Bhansali Engineering Polymers - An Import Substitution Story!

(jainnitinp) #466

Another response from the company to my query

How trustworthy are the recent expansion plans to 137 ktpa (announcement as of 14th Aug 2018)? What is the likelihood that they will not be shelved again like other similar plans were in the past by your company?

We appreciate your keen observation and anxiety whether 137 KTPA capacity will get implemented in the current fiscal. In view of the fact that almost all plant and machinery have been received, we see no reason why it can not be done. Please note that we regularly intimate BSE and NSE all major developments in respect of company’s operation and project planning & execution.

(phreak) #468

I did a shareholding pattern analysis on BEPL and found very interesting things. There was a group of real-estate companies kinda names holding a large chunk of BEPL in 2016. Together they held 4.24 Cr shares - i.e half of what the promoter then held. These holdings seem to go back quite a few years which makes me wonder if they were benami promoter holdings.

Over the course of time post demonetisation, these entities don’t have a single share and this 4.24 Cr shares are now held by

a) Promoter - about a 1 Cr shares
b) Retail - about 3 Cr shares

Promoter - all the buying was done in Dec '16 and Mar '17 when the price was around 25 levels on average - so it is fair to assume the promoter spent 25 Cr to buy these shares.

Retail bought the 3 Cr shares on the signal from the promoter.

Now if these holdings that sold out post demonetisation (might be an unrelated event but lot of interesting things happened during this unforeseen event, so it might be related) were indeed benami holdings then the promoter succeeded in distributing a rather large 3 Cr shares by just reshuffling some holdings to his name.

If these entities were not related to the promoter then I pity their wisdom in holding such a large chunk for almost a decade and then selling out just before a 10x run-up. If they were unrelated, how did they all decide to sell in the exact same quarter? I will let you all be the judge.

Disc: I bought and sold some BEPL last year without much knowledge while riding momentum. This analysis is completely post-hoc.

(Ankchandak) #469

There is some discussion on it in the forum earlier .
There was some despute between promoter and the entities you are referring to .
I am posting link of one of the earlier post. You can browse the post earlier to it to get more understanding

Disclosure : - Not invested in past/present and future

(jainnitinp) #472

[email protected]

(utsav_garg) #473

All of these real estate companies (MKJ Enterprises Ltd, MKJ Developers, Mantu Housing Projects, Sarvesh Housing Projects Pvt Ltd, Right Address Ltd, Twenty First Century Securities Ltd, Madanlal Ltd) are registered in Kolkata. Co-incidence?

(jainnitinp) #474

Excerpt from the AR released today

(jainnitinp) #479

Interesting excerpt from the FY18 AR (page 33). Four wheeler manufacturers are currently not BEPL’s clients. If they do succeed in getting even a few of the names mentioned below under their clientele, it could be a huge upside.

BEPL’s business strategy continues to intensify its efforts to optimize its share of highly remunerative ABS market segment, especially from the automotive industry. This activity will be fully backed up by state of the art R&D Centre being established by the company, which will be operationalized by September 2018. Though for this very purpose, BEPL has established a JV company with Nippon A&L Inc., Japan (NAL) but its full impact will be visible after the R&D Centre gets established. This is because ABS is a performance polymer and its grades are specially developed for specific application required by the customers. This is precisely the reason that BEPL has adopted the policy of focusing more on specialty grades which requires stupendous efforts in the beginning but once developed such efforts are highly paying, not only in terms of price but perpetual continuance of business with the customers due to the position acquired in the supply chain established by the customer. India is becoming a global manufacturing hub of two wheelers as well as four wheelers. This is why international giants in the automotive field, viz. Suzuki, Hyundai, Honda, Toyota, Volkswagen, General Motors, Ford, Nissan, Renault, Fiat have established their respective manufacturing facility in India, with growing degree of indigenization of its components. For components manufactured out of ABS, BEPL’s presence is well registered with all such international giants but its share of their outsourcing requirement has to grow more since it is still dominated by overseas suppliers of ABS, mainly LG and Lotte. It is reiterated that it will not be difficult for BEPL to tilt preference by such customers in its favour, once the R&D Centre at Abu Road is established.

(prashantrane2000) #480

Good article on BEPL

(jainnitinp) #481

This is an open market purchase (BEPL does not have any ESOPs).

(jainnitinp) #482

Does anyone know who is R Pattabiraman? Is he a big ticket investor? He has purchased significant number of shares last year. Google searches by that name are not giving a clear result.

(hemtan100) #484

D.N. Mishra the company secy who has been buying BEPL stock from the open market has tendered his resignation. Last day 6th Oct 2018.

(sunny.20.jain) #487

BEPL 34th Annual General Meeting with Yearly Guidance and Strong growth story
Entire Details of 34th AGM in the link below

(paresh.sarjani1) #488

Blog shows incorrect numbers in terms of ebitda and profit by one decimal.
Instead of 154 crores it shows 15.4 crores as pbt and instead of 99 crores…it shows 9.9 crores as PAT
Can you get it corrected…its misleading

(S_Banerjee) #489

Strong growth projection by mngmnt.

