TANFAC INDUSTRIES - Q2 FY 21 RESULTS REVIEW

 

TANFAC INDUSTRIES

Q2 FY 21 RESULTS REVIEW

DT 28 11 2020

 

COMPANY OVERVIEW

 

Tanfac Industries Ltd. is engaged in the manufacture of chemicals such as aluminium fluoride and anhydrous hydrogen fluoride.

In addition to this, it manufactures sulphuric acid inclusive of oleum, and, speciality fluorides.

The fluorine based chemicals have vital applications in industries such as aluminium smelting, petroleum refining, refrigerant gases, steel re-rolling, glass, ceramics, sugar, fertilisers, heavy water, etc.

The speciality chemicals are used as intermediates in the manufacture of pharmaceuticals drugs and agrochemicals.

The product range of the company includes -

Inorganic Chemicals-Aluminium Fluoride, Anhydrous Hydrofluoric Acid, Cryolite (Granular), Dilute Hydrofluoric AAcid, Hydrocholric Aacid - HCL, Oleum & Sulphuric Acid.

Speciality Inorganic Fluorides- Ammonium Bifluoride,Cryolite (Powder),Fluoboric Acid, Hexa Fluoro Phosphoric Acid *,Magnesium Fluoride, Potassium Fluoborate, Potassium Fluoride, Potassium Hexa Fluoro Phosphate, Potassium Silico Fluoride, Potassium Titanium Fluoride, Potassium Zirconium Fluoride, Sodium Hexa Fluoro Phosphate and Sodium Silico Fluoride.

Speciality Fine Chemicals - HF-Pyridine Complex,Tetra Butyl Ammonium Bi Fluoride,Tetra Butyl Ammonium Fluoride Derivatives,Tetra Butyl Ammonium Fluoride Trihydrate,Tetra Ethyl Ammonium Fluoride Dihydrate and Tri Ethylamine Trihydrogen Fluoride Complexview less -

 

Management

V T Moorthy         :     Director

M R Sivaraman     :     Director

Shankar Narasimhan: Director

R Karthikeyan      :     Director

R Rajalakshmi      :     Director

Business Head     :     Mr. Kalyan Ram Madabhushi

President & CEO   :     Mr. K. Sendhil Naathan

CFO                     :     Mr. N R Ravichandran

 

CHAIRMAN'S MESSAGE DT 28.09.2020 -EXTRACTS (FOR THE YEAR 2019-20)

your  Company,  had  registered  good performance during  the year which is second highest in its history. 

This was achieved despite the absence of the  spot  opportunities  and  tail  winds  that  had  helped  it  to  register  an all-time  high performance during  the  previous  year.

Post the lockdown in the last week of March due to outbreak of the pandemic, your Company had acted swiftly and got special consent from  the Cuddalore District  Administration  and  restarted  the  plants  in phases from 8 th of April and gradually improved the operations during the first quarter.

OPERATIONS AND OVERALL PERFORMANCE: 

As I said  in  the  beginning, your  Company had  registered good  performance  during  the financial  year  2019-20  which  is  the second highest  in  its history.   During  the financial year  2019-20,  your  company  had recorded EBIDTA,  Net  Profit  and  Total  Comprehensive Income of 27.10Crores, 16.97Croresand 17.28Crores respectively.

Your Company’s  sales  performance had decreased by 26%  at 164.80 Crores  against 221.71Crores  in  the previous  year,  due to reduction  in  sale and price of Sulphuric  Acid. This  was  partially  compensated  by  higher  sales  realization  in  HF Acid  due  to continuous focus on niche / value added segments and also successfully passing through the increase in raw material price.

Profitability had  improved significantly  due  to initiatives  like focus  on improving the  share  of  Value  added  products  (VAPs)  and  optimization of  product  & customer  mix.

