20 Microns Nano Minerals Limited
Prospectus research note
review extraction · 114 verified facts20 Microns Nano Minerals Limited is engaged in processing and selling of a wide range of Specialty Chemicals which primarily include (i) Functional Additives (FA) & (ii) Chemically Modified Minerals (CMM). 20 Microns Nano Minerals Limited is also engaged in processing and selling of (i) Soft Minerals (SM) & (ii) Hard Minerals (HM).
The commercial hook is that 20 Microns Nano Minerals Limited has a long term arrangement with the corporate promoter to market and sell its products through their network.
The DRHP places the company in Specialty Chemicals, so the issue needs to be read as a sector-specific manufacturing and distribution story rather than only as an SME listing.
Source: DRHP p.94, p.112
Management's own case rests on diversified product portfolio, diversified user industries, import Substitution, support of our holding company, product innovation and continuous R&D.
The same filing also shows concentration risk: top 10 customers accounted for around 59%, 57%, and 59% of revenue from operations in FY 2015, FY 2016, and FY 2017 respectively.
A key dependency is explicit in the DRHP: 20 Microns Nano Minerals Limited derives substantial synergies from Corporate Promoter, 20 Microns Limited.
Geographically, the disclosed footprint includes Exports to Nigeria, Saudi Arabia & Sri Lanka.
Source: DRHP p.45, p.113, p.128
This is a Specialty Chemicals issue.
The industry section gives a scale-and-growth frame: Rs 1,000 billion; Rs 5,800 - 6,200 billion; Rs 1,443 billion; 10-12% CAGR; 12-14% CAGR; 12% CAGR.
Demand drivers cited in the DRHP include increased intensity of consumption, end-use demand, improved consumption standards, government initiatives, favourable global factors, FDI up to 100%.
The counterweight is competitive intensity: highly fragmented with SMEs comprising 70-75% market share; global players present.
Source: DRHP p.92, p.94, p.95, p.96, p.106, p.108
The proceeds are not just a balance-sheet event: the named objects are to fund the capital expenditure for setting up new manufacturing facility at Plot 336, GIDC Waghodia, Vadodara, Gujarat; general Corporate Purposes; creating a public trading market for the Equity Shares of 20 Microns Nano Minerals Limited by listing them on the SME Platform of NSE (NSE EMERGE) to enhance its visibility and brand.
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To fund the capital expenditure for setting up new manufacturing facility at Plot 336, GIDC Waghodia, Vadodara, Gujarat
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General Corporate Purposes
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Creating a public trading market for the Equity Shares of 20 Microns Nano Minerals Limited by listing them on the SME Platform of NSE (NSE EMERGE) to enhance its visibility and brand
Source: DRHP p.75
Profit after tax
reported sequenceFinancial trend. Profit after tax turned positive from FY2015 onwards, with a loss of Rs. 27.40 lacs in FY2013 and Rs. 12.17 lacs in FY2014, to a profit of Rs. 149.58 lacs in FY2015.
Profit after tax. -2,740
Profit after tax. -1,217
Profit after tax. 14,958
Profit after tax. 9,018
Source: DRHP p.49, p.50
Control is concentrated before the issue, with Promoters hold 89,48,270 Equity Shares (99.76% of pre-Issue paid-up equity share capital); Promoter Group (excluding Promoters) holds 21,510 Equity Shares (0.24% of pre-Issue paid-up equity share capital).
Related-party angle. Related party transactions exist for the last five financial years and six months ended September 30, 2017 as per Accounting Standard 18, detailed in Financial Statements - Related Party disclosures on page 223.
Source: DRHP p.155, p.156, p.162, p.190
60
risk factors disclosed in the filing
The DRHP lists 60 risk factors.
The first layer is execution/legal risk: 20 Microns Nano Minerals Limited, the promoters, the group company and the directors are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.
Customer concentration matters because top 10 customers accounted for around 59%, 57%, and 59% of revenue from operations in FY 2015, FY 2016, and FY 2017 respectively.
Financial risk is also visible: 20 Microns Nano Minerals Limited has certain contingent liabilities and its financial condition and profitability may be adversely affected if any of these contingent liabilities materialize.
Regulatory risk is material because there have been some instances of non-filing / delays / incorrect filings in the past with certain statutory authorities.
Risk 20 Microns Nano Minerals Limited, the promoters, the group company and the directors are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, results of operations and financial condition.
Risk 20 Microns Nano Minerals Limited has negative cash flows in the previous financial years, details of which are given below. Sustained negative cash flow could impact our growth and business.
Risk 20 Microns Nano Minerals Limited has not yet obtained certain statutory and regulatory licenses, registrations and approvals required to operate its manufacturing facility... 20 Microns Nano Minerals Limited cannot assure that it will not be penalized for such non-compliance under the relevant laws which could adversely affect its business operations and financial condition.
Risk 20 Microns Nano Minerals Limited operates in a competitive business environment, both globally and domestically. Competition from existing players and new entrants and consequent pricing pressures may adversely affect its business, financial condition and results of operations.
Customer/supplier risk 20 Microns Nano Minerals Limited has not entered into any long term or definitive agreements with its customers.
Customer/supplier risk 20 Microns Nano Minerals Limited has not entered into any long term or definitive agreements with its raw material suppliers.
Customer/supplier risk 20 Microns Nano Minerals Limited is subject to product liability claims with respect to quality and defects in its products in India as well as in other countries where it sells its products.
Financial risk 20 Microns Nano Minerals Limited has certain contingent liabilities and its financial condition and profitability may be adversely affected if any of these contingent liabilities materialize.
Source: DRHP p.17, p.18, p.19, p.21, p.22, p.24
Exchange filings
Fields captured from NSE and BSEDocuments
Data sources: NSE . Data quality review, 1 warning.