The Hindu Business Line : Jubilant Organosys: Keep it reactive for a year

INVESTORS can consider the fixed deposit programme of Jubilant Organosys for a year. The company has bright prospects and its financials are improving. Longer tenures can, however, be avoided, as the incremental returns for the extended maturities are not attractive. There is the possibility of other companies hiking their interest rates. Sticking to a one-year option would give the flexibility of weighing other investment options and a chance to review the investment after a year.

Scheme details

The programme offers interest rates of 7.5 per cent, 7.75 per cent and 8 per cent for one-, two-, and three-years respectively. Interest rates are payable half-yearly. A cumulative deposit scheme is also on offer. As the interest rate is compounded half-yearly, the effective yield for the periods works out to 7.64 per cent, 8.21 per cent and 8.84 per cent. The minimum deposit amount is Rs 10,000. Further details can be had at the registered office at Bhartiagram, Gajraula, Dist. Jyotiba Phoolay Nagar, UP and at the corporate office at Plot No. 1A, Sector 16A, Institutional Area, Noida-201301 (UP).

Business prospects

Jubilant Organosys operates in three businesses: Pharmaceutical and life-sciences chemicals, industrial chemicals and performance chemicals.

The pharmaceutical and life-sciences business is engaged in the development of active pharmaceutical ingredients (APIs) and is one of the larger custom research and manufacturing services (CRAMS) players in the country. Although the industrial chemicals division, which produces acetyl, contributes the bulk of its revenues, the contribution from the pharmaceutical division is catching up, as it increasingly becomes the focus of the company. As the latter also contributes 56 per cent of operating profits, a growing contribution from this segment augurs well for earnings growth.

Revenues grew 21 per cent in 2004 to Rs 858 crore. Profits grew at an annual rate of 35 per cent over the past five years. The company has a high debt burden; but it has managed to cut interest costs in the past couple of years. On the back of increasing operating margins and healthier cash flows, it is now more comfortably placed to meet its interest commitments. Margins are also likely to remain firm in the near term, with the price of acetyl ruling firm.

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