Kiri Industries: Loan reduction and demand surge

Have been tracking the stock since 2020 and these are some of my thoughts on why the price has moved now. It was known since 2018 that Kiri is entitled to minority operation proceeds from Senda.

The share moved for a couple of days whenever they won in any court but then instantly came back down as winning didn’t mean that senda will pay.

Then in November 22 to Jan 23, when Senda didn’t even pay some small litigation fees which were due. the share crashed as the market gave up all hope of Kiri Industries getting the money.

So, now what has happened suddenly that the market is now again showing confidence of KIL getting those 5000 crores.

1. The preferential issue by the promoters : I have been hearing the promoters since past 4 years saying that they want to buy the shares but they don’t have the funds, they are trying to arrange funds. And now, suddenly they found some 500 crores lying somewhere. It was always thought that the promoters will invest only when they will be sure of getting the 5000 crores. They have taken 15% shares of the company at 2000 crore valuation now as they are now sure of getting the 5000 crores. there were no outsiders in this pref issue. No rights issue. Just preferential for the promoters. More than 28% of these warrants have already been converted.

2. USD 130 million Judgement funding.
   Why will a Fund give a Rs. 1000 crore loan to a KIL, whose only real asset is his share in DyStar. I know that the fund has taken some guarantees of Promoters, but that is just a formality in my opinion.
   They have given this funding because even they are now sure that KIL is now on the verge of receiving the Payment.
   In the Worst possible situation, even if Senda wins the appeal and no priority payment is given to KIL. Still 37% of DyStar sales will come to KIL.

3. The final stages of the Case.
   Kiri has won in Supreme court, kiri has won execution order in SICC and now the only point of debate in Supreme court is whether Kiri should receive priority payment of 5000 crores or it should only receive 37% of the total buyout proceeds.
   There is no other dispute now, DyStar will be sold, Non binding offers will be received on 22-11-2024.
   The process should get over in the First half of Calendar Year 2025.
   The market believes that now there aren’t many legal options left with the Senda group.

4. Only 50% of the proceeds will be invested into the new business and the rest 50% is still up for discussion. There is a chance that a special dividend or buyback might come as per the latest concall.

No doubt there is still a big big risk of Senda taking some more legal options and dragging it further. But that will always be there till the day the money is actually in KIL bank account.