Jayant Agro : Results Quarter and Year ending March 2012

Jayant Agro Organics
CMP: 119
Market Cap: 178.50Cr


Jayant Agro Year ending March 2012 results are out. lets look at the standalone numbers which are reported in the press..

The results at standalone level is picture perfect. 
Sales (topline) up by 45.17% and Net Profit (Bottomline) up by 52.76% indicating profit margin expansion.

3 year standalone numbers are even more impressive..

March 2010 Sales: 880.33Cr Net Profit: 7.84Cr

March 2011 Sales: 1,148.07Cr Net Profit: 17.74Cr

March 2012 Sales: 1,666.69Cr  Net Profit: 27.10Cr

In 3 yrs sales have doubled while net profits have more than tripple'd !! 

Consolidated Results:-

As mentioned before the numbers that we need to look at is consolidated results because of materially significant subsidiaries of Jayant Agro Organics namely Ihsedu Agro Chem and Ihsedu Specialty Chemicals (Ihsedu Specialities Chemicals is now awaiting merger approval from high court with Jayant Agro Organics)

3 yrs Consolidated Results for Jayant Agro.

1. At the consolidated level year on year sales growth is 51.30% which is great but net profit growth at 12.09% leaves a lot to be desired. the top two y-y highest percentage change are Interest (65.26%) and Taxes (59.01%) 

2. Interest payments: My understanding was that govt was giving a 2% interest rate subsidy to motivate exporters... hence exporters are reporting interest expense to claim that subsidy. 

Interest rate payments at 2.26% of  sales for year end March 2012 seems to be just that.. though a little on the higher side.. needs to be watched closely in the future..

2. Tax payments: Tax payments are up 59% (y-y) while net profit is up just 12% completely baffles me..

One of the many reason's companies are incorporated is because they are effective in reducing the tax paid to govt. 

Increase in tax paid :- 16.91cr (2012) - 10.63cr (2011) = 6.27cr

Increase in net profit :- 27.54cr (2012) - 24.57cr (2011) = 2.97cr

Surely taxes paid in 2012 is on the higher side and net profit is on the lower side.. 

Corporate Income tax rate in India is 33.2% so lets try to calculate the hypothetical PBT and hence Net profit for tax paid of 16.91Cr ..

Tax Paid 16.91Cr 

Effective tax rate 33.2%

PBT: 51.24Cr

Net Profit: 51.24 - 16.91Cr = 34.33Cr

P.N: this is a hypothetical calculation for our own understanding.

Here is another interesting piece of info.. effective taxe rate for Jayant past 3 yrs

2012: Tax paid: 16.91Cr Net Profit: 27.54 PBT: 44.46Cr Effective tax rate: 38% 

2011: Tax paid: 10.63Cr Net Profit: 24.57Cr PBT: 35.21Cr Effective tax rate: 30%

2010: Tax paid: 10.64Cr Net Profit: 12.46Cr PBT: 23.10Cr Effective tax rate: 46%

Jayant it seems has a habit of paying higher taxes.. infact in 2010 and 2011 tax paid is 10.64Cr while net profit is 12.46Cr(2010) and 24.57Cr(2011) 

Conclusion: Jayant year end March 2012 numbers though "impressive"  at standalone levels is just "fair" at consolidated levels mainly because of low rate of net profit growth.. digging a little deeper the taxes paid are very high and seems to give an idea that profits are being watered down.. looking at the last 3 yrs data we can see that Jayant management seems to be conservative in reporting net profit figures and taxes paid 3yrs avg is higher than the 33.2% corporate income tax rate set by govt of India. 

My personal opinion is for the year ended March 2012 at gross level (PBDIT) profit margins are stable  ..which could imply ...Interest rates are over stated and maybe depreciation also .. this has effectively reduced the net profit figures.. and skewed the results to such an extent that tax increase is 6.27cr while profit increase is just 2.97cr..  I would say jayant could have ideally reported march 2012 net profit of 34.33cr 

PN: these are my personal views/interpretation based on publicly available data.. Pls do your own deep dive before investing.

Jayant Agro Blog Archive