I think the core issue here is management guidance and ability to execute on guidance. There is a growing sense that this management, while being brilliant at its core business, indulges in over ambitious guidance. While this may be forgiven in an emerging star so to speak, multiples will rapidly drop for Kitex if they continue to do really well but fail to meet targets they set for themselves within timelines. This is the core concern as it is a pattern and unfortunately, not a comforting one.

Omkar results out today.

Sales increased from 66 cr in q2 fy 15 to 101 cr in q2 fy 16.

Net profit increased from 6.4 to 9 crores.

Half yearly EPS is at 8.35. (There is an error in the figure of eps reported in the result put on bse)

Looks like the good times are continuing for the company.

total debt at 215 crores as compared to 200 crores as at end of q2 fy 15. (there's variation in long term and short term figures but overall figures are as put up here)

Promoter pleding continues.

disc: invested.

Was covered by Value-picks blog also -

http://value-picks.blogspot.in/2013/02/the-curious-case-of-lactose-india.html

Promoters have also been reducing stake over last few quarters. Why?

Hi Aniket,
Thanks for appreciating the effort.

1) Margins have improved for 2 reasons -
a) Proportion of conversion sales have increased, if you observe sales have come down while EBIDTA has increased.
For eg FY 13 had sales of Rs 46cr & EBIDTA at Rs 3cr while, FY15 had sales of Rs 24cr and EBIDTA of Rs 5cr.
b) Increase in lactose capacity exclusively for Kerry (from 3500tons to 11000tons).

As of now Lactose India numbers include lactose exclusively done for Kerry and small work for sanofi (pls refer Mitin's reply above). Bigger kicker will be higher utlisation of kerry capacity and Lactulose (which will happen over next 2 years). Many companies outsource smaller ingredient or component work to specialists take for Eg AIA engineering...what AIA does (grinding balls) constitutes small ( in terms of cost) for mining and cement companies but AIA enjoys very good margins with almost monopoly. AIA cost is small and sticky for mining & cement companies. Lactose India with high market share and long history could have been chosen by kerry for similar reasons. Rs 10cr for Kerry would be too small, while they get supplies from Lactose India (Pls refer to Kerry transaction to understand)

2) Yes you are right contracts into these companies would require significant sales effort and track record. Lactose does have a track record and Kerry approached them for capacity expansion. According to management many of their clients insisted Lactose India to manufacture Lactulose (Lactulose is 3rd derivation from Lactose after processing...pls google further to understand the same). Thus Lactulose capacity has been put up after such requests/demand from clients.
Pls go through their site www.lactoseindialimited.com....it contains good info.
Hope that helps.
Thanks.

And very curiously , Kerry had announced in an notice to Ireland exchange in 2011, that they have acquired Lactose India

http://www.kerrygroup.com/docs/interim-management-statements/IMS/Q3_2011_IMS.pdf

and same was also reported in an Irish newspaper http://www.irishexaminer.com/business/kfqlojsncwau/

And again same was reported in 2011 AR of Kerry,
http://www.kerrygroup.com/docs/reports/2011/Kerry_Group_2011_Annual_Report.pdf

but Lactose India finds no mention in 2012 AR of Kerry http://www.kerrygroup.com/docs/reports/2012/Kerry_Group_2012_Annual_Report.pdf .

So officially it's part of Kerry group now

The business prospects appears good, but given this kind of mis-information, I doubt if promoter can be trusted ?