Thanks for sharing your perspective. While working on the company, I couldn’t understand a few things and will really appreciate your perspective on them.
1. R&D costs
Do you know why Best Agro’s R&D costs are mentioned as zero in their annual report? I imagine that generating trial data for getting patents and registrations will require some investments. What is the line item that this will get reflected in?
2. Freight outwards expenses
Their freight expenses are very low at 2.6 cr given the size of their business. Dhanuka, which is of similar size in terms of topline has freight expenses of 39 cr. Why are these so low for Best Agro?
3. Other expenses
Best agro has other expenses of 36 cr. on topline of 1211 cr. vs 155 cr. on topline of 1478 cr. for Dhanuka. Does such low other expenses imply that they are largely trading in agchem segment?
Also, their audit fees is on the higer side at 45 lakhs (vs 21 lakhs for Dhanuka which has higher revenues).
4. Consolidated vs standalone nos
I was also looking at H1FY23 results, and couldn’t reconcile (consolidated - standalone) numbers.
On a consolidated basis, revenues were 1164 cr. and EBITDA was 249 cr.
On a standalone basis, revenues were 1009 cr. and EBITDA was 100 cr.
So if I wanted to understand contribution from subsidiaries (consolidated - standalone):
Sales: 1164 - 1009 ~ 155 cr.
EBITDA: 249 - 100 ~ 149 cr.
How are their subsidiaries making such high EBITDA margins (close to 96%)?
If you can help me reconcile these numbers, it will be really useful. Thanks in advance.
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