Success of business depends on the outcomes of calculated risks.

A single
miscalculation may lead to serious problems or even ends in total collapse of
well run frms. Many Indian companies including large and led by well known
promoters caught on wrong foot few years back. Those are the companies
initiated large acquisitions ust before the subprime led global recessions.
!everaged buy outs creates severe pressure on their balance sheets on one
side and lower demand for products on the other side worsened the
situation. Many Indian promoters learned valuable lessons from this crisis
and some are still fghting for a comeback. "n the other side this unfortunate
events this o#ering some attractive opportunities to investors with high risk
appetite to invest in companies with ability to come back$ at attractive
valuation. This week !et us look into one such opportunity % &ilcare !td
&ilcare was a high 'ying stock for past many years and its stock price
touched a level of (s.)*+, in -,,*.It was the most favorite of .oreign
Institutions$ Indian Mutual .unds and well known /0I investors including Mr.
(akesh 1hununwala. (1 is still holding * 2 stake in this company. Its business
units are mainly classifed into three divisions vi3 % 4ackaging Innovations$
5lobal clinical Supplies and 0on 6lonable Id Technologies .&ilcare is the
market leader of &lister packaging in India with more than 7,2 market
share. It can8t be called as a packaging company but an (9: driven
packaging solution provider mainly for pharma sector. As on March +)$ -,)+
&ilcare has fled over );< patents worldwide ."ut of this += have been
granted and balance under process at various stages. Its Indian business is
only a small part > -, 2 of total turnover > and company is a preferred
supplier of packaging solutions for world pharma leaders like &ristol>Myers
Squibb$ 5la?oSmith@line$ 1ohnson 9 1ohnson$ Merck$ 0ovartis$ 4f3er$ Sanof>
Aventis$ Teva etc 6ompany operating from A manufacturing facilities across
the globe including India$ BS$ 5ermany$ Singapore$ and Italy. 6ompany
supplying its products in more than 7, couturiers through own marketing
channels. "n a consolidated basis company reported more than (s.+,,, 6r
sales in last fnancial year.

Reason for pain
As I mentioned at the beginning$ many Indian promoters caught on the
wrong foot due to large acquisitions ust before the beginning of recession.
&ilcare done the same mistake Csince nobody was aware about the arrival of
recession in advance we may not call it as a mistakeD which acquired the
Swit3erland headquartered plastic flm making unit of I0E"S at a cost of
(s.;,< 6r. "ne third of this all cash deal funded by the company8s internal
accruals and the rest raised in the form of bank loans .Fith this acquisition
I0E"S8 flm units manufacturing facilities in BS$ 5ermany$ Italy and India
C6aprihans !tdD came under the fold of &ilcare. 6ompany e?pected good
growth post acquisition of this unit which commands more than -,2 market
share of high quality polymer flms in the entire world.. 6ontrary to the
e?pectation of the management$ &ilcare become a victim of worldwide
recession. In addition to lower demand growth$ company could not service its
large debt which taken to acquire the I0E"S division. This market leader
struggled for working capital and debt repayment and reported huge loss.
Share price nosedived from (s.)*,, level to (s.=, level.
Why this stock
There is many companies from listed space facing similar situation .&ut I
believe this is something special due to following reasons.
4romoter8s capacity to reali3e mistakes$ learn lessons and bring back to
normalcy with quick and accurate decisions is an important factor in
business. I believe$ its promoter Mr. Mohan / &handari is capable to
handle the situation and able to bring back from the verge of collapse.
&ilcare is not a small company .It is a large organi3ation with si3able
market share in its products not only in India but globally too.
6ompany having good assets across the globe
&I!6A(E is not mere a packaging company but driven by strong (9:
capabilities and innovations with many patented technologies in its credit.
6ompany already started initiatives to reduce its debt by divesting non
core assets and already sold it8s BS and European 5lobal 6linical supply
related operations for (s.+=, 6r .Management also promised to
concentrate in further debt reduction initiatives in the ongoing fnancial
year.
The most Attractive Point
(9: is the key strength of &ilcare !td. 6ompany successfully developed an
innovative frst>of>its>kind technology named > non6lonableI: C nci:D .This is
a nano technology based solution which can be seamlessly integrated with
products$ I: cards and documents to provide a totally secure and reliable
identifcation and authentication solution. Even this technology developed to
fght against 6ounterfeiting and piracy of medicines$ 6ompany is e?tending
its scope to a number of felds including e>governance$ security etc. 4harma
makers are loosing 6rores of (upees due to counterfeit medicines and such
medicines are estimated as high as +, 2 of the total sales. This is a big
headache for global pharma giants and nci: technology is emerging as a
viable solution for this issue. 6ompany claiming &iocon and !upin already
started using this technology in medicines e?porting to certain countries
.This invention recently won the 0ational Intellectual 4roperty award -,)= by
5overnment of India. Management made representations to (&I to introduce
this technology which can help to make Indian currency notes fake>proof in
the future. This is a complete track and trace system which can be widely
used in the feld of e?port of any product. Since many technical terms are
involved$ it is better to go through the below links for more understanding
about this technology
)D Innovative Product of the month - Non Clonable Id Technology

-D ilcare!s nonClonableI" Technologies -#
+D ilcare!s nonClonableI" Technologies -$
This is a breakthrough in fghting against piracy in many felds. 0ew govtGs
e?pected initiatives in e>governance may open up big potential for this
technology .6ompany already signed agreements with state governments for
similar proects
Conclusion
This is not a stock for skeptics or critics but for optimists and risk takers.
Many negatives are still there like promoter pledge Cpledged to avail loans
for I0E"S acquisitionD huge debt$ loss in last .H etc. &ut above all$ I strongly
believe$ It is a must buy in the portfolio of an e?treme risk taker. 6ompany8s
latest quarter consolidated fgures indicating an early sign of revival.
European economy is in a recovery path$ promoters taking steps to reduce
debt$ company improving in (9: front and inventing technologies with good
potential. If nothing will happen % you will lose (s.*7 but if something happen
on positive side Cprobability is highD this stock still possess potential to regain
four digit fgures again in few years down the line.