Omkar Speciality Chemicals Ltd -- OSCL

(Akhil) #819

Why to you think that demerger happened because of family dispute? I was under the impression that value unlocking was the main reason.

It’s true that the management hasn’t performed. Many times promises were broken. They should have been more upfront about share selling from the very beginning. But, at the same time, it seems they have learned from these mistakes. They have been successful in bringing down working capital cycle to good levels. They have learned the importance of manufacturing value added products rather than mere commodities.

They have also learned the risks of keeping a high amount of debt on balance sheet. Hence the rights issue. In future, they might be more prudent in terms of taking debt.

Can you elaborate more on this informal discussion? Is this info directly coming from the management? Because I was told by the CFO that this pledging was done for meeting the working capital needs of Lasa.

(nkgambhir) #820

In the concall Mr Herlekar had indicated that the company had taken a one time hit of about 95crores. OSCL has taken a hit of 63 crores. LASA has taken a itof 30.5 crores. The total hit is 93.5 crores.

(Manish Vachhani) #828

There seems to be a one way discussion with no value being added. I have found nkgambhir repeatedly posting on this thread only. It looks suspicious.

(Donald Francis) #829

A post was split to a new topic: How to help Moderators CONTAIN deviant-suspicious activity of posters

(Akhil) #830

(saumilshah) #831

What is the current promoter stake in company?
As per my calculation it is about 40%…then why on this et now interview its mentioned 30%?
Have they sold more stake?

(nkgambhir) #833

You are right. As per their earlier disclosures, it is 40 %. Either Mr. Pravin is making a mistake or they have sold more stake. But, there has been no announcement about selling.

(csteja) #834

When is LASA expected to be listed ? Any guesses on the price.

Should n’t it be (40.2+90)/2 + 10 = 75.1 ?

(Mohammed Rehan) #835

How much wud be the equity dilution because of the rights issue?

(nkgambhir) #836

You are right. That was a mistake. Thank you for corecting me.In fact it should be (40.2+100)/2 = 70.1 .
What do you think ?

(csteja) #837

Yes, 70.1 if you mean 10 BV before dilution . I just assumed OSCL adds 10 BV(after dilution) in FY18 as mentioned by you for calculation purpose. Not knowledged on business prospects of chemical business and subsequent projections as I started following OSCL recently.

(nkgambhir) #838

Promoters shareholding :

Pravin Herlekar ( Father ) : 10.21 %

Omkar Herlekar ( son) : 25.51 %

Rishikesh Herlekar ( son) : 2.51 %

Svaks Biotech : 1.85 %

Pledged shares :

Pravin Herlekar : 8.55 % of total equity capital.

Omkar Herlekar : 3.78 % ot toal equity capital.

Now these are disclosures from the company dated 6th June.

(Donald Francis) #839

Reproducing earlier caution to @nkgambhir on too-frequent non value-additive posting on only one thread.
Subsequently member has disclosed some details about staying close to Delhi. Accordingly he has been asked to get in touch with VP Member @aveekmitra face-to-face for an evaluation of “intent” behind one-sided aggression on counter.

Newbies please do note @nkgambhir account activity is under watch, till he complies with request for face-to-face interaction with VP Members

Dear @nkgambhir,

Several requests from Moderators to you, have been ignored.
Your user activity ONLY on this one thread - OSCL - is now flagged by system also as “deviant behaviour & suspicious”.

As requested , please provide more identity details, city, profession, and put up a photo.

Continued failure to respond to Moderator requests (while continuing to post) has left us with no option but to CAUTION everyone PUBLICLY about this profile. Newbie users may please treat such deviant behaviour with due caution.

Failure to respond, and/or carry out some of the requested changes may lead to suspension of account.


I find it bizarre too that this thread has always stayed at the top 5-10 discussions for more than a month now on any given hour and yet has hardly contributed to discussion on the company’s fundamentals. For example, I know that a certain Mr. Harlekar is the promoter but I haven’t gathered what products, what segments the company operates in and what has contributed to the revenue so far and what are the margins and challenges and so on. All that has gone on here is about Lasa and Harlekar and price targets. From my short stint here on VP, this is the lowest quality thread I have come across here.

(Donald Francis) #841

@phreakv6 and Members - please flag up non value-additive posts. They CAN and should be deleted!

But this is no one person’s job!! Someone as dedicated as Manish Vachhani is spread too thin these days. If everyone pitches in - not only in OSCL but also other threads that ypu participate in and flag/notify users about non-value additive posts - the clean-up act can be done much much better.

A caveat: do allow for spontaneous reactions, and be watchful of our propensity to “judge” too fast and too harshly - give it a second thought before flagging. But of you detect repeated non-value-additive posts and questionable “intent” - be sure to flag up everywhere.

Usually 4-5 flags on a non value-additive post to such an user - can make all teh difference. The guy GETS the message very fast that VP is NOT the place for inane stuff.

