The red flag turned on after someone pointed out this same report on May 2013.
You may like to read the subsequent posts.
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I can see it in the investment in subsidiary section of the consolidated cash flow statement.
Have the same questions on the balance sheet and cash flow statement disparity
The products are there on the website: http://www.caplinpoint.net/products.aspx Not sure what youâre referring to.
That is correct. The company recognizes this as well. This is also why they are increasing revenues from US operations which has increased 3x in 1 year.
ROCE/ROE has come down and yes, capital is growing, these are the capex they are making into the US injectables Plants. This should not come as a surprise to anyone who reads through last 2 ARs.
Can you please quote where youâre getting market salaries from? I dont think this is a negative, per se. As an example, Asian paints pays much below the market level, but it is perceived as a positive (that people want to join Asian paints despite them paying below the market averages; and they hire from IIM A/B/C).
I am hopeful a lot of these questions would be answered by the Annual report which has not been released yet.
But it is being invested into the injectables plants, is it not? For me personally, a small growth company retaining earnings is much better than it distributing to shareholders. (Much more different for a company which does not require capex and is not growing a lot).
Caplin earns 60% of its revenues from Trading. They buy formulations from china, then sell them all over the world. 40% of the revenues come from manufacturing. This latter number is growing. This is why you will eventually see this fixed assets number also growing over next few years (until now it was low mainly because large % of their revenues came from trading). Also, the 75cr growth in fixed assets is a whopping 46% growth! I donât think we can call this as being small.
A lot of these things will become clear if one were to read their annual reports. They were earlier a purely âtradingâ company (NO manufacturing). slowly now they are building their own plants. This is why the E is going up and ROE is going down.
This is also well explained in most ARs. Earlier they were largely working with small distributors who caplin could ask to pay advances. Now they are taking much bigger government contracts where taking an advance is not possible.
I think this is a fair point and a clear area of uncertainty for caplin. What gives me comfort is the managementâs work on doing stuff like backward integration always looking for newer ways to improve margins.
Can you please provide a source for this. 3 lakhs figure seems abysmally low for a Managing director of a company like caplin.
I agree this seems like a discrepancy. I would wait for the AR to find out how to resolve this discrepancy.
Im wondering if it might be useful if we try to send 1 email to caplin with all these questions collated together to get their thoughts. What do you think?
I dont think this is available in public domain we should ask the management about this.
Sorry i have not heard of this. Can you please provide a link or reference?
As someone else also pointed out, I would suggest all investors to go through the full thread before investing their hard earned money into a company where they might have less than full conviction.
There is definitely some uncertainty about some parts of this companyâs story, but i think such is the state of indian stock market right now. All companies with low uncertainty are available at a P/E of 30 or 50 or 70 and only companies with some uncertainty are available at a low valuation. It is not a 1:1 mapping but this also reminds me about one of Buffetâs investments in 1970s-80s when Buffet invested in Mastercard during some crisis where some company had lied about their oil wells being full of oil. Uncertainty does not equate Risk. imo the current price prices a lot of these uncertainties which is why I think there is a huge upside.
Having said that I will probably trim my position in the days to come (In caplin as well as every other equity holding). Listening to a lot of macroeconomic viewpoints, from what I can make out, the downside risk (overall for equities as an asset class) is much much higher than the upside.
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I have sent the mail regarding the mismatch between cashflow and balance sheet on the day of conference call. Have not got reply
Ya I am also waiting for AR or checking in six monthly cashflow statement. As far as cashflow statement considered I think its completely wrong or they are fooling us. I dont know whether a public limited company will file a wrong
Yes, exactly you are right. Promoter insists on legacy creation. His actions conveys he is embarking on that story.
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Does he have any other businesses or occupation. How does he manage to meet his household expenses. Is that charged to the company or does he sell now and then. Or does the dividend more or less covers it ?
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All the recent information in this thread is very very worrying indeed. I was particularly surprised at the obvious mismatch between the numbers in balance sheet and cash flow statement as flagged above. Not just for inventories and receivables, but for others too.
