Some points from AGM:
Dystar Company Sale:
- Deloitte working efficiently on selling process
- Due diligence has been completed and bids has been invited. Deloitte has reached out to a number of prospective clients all over the world. As per management binding bid is expected to be received by mid to end January 2025 and sale process should get completed by March 2025 followed by sale agreement signing thereafter.
- Priority payment and interest payment appeal is scheduled on 12th Nov and management is confident that judgement will be in their favor and most probably will be received by December end. Since interest payment judgement will come before sale completion, Deloitte will be able to share the interest payment proceeds along with USD600+ million sale proceeds.
- Shareholder raised question on 50+ crore payment from warrants proceeds on legal expenses. Management replied that it will take care of pending legal invoices, Deloitte fees (50:50 shared with Senda) and current appeal case payments. They have strong team of 11 lawyers handling the case and such team will be needed till the end of sale process.
Indo Asia Copper plant
- All the clearances and approvals are in place. Construction not yet started but management is confident about conducting groundbreaking ceremony by October 2024 end and phase 1 completion in 24 months.
- Plant project cost estimate is 16k crores. Production capacity will be 10 Lakh tonne copper and 16.5 lakh tonne fertilizer. Will be constructed in phases with phase 1 cost estimate of 2.5k crores. Estimated annual revenue of the whole plant will be 30k crores and PAT of 3k crores.
- Handled by senior veteran named Sanjay Sarkar who has 30 years of experience and is now assembling a team for the project.
Shareholder raised concern on capacity surplus of Copper after their plants commissioning, management replied:
- India’s domestic demand for copper currently is 15 Lakh tonnes and is expected to reach 30 Lakh tonne by 2030 owing to focus on renewables, EV and allied industries
- Only 2 Copper plants are operational at the moment – Birla Copper (4 Lakh tonne), Kutch Copper (Adani; 5 Lakh tonne operational & will be scaled up to 10 Lakh tonne). Two in process – theirs in Gujarat and JSW in Orissa.
- Forget about exports, there is enough domestic demand to absorb their additional plant production of 5 Lakh tonne (expect commissioning in FY2026-FY2027)
- Government is supportive and has eased restrictions on Copper ore import.
Shareholder raised concern on market not appreciating the 5k crore cash proceeds, management replied:
- They too don’t know why market is reacting this way. They said promoter group is fully committed and is increasing their stake through warrants. Their shares are not pledged but encumbered and promoter group is not selling any share of the company (i didn’t understand this point).
- Shareholder also asked for more disclosures and reaching out to institutions for marketing their company to which they replied they will surely do that and will invite shareholders to attend the groundbreaking ceremony.
- They highlighted that they are in touch with the FIIs who are invested in their company and they told that even the FIIs too know that the company is going to receive 1000 rupees per share of cash but still don’t know why their stock price is not increasing.
- They didn’t gave any sure answer/hint on dividends after receiving cash proceeds.
About their newly registered company on Green Hydrogen production:
- Feasibility study is being conducted by a German based firm and hopeful of receiving the results by January
- Team is not yet assembled
- Ammonia from the plant will feed into Fertilizer plant therefore achieving backward integration
Some other points of note:
- Management is aware of the lost decade of no growth due to litigation and highlighted that they will not be investing any more capital in their Dye business and all the future money will be spent on future growth opportunities in Copper and Green hydrogen business.
- Dye business is operating at less than 50% capacity and is slowly improving as shown in numbers of reduction in losses YoY.
Disclosure: Invested with very large bias. Kiri industries forms extra large position in portfolio.
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