This special situation looks interesting and there seems to be many positives going for it despite obvious negatives due to which stock seems to be languishing in a range for quite sometime now. The proposed spin-off may help it unlock the potential value.
Is record date for the de-merger announced? If not, any indication from the mgmt when it’s likely to be announced?
Disc: Accumulating
key concerns for me -
The management seems to have clear plan for ramp-up of products though due to these concerns I am not clear about future prospects.
Disc. - Invested
Reply from Company Secretary -
Unit No.5 from Omkar Speciality Chemicals Ltd. has now been transferred to Lasa Supergenerics Ltd post demerger.
Lasa has concrete plans to make human APIs/Veterinary APIs at this plant. Minor modifications in the plant are required to make it suitable for FDA requirements and compliance of regulatory matters. The same is in the progress and the plant is expected to go on stream during Current Financial Year.
In addition to Unit NO.5, Lasa has got enough manufacturing capacities at Urdhwa Chemical Company Pvt. Ltd. (which are also merged in Lasa) and Lasa’s own facilities at Mahad. In other words, Lasa will not face any capacity constraints for its growth
Reply received from the company
This refers to your list of queries vide your mail dated 23rd May 2017. We would like to address it as under:
The promoter holding is 40.09%.Percentage of promoter shareholding currently pledged is 9.91%.Your comment on the freight charges appears to be pertaining to previous FY2015-16. The freight charges may vary regularly depending upon following factors:(i) Origin to destination.
(ii) Freight incurred on handling of material to and fro job workers.
(iii) Domestic freight and international freight (comprising of sea shipment and air shipment). Hence we cannot directly co-relate the amount of freight charges with volume and/or value of the goods sold.
Query regarding consumption of raw-material: we believe that, this question was addressed during our concall. You are requested to refer to the concall transcript.Unit No.5 status: Unit No.5 from Omkar Speciality Chemicals Ltd. has now been transferred to Lasa Supergenerics Ltd post demerger.Lasa has concrete plans to make human APIs/Veterinary APIs at this plant. Minor modifications in the plant are required to make it suitable for FDA requirements and compliance of regulatory matters. The same is in the progress and the plant is expected to go on stream during Current Financial Year.
In addition to Unit No.5, Lasa has got enough manufacturing capacities at Urdhwa Chemical Company Pvt. Ltd. (which are also merged in Lasa) and Lasa’s own facilities at Mahad. In other words, Lasa will not face any capacity constraints for its growth.
Ours is a Company engaged in manufacture of Speciality Chemicals and not Commodity Chemicals. In manufacturing of commodity chemicals such as Refinery products, petrochemicals, salt, soda ash, caustic soda, cement, etc. the plant capacities are dedicated to manufacturing of a single product and there is no variation in terms of a production capacity once the facility is installed. However, in case of speciality chemicals, the facilities are multi-purpose and a number of products can be manufactured in the same capacity on alternate basis. Since the manufacturing process and the number of steps involved in the manufacturing are different for different products, the resultant output from a given capacity also varies according to the product mix manufactured, during a particular period. Hence the volumetric capacity (the aggregate volume of all the reactors combine together) remains the same but the output quantity may vary depending on the product mix.The promoters have sold stake in the recent past for reducing high cost debt. This is currently invested in the company as unsecured interest free loan. The Board will take appropriate view on conversion of this debt into Equity after compliance of all the necessary statutory requirements.Status on Working Capital: This issue was also addressed during the concall. Kindly refer to the transcript.The capacity: As explained during the concall, the Company has already resorted to get some of the products manufactured from dedicated job workers. So currently company does not face any capacity constraints.
Thanks & Best Regards,
Sunny Pagare
Conversion of debt to equity through what means? Is the unsecured loan in the form sub-ordinate debt convertible to equity? Does it sound like Equity dilution for minority shareholders?
Discl. Tracking
Either by warrant issue or by conversion, dilution was almost certain. Now we need to monitor the conversion or issue price and “after compliance of all the necessary statutory requirements”. Whether they comply in spirit or by letter and minority shareholders are treated fairly or not needs to be seen
Disc: invested
the conference tomorrow, in my view , is being held to announce the listing schedule of LASA supergenerics and also to clear the misgivings of the analysts/investors about the details of the demerger.
Record date - 13th Jun
What’s basis for these assumptions?
Could you please detail the same potentials here as you see them and help the market and the community realize them? It would be of immense help if you have already figured them out and save tons of efforts of many.
Thanks,
Aksh
If warrants are certain, I would be cautious to invest in such promoters. Regarding Share sell they have multiple times lied on concalls before as well. Clearly if promoters want additional shares, can well buy from the open markets than issuing warrants.
Discl. Tracking
If you go thru the quarterly results , you will find that the consolidated profits are almost double the standalone profits. Thus we can safely assume an eps of 10 for LASA when standalone Omkar is earning 15 per share. Moreover as LASA is growing at a very fast pace, so it warrants a pe ratio of 15. Omkar alone might be discounted by 10 times, so we have a total of 300 for both and not 350. That was an error in my original message.Both Speciality chemicals and Veterinary API are high growth industries. The demerger will enable eaach company to realize its true potential. Standalone Omkar is moving up the value chain as indicated in the latest concall, so we can hope for a rerating by the market, based on better numbers.
What is the time and venue of the centrum corporate connect conference today ?
So they still have 8.55% promoter shares pledged. What happens to them after demerger if they are not able to de-pledge them by then?
The NBFCs sell Omkar shares in the market immediately since it will take some time to list Lasa and in the meantime Omkar share price would have adjusted. Or do the promoters infuse further capital / pledge even further to maintain their loan amount value to share.
I recall in some past conference call this was the rationale given and that is why they had committed to 100% de-pledging before demerger.
Can someone clarify this from the management.
While your concern is genuine, here is my view. Most scrips nowadays are listed within 2-3 days after allotment. I hope OSCL promoters complete all the formalities by 13th of June, so that LASA is listed within 2-3 days after that or simultaneously, so that the pledged shares do not cause any problems. As LASA was incorporated in 2015 itself , so I hope this will not be a problem. Moreover, the banks/fis with whom the OSCL shares are pledged will also receive the LASA shares, so it will be a matter of just 2 daya to a week.
“The unaudited provisional figures for year ended 31st March 2017
show a topline, that is sales of around 200 crores, up from around 136 crores during previous
financial year and EBITDA works out to around 22%”
So can we safely assume profit to be around 10-14 cr range for LASA
" We are also in the process of completing the procedures for listing
the shares of Lasa Supergenerics Limited. The same is expected to be get listed before end of
June 2017"
Wait is finally going to get over
Has anyone tried to evaluate Omkar and Lasa? There might be lot of volatility on the record date just like in the case of Sintex. How can we take advantage of such volatility?
Can you please write details about the sintex demerger and the kind of volatility that was seen ?
Again mr.omkar has pledged his shares.
