Hi @anand_paxonet The following three screen shots will put your question to rest.
According to this whitepaper from Vikas ecotech Organotin stabilizers or Methyl Tin Mercaptide are tin based stabilizers.
The website of Shital says its product Shitastab Mts 120 is Methyl tin Mercaptide.
Analyst at BoB says Vel is the only manufacturer of Organotis.
We may call up the analyst and try to get her/his point of view on this.
Gaurav,
Thanks for this. I am also investigating on similar grounds. When searching for Organotin MTM, only VEL name pops up while Tin Organotin throws up diverse names. I am not an expert in understanding subtle differences between products and hence confused.
When i spoke to Vikas folks, they repeatedly mentioned something like, manufacturing of some of these in India is difficult and they acquired Knowledge from across the globe. So the open questions for me would be:
Again high volume of 79 lac on NSE and 62 lac on BSE. Saw bidders with high quantities but it didn’t allow price going up…what could be reason for this volume for last 2 trading sessions.
Vikas EcoTech Ltd has informed BSE that the Company has appointed Grant Thornton India LLP, one of the world’s leading independent assurance, tax and advisory firms as the company’s Internal Auditor, for the financial year 2016-17.
This is great news. Any doubts with regards to Suppression of income by concealing it under Receivables should go down now.
Excerpts from AR 15-16
"Superior quality of outstanding debt: With our focus shifting from small to large enterprise customers our debtor quality has gone up. Thus, outstanding debts turning bad remained insignificant. We upgraded_
our credit appraisal norms through the use of predictive analytics, ensuring that incase of any client’s
health concern, our system alerts us to factor it in our dealings ahead of others."
AR doesn’t show any amount as written-off or bad-debt.
This is extremely comforting and nice to know.
I have certain concern regarding Management Compensation in that it is too low. MD draws 3,60,000 and CEO draws 16,80,000 in salary as per disclosures in annual report.
In my understanding, Company has not issued any stock options this year. So, why is Mr. Ashutosh Kumar working for such low compensation. In adidtion he holds only 75,000 stocks in the company, capital gains on which imho is not remunerative enough to work for such low salary in a successful and growing company.
Is there anything cooking behind the innocent looking numbers? Please share your views and wisdom.
Some Red Flags I see:
Mgmt had done NBFC when that was in fashion. Specialty chemical is in fashion now 
The Annual report with discussion on global macro ,etc comes across as either the work of a super enthusiastic outsourced IR team or very market price focussed mgmt
Articles like Business India titled"Vikas Ecotech catches the eyes of international
investors" instead of talking abt the business also indicate pumping with investor focus. At this stage they should be trying to use press to get attention of customers and not investors.
Even lending organizations may not have this level of intelligence! Predictive analytics for few hundred crores? One should ask mgmt why they cant just do factoring if receivables quality is improving
mgmt pay as pointed out before
Prince type transactions are related party (customers). Not sure what to make of it given high receivables.
receivables are key tracker. High value add (R&D is the focus of spin in the annual report) does not normally go hand in hand with poor bargaining power in WC
1F06FC2F_BCE8_4D48_83C4_671FB87899BA_163127.pdf (1.3 MB)
In the attached jun16 results, in segment reporting, the manufacturing sales value came from 86cr in mar16 to 72cr in june16. The trading volume has jumped 2 times which has .3% NPM. This seems to be fishy. Do anyone know the reason for sakes drop in june16
The management commentary got me stumped. Not only did the promoter indicate extravagant 35-50% growth for next 2-3 years, he also indicated that the estimate was actually conservative in his view. A part of me did think that maybe this is a promoter with intent to pump - but the interesting eco friendly specialty chemical business got me interested and I have taken a somewhat significant bet on VEL.
I am invested and interested in the dissection raised by @arvind_aries
Very basic question. What kind of moat does Vikas Ecotech have? It appears that none of the products are patented. Competitors in the thermoplastic elastomers market are the likes of BASF and DuPont that pursue aggressive R&D and have the benefit of scale.From the AR2015, the annual spend on R&D is 9.76 lacs (Pg 46) which they claim in Pg 45 has improved production efficiency and increased market share. Really, 9,76 lacs has done that much! They also have not imported any new technology recently. The AR reads very suspiciously and the management is trying really hard to present an amazing future.
That is a huge red flag for me.
Also, on organotins: These are mostly used to stabilize PVC. However, they are toxic and hard to recycle.I don’t see how this is environmentally friendly in any way. I have a PhD in Chemistry from a German institute. It doesn’t take that to know Sn substituted hydrocarbons are poisonous. On googling I found this (http://www.imo.org/en/OurWork/Environment/Anti-foulingSystems/Documents/FOULING2003.pdf). This is basically a 2002 resolution stating that organotins must be phased out for anti-fouling agents.
Disc: Invested in a competitor, BASF.
