Based on my research experience, nd m sure lot of other investors vl agree wid this. The co. has very limited disclosures in its available materials and its not easy to find the answers you are looking for. Unless you have sm specialised scuttlebutt resources at your disposal, I suggest that this investment is a pass if u r looking from a retail investor point of view and the scuttleutt resources availale to him\her.
Disc :- Not invested. Resarched and passed it precisely for less info available and difficulty of obtaining it.
Their Auditers resigned by stating that “Company is adopting cost reduction measures and will not be able to pay the fees as proposed by us”
Auditer charges for FY 22 was 16.5 lakh, FY 21 was 15 lakh ( as per AR ). So probably auditers were expecting about 18/18.5 lakh ( at 10% increase ). Company denied and changed auditers. ( intention to reduce in other expense is visible here as well. )
So it looks like that company is seriously looking to improve bottomline. However, One needs to observe as to if / how they can improve topline as well going forward.
Disc: I have small position at lower price from current levels.
Currently operating at <50% utilization. Focus in not on volume growth, focus is improving bottom line and gross margin
Replacement cost of current capacity is not very high, key strength is technology
Had to stop anti foam product business in 2019 due to global of Dow and Dupont. This product was given to Dow. It used to contribute 40% to sales at 40-45% EBITDA margins. This product line is no longer in any Dupont portfolio
Cash usage
5-6% on fixed deposits, no answer given to give back excess cash
Have a global treasury policy, cannot invest in debt or liquid mutual funds
What is the vision for next 3-5 years?
Over next 5-years, hope to drive export growth from Daman plant
Expand silicon based products, exports from Daman, qualify new products
Target 16-18% margins in FY24 and 8-10% organic growth
Longer term focus is towards growing Multibase’s business in India, move more safety based products to India
Want to improve supply and variable cost in Daman factory. Their current raw material supply base is largely in Europe which makes their Indian entity unviable. They are looking to establish more raw material supply base within India, and then expand business of Multibase as then it will be of higher strategic importance to Dupont
Related party
Other 2 Indian Dupont entities: Electronics & water protection business. Product mix is completely different
Customer concentration
Distributors handle end market, that’s why top customer contribution looks high
Miscellaneous
Trading sale margins were adjusted in Q4FY23 which resulted in higher margins. Will keep fixed margins for traded products
Will it help Multibase India to come back to growth trajectory once again or Will we see another value destruction like in the Dow demerger?
Disc: Invested
