@saurabhricha
Thanks a lot for initiating this thread…can you advise what exactly changed from FY 2018 to FY2019. The margins and sales have almost doubled, is it because of the China factor or product mix is changed.
@arvind_aries
Following are the risks:
Low Liquidity
No Management succession plan
No Capex visibility
Playing around with environmental clearances
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Chemcrux posted great numbers considering 3 months of complete plant shutdown! Infact they improved margin which is a key ingredient of PE re-rating.
Looking at the lesser post here, seems many investors made an exit while the stock price crashed from 260 to 150 level during Feb-March 2021. I didn’t reduce holding during the downfall realising that the plant is not going to remain shut forever. However, I too pleasantly surprised while the price jumped from 150 level to 338 within April-May 2021 period. Now, I did partial profit booking at 300+ level over the last few weeks which will be visible in June 2021 ending shareholding pattern.
Not sure, while they will receive environmental clearance for expansion but still believe in the possibility of growth+margin expansion+PE re-rating. My partial profit booking is solely for balancing portfolio allocation.
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I would like to highlight a couple of points from your post above:
- 3 months of plant shutdown - The plant was shutdown from 19 Jan till end of the quarter which is 2 months and 12 days. In 2020, a nationwide lockdown was imposed from 24th March and the plant was shut for 8 days in 2020 H2 as well.
So effectively the plant shutdown was for ~ 2 months
- Margin improvement - would be really interested to know how you came to this conclusion. As per my calculations, EBITDA margins for H2 are inferior compared to last year (understandable due to negative operating leverage on account of plant shutdown)
H2FY21 - 25% vs H2FY20 - 27%
Would be interested in knowing your take on the triggers of margin expansion going forward.
PS: We really need to stick to hardcore data and facts without involving any of our biases
Disc: Sold out at 300+ levels
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There was another plant shutdown during September 2020, check the entire BSE announcement for the facts. I hope you also understand that it is not like from the Day1 of resumption the company can operate at 100% of the previous capcity. It takes few days for complete streamline of the process.
Margin improved in H2FY21 compared to H1FY1 level, despite higher number of days plant shutdown in H2 which is a big positive surprise.
I had around 1 Lac shares, around 2% of the company since 2017-2018, not possible if I had misread data/facts. But yes, feel free to express your conclusion
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I have gone through every single disclosure and that is how I came to the conclusion of 2 month shutdown.
The plant shutdown in September 2020 was only for 10 days from 1st to 11th Sep. I believe 19 days would be more than sufficient for any company to resume normal operations and have no spillover effect on H2.
In Q1FY21, the plant was shutdown for the first 14 days of April due to national lockdown and then was operating at 60% capacity for most of Q1 and Q2 had a shutdown of 10 days in September. So effectively there was a loss of 2 months in H1 as well.
Plus, I’ve also validated the same trend of margin improvement in H2 of previous financial year FY20 EBITDA margin H1FY20 (24%) vs H2FY20 (27%).
There appears to be some seasonality in terms of the product / customer mix which is leading to better margins in H2.
I don’t want to make any conclusions, I just don’t want anyone to be misled on the forum due to wrong data/facts.
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As per today’s disclosures to exchange, the management to consider migration to main BSE board and also to consider a bonus issue.
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The board has announced 2:1 bonus and migration to BSE main board. Also appointed a new CFO on account of resignation of current CFO.
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Anyone saw the AR?? The director’s remuneration is 2.1 cr whereas the Net Profits are 9 Cr. Doesn’t it sound too much?
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Hi,
I have attended this year AGM but I’m sorry, I couldn’t grab any of the questions and answers due to the low internet bandwidth of the company.
There were many positives this year, which @ayushmit would be sharing and the negatives would be highlighted ( if any).
The bottom line is the approval of the proposal by the SEAC committee and their recommendation to the SEIAA committee for EC approval ( Refer to page 57 of the attachment).
The SEIAA meeting is in a couple of months.
After a long haul and continuous efforts by the management of the company, the proposal has been approved.
Eagerly waiting for @ayushmit thoughts, insights, and statements.
I sincerely apologize for not contributing for this year’s AGM.
