VAKRANGEE LIMITED - Company Update - other aspects -Latest Position

VAKRANGEE LIMITED

Company Update

November  28,  2018,  Mumbai:

Update on SEBI Investigation

On trading activities

About Vakrangee Limited:

Vakrangee Limited is a unique  technology  driven  company  focused  on  building  India's largest network of last-mile retail outlets to deliver real-time Banking & Financial Services, ATM, Insurance, e-Governance,  e-Commerce  and  logistics  services  to  the  unserved  rural,  semi-urban  and  urban markets.

Its Assisted  Digital  Convenience  stores, called as “Vakrangee Kendras”, act as the “One-stop Shop” for availing various  services  and  products.  Vakrangee  currently operates more than 45,000 “Vakrangee Kendra” outlets across India.

The Company has been at the forefront in the financial inclusion space in India. It has signed the “Common BC” and “National BC” agreements with various public sector banks for offering real-time banking to the unserved and  underserved  rurban  population in  India.

Under a strategic initiative, the Company is upgrading the existing Vakrangee Kendra outlets into the Next Gen format.  These Kendras  boast  of  a  modern  and  standardized  format  with  a  uniform  look-and-feel  in  all  the outlets and is aimed towards building consistent service levels and uniform consumer  experience. The model also  embodies  technological  advancements, including mandatory  ATMs  that  enable  the  ease  of  financial transactions; centralized monitoring with the help of CCTV Cameras which would provide remote assistance to these pan-India  Kendras

Securities  &  Exchange  Board  of  India  (SEBI), had conducted  an investigation into the trading activities of certain entities in the scrip of Vakrangee Limited.

 No findings or instance of any stock manipulation by Promoter or Promoter group entities.

There  were  no findings or instance  of any stock manipulation by Promoter or Promoter group entities.

·       There  have  been rumours  and  various media  reports and  articles over  the past  few  months about the company’s promoters being under  SEBI’s scrutiny  on  charges  of stock manipulation.  Latest development indicates that the rumours were totally baseless .

·       Company promoters have also received a clean chit from the office of economic offences wing (EOW).

·       A complaint was filed with the office of Economic Offences Wing (EOW)  against  the  Company  and  its  Promoter/  Managing  Director  &  CEO  Mr.  Dinesh  Nandwana relating  to  price/  volume  manipulation.

·       EOW  had  conducted  an  enquiry.  Company  had  provided  all  the  satisfactory  replies  and  supporting  documents. 

·       Upon  completion  of  their  investigation,  the  office  of  EOW have  communicated to the Company that they have not  found any substance in the complaint  and hence closing the enquiry, thereby giving clean chit to the Company.

·       During  the SEBI investigation it  was  observed  that  promoter  entities  viz,  NJD  Capital Private  Limited  along  with  Vakrangee  Holdings  Private  Limited,  Mr.  Dinesh  Nandwana  and  Dinesh Nandwana   (HUF)   (being   members   of   promoter   and   promoter   group),   had   increased   their shareholding from 38.71% of share capital to 41.61% of share capital between June 2015 to August 2015.  

·       They  were  required  to  make  disclosures  related  to  the  above  transactions  to  the  company  / stock  exchanges  pursuant  to  the  provisions  of  SEBI  (PIT)  Regulations,  2015  and  SEBI  (SAST) Regulations,  2011  within  the  time  frame  specified  thereunder.  

·       It  was  observed  that  there  was  a slight delay in intimating the same to the company and to the stock exchanges. This matter was  reviewed  by  SEBI  and  it  was  intimated  to  the  promoters  to  be  careful  in  future  to  avoid recurrence of such instances.

·       Mr. Dinesh Nandwana, MD & CEO, Vakrangee Limited,stated , “We have always maintained that these rumour-based media articles relating to stock manipulation by Promoter or Promoter entities are false and completely baseless. We are proud to state that we have been proven right today,as observed by the outcome of the investigations from EOW and SEBI.

·       We continue to remain positive and confident with respect to our business model. Meanwhile, we have adopted a strategic decision to upgrade all our existing Vakrangee Kendra stores into a standardised Next Gen store format.

·       About 3,500-4,000 Vakrangee Kendra outlets will be upgraded as per the Next Gen model during the quarter-ended December 31, 2018, and these are currently in advanced stages of completion. These outlets are spread across 380 districts and 2,548 postal codes of India , of which over 2,500 - 3,000 outlets belong to Tier 5 & 6 cities.

