Tuesday, 26 June 2018

#MarketWatch: What next for Manpasand Beverages?

Manpasand Beverages auditor resignation

Over the last few weeks, the Indian stock market has been hit with several shocks. The large caps were affected by rising crude and currency prices. The tumble in the small cap and mid-cap were led by the investor confusion in few selective stocks like Vakrangee, Inox Wind and Manpasand Beverages. Manpasand Beverages through its corporate disclosure declared the announcement of resignation of its statutory auditors M/S Deloitte Haskin & Sells, Vadodara. On the subsequent day, the Board of Directors of Manpasand Beverages appointed M/s Mehra Goel and Co., as their statutory auditor for the year. The newly appointed accounting firm has 13 partners on-board with an operational experience of sixty five years.

Although, there have been many cases of resigning auditors in the recent past. Several misinformed presumptions were disseminated through mainstream and social media which affected investor sentiments at large. Most of them are unsubstantiated rumours that are not based on any factual evidence and a lot of shareholders and investors have been negatively impacted. In fact, according to Prime Database, between January and May 2018, 32 auditors have resigned midterm, while for 2017-18 the number of exits stood at 36. 

Investors should be aware that Deloitte was auditing the financial results of Manpasand Beverages for the last 8 years and had never expressed their concerns on the financial performance of the company. Further, there has been no instance till date where the company has denied disclosure of any financial information. This rumour ride has affected the stocks of the company. Although the investors should prefer official sources of information than media agencies for further investment opportunities.

Manpasand Beverages has been one of the fastest growing listed FMCG companies. The company reported staggering 43.8% rise in net profit of Rs 72.6 crores for the financial year end of 2017. The total income for the same year stood at Rs. 735 crores. For Q3 2017-18, India’s leading fruit drink player, Manpasand Beverages, reported a growth of 64% rise in net profit at Rs 11.9 crores against net profit of Rs 7.2 on Year on Year. 
A 2016 report by Mintel on the global juice market indicates that in India too, packaged juice is likely to grow by taking a share from fresh-squeezed juice and moving into small cities and more rural areas, similar to what is observed globally.

“In India, for example, local fruit juice manufacturer Manpasand Beverages found success focusing on semi-urban and rural markets, where growth is fuelled by rising disposable incomes and a void left by bigger brands that have largely stuck to urban centers,” the Mintel report states. 

Manpasand's healthy market position in the fruit drink segment is underpinned by presence of brand Mango Sip and Fruits Up. The company has made several innovations in the past couple of years, which have enabled it to enter in top 5 players in the mango-based drinks market. In fiscal 2014, it launched the Fruits up brand in the carbonated drink market. The brand grew 71.30% over the past three fiscals and contributed 25% to the company's revenue in fiscal 2017. With network of 4000 distributors across the country and strong presence in Western and northern parts of India, revenue increased significantly over five fiscal through 2017.

The company already has 5 manufacturing units spread in Vadodara, Varanasi and Ambala. Manpasand Beverages plans capex of Rs 600 crores to increase manufacturing capacity with plants at Sri City, Vadodara, Varanasi, and in Khurda, Odisha. The ground-breaking ceremony of upcoming Khurda plant was commenced in the august presence of CM of Odisha, Shri Naveen Patnaik. These four new plants are sure to double the company’s production capacity in the coming months. This shall also help the brand to reach newer markets as the production facilities increase. Manpasand Beverages also plans to enter into new beverage verticals in near future.

What market investors want? Stable outlook, prospective growth and a laborious past for a glorious future. Manpasand Beverages Limited was set up as a proprietorship firm named Manpasand Agro Foods in 1996 in Vadodara, and was reconstituted as a private limited company in fiscal year 2012 and public limited company in fiscal year 2014. Since then it has been expanding its market portfolio. 

Manpasand’s flagship brand, Mango Sip is growing by leaps and bounds and is expected to grow at a CAGR of 33.1% to Rs 1,408 crore by FY20. The recent backlash against carbonated cola drinks especially in the south and the upcoming Sricity facility will help Manpasand acquire southern markets. The Indian Juice market is expected to register compounded annual growth rates (CAGR) of 8% by 2022 to cross Rs. 17,500 crore compared to around Rs. 12,040 crore at present, according to Euromonitor International. The report states that the regional players and start-ups are currently challenging present market leaders by introducing new healthy lines of juices. Over the forecast period, these companies are expected to increase their production capacity and distribution networks to ensure year-round availability, which is likely to affect the current competitive landscape of juice in India.

