SYSCHEM ANALYSIS
- Syschem is an Antibiotics API manufacturer. Syschem has a market cap of around Rs.200Cr. Its manufacturing plant is located at Kalka, in Haryana.
2.The existing management do not seem to have found a way to run the company profitably. They were consistent, only in making losses, over the last 10 years!
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3rd party started acquiring shares and offered to take over the management. Actually that has happened, if you check shareholding data. By March 2022 quarter, the lead-promoter has changed.
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There is a remarkable change in quarterly performance since last 4 quarters. The new management seem to have turned the company around. The operating margin has become ~10% vis a vis the earlier perineal, negative numbers
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There is visible sales / profit growth. the new promoters of Syschem are owners of “Industrial Solvents & Chemicals Pvt Ltd” (ISCPL), a 500Cr company with decades of experience in pharma intermediates & APIs.
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Apart from blue chip pharma companies in India, ISCPL has customers in Europe, Africa, Middle East & Far East who are served through their group company, “Indosol Exports”.
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What we can presume is that the new management will be able to use their Indian as well as foreign operations to cross sell Syschem products, at higher margin. ISCPL has enviable client list including all major Indian Pharma Blue Chips
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ISCPL also been able to arrange bank funding (HDFC BANK) to key raw material suppliers, recently, by extending their corporate guarantee, which would have been impossible for the previous investors
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They should be able to expand capacity and add more products, to the API portfolio of Syschem. Potential
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Syschem India Promoter holding increased from 22% in June22 qtr to 52.10% in Sept qtr with new promoters coming in. 9 consecutive quarter losses till Dec 2021 and 3 consecutive quarter profits from Mar22 to Sep 22.
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