Jayant Agro: Falling Export/Sales number.. Worried?

I was just trying to understand the Sales figures of Jayant and why they have been dropping in recent quarters..

Consolidated: 

Sept 2012 Sales: 360.67Cr (Sept 2011: 490.06Cr)

Dec 2012 Sales: 323.58Cr (Dec 2011: 403.18Cr)

 

The drop in sales is definitely of concern specially when till March 2012 Jayant had clocked 500% profit growth and 400% sales growth in past 5 yrs

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Consolidated Sales/NP numbers.

March 2007 Sales 462.49Cr Net Profit: 6.76Cr

March 2008 Sales 605.96Cr Net Profit: 9.51Cr

March 2009 Sales 875.86Cr Net Profit 7.49Cr

March 2010 Sales 904.01Cr Net Profit: 12.47Cr

March 2011 Sales 1,175.26Cr Net Profit: 24.92Cr

March 2012 Sales 1,832.26Cr Net Profit: 31.35Cr

9 months ending Dec 2012 Sales: 1147 Cr Net Profit: 28.6 Cr

Current Market Cap of the company is: 135.15Cr.

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Is the Jayant Agro Story Over??

Did some digging on the internet and ..voila!!

The Director General Of Foreign Trade (DGFT) passed a new resolution with regards eBRC (electronic Bank Realization Certificate)

Story: Exporters used to export stuff and the cash used to be received by Banks. The Exporter was then responsible for getting the Bank Realization Certificate from the Bank and submit it to DGFT to claim export incentives..

According to new rules.. as soon as the banks receive the money.. The bankers are now responsible for sending Bank Realization Certificates to DGFT and exporters then will update the data on DGFT to claim export benefits.. This would make the process paperless as well as improve process flow.. this is known as "eBRC" (my understanding from publicly available information)

From August 2012 it is mandatory that all export BRC should use this process

It is now the responsibility of the bankers instead of exporters to submit eBRC to DGFT.

As with any new idea there were teething problems.. getting the information right..and having the banking foot soldiers upto the task.. 

look at the eBRC data I have collected from DGFT for Jayant.

Used: these are BRC that have been used to claim export incentives

Available: These are BRC that have been uploaded by banks and available for exporter to claim incentives from DGFT

Cancelled: These are BRC that have been cancelled by the banks due to error in data..

PN: this is data as of May 5 2013.

August 2012: 

- only 30 export incentive requests have been submitted by Jayant successfully.

- 135 incentive request are available for which jayant has yet to submit incentive claim with DGFT

- 39 requests were cancelled due to error in eBRC data by banks..

Conclusion: It was a dismal month for Jayant as far as exports and export related incentives.

Sept 2012:

- export incentives successfully submitted by Jayant Agro has doubled as compared to August 2012 but as you can see its still a far cry from other subsequent months data..

- very sharp drop in available BRC .. looks like exports were being shutdown just to clear old backlog..

- 40 request cancelled

Conclusion: Looks like DGFT, bankers and exporters are all fighting to report better metrics.. which means stop new orders.. clear old backlog.. reduce errors/cancellation

Oct 2012: 

- 134 export incentives submitted .. which is 100% increase over Sept numbers

- Available eBRC to claim incentives is very high at 75 which means even exports are trying to clear the backlog and still learning to submit the eBRC for export incentives request.

- 86 cancelled request.. looks like still some more training required..

Conclusion: eBRC are being submitted by bankers to DGFT and exporters are also trying to submit incentives but system still has bottlenecks..

I think you get the picture.. 

fast forward to March 2013 Jayant Agro has successfully submitted 188 requests for export incentives to DGFT

Jayant still has 139 request more that need to be submitted..(maybe due to want of data..)

Other important observation is: For the Quarter Jan-FebMar 2013 there are: 656 (Used + available) eBRC

There are 90 days and that translates to 7.2 BRC per day!! WoW!!

So Jayant has been busy exporting consignments of castor oil and its derivatives on a daily basis.

Conclusion: new regulations specially making it mandatory that all BRC will be submitted electronically as eBRC by the banks was the underlying reason for drop in export numbers.. I am sure this was the reason for sharp fall in export numbers reported by India as a nation..  Jayant as we have seen is doing just fine..

PN: This is my interpretation based on review of publicly available information.. Please do your own deep dive before jumping into any conclusion.