Deep Dive 2.0: Bharat Rasayan

Hi @supriyo Please resist from using negative words. We dont cast aspersions . We just identify if there are risks/red flags and how to model that in our valuations.

secondly, as @Donald said, lets move to BR Thread.


I think we are diluting the entire discussion by not having some basic understanding of how cash flow from operations is calculated!
Please refrain from using such strong words until you have some strong ‘factual’ information about the company.


Hi Soham,

Thanks for digging in the EC report of Rasayan for Dahej plant. You can find one for Saykha as well - BR EC Report_Saykha Expansion.pdf (7.1 MB)
Normally, what happens in an EC filing is that companies takes approval for as many products as possible so that they don’t have to go back to ministry in case of addition of new products. These is primarily to avoid delays in getting approvals in case of addition of new products. They file for products which they might be looking to manufacture 3 - 5 years down the line as well. Many of the times, the company might not even manufacture some of the products they file in EC.


Yes, I did find the one on Saykha as well (and was trying to project some details on the other greenfield project, no luck yet).

And thank you for clarifying the dynamics of the approval. Many thanks so 20-22 molecules it is then. Will get the second version corrected.

@ashwinidamani I am in agreement with you on raising red flags and those of us responding have absolutely no right to ask you to have a better understanding of business. The red flags are an outcome of Balance Sheet /Cash flow/P&L and other notes to accounts. I do appreciate the work you are doing.

@anantjain87 is a different anant jain, I guessed you were referring to me.


Absolutely with Ashwini and Anant on this. That’s the whole purpose of the exercise. The forensic auditor does not need to have a deep understanding of the business in question. The job is ONLY to point out inconsistencies that crop up from a scrutiny of the Accounts statements, and Notes to Accounts. There can be differences in the interpretation of Inconsistencies. There can be deficiencies even when enough drill-down or drill-through is not done on the Account Statements. That’s all a part of our getting better at the job, and getting better at accommodating new roles into Team VP.

It is the also the job of the Forensics person to therefore stick to FACTS - and perhaps only to point to the inconsistencies - rather than share an opinion this way or that way. If any opinion shared (that is completely SHORT on facts and NOT substantiated by any datapoint) obviously there will be strident objections raised - that’s NOT the job of the Forensics audit, certainly NOT to play the Devils Advocate role - as highlighted in Alembic post. The devil’s advocate role is better played by Seniors who can address both sides of the story equally well - because they are (willing to) engaging deeper into the story - in order to better understand the facts, intentions, and implications.

I don’t think there are insults traded anywhere (especially on this [Alembic post] being referred to repeatedly (Alembic Pharma (Oral Solids ==> Injectables, Onco, Derma, Opthalmic))) by me. I normally refrain from intervening in the red flags discussions - thats a deep subject matter expertise area - and leave it to professionals - CAs/Accountants to delve in. and sort out differing interpretations - not my expertise area, and neither my cup of tea. But I do and will intervene in future too - only to settle important basic guidelines - as in Alembic discussion, and also in Bharat Rasayan thread after this recent spirited animated discussion between passionate folks (I was unaware of for a few hours)

Let’s get better at this - as we understand each other and our intents better - while showing the maturity publicly needed. I am sure after 5-6 such exercises, all of us will settle down to a much smoother working relationship. Rest assured there is RESPECT - there are no insults - certainly not from my side. And I don’t think from Ashwini’s side either.


Source: CARE report on Agrochemicals
Two questions:

  1. Clearly India is doing extraordinarily well in exports of herbicides and fungicides while pesticide exports are declining. What explains this trend? Is it secular or temporary

  2. Given that BR is largely into pesticides, could their expansion into fungicides and herbicides bring the next level of growth? Clearly, Astec is benefiting from being a fungicide technicals player inspite of being a less efficient operator than BR

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Finally what’s the take of VP on red flags raised? An average investor who is neither an expert in reading balance sheets not has a deep understanding of business gets confused and doesn’t know the outcome or which way to go?IMHO, we need to draw some conclusions on such findings or even to dig further .

Disc: no holding

1-Globally Herbicides accounts for highest proportion around 43% of Total Pesticides sales. In India Insecticides account for highest sales of around 53%. This may be one of the reasons.
2-Efficiency is very subjective term. A pesticides producer manufacturing from basic stage will generally enjoy higher margin that buying Intermediate and doing final stage of reaction.

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Red Flags are always something where you adjust valuations. In this case maybe you can decide, that you dont want to buy the co at say 25 PE, and are ok with 15PE, in light of risks .


Regret the delay in getting back on BR deep Dive Skeptical Take.
a) was hard to find someone - who is conversant with BR, but not SOLD out :slight_smile:
b) even after locating such a person, its hard to get mutually convenient time.

But the good news now. BR Skeptical angle take is being captured as we write, and hopefully will be out for transcribing tonight/tomorrow.