Bepl AGM takeaways

  • 137000 tpa will be achieved by march 2019 and for FY19 the output will be 75000 tpa and for next year FY20 minimum they will achieve output of 100000 tpa and max around 120000 tpa
    General grades and speciality grade should be in balance and for achieveing 137 ktpa by march they have to shutdown plant in between that is why capacity utilization is around 75% for Fy19
    Value wise they sell abs between rs.150 to rs.400 per kg ranging from normal grade to speciality grade. They have around 100 to 150 grades and each grade have approx 2000 colors so once a customer is tied up, customer dont go to other player for purchasing his qty. so the idea is to produce a balance between normal and speciality grade to gain maximised profits and market share at the same time.
    Out of the total capacity to be added by march 2022 i.e 337000 tpa around 200000 will be speciality grade.
    The research centre will be operational in a day or two and they have good researchers from the industry there to identify new application with speciality grade and tap customer for those grades. As rightly mentioned by Mr. Babulal bhansali that for us cost will be same for raw material imported, but will try to maximise profits from speciality grade. Also he shared the fact that earlier there were 4 players in this business and Mr. Babulal bhansali took over two companies in the past whose results can be seen now with their plants used for increasing the current capacity from 80ktpa to 137ktpa. These companies worth 200 crores were purchased for just 11 crores and the EVA that the plant is adding now is like cost free to the company.
    Also he mentioned that ABS have no link to rising crude price the only impact is from the price prevaling in the mkt due to demand and supply gap and 80% of the raw material is imported.
    Also they dont not have any hedging policy for raw material import bills as they claim that it is on 90 days period and we have pricing formula based on 90 days period in which 50-60% of the contract is covered where the price fluctuation is passed on the customers and rest 50% is expose to dollar fluctuation, and for hedging we need to pay 1.5-2% cost to bank so why should be bear the cost in advance when the question is just for 90 days and such fluctuation in currency from 67rs to 72 is not regular and once in a time. And if any fluctuation loss is incurred it is incurred from the profits generated and our main focus is to maximise profits through product development and marketing and adding clients.
    He also said that for sustaining in the long term, port based expansion is a must and they will any how complete that by march 2022 and will make operational till that date. For that matter land which is 6.5 km away from port is finalised and negotiation with govt. will happen and will be closed within 3 months time and after that it will take 9 months to get environment clearance for setting up plant. Thus the commercial production can easily be achieved by 2021 and entire capacity expansion will be done from internal accrual and for that total capex estimate will be out by year end i.e march 19.
    Wrt to fire incident he said the fire took place in the plant which was not operational and shut and due to reasons not known but have taken due deligence and audited the entire plant by its technological partner so that such incident dont take place again. He was busy with settling things at the satnoor plant and getting it back to 100% capacity utilization and returned just few days back, this was the reason for postponening the annual meet and keeping the 137ktpa expansion on hault till anything clear emerges. Once the activity was normalised and the plant came back to 100% capacity he then announced the expansion will continue with delayed period of 3 months. He also mentioned that the loss was to the extend of 2 crore and will be recieved from insurance company but the loss of business for 1.5 month is the real loss but still we have a target of 1800 cr sales for FY19 and current quater revenue will be 400cr+
    The new research centre at abu road will contribute a lot for maximising profits and that in turn will build products for various industry application and that will add new customers.
    From the total sales of ABS, 40% goes to automobile sector which is a speciality grade and rest in other application ranging from consumer durables.
    Mr. M.C. Gupta is also director to another company who is a major player in EV and will identify opportunity for bepl in that segment.

(sunny.20.jain) #491

BEPL 34th Annual General Meeting
Financial guidance and Strong growth story

(almantri) #495

Any thoughts if this method is better than hedging?

I think management is over promising and we should take it with a pinch of salt.

(jainnitinp) #496

At the AGM, these numbers were already provided with a word of caution. Mr Bhansali said “projections are after all projections”.

However, he also said that this will be the first quarter when the company will cross 400cr in revenue. He was then asked if this run rate will continue for the upcoming qtrs and the will the company achieve 1600cr for the fiscal. To which he pulled up a sheet of paper and said that they expect to cross 1800cr in revenue, if things go as per plan.

(almantri) #497

Last quarter was 201 Cr (due to fire incident), before that 301 Cr. I would be happy if they can achieve 350 Cr this quarter and 1400+ at the end of the Year. Promising above that is being over ambitious.

(almantri) #500

I already know that. Putting my assumptions on this platform is for a reason, to get counter views of different folks having different thinking but looking at same stock.

(jainnitinp) #501

So let me summarise your assumption - even though the company is halfway through the fiscal they could be off by 450cr on a base of 1800cr?