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02

(in %)

EBIDTA 16.08 11.51 16.39 15.26 13.33 12.71 14.16 16.02 12.56
Margins
OPM 12.83 8.76 12.6 12.21 10.02 8.82 9.59 10.97 9.15
NPM 5.25 2.61 5.98 7.51 4.56 1.98 0.94 1.09 2.5

Yearly Margin Scenario for Anil Products

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04

(in %)

EBIDTA 13.99 10.78 11.22 9.21 7.35 6.26 7.13

Margins
OPM 12.61 9.26 9.63 7.9 5.97 5.18 5.79
NPM 6.4 3.77 3.14 2.69 1.18 0.97 0.46

Yearly Margin Scenario for Sukhjit Starch

FY10 FY09 FY'08 FY'07 FY'06 FY'05 FY'04 FY'03 FY'02 FY'01
(in %)

EBIDTA 12.32 12.18 17.15 19.32 11.06 9.4 10.02 12.42 12.93 12.97
Margin
OPM 10.03 9.67 15.36 17.57 9.11 7.21 7.65 10.16 10.72 11.03
NPM 5.65 5.69 11.1 12.7 5.25 2.89 3.08 5.17 5.69 5.36
 Last 9 Quarters' Sales, EBIDTA, OP & NP Performance of Each of the Listed Company

Quarterly Performance of Riddhi Siddhi

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 202.76 231.26 193.58 164.43 156.33 161.53 124.05 126.01 122.4
EBIDTA 44.97 49.09 28.68 23.42 18.7 5.11 15.19 20.79 21.18
Operating 39.49 38.72 24.41 18.79 13.76 3.89 10.94 16.59 17.13
Profit
Net Profit 27.4 12.13 12.77 9.15 5.14 3.5 1.26 1 8.22

Quarterly Performance of Anil Products

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 106.41 102.24 96.57 90.23 85.53 87.06 81.32 57.29 53.35
EBIDTA 19.27 18.47 13.96 10.7 9.26 11.07 8.54 4.61 6.24
Operating 17.75 17.12 12.53 9.46 8.11 9.76 7.57 3.64 5.28
Profit
Net Profit 8.82 7.52 7.15 5.33 3.98 4.26 3.89 0.86 1.5

Quarterly Performance of Sukhjit Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 78.89 73.02 69.17 58.16 57.85 51.57 52.62 50.22 49.04
EBIDTA 13.65 13.2 7.68 5.7 4.8 4.88 5.42 6.74 7.61
Operating 12.15 11.7 6.48 4.45 3.55 3.38 4.22 5.84 6.71
Profit
Net Profit 8.54 7.13 4.03 2.3 1.81 1.34 2.05 3.8 4.81

Quarterly Performance of Guj. Ambuja Exports (Maize Processing Division)

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 93.49 94.63 91.01 73.26 78.77 58.86 54.65 47.82 52.7
EBIDTA 16.74 16.16 9.02 7.73 8.11 5.25 1.11 4.72 3.86
Operating NA NA NA NA NA NA NA NA NA
Profit
Net Profit NA NA NA NA NA NA NA NA NA
 Quarterly Performance of English Indian Clays (Starch Division)

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 40.44 44.66 39.09 36.47 39.12 35.43 37.98 35.08 39.12
EBIDTA NA NA NA NA NA NA NA NA NA
Operating 2.98 3.44 1.53 1.56 2.04 0.37 1.81 1.93 2.04
Profit
Net Profit NA NA NA NA NA NA NA NA NA

Quarterly Performance of Universal Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 26.87 25.8 18.74 18.44 21.19 18.34 18.91 18.01 18.71
EBIDTA 3.41 3.92 -0.27 -0.46 2.31 -0.37 0.15 0.35 1.24
Operating 2.53 3.08 -1.05 -1.24 1.53 -1.17 -0.65 -0.45 0.44
Profit
Net Profit 1.27 1.41 -0.5 -0.7 0.49 -0.97 -1.05 -1.02 -0.43

Quarterly Performance of Gayatri Bioorganics

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 19.22 20.01 15.19 14.01 12.42 11.82 11.44 11.74 11.88
EBIDTA 1.87 3.69 0.36 0.45 0.77 0.14 -0.01 -0.23 0.15
Operating 1.11 2.95 -0.37 -0.28 0.05 -0.56 -0.73 -0.95 -0.55
Profit
Net Profit 0.75 2.6 -0.59 -0.4 -0.11 -0.73 -0.93 -1.06 -0.61

