Uniply - Bet on new mgmt. bringing scale, brand & operating efficiency + GST


#150

Circular trading cited for Uniply in this article. Seems like a cause of concern in case the referred transactions were undertaken post management change. The article mentions that the charge sheet was filed in Aug,2017.

Is there any way to understand connection of mentioned director Jagmohan Kejriwal with Uniply?


(Ashish Rampuria) #151

Case of concern here. Can somebody check with the management of Uniply? I have send them an email on the generic id - [email protected]


(karan) #152

Ashish…spoke to CS who has been with the company prior to new mgmt…this case pertains to old mgmt Bengani when the company was under him and he is has dealing with the matter for sometime …new mgnt or Keshav have no such dealing and this does not impact them or Uniply at all…

Further on affordable housing project, it is not involving working capital since all the materials are directly being supplied by the agency and the agency is also directly paying for all the materials…hence this makes it low wc intensive model for Uniply. Doors and other stuff which vector and uniply decor makes is being used for this project which helps uniply’s bottomline . Further, in the agm they have talked about getting into kitchen solution space as well.all this being done to increase residential footprint of uniply as corporate footprint is already strong via vector acquisition.


(gardner) #153

hi. thanks for info!

could you kindly clarify, what does it mean to say, " . . . all the materials are directly being supplied by the agency and the agency is also directly paying for all the materials. . . "??? whats an agency here? is it that the construction project is awarded to someone else who in turn arranges only materials, and Uniply only executes it’s on the labour rate / job work basis!??. . . if it’s so it would be a very wired thing to be in!! am confused! :roll_eyes:


(karan) #154

Since this is affordable housing project, there is a govt agency which is involved- here it is GHMC - greater hyderabad municipal corporation - . they are directly ordering for cement, sand, water etc and paying for it directly…Uniply apart from executing the work in this project, uniply is responsible for interior fit out…


(ramdhawad) #155

While I am still waiting for feedback from CS and their investor relationship team, belive what @karanuberoi2000 is mentioning above clarify’s most of the doubts. Essentially what they are doing is a project management kind of a job where the only capex required is the in-house site manager/ architects, which they already have on board thereby utilizing them up to max potential. It’s low cost high margin scenarios and thus different than a RE company who need not have land bank, block working capital and get in to all the tussle of various clearances from diff regulatory bodies. Everything is provided for and they only execute the projects. As mentioned in AR, this is too small a job to attract large players like L&t or Dilip Buildcon etc and too big a job for small players to get qualified as approved vendor from PWC, thereby creating a although small but Moat around them.
In a worst case scenario, if they don’t get enough orders in this segment what are the loosing ?? Nothing except some extra manpower on bench.


(karan) #156

that is correct ramdhavad…further i have seen uniply investing in brand building as well…they had set up a kiosk this weekend at phoenix mall in chennai…

I think Keshav is building a unique company having made investment in with respect to ppl/ capacity…and synergies and operating benefits will flow through

recently he converted his warrants at 82 rs … increased stake from open mkt as well…


(gardner) #157

yet some more insider share trading (a sale of 15.50 Lac equity shares, representing about 0.94% of equity), between uniply and one of promoter lead holding company. uniply 06.11.2018.pdf (158.9 KB)


(srikanth.palugulla) #158

It is still not clear & contradicting whether they are only providing service job or Site- management/Architectural work for the Civil Work. (Why are we concerned about this, as this segment will form the core of the company going forward).

  • As mentioned in Pg. 29 of AR, Company itself is stating they are using state of the art technologies like pre-cast products in the affordable housing segment.

  • If they are only doing service job, why is it mentioned that “They source building materials from the local un-organised players, making this business asset light”

  • if they are doing service job, why would there be a working capital requirement unless for raw-material procurement and funding the debtor cycle. Below is the excerpt from the AR

“We maintained our working capital requirements at around 16-20% of the project value”,
which is around 70 - 85 cr (assuming order book is 636 cr with average project period of 18 months). Additionally they have spent 10 cr towards capex

What I feel and I can be completely wrong

Company is too excited to show off that they have the capability to take up the civil works & they have taken multiple projects in civil construction, with negligible experience in this segment.

