Exactly, they carefully choose some import substitute niche products. Maybe this is the reason, factory manager (Vipul) told me that he never faced any demand concern or slowdown in enquiry. The challenge seems with the expansion not with the market demand.
No idea about them, but one interesting observation is, out of 49 Lacs odd shares, 73% is with promoters, 2% with me, 5% with my very close circle HNIs since 2017, another 3% closely held, leaving only 17% odd approx 8 Lacs shares, not sure out of that 8 Lacs shares how much is closely held! Wider equity base is required both for BSE main board migration and proper valuation. I will bat for bonus in the upcoming AGM.
They did expansion in FY19 within the existing premise. More than EC approval, I am betting on prudent product mix which was the growth driver for the last many years. I know, after some point, any company can’t grow topline merely prefering higher value added products but still besides EC approval and further capacity expansion, I am hopeful about growth due to prudent product mix and value added products
Sanjay Marathe and Girish Shah - they are the driving force of the company and all key decision makers. Apart from them, in my view, all remaining employees are in normal payroll (as of now). Few employees are associated with the company for decades but they are neither decision maker nor have ownership interest.
The company is too small for separating R&D division or any such. One of the promoter, Sanjay Marathe has in-depth technical expertise, R&D and product selection might entirely coming from his brain. Another promoter Girish Shah also has in-depth technical know how but mostly oversee marketing, customer relation and all other matters.
Another point I like to share is that, I had interacted with a lot of SME companies in the last 3 years and found Chemcrux management (Mr Girish Shah) is the only one that consistently “UNDER PROMISE - OVER DELIVER” while other SME promoters always promise tall! If you follow post FY18 management commentary (check BSE announcement during May 2018), you will find they talked about 30% growth guidance in FY19 due to expansion. However, they outscored their own guidance with approx 75% topline growth in FY19. Further, in last year during company visit, Mr. Girish Shah told me don’t expect similar 75% growth in FY20, rather guidance was no such growth in FY20. However, in FY20 topline registered 4.5% growth with 14% jump in net profit! Again in FY21 guidance they mentioned about the probability of impact in profitability due to COVID-19 lockdown and all. Let’s see whether once again they can outscore their guidance.
As per my experience, it is next to impossible to predict growth correctly for any small business (not talking about large companies) due to the ever changing business dynamics. I can’t say with assurity how much my own business can grow in the coming years as there are always a lot of moving variables. So, apart from large established business (like RIL, TCS, Infy etc), guidance from any small company should not be considered seriously. However, while a small company like Chemcrux always outscoring its own guidance, it requires serious attention and offers testimony about the management quality!
Disc - Invested since 2017