I think we should focus back on discussing the fundamentals of the company. Instead of picking on posts made by individuals. This thread is getting off track and is not going to help anyone furthering their knowledge about the company / industry.
Today’s price action says it all. No response from big houses who brought out the initial research reports. No response by any media houses. Good going. Recent two negative circuits of 20% in Marksans pharma is still vivid in memory with lesser issue than this. Thx God
Not considering the authenticity of the report I have two questions …
- Actus Plan is USFDA approved but none of it’s APIs are which the management is betting on for improving their profit margin. Is it not a concern for us ?
- Why they are pledging share to increase their holding ? It can be used in much wise way for capex requirement.
not sure if anyone tried to call up or write to the company about the report. But i did write to them yesterday morning and the CS replied by 6 PM yest evening itself presenting a point by point rebuttal to every claim made in the report with figures and data and not by just denying the report. And this, despite the fact that they were not named in the report. I can’t share the contents of the email as its a 1-to-1 email but i would seriously exhort anyone with any impending doubts to write to the CS about it and get it clarified.
Hope this puts all matters to rest.
Thanks for asking the company…I admit their responding is a good sign. It would have been excellent if you have shared the contents of the reply with us(removing any personal information) but I have also sought the reply from them. Once we have the reply, we can dissect it here and close the subject.
company reply must be posted here so that all get the clear picture . otherwise this forum can get misused by shorters for personal gain at cost of small investor-that would be not just unethical but also hugely tragic
Dear @hemtan100 …You set a great example by objectively digging into the problem and trying to find a way to solve the problem, instead of cluttering the thread with random comments and belittling others/author of the report.
Btw…my personal opinion is that it should be OK to share the email from CS. But you are free to take a call.
I would request everyone to think before posting whether they are adding value to the discussion or just littering the thread without any real info. It is our responsibility to keep the quality of discussions high. If you have a concern, please try to make efforts to first address it yourself and then seek other’s help. Then we can have a much better flow of discussion.
1.As the report the Gross property, Plant and Equipment (PPE) addition during the FY13-15 is USD$ 41 Mn and cash outflow for Capex addition during the same period is US$ 89.6 Mn, which is not matching with the Audited numbers as per the Annual Report of the Granules India. On Consolidated basis, during the period FY13-15 Granules India had an Capex of INR 531Crs. (which is approximately US$ 90 Mn, considering an average INR to US$ conversion rate of 59) and the same figure is matching with the reported Gross Block addition. Again, on Standalone basis also, during the period FY13-15 Granules India had an Capex of INR 258 Crs. (which is approximately US$ 44 Mn, considering an average INR to USD$ conversion rate of 59), which is also matching with the Standalone Gross Asset addition.
2.Granules India Ltd has corporate guarantee to the lenders of Granules Omnichem Private Limited for the term loans given by the lenders. As the Granules Omnichem is a newly set up joint venture company (50:50 joint venture with Ajinomoto Omnichem of Belgium), lenders wanted 100% corporate guarantee from each of the joint venture partners. The project was completed and started commercial production in FY 2016. Granules Omnichem reported sales of Rs.83.9 cr in Q1 FY 17. Granules Ominchem is expected to achieve turnover of around Rs.180 cr and profit of above Rs.10 cr in FY17. The company is meeting its commitments on time. The treatment of Corporate Guarantee given to Granules Omnichem Private Limited is reported as per relevant accounting standards applicable to Granules India Limited. The fears expressed the author in the article are without any basis and unwarranted.
3.As per the report the Net Worth indicated for the Company is 36.10 Crs. which is not matching with our company’s net worth. Granules India Net Worth as per March31st 2015 was INR 427.1 cr as per consolidated accounts.
4.There are few other numbers also indicated in the report, which are also not matching with the Audited Numbers. Related Party Loan as per the report USD$ 15 Mn, but and as per the Annual Report 2014-15, it was INR 10.2 Lakhs.
5.Granules has intangibles assets of Rs.8689.28 lakhs (as per standalone accounts) and Rs.8850.73 lakhs (as per consolidated balance sheet) as on 31st March 2015. Out of these intangibles assets, major portion of intangible assets were acquired when the company acquired Auctus Pharma Limited in Feb 2014. Auctus Pharma Limited was a wholly owned subsidiary as on 31st March 2014 and the accounts were consolidated with Granules India in FY 14 accounts as per applicable accounting stanards. Upon approval of merger scheme by High Court in FY 15, the accounts of Auctus Pharma Limited were merged with Granules India Limited as per relevant accounting standards. Suitable disclosure was included in standalone accounts (Refer Note No.2.40 page 112 of the annual report of FY15).
this was the reply i got from company sectretary
Thanks for sharing, its always good with the company clarifying straightaway… This should put all the rumours to rest.
kee-kaa bomb is fussss now. If it was a game by shorters, I think that should be probed by SEBI - who were the shorters and who has bought in last few days/months. This will help in cleansing the system.
