Scripscan:K S Oils Ltd
cmp:10
Code:526209
Story:K.S Oils is a leading player in the branded edible oil market with the largest organised market share in branded mustard oil, consumed mainly in Eastern and North Eastern India. After registering strong growth in its home markets, K.S. Oils embarked on both a geographic and product expansion spree, expanding its brands into soyabean and palm oil and reach into North and Central India.The company raised and invested substantial sums in acquiring palm oil plantations in Indonesia by way of establishing backward linkages in 2009 and 2010. However, rising borrowings in an increasing rate scenario have resulted in interest costs sky rocketing, undermining the company's net profit margins.After closing 2009-10 with a strong 29 per cent expansion in net profits on the back of a 28 per cent sales growth, K.S. Oils' profits have been slipping for four quarters running.But there's much more than operational performance which meets the eye.Recently,In a filling to the Bombay Stock Exchange,KS Oils informed that its chairman Ramesh Chandra Garg has sold 3.05% of his holding. With this sale, Mr Garg's share holding has is now down to 8.23%. Other institutional investors continue to offload shares.The Intelligence Bureau in December 2010 noted massive price rigging and insider trading in KS Oils.The company has also been accused of tax evasion.The recent fall has been caused by tremendous selling by the lenders where the shares were pledged(edelweiss and SICOM together sold nearly 95 lakh shares on 12th and 16th august respectively).KS oil has got classy shareholders like Rajat Gupta,Siva sankaran,Baring but its in a complete mess presently.KS oils no doubt is in troubled water and is required to do a lot to be the bluechip company it was not many months ago.Corporate governance though is a big issue here.Investors having it should hold on hoping for a better price to exit.
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