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Natraj Proteins


Natraj Proteins is in the business of manufacturing soy products – primarily de-oiled cakes and soya refined oil.
The company has reported stable operating profits on similarly stable revenues – reporting about 5cr of operating profits on revenues of about 190cr in the last financial year using a moderate debt load.

It is primarily exposed to the risk of unpredictable monsoons affecting soy seed availability and prices, which constitutes its major raw material cost.  It is also exposed to the risk of a strengthening INR against US$ since it generates sizeable export revenues in US$.  It is also dependent on the specific risk of capacity constraints on the Indian Railways, impacting its despatch timelines.

Management haven’t paid dividends in the last five years presumably to pay down its external debt.  This may be justified since it reduces financial risk to equity shareholders – Now that the debt load is moderate, it remains to be seen if they will initiate dividends in the near future if the business continues its recent performance or embark on uncertain capital expenditure drives. 

Minority shareholders would need to re-evaluate the company based on management’s future course of action and their assessments of the business’ future economic potential.  It is worth noting, however, that managements paying out even moderate and consistent dividends tend to maintain better financial discipline and profitability over the long run than those that don't, and of course, “a bird in hand is worth two in the bush”.
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