Granules India Ltd


(kv) #462

For 2014-2015 FY, this same calculation leaves a significant gap according to my calculations. However could you please check? I will also take a look for the earlier years. I agree that this looks too obvious of a discrepancy.


(Hrishi) #465

If promoters jacked up the price they would sell out but then Granule’s had warrants issued and promoters subscribed to it.

I am not good at balance sheets but then i don’t think promoters will jack up the prices and then issue warrants and then they will buy it at higher prices. Rather if crooks, they will show less profits and steal the money.


(Praveen A) #466

Small discrepancies of the order of 10cr are there in all three years. However nothing of the magnitude which is suggested. In the FY14, there is no separate entry for the the cash spent on the auctus acquisition in the cash flow statement and they appear to have clubbed the same in ‘Purchase of fixed assets’.


(Hrishi) #467

where is 100X cited in report? I could see
"We also avoided a listed pharmaceutical company with business prospects that looked promising on the capex rampup."

Also the report does not have a word API anywhere.


(Vipul Bathwal) #468

Another stock in the API space that has been sliding lately is Strides Shasun - they have decided to hive off their commodities API business. Is this the report that is causing a slide there as well? Can someone on this forum not get the management of granules respond to this report and kill the speculation. Not responding now may be construed as some sort of acceptance of the accusations made in the report.
I also could not find the word API mentioned in the report


(Hrishi) #469

I looked at screener and it says:

Sales growth 7Years: 25.67 %
Sales growth 5Years: 24.67%
Sales growth 3Years: 23.25%

Profit growth 7Years: 60.61%
Profit growth 5Years: 41.11%
Profit growth 3Years: 53.14%

So, this means to me Granules is doing something right for last 7+ years.

For me Granules is:
Not blowing any money in miracle product.
No big patent issues, litigation at minimum.
Never got into big FDA issues.
Basic products are required after 30 years and they are doing something to be a better company.
And if nothing works out they will grow similar to past performance.

Also this Hyderabad company taboo, please leave it. And also the other activities of promoters.
Look at Amara Raja Battery. Promoters pay themselves very high and close to politicians and i lost my 5 bagger by selling early due to Hyderabad company taboo and political activities.


(Vipul Bathwal) #470

Are you sure you have specifically seen the words “API” and “100x” mentioned in the report? At least I could not


(Vipul Bathwal) #471

hey - pls ignore this message - I saw that you have already answered this query in one of your earlier posts by giving the website link


(Anandh) #472

Please do not make ‘ad homein’ attacks merely because views differ from yours. I have been a forum member for a while, and do write on companies albeit not just on VP. **It is an unfortuntely coincidence that this happens to be a stock in F&O which can be shorted and therefore yes market manipulation is possible. However, people can draw their own conclusions and for a stock with multiple red flags(unknown auditor, growth above industry, complex business model), better safe than sorry **

If you noticed, the original report was released on May 2,2016. This should have ideally surfaced that month itself but I discovered that website only recently! These time gaps happen. For example, even in the case of Cadilla Healthcare, the FDA observation letter was publicly available on their site on 23 Dec 2015 a week before economic times article referenced it on 1 Jan 2016/6 Jan 2016, and much before the company even acknowledged it. Shorters would have made a killing just due to this information gap.
http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2015/ucm479712.htm


(Anandh) #473

The Actus acquisition will not increase the Consolidated capex **position **as Auctus being a wholly owned subsidiary was already consolidated earlier. If you run the numbers at the consolidated level as I have done, you will not see this impact in the cash flow/b/s, and therefore could throw up some questions. ****


(Yatharth) #474

It may simply be a coincidence that two boarders cited this report on the same day.

But, apart from this report, I am not sure about this comment:"*However, people can draw their own conclusions and for a stock with multiple red flags(unknown auditor, growth above industry, complex business model), better safe than sorry"

Do you believe and wish to point out that this a not investment worthy company irrespective of what we learn from the report?

Appreciate the opportunity to revalidate the thesis.

Disclosure : very small holding in Granules.


(Pankaj) #475

What if we do this analysis from FY12-FY16 now that AR16 is available. Do people see any discrepencies ?


(Sami) #476

CLSA came up with similar negative report on YES bank, however YES stock price doubled since then. Hope there is no vested interest playing here.

Disclosure: have small portion invested in Granules


(Rajeev M. Parashar) #477

This is unrelated to what’s being discussed, but why did this happen in Feb 2016? Is it a cause for concern?

CARE SUSPENDS THE RATINGS ASSIGNED TO THE BANK FACILITIES OF GRANULES INDIA LIMITED.
http://www.careratings.com/upload/CompanyFiles/PR/GRANULES%20INDIA%20LIMITED-02-08-2016.pdf

CARE has suspended, with immediate effect, the ratings assigned to the bank facilities of Granules India Limited. The ratings have been suspended as the company has not furnished the information required by CARE for monitoring of the ratings.


(Anandh) #478

I doubt that is a concern since they are still rated by Fitch
https://www.indiaratings.co.in/Issuers?issuerID=600&issuerName=Granules-India-Limited
They may have decided to discontinue the CARE rating but as long as some other agency rates them it should not be a red flag


(Anandh) #479

When I do the numbers on a consolidated basis from FY12-FY16, the cash capex and gross block additions seem to match. We should note however that the annual report was made available much after the initial report publication


(Anandh) #480

My only point is that the company is not audited by a reputed/large audit firm, also they have been able to outperform in a commodity industry that too pharma-these factors are red flags in financial statement analysis/fraud risk. I do not comment on the industry merits as I said, i do not know the pharma business well. I just put this information out there for people to be aware and dissect if I missed out anything, in case this news is picked up by other channels.


(Pankaj) #481

I tend to agree with @andy161161 . The company needs a better auditor and i’m sure they can afford one.


(Rajeev M. Parashar) #482

An intangible asset is an asset that is not physical in nature. Corporate intellectual property, including items such as patents, trademarks, copyrights and business methodologies, are intangible assets, as are goodwill and brand recognition.

Am I right in saying ‘Intangible Assets Gross Block’ is a subjective number?

Coming specifically to the topic of discussion, as @aveekmitra said,

The analysis made by the author of the note can’t be substantiated with
facts and figures as we also did a deep dive into Granules about an year
back and had similar apprehensions.

Is it a case of having to choose between giving the benefit of doubt to the management & getting out of the stock?


(mrai74) #483

I went through the post where @andy161161 is claiming that the report published by a singapore based agency has quoted certain manipulation about an unknown company, although he is trying to corelate this to our company. I am not an expert to evaluate the figures quoted by him, but as a long term investor, I have few queries

  1. Why the report don’t disclose the name of company, I understand that they are aware of the figures or balance sheet, which has been used to analyse
  2. If they are afraid of company may file a legal defamation suit, if they name the company
  3. If they are not confident enough on their own analysis & afraid of quoting name, why others should believe them
  4. I am aware that promoters have a black spot on them, which is 13-14 years old & since then they have rebuilt their image
  5. I tried to call & check from company secretary, which they denied saying they can’t respond to any report which does not name their company
  6. I understand that investors should wait for quarterly results to decide their future strategy
  7. The report may or may not be wrong, but it lacks the confidence from the agency which has quoted it
  8. Overall it looks like a trap to have the shares on lower prices
  9. The major factor in investor’s favour is that promoters are regularly increasing their holdings
  10. I am not sure but comapny has all the powers to exercise lagal options against anyone, who is trying to malign their image, I am not sure if its the agency or the boarders, who are trying to name that unknown company in the report

If I am satisfied by answers to above questions, I shall immediately come out by selling my long term holdings in Granuels