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Orient Beverages


Orient Beverages is in the business of supplying ‘Bisleri’ branded mineral water.  It is also engaged in real estate activities.

The company has reported no growth in revenues but reported consistent net profits (including rental income – see below) over the last five years.  It reported a net profit of 1cr on revenues of 13cr in the last financial year.  It operated with a relatively high net debt load of 5cr (as at 30th September 2010).

The mineral water business has been on a declining trend and is exposed to further deterioration of revenues as a result of slowing demand for its products with no real prospect of a turnaround.  It has been a victim of labour unrest at its plants and there doesn’t appear to be a reason why this wouldn’t happen again in the future. 

It has also veered away from its core business and into real estate with currently one major rental customer (United Credit) generating its rental income – this would require a different assessment of its business prospects and there doesn’t appear to be a sufficient track record to make sensible judgments on its long-term future.

Moreover, the company appears to have a number of unquoted investments and disbursed loans - whose value is uncertain.

Furthermore, promoters have pledged a portion of their shares and this may result in management changes if those shares are revoked for any reason.

Management haven’t declared dividends in any of the last five years.  This is perhaps unsurprising given the above mentioned activities.  Nevertheless, this appears to be an illogical policy given the lack of profitable growth in its core competence (mineral water) and management inexperience in real estate activities – the appropriate policy would be to return shareholders’ funds that aren’t used in the core business.
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