Sharing an in depth video on Pharma Value Chain by SOIC

Will this be the Next Megatrend in Pharma Sector? 🔬💊

Neuland is discussed in depths from 16 to 22 minutes on the time line.

Hope you find is useful

Invested and Biased

dr.vikas

If you go through the last conference call, management acknowledges the difficult last 7-8 years and finally the tide has turned favorable with strong tailwinds. If anything the past has taught them to be more conservative and they are diluting and raising capital cushion probably at the right time.

While discounting business performance and capital allocation track record we should also be considerate of the operating environment and challenges thereof.

Disc: Invested from lower levels, booked partial profits in the 1400-1500 range.

I want to add few things here. These are my personal views and may be wrong.

Q1, Is Umar Balwa, managing Director of the company, is right person to talk about the production capacity, capacity expansion and revenue potential/guidance etc.

My answer is no, because he holds a Bachelor’s Degree in Economics & Commerce, from the Mumbai University but do not hold any engineering degree. He currently holds the position of Director of Global Operations for the Balwa Group, which includes the engineering company Sealmatic, food processing division Panetteria and the hospitality division of the group’s numerous projects. Balwa Group, founded in the year 1986 is a traditional family run business enterprise. Since its inception, the Group has been active in the fields of Hospitality, Real Estate, Engineering and Food Processing. The Group’s hospitality portfolio includes a varied range of business and leisure accommodation with 5 and 4 star rating. Fairfield Marriot, Radisson, Residency Sarovar Portico and Grand Blossom are the elite hospitality projects developed by the group. The Group’s realty division includes Techniplex, Resiplex, Indiplex etc which are high end commercial, residential and industrial units in the heart of Mumbai city.

So, technically he gives his service to Sealmatic India on part time basis.

Q2, Then, who is the right person?

My answer is executive Director and co-founder of Sealmatic, Mr. Hanif S Chaudhary.

Mr. Hanif was Assistant Vice President of Burgmann India Pvt. Ltd. for 18 years from 1993 to 2011 before co-founding Sealmatic. Before Burgmann he was Production Manager at A.K. Engineering, a Balwa group company, from1989 – 1993.

Hanif Chaudhary has formal education in the field of mechanical engineering. He has been extensively trained in Germany and Japan in the field of mechanical seals. He is the operational head of Sealmatic and responsible for planning, leading, organizing and quality conformation to international standards.

While Umar Balwa has formal education in the field of Economics & commerce. His experience of over 30 years in global business has earned him the position of international spokesperson for the Balwa group as well as for Sealmatic India. His personality is dynamic and more suited as a salesperson.

3, The foundation of Sealmatic is the idea of Mr. Hanif. Mr. Umar Balwa also confirms it. Mr. Balwa tells, one day Mr. Hanif came to him and made an unexpected suggestion to him. Why don’t we start a mechanical seal business? Mr. Balwa looked at him with a quizzical expression and answered, “Do you know what it takes to start a mechanical seal company?” Mr. Hanif said, “Yes.” Then Mr. Balwa asked him if he was willing to go through the grind and the pain of starting out again. Mr. Balwa pointed out that they were merely 22 when they started out in 1989 as opposed to their current age. They were both in their mid-forties and so he wondered aloud if our energy levels had abated. Even as I posed these rhetorical questions, I knew that Hanif Chaudhary and I didn’t really have any doubt in one another’s abilities. In reality, from that moment on, a new idea had begun to germinate in our minds.

Mr. Balwa also tell that, What prompted him to restart the painstaking process? It could probably be the strength and support of Hanif who has always stood like a rock besides him and given him the grit and determination to move forward against all odds. Hanif effortlessly and efficiently took over the entire operations on the production side and left him free to scour the world of international business.

My Conclusion: – don’t take the act of frequent media releases, announcement, and Earning guidance from Mr. Umar Balwa too seriously. We should treat him as a spokesperson of Sealmatic India. We should analyze the business and its progress instead of the word of the promoter.

valuation is tricky I am not an advisor , I use DFC with my own growth numbers and terminal multiples and I see that for me its undervalued but I do not know how it al turns out .

It is due to RBI regulation on Feb 23 that restricts onboarding of new customers until migration of existing customers to new handles is complete and you have to take customer consent before giving them new upi handle. Basically since the psp bank is going to be changed from PPBL to other banks RBI is looking at it as if it is a case of fresh UPI registration. Don’t know how long this saga will continue before allowing them to onboard new customers. What’s interesting is that existing customers started getting messages since yesterday like this “ Paytm is now powered by 4 banks!
We are creating new UPI ID with these banks to ensure seamless payments. If you wish to opt out, tap https://m.paytm.me/UPInew“. Whether the regulator had permitted them to do this or not is unknown. If it is a no, they will again be in the crosshairs. Uff. But killing it you will end up having a foreign controlled duopoly in the countries payment system. Interesting times in payment space!!!

What a wealth destroyer PAYTM has been. From a listed price of 1800 to 450 now, a 75% evaporation. The dangers of buying a stock based on narratives.

2. Having said that, I think the worst seems to be over for now in terms of firefighthing: monthly transacting users have stabilised in the range of 7-8 crores and merchant subscription at 1 crore.

3. How the company is going to generate value going forward is a metric to be seen but is it not the case with all the new age companies ; Nykaa at 50k crore valuation; Zomato at 1.93L crore valuation with thr estimation of profitable cash flow assumptions stretching in to 15-20 years to make sense of these valuations.

4. The value of a payment business is not in transactional revenue but in the data and the insights it generates. Imagine an insurance company cross checking your declaration that you’re not a smoker by requesting the data from payment companies for a fee(a daily debit of Rs.18/-). Paytm still holds 8-9% market share in UPI transactions and with the regulator wanting to cap the market share of each TPAP at 30%, it can only be beneficial to Paytm if it manages the risks outlined in pt.1 well enough.

Disc: Not invested. Interested and studying further.