• Revenue grew 15% year-on-year to Rs. 176.7 crores in Q1 FY25
• Advanced Pharmaceutical Intermediates segment grew 16.6% to Rs. 135 crores
• Specialty Chemicals segment grew 10% to Rs. 42 crores
• Gross margin improved to 42.1% from 40% in Q4 FY24
• EBITDA margin declined to 16.7% from 22.1% in Q1 FY24
• Establishing Enchem AMI Organics as a subsidiary for electrolyte manufacturing
• Expanding electrolyte additives capacity to 2,000 metric tonnes
• Developing 8 new electrolyte additives beyond VC and FEC
• Expanding into Japan market after successful PMDA inspection
• Promoting new molecules from Baba Fine Chemicals to Korean and Japanese customers
• Ankleshwar plant expansion on track – remaining 2 blocks to be completed by Q2 FY25
• 16 MW solar power plant project initiated, expected completion by Q2 FY25
• Electrolyte additives capacity expansion on track for completion by end of FY25
• Targeting 25% revenue growth for FY25
• Aiming to reach 20%+ EBITDA margins by Q3/Q4 FY25
• Expecting asset turnover of 3-4x for Ankleshwar plant at full utilization
• Confident of meeting 25% growth guidance for FY25
• Expecting sequential growth in coming quarters
• Fermion contract to fully ramp up in FY26
• Peak sales for Apixaban and Rivaroxaban expected in FY26
• 15% YoY revenue growth despite industry challenges, driven by pharma segment
• Margins under pressure but expected to improve with higher utilization and better product mix
• New growth drivers like electrolytes, Japan expansion, and CDMO contracts in pipeline

A couple of corporate governance issues to be aware of in Seamec

1. Payment of hefty advisory fees to a related party company owned by Directors (Amounting to 4% of revenue or 10% of cash PAT whichever is lower). Management says this is a way of compensating corporate for shared services.

2. Heavy investments in UK subsidiary, supposedly for setting up an office to tap into North Sea markets (55Cr via equity and 145Cr+ via loans). Management has said that in response to investor concerns they are seeing how to liquidate part of these investments and bring them back to the standalone entity.

A few other thoughts about Seamec

• The OSV/DSV industry seems interestingly poised with no new supply of vessels expected in the next few years. Contract rates for these vessels should keep going up as and when contracts expire. This should result in operating leverage. An industry article which talks about the situation for OSVs – https://www.rivieramm.com/news-content-hub/news-content-hub/many-happy-returns-for-osv-owners-in-2024-and-beyond-79086

• At the same time, buying a 2nd hand vessel from the market may not deliver desired ROCEs because 2nd hand vessels prices are also very high. Here, Seamec has an advantage, as its parent company HAL Offshore is going to transfer a couple of vessels to Seamec over the next few years. One DSV, NPP Nusantara, will get transferred to Seamec in Sep 2025 for a purchase price of INR 200Cr. At this purchase price and the prevailing charter rates, Seamec should be able to make good ROCEs.

• 3 of its existing DSVs are nearing end of life and will need replacement in the next couple of years. Remains to be seen how these get replaced. Any delays may impact revenues temporarily. Management has hinted that there is an outside chance for extension of life by Govt of India considering the criticality of these vessels and the prevailing market conditions.

• While Seamec gets almost all of its revenues from ONGC, even ONGC is heavily dependent on Seamec and HAL Offshore for its DSV needs. So the dependency is mutual.

Disc: Not invested yet, tracking. Invested in another O&G ancillary play, Deep Industries.

Sharing the latest results and investor presentation

https://www.bseindia.com/xml-data/corpfiling/AttachLive/ab86bada-4eee-4812-b171-b357471ffd96.pdf

Also sharing a tweet by Vineet Jain
https://x.com/vineetjain1101/status/1823956832550879413

I am just tracking. No investment.

dr.vikas

@kalpesh4430 it wasnt removed. Even in quarter ending June 4.5 Cr was paid to the promoter(s)