Saturday, June 27, 2009

Gwalior Chemicals - Update

I already written about the Gwalior Chemcials deal with Lanxess and the investment opportunity. As part of the process the company has sent across the notice for the postal ballot. I am enclosing a link to the same.
The management has reiterated its decision to distribute Rs 100 crores to the shareholders in this communciation.

5 comments:

VISHNU said...

Hi Ninad,

I just looked at your idea..It looks fantastic..I have started investing in this idea..I hope you dont mind the coattailing..(I always have sinking feeling when I copy other's idea)..

Thanks
Vishnu

Ninad Kunder said...

Hi Vishnu

I dont mind the coattailing but please do u r own due dilegence.

I just hope that u r sinking feeling doesn't come true for both of us. :-)

Cheers

Ninad

Ankur said...

Hi Ninad,

Very well written analysis.

2 things which I want to point out :

1. Total tax outgo on the sale of the business will be close to 30-40 crs. I checked that with the company. This needs to be deducted from the valuation.

2. The postal ballot mentions that around 31 crs out of the total proceeds from the sale will be kept in an escrow account and will be released to Gwalior Chemicals on achieving certain operational results.

However, the above points do not hamper the attractiveness of the idea.


Regards

Ankur Jain

Mini Index Forecasting said...

Great idea...Thank you, hey Nainad keep it up!

Ninad Kunder said...

Hi Ankur

1) You are right i did miss out on the tax part of the transaction. Your numbers in the 30 -40 crore look fair. Thats about Rs 17-18 per share that needs to be shaved off from the book value.

2) I m not too concerned about the Rs 30 crore retention. Its less than 10% of the deal and typically most deals will have such milestone related payments. They are amidst a plant expansion process and i would presume this would be tagged with that.

Cheers

Ninad