AksharChem (India)


(DEEPAKSINGH) #41

Shree puskar concal important take way:

  1. Vinyl sulphone price in q1 is 225-250 which is lower than last year q1
  2. H-acid price is 325-345 which is lower than last year q1
  3. Chinese pollution situation going back to more worst,as Chinese govt appointed new committee “CPA” which they are conducting audit each and every plant and so so many illegal intermediate company shutting down
  4. So mgmt telling there is no room for price go down from here .and it is only go up from here.

Hope this helps…


(bkasal) #42

Hi,

Any idea, why delay in Q1 results announcement?
Red flag?

Thanks.


(Sandeep) #43

Reason for the delay has already been shared with the stock exchange by the management of AksharChem.
Please go through this

http://www.bseindia.com/xml-data/corpfiling/AttachHis/34106a70-4576-47db-bf7a-0cf6f37d4471.pdf


(bkasal) #44

Thanks, noted the same.


(Nirav Dedhia) #45

Does any of you know the approximate market rates for CPC Green, CPC Blue, Precipated Silica and Violet 23?

Estimating CPC Green from their Annual reports for last year it seems their avg for last year was 240. Also dissecting the numbers on their annual report which states VS forms 68% of the total revenues I obtain the price for VS as 400. Though I am trying to synthesize the numbers for Vinyl Sulphone from the available information and may be wrong on certain assumptions, if what you claim about recent Vinyl Sulphone prices is true we could see a downfall in revenue in the current qtr.

Disc: Invested


(Sandeep) #46

Q1 result: Subdued

http://www.bseindia.com/xml-data/corpfiling/AttachLive/3ba8719e-519d-4345-ab64-8c6703cd1bb3.pdf


(khs) #47

Akshar Chem investor presentation: http://www.bseindia.com/xml-data/corpfiling/AttachLive/a4fe769b-f8e4-478f-ab3c-04412ed0e515.pdf


(sathish kumar jalantran) #48

Aksharchem concal summary:

  1. Vsulphone current price is 250
  2. China situation worsening more
  3. Aksharchem mgmt confident that next 10years going to be belong to india
  4. China MKT share currently 60% and it can go reduce to 50% by next year
  5. Gujarat environment norm getting tighter which help all the bigger player as more than 50% is unorganized player
  6. Vsulphone price going to increase from here they are very confident
  7. Vsulphone raw material like aniline oil is very high in q1 and q2 due to shortage created by china situation which will largely reduced now and situation is normal correctly. So we expect margin pressure in this quarter too
  8. Guided 21-23% margin going forward,current 19% margin is one off due to rupee appreciation and raw material price increase

Regards,
Sathish


(narenarora) #49

Did anyone attend the earnings call today. Would be grateful if summary can be posted

Regards
Disclosure: invested in recent fall


(DEEPAKSINGH) #50

can anyone update on concall what were the key points…like on china and all
and also what were Vinyl sulphone and Hacid avg price in Q2 was…and how much they expect it going ahed.

thanks in advance

Regards


(neo-th3-one) #51

get on researchbytes, the concall audio is posted


(Sriram Krishnan) #52

Vinyl Sulphone prices have increased over the last quarter. However, the company has passed on some of the price increase. As per the company, there is a 3-month lag in passing on the prices.

Conference call notes:

Source: http://thebetterinvestor.com/aksharchem-q2-conference-call-notes/


(sjsandesh) #53

Why is the result of Aksharchem so bad, sales are redusing with profit, when other chemical companies are doing good.


(narenarora) #54

Company had taken plant shutdown for 15 days in Q3FY18. This could have impacted top line and profits.

Disc: invested.


(Capsule91) #55

@narenarora but why then there is inventory buildup? I think the true sales were down infact…
The margins are increasingly becoming pathetic plus the rupee appreciated further…

Can anyone explain why the tax pay is increasingly becoming lower??

Also unutilized funds of the qip money goes to mutual fund investment… they said in PPD its going to be money market mfs… Any idea about the annual tax free returns from this instrument akshar has invested?

In the PPD they said upto 175cr of capex is planned, of which the details break up shows only 131cr project cost, where is the rest 44cr going to be employed? Not yet decided?
Now throuhh qip they raised only 69cr, of which 3cr is the cowtbof qip, so we have 66cr of extra capital…
Atleast for this first phase of the capex , 131-66cr=65cr is to be got from somewhere…
Total cash plus bank bal. Is 3.33cr
Receivables 155cr, so there is 18.63cr at H1 end…
This quarter shows such pressure, i dont think even that much would be there or not…
Anyway, still 45cr is needed…

My question is has the management said how they will fund this extra 45cr??
And will it be foreign currency loans or not, if not whats the interest cost…?

Also out of 175cr plan 131cr is visible in this capex…
Rest 44cr will be sourced from where? More qip or debt or will we get rights issue?
And whats the plan with this 44cr which has no where been mentioned in PPD…

Please help me out… Else i will be bringing these up in concall…

Disclaimer… Researching , interested, not yet invested


(narenarora) #56

Interesting questions. One should ask the management in concall if possible.
The PPD mentions of the total capex of 132 cr; 66 cr from QIP and balance 66cr from internal accruals and domestic debt.
the company had almost 50 cr of investments (current +non current) as on 31.0317 as per annual report.

regards
narendra


(Capsule91) #57

@narenarora i got a bit of answer, that 175cr includes the greefield expansion of cpc green, but this 131cr they showed in the ppd dosent include that, hence the difference…
Check the last investor presentation for the break up…

I am an investor in gnfc too for quite sometime and from their concalls and talks and outlooks , aniline prices are not coming down, as of jan, its as high as q3…
So margins on VS are gonna continue to be constricted , Any outlook on sulfur price recent trend?

