Everything you need to know about Jubilant Industries

About the company

Jubilant Industries Ltd. is a Jubilant Bhartia Group company which counts amongst its group, successful Indian-listed companies like Jubilant Foodworks, Jubilant Life Sciences and AIM-listed Jubilant Energy. It is engaged in the business of Manufacturing Agri Products and Performance Polymers through its wholly owned subsidiary Jubilant Agri and Consumer Products Limited (JACPL).

Formation of the company

The company was formed as a result of demerger of Agri & Polymer Business of erstwhile Jubilant Organosys Ltd. (now Jubilant Life Science) because of which it automatically got listed on Indian bourses on 14 February 2011. At the time of demerger, the implied valuation of the demerged business, based on share allotment ratios, was put at ~INR 300 Cr. The demerger was done to enable the parent company – Jubilant Organosys to concentrate on Pharma & CRAMS business and let the new company ie Jubilant Industries, which had in its fold, strong brands like Jivanjor (2nd largest after Pidilite) and Ramban (4th largest in India) as well as world leadership position in Food Polymer & VP latex segments, to pursue independent growth strategy by concentrating on these growing segments. Application Polymers business, which was also a part of a demerged entity, was subsequently discontinued during the time of demerger as this was an extremely low-margin business with least growth prospects.

After demerged from its parent company, Jubilant Industries significantly enhanced its distribution network for Jivanjor brand and also expanded capacities in Food Polymer and Latex business segments. The efforts made by the management enabled Jubilant Industries to acquire visibility of steady cash generation with decent growth in topline over next many years.

Business Segments

The company operates under two business segments:

1. Agri Products: The company’s Agri Products comprises Single Super Phosphate (SSP) and Crop Growth which it offers under the brand name “Ramban”. The Company is among the top domestic players in Single Super Phosphate (SSP) and with its Ramban brand, the company commands a leadership position in Uttar Pradesh. The company generates ~42% of its income from Agri business.

2. Performance Polymers: The company’s Performance Polymers segment comprises consumer products such as Wood Adhesives & Wood Finishes and Specialty Polymers such as VP Latex and Food Polymers. Its Adhesives brands are “Jivanjor”, “Vamipol”, “Polystic” and “Hero” and Wood Finishes brand is “Charmwood”. The company generates 58% of its income from this segment.

Discontinuation of Liquor Business

In FY21, the company discontinued its operations of manufacturing Indian Made Foriegn Liquor. The manufacturing unit for the said business was located at Nira in Maharashtra which was sold to a group company, Jubilant Life Sciences Limited (JLL) for a consideration of INR 13.3 Cr. 

Market Share

The company’s brand Ramban has a 44% market share in Uttar Pradesh and Uttarakhand, whereas a 54% market share in the core areas of Western Uttar Pradesh. It bags the first position in India and second globally, for manufacturing VP Latex used in dipping of automobile tyre cord and conveyor belt fabric. The company is also one of the leading suppliers of Polyvinyl Acetate (PVAc) to the chewing gum industry. PVAc is the major raw material for making gum base for chewing gum and bubble gum. Not only this but its adhesive brand Jivanjor bags second position in its niche after Pidilite and has more than 6000 dealers across the nation.

Manufacturing Facilities

The company along with its subsidiary has five manufacturing facilities across India, two in the state of Uttar Pradesh (Gajraula and Sahibabad), one in Rajasthan (Kapasan, Chitorgarh), one in Gujarat (Savli, Vadodara) and one in Nira, Maharashtra. 

Promotional Activities

In Agri Products, various promotional activities are conducted by the company at field level to generate awareness among the farming community/ channel partners etc. These activities include spot farmer meetings, shop/ wall/trolley paintings, dealer and retailer meetings, farmer consultations/ visits, jeep campaigns, field demonstrations, kisan melas and field days.

New Products

In the current and previous fiscal year, the company launched two products in its Agricultural segment, Nutra-Mix 6% and Sulpha WG -90%. It also introduced products under FCO – Boronated SSP(Granular), Zincated SSP (Powder), Zincated SSP (Granular), SSP fortified with Boron and Zinc (Super Formula – Granular). The company is also in process of launching Mono Zinc, Nutri mix 5% (State Grade) and Bio-Poshan. In the Performance Polymer segment, it rolled out two key strategic Brand Initiatives in FY21. 

