Browsed the website of Towels enterprise limited, in the product section they do have ‘Chemicals’ with the following chemicals
Ethyl acetate
Acetic acid to name a few.
Does anyone know which chemical is being bought from TEL?
Hi, can you share the number where you called please, I need to ask about another related party transactions: Vivachem Intermediates pvt limited
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Hello, the number is mentioned on their website under contact us head. It is 08046067481
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Vivachem is an associate company of IOLCP, it is clearly mentioned in the below attached link. Managing director also mentions about their growth through expansion and expanding the employee base.
Please read the below article.
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What could be reason they setup new company itself to manufacture raw material instead of opening another unit under iolcp itself? As it has become a Related Party Transaction, it makes me bit worried. we will not know at what price they are buying it. In future if they wish to siphoned money they can easily inflate price at Vivachem.
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Article by moneylife.
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Just one month back, another article by the same money life 
IOL Chemicals: Attractive at the Current Prices
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it is a premium article. Not able to read.
Two contradictory articles by Money Life within a period of two months on the same Company.
Article on 19th Sept. 2019 IOL Chemicals: Attractive at the Current Prices concludes that “The recent crash in IOLCP’s price has made it an attractive buy. However, the business has to deliver steady profits for the stock to regain upward momentum. It is a commodity business and, hence, investors must apply a stricter margin of safety.”
Within two months on 25-Nov-2019 IOL Chemicals: Why a Company Trading at a P/E Ratio of 3 Is Not ‘Cheap’ , the article concludes “Investing in this company may turn out to be like driving in the night with the headlights switched off.”
The price has not moved much between these two dates.
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Hi,
Can anyone share the main gist of this article for us:’ [IOL Chemicals: Why a Company Trading at a P/E Ratio of 3 Is Not ‘Cheap’ in a bit of detail? thanks-in-advance.
The Gist
The rapid rise in revenues of the company can be explained by two factors—doubling of production capacity for ibuprofen and a 77% increase in the selling price of ibuprofen.
With ibuprofen prices expected to reduce due to excess production capacity in the industry, the profit margins of IOL Chemicals are sure to come down.
The general investor in this company without any specific knowledge of chemicals industry, especially the ibuprofen supply chain, can only take a wild guess as to how much the prices will reduce and where the profit/loss margins will settle.
Investing in this company may turn out to be like driving in the night with the headlights switched off.
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There is no mention of this company as associate in their AR 2019. It is only mentioned in related party controlled by Vijay Garg
@all/@mayanknagarwal
i got reply from IOLCP after sending my request to NSEInvestor cell service.
Here is the reply-
This is in reference to your trailing email with regard to query on related party transaction entered between IOL Chemicals and Pharmaceuticals Limited (the Company) and Towel Enterprises Limited. In this regard, we wish to inform you that M/s Towel Enterprises Limited is mainly deals in the business of Chemicals and Textile. Under the said related party transaction, the IOLCP has purchased some chemicals such as acetic acid, sodium metal etc not the towels.
As i see the email trail, someone in the NSE took my request and asked IOLCP to reply within 5 days.
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I have dropped an email to IOCL, but not got any reply. It has been more than 10 days
Can you help me with email of NSE to keep in cc?
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nseiscbeng@nse.co.in
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There is no overcapacity in Ibuprofen production according to me. If you have read somewhere please copy paste the link here so all can read and take call according to it. My take is, the demand is constantly increasing in region like Africa , middleast and in USA too! It is OTC drug in USA(BTW, I live n USA) and I run a gas station/convinient store where I sell Ibuprofen too. Any drug OTC is sold good as it comes without prescription because getting prescription is a big big hassel in USA.
IBB prices are constantly on up as can be seen the price of Vinati Organics and as IBB is the main raw material for producing Ibuprofen, no way the prices is going to come down.
Even after new capacity will be coming through Basf plant in Germany in 2022, the demand by that time will shoots over the capacity of the world.
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Are you comparing IOL Chem with Gillette, 3M, Dmart? Isn’t that too much for asking. According to me, the entire comparison is wrong and hence I stopped reading your link after I saw you compared them with blue cheap Cos. . It is very immature to compare IOL Chem with blue cheap Cos. and hence I feel your report is with bias. I want a neutral report. When you are unbiased then only you can write a good reprot. I am here since 1985. Seen sensex at 370. I have gone through all these.
Don’t become prejudiced with any stock, You are already predetermined that at p/e 3, this stock is not worth investment. Sorry for my blunt view. I maybe wrong and you may prove right. This is stock market and anything can happen. My 35 yrs experience says that. I am holding and will hold for longer period, Not thinking atall to sell in near furture. Promoters has taken stake at 205 and that is a positive for me.
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I think we are missing couple of points here. Although I agree that ibuprofen price fall is hugh risk for the company.
However company has increased capacity utilisation of chemicals business line and turned it around from losses to profits.
Debt repayments has been done, the company is on verge to be debt free. I think in current quarter debt repayments were not done due to working capital required for US ibuprofen exports.
Till now management is over achieve ing what they were commenting in tv interview s. However somehow they have not given interview in this quarter.
The company is also diversifying and trying to reduce its dependence on ibuprofen.
So my take is ibuprofen price fall risk is there (currently a big risk) but i think the company is changing and have other strengths which far outweigh the risk.
