1. Seeking Rich Valuation

• In comparison to FY22 sales of Rs 1130 crore and net profit of Rs 189 crore, the company is requesting a valuation of Rs 5000 crore (based on the upper price band).
• We think that given that this is a commodity business, such a high valuation is unjustified. ​

2. Limited Products

• Revenue is entirely dependent on the three products. This is a cyclical industry, and lower prices may result in lower revenue.​

3. Top 10 Customers Account for Majority Revenue

• Over 60% of revenue is generated by the top ten customers. As a result, if even one of their clients decides not to source their requirements from them, it could have a serious impact on the company.

4. Increase in Product Prices Boosts Revenue

• The increase in revenue in FY22 can be attributed to a sharp increase in global bromine pricing due to low Chinese bromine production. If global prices begin to fall, revenue figures may suffer significantly. ​
• While they are one of the major domestic producers of potash sulphate, revenue from this segment accounts for only 1% of total revenue. ​

5. Potential Conflict of Interest

• Promoters have interest in entities to companies that manufacture industrial salt (the company gets 45% of the revenue from industrial salt). Potential conflicts of interest could arise.​

6. High Attrition Rate 

• The company's attrition rate is high, which is not a good sign. It was 28.7% for the fiscal year ending March 20, 2022.​