Future plans

The company’s focus will be on increasing market share in core command areas of both plants i.e. Gajraula (UP) and Kapasan (Rajasthan) and also increasing sales through rapid Expansion into other states, for improving sales of value added products like Boronated SSP Zincated SSP, Fortified SSP with Zinc & Boron and Agri-nutrient products Like – Shaktizyme, and Bio Poshan, which gives promising results in crops and vegetables.

Meanwhile, the business strategy for Polymers revolves around New customers and New product/ application development. 

Share price Analysis

• With the current price of INR 426 as of December 21, 2022, Jubilant Industries is hovering near the low of its 52-week range of INR 315  – INR 797
• The stock price has delivered a compounded 5 year return of 10%.

Financial Snapshot

For the second quarter of FY23, the company reported Revenue from Operations of INR 426.61 crore in September 2022, up by 30.21% from INR 327.62 crore in September 2021.

Meanwhile, the quarterly Net Profit slumped by 49.59% to INR 14.29 crore in September 2022 from INR 28.35 crore in September 2021.

The outbreak of Coronavirus (COVID-19) pandemic globally and in India and subsequent lockdown by the various State Governments has impacted business operations of the Company, by way of interruption in production, supply chain disruption, unavailability of personnel, closure/ lock down of production facilities etc. COVID-19 pandemic and consequent lockdown has impacted the regular business operations

Though, In line with the operating profits, the EBITDA too fell by 30.21% and stood at INR 30.31 crore while the company’s EPS has decreased to INR 9.48 in September 2022 from INR 18.86 in September 2021.

Industry Analysis

The company operates in diverse sectors ranging from fertilizer, food polymers, performance polymers, wood-working adhesive and wood finish. In Agri Products, the Indian Phosphatic fertilizers sales registered de-growth of 14.88% in FY22 in comparison with FY 21 in the domestic market due to less import of DAP, MOP and Complex fertilizers. The SSP industry has registered growth sales of 9% in India as compared to last year. SSP Sales has recorded an increase of 23% in Rajasthan, 34% in Haryana, 8% in Madhya Pradesh, and marginally increased 1% in Uttar Pradesh & Uttarakhand respectively during April 2021 to March 2022 over last year.

DAP, NP / NPK and SSP are the main forms of Phosphate fertilizers used in India. SSP is a multi-nutrient fertilizer containing ‘Phosphate’ as primary nutrient and ‘Sulphur’ and ‘Calcium’ as secondary nutrients. SSP is also fortified with Boron and Zinc as the deficiency of micronutrients in Indian soils is gradually increasing. Hence, fortified SSP will be handy to the farmer to address the deficiencies of Boron, Zinc, Sulphur and Calcium etc. In India, SSP contributes 20% in the total Phosphatic segment (DAP, NP/NPK and SSP) in FY 22.  

Meanwhile, the Adhesive industry in India was hit at the beginning of the Year with the COVID crisis and the subsequent lockdowns imposed in various parts of the country. The industry managed to bounce back in the last 6 months of the Financial  Year. The Raw Material prices increased significantly, prompting the industry to take the first price hike in almost 2 years in March 2021. This hike has been followed up with another hike with effect from May 2021 as the Raw Material prices continued to increase.

In Latex Business, the global tyre manufacturers benefited from strong revival in demand in many markets as a result of catch-up effects from previous year, which on contrary resulted in some suppression in demand due to shortage of semiconductor chips, thus limiting demand in OEM type market segment. However, global demand for replacement type markets witnessed double digit growth. – VP Latex is used to impregnate man made fabrics and enable the adhesion of fabrics to the rubber of automobile tyres and conveyor belts.

In Food Polymers, the company’s products cater to the chewing gum & bubble gum industry. The Chewing/Bubble Gum industry somewhat recovered in 2021-22, after seeing a sharp decline in 2020-21 due to pandemic. However, the industry is still much lower than its pre-pandemic levels. Though the industry could recover slightly, it faced significant headwinds due to exorbitant increase in costs of raw materials as well as transportation. The costs increase impacted margins of our Food Polymers business too but we could manage to pass on some of these costs increase to our customers towards the second half of the year. Over all Food Polymers business grew significantly this year through market share gain, adding new customers and new geographies in business. Though, the gum industry is consolidated with the top two companies’ together accounting for around 60% market share. The global market shares for the top five chewing gum companies are estimated to be around 83%.