Archean Chemical – Specialty Chemical Leader

@Aditya_Bajoria : Thank you for cross checking the IPO document, which i could have missed.

1. They are paying money but in last 5 years lease didn’t extend. As you know all industrial salt, Bromine everything comes from this one location. They can clearly write that.

2. Lets consider this case of taking 2-3% in revenue as commission, if you go through RHP you will see that in the last 5 years (2018-22) . They have 2 bad years where they are negative profits and excessive rains erased all their margins on both the years. 2022 is where ACL had good profits and also inventory turnover. They raised cash at their peak year at 27~28PE to 2022 profits which is their peak year probably. After IPO proceeds they retired debt and all interest costs came to bottom line.

To think through what i surfaced, promoters just raised money from people at a very good valuation(check interest rates they are paying on their previous loans and valuations at which they diluted equity). ACL made good money through IPO and even before first year got completed Promoter had his eyes money.

3. IPO proceeds are 1462 crores according to RHP.(Page 78) (657Cr to Promoters and 802 Cr new issue).

Lets look at their net cash rough estimate
ipo proceeds 807 cr
Net Profit is 384 cr (not adjusted for recievables)
underwriting expense -40 cr
total 1151 Cr

retirement in debt 828 cr

so total remaining is 323 crores(1151 – 828)

how much did the balance sheet swell by (1756-1532Cr) = 224 Crores.
we now see a differential of ~100 crores.

Lets look at Cash flow statement (FY2023 – FY2022).

1. Inventories changed by -37 crores
2. Trade receivables changed by 120 crores
3. Trade payables changed by 20 crores
4. Other liabilities changed by 70 crores

Balance sheet

1. Inventories changed by 47 crores
2. Trade receivables changed by -40 crores

I was unable to understand how did the numbers differ here between balance sheet and cashflow.

I was probably wrong in using the number 250 Cr, it could be lesser or i could be wrong with my assumption. The numbers didn’t tally for me, so i gave it a pass.

i wasted almost 1.5 month on this, If you could point out what is wrong in my calculation i will change my mind as well, because you rarely get 10x inventory turnover and 40% opm hand in hand.

Edit: Provisions of 8.5 crores were not included in cost…