Lasa Supergenerics Limited


(paresh.sarjani1) #435

Any comments viess on results?

Increase in cost of materials is huge it’s almost 90% of (Sales - Change in Inventories).

In previous quarter it’s 70% of same.

Any idea crude rise effect is such huge ?


(ragsingh0305) #436

crude is one of they key reaosn of RM cost shooting up…They have thier investor call tommorow at 12 noon.

It some1 attend, please write a summary of the con call.


(b_tyagi) #437

Company needs a minimum of 23% EBIDTA margin to break even. Lower than that, it will be in loss. This can happen only if raw material price increase is fully passed on to the customers, and top line also increases. I do not know what are the chances of that happening soon.


(ragsingh0305) #439

any one attended today’s conference call?


(paresh.sarjani1) #440

Yes I attended.it was rubbish conference call. The way Dr Omkar was replying to questions, he seemed less interested in comforting investors.

As per him,
Raw material prices have gone up by 200-300% for them and so this has affected gross margins.
He was not much hopeful for next two quarters and said it would be stable quarters not expecting much growth.
He didn’t even gave guarantee about profits in next two quarters owing to uncertainty in their raw materials.

He said it’s turbulent times for business and so even rights issue has been referred by 2-3 months may be owing to bad market mood.

One sincere investor asked about the future of Lasa and plans on futur where he replied, give me two years of time and Lasa story would be self explanatory.

Someone asked about increase in additional expenses and he was not able to justify. Saying last year it was 12 this year it’s 18 crore not much difference…I mean this is not a proper reply…

He was very blunt in replying.

Disclosure: I am holding LASA since long. Not yet decided to sell.


(paresh.sarjani1) #441

Some figures people might be interested in

Debt is only 90 crores to Bank and 30 his personal which is interest free

Company has posted quarterly loss first time since inception and Dr omkar was ready to provide all purchase orders along with raw material names whose prices have spiked up 200-300%.

After 11 lakh share transfer…Dr Omkar would own 36% of stake none of which is pledged I think*

10% sales will be used in capex this year

Increase in Prices can be passed on to customers with some time delay. According to Dr Omkar, raw material price increase…worst is over… can’t worsen more

Increase in promoter stake can be thought only after company has enough cash to take care of it’s operations.


(ragsingh0305) #442

Given the current valuation of the business and peaking out of crude oil prices…the downfall in the stock could be limited…usually in most of the business the company’s are able to pass on the increased input costs… especially companies like this which has niche presence…anyways thanks for the inputs


(vishwa7000) #443

This kind of thesis will apply for companies with good corporate governance track record. Companies like lasa, omkar, vakrangi, manpasand, PC jeweler are slaughtered basically due to questionable corporate governance and nothing can be assumed or extrapolated in such cases IMHO.

Disclosure: Last forms minute less than 0.25% portfolio.


(ragsingh0305) #444

Issues with Lasa is more operational in nature than corporate governance. We should not paint every1 with the same brush. I believe these operational challenges can be resolved given reasonably sound business fundamental. One or two quarter of setback in growth is too short period to judge its under-performance. The company in the recent past has grown at a CAGR of 25%-30%.
I don’t think promoters are dishonest people. Omkar specialty fall was due to high working capital and debt levels. Demerger was the right step to carve out and save a growing and healthy company. Lasa has been quite conservative in terms of leveraging its balance sheet (90 cr of debt on a normalized level of 48 cr of EBITDA). The promoters have paid debt from their personal funds. I am still betting on this company to turnaround from hereon.


(vishwa7000) #445

Thanks for enlightenment, what you said is one way of looking at it and bodes well with the promoters with unquestionable integrity. Huge inventory write off to the tune of 60 crores at convenient time by Omakr, plant and equipment write off to the tune of 100 crores during demerger by Lasa/ Omkar, then Omkar defaulting conveniently to face NCLT , changing auditor conveniently by Lasa, so many things happening together cannot be coincidence with lasa / Omkar. IMHO, Promoters are much -much smarter than gullible investors and taking them for ride every now and then. IMHO, Earlier growth by Lasa is just a dressed up figure carved out from Omkar and placed in Lasa to lure the investor, not even single quarter they could sustain the similar growth after demerger.


(devinmori) #446

Earning call transcript for people who have not the join call like me :slight_smile:

Earning call transcript


(maheshkumar) #447

Key highlights

Cons

  1. bottom line impacted due to high crude price
  2. crude prices need to come down else there will be ongoing loss
  3. likely difficultl period till 2019

Optimistic about Very bright future ahead as per management

Pros
1)In antihelminthic agents only competition is from sequent
2) significant backward integration
3) if crude price remains high then possibility of passing on the price


(parthibansubramanian) #448

Oil price is no way coming down for next several years… so does it mean that they will never be profitable in near future?


(maheshkumar) #449

Then the prices of API will increase and then the manufacturer will increase their product price
So customs will pay extra
All businesses are like that ,if there is sustained rise in crude price or any other commodity then the end product gets expensive

I think there is good scope to grow as there is ongoing demand with limited number of players
Only question is about the integrity of management
Management was very open and invited any one to see the books,that’s I think is positive


(ashutosh_shah) #450

Omkar should have heged the oil prices if his business is so dependent on oil. In no way he can pass over the increased price to customers.


(vishwa7000) #451

Exactly, it is nothing more than commodity chemical business, although painted as speciality, supergen etc. No pricing /bargaining power despite having no competition. huge huge CG issue on top of that. They only want more and more money by right issues and banks, do the capex, show increase sales on the books, show more ebidta, with no little profit and then take one time inventory / plant -equipment P&L write offs in future. IMHO, This is the business model of Omkar/ Lasa.


(paresh.sarjani1) #452

@vishwa7000
I understand that you may be frustrated with the write off of 30-40 crore in Omkar.

Interesting thing is that when I searched Google for the top three products which Dr Omkar mentioned in concall…they do have a visibility …I was easily able to find Lasa as one of the top producers of albendazole…fenbendazole…ornidazole…

As a investor I feel…we should try to have visit in the lasa unit to check authencity of numbers…

I believe it’s good company having bad time somehow and patience will be tested…

Even sequent Scientific posted operational losses in some subsidiaries…so it’s easy to assume that both these are into similar problems…


(sta) #453

Mr omkar has taken his total holding to above 36 percent as promised in con call. Turning out to be a hell of roller coaster ride. Does anybody know how we can track the raw material price.the raw material are Bromine, hydrazine hydrate , thiophenol, ortho nitroaniline, dichlorophenol


(ragsingh0305) #454

will total promoter stake be now at 42.5%…??.apart from 36% of Omkar, there is one ‘other’ category in promoter holding 5%+


(khinger) #455

No, that shall be changed to non-promoter. It got approved in April so end of Q1 he will keep on holding 36% as he had promised in con-call initially.

Regards,
Kshitij