1st Issue - Promoter is giving loan to company
The interest rate promoter is getting is 9% which is at arm's length. This reflects promoter commitment and confidence in company rather than being a ref flag
1/n
3rd issue - Sales to group entities
Have addressed here in this thread. However, with the current results, 2nd issue is alleviated.
2/n
Promoter's salary is actually low. Adding Profit linked incentive (commission) it becomes high. This shows he is more invested to generate higher profits for the company and his belief in growth. One should not be penny wise pound foolish
3/n
True with all companies in aggressive growth phase. Investor should be happy that the money is being invested to generate higher returns instead of paying tax and giving dividend. Do you buy Growth Mutual Fund or Dividend Mutual Fund?
4/n
Generally happens with very aggressive growing companies in capital intensive sector. Once they pause the investment even for a brief while, they clean up the balance sheet pretty quick.
Moreover this is no more of an issue with BR now
5/n
BR was set up as a backward integration for other two companies and gradually it found its own growth path surpassing the other group companies. Moreover, negligible dues from group companies
6/n
Won't detail much here as not to be spoken in public but observe 3 things for those companies and connect the dots
1. Date of Acquisition
2. Holding Tenure
3. Their AGM date
7/n
Plant 3 - This is now Nissan JV with 30% ratio of BR
Capex - 290 cr + 20 cr land(this will be paid back to BR for selling the land)
Now some details
8/n
Gupta ji won't give such an asset for JV if something significant was not on offer. It is anybody's guess. I am inclined to assume Patented molecules or higher share of business from Nissan.
9/n
10/n
EC is pending site visit for 200 cr expansion
If i add the expanded capacity from Plant 2 and Plant 3(only 30% as their share) - For Those who think they had only 1 star plant
11/n
40k tpa for Agrochem from 12.3k tpa
15.6k tpa for Formulations from 12k tpa
If it was 100% of plant 3 capacity would have been
65.2k tpa for Agrochem
24k tpa for Formulations
12/n
Capacity is still expected to be 3.3 times for agrochem and 1.3 times for formulations. This in itself is a stupendous number with a promoter like Gupta ji
13/n
1. Balance Sheet does not stretch
2. JV will significantly augment their capabilities to next level
BR has invested 9 cr in JV. I am not sure if BR has to invest any more capital
14/n