Wednesday, October 5, 2011

Kilpest India Ltd - Personalized Medicine For Your Portfolio



Kilpest India Ltd (BSE Code : 532067) is an established 38-year old Agri-input company, manufacturing & selling a range of crop-protection products like pesticides (including bio-pesticides), micro-nutrients & bio-fertilizers.

The company has a product portfolio of about 50 different products which it sells through a nationwide distribution network of over 2000 dealers. The "Kilpest" brand is well established in the north, particularly Madhya Pradesh, and in some areas it is even used generically by farmers when they wish to ask for pesticides in general.

Medical Diagnostics Foray

In 2010, Kilpest identified molecular diagnostics as a future growth-driver, and tied up with a leading Spanish Biotechnology company M/S Biotools B&M Labs S.A - focussed on molecular biology & diagnostics - and it's spin-off company 2B Blackbio S.L - a biotech company focused on Personalized medicine, nutrigenomics , pharmacogenomics & companion diagnostics - to form a new joint venture company 3B Blackbio Biotech India Ltd.

3B Blackbio Biotech India Ltd intends to lead the research and development of new tools in the field of personalized medicine, medical diagnostics, pharmacogenomics, as well as provide diagnostic tests to predict drug treatment effectiveness (Companion Diagnostics) and enter the field of nutrigenomics.

It has already put up a state of art GMP compliant biotech facility in Industrial area, Govindpura, Bhopal, the first plant of its kind in central India. The plant was inaugurated in April 2011 by Dr Narottam Mishra, Minister of Health, Govt of Madhya Pradesh,  along with Mr. Erik Rovina Mardones, Commercial Counsellor, Embassy of Spain & Mr. Adrian Gutierrez, Chief Representative, The Centre for the Development of Industrial Technology (CDTI, www.cdti.es) - a public enterprise under the Ministry Of Science & Innovation, Spain, which promotes innovation & technological development of Spanish companies.

As reported by Pharmaceutical-Technology.com :

" The facility will produce molecular biology products such as PCR enzymes, PCR reagents, real time kits, reverse transcriptase kits, cloning vectors, electrophoresis reagents, nucleic acid purification, accessories and plastic products, molecular diagnostics, AGFoods kits, BIOFood ID kit, BIOFood mixed kit, BIOGenics standard kit and 3B control DNAs.

It will also manufacture equipments such as end-point thermal cyclers, real-time thermal cyclers and gradient thermal cyclers. 3B Blackbio Biotech India has an international patent for the gelification technology owned by Biotools B&M Labs.

The R&D team will focus on proteomic and genomic biomarkers and technology development to global standards. Its focus areas also include oncology, microbiology, allergy, cardiovascular, metabolic disorders and pharmacogenomics.

The customer services will include DNA & RNA extraction, sample isolation, microbial identification, micro-sequencing and genotyping complying with the latest GMP practices. Other services include companion diagnostic tests, human genetic tests, prognostic tests, critical referral tests, nutrigenomics, bulk clinical samples processing and fungal identification services."

(Source : Pharmaceutical-Technology.com
More information - including details of laboratory equipment - are available in the referred article :

Other Required Reading :
  1. The 2011 Annual Report of the company,
  2. Management Inteview on CNBC : http://www.moneycontrol.com/news/business/kilpest-india-signs-mou-for-jvspains-biotools_487426.html
  3. Websites of Collaborators,
  4. GenomeWeb.com article, which covers the Nutrigenomics aspects of the partnership, and the reasons for Biotools to choose Kilpest as their partner :  http://www.genomeweb.com/arrays/biotools-kilpest-form-joint-venture-offer-arrays-dietary-food-testing-india
     )

    The tools & services to be provided by 3B Blackbio Biotech India are also becoming essential for Pharma companies in order to show the efficiency of newly developed drugs and penetrate in that way markets in an easier way, as well as differentiating themselves from other competitors.

    It is quite likely that in the next 5-10 years most Healthcare systems will request companion diagnostic tests especially in oncology and metabolic disorders before prescription and treatment can be initiated.


