On 9th May 2012, Jubilant Industries Ltd. announced its results for Q4FY12 (12'Months'FY12).

This was the first time the merged Retail business financials were announced post merger. Although non -Retail businesses performed exceptionally well, way ahead of estimates, however, Retail business spoiled the entire picture with the numbers turning out to be way below estimates, especially on Operating Loss front. Given below are the highlights of the results :

(1) Consolidated Revenues (including Retail business) for Q4FY12 came at Rs. 247.51 cr.. For

12'Months'FY12, consolidated revenues (including Retail business) stood at Rs. 995.81 cr.. It is worthwhile to note here that in the declared Results, subsidy income for opening stock of SSP fertilizer and raw materials is not included due to DOF's Office Memorandum dated 11 th July 2011 which is being contested by the industry. In absence of such directive, revenue would have been higher by Rs. 13.58 cr. for 12'Month'FY12 to stand at Rs. 1009.39 cr.

(2) Consolidated EBITDA Profit (including Retail business Loss) for Q4FY12 came at Rs. 2.79 cr.. For
12'Months'FY12, consolidated EBITDA Profit (including Retail business Loss) stood at Rs. 11.76 cr.. It is worthwhile to note here that this Results does not include subsidy income for opening stock of SSP fertilizer and raw materials due to DOF's Office Memorandum dated 11 th July 2011 which is being contested by the industry. In absence of such directive, EBITDA Profit would have been higher by ~Rs. 9 cr. for 12'Months'FY12 to stand at ~Rs. 20.76 cr.

(3) The key highlights for the year was the strong performance of company's Performance Polymers

segment which grew its revenues by 32.5 % YoY & a stable performance of company's Agri segment inspite of uneven monsoons affecting the entire industry. Performance Polymers segment expanded its Operating Margins by 164 basis points YoY which is significant considering the domestic as well as global slowdown the economy has faced in the entire year.

(4) The growth in 'Performance Polymers' segment (which includes Consumer Products-Jivanjor Brand ,
Food Polymer-SPVA and Latex) can be largely attributed to better capacity utilisation of the expanded capacities, healthy order-flow in Food Polymer segment as well as successful new product launches in Consumer Products segment.

(5) Company's Retail business numbers were announced for the first time post merger and they turned
out to be very dismal. Retail business attained a Revenue of Rs. 359.12 cr. for FY12 which translates to a YoY growth of just 14.3 % which is very low considering the fact that one new Mall-cumHypermarket was opened by the company in July'2011. In other words, it simply means that compay's Retail business has turned out almost flat-to-negative SSSG (same-store-sales-growth) which doesn't augur well for the long-term sustainability of the business when seen in the backdrop of the small scale of operations, 2 nd largest marketshare company enjoys in Bangalore as well as aggressive promotional campaigns that it has undertaken since January'2012.

(6) Operating Loss for Retail business stood at Rs. 98.59 cr. v/s Rs. 50.05 cr. of last fiscal. Although the
current year's figures include a goodwill amortisation expense worth Rs. 12.37 cr., but, even excluding that, an Operating Loss figure of Rs. 86.22 cr. doesn't speak highly of Retail operations of the company. Its worthwhile to note here that after cotinuous improvement in OPM of Retail operations since inception, this is the first time company has suffered heavily on Operating front and the main reasons for the same could be the aggressive promotional campaigns not turning out the expected volumes as well as rising competition requiring aggressive discounts to be offered on products.

View Post Q4FY12 (12'Months'FY12) Results :

Without discussing the nitty-gritties, let's come straight to the point. Post Q4FY12 results, if I am an investor, what status I will assign to Jubilant Industries Ltd. Does it deserve a SELL now. The reply will be a clear NO because of : the prevalent cheap valuations, the group involved (Jubilant Bhartia), Non-Retail businesses have turned out an exceptional performance in FY12.

So, does it deserve a Buy now because of the 40 % correction in stock-price post Q4FY12 Results. Again a clear NO because : the correction in overall markets (due to micro and macros) have provided ample opportunities elsewhere which are more stable and certain, Retail business has turned out a disastrous performance in FY12 with almost flat-to-negative SSSG, there has been no proactiveness on management's part to open new stores which are very crucial to raise scale of operations crucial for improving OPM, a step-child behaviour adopted by the group towards Jubilant Industries.

To conclude, the company at best deserves a Hold now with close monitoring of critical aspects lke : any fund-raising initiatives by the management, crucial will be the route, debt, equity, a mix, the extent of dilution, the pace of opening new stores (2 stores were planned to be opened in FY12 out of which 1 opened in FY12 while 3 stores are planned to be opened in FY13 out of which 0 opened till 2'Months'FY13). This is the crucial aspect as if the stores are not opened up fast or any other initiatives are not taken to increase the scale of operations, then, the low scale will itself eat-up all the non-retail profits, performance of non-retail businesses which turned out an exceptional performance in FY12 because of better capacity utilisation as well as clean-up of SSP inventory ahead of FY13, AR2012 in which management could provide the vision for the consolidated entity as well as each of its businesses, starting of any IR-initiatives by the management.