Quarterly Performance of Tirupati Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Sales 12.01 11.91 11.3 11.91 11.55 10.92 9.91 10.77 10.44
EBIDTA 1.34 0.5 0.66 0.75 1.56 1.19 0.06 0.63 1.04
Operating 1.14 0.3 0.46 0.58 1.34 0.9 -0.11 0.47 0.87
Profit
Net Profit 1 -0.26 0.21 0.36 1.08 0.59 -0.36 0.16 0.56
 Last 9 Quarters' Sales, EBIDTA, OP & NP Growth % of Top 3 Listed Companies

Quarterly Growth of Riddhi Siddhi

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

Sales -12.32 19.46 17.73 5.18 -3.22 30.21 -1.55 2.95% 122.4
EBIDTA -8.39 71.16 22.46 25.24 265.95 -66.36 -26.94 -1.84 21.18
Operating 1.99 58.62 29.91 36.56 253.73 -64.44 -34.06 -3.15 17.13
Profit
Net Profit 125.89 -5.01 39.56 78.02 46.86 177.78 26 -87.83 8.22

Quarterly Growth of Anil Products

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

Sales 4.07 5.87 7.03 5.5 -1.76 7.06 41.94 7.39 49.04
EBIDTA 4.33 32.31 30.47 15.55 -16.35 29.62 85.25 -26.12 7.61
Operating 3.67 36.63 32.45 16.65 -16.91 28.93 107.97 -31.06 6.71
Profit
Net Profit 17.28 5.17 34.15 33.92 -6.57 9.51 352.33 -42.67 4.81

Quarterly Growth of Sukhjit Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

Sales 8.04 5.57 18.93 0.54 12.18 -2 4.78 2.41 49.04

EBIDTA 3.41 71.88 34.74 18.75 -1.64 -9.96 -19.58 -11.43 7.61
Operating 3.85 80.56 45.62 25.35 5.03 -19.91 -27.74 -12.97 6.71
Profit
Net Profit 19.78 76.92 75.22 27.07 35.07 -34.63 -46.05 -21 4.81
 Last 9 Quarters' Expenditure Trend of Each of the Listed Company (except GAEL & EICL)

Quarterly Expenditure Trend of Riddhi Siddhi

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Deprec. 5.48 10.37 4.27 4.63 4.95 2.22 4.25 4.2 4.05
Finan. 4.52 4.09 4.81 5.78 6.14 -1.67 7.79 13.77 6.13
Expenses
Tax 8.18 23.26 7.1 4.29 2.56 1.33 1.89 1.82 2.78

Quarterly Expenditure Trend of Anil Products

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Deprec. 1.52 1.35 1.43 1.24 1.15 1.31 0.97 0.97 0.96
Finan. 6.52 5.79 4.11 3.27 2.76 2.53 2.93 2.47 2.47
Expenses
Tax 2.41 3.8 1.26 0.86 1.36 2.96 0.75 0.3 0.9

Quarterly Expenditure Trend of Sukhjit Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Deprec. 1.5 1.5 1.2 1.25 1.25 1.5 1.2 0.9 0.9
Finan. 1.69 2.55 1.71 1.55 1.24 1.44 1.32 1.64 1.15
Expenses
Tax 2 2.25 0.9 0.8 0.5 0.6 0.85 0.5 0.65

Quarterly Expenditure Trend of Universal Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Deprec. 0.88 0.84 0.78 0.78 0.78 0.8 0.8 0.8 0.8
Finan. 0.75 0.5 0.52 0.71 0.62 0.64 0.7 0.77 0.8
Expenses
Tax 0.51 1.17 -0.03 -0.33 0.42 0.1 -0.3 -0.2 0.07
 Quarterly Expenditure Trend of Gayatri Bioorganics

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Deprec. 0.76 0.74 0.73 0.73 0.72 0.7 0.72 0.72 0.7
Finan. 0.53 0.34 0.21 0.11 0.17 0.14 0.2 0.11 0.05
Expenses
Tax 0 0 0 0 0 0 0 0 0

Quarterly Expenditure Trend of Tirupati Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in ` cr.)

