By: Abhilash Kanaparthi Aditya Alok Ranjan Aneesh Ajayan Nitin

(01) (02) (05) (09) (37)

y Tide Water Oil Co. (I) Ltd is a part of the multi divisional Andrew Yule

group 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 automotive

and industrial applications in India.

y The company`s plants are set up in Howrah, Royapuram, Turbhe, Silvassa

and Faridabad.
y The company`s products marketed under the `VEEDOL` brand name are

well established and acknowledged in the industry for their quality and variety.
y The products manufactured under the technical collaboration agreement

with Nippon Oil Corporation (formerly Mitsubishi Oil Co Ltd) and marketed under the `ENEOS` brand name have carved out a niche for themselves in select markets.

Income
Sales Turnover Net Sales Other Income Total Income

Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
100 100 100 100 120.03 119.19 182.01 117.96 145.15 147.19 2.09 147.06 178.70 181.23 146.86 182.64 204.82 209.16 197.49 214.11

Expenditure
Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Total Expenses 100 100 100 100 100 100 100 104.94 108.11 151.50 396.85 139.60 26.98 112.53 126.03 127.93 142.97 393.12 223.57 37.40 141.02 130.01 148.65 167.12 570.49 343.73 44.74 164.81 165.90 145.95 211.87 784.24 333.91 62.05 195.45

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

years. Over the same period, the Raw Material costs & Power & Fuel Costs have increased by about 50%. The Other Manufacturing Expenses of the company have shot up greatly to 7.8 times of what it was in the year 2007. The Selling & Admin expenses have roughly trebled during the same period. This implies that the company is facing market competition and hence the marketing expenditure has increased. Overall the company s Total Expense have just doubled implying that the company is able to pass on the cost to its customers and maintain its margins which is a very healthy sign.

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 Operating Profit Reported Net Profit

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

15.8

4.32%

35.97

8.34%

47.7

8.87%

91.66 13.72% 99.06 12.65%

8.97

2.45%

23.18

5.37%

27.55

5.12%

57.79

8.65%

64.16

8.19%

Operating & Profit Margins

16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

14.07%

13.18%

9.02% 8.40% 4.40% 5.41% 2.50% Mar '07 Mar '08 Mar '09 Mar '10 Mar '11 5.21% 8.87% 8.53%

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.

Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

266.45 76.68% 279.62 1.11 14.66 0.32% 1.2

71.51% 335.81 68.53% 346.41 60.49% 442.04 65.08% 0.31% 1.42 0.29% 4.28% 1.65 24.5 0.29% 4.28% 1.62 31.06 0.24% 4.57%

4.22% 22.21

5.68% 20.96

3.49

1.00% 13.85

3.54%

13.72

2.80% 19.91

3.48%

27.37

4.03%

51.04 14.69% 71.25 18.22%

114.11 23.29% 175.44 30.63% 170.43 25.09%

10.75

3.09%

2.9

0.74%

4.02

0.82%

4.81

0.84%

6.67

0.98%

0.00%

0.00%

0.00%

0.00%

0.00%

347.5 100.00% 391.03 100.00% 490.04 100.00%572.72 100.00% 679.19 100.00%

y The company s major expenses are its raw material

costs. y Over the years, the raw materials cost as part of its total expenses has decreases thus easing the pressure on performance margins. y However, the selling & admin expenses outlay has increased from 14% to 25% in these 5 years inferring that the company is focusing on its brand and facing competition in the sector.

Sources Of Funds Reserves Networth Secured Loans Total Debt Total Liabilities Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Current Liabilities Provisions Total CL & Provisions Net Current Assets

Mar '07 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Mar '08 120.65 119.91 72.12 41.75 110.63 117.17 107.98 129.53 182.98 100.00 140.35 96.08 114.14 123.66 117.47 55.73 118.09 143.90 114.69 131.63 106.14

Mar '09 144.58 143.00 36.24 20.98 128.50 140.13 119.63 167.68 906.38 100.00 110.17 111.83 233.88 120.58 176.36 105.94 138.23 166.77 166.20 166.53 113.26

Mar '10 196.08 192.74 0.00 0.00 169.83 239.68 131.06 385.69 57.45 100.00 192.67 142.96 78.51 167.18 43.10 136.77 124.65 191.38 25.23 121.62 127.32

Mar '11 252.83 247.58 0.00 0.00 218.16 248.57 166.49 358.90 111.70 100.00 249.30 198.91 150.44 224.81 102.60 22.81 173.99 228.74 51.89 154.48 191.21

y More or less all the vital aspects of the balance sheet y y y

have doubled in the past 5 years. The company became debt free from the year 2010. The company s investments have remained constant. The provisioning by the company is showing a declining trend lately concluding that the company is managing its earnings. Based on the above observations, we can infer that the company is highly conservative with no aggressive plans of expansion.