Not worrying about pigments because i found in the concalls its easier to pass though the RM costs in pigment than VS… Infact the fact the revenue pie of Vs going to get diluted mainly by Cpc green is a good thing for the margins going forward in these tough times of RM prices, as it will be easier to pass though in pigements and margins will be better…

Also i am impressed with Silica capex wich will be almost 50percent of the topline addition 80 to 90cr…As its RM dosent have a pricing power, so there we dont have a pressure from RM on the margins, further diluting the revenue pie of VS where the main margins are getting compressed and forms 60percent plus of the present topline…

With backward integration of cpc blue which is required for cpc green as a RM, we can protect ourselves from whatever margin contraction that might have been possible otherwise…

So i feel this capex will not only add topline but aid some potential sustainable margins too…

I will try to get this logic verified in the concall, but do members of this thread validate it…?


I just hope they take foreign currency loans, much much cheaper in finance costing…
The previous long term loan was from domestic source where the interest at current rating of the company is around 9 to 10percent, which is only 5 to 6 percent on foreign currency loan, which will be substantially lower, although there may be some forex loss ( increased interest cost) on account of usd/rupee fluctuations , yet the forex loss would occur only if rupee weakens but that will be offsetted by export related forex gains in the same situation of weaker rupee if that ever happens…

Disclaimer… Contains forward looking statements… Not invested yet, researching …


(Capsule91) #58

@Yogesh_s

Plz help me understand, why are u not considering the fact that the coming capex will not only double the topline but also increase and stabilize margins…
Plus at current market cap, the capex has not been factored in …
And aniline prces might not hold stable like this for long , although current it is, so margins in venyl segment can be better even…
And the company stresses that next 10years india will be a major in dye n pigment export with 15percent cagr growth which means the company can further go for capex…
With the qip for capex they seemed desparate for growth , indirectly this cannot be the peak of the business cycle…
The financials are good, balance sheet is clean…

Plus the capacity utilization is only 80percent, at the face of such a high growing demand…
So there is lot of steam left…
Plua thr cpc blue backward integration, is just going to keep more control over the pigment margins which is already stable…
Plus although cyclical pigment buainess is, the year round topline remains stable

I see huge growth and huge undervaluation…
Yes with so many variable parameters dcf model is useless…
I admire ur posts and capacity, i want to know why are u ignoring this company just on the basis of numbers , also taking numbers from esrtwhile scene of 2015 when the chinese business with comipitive margins was a clear suffocation to indian exports…
I dare say, this can be a avanti feed story…

Your insights plz…

Disclaimer… Interested and researching, not yet invested


(Rajesh) #59

Big capex, big demand projections in future, capital raising, announcement of some old technology factory closures giving more pricing power to survivors in game etc is perfect recipe for trap in commodity companies. Experts are smart, they always suggest to buy with target price in addition to general clause that one can keep for very long term to reap.
Market closes it’s eyes at this time that what is happening in one company, it is happening in all survivor, victorious companies I.e. capex. It increases supply worldwide I.e. more than demand. Now pricing power goes away with the blink of eyes. Now again cycle starts …Company going into loss phase, no pricing power, increasing debt.
So our all guru say while buying commodity company, never see demand side. Demand always increase slowly slowly as the world grows at 5%. No one can predict actual. Focus on supply it increases to double within no time, this is the right time to quit when everything looks good. Supply is predictable, demand is not.
Watch for inflection point when commodity company going down.


(Capsule91) #60

Point well taken @Rajesh1975

You mean to say, survivors of a disruption take full advantage of the sudden cash flow and starts building capacity… And hence all similar attitude starts resonating, the supply increases thus blunting the demand supply gap…

But i dont understand how supply crunch in whole of china which used to be the dominant player is going to be replenished by capex by other secondary players so soon given the fact that capex dose take time to come online…
But why will any company risk its financial health to mount capacity if the cycle has topped …
Specifically for aksharchem, its capacity utiliation has remained the same since last 3 years, so it can be concluded the production volumes didnt increase plus the inventory levels remains the same , rather has increased a bit …
The last time they did capex was in 2015 when they were maxing out on capacity, that makes sense…
So this time if capex is done at submaximal capacity utilization will it not indicate this is the infliction point…

On a side note half of the capex is being done in precipitated silica which is not a part of chinese disruption…

Plus venyl sulphone margins are taking a hit due to a major raw aniline whose prices have surged due to similar chinese disruption theme and prices have become highest ever…

So if aniline is also at the top of a cycle with impending oversupply, its crash shall bring up or balance the price decreased of venyl suphone in case of laters price crash…

So the worse case can be of neutral effect…

According to peter lynch, capex is a red flag only when the company has maxed out on its full capacity
Please share your views on this confusion…