Your Company  also  focuses  on  significantly conserving  cash. Tight  control  on  working capital  further  helped  in  increasing  the  operating  cash  flow  which  is  used  to  repay  all  its debts.   This  has  helped  the  Company  to  significantly  reduce  the  Finance  cost  to 0.84Croresfrom 3.04Croresduring  the  previous  year.   I  am  glad  to  inform  you  that  your Company  had already achieved  debt-free  status  and  poised  to further  improve  its  cash position.

Q1 FY’21 PERFORMANCE: 

Despite challenging circumstances due to lock down, your Company has posted a turnover of Rs.28 crores and EBIDTA of Rs.5 crores during the first quarter of current financial year compared to turnover of Rs.32 crores and EBIDTA of Rs. 4 crores during previous quarter (4th quarter  of  financial  year  2019-20).     

Improved  EBIDTA :  despite  reduction  in  turnover was  due  to  initiative  taken  for  increasing  the  share of  VAPs and  reduction  of  fixed  costs.

Your  Company  will  continue to  focus  on  these  initiatives in  the  remaining  quarter  of financial  year  2020-21  and  strive  to  reduce  the  impact  in  the  overall  performance  of  the year due to pandemic.

FUTURE PROSPECTS:  Your Company has a well-calibrated strategy of customer orientation, cost optimization and product development. I am confident, your Company will emerge stronger from this global crisis and will continue its unrelenting pursuit of enhancing shareholder value, and growth in earnings and revenues. Your Company has made a comprehensive Business Continuity Plan backed up by robust periodic review  at  the  apex  level.    Your  Company has  initiated  measures  to  optimize operations of the plant, reduce fixed costs and conserve cash. Your Company continues to maintain   a   very   comfortable   level   of   liquidity   to   navigate   this   uncertain   business environment and is well prepared to withstand temporary disruptions and sustain its market share across its products.With the help of ongoing and fresh initiatives proposed by the company, your Directors are optimistic about further improvements in the operational performance of the company in the coming

 

QUARTERLY RESULTS

 

Tanfac Industries (in Rs. Cr.)	Sep '20	Jun '20	Mar '20	Dec '19	Sep '19	YOY	QOQ
Net Sales/Income from operations	34.29	27.75	32.24	38.09	36.48	-6	23.57
Net Profit/(Loss) For the Period	4.74	2.58	3.65	3.85	1.58	200	83.72
Equity Share Capital	9.98	9.98	9.98	9.98	9.98	0	0
Basic EPS	4.76	2.59	3.65	3.86	1.58	201.27	83.78
Consumption of Raw Materials	16.79	15.21	13.85	20.63	19.73	-14.9	10.39
Increase/Decrease in Stocks	-0.83	-0.89	3.58	-1.34	-0.49	69.39	-6.74
Power & Fuel	--	--	2.18	--	4.08
Employees Cost	3.23	2.96	3.2	2.98	2.75	17.45	9.12
depreciat	1.9	1.09	1.02	1.26	1.21	57.02	74.31
Other Expenses	6.45	5.41	5.73	9.99	6.27	2.87	19.22
Total Expenditure	27	23	29	33	33	-18.18	17.39
P/L Before Other Inc. , Int., Excpt. Items & Tax	6.75	3.97	2.69	4.57	2.94	129.59	70.03
Other Income	0.08	0.06	0.1	0.75	0.14	-42.86	33.33
P/L Before Int., Excpt. Items & Tax	6.83	4.03	2.79	5.32	3.08	121.75	69.48
Interest	0.06	0.04	0.17	0.21	0.19	-68.42	50
P/L Before Tax	6.77	3.99	2.61	5.11	2.89	134.26	69.67
Tax	2.03	1.41	-1.03	1.27	1.31	54.96	43.97

 

MP  180

PE(FV 10)      9.453781513

VOLUMES      8,983     NOT TRADED IN NSE FOR LAST 30 DAYS

52 Wk L/H     63.5       223

 

TECHNICAL ANALYSIS

DAILY AND WEEKLY BEARISH  

MONTHLY BULLISH    

 

