Triveni Engineering and Industries Ltd - Company Analysis

 Triveni Engineering and Industries Ltd Company Review

Triveni Engineering and Industries Ltd is one of the leading sugar manufacturers in India, with a diversified portfolio of products such as sugar, ethanol, co-generation, gears and water treatment solutions. The company was founded in 1932 by Shri Dharmpal Ji Trivedi and has grown to become a market leader in its segments.

In this blog post, I will review the company's performance, strengths, weaknesses, opportunities and threats based on its latest annual report for the financial year 2020-21.

Performance:

The company reported a consolidated revenue of Rs. 4,378.7 crore, an increase of 8.6% from the previous year. The consolidated profit after tax was Rs. 325.9 crore, a growth of 26.4% from the previous year. The company achieved an EBITDA margin of 16.5%, an improvement of 140 basis points from the previous year.

The company's sugar segment contributed 72% of the total revenue, followed by co-generation (13%), ethanol (9%), gears (4%) and water (2%). The sugar segment registered a revenue growth of 6%, driven by higher sugar production and sales volumes. The co-generation segment registered a revenue growth of 18%, driven by higher power export tariff and availability of surplus bagasse. The ethanol segment registered a revenue growth of 23%, driven by higher ethanol production and sales volumes. The gears segment registered a revenue growth of 11%, driven by higher demand from domestic and international markets. The water segment registered a revenue decline of 12%, due to lower order inflows and execution delays amid the pandemic.

Strengths:

The company has a strong presence in the sugar industry, with a cane crushing capacity of 76,500 TCD (tonnes crushed per day) and a sugar production capacity of 10 lakh tonnes per annum. The company has seven sugar mills located in Uttar Pradesh, which is the largest sugarcane producing state in India. The company also has a distillery capacity of 320 KLPD (kilo litres per day) and a co-generation capacity of 163 MW.

The company has a diversified product portfolio, which helps it to mitigate the cyclicality and volatility of the sugar industry. The company produces ethanol from molasses, which is a by-product of sugar production, and sells it to oil marketing companies for blending with petrol. The company also produces power from bagasse, which is another by-product of sugar production, and sells it to state electricity boards or third parties. The company also manufactures high precision gears and gearboxes for various industries such as cement, steel, sugar, defence, etc. The company also provides water treatment solutions for industrial and municipal applications.

The company has a strong focus on innovation and quality, which helps it to maintain its competitive edge in the market. The company has invested in research and development activities to improve its operational efficiency, product quality and customer satisfaction. The company has also adopted various quality standards and certifications such as ISO 9001, ISO 14001, OHSAS 18001, etc.

Company Analysis

Triveni Engineering and Industries Ltd (TEIL) is a leading manufacturer of sugar, ethanol, co-generation and engineering products in India. The company has a diversified portfolio of products and services that cater to various sectors such as power, oil and gas, water, defence, aerospace and automotive. TEIL has 10 sugar mills with a total crushing capacity of 76,500 tonnes per day (TPD), 7 co-generation plants with a total power generation capacity of 291 MW and 4 distilleries with a total ethanol production capacity of 320 kilolitres per day (KLPD). TEIL also has a strong presence in the engineering segment with its subsidiaries Triveni Turbine Ltd (TTL) and GE Triveni Ltd (GETL) that manufacture steam turbines and gearboxes respectively.

TEIL has shown consistent growth in its revenue and profitability over the past five years. The company's revenue increased from Rs. 3,062 crore in FY17 to Rs. 4,375 crore in FY21, registering a compound annual growth rate (CAGR) of 9.3%. The company's earnings before interest, tax, depreciation and amortization (EBITDA) margin improved from 12.6% in FY17 to 16.5% in FY21, reflecting its operational efficiency and cost optimization. The company's net profit increased from Rs. 165 crore in FY17 to Rs. 311 crore in FY21, registering a CAGR of 17.1%. The company's return on equity (ROE) improved from 11.8% in FY17 to 15.9% in FY21, indicating its effective utilization of capital.

TEIL has a strong balance sheet with low debt and high liquidity. The company's total debt reduced from Rs. 1,213 crore in FY17 to Rs. 837 crore in FY21, resulting in a decline in its debt-to-equity ratio from 0.8 to 0.5. The company's interest coverage ratio improved from 4.2 in FY17 to 7.6 in FY21, indicating its ability to service its debt obligations comfortably. The company's current ratio improved from 1.3 in FY17 to 1.6 in FY21, indicating its ability to meet its short-term liabilities easily.

TEIL has a positive outlook for the future with several growth drivers and opportunities. The company expects to benefit from the increasing demand for sugar and ethanol in the domestic and international markets, driven by the government's policies such as the ethanol blending program (EBP), the minimum support price (MSP) for sugarcane and the export subsidy for sugar. The company also expects to benefit from the rising demand for power and renewable energy in the country, driven by the government's initiatives such as the National Electricity Policy (NEP), the Integrated Energy Policy (IEP) and the Renewable Purchase Obligation (RPO). The company also expects to benefit from the growing demand for engineering products and services in various sectors such as oil and gas, water, defence, aerospace and automotive, driven by the government's policies such as the Make in India program, the Atmanirbhar Bharat Abhiyan and the Defence Procurement Procedure (DPP).

TEIL is a well-managed company with a strong corporate governance and social responsibility framework. The company has a professional and experienced management team that is focused on creating value for all stakeholders. The company has a transparent and ethical business conduct that is guided by its code of conduct, whistle blower policy and anti-corruption policy. The company has a proactive and responsive stakeholder engagement that is guided by its stakeholder grievance redressal mechanism, investor relations policy and corporate social responsibility policy.

In conclusion, TEIL is a leading player in the sugar, ethanol, co-generation and engineering segments with a diversified portfolio of products and services that cater to various sectors. The company has shown consistent growth in its revenue and profitability over the past five years with a strong balance sheet and positive outlook for the future. The company has a well-managed corporate governance and social responsibility framework that creates value for all stakeholders.

Disclaimer - I am not a registered investment advisor and the view expressed are not investment advice. Please conduct your own research before investing.