REI Agro is one of India’s largest basmati rice processor and exporters.  It has diversified into retail sector and has around 500 six ten stores.

It operates in the entire value chain of basmati rice viz. Procurement,Processing,Distribution,Retail

The company has different brands of packaged rice to cater to different segments

Premium (24% of sales)

Kasauti,Real magic

Mid range(56% of sales)

Mr Miller,Hungama,Iron

Economy (20% of sales)

Hansraj,Raindrop

The entry barrier in Basmati rice is that it has to be matured for 18-24 months before milling and selling and the maturing determines the quality and prices of the basmati rice.

The company demerged the retail division and listed the shares as REI Six Ten.

FINANCIALS

For  March 09 the company had sales of 2448 crores and net profit of 60 crores which gave an EPS of 2.04

For June 09 qtr the sales were 858 crores(June 08 704 crores)

Net profit for June 09 41crore(qtr eps of 1.42) against 34 crores (qtr eps 0.71)

The company derived revenues of around 8 crores from windmills.

Equity has reduced from 48.17 crores to  28.9 crores due to demerger. Face Value is Re 1.

Promoters hold 42 percent stake out of which 27 % is pledged.

TECHNICALS

The stock made an all time high of 178 in May 08 and fell down to 33 in Nov 08 (probably due to demerger)

Stock raced to a high of 103 in June 09 and since then has fallen  to a recent low of 45.5 and trying to make a higher bottom against a bottom of 38 made in April 2009. The stock seems to be holding the levels of around 45 in the current downmove and it has to be seen how it pans out.

The management has approved plans to raise 1500 crores through a rights issue.

The company holds around 27% stake in REI Six Ten

Detailed investor presentation and reference material is available on the company website

Disclosure:  I am invested in the company.