BCL Industries

BCL Industries
Company Overview
BCL is a part of the Mittal Group founded in 1976, by Late Shri D. D. Mittal. Under the
stewardship of Mr. Rajinder Mittal. The company is in the edible oil and distillery business in
India.
The company is a diversified conglomerate in manufacturing and development with business

interests spread across a variety of industry verticals namely Edible Oil and Vanaspati, Distillery
and Real Estate.
Promoter stake is 61.36%
Segments Edible oil & Distillery Real Estate

Vanaspati
Activities Manufacturing of Manufacturing of Development of
vanaspati, refined oil, ethanol and extra premium
and extraction of oil & neutral alcohol (ENA). real-estate projects
solvents from seeds
Capacity 1020 MT Two units 200 KLPD 2 projects
each
Segmental Revenue 73% 26% 1%
EBITDA margin 4.20% 15.79% 27.96%

Distillery Business:
BCL entered into the distillery business mainly to diversify away from edible oil business. The
company mainly produced grain-based Extra Neutral Alcohol (ENA). Apart from being used in
alcoholic beverages, ENA is also used in cosmetics and personal care products like perfumes,
toiletries and pharmaceutical products such as antiseptics, drugs, syrups, etc. Alongside, the
distillery is involved in the bottling of liquor for Punjab Made Liquor (PML) and Indian Made
Foreign Liquor (IMFL). The ENA facility in Bathinda, Punjab has a manufacturing capacity of 200
KLPD The company has a forward and backward integrated Distillery-Ethanol plant. Key clients
in contract manufacturing are UB Group, Radico Khaitan, OIL Chemicals and IFB Agro (as per
FY19).
The manufacturing facility of the company has an integrated distillation plant with a total
capacity of 200 KLPD in Bathinda, Punjab and 200 KLPD in Kharagpur, West Bengal
The company can manufacture ENA/ethanol from multiple crops (rice, millet and maize), hence
reducing the risk of raw material price fluctuations.
The company distillery can

also manufacture Ethanol
along with ENA. After the
launch of the Ethanol
Blended Petrol (EBP)
program the company
converted 130 KLPD of its
existing capacity into
production of Ethanol.
Growth Driver:
The Indian Ethanol market is projected to grow from USD 2.50 billion in 2018 to USD 7.38 billion
by 2024, exhibiting a CAGR of 14.50% during 2019-2024, on the back of increasing Ethanol use
in applications such as fuel additives.
Capacity Expansion plans in Distillery Segment:

BCL Industries has plans to take up the total group distillery capacity to 700 KLPD over the next
two years and the company will become one of the largest producers of Ethanol from grains in
private sector in India. (Present total capacity is 400 KLPD)
West Bengal Expansion:

BCL has set up a 200 KLPD state-of-the-art ENA plant at Kharagpur, West Bengal under its
subsidiary M/s. Svaksha Distillery Limited (SDL).
The Company is currently expanding the capacity of the distillery in Bathinda by adding a 200
KLPD Grain Based Biofuel Distillery. Prerequisites like the CLU for land, interest subvention and
environmental clearance from MOEF have already been obtained. Your Company aims to bring
this plant to production by the end of FY 2022-23. Post expansion, the capacity of the Bathinda
unit will be of 400 KLPD. Company was able to commence production from July 1st at 50%
capacity but due to some initial issues at the power plant the company has had to take a
shutdown of 15-20 days and is hoping to come into full production by start of September 2022.
While the production stabilizes at Svaksha, the company has successfully obtained the orders to
supply Ethanol to OMC’s and Reliance. The company has also received the FCI allocation of rice
against the supply. The company also plans to expand this capacity by adding another 100 KLPD
of ethanol manufacturing for which the land and power availability is in place.
About 30% of ENA manufactured at BCL was exported to West Bengal. Hence, the
manufacturing facility in Bengal will help BCL in the following ways:
• Catering and propelling demand in West Bengal.
• Logistics savings through eliminating transportation costs from Punjab to Bengal.
• Saving in duties levied on sale in West Bengal.
• West Bengal is also a gateway to North East India and to East and South East Asia
Bathinda Plant:
The Company is currently expanding the capacity of the distillery in Bathinda by adding a 200
KLPD Grain Based Biofuel Distillery. The Company aims to bring this plant to production by the
end of FY 2022-23. Post expansion, the capacity of the Bathinda unit will be of 400 KLPD.
Edible Oil Segment:
Edible oil and Vanaspati contribute ~73% of the total revenue, the EBIDTA margin is 4.2%.
Indian edible oil market is stagnant and has remained range-bound. India largely relies on oil
imports for about 60% to cater the domestic edible oil requirement. However, domestic players
largely remain hesitant to increase their oil production capacity, and mainly relies on the
government to implement policies which can push domestic edible oil production. This shows
the extent to which edible oil is dependent on government policies for a growth driver.
This segment has seasonality wherein the demand dips a bit in the summer months and goes
back up in monsoon and colder months.
Growth Driver:
India is the second largest consumer of edible oils in the world. The edible oil market in India is
projected to grow from around $21.5 billion in 2019 to $35.2 billion by 2025 due to increasing
disposable income and changing eating routines and habits. (CAGR ~8.5%) – FY22
Real Estate Segment:

The company has two existing completed projects with a very large realizable value expected
from each project with no debt on any of the assets.
1. Ganpati Enclave – 65 acre land at Dabwali road, Bathinda city.
2. DD Mittal - mid-segment housing project located at Multania road in the heart of
Bathinda city. The project is already constructed and completed in all respects. About
96% inventory has been sold out and handed over to the occupants.
The company don’t intend to expand in real estate segment and is selling the remaining
inventory which is a positive sign of not venturing into unrelated and capital-intensive business.
Moreover, the company is using the revenue realized from real estate to reduce debt and fund
their capex.
Update on CAPEX:
Svaksha Distillery:
The company has obtained all necessary information for the commencement of Svaksha
Distillery and was able to commence production from July 1, 2022 at 50% capacity, but due to
some initial issues at the power plant the company has had to take a shut down for about 15 to
20 days and is hoping to come into full production starting September 2022. - Aug 22 Concall
The company is aiming to start the Svaksha plant in the 1st week of September at 100% capacity
utilization.
Bhatinda Plant:
The company is aiming to start the additional capacity of the plant from December 2022.
Positive Points:
BCL is also relaunching its country liquor an IMFL brand which they had to discontinue in 2015
due to excise policy.
BCL Industries has received order from OMCs and Reliance to supply ethanol. While OMCs
enjoy payment terms of 21-day credit, BCL fixed credit cycle with Reliance to 15-day credit
cycle.
The company has won a case against a 6 acre land which was on dispute. BCL is thinking of
selling the area as plots by giving basic facility of roads, sewage etc, and not converting it into
residential flats.
The management has forgone taking dividend from the company and gave to other
shareholders which is a positive sign of perception change towards management. (Happened
twice now)
ROE and ROCE have been above 15% on an average over the years.
NFAT has been on an increasing trend. With the new capex in place, the number might dip
midway but will start going up again once the sale will increase due to new live capacity.
Cumulative CFO= 234 and PAT= 222. Which is a good sign of profit conversion to cash.
Debtor days, Inventory days, working capital cycle have gone down.
Number Crunching:
5-year CAGR= 25%
Sales went from 642 to
1988cr
PAT CAGR= 54%
BCL has will start its West Bengal plant at 100% utilization from September and Bathinda will
start by December month. Hence company’s’ total capacity will almost double. Assuming the
growth will be half of previous sales growth. Assuming 13% CAGR till FY 2026, expected sales
growth will come around 2900cr.
Taking average NPM of last 4 years= 4%
NPM in 2026 will be ~116cr
PE ratio from future earnings comes out to be 6.9
The median PE for the last five years is 8.7. Looking at the arrived PE value from the above
assumption, the stock looks under-valued (provided sales growth and profit comes aligned to
our view)
EV/EBIT = 8 P/S = 0.4 P/B = 2.2
Looking at the above ratios, BCL is looking attractive to add at the current Mcap and watch
closely as and when company’s sales go up with new capacity in place.

BCL Industries

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BCL Industries

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BCL Industries

The company is a diversified conglomerate in manufacturing and development with business

Promoter stake is 61.36%

Segments Edible oil & Distillery Real Estate

EBITDA margin 4.20% 15.79% 27.96%

The company distillery can

Capacity Expansion plans in Distillery Segment:

West Bengal Expansion:

Real Estate Segment:

EV/EBIT = 8 P/S = 0.4 P/B = 2.2

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