After going over the numbers, I found the following
Using the numbers from the balance sheet under the heads âloans & advancesâ, âtrade receivablesâ, âinventoriesâ, âcurrent liabilitiesâ and âother non-current liabilitiesâ, the summation is nearly the same as that reported under âworking capital chargesâ, excluding the forex charges. I was not able to find that number anywhere to cross-check.
So, in all probability, it seems that the numbers reported against different heads in cash flow statements are a result of serious typographical errors and the final number (CFO) reported looks correct. For instance, the actual number for the change in the inventory is of the same order of magnitude reported under receivables and so on.
But my point is whether such mistakes, if at all i am correct in my calculations, are fine in the reported (audited) results on Exchange?
I checked through for the same numbers in the AR 2018-19 and did not find similar discrepancies.
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If you go through the report (Page 60) it is mentioned the product they were selling is counterfeit of Viagra but it was not completely fake as they had the active ingredient in it. But yes it is against the law.
plus as someone mentioned above, they donât have any info about their products on their website, it is only mentioned what range of products they have but NOT actual names, I got curious and did a Google search and found there are only few product images related to Caplin, mostly industry photos and some awards and certificates.
even though the mentioned issues are old, management integrity feels questionable to me now.
Disc:- was invested but now out.
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The report about counterfeit Viagra is almost 2 decades old. That was a time when the company was very small and piracy was rampant. Since no such incidents seem to have been reported in the past decade, Iâm hoping the management learnt their lessons from that incident and stopped resorting to such shady activity.
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anybody can check the trade names of caplin point products here
I already saw that, thatâs why Iâm more suspicious. The link you sent⌠Have you clicked on the product list? What it shows? It shows no info available.
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There has been a very long back & forth on whether Caplin has governance issues / Accounting Issues, with both sides having rationalization for their point of views.
But i donât see why there has to be such a long debate on the same. If there are some red flags and that too for very long with no clear cut answers for the same, one should skip the company and move on to another company. There are so many other companies to choose from.
And it is not that Caplin has some 50-60% of growth which is not available anywhere in the markets. There are many companies delivering better than Caplin.
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Antibiotic
Get Latest Price
S. No. PRODUCT COMPOSITION STRENGTH
1 AVICILLIN-250 Injection Ampicillin Sodium equ. to Ampicillin 250 mg
2 AVICILLIN-500 Injection Ampicillin Sodium equ. to Ampicillin 500 mg
3 AVICILLIN-1000 Injection Ampicillin Sodium equ. to Ampicillin 1000 mg
4 AVIDURE Injection Benzathine Benzyl Penicillin 2,40,000 Units
5 AVIPENFORTE Injection Benzyl Penicillin Sodium 1,00,000 Units
Procaine Benzyl Penicillin 3,00,000 Units
6 AVIPEN-G Injection Benzyl Penicillin (as Benzyl Penicillin Sodium) 1,00,000 Units
7 CAPLIN-250 Capsules Ampicillin Trihydrate equ. to Ampicillin 250 mg
8 CAPLIN-500 Capsules Ampicillin Trihydrate equ. to Ampicillin 500 mg
9 CAPLIN Dry Syrup-125 mg/5 ml Ampicillin Trihydrate equ. to Ampicillin 125 mg
10 CAPLIN Dry Syrup-250 mg/5 ml Ampicillin Trihydrate equ. to Ampicillin 250 mg
11 CARMOX-250 Capsules Amoxicillin Trihydrate equ. to Amoxicillin 250 mg
Bromhexine HCl. 8 mg
12 CARMOX-500 Capsules Amoxicillin Trihydrate equ. to Amoxicillin 500 mg
Bromhexine HCl. 8 mg
13 CEEMOK-250 Capsules Amoxicillin Trihydrate equ. to Amoxicillin 250 mg
14 CEEMOK-500 Capsules Amoxicillin Trihydrate equ. to Amoxicillin 500 mg
15 CEEMOK Dry Syrup-125 mg/5 ml Amoxicillin Trihydrate equ. to Amoxicillin 125 mg
16 CEEMOK Dry Syrup-250 mg/5 ml Amoxicillin Trihydrate equ. to Amoxicillin 250 mg
17 CHLORAMPHENICOL Injection Each ml contains Chloramphenicol 250 mg
Benzyl Alcohol 1.5% mg
18 MAYCEF-500 Injection Ceftriaxone Sodium equ. to Anhydrous Ceftriaxonexone 500 mg
19 MAYCEF-1000 Injection Ceftriaxone Sodium equ. to Anhydrous Ceftriaxonexone 1000 mg