Though i have asked questions regarding the discontinuation of chloro toluenes and the increase in capex with decrease in manufacturing facilities if the EC is approved.I just couldn’t note any answers for the reasons cited above.
chemcrux page 23 to 60.pdf (7.2 MB)
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I couldn’t attend the AGM due to time zone difference. @ayushmit, would appreciate your notes and comments from the AGM. A sincere request 
No major update/notes at my end. The AGM was inline with earlier meetings wherein the management seemed confident in what they are doing. Based on the answers, it seems they have leadership/edge in some pharma intermediates that they manufacture as the margins are high and stable and the management did say that mostly they are able to pass on cost increases.
Key discussions were around expansion and pollution issues and management answers were:
- The co has complied with the pollution issues raised by GPCB and there shouldn’t be long term issue.
- Expansion application is under process. Once they get approval they would be able to commission in about a year
- Co is also looking to invest into some new land/unit to expand operations. Though can’t say about timeline.
The co has also been investing into some dryer and R&D unit. Investment has been of about 10 Cr.
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Thanks, Ayush!
Based on your past experience with such companies, how long does it take to get approval from SEIAA? I did quick Google search, and it seems SEIAA can reject EC approval too?
For Chemcrux, things surely seem to be becoming better. How much? Only time will tell.
Looks like SEIAA has approved and is pending for approval for minutes of the meeting ?
status changed from Agenda Uploaded by SEIAA to Awaiting EC
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Any idea why would the listed entity buy stake in a private entity owned by the promoters and extend loan? Instead, why cant they set up fully owned subsidiary?
I sold my holdings after I saw this announcement.
From announcement on BSE-
For furtherance of business prospects, the Board of Directors decided to make investment by acquiring 50% of share capital of Kalichem Private Limited and to make further investments or grant loans as and when required.
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Kalichem was incorporated on 29 July 2021 as per the information on Zaubacorp. My guess is that the new entity has been set up to benefit from the recent lower taxation rules for new companies. Acquisition path was selected rather than setting up a subsidiary to reduce the changes of objection by tax authorities to the applicability of the tax rules. The paid-up capital appears to be as less as Rs 1 lakh only. I presume that the amount involved in the acquisition is of the order of a few lakhs of rupees.
In any case, there is no point in investing while lacking trust in the promoters and the management. Not every decision will be to the full satisfaction of the investors.
Disclosure: Invested.
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Promoter’s having directorship in other companies would be a sell.
Promoters investing their money in buying stakes of other companies would also be a sell owing to conflict of interest too.
Promoter’s investing company’s money would imply:-
Risking the company’s money siting the unsurity of the outcome, safeguarding themselves.
If the outcome is successful, the benefits are passed on to the shareholders.
If the outcome is a failure, the company has not gone into debt financing the transaction. They wouldn’t loose much.
If the outcome of Kalichem -a success or a failure :-
Success brings in dividends and share price appreciations to chemcrux.
72% of the company is held by promoters. They are the direct beneficiaries of it.
So is the failure.
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-
Kalichem private shares the same address as Kalintis Healthcare i.e.,
“52A,Jarod Samlaya Road PO Gardhiya, Tal-Savli, Gardhiya Gardhiya Vadodara GJ 391520 IN”. -
The name Kalichem has a peculiar name sharing with Kalinitis healthcare(KH).
The above two makes one believe that Chemcrux might be an investor in Kalinitis Healthcare(KH).
Why is this interesting?
KH was founded by Mr. Rasik Gondalia who has set up and sold multiple pharma businesses. KH is a startup in the pharma industry as it was founded in 2015 but the team running KH is experienced.
KH has an FDA approved API facility since 2018.
Could not locate any financial info regarding KH.
With expansion around the corner this might just be the association that will be mutually beneficial to both Kalintis and Chemcrux.
Hoping this story turns out true. There has been no word by the management. I might be wrong here with my assumption.
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You could be right. I have no way to confirm one way or the other. What caused more concern to me was that the investment amount was not mentioned. Looked like a resolution passed in a hurry.
If this is indeed for expanding capacity and taking advantage of lower taxes for new companies, I would miss the upside. However, for me investing is as much about protecting downside as it is about achieving upside - hence I decided to sell once I had the doubt. I made a near 100% returns - no regrets on that front.
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My experience with Chemcrux has been good. The management has so far been investor friendly ever since it listed in SME with all timely disclosures, dividends and bonus. I have no reason to suspect them.