Awaiting Action against Indonesia…That is critical for normalcy, Indonesian companies are clearly misusing it’s forest concessions & the ASEAN FTA really hurts us.
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Seems this is against imports from Chile and China PR only, and not Indonesia.
Case registered in June 2024 and till now no material progress other than meetings.
Unless strong business groups like Adani, Ambani, Tata, Birlas have stake at risk against below cost imports - don’t think government machinery act at an urgency level.
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Paper companies are enjoying good profit… Major paper stocks are still available at a good PE of around 10… it clearly indicates the profit they are enjoying… there should be reason to impose Anti dumping duty… Normally Anti dumping duty is imposed to protect the local business… there is no reason to ask Anti dumping duty when you are enjoying good profit…
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JK Paper last evening announced:
- Acquisition of (60% stake) Radheshyam Wellpack - https://www.bseindia.com/xml-data/corpfiling/AttachLive/1608948f-48f5-4bfc-84b5-94430db6a37d.pdf
- A scheme merging it’s recently acquired 100% owned subsidiaries like … JKPL Utllity (Ex - Manipal Utility), Securipax Packaging, Horizon Packs … with itself (i,e. JK Paper) - https://www.bseindia.com/xml-data/corpfiling/AttachLive/d6d6cc84-a33c-4f0a-bc18-1172ae5051b9.pdf
Within the above scheme, prima-facie, there seems to be a daylight robbery by management where they will be issuing approx. 1.19 cr shares i.e. 3.31% additional equity of JK Paper to promoters (Singhania family). at cmp, its worth Rs. 540Cr.
Rationale given is simplification.
Facts:
-
Enviro Tech Ventures have 2 class of equity shareholders. - JK Paper (owner of 96.08% equity) & Singhania family’s entities (own remaining 3.92% equity).
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Enviro Tech Ventures have 2 class of preference share shareholders - JK Paper (owner of 77% preference shares worth Rs. 215 Cr) & Singhania family’s entities (own remaining 23% preference shares worth Rs. 63 Cr).
Source - FY2024 annual report of Enviro tech
My understanding, JK paper’s additional equity is getting issued to Promoters at highly discounted rate against their minority holding in Enviro tech.
Rather out of cash available in JK Paper books, buy out minority stake of Promoters in Enviro tech to make it 100% subsidiary and merge with JK Paper.
Look forward to views of fellow VP members.
Disc: Invested
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The Networth Addition will be around 813.05 crore at the cost of issuance of 1.19 crores of shares, so am i missing something on the facts or the detail surrounding the calculation? please Elaborate.
@Umang_Adatia the networth getting added is already owned substantially by JK Paper because of its holding via direct equity shares as well as preference shares in Enviro Tech.
Serious question is - if Promoters minor stake valuation in Enviro tech infra is worth 1.19 Cr shares * JK Paper per share price ?,
(a) If Yes, a fair deal.
(b) If No, - it is less - robbery with JK paper non-promoter share holders
(c) If No - it is more - Promoters considers that intrinsic value of listed JK Paper is much more vs what Mr. Market is offering, hence they accepted less listed shares vs exchanges in unlisted enviro tech.
My understanding is (b).
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Don’t know if it makes much difference but the preference shares in Enviro Tech held by JK paper were redeemable in cash whereas those held by promoters or others were compulsorily convertible to equity shares at varying prices I think. Still doesn’t look great overall.
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I have a little understanding of this subject but I tried reading about it.
From Annual Report 2019-20 | 173:
(c) Reconciliation of Preference Shares Capital (In numbers)
Particulars March 31, 2020 March 31, 2019
Preference Shares outstanding at the beginning of the year 40,00,000
Add : issued during the year (Nominal Value H100, H100 Paid up )
Previous year (Nominal Value H100, H20 Paid up)
23,00,000 40,00,000
Preference Shares outstanding at the end of the year 63,00,000 40,00,000
Subsidiary issued following preference shares :
During the Current year :
JK Enviro-Tech Limited has issued Compulsory Convertible Preference Shares having nominal Value of H100/- (One Hundred) each,
aggregating to H23,00,00,000 (Rupees Twenty Three crores only), having 0.01% dividend (on cumulative basis) on 4th September 2019,
to be convertible into Equity shares of the Company, having nominal value of H10 each, at a conversion price of H20.80 per equity share
(including premium of H10.80 per equity share) at any time upto 7 years but further extendable with mutual consent of the Company
and the shareholder(s), by way of preferential allotment for cash. These convertible preference share is recorded in Other equity.Notes to the Consolidated Financial Statement for the year ended March 31, 2020
Note 16. SHARE CAPITAL (contd.)
