3B (15-20 employees, not able to find exact number, google showing 13)
1.08 - 0.35 / 20/12 ~ 30500 /month.
Gross block for 3b is around 2 cr which is mainly comprised of Lab, R&D and other equipment. With this 3b is doing 14-15 cr turnover, which is possible as this is high asset turnover business. Reason could be bulk procurement of some of the kit components. We should not forget support from Biotools.
Regarding top 10 shareholders and their other holdings, it is quite evident that most are smallcap investors which is a risky game and few operators could be there. We donāt know what their family or connections are holding etc. So no comments further on this.
Todayās holder can leave or new can enter. Track record of initiator/blog is not much promising, I accept.
Sir one more point i noticed that Varun Daga is mostly issued Preferential allotments in many of his investments. I could not find much about Suresh and kamal but have noticed that they have stakes in companies like ECS Biztech, Universal Office Automation, Asya Infosoft Ltdā¦and still finding will edit this post if i find more.
In Balane sheet Stanalone Salary expense is 1.45 Cr under other expense head R&D salary is mentioned about 17.56 Lac whereas Consolidatd number shows salary expense 2.53 Cr under other expense 17.56 Lac and KMP are taking 56.3 Lac from this company in total not 0.32 Cr. One point we are missing here that why not the Spainish company is not participating in any of the equity allotment and now there is not any mention about it in ARs also. ARs are a pain to read not clear and repetition of same point for many years.
If itās so easy to do this, why doesnāt Lal Pathlabs or Metropolis etc do itā¦ 2 crores of Fixed assets of which hardly 50% is operational assets (balance being supporting asset like Building, R&D assets)ā¦ Please show me the value of Plant and Machinery.
How come they were able to build such a fantastic biz by just 1 odd crore of Investment (or less). The Spanish co is so generous that it gave the technology without equity or royalty participation
Few days back when I checked their LinkedIn profile it showed one employee only. But today when cross checking the same I found 11 employees mentioned. Has anyone else experienced the same.
Rent might be in miscellaneous expenses.
R&D equipments can be used to produce some components of kit for that we have to understand procedural aspects of PCR, Rev. transcriptase PCR, etc.
Definitely they are not making everything indigenously, but we must give them credit for developing covid19 kit in a short span of 14 days. Some knowledgeable heads behind it for sureā¦
Sir i would do that cash flow matching tomorrow.
One thing i have observed that LinkedIn profiles of 3B Black Biotech employeeās are very much interesting, i could some of profiles which boast a good number of credentials in terms of past works and their research work.
This point is also a important point this field requires the top talent to run and do R&D.
like i just want to share one publication from 3B Black Bio
Key components of a PCR amplification reaction areā¦
Thermostable DNA polymerase
Deoxynucleotide Triphosphates (dNTPs), sequence specific probes
Reaction buffer and magnesium
Oligonucleotide primers
Thermal cycler (machine)
Reverse transcriptase (in RT qPCR)
Now while developing a kit, company take template DNA/RNA, decides sequences, enzymes, buffers, co-factor(magnesium), primers, etc etc all goes to R&D. All machines, which usually needed to perform test, are required to set kit, calibration & controls.
You can see Soapstone in raw material, its magnesium rich mineral talc, a co-factor.
Once kit is set, all incoming batches of chemicals are validated using same machines I think which is called calibration and controls. Again not for commercial production.
What looks interesting in company is product scale. A kit (suppose has 100 tests in it) might be price around 70000 on an avg. Lets take 50000 avg price for 100 tests kit. So at current run rate if they sell 10 kits a day, able to generate 18 cr topline in a year.
I just know basics of reading financials, not an expert. I own a pathology Lab, so just trying to connect dots.