Great to have the detailed reply from company secretary posted by @zulfi (zulfiqar), I had earlier (30/08/2016 2:20PM) mentioned that company secretary had denied any link with so called analysis. As I had a telephonic discussion, I was confident enough.
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
Anyway the baseless report gets buried with point to point email reply. Its good for investors. It would have been better if the author had sent the mail to company secretary before posting here (The report was 4 month old, delay of sharing it by 1 or 2 day would not have made any impact) to unnecessary create uncomfortable situation.
Let us learn to make this forum more beneficial for co-boarders rather than sharing half cooked information.
one suggestion for this great forum if i may is that broaders should or if any reports come must be authenticated
For the benefit of everyone, here’s the exact reply that I received from Granules. Very prompt in replying back. My email went out to them yesterday in the noon and I got a reply in 6 hours the same day with all the data and facts.
Hope this helps the forum!
Thanks @hemtan100. I have many complaints like
- High promoter compensation
- Debt driven capex in an IP driven industry
- Divided attention by having other passions like Winery etc.
Which I have mentioned in this forum but never sniffed any scam. I did my part of research and could not find anything suspicious. All numbers do tie-up and what has happened is that this hedge fund must have got data categorization wrong. They should recheck with their KPO suppliers once again. If anyone is still in doubt, he should check subsidiary financials published by Granules for FY15 & 16. @aveekmitra has raised many valid points and I would have exited or not invested as I had similar conclusions. But everything has value and I bought heavily between 70-80 and averaged up till 120.
I had done one analysis on ROIIC i.e. return on investment on incremental capital and updated it recently. All data coming from Screner. Please see attached file. The story is still evolving next phase of re-rating has to come from IP to justify higher allocation for me. However, ROIC is improving and all investments do make sense as of now. It is improving on 3 yr rolling basis as well.
Granules Calc.xlsx (11.8 KB)
Post clarification from Granules management & understanding that the report (read post) is nowhere related to our company. I understand that @andy161161 or the VP moderator should act and remove the post from the forum.
I may sound a bit eccentric here, but why remove Andy’s post. He has posted a valid query that prompted all of us to investigate the Granules book in detail. I believe that all the ensuing clarifications would go headless without the definition of fundamental problem.
Why is it viewed as being negative? No matter whether it turned out to be an issue or non-issue, how many times have we done so much deep-dive analysis of the cash flow statement? It is a fantastic learning experience for me. Now don’t beat me up
The report refers to Granules India, this is obvious by the fact of ‘leading API manufacturing’ and ‘100x bagger by a leading brokerage house’. That the numbers used are incorrect does not detract from that fact.Also, only time will prove whether there are any other issues like that raised by @aveekmitra
@KC1986 and others.
And if the criteria for removal is that the source data is wrong, then I think VP should have a defined policy on posting third party material. I agree that one could have asked the company (Kudos to @hemtan100 for doing what most people missed) l-the reason I posted it on VP was to validate if I missed out something since the numbers were not tying up-but that is a process flow and nothing that vitiates the post per se.
Merely it being a ‘short’ side report or a critique should not expose it to a higher standard of scrutiny than long reports like the famous 100x report of Motilal Oswal. Unless of course VP is long oriented only in which event I rest my case.
I think to keep quality of discussion at a level which adds value to everyone, let’s think before posting anything on any thread. Kindly read previous posts first to know if the issue has already been discussed or not, whether writing anything adds any incremental value or an endorsement or a refutation of the points already discussed.
If incremental value add is there, please write in detail … It may include new questions also which may have come in your mind and not already covered. It would surely be a value add.
If endorsement or refutation of a point already discussed, then please add additional points to establish your argument.
Imagine, you are a newcomer to the thread … You would be exasperated to go through almost 500 posts and may get completely exhausted to separate “wheat from chaff”. So to maintain the thread usable in future and for every boarders’ own advantage, I feel it is important to keep it clutter free. Isn’t it?
Lastly, let me make my point about my Granules note clear again… I feel the analysis done by the analyst is completely wrong and a figment of imagination. The argument forwarded is confusing and not backed by any cross verification. An apprehension may come seeing few numbers eerily matching (like I had), but it doesn’t make a case for any allegation or verdict without thoughtfully considering other possible scenarios and without trying to understand the business, which the author of the report didn’t do.
I reiterate, I may have reservation about investment last year but it’s has got nothing to do with the kind of atrocious claims made by the author.
It’s akin to dimwitted police officer of a detective novel who summarily conclude that since the murder weapon is found in the car of a suspect, he is the killer. There may be 10 other scenarios possible which he completely forgets just to show and prove himself as an intelligent investigating officer. He builds his case around his self belief and not around the truth.
Please think about it. Thanks for reading …
Disclosure: I have no position in Granules and have not recommended to anyone to buy or sell. Rest of the disclosures are already posted in my previous post.