Deprec. 0.2 0.2 0.2 0.17 0.22 0.29 0.17 0.16 0.18
Finan. 0.14 0.25 0.14 0.19 0.24 0.31 0.24 0.29 0.29
Expenses
Tax 0 0.25 0.1 0 0 0 0 0 0
 Last 9 Quarters' Expenditure Viewed w.r.t. Sales & EBIDTA (of 3 Top Listed Companies)

Quarterly Expenditure viewed with respect to Sales and EBIDTA of Riddhi Siddhi

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

Deprec. 2.7 4.48 2.21 2.82 3.17 1.37 3.43 3.33 3.31
(% Sales)
Fin. Exp. 10.05 8.33 16.77 24.68 32.83 -32.68 51.28 66.23 28.94
(%
EBIDTA)
Tax 18.19 47.38 24.76 18.32 13.69 26.02 12.44 8.75 13.13
(%
EBIDTA)

Quarterly Expenditure viewed with respect to Sales and EBIDTA of Anil Products

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

Deprec. 1.42 1.32 1.48 1.37 1.34 1.5 1.19 1.69 1.8
(% Sales)
Fin. Exp. 33.83 31.35 29.44 30.56 29.81 22.85 34.31 53.58 39.58
(%
EBIDTA)
Tax 12.51 20.57 9.03 8.04 14.69 26.74 8.78 6.51 14.42
(%
EBIDTA)

Quarterly Expenditure viewed with respect to Sales and EBIDTA of Sukhjit Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

Deprec. 1.9 2.05 1.73 2.15 2.16 2.91 2.28 1.79 1.84
(% Sales)
Fin. Exp. 12.38 19.32 22.27 27.19 25.83 29.51 24.35 24.33 15.11
(%
EBIDTA)
Tax 14.65 17.05 11.72 14.04 10.42 12.3 15.68 7.42 8.54
(%
EBIDTA)
 Last 9 Quarters' Margin Scenario of Top 3 Listed Companies

Quarterly Margin Scenario for Riddhi Siddhi

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

EBIDTA 22.17 21.22 14.81 14.24 11.96 3.16 12.24 16.49 17.3
Operating 19.47 16.74 12.6 11.42 8.8 2.41 8.81 13.16 13.99
Profit
Net Profit 13.51 5.24 6.59 5.56 3.28 2.16 1.01 0.79 6.71

Quarterly Margin Scenario for Anil Products

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

EBIDTA 18.11 18.06 14.45 11.86 10.82 12.71 10.5 8.04 11.69
Margins
OPM 16.68 16.74 12.97 10.48 9.48 11.21 9.3 6.35 9.89
NPM 8.28 7.35 7.4 5.9 4.65 4.89 4.78 1.5 2.81

Quarterly Margin Scenario for Sukhjit Starch

June'10 March'10 Dec'09 Sep'09 June'09 March'09 Dec'08 Sep'08 June'08

(in %)

EBIDTA 17.3 18.07 11.1 9.8 8.29 9.46 10.3 13.42 15.51
Margins
OPM 15.4 16.02 9.36 7.65 6.13 6.55 8.01 11.62 13.68
NPM 10.82 9.76 5.82 3.95 3.12 2.59 3.89 7.56 9.8
 Brief Textual Overview & Analysis of the Industry asto Why It will Start Carving its Place in
Every Portfolio meant for Growth

With a current Industry size (Organised) of ` 2082.17 cr. and a 15 % p.a. growth
expected till 2015, Starch & Starch Derivatives is an industry commanding a definite place
in any growing portfolio. It is not the sheer size but the pace of achievement of such size
which deserves an attention. Over the last five years, industry has grown at a CAGR of 21.8
% from a meager ` 880.99 cr. in FY06 to the current ` 2082.17 cr. in FY10. To add, this
growth in size is coupled with a strong cash generation which is evident from the fact that
EBIDTA of the industry has grown at a CAGR of 41 % from a meager ` 79.42 cr. in FY06
to ` 273.67 cr. in FY10. This growth in EBIDTA is achieved inspite of the fact that the
price of the main input of the industry viz., maize, which constitutes 65 % cost for the
industry, has almost doubled in last five years. This trend depicts a widening of the
marketplace for the industry as well as the ability of the industry players to command
pricing environment of their products. With a stable pricing scenario expected for maize in
coming few years and factors like :

➢ high price of sugar prompting need to search for its alternatives, especially in Food
& Beverages Industry,
➢ extremely low per capita starch consumption in India which is less than 1 kg. as
compared to US where it is 64 kg. and global average which is at 6 kg.,
➢ emergence of starch as an environment-friendly alternative to plastics in many
applications like carry-bags,
➢ use of starch in innovative applications like manufacture of ethanol and
biodegradable plastics, etc.

: the Starch & Starch Derivatives industry is likely to experience a rapid

scale-up in size alongwith robust cash-generation in coming few years. A glimpse of the
healthy future cash-generation is evident in Q1FY11 where industry has posted an EBIDTA
which is 38 % of the EBIDTA of entire FY10. To talk in numbers, in Q1FY11, the industry
has posted ` 580.09 cr. sales with an EBIDTA of ` 104.23 cr. which entails to a YoY growth
of 119.20 %. Normally, June (Q1) is the leanest quarter for the industry and to post such
healthy numbers in a lean quarter paints an extremely rosy picture for the industry.