The Euromonitor International report states that Coca Cola, Parle Agro, PepsiCo and Dabur together account for the vast bulk of juice sales primarily due to their successful portfolios of mango-based drinks. However, companies like Manpasand Beverages and Hector Beverages are quickly gaining market share since the last couple of years. Also, a Motilal Oswal report published in May 2018 suggested that Manpasand Beverages Limited shall see continuous growth in the coming years and would positively impact in its stock value.

Much of the ambiguity around Manpasand Beverages was to do with the fact that the company had not shared a schedule for its Meeting of the Board of Directors of the Company. However, now that the company has informed the bourses that it would convene a board meeting on June 27 to consider and approve audited financial results for Q4 FY2017-18. Soon, after this corporate announcement, the shares of Manpasand Beverages saw an upward trend since the third week of June; further validating the growing positivity about this company in the investor community.

Disclaimer – We have provided all information based on our research and we do not have any holding. Please consult your financial advisor before making any investment decision.

- Chaitanya Kulkarni.

Monday, 25 June 2018

India becomes 69th member of Europe's EBRD Bank

India EBRD bank

India’s membership will pave the way for more joint investment in EBRD regions.

Shareholders of the European Bank for Reconstruction and Development (EBRD) have agreed to India becoming the Bank’s 69th member, setting the stage for an increase in joint investment with Indian companies in the EBRD’s regions.

The Indian government applied for EBRD membership on 18 December 2017, saying the step would benefit both the Bank and India. India will take a shareholding in the EBRD but it will not be a recipient of EBRD financing. The EBRD’s Board of Governors, which represents all of the existing shareholders, voted in favour of India’s application.

With India’s impressive economic growth over the years and enhanced international political profile, it was considered appropriate that India should expand its presence on the global developmental landscape beyond its association with the Multi-lateral Development Banks (MDBs) such as the World Bank, Asian Development Bank and African Development Bank. The decision to join the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) was taken earlier in this backdrop.

“This is an important step in the relationship between the EBRD and India, allowing us to build further on already very close ties.” – Suma Chakrabarti, President, EBRD.

The EBRD has long worked with top-class Indian companies on investments in the EBRD’s regions, which comprise 38 economies across three continents. The Bank has cooperated with Indian enterprises on joint projects worth nearly €1 billion, including investments with Tata, SREI and Jindal.

Impact:

  • Membership of EBRD would enhance India’s international profile and promote its economic interests. Access to EBRD’s Countries of Operation and sector knowledge.
  • India’s investment opportunities would get a boost.
  • It would increase the scope of cooperation between India and EBRD through co-financing opportunities in manufacturing, services, Information Technology, and Energy.
  • EBRD’s core operations pertain to private sector development in their countries of operation. The membership would help India leverage the technical assistance and sectoral knowledge of the bank for the benefit of the development of private sector.
  • This would contribute to an improved investment climate in the country.
  • The membership of EBRD would enhance the competitive strength of the Indian firms, and provide an enhanced access to international markets in terms of business opportunities, procurement activities, consultancy assignments etc.
  • This would open up new vistas for Indian professionals on the one hand, and give a fillip to Indian exports on the other.
  • Increased economic activities would have the employment generating potential.
  • It would also enable Indian nationals to get the employment opportunity in the Bank.

The total value of joint India-EBRD investments in EBRD economies currently stands at €982 million, with the majority of the transactions in the private sector.

The EBRD also works closely with leading Indian chambers such as the Confederation of Indian Industry, and the Associated Chambers of Commerce and Industry of India. It recently signed a Memorandum of Understanding with the Federation of Indian Chambers of Commerce and Industry.

In 2017, the EBRD signed an accord to strengthen ties with the International Solar Alliance, which was launched during the 2015 UN Climate Change Conference in Paris at the initiative of Indian Prime Minister Narendra Modi and former French President Fran├žois Hollande as a platform for cooperation among solar resource-rich economies.

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Also published on InfraStory.com