Found some red flags
- company raised FCCB pre 2009 and then invested into debentures of pokarna engineered stone which owns the quartz mines. Since it’s a subsidiary I cant locate the schedules of its fixed assets. pokarna engineered stone was incorporated in 2001 and it’s not clear to me how it became a subsidiary of pokarna in 2009.
pokarna raised money in 2009 through FCCBs and invested as debentures into its subsidiary. I can’t find detials of the mines owned/leased by them – how much they paid, royalty share with government etc. what are the terms, can these be fished out dry, what about pollution control/environmental clearances.
It seems unbelievable that quartz being a mineral would have no “externalities” to be shared with the government (especially as its exported for the benefit of a private party) much like telecom spectrum.
At this point, I have no answers either way – anyone in the know, if you can help. the biggest moat in mining business is acquiring a low cost mine itself – similar to acquiring inexpensive spectrum in telecom. The rest of it is riff -raff – for eg., it does not matter what towers you use ericsson or nokia and similarly so, bretton stone or otherwise. Those are the axes to make the trees fall – I am interested in how they got the forest – especially a national resource.
And to round it out, check this article out :most of these names would be familiar – these were companies that raised FCCB’s and defaulted and were not known for their governance. how can things change so quickly – operating a quarry requires environmental clearance etc. and why borrow FCCB and invest into a subsidiary that makes mines. Why not borrow under the subsidiary itself directly ?
Any help would be greatly appreciated.
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