These days, the game of many Indian companies is getting spoiled due to dumping of cheap goods from China. Particularly, huge pressure can be clearly seen on the profits and order books of companies in sectors like agrochemicals and fluorochemicals. But, even in these difficult times, two domestic companies are standing strong. Nitta Gelatin India and Narmada Gelatines are not only maintaining their dominance by defeating this challenge from China, but their balance sheet also looks very excellent. The return on capital employed (ROCE) of these companies working in a specific sector like gelatin manufacturing is much higher than the industry average.
Dragon’s dumping is ineffective in this business
Interference of cheap Chinese goods in the pharma and food supply chain is common. But the story of gelatin business is completely different. It is not so easy for a new company to enter this industry. Stringent quality certification, difficult regulatory approvals as well as limited availability of raw materials make it a safe fort. This is the reason why even China’s cheap supplies are not able to penetrate this fort and Indian companies are successful in protecting their margins without any major foreign threat.
Nitta Gelatin’s Profit Mathematics
Nitta Gelatin, started in the year 1975, is today the largest company manufacturing gelatin, osin and collagen peptides in the country. Apart from pharma and food industry, this company manufactures di-calcium phosphate for poultry feed. Their ‘Velnax’ brand is also present in the consumer market. This company, which has a joint stake of 75 percent between the Government of Kerala and Japan’s Nitta Gelatin Inc., has made an excellent record of profits in the last five years. Even though its sales growth has increased at a pace of 8 percent annually to Rs 588 crore (FY 2025-26), its net profit has declined rapidly. The profit of Rs 18 crore has increased to Rs 97 crore at an annual rate of 41 percent. Operating margin has increased from 11 percent to 23 percent. There is only Rs 4 crore in the name of loan, due to which it is almost debt-free. An excellent ROCE of 27 percent makes it unique in the industry.
Strong balance sheet of Narmada Gelatins
Narmada Gelatins, operating from Jabalpur in Madhya Pradesh, was started in 1969. This company, with a market cap of just Rs 286 crore and 75 percent promoter holding, also has a strong hold in its sector. In the last five years its sales have increased from Rs 135 crore to Rs 215 crore. At the same time, the net profit has jumped from Rs 8 crore to Rs 28 crore. Strong ROCE of 28 percent and strong investment portfolio of Rs 41 crore speaks of its financial health. The company has a debt of only Rs 8 crore. Besides, it is also giving a dividend yield of 2.2 percent, beating the industry average. Due to the jump in profits, the company’s operating margin has also improved from 6 percent to 19 percent.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
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