Godavari Biorefineries Ltd Company Review
Godavari Biorefineries Ltd filed document paper DRHP to float an ₹700 crore with market regulator SEBI in September 2021. The company got Sebi’s final comments on the IPO request at November-end (2021). However, Godavari Refineries Ltd has not utilized the option yet with the desired IPO. It may be because of market volatility or because they are waiting for the right time to list the company.
Godavari Biorefineries Ltd Company Review
The company was incorporated as “Godavari Investment and Finance Corporation Limited” in Mumbai, Maharashtra as a public limited company on January 12, 1956. The name again changed to “Godavari Biorefineries Limited” on November 10, 2006, and a certificate of change of name was issued by the RoC.
- Godavari Biorefineries Ltd is founded by “Padmabhusan” Late Shri K. J. Somaiya.
- Godavari Biorefineries is engaged in producing sugar and related products such as ethanol and other biochemicals.
- The company is one of the largest producers of ethanol in India and a pioneer in manufacturing ethanol-based chemicals.
- Godavari Biorefineries is also the largest manufacturer of MPO worldwide.
- It is one of the two manufacturers of natural 1,3 butylene glycol globally.
- Godavari Biorefineries Ltd is the only company to produce bio ethyl acetate in India.
- With over 80 years of experience in the sugar industry and over 60 years of experience in the bio-based chemicals industry, the company has a diversified product portfolio of bio-based chemicals and sugar products.
- Two manufacturing facilities – Sameerwadi Manufacturing – located in the Bagalkot district in Karnataka and the second one – Sakarwadi Manufacturing – located in the Ahmednagar district in Maharashtra.
- The company is planning to expand its ethanol capacity from 380 KLPD (as of June 30, 2021) to 570 KLPD.
- The ethanol and chemical business of the company contributes 69% of the total revenue in FY 2021-22.
- About 80% of the total revenue is generated from India and the rest 20% comes from exports to Europe, the Middle East, China, etc.
- The product of company caters to various industries such as Food and beverages, Fuel, Pharmaceuticals, Trading, Flavour & Fragrance, and others.
- The company is expanding to make 600,000 liters per day from the coming sugarcane crushing season (2023).
Godavari Biorefineries Ltd Owners
Godavari Biorefineries Ltd is led by a highly experienced senior management team. The Promoters of the Company are:
- Samir Shantilal Somaiya is one of the Promoters and the Chairman and Managing Director of the Company.
- Godavari Biorefineries Ltd belongs to the Somaiya group and hence other family members are also promoters of the company.
Godavari Biorefineries Ltd Turnover
- Total Revenue from the operation remained flat over the period and grew from FY19 to FY22.
- PAT has also gone up from INR 252.54 lakh in FY 2020 to INR 2,456.00 in FY 2021.
- Although PAT has declined to reach INR 1,632.69 in FY 2022, total revenue has gone up from INR 1,53,337.65 in FY 2021 to INR 1,69,767.46 in FY 2022.
- The net cash flow from operating activities has remained strong during this period
- Godavari Biorefineries Ltd has reduced debt over the last couple of years.
- However, total borrowing has gone up. As of March 31, 2022, Godavari Biorefineries Ltd had total borrowings of INR 63,387.63 lakh as against INR 61,526.12 lakh by March 31, 2020.
Godavari Biorefineries Ltd Financial Snapshot
| All amounts in INR Lakhs | |||
| (Year ended March 31) | 2020 | 2021 | 2022 |
| Revenue Operation | 1,44,878.21 | 1,52,626.24 | 1,69,080.35 |
| Total Income | 1,46,150.85 | 1,53,337.65 | 1,69,767.46 |
| Total Borrowing | 61,526.12 | 56,711.23 | 63,387.63 |
| EBITDA | |||
| Profit After Tax | 252.54 | 2,456.00 | 1,632.69 |
| Earnings Per equity Share-Diluted | 0.62 | 5.86 | 3.89 |
| Net Cash from Operating Activities | 23,953.63 | 12,881.58 | 4,043.11 |
| Debt/Equity Ratio (%) | 2.61 | 2.71 | |
| RoE % | 0.12 | 0.07 | |
| ROCE (%) | 0.15 | 0.10 | |
| Inventory Turnover Ratio | 3.80 | 2.81 |
Is it safe to invest in Godavari Biorefineries Ltd IPO for long term?
- Godavari Biorefineries Limited is a well-diversified company in terms of geography across the globe with strong experience in the industry.
- Strong brand name of Somaiya, clean management.
- Consistent performance in revenue and profit. The company recorded strong PAT growth over Fiscal 2020 – Fiscal 2022 from INR 252 lakh to INR 1632 lakh during this period.
- The largest producer of ethanol by June 30, 2021. Expanding its ethanol to reach 570 KLPD.
- The government of India is pushing for a higher blending of 20% ethanol in fuel by 2025.
- Strong portfolio of bio-based products. Demand for bio-chemical is also expected to go up due to the China factor.
- The sugar industry used to be a seasonal business, however, now it is all seasonal business thanks to ethanol and bio-chemicals
- With all the above factors, I would invest in the company during IPO or pre-IPO. One thing left is the valuation of each equity share.
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