Today’s update also explains the recent selling by Omkar as he was supposed to bring his holding in OSCL below 9%, in due course and with all the required approvals they will transfer the cross holdings to each other…
A note on LASA published by alphainvesco today:
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Read the report at alphainvesco
Explains the LASA story well with what we do know; in simple language, vet api’s do not have the stringent testing as human api’s, the approval cycle is faster, the margins are good etc…
It very well explains Lasa but seems to make a mistake in comparing LASA and OSCL showing a bias at a couple of places.
Statement 1
As clearly visible, Lasa has better margins, better working capital management and better capital structure despite growing at a much faster rate.
My comments / notes:
Although the above is a fact as a standalone statement in comparison to each other but it does not mean OSCL is not a good investment and only LASA is.
Statement 2
What Next? As we can see, working capital situation of specialty chemical division has improved a lot, while Lasa needs lower working capital, as an industry norm. Promoter, Omkar Herlekar, has plans to raise his holding in Lasa. How & when that happens, we need to see.
My comments / notes.
Will Pravin not have the desire to increase his shareholding in OSCL? Only Omkar would like to increase his shareholding in LASA? The play with words and what is left unmentioned is what I am highlighting.
Statement 3
Promoter Actions– While a lot of past actions can be attributed to Pravin Herlekar and his team; if Omkar Herlekar and his team also engage in similar actions of pledging and selling etc then it would hurt market sentiments and would impact near term performance of the stock.
My comments / notes.
This got very close to out and out blaming Pravin for everything that has gone wrong. No one hand can clap without another. The report also did not mention that Omkar has been pledging and selling shares since the de-merger, which we believe might have been for his requirements for funds for LASA but cannot be sure, although that is still the logical reasoning.
Statement 4
Headwinds of Omkar Speciality gone– With independent listing, company is now free from legacy issues of the parent, OSCL namely working capital problems and promoter selling.
My comments / notes.
Again, it seems to point only to OSCL. The fact is the one CAPEX that really bought them into this mess is the unit 5 which has been transferred to LASA (yes sure they had longer WC in OSCL but that alone would have been manageable and corrected faster if not for the unit 5 delay). And although it will start soon hopefully, if OSCL had not funded (via all the routes) the unit would not have been built. So although, yes, LASA will enjoy the unit, the fact is OSCL’s real troubles came because they thought that unit 5 will start quickly and they will get the permissions, would only Pravin have thought this, and not Omkar? And all the promoter selling was Pravin? He was the cause and reason for everything? I don’t think so.
My Commentary:
Alpha Investo has very nicely captured the LASA business and it’s future growth possibilities, and to be fair he is only talking about LASA (other than the above when comparing with OMKAR).
But, let’s not forget that Pravin the first “Alpha” of the family. He is not going to sit back and not be competitive. He has one of the most competitive streaks I believe I have seen. That is the only thing that explains how he has grown OSCL from nothing in his kitchen to where it is, else today Omkar would not even have the opportunities that he is enjoying.
Second, please do not miss the mentioned but not explained, OSCL will hold 10% of LASA’s equity. that means at the valuation done by alpha invesco OSCL is going to get a bump up to the tune of around 27.5 crores of LASA shares. That will make OSCL stronger.
Finally, I have seen these promoters say many things that they could not do; but in all the research I did, the one thing they have not failed in and have always done more than promised is sales growth with margins. They have always made outlandish sales and growth statements, and then gone ahead and delivered on them. Pravin has said a short while ago that he will bring in additional 200 crores of revenues in OSCL from the new perfumes and fmcg segment alone by 2019, don’t write the father off so quickly.
I have full confidence that Pravin will deliver. So will Omkar.
For us as business partners, and I am using a some very big words here, I hope I have this right… we as professor bakshi says… and to use his words, might have found ourselves not one but two “intelligent fanatics”. It’s a very strong possibility.
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I know that management announced long back that LASA will be demerged and Omkar will be running the show.
But now reading from the latest updates shared by the management like:
- “no special rights through formal or informal arrangements in each other’s company”
- "Both will not interfere in the day-to-day affairs of each other’s company
This leads me to believe that there has been dispute in the Herlekar family. Seems like ownership is being distributed as part of dispute settlement as if father and son are not on talking terms. Can someone provide any insights and confirm if this “family dispute” is actually true?
Unfortunately, I must say you’ve converted analysis into mythology now. Your views read like a modern day Mahabharata. It implies a lot of assumptions and completely rhetorical statements based on conjecture.
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Very possible. Unless you have a data point and only statements to declare it conjecture, then the future is as known to you as is is to me. Unknown. So, I have only extrapolated their previous ability to gauge their future ability.
In simple English, let’s say there are 2 friends. When they reach age 40, one has 20 Cr and the second has 5 lacs. Now, both think they have great future potential and could achieve this or that. Anything is possible but data gives a pointer to who will actually be where at 60.
Same with investing for me. Only the past performance can give some indicator of future abilities.
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Yes in one of the article the management had predicted that they would do 600 in sales. And they did 545 crore sales . This was outlandish when they were doing 275 In sales
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Dear @valuestudent,
Going against common belief is very tough. Anyone otherwise can gauge a company on the numbers…but it’s an art. It’s very clear that sector has tailwinds, they have some niche products/ patents, sales has been growing. Mr Pravin is very qualified to handle business and was successful in past in development.
This appears to be a temporary phase, which is seen to be happening in many family controlled organizations in India. This is where opportunity lies. I was reading about Titan (post of Raghav Behani on his blog) as how it came out from tough situation, just because Sales did not hamper. Though I welcome opposite views but your efforts are really admirable in holding our conviction in this stock. Thanks,
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Dear @Santosh_D Thank you for the kind words.
It is a good learning experience for me as I am only trying to practice here with others, and the more I discuss the more I learn as well else I have to discuss with the wall 
. My teacher has taught me, “In stock market, if right stock bought at right time and in right quantity at right price then there is no risk but very good gain is certain. If any thing missed out of these four basics then hope of big gain is false”.
Please find attached an old one page report on OSCL and a little bit on the spec chem players; it is slightly old but many questions on the kind of profile that OSCL has in the speciality chem industry are answered by seeing the companies who were invited to this meeting; it was good for me to go back and read it as well. They here speak about their customers and business in a forum where most people know the facts of each other.
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Thanks. This article answers a lot. At least the business is not all cooked up.it’s nice that oscl is invited with big league players.
Disc. Invested
Results board meeting on 14th August 2017.
http://www.bseindia.com/xml-data/corpfiling/AttachLive/46611da9-63d6-486d-a31a-bfc2c093071f.pdf
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Earning Conf Call on 16th August 2017
http://www.bseindia.com/xml-data/corpfiling/AttachLive/d7b09e89-9c96-43fc-84a4-57a2079282ba.pdf
Sorry, I inadvertently posted CLSE results on this thread. Withdrawing the post
One can find the results here:
https://www1.nseindia.com/corporates/corporateHome.html?id=allAnnouncements
I think this is the Results link you meant to post: https://www1.nseindia.com/corporate/Outcome_BM_14082017164709.zip
Is the result is excluding the numbers of Lasa Lab ??
Yes it excludes lasa
I have recorded the conference on my phone but unable to upload it here because mp3 format is not allowed.
Sir how to participate in concall ?
Is there any process of early registration or we can call at the same time ??
Just call the number as published by the company