@sn123
Since you seem to be knowledgeable about chemicals, I invite you to have a look at this information and tell us if you think it is a good development
http://money.livemint.com/news/company/news/vikas-ecotech-signs-mou-with-european-company-nafigate-corporation-460186.aspx
Okay. PHA is a class of mostly biodegradable polymers that are an alternative to polypropylene (and some other petroleum based polymers). Using bacterial fermentation to generate biodegradeable organic polymers is at least a 20-25year old idea. Some more googling has led me to see that similar technlogies already exist for converting waste water to PHAs. I don’t know what “Hydal technology” specifically is but it appears to me that cooking oil is more expensive than waste water :-).
I don’t know how much of a competitive edge this transfer of technology will give to VEL, especially as really big chemical companies are heavily invested in these materials
there is report that huge fire in BASF german plant , kindly throw some light regarding that, which may be helpful for those want to shift from vikas to BASF
Disc;Invested in Vikas
Skimmed through the annual report of Vikas Ecotech and a found a few red flags wrt research and development mentioned above. I am not recommending a buy on any stock at all.
Such a report is obviously concerning. I had the chance to visit the same German site some 5 years ago for a job interview. It is a huge state of the art site spread across a few acres. Saw some employees rowing in the river where the effluents go! They take safety incredibly seriously and a walk inside the factory makes this amply clear.
I am not able to find conference call transcripts of vikas. Can we ask these questions in their conference call…i felt management is try to project too much…but since PVC industry is going to be better off n read US n Europe are reducing lead in PVC…vikas can florish.
https://www.quora.com/What-is-methyl-tin-mercaptide
This guy claims to be no.1 with 20000 Mt capacity…the data is of 2012…he has given his number…I have sent him a message…let him come back…
The fellow responded…and I asked him all the questions related to MTM…his company had 20000mt of capacity in 2012…so must be having 25000-30000mt today…and they are leaders in their China market…this guy responded to all my questions…
It’s a wassapp conversation…I can’t post it here…send me your email ids…Ill forward the content…
Material facts that came out
3). He said MTM is very eco friendly…not at all toxic…it is the future…it is the best stabilizer…so someone who said it is toxic…he must be referring to organotin in general…not MTM…it’s eco friendly …and thats said by a big MTM player who has no conflict of interest here…
4). He said vikas pays them upfront…so no problem on that front…
Apart from this, I went through AR 15-16 twice…to grasp things well…my observations
1). Disclosures are fantastic…I have seen very few companies giving such disclosures…
2). Related party transactions have reduced compared to last year…non current investments going down (sold moonlight)…merged sigma plastic …booked a gain on sale of moonlight and no goodwill booked on purchase of 25% stake in sigma…lifts my confidence…
3). Promoter family has mortgaged their personal properties to get loans…but again it’s OBC bank …not proper credit controls…but atleast they would have checked the properties properly…so one should give benefit of doubt.
4). Low R&D expenses- I was shocked too…but I wondered…if they had to do a fraud…why would they show only 9 odd lacs as R&D…theh could have shown 2cr…who is going to check that…??trust me even auditor wouldn’t be able to verify this…and it’s not auditors responsibity to check other than financial stats…but we should ask the company on this…
5). High debtors - it’s surely alarming…but I think, bcoz they are new in the speciality business, their products are new, they are forced to give better credit terms to their customers…once they get used to the product…credit terms can get reduced…now here should one look at 10 years sum of CFO and compare it with PAT ?? I think - we can do this with page or any other co that has been in the same business for years…a company starts a business…it grows aggressively …and then it matures…so in the entire business life cycle…it’s ok if the business generates negative CFO in the early stages…but what if the business changes it’s business entirely in middle of its business life cycle…?? A new business life cycle starts again…company is again new…and has now again started growing aggressively…so naturally will have to invest in working capital…I think here standard rule will not apply…
6). There are no write offs…there are no accounting mischiefs to my knowledge…Yes debtors is one…but that has been explained by me…
7). Sustainable EBIDTA margins- promoter has said 22% in long run…but AR does clearly mention about the benefit of reduced raw material prices…it has boosted their margins…I think (pure guess) these guys must pass on the raw material benefit to customers (but with a lag)…so , ebitda margins might be inflated by say 3-4% …and going forward with change in product mix, the ebitda margins go up rather than coming down…we need to note here, top line would also have gone down due to less price realizations(due to low raw material prices)…still these guys were able to grow at such scorching rate…still thinking on this!!
8). Prince pipes have invested in this company…2.5% nearly…I checked about prince pipes…it’s no.3 player in the market after astral and finolex…the amount invested is not important…their faith in the company’s products is important…
What else - the Chinese guy got interested in vikas ecotech…I am going to send him my research report in a week…he will like to invest in the company…
Disc - invested…started with small quantity…still digging…views expressed are purely my views…
Abhishek…your efforts are highly appreciated and you have gone out of the mile to verify this company…i liked this company and always thinking whether these guys are just projecting…your analysis gives lot of confidence in Vikas…my email ID is arvindaries@gmail.com
Rgds
Ram
