They have received an order of 733 Crore and might receive one more similar order. We should be able to see their execution skills in coming quarters. I am tracking it and took an initial position.
Disclaimer: Invested
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They have also incorporated a new wholly owned subsidiary called Kotyark Bio Specialty Ltd.
The only description provided about the business of this company, is that it will deal in advance Glycerin.
This information can be found here
Company seems to have great potential to create wealth for the share holders. The only concern for me is governance and execution and they seem to lack in both as pointed in this discussion.
i donât understand why they are raising capital through preferential issue(of 55 Cr). they seem to have great order pipeline of worth more than 1500 Cr. they could easily make this money and pay within a year.
I would appreciate if someone can shed more light on these issues.
Disclaimer: Invested
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Company has allocated 6.35 lacs shares to promoters/non-Promoters/public aggregating to 49.5 cr on preferential basic at 780 rupees share.
Seems like a good news. We should wait and see who has bought these shares.
corp filing
Disclaimer: Invested
Was interested by the numbers so went through the filings and annual report. Found some points which were a bit intriguing/strange. If anyone has any counter-points on the same; would be extremely helpful since the order book is growing at a rapid pace and it seems like a structurally growing business:
- FY22 Gross block on which company did 150 cr and presentation claims utilization of ~15-20% was 10 cr. So on a 10 cr gross block, company can do 750 cr sales? And make double digit margin on the same? Seems too good to be true. What am i missing?
- CFO salary was only 3 lakhs. Seems too low for a company that does 100 cr+ of sales
- Hard to find any employees on LinkedIn/company page on LinkedIn.
- Some of the costs for eg. manufacturing cost of only ~15 lakh for a 100 cr+ revenue company seems too low.
- Value of RPTs with sister company Yamuna is quite high. Anyone have any insights on the corporate structure and the reason behind these being 2 separate entities?
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There are many points which donât get answered to reflect the tremendous growth which is about to be there in next 1 year.
- Whatâs the entry barrier for the bio-diesel? Why no other player has come close to it?
- Why there has been resignations of 4 KMP over the past year?
- Cash flows being negative?
Can Anyone answer the above points to throw light on it?
- Even mgt was asked and their simple answer is we canât comment on entry barriers. We like our business and hence we are into it. Previously Kotyarkâs promoter family business was mainly of the non edible vegetable oils(raw material of bio-diesel) before they started manufacturing bio-diesel. Also Kotyark is the market leader in bio-diesel currently in India and from last tender, itâs market share can likely increase
- I can asnwer on CFO resignation â Higher studies. You can check the mgmt commentary dated Oct 30, 2023.
- On operating level, they are cash flows positive. They are doing more capex and probably over all net cash flow negative. They have recently purchased 2 land parcels near their current factory (Got to know from nearby people)
Disclosure - Invested and could be biased
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Hi experts,
Press :- https://nsearchives.nseindia.com/corporate/KOTYARK_17052024221745_Press.pdf
In the above mentioned press release i see some surprise and cautions points which looks very strange.
ex:- it still did not realize its full potential. This was primarily due to delays in the issuance of Purchase Orders by Oil Marketing Companies (OMCs) against the tenders won by the company. In many cases, even after the issuance of Purchase Orders, the required Indent for supply came late. These delays from OMCs have led to the lapse of orders in some instances, leading the company unable to supply such orders
can any give some comments on the same?
@srt @yrm91 @Chirayu26 @Vivek_Chadha @Dhvanit_Merchant17
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Right
So OMC releases the tender â Purchase Order â Letter of intent
Since the bio diesel theme is new there is gap in the procurement of bio-diesel from OMC side. Also the raw material prices are high.
Post elections we should see some improvement in the procurement process and more and more tender will be released
Please see the ppt released by company. It was able to fully execute the quantity received in LOI. Its the OMCâs which are delaying plus govt extended the penalty imposition by 1 year and hence a delay in procurement as per my analysis
Disclaimer - Invested and biased
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In my line of business I deal with a lot of government owned oil and gas entities and delays in procurement are norm here. Small companies who donât have leverage, bargaining power and dedicated sales presence struggle with their collection. The smaller the vendor, the more delay they are likely to face with collection.
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Its not about collection, its about Letter of intent for supply of bio-diesel
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That was my point. Company executed an order against letter of intent and not an actual purchase order. If they donât have purchase order they wonât get paid as itâs not in the system, which will impact collection.
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Itâs not an intent itâs called INDENT.
The company clearly states that they have POs but subsequently those POs were not converted to indents.
Google meaning of indent,
Disc: invested
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Iâm in sales and I have seen usage of letter of intents (spelled on customer-issued letter as âintentâ). LOIs are generally used in the cases where there is time-pressure for business to recognize booking in a given period (month or quarter) and there is a delay in issuing POs (purchase order) due to several factors (approvals, system breakdown etc).
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The company issued statement says indent, and specified what order the system follows,
What you have seen may be different.
Disc: invested
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Vikas is right. Indent is different from. (Letter of) Intent.
LOI is a mere wish to do (procure)âŚindent is request to supply against issued purchase orders.
Regards
Disc. Tracking not yet invested
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Indent and intent shouldnât be mixed up. Indent here is a kind of call-off or request for services/supply against an agreed scope of work which is included in the purchase order. And which is what you see here.
Letter of intent is basically an unofficial agreement between seller and buyer to have a transaction without a legally binding purchase order in place.
So in case of Kotyark it seems they started the work not based on letter of intent but actual purchase order. But their problem as per the excerpt produced by you is delays in getting purchase order and not being committed the full scope of supply, as stipulated in POs, by their buyers. This leads to mismatch in booking and actual revenue of the company that eventually shows up in P&L.
Letâs hope they can resolve this with their buyers although I would say this is a very common with large government buyers.
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Company website is down from weeks. No filings in long time.
Multiple queries sent on compensation of Gaurang bhai, Dhruti and Bhavini Shah is still unanswered.
Salaries for the current Fy shall be as follows:
Gaurang Bhai: 17 lacs per month
Dhruti Shah: 4 lacs per month (previous CFO has a salary of 25 thousand per month)
Bhavini Shah: 7 lacs per month
Combined annual salary of the family: 3.36 cr for a comapny with PAT of 22cr (15% of PAT)
Why does the promoter family deserve such a high salary for a company of this scale?
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There is AGM on 27th Sept. You can sent questions as shareholder to CS and they shall be obligated to answer.
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Queries were sent to CS post release of AR. 2 reminders have been added on top of it. No response.
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