Why does trading company have a majority stake here? Isn’t it amusing?
Hello,
I am currently researching this stock and I have a question regarding capex. The company mentions that they need approximately ₹60crores for capex but so far they have only done a small part of it. My question is how does the company plan to fund it? Their free cash flows aren’t that big and the borrowings don’t seem to be at levels to accommodate the same? If someone has an answer for this please let me know. Thanks!
Last year company did had ending cash balance of 7 crores, that too after spending around 7 crores in CAPEX. While the Polyacrylamide powder form expansion is expected to be completed till Fy 2022 (as mentioned in the recent AR). Working cycle this year has hampered a lot in chemical sector, hence this can consume some of the CFO for the coming year. However company already at significant lower debt.
With 50% debt too (around 30 crores) interest will not be burdensome. On the top of it new expansion if worked well in COVID can even contribute increasing CFO compared to last year (which was 17 crores). I guess this would suffice the further expansion.
2 Likes
That seems plausible. Thanks for this!
1 Like
Black Rose Q2’2021 Nos.
Sequential growth for standalone business is pretty good, 252% and 277% Rev & EBITA growth.
YOY growth for standalone business is flat & decent EBITA growth.
3 Likes
Acrylamide EBIT are steady for past 3 years in Low 20’s
Polyacrylamide(Liquid) assuming on full capacity 40000 MTPA at 25 per kg, company can generate sales of 100 Cr
1)What are expected EBIT margins for Polyacrylamides(Liquid)?
Polyacrylamide(Solid) assuming on full capacity 10000 MTPA at 250 per kg, company can generate sales of 250 Cr
2)What are expected EBIT margins for Polyacrylamides(Solids)?
Can anyone help me out with what are general margin in this business as there no other company which is listed in market which produces Acrylamides or its derivatives
Thank you everyone for sharing your thoughts about company in this thread it really help me get a more clear perspective about Black Rose.
2 Likes
Thats the revenue of current 12 month rolling period…sounds a bit strange if all expansion is not going to bring any extra revenue.
Anyone done any maths could you please help with the calculation?
Much appreciated.
Q3FY21 summary
The share of manufactured products in the revenue of the company increased.
Key financial indicators further improved during the period.
Net profit margin increased by more than 4% to 13% & EBITDA margins are now at 18.7%. Profits for the quarter again hit an all-time high.
The company is planning to manufacture acrylamide
powder at its Jhagadia plant. The expected capacity of the plant would be 3,600MT, the
required investment outlay would be Rs.8 crores, and potential additional revenue would be
Rs.55 crores (at today’s market price). The initial capacity would be aimed at replacing 100% of
India’s imports while further capacities could be added to serve larger global requirements. The
company has entered into a technical services agreement with Mitsui Chemicals, Inc., Japan,
for this planned expansion.
Work on the 10,000MT polyacrylamide solid plant is currently in the piloting and R&D stage after
completion of the initial civil work for the building. There have been delays in this project due to
the R&D work on polyacrylamide liquids as well as other acrylamide derivatives, including the
acrylamide powder expansion. Furthermore, with the rise in the company’s profits, the company
has considered financing this Rs.60 crore project from internal accruals but lately the company
has also received suggestions to consider a possible fund raise through issue of new
shares/warrants/etc. In case such an option is considered, the company feels it may be prudent
to allow for some time to evaluate possible funding sources and valuations at the time of capital
expenditure so that it provides better value to stakeholders.
7 Likes
Blackrose mentioned in its Investor presentation that the domestic manufacturing in the polyacrylamide solid is import-dependent and only 1% of the entire demand is domestically produced, and they already have some competition in the polyacrylamide liquid business, how come the competitors in the liquid business not focusing on the solid business?
how come only blackrose is focusing on the polyacrylamide solid biz and not other well established competitors like pidlite, on exchange, BASF
Disclosure: Invested
5 Likes
There is only player apart from Blackrose who is manufacturing Polyacrylamide in India. As mentioned in AR Polyacrylamide is imported 100%.
Recently (in 2020) SNF global (MNC giant) competitor of Blackrose started with their production in India. They are also manufacturing the solid and liquid part. However only 2 players are there in India now. While due to covid chemicals has seen lots of domestic consumption. I guess from the sense of no other player in India company did mentioned not other player is focusing.
5 Likes
Did anyone attend the call yesterday? Would be obliged if you can share some highlights while we wait for the transcript to be released.
1 Like
They have uploaded recording of their first concall:
5 Likes
Hello
Seeing no posts regarding Q1FY22 and recent AGM FY21, I thought to share my notes -
(AM - Acrylamide, PAM - Polyacrylamide, NMA - N-methylol acrylamide)
Q1 FY22 concall
- Capacity utilization for AM - 40%, for PAM liquids- 25%. A lot of stocks had been built up due to slow sales of April and May + COVID lockdowns.
- We will be prioritizing PAM solids in Q4 FY22, and sometime in early FY24, the plant will commence ops. (plant set-up during fy23)
- Within 6 months of our starting production of AM solids, we expect to attain 100% capacity utilization. Demand is very strong for this product.
- For NMA, certain approvals will be required from customers. The domestic market will be around 50% of our sales, so it’ll take us up to a year or year and a half to capture the domestic market. And simultaneously we will send samples to the export market.
- The 8 cr CAPEX for AM solids is only for the equipments and machines needed to make AM solid from AM liquid. We don’t need to set up a new plant altogether.
- Capacity utiliz of PAM liquid was around 25% in the qtr and we aim to inc it to 35% in next qtr and then gradually to over 50%. By end of FY22, we target to reach 60% cap utiliz.
- Some of our large customers to whom we export have been with us for last 5-6 years.
- Exports are an important part of our business, it is also higher in margins than domestic ones.