    Nutrigenomics
    Nutrigenomics has been defined as the application of high-throughput genomic tools in nutrition research. It can also be seen as research to provide people with methods and tools who are looking for disease preventing and health promoting foods that match their lifestyles, cultures and genetics. Nutrigenomics is a developing science and its contribution to public health over the next decade is thought to be major (source : Wikipedia).

    Besides the Medical Diagnostics products, the Joint Venture will also launch the collaborator's Nutrigenomics products - such as "Diet-Chip" (www.biotools.eu/pdf/Brochures/DietChip%2009.pdf), a micro-sequencing array that analyses the expression of 133 essential metabolic genes - which will help doctors & nutritionists to recommend and monitor specific dietary & lifestyle changes for individuals that will prevent, assess & treat disease risk, especially in individuals with a high risk of obesity, cardiovascular disease, diabetes etc.

    The company's nutrigenomics products will not just be useful for doctors & nutritionists. Food makers can use these products to assess the health benefits of their products & back up claims of the special health benefits of their products with scientific data. Similarly, laboratories offering food intolerance testing can also use these products. (Source : GenomeWeb.com article referred above)

    Briefly :

    Kilpest India Ltd

    Company Website : http://www.kilpest.com

    Dygnogene Division : http://dygnogene.com/index.html
    (Diagnostic Services Division of the company. Tie-up's with hospitals, nursing homes,doctors will be executed through this division)


    JV - 3B BlackBio Biotech India : http://www.3bblackbio.com/


    Collaborators & Joint Venture Partners

    Biotools B&M Labs : http://www.biotools.eu/

    2B BlackBio : http://www.blackbio.eu/en/index.html

    BSE Scrip Id : KILPEST
    BSE Scrip Code : 532067
    CMP : Rs 16.25 (closing price, BSE, 4th Oct, 2011)
    FY11 EPS : Rs 1.30
    FY11 Dividend : 10% (Rs 1/- )

    Recommendation :
    With it's new joint venture, Kilpest India now operates in 2 exciting spaces :
    1.     Agriculture, focusing on crop-protection protection products , both chemical-based & biological (chemical free).
    2.      Healthcare, with special focus on molecular diagnostics , nutrigenomics & personalized medicine.

    The humungous potential of both these segments need not be explained. Rather, what needs to be closely watched is the company's growth plans, execution skills & also it's ability to raise the funds required to propel growth.

    Hitherto, the company has been rather conservative & has not chased growth aggressively, but this is expected to change going forward, with the 2nd generation of promoter management now effectively at the helm. If Kilpest India can optimally execute it's growth plans going forward, it can deliver excellent returns to it's shareholders over the medium to long term.

    But crucial to shareholder returns will also be how & by what route the company is able to raise the funds it requires for it's expansion, especially in the new line of business which is a high margin business. Any substantial equity dilution will dilute shareholder returns.

    Keeping this in mind, the author recommends investors to closely study & track this company going forward, and take an appropriate call based on their conviction in this idea, after proper study.


    Author : Bosco Menezes

    Recommendation Date : 04.10.2011

    Disclaimer/Disclosure :
    At the time of writing this article the author has a position in the stock covered by this report. The author or any of his dependent family members may make purchases or sales of the securities mentioned in the report while the report is in circulation. Readers/recipients of this report are strongly advised to do their strict due diligence, and should be aware that the value of investments can go down as well as up. The author shall not be liable for any direct or indirect losses arising from the use of the contents of this report, and readers are therefore cautioned to use the information contained herein at their own risk. In fact, readers would do well to seek the advice of a qualified independent advisor. The author certifies that all of the views expressed in this report accurately reflect his personal views about the subject company at the time of writing this report. Feedback / brickbats may be hurled at the author at boscom@gmail.com

    Revision History :
    13.10.2011 -> Added additional information regarding the proposed activities of 3B Blackbio Biotech India Ltd, based on the Pharmaceutical-Technology.com article referred above .
    12.11.2011 -> Nutrigenomics section added, with inputs from Wikipedia & the GenomeWeb.com article referred above.