20 MAYERY Tablets Erythromycin Stearate equ. to Erythromycin 500 mg
21 MAYERY Dry Syrup-125 mg/5ml Erythromycin Stearate equ. to Erythromycin 125 mg
22 MAYMYCETIN-1000 Injection Chloramphenicol Sodium Succinate equ. to Chloramphenicoloramphenicol 1 gm
23 MAYTAX-250 Injection Cefotaxime Sodium equ. to Anhydrous Cefotaximeime 250 mg
24 MAYTAX-500 Injection Cefotaxime Sodium equ. to Anhydrous Cefotaximeime 500 mg
25 MAYTAX-1000 Injection Cefotaxime Sodium equ. to Anhydrous Cefotaximeime 1000 mg
26 MAYZID-500 Injection Ceftazidime (as Ceftazidime Pentahydrate) 500 mg
27 MAYZID-1000 Injection Ceftazidime (as Ceftazidime Pentahydrate) 1000 mg
this is from the same link
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@sham72942, @Dr.stock Maybe Iâm being too sceptic but just for the sake of it, here are TWO more doubts about Caplin:-
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Why these names and info are not there on their official website but on the Indiamart site where they are registered as a Supplier?
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Why(and this is more interesting), Why when you search any of the names from the list above or from the Indiamart, there is no result for the medicine or medicine package with Caplin name on it?
I checked all the names for diabetes tablets and some random names from the list but either the medicine image is not there in image search or the medicine is available with some other brand but not with Caplin.
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I can find branded ones⌠But trade generics they wonât be having name.
Their app is https://play.google.com/store/apps/details?id=com.quetenx.app . Previously in this thread, they are saying not able to find. Even now Iâm unable to download because of different country. It will be helpful if someone download and posts the pics of products from their app.
Since they are using local language/spanish in their products. We are not able to Google it in English.
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@sahil_vi
Thanks a lot for your comments. They were helpful !
We do agree decreasing ROE and increasing receivables are a concern. Itâs also unlikely this trend will change anytime soon. What do you think can trigger a higher re rating of the stock then ?
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Thanks for the great question.
If we go back to December we will observe that the stock price declined 30% without any good reasons. In fact Iâve observed this trend in several companies (specially small and midcap) where stock prices decline without any triggers. If they can fall without triggers, they should imo, rise without triggers as well. Imo the re-rating trigger (if it can be called that) will be a midcap and smallcap bull market. Imo all attempts to rationalize stock price movements are an exercise in folly since it is impossible to predict the collective motivations of thousands of humans. If hertz (American bankrupt car leasing company) can rally 600% after declaring bankruptcy, then anything can happen in the short term imo.
On the company performance front, Iâm quite interested in tracking the performance of the injectibles business the margins and roce for that segment. That should also help instill confidence in investors about the durability of the growth for the business. On the other hand, if the injectibles businesses grows while shrinking margins and roces too much, then it would make investors (including me) want to exit the stock.
Also I want to point out that the roe and roce can and will improve in the coming quarters since capex works that way. You invest capital at time X, and returns are slowly generated from this asset over next k years (capacity utilisation does not start off being 100% in first quarter after the starting of the new factory). So the roce increases again going from trough to peak then some more capex, lower roces and the cycle goes on.
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Mathhews india fund continuously selling caplin. see their shareholding continuously coming down.
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They just finished their Capex, which has not yet started paying off. Once, U.S. business picks up, company shall see incremental cashflows, which would help RoE improvement. For U.S. business to contribute meaningfully, it will take another 2 years atleast IMO. However, receivables would continue to remain elevated, but this should offset by margin expansion (which is not being seen yet).
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