Sampre Nutritions

[rankamoksh]

Current Mcap: 40cr
CMP: 59.2

Sampre Nutritions Limited is a Public Limited Company domiciled in the State of Telangana,
Hyderabad incorporated under the Provisions of the Companies Act, 1956. The Company is
engaged in the activity of manufacturing of confectionery products.
The principal place of business is situated at 133, TSIIC Industrial Estate, Medchal-501401,
Medchal Malkajgiri Dist, Telangana.
Total no of employees:128

The company is engaged in manufacturing complete range of confectionery, éclairs, candies, toffees, powder and centre filled products. The company is instrumental to deliver the growing volumes for most of the MNC’s and beside producing its own brand. The group one stop shop for complete range of confectionary productions.

Large companies such as Mondelez, Nestle, and Mars dominate the chocolate category, while regional firms account for over 35% of the confectionery market.

The Company had signed an agreement with The African Peace and Security Union to set-up of manufacturing plant for the complete range of Fortified Vitaminized Candies for African Countries and all related requirements in November 2022

Sampre Nutritions Ltd, Gurbani Group inks MoU with The African Peace and...

As the current production capacities are being fully utilized and in view of request from M/s. Mondeleze India Foods Private Limited, Principal client of the company for additional capacities, agreement with Reliance Retail Limited for supply of complete range of confectionary and potential demand from export market, there is urgency to increase production capacities to serve the order of customers.

Considering 25 years of valuable association with Mondelez India, they have further approached the company for manufacture of caramel based lollypop in eclairs category. In this regard company has placed order for import of new line of machinery for manufacture of lollypops with capex of 2.5 Crores and this is expected to add another 350 tonnes per annum capacity to the existing capacity.

Company has also raised funds by way of issue of equity and Convertible Warrants
with the object of meeting the long-term funding requirements of the Company for
capital expenditure, working capital, general corporate purposes, etc. in order to
support the future growth plan of the Company. Also, Company has obtained
approval of members for raising of funds and issuance of securities through QIP
and/or FCCB and/or any other permissible modes not exceeding USD 100 Million
only.

Management of the company:

Red Flags:
1:) The company has significant related party transactions.

2. Significant increase in management remuneration.
   

   
   
   
   

3. Wide fluctuations in operating margins of the company
   

   

4. Decline in promoter Shareholding
   

   
   
   Promoter shareholding has declined in the last few years due to dilution of equity by issue of warrants and equity to raise funds for capex of new plant that has commissioned.

5. Pending litigations:
   

   

Disc: Hold a tracking position

[rankamoksh]

@DEBASHISH Sir would love your insights on this business. I’ve done a deep dive into their business after seeing the bulk deal you participated in.

[rankamoksh]

Sampre Nutritions is again doing a fund raising worth 83 Cr which is more than their market cap through FCCB after already done fund raising so many times.

The company had many red flags earlier regarding high volatility in margins and sales too but I choose to ignore it as it was exclusive manufacturer for Mondelez which gave the company some credibility and also through scuttlebutt I found that their plant at Hyderabad, Telangana was very good and since they were approached by Mondelez to set up a new plant for lollypops so fund raising made sense and since the promoter himself was not selling due to raising funds through preferential allotment he got diluted.

So I had mailed their investor relations for questions I had but I have received no reply.

Now in the past they had also come with a similar circular that they would be raising $100mn

It was just a plot to pump and dump shares as can be seen in this chart.

Their Related Party Company is in the same business

They have earlier made announcements of opening new subsidiaries in Dubai and England similar to their announcement now of signing an MOU with African.

Now they are raising capital through Aries Capital Ltd as their lead manager, this company was also the lead manager for fund raising through FCCB route for Evexia Lifecare and KBC Global.

Now if we look at both these companies now:
Evexia Lifecare’s borrowed 700 CR and then siphoned off this money in Africa

Similar pattern was observed in KBC Global:

Although after the announcement of fund raising the stock is locked in Upper Circuits I have decided to sell all my holdings as this company is most probably fraudulent and I choose to ignore all the red flags as it reminded me of Warren Buffet See’s Candy business and since they were exclusive manufacturer for Mondelez for eclairs, I was expecting an update regarding the money they had spent on importing machinery for manufacturing of lollypops for Mondelez and was expecting some increase in sales and margin once it goes live.