When an industry is growing at a CAGR of 21.8 % and experiencing

robust cash-generation, its players are expected to reap handsome rewards out of it. From
an EBIDTA margin of just 9.01 % in FY06, industry achieved an EBIDTA margin of 13.14
% in FY10 and an even healthier EBIDTA margin of 17.97 % in Q1FY11. Such healthy
numbers call for an expansion in valuation of the listed players of the industry which, to
everybody's surprise, are still quoting at single digit P/E. Agreed, Starch & Starch
Derivatives industry is having a very concentrated nature with top 4 players accounting for
more than 70 % of the industry size. Still, a consistent growth since last five years and an
expected robust growth environment for next five years call for a valuation-adjustment of
top 4 players and an investment-on-merit in other players.

In this report we provide a brief textual overview and deep tabular

analysis of all the listed players.
 Riddhi Siddhi Gluco Biols Ltd. - An Industry Outperformer

Riddhi Siddhi Gluco Biols Ltd. is an industry by itself rather than an industry player.
It is this company which has contributed tremendously towards the growth of Starch &
Starch Derivatives industry and has brought the industry to such a level that it is hard to
imagine a growth portfolio without the presence of this industry.

To talk in financial terms, if we take into account just last five financial years,
Riddhi has swelled its topline by a whooping 200.40 % vis-a-vis industry which has swelled
its topline by 136.34 %. On EBIDTA front too, Riddhi has swelled it by 262.37 % vis-a-vis
industry EBIDTA which swelled by 244.58 % over last five years. Riddhi enjoys a 35 %
market share of the industry and is an undisputed leader of the industry. A strategic equity
stake of 14.95 % by world's 4th largest cornstarch producer Roquette adds visibility to
Riddhi's leadership status remaining undisputed for many many years to come.

Rather than going into other details, here we will only briefly discuss the financial
terms of Riddhi. On financial front, Riddhi is a very strong company with almost the entire
investment phase having got concluded with the commisioning of 30 % additional capacity
at Rudrapur plant in June 2010. Going forward we can see a significant reduction in debt
position of Riddhi because of the healthy cash generated by it in FY10 and expected
robust cash that will get generated in FY11. Q1FY11 was a curtain-raiser to this with
expansion of OPM by 1067 basis points YoY and 270 basis points QoQ. In the same
quarter, Riddhi expanded its NPM by 1022 basis points YoY and 829 basis points QoQ. For
FY11, Riddhi is expected to achieve an EBIDTA margin of 17.5-18.5 % on a topline of `
1056 cr. with an EPS of ` 77.60. FY12 will see its expanded capacity attaining a utilisation
level 85 % + which will see its topline getting swelled to ` 1380 cr.

One important point to note regarding the quality of earnings of Riddhi is the fact
that its depreciation and tax charge has consistently been much higher than all the peers
including Anil Products and Sukhjit Starch while its EBIDTA margins have traditionally
been better than all its peers.

At the current market price of ` 391.65, Riddhi is trading at a P/E of 5.04 based on
FY11E EPS of ` 77.60 and at a P/E multiple of just 4.63 based on FY12E EPS of ` 84.50
(after factoring in an equity dilution in FY12). This is the cheapest valuation at which one
can get the leader of an industry which by itself is growing at 15 % + and the company
which has consistent track record of last ten years of outperforming the industry by quite a
wide margin. Hence, Riddhi is a strong rerating candidate and the safest bet for the Starch
& Starch Derivatives industry and untill the time it adjusts its valuation and starts trading
at a historical multiple band of 8-8.5 its FY11E EPS, it will retain a 'Safe Buy” status.
 Anil Products Ltd. - An Industry Performer

Anil Products can best be described as an 'Industry Performer' which will grow its
topline inline with the industry while outperforming the industry in terms of EBIDTA.
Over last five financial years, Anil swelled its topline by 118.34 % which is lower than the
growth of industry topline which swelled by 136.34 % over the same period. However, Anil
managed a swelling of 315.53 % in EBIDTA over last five years which is far ahead of the
industry EBIDTA which got swelled by 244.58 %. This is because the company's main focus
has always been value-added products which command a higher margin. However, with a
three-fold capacity expansion planned in next 3 years, this scenario could very well change
and the company is expected to grow its topline inline or ahead of the industry topline.
Margins could take a hit as company will enter into an investment phase over the next 2-3
years which could very well see it underperforning Riddhi and Sukhjit.