Key questions remain.
a) Can the company deliver or it has bitten too much to chew

Q1FY19 result shows company has achieved construction revenue of ~70 cr and expects to complete the projects in hand in next 12 - 15 months (~ 90% of the project value). Considering the forth coming elections of Govt of Telangana, the above timelines look too optimistic.

b) What is different with Uniply as compared to any other construction company in affordable housing segment??. The margins from this segment is not extra-ordinary, if not every construction player would have bid for the project. Further, the receivables from the Govt. are always delayed and doubtful

with the above unanswered questions. we see the below, what should we infer from this, why would the promoters and other shareholders convert their warrants @ 82/share (premium of 60% as on 9th Oct)

The above excerpts of the segment wise breakups have been taken from the below research report, for your reference.
http://backoffice.phillipcapital.in/Backoffice/Researchfiles/PC_-Uniply_Q1FY19_Results-Aug_2018-_new_20180816201431.pdf

Disc: Invested, but confused with no clear direction.
May be have to go wtih Mohnish pabrai’s suggestion. Investment should be a no-brainer otherwise give it a pass


(ramdhawad) #159

The nos are disappointing. Half year consolidated revenue is approx 250 cr and the entire year projection was about 1200 cr. Wonder how they are going to keep the target, although I do recall reading somewhere in AR where the mentioned that some of the construction orders could get pushed to second half.
While on YOY basis the nos looks good but it’s concerning on QOQ basis and when we compare it with the annual projections. Still counting on the entrepreneurial spirit of the man Keshav is and belive he will go to any extent to increase productivity and efficiency and go wher there is the most bang for his buck. The segment was profit break up shows the new area of construction has very high margins compared to plywood and other related business.


(aerofire) #160

Uniply Industries has decided to defer the scheme of amalgmation of its whollyowned subsidiary Vector Projects (I) Pvt. Ltd. by 12 months. Taking into consideration the ongoing and upcoming projects with large multinationals, and the challenges with regard to paperwork on vendor prequalification criteria, the board has decided to defer the scheme of amalgamation by 12 months, the firm said.

https://www.pressreader.com/india/the-hindu/20181118/403658212121094


(gardner) #161

. . . now the scheme of amalgamation with Vector projects is called off!! don’t know how to evaluate this; can anyone throw some light on the implications?

. . anyways, there’s too much activity in this scrip; the promoter after commendable success in turning around seems to be now carried away and using all tools (seemingly, from his investment banking background) to create a perception of high growth company and performance matrix: . . . stock split, constantly changing promoter holding with share sale & purchase, share pledges; mergers and calling offs, warrants, affordable housing and pure constructions business, tall announcements etc etc . . what does one focus on?? . . . its too much to evaluate and digest. . .

Disclaimer: was keenly tracking, now am growing jittery. may abandon following on this scrip


(David ) #162

The only thing which keeps me tracking uniply is malabar fund. what he has seen which i am not able to see. This will be a good learning experience for us.


(Amitdarji) #163

Another selling from promoter side.


(karan) #164

Guys there is no promoter selling…its all being done between promoter entities or pac for tax planning…caishen enterprise is also PAC …

So the promoter has actually increased his stake in early Oct via share converted at Rs 82 and all transaction post that is only for tax planning purpose between promoter entities


(Amitdarji) #165

Sir can you tell in detail pls.
what is Total promoter holding after convert the warrant @82?


(karan) #166

Approx 28 percent including Caishen stake…


(karan) #167

It was 24 percent as of Sept …which has increased to 28 percent via warrant conversion at 82 and also open mkt purchase by promoter…