Meghmani Organics Ltd

(duranvskp) #234

meghmani q2 results:

(James Sebastian) #235

Whats your view on the results ? Not actively tracking, b ut looking as it came on my screener.

(puneetc) #236

Results looked good at a broader level. Why then market seems so despondent about this company?

(TheRishiK) #237

Revenue declined for basic chemicals, which is supposed to be the key growth area… that seems to be the concern!

(puneetc) #238

Are you referring to the QoQ figures? Coz I see that YoY it has shown growth.
Also wanted to understand if cyclicality plays any role here or not.

(Bharat) #239

Kindly go through the Annual Report and read and learn about the business. Read Credit reports too. That may help.

(manivannan.g) #240

“Probably” due to this ?

(Raj A A) #241

Looks like that. Stock crashed after conf call.Bad corporate governance? Lesson to other managements that any kind of misgovernance will be to their own peril at the cost of market cap.

(Virendra) #242

How did they get away with this? if the company has bought stake, won’t it be a part of Investments? How is it that its gone to promoters? Anyone care to explain?

(Rushikesh Kanthamani) #243

Nice explanation given by a CA…must watch

(Nolan) #245

There seems a wrongdoing on part of management. They are trying to use shareholder’s money to increase their personal stake in Finechem.

(Susindar) #246

The structure looks very funny. So Meghmani organics in effect pays for the 25% and giving it free to Promoters. For that it will receive 211 crores extra from Meghmani Finechem where it owns 83% anyways. That is 83% of the money paid back is its own money. The promoters in effect increased their stake from 17% to 43% by paying 17% of 211 crores ie 35 crores for which Meghmani Organics paid 221 crores! Such thieves!! Selling it right away.

(Manohar T. Patil) #247

On top of this, these thieves have courage to come to television and say that they have got the legal opinion on such arrangement. Clearly, the laws needs to be strengthened by SEBI and Govt.

(ASG) #248

I am stunned by the management’s utter disregard for minority shareholders

(Bharat) #249

It is still beyond my understanding that what exactly the promoters has done.
Who would pay the 221 Cr loan amount back to the MOL. If this money will be paid back by MFL , then the promoters having 43% stake in MFL would be at loss as shareholders of MFL will have liability of only around 57% of said loan.
Now the 211 Cr money which Mr. Soparkar said will be given by MFL to MOL in subsequent years after amalgamation, is it like that the total amount which the promoters should have had paid for 25% stake in MFL (211 Cr) , they will only pay 43% of it now and rest 57% will be paid by Shareholders of MOL where again promoters have 47% stake. So overall promoters will pay (43% + 47% of 57% = 70%. and rest 30% would be paid by Shareholders. In that way , promoter acquired 25% stake in MFL at 70% of the amount only.
The real question is who will fund the 221 Cr loan !
Very confusing…can someone explain in laymen

(Susindar) #250

This exit to IFL was already provided by Meghmani organics for Rs221cr in April 2018. Ie it purchases 25% from IFL using a wholly owned subsidiary. There is no issues till here. After this Meghmani organics holds 83% in the company.

So what is going to happen is Meghmani finechem will repay 221cr back to Meghmani organics (in effect this means 83% of this money belongs to Meghmani organics anyways) for Meghmani Organis to transfer this shareholding to promoters after which promoters will own 43%. There is also some amount of 211cr which will (most probably not with such Corp governance) be paid in next 10 years by Meghmani Finechem again where Meghmani organics should rightly own 83% and 83% of this amount will be its own. So the consideration promoters will pay is something like 35cr now and 35cr in 10 years to buy 25% stake worth 221crs in April 2018. This definitely ranks somewhere along Satyam. Daytime robbery. The reason given is sillier that Meghmani organics don’t want to own basic chemicals so that it throws it stake away!

(Bharat) #251

You mean to say that the Promoters as of now has bought the 25% stake in MFL by paying only 17% of this 221 Cr and rest is to be paid by MOL shareholders (83%) and in this way , the MOL will get the money back. As a result of this , the promoters have bought this 25% stake at just (17% + 47% of 83%) which is around 56%. That means they bought that stake from MOL at 46% discount to the actual value (100-56%) or we can say the minority shareholders suffered a loss of 46%. That means promoters have to pay only 120 Cr out of 221 for getting that 25% stake and 100 Cr is the loss to Minority shareholders.

Now coming to the 211 Cr part which they said that MOL will get in subsequent years. So in that consideration , the promoters have now 43% holding in MFL and 57% is by MOL. If they pay that 211 Cr , promoters would have to pay (43% + 47% of 57%) which is around 70% and rest 30% of it will be again paid by minority shareholders. 70% of 211 Cr is around 147 Cr which promoters will pay to MOL and 64 Cr will again be bear by the MOL Minority shareholders.

If we combine both the cases , the Promoters overall paid Rs 120 Cr + 147 Cr = 267 Cr and the Minority shareholders will bear 164 Cr.
Overall the promoters increased their holding in MFL by 25% at the cost of only 103 Cr (267 Cr - 164Cr).
Is that right !

(Janme) #252

From the hindsight, this looks like a reason for resignation of independent directors.

(Mayank Narula) #254

Correct me if I am wrong here. Is he assuming that after conversion of OCRPG, MACL shall be 100% WOS of Meghmani Organics and 81% holding of Finechem is going to converge into meghmani organics?

That’s not gonna happen, otherwise there was no need to create MACL at all. MOL could have infused money directly into Finechem.

In all probability, it looks like that they have taken money from a public company and transfer ownership from IFC to MACL, which is controlled by promoters.

Not holding.

(Rushikesh Kanthamani) #255

Yes u r right, they will take 43% stake of MFL, now its looking almost evident as they said on cnbc interview so no doubt about it now.

I am looking into this with a different prospective though. When I bought megh then I have never accounted for the 25% stake in the first place which is the point of concern here. The IFC stake was a bonus in this story(and on the announcement date too stock didnot shoot up a lot or so but now it has over-reacted in a downfall and I am assuming it might not stop at 60 and I will not be surprised if we see 50lvls too), hence no regrets for me. On the company level its working as it should. The only Problem Now I have is that management should have been loyal to the shareholders, they have kept their interest above the company and its shareholders. So according to me short term pain will be for sure but in longterm I dont see a big problem as far the performance is concerned. And I might add more at 50lvls only if it comes

Disc- Invested