Business Analysis: Jyoti Resins and Adhesives

Summary

In this video, the host analyzes Jyoti Resins and Additives, a company that manufactures adhesives for wood under the brand Euro 7000. The company has a loyalty program for carpenters, a diversified product portfolio, and operates in 13 states with 10,000 active dealers. The video discusses the company's growth trajectory, competitive edge, and financial performance, with a focus on volume growth and capacity expansion. The host also highlights potential risks and the company's management history.

Takeaways

• 🏭 Jyoti Resins and Additives is a company that manufactures adhesives, specifically for wood applications.
• 🏷 Their product is sold under the brand name 'Euro 7000', which is a white adhesive liquid used by carpenters.
• 🐛 The company offers an anti-termite application, a type of adhesive that prevents insects from damaging wood.
• 📈 Jyoti Resins and Additives has a diversified product portfolio and sells in a variety of quantities, from 500 grams to 70 kgs.
• 🔑 The company's USP is a loyalty program that rewards carpenters with points for purchases, which can be redeemed for future discounts.
• 📊 They have a widespread network with 10,000 active dealers, 50 distributors, and over 3,00,000 carpenters.
• 📈 The company has seen robust volume growth, with an 8% increase in Q4 of FY23 despite seasonality factors.
• 💹 They project a volume growth of 25% over the next three years (FY23 to FY26) while maintaining a margin of 20-25%.
• 🚀 Growth plans include increasing production capacity and expanding into new states, with a focus on distribution and active dealers.
• 💼 There are concerns about the management's past, with instances of SEBI cases for market manipulation in the late 90s and early 2000s.

Q & A

What is the main product of Jyoti Resins and Additives?

The main product of Jyoti Resins and Additives is adhesives, specifically glue used in wood applications.

Under what brand name does Jyoti Resins and Additives sell their adhesives?

Jyoti Resins and Additives sell their adhesives under the brand name 'Euro'.

What is the USP or competitive edge of Jyoti Resins and Additives over other companies?

The USP of Jyoti Resins and Additives is their loyalty or reward program for carpenters, which encourages repeat business and loyalty.

How does the loyalty program of Jyoti Resins and Additives work?

The loyalty program works by crediting points to carpenters' accounts based on their purchases. These points can be redeemed to offset the cost of future purchases, effectively providing a discount.

What is the volume growth projection for Jyoti Resins and Additives for the next three years?

Jyoti Resins and Additives projects a volume growth of around 25% for the next three years.

What is the current capacity of Jyoti Resins and Additives' manufacturing plant?

The current capacity of Jyoti Resins and Additives' manufacturing plant is 2400 tons per month.

What is the potential future expansion plan for Jyoti Resins and Additives?

The potential future expansion plan includes increasing the capacity utilization to 80% and then investing in another plant, possibly in Bangalore, after 1.5 years.

How does seasonality affect the revenue of Jyoti Resins and Additives?

Seasonality affects the revenue as Q3 usually sees the highest revenue due to the festival season, while Q4 is comparatively slower. This is because people tend to repair and paint their houses before festivals.

What is the reason behind the flat revenue on a quarter-on-quarter basis despite an 8% volume growth?

The flat revenue on a quarter-on-quarter basis despite an 8% volume growth is due to the reward program where points accumulated by carpenters are treated as expenses until redeemed, which affects the revenue recognition.

What are the risks or red flags associated with Jyoti Resins and Additives as per the script?

The risks or red flags include the possibility of competitors replicating their loyalty program, volatility in raw material prices, and past management issues related to market manipulation.

What is the financial performance of Jyoti Resins and Additives like according to the script?

The financial performance of Jyoti Resins and Additives is positive, with an increase in revenue, profit before tax, and cash flow from operations, despite some concerns about trade receivables and inventory levels.