Tide Water Oil

8/4/2019 Tide Water Oil

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By:

Abhilash Kanaparthi (01)

Aditya (02)

Alok Ranjan (05)Aneesh Ajayan (09)

Nitin (37)


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y Tide Water Oil Co. (I) Ltd is a part of the multi divisional Andrew Yulegroup that has diverse interests in Engineering, Electrical, Tea Cultivation,Power Generation, Digital Communication Systems and Lubricants.

y The company manufactures & sells engine lubricants for the automotiveand industrial applications in India.

y The company`s plants are set up in Howrah, Royapuram, Turbhe, Silvassaand Faridabad.

y The company`s products marketed under the VEEDOL` brand name arewell established and acknowledged in the industry for their quality andvariety.

y The products manufactured under the technical collaboration agreementwith Nippon Oil Corporation (formerly Mitsubishi Oil Co Ltd) andmarketed under the `ENEOS` brand name have carved out a niche forthemselves in select markets.


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Income Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

SalesT

urnover 100 120.03 145.15 178.70 204.82

Net Sales 100 119.19 147.19 181.23 209.16

Other Income 100 182.01 2.09 146.86 197.49

Total Income 100 117.96 147.06 182.64 214.11

Expenditure

Raw Materials 100 104.94 126.03 130.01 165.90

Power & Fuel Cost 100 108.11 127.93 148.65 145.95

Employee Cost 100 151.50 142.97 167.12 211.87

Other Manufacturing Expenses 100 396.85 393.12 570.49 784.24

Selling and Admin Expenses 100 139.60 223.57 343.73 333.91

Miscellaneous Expenses 100 26.98 37.40 44.74 62.05

Total Expenses 100 112.53 141.02 164.81 195.45


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y The net sales of the company has doubled in the past 5years.

y Over the same period, the Raw Material costs & Power &Fuel Costs have increased by about 50%.

y

The Other Manufacturing Expenses of the company haveshot up greatly to 7.8 times of what it was in the year 2007.y The Selling & Admin expenses have roughly trebled during

the same period. This implies that the company is facingmarket competition and hence the marketing expenditurehas increased.

y Overall the companys Total Expense have just doubledimplying that the companyis able to pass on the cost to itscustomers and maintain its margins which is a very healthysign.


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Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

Total Income 365.69 100.00% 431.35 100.00% 537.79 100.00% 667.89 100.00% 782.97 100.00%

Total Expenses 347.5 95.03% 391.03 90.65% 490.04 91.12% 572.72 85.75% 679.19 86.75%

OperatingProfit 15.8 4.32% 35.97 8.34% 47.7 8.87% 91.66 13.72% 99.06 12.65%

Reported NetProfit 8.97 2.45% 23.18 5.37% 27.55 5.12% 57.79 8.65% 64.16 8.19%


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4.40%

8.40%9.02%

14.07%13.18%

2.50%

5.41% 5.21%

8.87%

8.53%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%


Operating & Profit Margins

Operating Margins Net Profit Margin

Operating Margins & Profit Margins have steadily increased over the past 5 years.The Company is able to keep its costs under control and improve its margins.


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Raw Materials 266.45 76.68% 279.62 71.51% 335.81 68.53%346.41 60.49% 442.04 65.08%

Power & Fuel Cost 1.11 0.32% 1.2 0.31% 1.42 0.29% 1.65 0.29% 1.62 0.24%

Employee Cost 14.66 4.22% 22.21 5.68% 20.96 4.28% 24.5 4.28% 31.06 4.57%

OtherManufacturingExpenses 3.49 1.00% 13.85 3.54% 13.72 2.80% 19.91 3.48% 27.37 4.03%

Selling andAdmin Expenses 51.04 14.69% 71.25 18.22% 114.11 23.29% 175.44 30.63% 170.43 25.09%

MiscellaneousExpenses 10.75 3.09% 2.9 0.74% 4.02 0.82% 4.81 0.84% 6.67 0.98%

Preoperative ExpCapitalised 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%

T

otal Expenses 347.5 100.00% 391.03 100.00% 490.04 100.00%572.72 100.00% 679.19 100.00%


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y The companys major expenses are its raw materialcosts.

y Over the years, the raw materials cost as part of its

total expenses has decreases thus easing the pressureon performance margins.

y However, the selling & admin expenses outlay hasincreased from 14% to 25% in these 5 years inferring

that the company is focusing on its brand and facingcompetition in the sector.


