It was sometime around the middle of 2013, we were analysing a company, Fresenius Kabi Oncology (FKL), in wake of Sebi’s mandate for companies to comply with the minimum 25% public shareholding norm. The promoter (Fresenius Kabi Singapore) was holding 81% stake at that time and had decided to offload the excess holding in the market. When we were analysing FKL in detail, we came across a name, Shilpa Medicare, in its list of oncology API suppliers.
In fact, we were a bit surprised to know that SML was a listed entity engaged in the supply of oncology API to not just players in India but in Europe as well. Later, we approached the management to understand the company’s business model. Initially, the promoter Omprakash Inani was very reluctant to meet. After much persuasion, we met him for 15 minutes in Mumbai. We discussed briefly about the company and expressed our desire to deep-study the company. Inani’s first reaction was that since the company was in the process of building the business, it would be better if we could meet him after the management had done some more work. In response to this request, our instinctive question was after how many days should we approach the company, assuming that the company must be in the final stage of some announcement and, hence, was unwilling to talk at that point in time. But the promoter said that the work they were doing would turn into blockbuster numbers only around 2017-18, a good four years from our meeting date! We were shocked to hear that but the answer made one thing very clear that here was a promoter who is a visionary and not at all impatient to grow the business. He wants to give his best without haste to fulfill his dreams.
After that meeting we waited for a few months, deep-dived into more details about the molecules SML was working on, taking cues from the USFDA and related websites. After some requests, we finally met the management at SML’s Raichur facility in Karnataka.
The meeting was even more interesting. The management had a clear timetable of what they were planning to do over the next four years, the amount of funding the company would require and, similarly, how it would sustain itself during the intervening period.
The important thing that the promoter made it very clear was that given the four-year time-frame, we should not ask him about financial ratios or near-term