Adding below Omkar IR’s response to few questions that I had asked them over the e-mail.
1) Finance Costs –
1) I heard in the concall that the short term debt has been converted into long term debt. E.g. given was of a 1 year loan getting converted into a 2 year loan. What is the purpose of re-structuring debt like this?
Ans.- Since, the STL were putting pressure on cash flow, hence, some of the Short Term debts have been renegotiated with lenders and converted as Long Term debts.
2) The above restructuring i.e. converting short term debt into long term I assume should result in interests costs going down. But I see that the finance costs have been going up. What is the reason for finance costs going up despite a re-structuring like above?
Ans.- The conversion was done at the end of quarter hence there is no significant change in interest cost. The additional finance cost is due to interest on Loan against shares.
3) Has any extra debt been taken? And, if yes then for what purpose?
Ans.- Rs.4 crore additional limits were sanctioned by Bank to meet the additional working capital requirement of Lasa.Has our company being capitalizing interests costs? If yes, then why? No interest capitalization during the quarter.
2) Process Patents-
1) Assuming that these process patents result in reducing costs, what is the impact of these process patents on costs i.e. by what percentage are the costs brought down?
Ans.- Around 15%.
2) If possible can the impact of these process patents on Margins be stated?
Ans.- The impact of these process patent can be seen in the long run.
3) What were the savings in H1 FY16 and Q2 FY16 because of these process patents?
Ans.- Direct saving cant be quantified but Increase in sales revenue, Having good concrete order book in Hand are the Advantages and results of Having Process patents.
4) Do these process patent provide any competitive advantages over competitors?
Ans.- Yes.
5) Don’t competitors come up with such process patents?
Ans.- So far the competitors have not developed such processes.
3) Raw Materials-
1) What is the outlook going ahead on raw material prices?
Ans.- We expect the raw material prices to remain stable in near future. As most of our RM are basic petro Chemicals.
2) What is the percentage of imported raw material costs as a part of overall raw material costs and as a percentage of sales?
Ans.- Will be Provided shortly.
4) Does our company enter into any forward contracts to hedge currency fluctuations? If yes, then can you state the amount of such forward contracts as on date?
Ans. No. Generally we have natural hedging on account of forex inflow on the export sales made by the company.
5) Are there any inspections and certifications lined up from regulated markets in Europe and USA for our plants? If yes, then from which markets and regulators? And till when will our plants receive those
certifications or approvals?
Ans.- Yes. We are planning approval of TGA as Our API has high demand in Australia and New Zealand(2-3 Months approx.). Also at later stage were are planning to Get US FDA as well. (Around a year’s time Max)
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