Interestingly enough, for the first time the govt. appears to have released data for June for all individual commodities already. I thought it was a bug on phreaknomics but it is actually true But they haven’t given quantity info for June yet so we can’t make out realization for June yet. Good to see that in June as well there is 200% growth.
Correspondingly, the imports are still extremely suppressed and almost negligible.
Mangalam Organics result is out.
It is not inline to our expectations. May be other companies are benefiting from higher exports or the export numbers need to be looked into again for its correctness.
Sales least of the last 3 quarters is looking bad.
If Mangalam Orgaincs can sustain this sales and margin then still it can command better Price to Earning. But can it ? or it will produce further lower number?
So, rally be limited after good time in the market comes or no rally at all
Good results on YOY basis. But what could be the reason of surge in “change in inventory”.
There could be two reasons for that: Either they have Good order book or there is a mis-managenent.
Boarders who are tracking this company for long @phreakv6 & @RajeevJ can through some light on it based on their past experience.
@satya61229 Export/Import numbers indicate that we are supplying to RoW and China’s dumping is nearly non-existent and numbers, especially margins are in sync with that. Since most of the consumption is domestic, we cannot expect sales growth to mirror export sales growth (For eg. Q1 exports by value is just 41 Cr which might just be less than 10% of domestic consumption in the same period). Also, we cannot compare QoQ because of inherent seasonality in the business, as I had illustrated few months back.
Gross Margins are at 42% which is slightly improved over last quarter which was at 40%. Overall results look good. From here on, it is all about sustainability of the numbers which will show if the story is structural or not. Market is currently pricing in for a one-time commodity tailwind at 2.5x EV/EBITDA. It has now lasted 1.5 years roughly. If it lasts after the capacities increase and through the festive season, maybe it is structural, otherwise it is not.
As for current quarter, is a 25% PAT growth at a time when most businesses are bleeding bad? (Not to mention the recent ratings upgrade by CRISIL as well). Interestingly, management has sort of made some sort of guidance along with this quarter’s results saying they are confident of the long-term prospects of the Camphor business and that they are growing branded sales in modern trade, general trade and e-Commerce. Maybe bear market effect
@phreakv6, Thanks for the reply.
Many times management of many companies have cheated by buying in small quantities and by giving rosy forward looking pictures.
Amazon has made its product, Amazing choice products then i have expected huge jump in sales. But, nothing is visible.
https://www.berjeinc.com/2019/02/01/turpentine-derivatives-37/
Prices in China continue to soften for Gum Turpentine. Lack of demand from U.S. (trade war) and need to move stock has fueled this. However downstream manufacturers in China have high priced inventory and are keeping prices firm for certain derivatives. We expect to see more offers from India
As deal with DRT is for terpene phenolic resins, something strange is happening about it in china…
As we can see in above image, FOB china has increased suddenly around 5 times what does it signifies?
After going through Mangalam Organic annual report please find my initial observation:
Remuneration increased by 800% for the promoters
Net profit above 100 cr on the same hand operating cash flow of mere 29 cr.
Free cash flow is just 3 cr after deducting cash flow from investment from operating cash flow
Company might be capitalisng expenses for ongoing CWIP
Employee benefit cost increased from 12cr to 22cr
Foreign currency outflow vs inflow is 240 cr vs 45 cr ( hence this can draw our conclusion that company is importing raw material and not manufacturing it inhouse)
Dividend paid Rs 1
Company was having good CFO till 2018 were as in 2019 after earning more then 100 cr as net profit, free cash flow is mere 3 cr.
On the other hand Comparing with kanchi Kapooram annual report:
Net profit increased from 15 cr to 28 cr were as remuneration of promoter is increased by 30% overall
Net profit before tax above 41 cr on the same hand operating cash flow of mere 27.2 cr. (After considering finance cost paid under Cash flow from finance activity)
Free cash flow is 22 cr after deducting cash flow from investment from operating cash flow
Employee benefit cost increased from 4.35 cr to 5.95 cr
comparing both annual report i think so kanchi kapur is much much better then mangalam organic .kanchi kapur done expansion of 8 cr with preffrence issue own personal fund and now kanchi is debt free company .while u just check loan book of mangalam u can easily understand differnce.
Kanchi is only B2B player and mangalam is a mix of B2B and B2C also mangalam has reduced it’s equity by buy back enhancing shareholder value where as kanchi has diluted equity in a scenario where ur net margins are 20% and more it is more prudent to reduce equity and use funds of Banks which cost you Max 11% also mangalam is process of doubling it’s capacity and new capacity will come online in October, expansion is being reflected on balance sheet as well where as on other hand kanchi is not expanding noting is visible on gross block in kanchi,also mangalam is aggressively shifting it’s focus to retail where margins are much higher when compared to B2B model also mangalam AR provides much more clarity and business and there way forward and on other hand there is very limited info in kanchi AR, mangalam has also mentioned DRT will start contributing from 2020 which will be a game changer, I will be sharing more details in day or two as I am caught with some personal work…thanks
Sir everything looks good in mangalam but just check cash flow in annual report u can easily understand. As against kanchi is now debt free .I feel kanchi much better manage company.
How can management take such high salary back home.
800 % rise in remuneration.
Further in case when business slowdown will management reduce there remuneration.
Topline has increased without taking due care on collection but they are making sure salaries are paid on time viz a viz rise in employee cost from 12 to 22 cr
Trade payable are paid on time hence clearly scene supplier having control on them.
In quarter 1 of 2020 company was able to show higher profit by showing tax expenses of just 11 percent.
As per my understanding company does not enjoy any tax benefits from government. Further as per IT law if company in excess of of 400 cr turnover need to pay tax MMR. Accordingly if company could have made provision at MMR then profit could have read at 12 CR instead of 17 Cr.
Please seek clarification from the management for the same.
Mam u need to do homework properly I think you should re look at many things first of all salary hike taken by promoters was approved last year in AGM and this year they have not hiked any salary also u said in previous post net profit for company was 100 cr where as it was only 72 cr PAT also out of 10 positive in annual report you choose to point out only few neutral things which were already known since last AGM and already reflecting in numbers…
Management remuneration of Rs.25.00 lakh per month to each person for its nature of business and its scale of operations is unheard of. If management is interested in taking out money in such manner, the share holders cannot do any thing except hoping that better sense prevails with them. All minority shareholders put together can not stop such resolutions. The management did not have time or did not show any interest even in writing proper Management Discussion and Analysis till 2017-18 when they have taken huge hike in remuneration. Their MD&A in AR 2017-18 was a one liner indicating the address of the company.
Copy of total MD&A para in AR 2018 is reproduced below:
“MANAGEMENT DISCUSSION AND ANALYSIS OVERVIEW The Company is engaged in the manufacturing and selling activities of Camphor, Sodium Acetate and by products, Terpene Chemicals and Synthetics Resins at its units located at Kumbhivali Village, Taluka Khalapur, Khopoli”
Yes, this was full text of MD&A.
Management has to act ethical.
Resolution has already been passed last year without any objection from shareholders and despite salary hike company delivered very good numbers topline jumped by 100% and PAT by more then 400% also salary hike is good thing I feel if numbers are getting delivered at least they won’t take out from back doors
If base is small % hike will always look bigger just look at performance post that …also last year company returned 15 cr via buy back and dividend this year they invested profits in expansion which will come online in oct and post which mangalam will have 55-58% market share in camphor market in india…
But they haven’t given quantity info for June yet so we can’t make out realization for June yet. Good to see that in June as well there is 200% growth.
