Case Study: Pioneer Distilleries Limited

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Introduction Pioneer Distilleries Limited, a subsidiary of United Spirits Limited is engaged in manufacturing of Alcohol. The factory is situated at Dharmabad of Nanded District of Maharashtra. On its growth side, the Company installed a new 30KLPD Ethanol Plant in the year 2004-05. Further, the Company has expanded its Alcohol Plant capacity from 50KLPD to 100KLPD in the year 2006-07. In the year 2010-11 the Company has set up a 60KLPD Grain Based Alcohol Facility and commissioned 4.725 MW Biogas based power plant. Plans are afoot to install a fresh production facility for Malt Spirit shortly. The Company also proposes to set up an IMFL Bottling Plant. Both these facilities will come on stream during the fiscal 2011-12. Pioneer Distilleries…show more content…
EBITDA, PBT & PAT EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation, and Amortization. PBT stands for Profit Before Tax, and PAT stands for Profit After Tax. The graph visually shows how the net profit of the company stand reduced due to the impact of Interest, Depreciation, and Tax. 4 Total Assets and Asset Turnover Ratio Total Assets is the sum of all assets, current and fixed. The asset turnover ratio measures the ability of a company to use its assets to efficiently generate sales. The higher the ratio indicates that the company is utilizing all its assets efficiently to generate sales. Companies with low profit margins tend to have high asset turnover. Net Sales Sales is the total amount of products or services sold by the company. 5 Networth Networth is the difference between a company's total assets and its total liabilities. It is also known as shareholder`s equity. Return on Capital Employed % Capital Employed is defined as total assets less current liabilities. Return On Capital Employed is a ratio that shows the efficiency and profitability of a company's capital investments. The ROCE should always be higher than the rate at which the company borrows…show more content…
When Z-Score is greater than 2.99, it is in Safe Zones. When Z-Score is between 1.81 and 2.99, it is in Grey Zones. Pioneer Distilleries Ltd has a Z-Score of 0.14, indicating it is in Distress Zones. This implies bankruptcy possibility in the next two years. The probability of the same has been explained in the following pages. 8 Probability of Bankruptcy of Pioneer Distilleries Ltd. For stocks, Probability of Bankruptcy is normalized value of Z-Score. For funds and ETFs it is derived from a multi-factor model developed by Macroaxis. The score is used to predict probability of a firm or a fund going into bankruptcy or experiencing financial distress within next 24 months. Unlike Z-Score, Probability of Bankruptcy is the value between 0 and 100 indicating the actual probability, the firm will be distressed in the next 2 fiscal years. Pioneers Distilleries Probability of Bankruptcy = Normalized Z-Score = 47.66% Companies or funds with Probability of Bankruptcy above 90% are generally considered to be high risk with a good chance of bankruptcy in the next 2 years. On the other hand entities with Probability of Bankruptcy of less than 15% will most likely experience some growth

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