    Tuesday, April 19, 2011

    Premier Ltd - Rise Of The Phoenix ?


    BSE Code : 500540
    NSE Code : PREMIER
    Website     : http://premier.co.in/
    CMP          : Rs 94 (closing price, BSE, 18th April, 2011) ; Rs 93.30 (closing price, NSE, 18th April, 2011)

    Premier Ltd (formerly Premier Automobiles Ltd), once a blue chip company from the Walchand group and a pioneer in automobile manufacturing in India, suffered a setback in the early part of the last decade, as labour & finance problems caused it to shut down it's automotive plants .

    However in the last few years it has clawed back on to the growth path largely on the basis of it's heavy engineering capabilities , and it is now aspiring to regain it's lost glory in the automotive space.

    The company currently has 3 divisions , as follows (source : company website) :

    Engineering
    Premier’s engineering division has focussed on alternative energy sources – specifically, the wind energy sector. It has developed and manufactured cutting-edge wind turbine components for companies such as Enercon.

    In fact, Premier’s engineering division provides end-to-end solutions for wind turbine component manufacturing. This includes fabrication, machining, blasting and painting of wind turbine steel parts like disc rotors, stator rings, stator carriers, rotor housings and supporting structures.

    Machine Tools
    Premier’s CNC Machine Division has consistently distinguished itself by setting new benchmarks for industry excellence. Today, the company’s focus on high-end technology has resulted in a sophisticated line of CNC Machine Division.

    Today, CNC Gear Cutting machines, Machining Centers, CNC Vertical Turning & Turn mill Centers and custom-built Special Purpose Machines bearing the trusted Premier label are regularly used by leading industries.

    Automotive
    Premier gave India the ubiquitous Premier Padmini. Today, Premier’s automotive division has reentered the passenger vehicle segment with the launch of India's first compact diesel SUV – the RiO.

    Other products in the newly launched range of commercial vehicles designed specifically for Indian roads are : Sigma - a compact, multi-utility diesel van, and Roadstar - a highly versatile pickup truck.


    So what's interesting ?
    The company has recently indicated that it plans to achieve revenues of Rs 700 Cr in 3-years time & Rs 1000 Cr within the next 5 years (source : Corporate India magazine, pgs 52-54 in issue for the fortnight ending 31.3.2011). Now that's 3 & 4 times the current turnover.

    It plans to do so on the basis of organic & inorganic growth. To fund acquisitions & further expansions, as well as retire debt, the company plans to monetize it's surplus land out of it's holding of about 216 acres at Dombivli near Mumbai.

    Recommendation
    If the company walks it's talk and is able to deliver on it's promises, there is a clear chance of re-rating in the coming 3-5 years.

    Unlocking the value of it's land holdings will be critical to this, as currently interest burden takes away a large chunk of the profits, besides forcing the promoters to pledge a large part of their holdings as collateral for the increasing borrowings required to sustain the company's expansions.

    Over the last couple of years, the promoters have steadily shored up their shareholding in the company, indicating their faith in the company's prospects.

    To conclude, the author recommends investors to track this company closely & once convinced that the company is delivering on it's plans, investors can take an appropriate call.

    Author : Bosco Menezes

    Recommendation Date : 19.04.2011

    Disclaimer/Disclosure :
    At the time of writing this article the author has a position in the stock covered by this report. The author or any of his dependent family members may make purchases or sales of the securities mentioned in the report while the report is in circulation. Readers/recipients of this report are strongly advised to do their strict due diligence, and should be aware that the value of investments can go down as well as up. The author shall not be liable for any direct or indirect losses arising from the use of the contents of this report, and readers are therefore cautioned to use the information contained herein at their own risk. In fact, readers would do well to seek the advice of a qualified independent advisor. The author certifies that all of the views expressed in this report accurately reflect his personal views about the subject company at the time of writing this report. Feedback / brickbats may be hurled at the author at boscom@gmail.com .