Current Ratio & Quick Ratio

3.00 2.50

2.13
2.00

1.87 1.70

2.06

2.39

1.50

1.00

1.35 1.08 1.26 0.95

1.15

0.50

0.00

Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Current Ratio

Quick Ratio

 Current Ratio decreased due to recession & then increased ---- The company is fairly in a good position meeting its short term liabilities.  The gap between the 2 lines decreased and then increased implying poor inventory management or increase in inventory.

Debtor Turnover
20.00

13.93
15.00

14.48 13.94 11.48

11.15

10.00

5.00

0.00

Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Debtor Turnover  The debtor turnover ratio has more or less remained flat over the given period.

Mar '07
Inventories Sundry Debtors Cash and Bank Balance Total Current Assets 67.54 59.05%

Mar '08
94.79 67.02%

Mar '09
74.41 53.96%

Mar '10
130.13 68.06%

Mar '11
168.38 65.49%

37.71

32.97%

36.23

25.62%

42.17

30.58%

53.91

28.20%

75.01

29.17%

9.12

7.97%

10.41

7.36%

21.33

15.47%

7.16

3.74%

13.72

5.34%

114.37 100.00%

141.43 100.00%

137.91 100.00%

191.2 100.00%

257.11 100.00%

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

ROCE
50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%

45.01% 37.87% 30.96% 27.12%

13.18%

Mar '07

Mar '08

Mar '09
ROCE

Mar '10

Mar '11

 The ROCE of the company has increased consistently over the period.  There has been a drop in FY 11 due to increase in raw material costs.

RONW (ROE)
35.00%

30.00%

28.67% 24.71%

25.00%

18.64%
20.00%

18.51%

15.00%

8.69%

10.00%

5.00%

0.00%

Mar '07

Mar '08

Mar '09
RONW (ROE)

Mar '10

Mar '11

 The ROE of the company has increased consistently over the period. Hence creating value for its shareholders.  There has been a drop in FY 11 due to increase in raw material costs.

700

18

16.62
600

600 500 11.07 8.79 8.79 300 200 150 9.47

16 14

500

12 10 8 6

400

300

200

4 2 0

100

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

Equity Dividend (%)

Dividend Payout Ratio Net Profit (%)

 The dividend payout ratio is low but the equity dividend % (Dividend on its Face Value) 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.

3000

2,980.26

2500

2,313.59
2000

1,708.56
1500

1,184.81
1000

1,427.45 663.34 736.46

500

102.96 Mar '07

266.04 Mar '08

316.23 Mar '09 Mar '10 Mar '11

Earning Per Share (Rs)

Book Value Per Share (Rs)

 The EPS of the company has been steadily increasing which has almost multiplied to 7 times in these 5 years, thus creating value for the shareholders. The BVPS has also steadily increased in the past 5 years.

Castrol Tide Water Oil Ltd

Price/BVPS EPS P/E (Industry Avg - 23.37) Networth (Crores) Operating Margin (%) Profit Margin (%) 23.26 20.30 25.64 495.00 25.25 15.66 2.29 746.67 9.15 261.57 13.17 8.48

 Based on the P/E, Tide Water Oil is highly undervalued based on the industry average & also its leading peer Castrol  Its Price to Book also shows that Tide is highly undervalued.

 Tide Water Oil s margins would majorly be affected by its raw  

    

material prices fluctuations. The company majorly depends on the automobile sector for its customers and hence dependent on it. Compared to industry average and its closest peer Castrol, it is grossly undervalued and available at good price for long term investment 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 holders in terms of dividends and consistent growth in EPS. Hence , it s 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.