·       Simultaneously, the process of upgrading the remaining 41,000 outlets into Next Gen Vakrangee Kendras is already underway, and these will get upgraded before the end of CY 2019.”

·       Business is running well. Nobody has resigned.

·       No impact of market share prices on the inside working

·       10 Business partners have been added who trust the company

·       L&S has been hired to revamp the Kendras and their suggestions are being implemented.

·       All outlets will have same design, make and feel.

·       Market cap steep fall victims – All - includes Promoter group

·       

·      Mumbai Mirror news article spread some rumours – non commercial news paper - Now these rumours and  charges are proved false

·       Gold standard kendra will have upto (500 sft) and silver kendras upto (200 sft)

·       ATM – EXPENSES for others : (1) RENT (2) SECURITY-WATCHMAN (3) CASH REPLACEMENT CHARGES IS ZERO (4) HANDLING CHARGES -2 GUN WIELDING SECURITY (5) CAPEX   

        But Vakrabgee kendras avoid many of these expenses and reduce the others. So, ATMs will be profitable. 

·                     ALL CENTRES WILL HAVE ALL SERVICES

·        COMPANY IS INVESTING CASH IN KENDRAS WITHOUT GOING TO BANKS

      (material Prepared for my YouTube Video)

 

VINATI ORGANICS - Q2 FY 2018-19 - A spectacular quarter

VINATI ORGANICS

Q2 FY 2018-19

A spectacular quarter

Vinati Saraf Mutreja : Managing Director & CEO

VOL is the world's largest producer of IBB & ATBS and the largest manufacturer of IB & HP MTBE in India. 2 state-of-the-art manufacturing facilities are in Maharashtra which use best-in-class technologies.

Facility	Plant 1	Plant 2
Location	Mahad – Raigad, Maharashtra	Lote – Ratnagiri, Maharashtra
Distance from nearest port (JNPT)	140 km	210 km
Year of establishment	1989	2002
Products Made	IBB and NBB	ATBS, NaATBS, TBA, IB, HP MTBE, DAAM
Certification	ISO 9001:2008; ISO 14001:2004 and OHSAS 18001:2007	ISO 9001:2008; ISO 14001:2004 and OHSAS 18001:2007
Cutting-edge technology	InstitutFrancais du Petrole (IFP) France	National Chemical Laboratories (NCL), Pune (for ATBS) and SaipemSpA, Italy (for IB)

Q2 FY 18-19 results Analysis

VINATI ORGANICS	Sep '18	Jun '18	Sep '17	YOY		QOQ
Net Sales	252.82	264.75	160.68	57.34		-4.51
Consumption of Raw Materials	121.28	129.56	83.78	44.76		-6.39
P B T	98.81	96.91	43.22	128.62		1.96
Tax	33.78	32.66	14.08	139.91		3.43
Net Profit	65.03	64.25	29.15	123.09		1.21
Equity	10.28	10.28	10.32	-0.39		0
Basic EPS	12.66	12.5	5.65	124.07		1.28
MP	1490
PE	29.42338
FV	2
52 W L H	760	1624
VOLUME	4563	523
PRICE TRENDS
04 12 18	1 week	2 week	1 month		3 month		6 month		9 month	1 year
Price	1455.8	1558.35	1502.05		1417.6		985.2		806.5	996.3
Gain / Loss	2.35%	-4.39%	-0.80%		5.11%		51.24%		84.75%	49.55%

Located on Mumbai Goa Highway, 250 km south of Mumbai is manufacturing site of ATBS,TBA,Isobutylene, HPMTBE,DAAM and other polymer products/by products. 

These are environment friendly solvents, industrial intermediate chemicals, industrial solvents exporters, petrochemicals, textile chemicals, aromatic solvent , polymers, water treatment chemicals (cooling water / boilers), dispersing agent, paper coating chemicals, construction chemicals, paints.

ATBS is the  largest  product  and  contributes  to  about  50%  of  its  sales mix.  As  far  as  ATBS  goes,  company ended FY2018 with strong growth on back of increased usage. The applications based on ATBS are growing as it is used to make polymers that go to water treatment, oil recovery, personal care, etc.  Along  with  that  the  exit  of  one  of  the  key  competitors,  Lubrizol has  further  added  to the growth in ATBS for the company.

ATBS grew by more than 35% on value basis and 25% on volume basis in FY2018 as compared to FY2017. Starting FY2019, Company has further consolidated its leadership position in this product and now it commands a global market share of more than 60%. This year, it expects to grow by more than 30% on volume basis. 