At the current market price of ` 196.70, Anil trades at a P/E multiple of 5.21 based
on its FY11E EPS of ` 37.75 (FY11E Topline – ` 455 cr.). After Riddhi, Anil will command
the 'Second-Best Buy' status for the Starch & Starch Derivatives industry.
 Sukhjit Starch & Chemicals Ltd. - A Consistent Performer

Inspite of underperforming the industry on topline and EBIDTA front over the span
of last five years, Sukhjit has managed to trade at higher valuation than all its peers
including the leader Riddhi is because of the fact that it has a low floating stock and
consistent bottomline performance over last many years. Lets look in number terms,
Sukhjit swelled its topline by 111 % which is lower than the industry topline which got
swelled by 118.34 % over the last five years. On EBIDTA front too, Sukhjit swelled it by
134.92 % which is far lower than the industry EBIDTA which got swelled by 244.58 % over
the last live years' period. With the robust Q1FY11 numbers posted as well as a capacity
expansion planned, Sukhjit could very well perform inline with the industry topline growth
while its underperformance on EBIDTA front could also very well continue. However,
because of the low floating stock and limited options available to invest in the sunrise
sector of Starch & Starch Derivatives, Sukhjit could very well continue to trade at a
premium to Riddhi and Anil in the near future but over the medium term it is expected to
show underperformance vis-a-vis Riddhi valuation and perform at par with Anil's valuation.
In the medium term, Riddhi's valuation is expected to correct itself higher to trade at a
premium to Sukhjit's and Anil's valuation after which, based on the expansion attained by
the industry valuation, Sukhjit's investment rationale will need to be reassesed.
 Gujarat Ambuja Exports Ltd. - A Dark Horse

Although 'Maize Processing Division' constitutes just a small segment of Gujarat

Ambuja Exports, but, its performance is hard to get ignored by anyone. Over the last five
years' period, the division has swelled its topline by 232 % which is far ahead than the
industry topline which got swelled by 118.34 % over the same period. Similarly, the division
has registered a EBIDTA swelling by almost 256 % over the last five years which is again
higher than the industry EBIDTA swelling of 244.58 % over the same period. Going
forward, this division is expected to perform exceedingly well with FY11E topline of ` 410
cr. with an EBIDTA of ` 69 cr. Although this might not mean anything for the valuation of
Gujarat Ambuja Exports as other divisions of it are expected to drag down its valuation
downwards, but, it is clearly a demerger story down the line wherein we can see this
division getting demerged into a seperate listed entity somewhere two years down the line
and hence, valuation getting unlocked for the shareholders. Hence, we term Gujarat
Ambuja Exports as a 'Dark Horse' of Starch & Starch Derivatives Industry.
 English Indian Clays Ltd. - A Sell-off Story

Totally in contrast of what we see in Gujarat Ambuja Exports, 'Starch' division of

English Indian Clays has consistently underperformed on both topline and EBIDTA fronts
as compared to the industry. This is the reason why, over the last five years, we have seen its
marketshare in the industry shrink to 7.65 % in FY10 from 11.79 % in FY06 inspite of the
industry registering robust growth. This is clearly the case of lack of focus and inability to
manage the available resources well. Hence, we term EICL's 'Starch' division a sell-off
candidate which will eventually get absorbed by a larger player two or three years down the
line.

Universal Starch-Chem Allied Ltd. - A Possible Risky Winner

'Risk' is the best word to describe investment into Universal Starch which might
eventually turn out to be a surprise winner but, when you have industry's top companies
available at single digit P/E multiples, why take such unnecessary risks. It is last two
quarters' performance which merits a status of 'Possible Risky Winner' status for Universal
Starch, but, if you look at its past trackrecord, it is best to avoid it till the time it proves
itself. Since already a sharp run-up has already taken place in the valuation of Universal
Starch, at a P/E multiple of 8.83 based on its FY11E EPS of ` 4.76, it is best to reasses the
investment decision into it at a later stage once expansion of valuation of entire industry
takes place.

Gayatri Bioorganics & Tirupati Starch – A Complete Avoid

If we term Universal Starch as 'Risk' then Gayatri and Tirupati are a complete
'Avoid' at this stage as Riddhi, Anil and Sukhjit are far superior bets for Starch & Starch
Derivatives industry available at attractive valuation at the current stage. Hence, when we
are at a stage where the industry has just started carving its place in every portfolio meant
for growth, top 3 companies will give much better returns than bottom 3 companies.