The CFO reported in the AR 2019 looks to be a mistakeā¦the figure is correct however is in brackets representing cash burnā¦the net changes in cash & equivalents however looks correctā¦
Sir i have tallied the cash flow statement from Screener and Annual report of the company from FY-2012-13 to FY-2018-19. There is only mismatch for three times as follows:
Employee benefit in FY-12-13 is 124 Lac but same is entered 145
in next years FY13-14 AR.
In FY13-14 EBIDTA 44 Lac is taken as PAT in next years AR
FY14-15.
donāt confuse when they say kits. its tests actually. so 3b talking abt 100 kits (10000 tests) /day and mylab 140 kits (14000 tests) /day.
Well 3b hasnāt reached anywhere near as it takes some time. Slow and steady wins in biotech. Sudden drop in corona cases may pileup inventory. A kit (100 tests) may be priced around 100000.
Personal views, actual numbers might be totally different.
In cash flow statement, all the sub-items do not add to the final number shown in CFO. The numbers shown in screener are correct.
While calculating change in inventory to calculate COGS, they are considering only change in finished goods and not raw material or WIP.
Other red flags:
Transactions with Ram Kumar Dhirendra Kumar HUF
a) Page 65 of FY 19 AR says Salary 56.3 lakhs
b) Page 96 of FY 19 AR says Salary 23.1 lakhs
This payout over and above KMP salary is wierd. If we adjust for this, average salary for other employees reduces to 11k a month which is too low. Amount outstanding to HUF is 2cr +.
Also receivables due for more than 6 months is very high at almost 25-30% of total receivables.
Agree with earlier observations on size of fixed assets. With less than 50lakhs of equipment (excluding R&D) , subsidiary is generating reveues of c. Rs 11 crs with EBITDA of 60% +. Completely out of line in comparison with peers.
As per my calculations CFO number are adding up and Each year on an average Rs18 Lac are Revenue Expenditure in R&D Head. The difference in KMPās compesation is due to standalone and consolidated numbers from FY17-18 only KMPs have started to draw salary from 3B Black Biotech. What does this Revenue expenditure suggest i could not figure out?
In Reply to your 2 point i have calculated
For FY16-17 Average salary= 3.43 Lac
FY17-18 Average salary= 4.2 Lac
FY18-19 Average salary=5 Lac
Above figures are approximate and after removing 3 employee as KMPs.
Tax stated in Standalone P&L Sheet from FY12-13 to 18-19= 42.09 Lac Tax paid in Standalone Cash Flow FY12-13 to 18-19= 53.29 Lac
Tax stated in Consolidated P&L Sheet from FY12-13 to 18-19= 357 Lac Tax paid in Consolidated Cash Flow FY12-13 to 18-19= 314 Lac
Some points i could find from not a concerned person but a student of Biotech. As per him PCR machine starts from 25 lac or so and now a days the machine comes with programmable function u do not need to take out the prepared sample or R&D liquid multiple times, all the functions(like Amplifying of RNA, cutting, primer addition, maintaining temperature and time) related to prepare Test Kits. He also told that BSc graduate are given 10-15000 as a salary, BTech 20000 and PhD will get 25000 as starting payments. The company need to have experience of its R&D team. We can see many of the employees are working in 3B Black Bio for more than 5 years i can see it in Linkedin profiles and many have very good Educations. A test kit when prepared can be fed to PCR machine and this programmed PCR machine will give u results. The two type of testing PCR based and Serum based. PCR based tests are more reliable and serum based test which can be done at home so that real situation of pandemic can be found at home only, are not giving acceptable results it may take more than 3 more month to get these Antibody test or Serum to accuracy.
Attaching an link also related to Serum test failure https://www.bloomberg.com/news/articles/2020-04-07/new-test-hopes-dashed-as-u-k-finds-antibody-kits-don-t-deliver
Also this RT-PCR test kits minimizes the use of chemicals and handling of samples in lab. This is also a step ahead of simple PCR base tests.
In the end i can say that its the experience of R&D team which will decide the success of any Biotech company and i can see it is there with 3B Black Bio. Do look at it
