Omkar Speciality Chemicals Ltd -- OSCL

Things are always not what they appear to be.

Let’s take a step back and do some math:

The positive value of 1,423 is basically a high cost iodine inventory getting written off due to the lower current iodine prices i.e. they aren’t able to pass costs back to customer. They key here, however is to note the gross margin improvement (how? - less focus on core chem biz and more focus on higher margin Lasa as can be seen in standalone vs. consol financials)

Next, on EPS:

How did you guys factor in the depreciation amounts that have gone up? See calcs below:

Variant perception gives very different view / thoughts / opinions :slight_smile: The reason I feel the 303 above is kind of true is because around 200 comes from the standalone statements. This can only mean good news – they are slowly starting production (or atleast starting to expense it :wink: ) at their new facilities.

Your views invited here.

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“You should invest in a business that even a fool can run, because someday a fool will.”

@Akhil_7306 easier said than done, its in hindsight we can tell this, and the companies which a fool can run is trading at very high PE’s so its not that easy to actually do this!

True and this is not an easy business to run.

After going through this thread I believe it could be a great investment opportunity based on the theme of capacity expansion and de merger. It would be helpful if someone can clarify few basic questions.

  1. Why Company is having difficulties in getting a loan from banks if overall business model is robust ? There must be some basic issue with the company. I noticed that working capital cycle has improved over the years. Ideally, it should help them to get a loan.

  2. Promoter’s stake sell just to release pledge is a too good to be true scenario, especially from promoters who do not value their own words.

@Saran :
They have expanded the capacities in various ‘existing’ plants. If you read this thread above you should find the plant wise details posted few moths ago. Those expanded capacities of (mainly) Chem business are now commissioned and being used so that is why that depreciation is kicked in the books.
But the Chiplun plant for Lasa (5000 MT capacity?) is NOT yet commissioned. When that happens you should see that depreciation going in the books of Lasa. But per my knowledge it is not yet commissioned. The production is happening from one of their expanded plant. They have shifted all their equipment in that plant. If that Lasa plant is not commissioned in next one year then they may run out of capacity for Lasa.

@Priyank:
From one of the knowledgeable source I get that somewhat dented promoter perception in the market and liquidity constraints are two reasons. Also leverage ratio is some what on a higher side in the recent past. Their cost of debt is also high due to these facts.

So finally we can expext depledging to get completed by 1st week of march.

Disclosure: Invested and planning to add more

9M FY17 Earnings presentation

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/3196C665_E708_4F4A_B000_709202DEF76A_151830.pdf

Announcement on demerger and concall 1st week of March

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They are clever to defer the concall to March, clubbing it with the hopefully good news of demerger permission, knowing very well that investors are going to grill them about their false promise of maintaining majority promoter shareholding now. So next few days we should expect more stake sale so that they can depledge entirely?

disc - invested

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IAny particular reason why they haven’t started producing in Lasa yet ? (considering its huge capacity + investment). Believe they have all the clearances they need.

Girish ji , it seems harsh for an owner to sell out at cheap valuations (if they believe they actually have value that is). Is this an example of forced selling ?

  1. You will find the reasons in the thread above.
  2. The reason for selling- The need to depledge before demerger. That means paying back those loans. The owners have no other income or assets other than this company. And they are finding it difficult to get loans from banks even with whom they have long business relationships- BOB and Axis. Only NBFCs are willing to lend short term at 16-18%. All that has forced them to sell their shares to raise funds. I am told they are trying soft loans against overseas/MNC receivables etc. Not sure about chances of success. So severe liquidity crunch has forced them to sell.
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With NCLT decision due on 2nd march, we can expect depledging to be completed soon.

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its all what a management is about . Well the liquidity crunch is a serious issue but if management can turn the tide I feel this counter can see good days ahead. I have a personal opinion is that the management were over ambitious and daring with come what may during the last few years which has resulted in the situation which the company is right now . How honest are the management in creating value for the investors is something which time will tell in the near future with the spin off and how the assets and stuff get distributed . I have a friend of mine from Badlapur and he knew the company as its the only big listed companies based from there . This give me a relief that people do know about such a company in existence in their neighbourhood. I have been shy of the counter due to the eroding promoter stake but if the future starts becoming brighter i wont mind plunging into this script

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Petition in newspaper for demerger notice

Source link
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/D4372C08_00D6_447C_8D82_17FA520BA563_151952.pdf

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Doesn’t Omkar need clearance from creditors and shareholders before the hearing from the court? Or was that already completed? I am not seeing any notices to that effect on BSE.

If anyone has some insight then please clarify.

Thanks,
Prit

Approval from shareholders have already been taken. (https://www.omkarchemicals.com/cs%20pdf/Voting-Results-for-the-Court-Convened-Meeting-of-Equity-Shareholders.pdf) Creditors also had given in-principle approval as was said in one of the concalls thought I am not sure when they received formal approval.

https://in117844069.fm.alibaba.com/productgrouplist-102890867/Cobalt_Derivatives.html

Got these products on Ali Baba… Is there a way to find out at what price they are selling it?

Are we expecting full de pledging disclosure today

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Definitely waiting for the NCLT case hearing outcome though

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