Super results by the company press release attached.
press release.pdf (322.2 KB)

Woah!! What happened to the stock today people? What was the sudden movement in the stock. I have a small position in the stock, was looking to increase it before it suddenly ran

I was and still am extremely bullish on fibre optics and connectivity solutions. Presently I am (wait for it) 45% (~10L) down on this stock after having been positive for a few months last year. Didn’t exit at the point of Q3 write-off’s thinking it will eventually get compensated by the market share grab in US/UK and subsequent quarters of profitability. Promoter track record is the only (and probably the worst) concerning aspect. They seem to be getting into more value added products and I’m really intrigued by the tons of patents that are getting granted (hope those are verified claims) and how it will help sales / margins.

Some of the other purchases alongside like RajRatan, Avantel, Page etc are growing like crazy and there have been disasters like Muthoot Finance & IndiaMart.

So the question is how do you handle such a scenario from a portfolio (~25 stocks) point of view. I’m just at around 1.5% in red maybe. When such a stock gives mixed signals, do you cut the losses and redistribute whatever is left or considering the pain has already been inflicted, stay put and hope the recovery wouldn’t be too slow.

I had attended the AGM of Thirumalai Chemicals held today online. Some of the running notes of the AGM are given below (can be some discrepancy in notes as):

• Fortunate that we didn’t lose any of our employees but some of their relatives were impacted due to covid.
• Last 1.5 years we have done well. Largely result of action taken by our staff and management team.
• Some segment of our market like construction and auto were impacted during FY22.
• FY22 we had our largest products, best sales, good profits, margins and cash flow. Our initiatives gave the best results. Our subsidiary in Malaysia had their best year. In previous year, we had set up subsidiary in Europe in Netherland. Started trading effectively and doing well in Europe. Even in US we have our team. These initiatives prepare ourself well for increased capacity in India and US. Our subsidiary in US has progressed well in petrochemicals and fine chemical plant that will make phthalic anhydride and food ingredients. Lost 6 months. Q1FY25 will start operations. Dahej project working. Started work in first phase – phthalic anhydride and fine chemicals. 20% addition due to phthalic anhydrite and fine chemicals due to debottlenecking will come by second half of FY24. Post expansion will expand geographically. Both projects are near RM procurement regions. During the last 3 years, board and management has worked very hard. In management, in operating team we are well versed with these challenges. Confident to work on multiple projects at the same time.
• Q1FY23 was a good quarter – able to meet our target. Rest of the year started to see some headwinds due to recessions – this will affect our results. May have downward pressure on margins due to this. Will handle the issue capably.
• We are largely in commodity business but have some fine chemicals and food business. Commodity business is highly volatile. We are seeing headwinds in last one month. If there are variations its on account of pricing being decided by the markets. Customers import internationally or buy from us. Producers from other countries sell in India where margins and prices can be lower. That is why margins are volatile. We cant control it. However, we do control costs and whatever is in our hand.
• Dahej investment is between 500 – 600 crore funded partly by debt and partly by equity. US investment is USD 100 – 150 million and mixed through debt and internal accruals.
• Our challenge is to reduce bad nos during worse times and maximize profits during good times. Focus on cash flows
• Existing capacity – 150,000 MT capacity in Ranipet and 20,000 MT in Dahej – grow 20% in Ranipet. Dahej adding 100,000 MT capacity. US adding 45,000 MT pthalic anhydride capacity being added. Demand is good – its still growing fast in pthalic anhydride – demand being met through imports.
• Malic Anhydride spreads and opportunity size? Capacity in Malaysia? Debottlenecking there?
• Malic acid – recovery by waste way?
• Malaysia and India have done well. Malic Anhydride made in Malaysia. Used to produce coatings, special paints, used in FRP – reinforced polymers, polyester resins and plastics, food ingredients, pharmaceutical products. Very wide use – pesticides. Lot of downstream products go into automotive products.
• Phthalic anhydride is used to make paints, pigments – blue and green etc. Fine chemicals and food ingredients – squashes, processed foods – idli, dosa, beverages etc – thousand used. Oil and drilling industry. Malic acid largely used in food and beverage industry.
• Markets doing? Markets doing well. Largely sold out and will continue to be sold out this year and next year also. We hardly carry any inventory. Strong activity by the government due to inflation and due to Ukraine war there is decrease in demand which is expected to take place like construction, food, infrastructure etc. This will impact China and whole globe will start slowing down. We are going to see compression in GDP globally. We sell our products to paint industry for construction and automotive industry. All these industry won’t be isolated from the slowdown. We will also have softening of prices of our product. We will run at full capacity. Capacity utilization currently is 95% in India and Malaysia.
• Cannot say we will be flat for this year. We expect to be flat for next 2 months. Things change and recover fast.
• Enough space for us in domestic markets.
• We strengthened our team and bought a new CEO, new head in Ranipet and even in Dahej. We are strengthening our team
• Fumaric acid is made from waste in phthalic anhydride plant. Chemicals extracted from it is used to make fumaric acid. Similarly, we will be doing lot of fumaric acid in Dahej as well.
• Cannot talk about how much we will borrow and how much will be internal accruals. But we are conservative. We are not being extreme in our borrowing. We are funding the capital.
• We don’t want to go to BDO and plasticizers. BDO has become a commodity. Our intention is not to increase commodity side. BDO went through terrible times few years back. 95% capacity utilization in Malaysia.
• Speed of execution – we need to get approvals first – take 6 month to 12 months. Project execution time is 3 years – 30 months atleast. Trying our best to do things fasters. ADD continues in phthalic anhydride. Will bring new capacities online as soon as possible.
• Net cash of around 280 crore as on March 31, 2022.

(Disclosure: Invested with 1 share to attend AGM)