Quarterly	Sep-20	Jun-20	Mar-20	Dec-19	Sep-19
Sales	34	27	32	38	36
Other Income	0	0	0	0	0
Total Income	34	27	32	38	36
Total Expenditure	27	23	29	33	33
EBIT	6	4	2	5	3
Interest	0	0	0	0	0
Tax	2	1	-1	1	1
Net Profit	4	2	3	3	1

 

HISTORICAL PRICES
3YRS BEF	105.3
2YRS	280
1YR	116.8
3MONTHS	211
1MONTH	167
1WEEK	174
NOW	180

 

Annual Results	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Sales	164	221	161	126	133
Other Income	1	0	0	0	0
Total Income	165	222	162	127	133
Total Expenditure	143	177	146	117	126
EBIT	22	44	15	9	7
Interest	0	3	5	6	7
Tax	4	5	0	0	0
Net Profit	16	35	9	3	0

 

CASH FLOW	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Operating Activities	21	36	17	15	16
Investing Activities	-9	-2	0	0	0
Financing Activities	-12	-33	-16	-14	-15
Others	0	0	0	0	0
Net Cash Flow	0	0	0	0	0

 

 

Per Share Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Basic EPS (Rs.)	17.02	36.06	9.7	3.3	0.4
Diluted Eps (Rs.)	17.02	36.06	9.7	3.3	0.4
Book Value [Excl. Reval Reserve]/Share (Rs.)	65.36	48.15	12.67	3.26	0.06
Dividend/Share (Rs.)	0	0	0	0	0
Face Value	10	10	10	10	10
Margin Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Gross Profit Margin (%)	16.44	23.76	12.79	11.56	6.41
Operating Margin (%)	13.63	20.15	9.74	7.82	2.83
Net Profit Margin (%)	10.29	16.22	5.97	2.6	0.3
Return Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Return on Networth / Equity (%)	26.03	74.89	76.59	101.15	721.76
ROCE (%)	31.85	74.71	79.17	98.59	7.18
Return On Assets (%)	19.04	30.94	11.31	4.26	0.44
Liquidity Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Current Ratio (X)	2.51	1.4	0.64	0.44	0.47
Quick Ratio (X)	1.6	0.86	0.39	0.28	0.26
Leverage Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Debt to Equity (x)	0.01	0.13	2.91	14.68	1,007.18
Interest Coverage Ratios (%)	26.59	14.68	2.64	1.5	0.53
Turnover Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
Asset Turnover Ratio (%)	184.91	190.76	189.29	163.88	146.47
Inventory Turnover Ratio (X)	9.7	7.32	9.58	11.65	7.45
Valuation Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
P/E (x)	0	0	0	0	0
P/B (x)	1.21	4.52	8.96	18.85	457.27
EV/EBITDA (x)	2.93	4.32	7.56	7.86	10.06
P/S (x)	0.48	0.98	0.7	0.49	0.19
Growth Ratios	Mar-20	Mar-19	Mar-18	Mar-17	Mar-16
3 Yr CAGR Sales (%)	9.25	18.48	10.52	2.55	-2.92
3 Yr CAGR Net Profit (%)	72.78	348.02	22.31	2.78	-67.21

 

STRENGTHS

Growth in Net Profit with increasing Profit Margin (QoQ)

Company with Low Debt

Book Value per share Improving for last 2 years

Company with Zero Promoter Pledge

WEAKNESSES

Companies with growing costs YoY for long term projects

Inefficient use of capital to generate profits - RoCE declining in the last 2 years

Inefficient use of shareholder funds - ROE declining in the last 2 years

De-growth in Revenue and Profit

Declining Net Cash Flow : Companies not able to generate net cash

OPPORTUNITIES

Companies with current TTM PE Ratio less than 3 Year, 5 Year and 10 Year PE

Negative to Positive growth in Sales and Profit with Strong Price momentum

Highest Recovery from 52 Week Low