False alarm.
5 Likes
I also got the same message from CS. Looks like the operators are trying out different ways to pull the price down.
Cupid at #137 in The Economic Times’ “India’s Growth Champions 2020” list of 150 firms.
More easily accessible format (Use the search bar):
Announcement of Recepit of Orders worth ~Rs. 16 Crores.
I think they’ve made this announcement because someone suggested in the last concall that the company should declare every single receipt of order. Really pointless, in my opinion. I hope they don’t continue doing this in the future.
3 Likes
I guess they should declare only meaningful order receipts… all such announcements just encourage speculators to get in and out… Also Mr Garg once said that he declared these mostly when they got orders from new geographies… where they had never exported before… so this could be one of those…
2 Likes
totally agree. they have also disclosed order worth a few lakhs.
Few Queries. Would request inputs on these.
- Co is primarily export oriented, but in FY18 only 40% of the sales were in foreign currency.
Any reason/input shared by the co. of sales structure in FY18. - Y-o-Y for the last 4-5 years, co. has never fully spent the CSR amount. How do we interpret this and are there any regulatory repercussions of this.
- Major revenue is from order backed by Donor/ NGO/ Govts. Doesn’t that mean that these agencies would always try to push for higher orders of MC (given cost difference) vis-a-vis FC. More so in years of low funding to these organizations. And MC market dynamics are not that good.
- Next level of growth for the co. could come from US market by FY22 (if all reqd approvals are in place in FY21). But for success in US market, co. would have to aggressive in marketing/ B2C sales, which does not seems to be forte of Mr. Garg.
- Mr. Garg talks about FC product differentiation. Any idea is this backed by some kind of patent or what are barrier for other players to copy (expect approval period of 2 to 2.5 yr). Doesnt seems to be capex intensive biz.
1 Like
I think you may be misinterpreting the word “Earnings” give in the initial notes in Cupid’s AR. Request you to go through the concalls for FY18. The mix was about 70-30 is favor of Exports.
The rules for CSR are not very rigid as far as I know (I could be wrong). The CSR amount to be spent can be carried forward provided the Board of 3 Directors provide a valid reason why the amount was not spent in the current year. They have been spending some of the carry forward every year. But the outstanding as on FY19 is Rs. 0.3345 Crores.
If a CS / CA can elucidate further on the rigidity of this legal requirement, that would be helpful.
Clearly, that has not been the case. Donors have continued to demand Female Condoms and the demand has seen a significant rise in the last few years. Here’s a well-research paper published by WHO on why Female Condoms make sense:
Even in India, Mr. Garg has tried to outsource Marketing. So I would assume that in the U.S., it would make sense to outsource it too. Also, this is the reason why Mr. Garg has been looking forward to recruit a CEO with a Marketing + B2C background. Unfortunately, the replacement CEO remains a concern.
Take India, for instance. The local Condom market is split between two extremes: Two or three players who have built up scale and are enjoying adequate Profits (B2C OTC Condoms Market Size in India is about Rs. 1,500 Crores if I’m not wrong) and a bulk of 14-15 players who make very cyclical profits and are generally not efficient in production.
There is no reason or motivation for any of them to try and break into the B2G Exports market. Of course, add this to the fact that it takes about Rs. 25 Crores + Building + Land and a 5-year gestation period, stringent screening by WHO and you’ve got an even stronger Entry Barrier.
It’s not that Rs. 25 Crores is a big amount for Mankind or Skore, but these B2C players often spend 50-70% of Profits on Marketing/Advertising and the competition is intense, with little room for error. For reference, Skore makes about Rs. 150 Crores in Revenue. I assume Profits must be at Rs. 15 Crores (10% Operating Margin). Rs. 8-10 Crores are spent on Marketing and Advertisement.
So, spending Rs. 25 Crores while waiting for a 5-year period for something which may or may not bear fruit knowing the market is only worth about Rs. 300 Crores, which already has 2 strong players is not a smart decision.
Now, B2C / Prescription market in the U.S. is a different story. I think even Manforce Pharma is trying to get in. Meanwhile, Skore is trying to enter into Female Healthcare, something which Cupid is also exploring.
9 Likes
Thanks a lot , Dinesh for clarifying the queries. Just 1 more thing.
In the report shared (2014), there are 3-4 players who have applied for FC approval (including Chinese and US players). Any update whether those got approved / rejected or result is awaited in coming future. If couple of them get approval, then the scene will change drastically.
I doubt anything is going to change “drastically”.
Cupid and FC2 dominate the market with almost 95-98% market share. HLL (A GOI firm) has some 2-5% of the market. PATH from China used to be a player too, but they lost their WHO Pre Qualification last year. Even before that, PATH contributed only negligible volumes.
Currently, I don’t think there are any real threats. Some smaller firms may be attempting to enter the market. But I’m sure we’ll get latest updates on that on Cupid’s concalls. Every time, someone always asks a question about the competition.
2 Likes
Management to meet on 4th March to consider 2nd interem dividend
2 Likes
Hand sanitizers sales are surging as per news reports. If the company seizes the opportunity here, shouldn’t this have a positive impact on Cupid?
1 Like
Contribution of these products is very minimal in topline / bottomline. I think other major players may grab the opportunity. Cupid management is not aggressive to such small term developments.
1 Like
Interim dividend is 3.50
1 Like
The company is exhausting its accumulated funds. There were many suggestions to use the fund via buyback etc but Mr Garg listens everyone and acts on his own. Similar problems have caused failure in finding a capable CEO, although its not hurting much because Mr Garg is managing efficiently but where is succession plan?
2 Likes
Guys Cupid was supposed to receive South African order in Feb 2020, but no update so far. Do they disclose all received orders on BSE or is there a chance they could have gotten the order but did not announce the same. Also, do you think the orders for this/next year would dry up given the market scenario because of CoVid 19?
1 Like
super, thanks a lot. Pertinent questions.
We all are worried about succession plan at CUPID. But no concrete action. Cupid is one man show (Om Prakash Gerg) for getting international tenders.
I learn that Om Prakash Gerg is in USA presently and his age is more than 70 years! (However, I pray that nothing will happen to his health in this corona crisis).
2 Likes