The Ravalgaon Sugar Farm Ltd ( BSE Code: 507300) is in its 75^th year of operations.

Business segments: confectionery & sugar

Equity: 0.34 crores (68,000 shares of Face value of Rs.50 each)

Long term loan: 24 crores

Market price: Rs.4200

Market cap: Rs.28.56 crores

Year ended March 31, 2008:

Revenue : Rs.75.77 cr

NP: Rs.1.57 cr (after paying Rs.1.57 cr in tax)

EPS: Rs.247

Dividend per share: 100% (Rs.50 per share)

Of the above revenue, Confectionery business has achieved sales of Rs.19.56 cr & Segment profit of Rs.5.24 cr

Half year ended Sept 08:

Revenue: Rs.48.30 cr

NP: Rs.3.09 cr (tax paid: Rs.1.67 cr)

Of the above revenue, Confectionery business has achieved sales of Rs.10.87 cr & Segment profit of Rs.4.89 cr.

Ravalagon has strong well entrenched confectionery brands like Pan Pasand, Mango Mood, Coffee Break, Choco cream besides the all time favorites cherries  /sweet centre candy( strawberry, orange, lime flavours ), Supreme (cardamom, rose & butterscotch).

The confectionery division has been operational since 1942 and has a strong pan India presence.

Acquisitions in the confectionery business over the past few years:

2 years back Godrej/Hersheys had acquired Nutrine for around Rs.270 crores while around 4 years back Lotte bought 60% in Parry’s for Rs. 65 crores valuing the company at Rs.108 cr.It is important to note that Parrys was making loss/negligible profit when it was acquired by Lotte.

Around a year back there was speculation that ITC will acquire Ravalgaon’s confectionery division for Rs.350 cr.

To me, this valuation seems absolutely unlikely but it will be wrong to turn a blind eye to the fact Ravalgaon with its strong & profitable confectionery  brands re-presents a delicious opportunity for takeover candidates. A back of the envelope calculation makes a price of Rs.100 crore plus /minus 15% very probable.which translates into around Rs.14500- 15000 per share.

At the current price Ravalgaon is available at a Market cap of under Rs.30 crores and clearly appears an excellent investment opportunity.

(Disclosure: I ‘m invested in Ravalgaon).