Sir the issue is not with the chemical , it’s with the company they have appointed called Sangam Enviro , they did not even have licence to operate in this field. Hikal should inspect the plant . But sangam enviro don’t have any plant as per reports …
They should have checked their background which they didn’t bothred to do …
They could have gone with other good companies in this space , but choosed a paper company to save costs or any other reasons known to them …
I’m not against any company or chemical sector, infact 20% of My PF is with speciality chemicals …
As a person from legal field I’m only putting the facts, which might help others to take informed decision on investing in such companies or even for asking tough questions to management during concall…
Like a company , even it’s shareholders have social and moral responsibility as they are part owners of a company … So they should take tough stand on wrong things Rather than brushing off by saying it’s a part of industry , no company is Clean, whole sector is such way and all…
Now this is a SERIOUSLY BAD NEWS for the company.
have to see how institutional investors act to this news.
But a GREAT NEWS for the Chemical Industry for the long run.
This sends a CLEAR message to all the chemical companies that such lapses cant be taken lightly henceforth.
This is the problem with small caps. You never know what really happens inside. BTW if one looks at the CG history of Hikal, it has a good track record. I am not saying it is the end of the company. Deepak Nitrite, Jubilant had several issues in the past.
All I am highlighting is it can be any other small cap tomorrow, with a new issue. It is always better to have a basket of good performing small caps in different sectors so that lucky ones outperform against the failed ones. Skill of picking stocks based on reported numbers alone surely takes a backseat here.
IMO these kind of unpredictable incidents provide good opportunity. Some from my knowledge
Nestle - maggi issue
Divis lab - usfda issues , CFO was asked to take leave due to insider trading
Infosys - acquisition of panaya and skava which leads to resignation of CFO and later CEO. Later infy write off those acquisition.
Majority of people tend to forgot about these incidents quickly once price movement starts . if we acquired above 3 company shares during those bad periods , current return would have been fabulous .
Coming back to hikal now no one will talk about 600 cr capex , cdmo project they are doing with Japanese innovator and 10 year contract , china + opportunity , api etc . We have to wait till quarterly results to get the complete picture from management .
To my opinion, this is a sheer negligence at company level (on-boarding vendor without checking required documents), resulting to life of 6 ppl and many hospitalized.
Though I am not an expert on this subject, but I feel when such basic things are not in place, high possibility we come across more such complexities in future.
To update: (as per local news)
The MD did not bother to appear before investigating team despite request and three of the company officials in lockup.
Total five tankers left the company premises in past two months → Investigating Team is looking how they were disposed off.
I have been curious about two things:
The cargo was non hazardous. It has uses in other industries. Still the company needed to pay the handler. Was the particular handler was chosen only to save money ?
Why the company is not pro-active about the whole incidence as it was announcing the mega deals ?
It can let the investors know since when the particular vendor has been impaneled, how many cargoes it has handled till date, what was the process/ credentials which allow the company to select the vendor etc.
Till date, there has been no news about involvement of any other listed chemical cos with particular vendor from any source.
There are many unanswered questions here. When any raw material (duty paid or exempted against end use licenses) is used in manufacture, which results in emergence of scrap/byproduct etc., how it has been cleared to the waste management handling agency?
Normally as I know, these waste handlers have to be licensed and all that they charge is a fee for handling and disposing the waste. They do not deal in these materials.
Disposing the byproduct/scrap/waste/slag can be of 2 kinds - (1) sell it to industries which use it further downstream or recycle it further. The Industry clearing the said scrap/waste etc., do not have the technology to further use it or want to invest for recycling. Here when the waste is cleared, there is a value assigned and proper invoicing needs to be done giving all details of buyers and also tax needs to be collected. To whom these waste was sold is not known. It cant be sold or invoiced to enviro agency as they do not use it further.
(2) it has zero realizable value, hence, dispose off. These agency follow a procedure where to be disposed. Normally there are areas specified for disposal.
So in this case, was it a sale or disposal is not clear. The enviro agency cannot sell it further to cement, dye industry as these are not raw materials purchased by them. Plus, the company cannot sell it to these agency as these are not products that can be consumed at the agencies end. Something doesnt fit in here
Is this is reason why all Pharma companies are down?
In ESG era, where countries are shutting down companies due to pollution which is helping Indian companies to gain business and sign long term contract, Indian companies are careless and doing jugaadu things.
As per this article MD is absconding. Crime branch is in search of him. Crime branch doubt company has links with chemical dumping mafia and paid lakhs of rupees to dump chemicals illegally.
Beg to differ - based on practical experience. ESG is becoming a key parameter for Investments by PE funds and VCs. But MNC contracts - i don’t think so. I have personal experience in multiple contracts, and this is hardly a clinching parameter - what really matters in real world is Pricing, Competency/Experience and Solutioning. If ESG is really so important, China would have never reached to the top level in manufacturing ever. Even locally, the current darlings like Deepak Nitrite etc would have never grown. No personal offence to you - but now a days, most people on twitter talk from theoritical view point rather than real world realities and experiences
I agree that ESG is a fancy word but I have personally observed that it is gradually picking up in financial and other sectors also.
Its was not just a dumping incident as causalities have been reported and also the silence of the Company itself is self incriminating in my view.
I know that people will forget this in next 6 months but then why to take chance. I decided to exit as my loss was only 5%.
Though there are difference of opinions about this ESG scoring but there are there to protect the environment and to protect the society we are living in. There will be some deviations but those can be debated and refined year after year.
I think we Asian economies have become sweat shops for the west, where these guidelines are very very stringent, which comes with a huge cost ( In a product manufacturing the cost of compliance is very huge ) , all these days their respective governments were not too strict on imposing these norms on a company that is trading in their land. Now they are forcing all their companies to be more strict on the companies from whom they are sourcing.
Our industries should adhere to these guidelines and charge the premium to the customer.
I have searched are there any other companies using this company for compliance check
Here other names two MNCs (there may be some other companies doing the similar work please share here if you know any)