- We consistently satisfy around 75-80% of existing domestic market demand on a monthly basis. So we look for exports aggressively for growth as domestic has more or less saturated. (don’t know for which product). We see our performance not only by capacity utiliz. But also by the % of demand we are able to satisfy domestically.
- We do intend to list ourselves on NSE too.
- Capacity utilization for liquid AM in the qtr was around 40%
- Good thing about our plant is that even at cap uti of 40% our EBITDA is in the range of 20-25% or even 30%. An increase in capacity utilization will further improve the margins.
AGM FY21
- The capex for AM solids and NMA is funded through internal accruals. For PAM solids, we will fund it through a mixture of debt and equity.
- For PAM liquids, we are focusing on the Morbi tile industry, but recently have got approval from a plant in Secunderabad, UP. We will focus on exports in this area only after we have further penetrated the domestic one.
- We can expect commercialization of polycarboxylates in FY23.
- For AM solids, trials by customers have already started. NMA will reach peak utilization in H2FY23
- Both the plants at Jhagadia and Kolhapur are leased properties.
- There is no long-term debt on the company. Around 13 crores short-term debt is there. The interest rate is around 7.6%.
- There is no criminal case against any of the company’s KMP.
Question - can anyone provide details about the 2 main promoters - Wedgwood Holdings and Triumph Worldwide? Not much information is available about them…
Disc. - Invested
14 Likes
Commercial production of NMA commenced. Numbers will add Q4FY22 onwards -
About NMA -
- Customers include - paints, adhesives, textiles companies, etc.
- specialty product so reaching full capacity utilization can take some time due to approvals
- Margins: 20-30%
- Company hopes to generate 100 crs revenue from solid AM and NMA combined in FY23 (solid AM plant is also expected to start commercial prod soon)
- 2 major global producers of NMA - SNF and allnex. India imports NMA from allnex from Belgium currently
- Technology used is in-house
- Potential additional revenue from NMA is Rs.35 crores per annum at the full capacity of 2000MTPA.
- Current imported domestic demand - 600 MTPA. many companies make NMA in India but for their captive consumption. They make unstable NMA. Many of them are also looking to shift to BRIL’s product so domestic demand can be 1500 MTPA
Disc. - Invested
8 Likes
Q4FY22 Con-call notes
AM solid -
- Plant has still not got the approval from government authorities. extremely delayed. Although mgt says it is expected shortly (within 1 or 2 weeks)
Edit -
Finally, commercial production has commenced.
I expect approx Rs 30-35 crs revenue for FY23 from this new product.
- Orders are already signed from France, Turkey, and Japan
- BRIL will apply for an expansion of 20,000 MTPA of EC shortly
General News -
- BRIL does not have a set EBITDA margin set in mind that they have to achieve before signing any deal. (this is contrary to many other companies who have a minimum margin requirement and then they do backtracking to see at what cost they will sell to customers)
- FY22 EBITDA margins - distribution: 12%, manufacturing: 22%
- For Q1FY23 - expected EBITDA margin for distribution: 8-10%
- FY22 revenue - exports: 10%, domestic: 90%
- Manufac revenues inc by 41% YoY. PAM liq. Sales increased 300%
- Distribution revenues inc by 48%. Top 5 products were 80% of sales and 67% of profit
- Target to have 170-180 crs for manufac revenues in FY23 (in FY22 it was - 106 crs) (i.e. looking at 65% growth)
- Target to have 10-15% growth in distribution business in FY23
- BRIL will set-up a R&D lab in outskirts of Mumbai: (great news)
- CAPEX -
- last column tells the % of capacity left for growth in the existing capacity. example - there is 30% capacity for growth in the 32,000 MTPA exiting capacity of AM liquid.
- PAM solid capex is expected to be completed in end of Q2FY24
- “We do not do business with all companies. There are many orders that we deny. We see track record of payments for the company, their management, quality control measure, reputation in market etc. If they follow all the things, then only we do business with them.” (I believe these are the stong Japanese values that the Mr. Jatia strictly adheres to)
- “Currently financial condition in morbi is not very good, so we are not expanding client base aggressively there. We do not want to encourage that a tile maker has a new supplier, so it will further delay the payments it needs to make to the previous supplier. We do not want to be treated that way in future, nor do we want our competitors to be treated in that way.”
- Mgt comment on the new SNF management - “We believe the new management of SNF is helping in leveling the playing field for all and not disrupting the field. They are more pragmatic and cost aware than the previous ones.”
PAM liquid -
- Target to grow volume 2x by end of FY23. (As of may’22, it is going slow due to morbi industry in slowdown phase due to insufficient gas supplies to them due to russia war.)
- FY22 capacity utilization ~30%. FY23 target - 60%
NMA -
- Approvals from big clients expected in Q1FY23
AM liquid -
- BRIL wants to send 3000-4000 tonnes per yr to US but freight rates are too high. If rates reduce by 40% then it becomes much more feasible.
- FY22 capacity utilization - 50%. Target to inc it to 60-70%
Conservative attitude
- NMA: Plan to achieve 600 MT sales by end of FY23 (if 2000 MTPA gives 35 crs, then 600 MT should give ~10.5 crs)
- BRIL is keeping revenue projection low and conservative for FY23 for AM solid and NMA. ~30-40 crs from AM solid (not 85 crs as told in earlier calls) (although officially sales team told 20 crs, but Mr. Jatia feels at least 30-40 crs is achievable) (I don’t understand why such high level of conservative attitude by the mgt. Seems negative to me. Because in Q3FY22 concall, they had indicated 100 cr sales from AM solid + NMA in FY23. But 30-40+10 gives just 40-50 cr sales)
Disc. - Invested
11 Likes