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SourcesOf Funds Mar '07 Mar '08 Mar '09 Mar '10 Mar '11

Reserves 100.00 120.65 144.58 196.08 252.83

Networth 100.00 119.91 143.00 192.74 247.58Secured Loans 100.00 72.12 36.24 0.00 0.00

Total Debt 100.00 41.75 20.98 0.00 0.00

Total Liabilities 100.00 110.63 128.50 169.83 218.16

ApplicationOf Funds

Gross Block 100.00 117.17 140.13 239.68 248.57

Less: Accum. Depreciation 100.00 107.98 119.63 131.06 166.49

Net Block 100.00 129.53 167.68 385.69 358.90Capital Work in Progress 100.00 182.98 906.38 57.45 111.70

Investments 100.00 100.00 100.00 100.00 100.00

Inventories 100.00 140.35 110.17 192.67 249.30

Sundry Debtors 100.00 96.08 111.83 142.96 198.91

Cash and Bank Balance 100.00 114.14 233.88 78.51 150.44

Total Current Assets 100.00 123.66 120.58 167.18 224.81

Loans and Advances 100.00 117.47 176.36 43.10 102.60Fixed Deposits 100.00 55.73 105.94 136.77 22.81

Total CA, Loans & Advances 100.00 118.09 138.23 124.65 173.99

Current Liabilities 100.00 143.90 166.77 191.38 228.74

Provisions 100.00 114.69 166.20 25.23 51.89

Total CL & Provisions 100.00 131.63 166.53 121.62 154.48

Net Current Assets 100.00 106.14 113.26 127.32 191.21


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y More or less all the vital aspects of the balance sheethave doubled in the past 5 years.

y The company became debt free from the year 2010.

y The companys investments have remained constant.y The provisioning by the company is showing a

declining trend lately concluding that the company ismanaging its earnings.

y Based on the above observations, we can infer that thecompany is highly conservative with no aggressiveplans of expansion.


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2.131.87

1.70

2.06 2.39

1.35

1.08 1.26 0.95

1.15

0.00

0.50

1.00

1.50

2.00

2.50

3.00


Current Ratio & Quick Ratio

Current Ratio Quick Ratio

Current Ratio decreased due to recession & then increased ---- The company isfairly in a good position meeting its short term liabilities.

The gap between the 2 lines decreased and then increased implying poorinventory management or increase in inventory.


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11.15

13.9314.48

13.94

11.48

0.00

5.00

10.00

15.00

20.00


Debtor Turnover

DebtorTurnover

The debtor turnover ratio has more or less remained f lat over the given period.


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Inventories 67.54 59.05% 94.79 67.02% 74.41 53.96% 130.13 68.06% 168.38 65.49%

SundryDebtors 37.71 32.97% 36.23 25.62% 42.17 30.58% 53.91 28.20% 75.01 29.17%

Cash andBankBalance 9.12 7.97% 10.41 7.36% 21.33 15.47% 7.16 3.74% 13.72 5.34%

TotalCurrentAssets 114.37 100.00% 141.43 100.00% 137.91 100.00% 191.2 100.00% 257.11 100.00%


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The sundry Debtors have decreased w.r.t total current assets and hencesignifying a better debtors management.


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13.18%

27.12%

30.96%

45.01%

37.87%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%


ROCE

ROCE

The ROCE of the company has increased consistently over the period. There has been a drop in FY11 due to increase in raw material costs.


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8.69%

18.64% 18.51%

28.67%

24.71%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%


RONW (ROE)

RONW (ROE)

The ROE of the company has increased consistently over the period. Hencecreating value for its shareholders.

There has been a drop in FY11 due to increase in raw material costs.


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150200

300

500

60016.62

8.79

11.07

8.79

9.47

0

2

4

6

8

10

12

14

16

18

0

100

200

300

400

500

600

700


Equity Dividend (%) Dividend Payout Ratio Net Profit (%)

The dividend payout ratio is low but the equity dividend % (Dividend on its FaceValue) has been consistently increasing thus creating value for shareholders.

This is possible because the company is generating higher profits and hence with

more or less the same dividend payout ratio , the company is creating value.


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The EPS of the company has been steadily increasing which has almostmultiplied to 7 times in these 5 years, thus creating value for the

shareholders. The BVPS has also steadily increased in the past 5 years.

102.96266.04 316.23

663.34 736.46

1,184.81 1,427.45

1,708.56

2,313.59

2,980.26

0

500

1000

1500

2000

2500

3000


Earning Per Share (Rs) Book Value Per Share (Rs)


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Castrol Tide Water Oil Ltd

Price/BVPS 23.26 2.29

EPS 20.30 746.67

P/E (Industry Avg - 23.37) 25.64 9.15

Networth (Crores) 495.00 261.57

Operating Margin (%) 25.25 13.17

Profit Margin (%) 15.66 8.48

Based on the P/E, Tide Water Oil is highly undervalued based on the industryaverage & also its leading peer Castrol

Its Price to Book also shows thatTide is highly undervalued.


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Tide Water Oils margins would majorly be affected by its rawmaterial prices fluctuations.

The company majorly depends on the automobile sector for itscustomers and hence dependent on it.

Compared to industry average and its closest peer Castrol, it isgrossly undervalued and available at good price for long terminvestment

The company is debt free The Performance of the company in terms of margins have

shown a consistent increase in the past 5 years.

The company is consistently creating value for its share holdersin terms of dividends and consistent growth in EPS. Hence , its a fundamentally strong company with a good track

record of performance.Also, due to low equity base, and high reserves, the market is

expecting a bonus from the company.


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Tide Water Oil

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