Just got curious to know about company as rememberd they objected to Credit down grade by credit rating agency. While going through past submission to BSE, came across presentation by management in August 2019. What I like is way they calculated ROCE during FY19 at 44%. While nothing wrong in approach of calculation of ROCE (that is excluding Capital WIP and Unutilised land), but the point is In Rs 1600 Cr Capital employed nearly 1200 Cr is non productive assets. Just wondering why chemcial company with this size shall carry Rs 211 Cr of untilised land (again base of upward valuation of 300 cr due to revaluation)?
Interesting learning for me.
When I further explore about Land details, I got interesting development. As per FY19 AR (Page 24 &25).
I refer to Project report submitted with EIA (not sure whether same being for Phase I or II).
On Page 23 of August 2019, We find nearly 196,000 sq mt land being un-tilised land. (It may be important to note that on same slide there is private placement of equity with Reliance Nippon and Zillow Real Estate Rs 41.4 Crore at Rs 180 per share).
While I do not have understanding about various project and that may be limitation to my wokring, I found interesting how can we have around Rs 300 Cr being added to Land value which is leasehold as given in Annual report. Further, when Project report (Environment impact study) provide for area of 61,000 sq mts (again leasehold from MIDC), there is no details of 196,000 sq mt as provided in presentation. Even annual report details of Gross block only provide for Leasehold land. So investor shall explore further details about commercial viablity of real estate deal by the company.
Lastly, depsite being Rs 300 Cr+ being added to Capital work in progress during Fy19, the company did not provide for any details about items which made up capital work in progress. Further, total debt being Rs 400 +30 Cr workng capital, say Rs 430 Cr, being subject to interest in MCLR to 260 bps, assuming cost of around 10% would result in Rs 43 cr while company has shown in ino material ncrease in interest charge in P&L and also not mentioned anything about capitalised interest in Annual report of FY19.
I would suggest investors to get more details about above mentioned issues.
Discl: No investment in the company