Hi @salonihemnani011 – Appreciate your perspective. I understand Lupin was de-facto saviour to tide over the BIFR situation. Me questioning the continuation of conversion/job work based business model was more around post BIFR phase. Company became net worth positive in 215-16 and was out of BIFR (SICA act was repealed in 2016).
Also, based on my reading the terms of loan from Lupin, first loan (3.75 Crs loan between 2012 -2014) was helping them from working capital (at least debtor days) since the 50% of the loan was getting adjusted against ‘conversion charges’ invoice. However, the second loan in 2017-18 for ~2 Crs. did not had the clause of loan being re-couped against conversion work. In that sense, my guess that it was not much WC accretive.
May be, it has to be looked at in context of the unstable history that the company (unfortunately) had, China choaking entire fermentation industry and the sheer market dominance that customer had.
Nevertheless, a positive sign if management is making some bold and decisive moves while being conservative and resilient for a very long period.
Thanks,
Tarun
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