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Just came across a link:point_down: https://www.prnewswire.com/news-releases/global-ibuprofen-market-size-to-reach-45-233-mt-by-2022--says-beroe-inc-300923998.html RALEIGH, North Carolina, Sept. 24, 2019 /PRNewswire/ – The global market for ibuprofen is currently estimated to be 44,347 MT and is projected to grow at a CAGR of 2 percent, according to Beroe Inc, a procurement intelligence firm. Ibuprofen prices have increased by 22 percent from 2017, due to increase in raw material costs, with the prices for Isobutyl Benzene (IBB) increasing by 11 percent.
The top 6 players in the market, namely, Shasun, Shandong Xinhua, Granules Biocause, IOLCP, BASF, and SI Group hold almost 80-85 percent of the Ibuprofen supply in the market. Shasun is the market leader with approximately 16 percent of the global production, however, IOLCP has the highest installed capacity. Meanwhile, Granules Biocause has 100 percent utilization of Ibuprofen production capacity, followed by Shasun with 96 percent.
https://www.beroeinc.com/category-intelligence/ibuprofen-market/
Beroe, which is based in North Carolina, further stated that procurement experts can access this report - on its market intelligence platform Beroe LiVE: https://live.beroeinc.com/
The most common forms of Ibuprofen are granules, salt, powder, and amines. The top consumers of Ibuprofen include Pfizer, BASF, Johnson & Johnson, Bayer, Pharmed, Dr. Reddy’s, Kentam and Ortho McNeil Pharmaceuticals, with the majority of Ibuprofen consumers operating at a global level, or based in the U.S., or in India.
IBB is the major raw material for manufacturing Ibuprofen and accounts for around 25 percent of the raw material cost, with sodium dichromate accounting for 17 percent of costs and aluminum chloride accounting for 16 percent. Major players in the IBB market are Vinati Organics, IOL Chemicals and Pharmaceuticals, and SI Group.
Key Findings:
- The past two years have witnessed a price hike in the costs of sodium metal, IBB and Ibuprofen.
- Most of the MNC chemical groups increase their chemical prices once in 5-7 years, stating an increase in the cost of manufacturing and an increase in the price of raw material.
- Vinati Organics leads the raw material supply globally for IBB and is planning to invest in Isobutylacetophenone or IBAP, an advanced intermediate of Ibuprofen which could be used as an alternative to IBB by manufacturers.
- BASF is planning to expand its capacity for Ibuprofen at its Ludwigshafen, Germany and Texas U.S., sites with a total investment of $227.6 million, and the German plant is expected to be operational by 2021.
- Key suppliers of sodium metal are Inner Mongolia Lantai Industrial Co. Ltd, MSSA S.A.S and Nipon Soda, serving industries of agriculture, green energies, automotive and housing, textile and paper in addition to chemicals and pharmaceuticals.
- Prices of Ibuprofen in India tend to be higher per kg as compared to Ibuprofen China prices, based on previous year trends
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I tend to agree with you.Industry is likely to grow 22%CAGR till 2023-24.Summary from another report ,though little dated Global Market Outlook on Ibuprofen
- Ibuprofen prices have increased by 22 percent over the past one year * driven by the increase in raw material cost
- Prices for Isobutyl Benzene have increased by 11 percent
- Aluminium chloride** prices increased by 4 percent in 2016 after consistently declining for the past two years
- Sodium metal prices increased by 5 percent over the past one year
- Additionally SI group increased its Ibuprofen price by 40 percent (in June 2016), however such an increase is currently not reflected by the rest of the market**.
Total market for Ibuprofen is currently estimated to be about 43,000 MT in 2017 and growing at a CAGR of 2 percentShasun is the market leader with about 16 percent market share, whereas, IOLCP holds the maximum capacity of 7200 MT
- Average utilization for the top six players is currently about 90 percent with Granules operating at full capacity
- SI group and IOLCP have the lowest utilization rates among the top six players
- BASF and IOLCP are the only two players expanding capacity for Ibuprofen. BASF has announced capacity expansion for Ibuprofen at its Texas, US and Ludwigshafen, Germany sites which are expected to be operational by 2018 and 2021 whereas IOLCP has expanded its capacity to 7200 in 2017, from 6200 in 2015
- Vinati Organics leads the raw material (Isobutyl Benzene-IBB) supply globally, and is planning to increase its capacity to 25000 MT
- •Additionally, Vinati also plans to invest in new capacity for Isobutylacetophenone -IBAP (advance intermediate of Ibuprofen) which could be used as an alternate to sourcing IBB by Ibuprofen manufacturers
Ibuprofen - Industry Utilization and Capacity Expansions
- Average utilization for the top six players is currently about 90 percent
- Granules Biocause is currently operating at full capacity, however does not have any planned capacity expansions until 2018
- SI group and IOLCP have the lowest utilization rates among the top six players
- BASF is planning to expand its capacity for Ibuprofen at its Ludwigshafen, Germany and Texas, US sites with a total investment of USD 227.6 million
- German plant is expected to be operational by 2021 , while the US plant is expected to be operational by 2018
- IOLCP has increased its Ibuprofen capacity (India) to 7200 MT in 2017 from 6200 MT in 2015
- Granules’ current and estimated capacity for 2018 is 4800 MT
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