It has added new customers for ATBS and also renegotiated its pricing contracts in this product. Since it is a very difficult monomer to manufacture and it has  a  proprietary  technology  for  this  it  do  not  see  any  new  competitor  entering  the  business and hence these sorts of margins are expected to be sustained over the coming years.

Company is further undertaking a capacity expansion, which will increase ATBS capacities from 26000 tonnes per annum to 40000 tonnes per annum. This is expected to be completed by April 2019 and will result in a capex of about Rs.75 Crores to Rs.80 Crores. Hence it expects to grow the ATBS volumes by 25% for the next two to three years.

second product is Isobutyl benzene; The Q1 sales were stable, but Q2 sales  are  slightly  lower  on  account  of  shutdown  taking  by  one  of  the  largest  customers.

Company expects to make up for this in Q3 and Q4. 

The third  biggest  product stream   is  isobutylene  and  MTBE. These  sales  have  fared  well over  the  last  few  years  and  they  keep  growing  year-on-year.  The  customized  products  and isobutylene derivatives, which were launched across the FY2017 and FY2018, are also delivering as expected.

New products and projects : Company expects to finish its butylphenol project by April 2019.  This  essentially  consists  of  four  main  products  para  tertiary  butyl phenol, ortho tertbutyl  phenol, 2,4-ditert butyl phenol and 2,6-ditert-butyl phenol. Now the first 2 are intermediates  to  be  used  in  resins  and  perfumery industries whereas 2 and 4 go in raw material for making antioxidants, which are also used as addictives in plastics.

With the capex of Rs.240 Crores Company is estimating to clock in sales of Rs.350 Crores to Rs.400 Crores from this project. With all of the above in place, Company is expecting to keep growing at 25% with a CAGR for the next three years

Company is  expecting  EBITDA  margins  of  about  35%.  ATBS is a higher margin product and as with increase in ATBS capacity, the volumes of  ATBS  will  go  up.

Once  butylphenol  comes  on  stream,  which  has  lower margins than ATBS, so blended margins for the next three years should remain at about 35% at EBITDA level.

For PAP, Company has set up a prototype  pilot  plant.  The  technology  or  proprietary  technology  developed  by  NCL  has  been successfully  demonstrated  at  the  lab  level.  Company is  now  running  trials  on  its  pilot  plant.  once  this  pilot  plant  runs  successfully  for  six  months  company will   decide  to  take  the decision whether to commercialize the product or no.

Company has plans for ATBS from 26000 to 40000

Company has  already  increased  IBB  capacity  from  16000  tonnes  to  25000  tonnes  last  year,  so  that should take care of the IBB demand for the next three to five years.

Butylphenol will  add  up  around  Rs.300  Crores  to  Rs.400  Crores over a period of time as company scales up.

Keeping  in  mind  these  three  ATBS,  IBB  and  butylphenol  Company  can  continue  to  grow  at  20%  to 25% run rate for the next two to three years.

The butylphenol plant is expected to come on stream by April 2019, so the first year is FY2020 It would take sales at about 60% to 65% capacity utilization and then from FY2021 take it at 100% utilization.

the  demand  for  ATBS should  be for  the  next  three  to  four  years 40000 tonnes.

 Lubrizol  exiting  the  market  and  the  overall  market  size  is  growing because applications based on ATBS are growing mainly in oil and gas, Shale recovery, water treatment and these kind of industries and that is why 40000 tonnes for the next five years seems to be achievable.

Butylphenol  presently  are  mostly  imported  into  India  from  Korea  and  Singapore,  so  mostly  we are looking at imports substitution. It is not made in India these products simply because they do not have the necessarily raw materials isobutylene. Now since VOL is the largest manufacture of IB in India, it makes sense for it to further integrate and start making these products in India. As far  as  the  margins  go,  it  works  at  a  15%  to  20%  ROI  basis,  The  margins  will definitely be lower than ATBS, but we still expect a payback within five years.

Market share would be 80% to 90% because already about 24000 tonnes or 25000 tonnes of butylphenols are imported  into  the  country  and  company is  going  for  a  larger  capacity  of  about  37000  tonnes,  so  we will also be exporting some butylphenols outside India.

Globally what would be the market size for this?

Vinati Saraf Mutreja:

Globally we have a huge product. Globally the market size would go in lakhs of tonnes.