Who wants to put up their hand for this?
I have a couple of guys/gals for this in mind too - judging from earlier interest/participation shown - lets see if they put up their hands
Anyone else who can demonstrate well - why he/she could be/should be fast-tracked?



Hi! I would like to volunteer for the skeptical take of the Bharat Rasayan deep dive exercise.

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Hello sir,
I would like to volunteer for the Bharat Rasayan Deep Drive Skeptical take. Would really like to learn and contribute with similar mindset people. Please count me in.

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Count me in Donald for this exercise.


nice to learn about your endeavor! do share your ‘skeptical take’ on the main BR forum as well!


Happy to share BR Take4: from Anant Jain
[Earlier takes from Rohit Balakrishnan (Self-Transcribed), Ankit Gupta (transcribed but synthesised with own views), Dhwanil Desai (yet to be transcribed)]

The idea behind different takes being - even with almost the same data-points available/shared between these folks)

  1. We can see for the same tick-box - lets say “ability to manage downturns” - the articulation on that aspect alone will be different from different folks. There is much to learn from these different articulations - on the same aspect, and as a whole picture that emerges.
    We may agree or disagree with the verdicts. Some will resonate more with us individually than the other take or rating on an aspect of business attractiveness or Management Quality e.g. Each guy has important nuances to offer - all of us can improve on the “Insights” front.

  2. When synthesised properly (by senior investors) - these 4 takes - can make for a very holistic view on the business. Still hunting for a more skeptical take on BR. Caveat - skeptical is not just the impression from red flags; A skeptical view can be on the quality of earnings, skeptical take can be on the business transition that others are expecting NOT happening -because of xyz reasons; we are looking for someone who has dug his hands deep on BR, understands the strengths, bit does not rate HIGH …for his own insights…if any

  3. Think once these are all transcribed well (ONLY the Analyst’s take - NOT synthesised with yours), we can head straight to writing the VP Bharat Rasayan Stock Story - by these very transcribers - so there is complete ownership - on keeping it updated. Oversight/polishing will be provided by the Analysts - they can guide one of the transcribers to update such and such development - say an EC clearance, and stuff like that.

Now, I have been engaging deeper with some of the volunteers. Purely from an engaged willing, hardworking perspective, this is what we are doing for BR transcribes

  1. Dhwanil Take and Anant Jain take
    @Parul teaming up with @ashkrithik
  2. Ankit Gupta Take
    Guys/Gals mentioned, get in touch with me :slight_smile:

As we do this well, we will speed up this activity soon. Keep watching this space, closely :slight_smile:



Thanks Donald for the opportunity.
Appended here is the summary on Ankit’s take on Bharat Rasayan.

Bharat Rasyan deep dive_Ankit Gupta version_v2.docx (124.5 KB)


Thank you very much for the sustained effort in helping capture an authentic version of Ankit’s take. Someone as meticulous as you is a delight for us deep divers.
We look forward to your version too - immediately - that raises a few other points/concerns - as also might offer slightly different perspectives on some of the conclusions?

Please have a quick look. This should have done justice to - just about what you and me discussed and captured back.

Now we can quickly ramp up on Dhwanil Desai and Anant Jain versions.
Still hopeful of doing another better skeptical take on BR

And then we can go on to the first official BR Stock Story - created and maintained by nextgen VP Contributors.


My own summary of BRL is as below:

Key positives

  1. Business quality is good – No doubt - Nissan JV – speaks about the technical capabilities and strength of the business. Not many companies in India have achieved this.
  2. No equity dilution last so many years despite growth
  3. Low debt levels
  4. Promoters putting supporting by funds as loans

Negatives that cannot be ignored
• Stock broking forms holding 12% involved in money laundering etc – Ravi kumar newatia sharing same address as some promoter shareholding firms. – Key risk
• Auditor not good (not an issue on its own but combined with other issues)
• Pretty bad Glass door reviews especially historically

Other negatives that can be ignored
• Why have 3 different companies (listed and promoter held), why not all business in one?- Historical structure issue? But important to note that promoter entities have 10-15% EBITDA margin which is reasonable. Related party dealings are there– but no significant pending amounts from them.
• Low dividend, though tax is being paid, can be justified for growth/capex
• Cash flow – If we assume payable days similar to industry, CFO looks fine. Also Astec Life Sciences (which is in similar line of business) has similar receivable days as BRL. There should be no further deterioration of receivable days from here (awaiting March numbers). Inventory at March end can be impacted due to lockdown.
• Imports at 68% of RM cost very high – watch reduction over time

Check further
• China 180 days credit to customers hypothesis leading to higher receivables - have we checked this in any China agrochem cos?



Please find attached stock story of Bharat Rasayan as per Anant Jain’s take.
Thank you @Donald for this wonderful opportunity. Learning has been tremendous from this deep drive.

BR deep drive Anant Jain version.pdf (395.1 KB)