(nkgambhir) #842

I have already responded to the message giving details about my profession, place of residence etc. I do not have a photograph to post at the moment. I am a normal investor and do not have any ulterior motives. I am a focused investor and do not invest in more than one or two scrips at a time, OSCL being one of them.

(Changu Mangu) #843

Dear @phreakv6 Here’s a basic primer. It’s a good question since so many things have changed in this company over the last few years.

OSCL (now de-merged) is a speciality chemical company predominantly born out of the business of Iodine and Selenium derivatives. It is slightly different from the regular speciality chemical companies on account of the fact that although they used to, they have now reduced much of their product portfolio in the commodity cycle products that generally impact chemical companies. They have been getting more and more into 6-8 higher level processed speciality chemicals to a point that they now do not even prefer making the base first step processed iodine but buying it to save time and effort by stepping aside from the first process of creating the named speciality chemical. This will also helpful in reducing the pressure on WC as their supplier of base Iodine is not going to be able to negotiate favorable terms from them and they will get time to complete the cycle of processing, supplying and getting paid from the customers before they pay their supplier and the customers of OSCL will surely pay, on account of them being well established businesses, but they pay at their leisure.
They have also applied for 14 or 15 patents (which as we all know means that only they can manufacture the exact product) and the granting of patent is just a formality which happens with time and they start manufacturing the product as soon as they apply for the patent.
Their main edge is that they first develop a product for the customer, then they patent it and then become the only supplier for that product to the customer. Most of their customers are pharma biggies. They are now also expanding their product portfolio to many other higher margin products (which last fy showed some traction as it is now around 10% of the turnover). It is incomparable to view the old OSCL with the new emerging OSCL because of their change in business strategy and of holding many IP’s.

They also till recently had a few subsidiary companies; the main one of which was Lasa Supergenerics which has now been renamed to Lasa Laboratories. The entire company and it’s subsidiaries have gone through a merger and demerger exercise to leave them with only two separately operating entities as mentioned above.

Lasa is a company they purchased for 6 crores in 2011 and has recently done 200 crores in revenues in fy 2016-2017.

Lasa is a manufacturer of Veterinary API’s. They are growing fast and are in a business with serious tailwinds both of which are good as the tailwinds are supportive of business coming to India and also the fact that Lasa is winning the orders shows the trust of the customers towards Lasa. In one conference call the promoters indicated that they might also get into Human API’s in the future.

On the issues which have caused this to become a very debated thread is actually just 2 things which have lead to many other things happening and they are the most discussed here instead of the business :slight_smile:

  1. The promoter pledged their shares ( and did not buy a ferrari; they gave the entire money to the company as an interest free loan)
  2. Inefficient management of WC and did long term CAPEX with short term funds.

My thought process was; both these issues have nothing to do with the growth prospects or the profitability of the business in general and since the market has beaten it down due to sentiment and not on fundamentals I liked the business.

I am sure some will argue that WC is a fundamental issue. I sat and thought long and hard and realized that whatever their WC issues may do or not do, it will not make the company bankrupt and neither will the promoter holding of percentage a or b have any actual impact on the “actual business” which is moving along just fine. They might just not have growth for some time if they want heal the financial issues and I was fine with that and we own a good business is visible from the margins it enjoys.

They have now announced a rights issue for OSCL the details of which are still to come out but I am watching it carefully. I have some people think that they are going to remove debt with the rights issue (which they might do to a certain extent) but that does not seem to be the only reason for the rights issue. They have also clearly said that they will be using some money from the rights issue to buy some more units or something along those lines to expand the business of OSCL. Now, that is contradictory to their earlier statement very recently that they are going to use contract manufacturing for further grow instead of CAPEX. Now whether they do greenfield or brownfield, it is immaterial. They have again it seems changed their mind about no more CAPEX. I am hoping they are prudent and reduce debt by at-least 80% and leave only 20% maximum on their books and it’s fine by me if they use the rest of the cash from the rights issue for expansion.

What do I like; they have a good business going through bad times (on the surface only). The real business is fine and available at a great discount.

I try to find things where the risk of loss is lesser and not so worried about the percentage of gain. This if one is a contrarian seems like it and I reserve the right to be wrong because it’s my money :slight_smile:
Hope this helps.

(sta) #844

hey guys i wanted to know what do you guys write that you guys get an answer from the investor relation. the management never answers my queries on mail. Thanks for help. there is too much confusion regarding pledge and unpledging and needed answers from the management. Thanks for the help.

(bkasal) #845

Not sure how much revenue company could generate from these patents? Their R&D spend is min. From annual report '16.

(Changu Mangu) #846

@bkasal Could you do a full comparison from 2011 to 2017. Just 2 years of R&D expense neither shows it is higher or lower and we cannot draw any conclusion from it.
If you could build a comprehensive report which has the data for the last 6 financial years of R&D for OSCL and add to it the information of the R&D spend of competitors in a similar Industry, include the number of people in the other R&D departments, patents filed by each and then present a report; that would be data worth studying for all of us to learn. Look forward to it. Best.