During the Previous year :
JK Enviro-Tech Limited has issued Compulsory Convertible Preference Shares(Series 1 and 2) having nominal Value of H100/- (One
Hundred) each, aggregating to H40,00,00,000 (Nos 40,00,000), having 0.01% dividend (on cumulative basis), with H20 payable on
application and balance H80 to be payable at the end of 5 years from the date of allotment or at the time of conversion whichever is
earlier,to be convertible into Equity shares of the Company, having nominal value of H10 each, at a conversion price of H12 per equity
share (including premium of H2 per equity share) at any time upto 7 years but further extendable with mutual consent of the Company.
The equity portion of convertible preference share is recorded in Other equity.
^“H” is Rupee. Copy paste formatting issue.
And the latest announcement:
To Equity Shareholders:
- 2635 fully paid equity share of Rs. 10 each of Transferee Company, for every 10,000 equity share of Rs. 10 each held in the Transferor Company 4.
To Compulsorily Convertible Preference Shareholders:
- 21,958 fully paid equity share of Rs. 10 each of Transferee Company, for every 10,000 Series l Compulsorily Convertible Preference Share of Rs. 100 each held in the Transferor Company 4.
- 21,958 fully paid equity share of Rs. 10 each of Transferee Company, for every 10,000 Series 2 Compulsorily Convertible Preference Share of Rs. 100 each held in the Transferor Company 4.
- 12,568 fully paid equity share of Rs. 10 each of Transferee Company, for every 10,000 Series 3 Compulsorily Convertible Preference Share of Rs. 100 each held in the Transferor Company 4.
My understanding:
- JK-Envirotech issued lots of preferential share at a cheap rate of 20.8 Rs.
- Promoter is swapping JK Envirotech’s preferrential shares of different classes to JKPaper’s share and the ratio is 1 Enviro’s to 2 JK Papers.
- Pennies to the normal equity shareholders of envirotech.
Looks like a steal deal to me. But i don’t have confidence in my analysis.
And they have doors open to repeat this with PSV Agro entity.
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Thank you Gaurav for being so vigilant and sharing this. I had a quick look at the scheme of arrangement and the numbers you shared from Enviro tech annual report and it seems to me also that this is a very unfair deal for minority shareholders.
I keep notes on the integrity of various companies and if its helpful to you will be happy to share that. If so, please directly message me.
Disclosure: Had a very small position in JKPAPER which I exited today.
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Board approved the acquisition of majority stake ( 65 % Stake ) in Quadragen VetHealth Private Limited For Rs 300 Cr
Company. said this is a strategic acquisition in a promising and rapidly developing industry segment and provides a new opportunity for the Company to grow.
QVPL, a specialty animal health chemical company in India, was incorporated on September 15, 2010. Based in Bangalore, it manufactures, markets, and exports animal nutrition products, including feed additives and growth promoters. It operates in India and exports globally.
Turnover
₹151.96 Cr (FY 2023-24)
₹141.88 Cr (FY 2022-23)
₹103.19 Cr (FY 2021-22).
In JKPL seems a serious capital allocation issue.
Just did google on this QVPL - and here what rating agency says:
25015-RR-20190222.pdf - In it they saying “The high fragmentation in the industry, with the
presence of several brands in each segment, limits the pricing flexibility available to the players in the industry.”
Press Release - Here in Jan 2024 rating they shared that “Recently, it acquired a 100-per-cent stake in Karnataka Nutraceutical India Ltd (KNIL), which is into a similar line of business.”
In FY2016, they were at sales of 41 Cr, and now in FY2024 - their sales are 150 Cr (including contribution due to acquisition of KNIL). Hardly 18% CAGR in so called “promising and rapidly developing industry segment” - as per Shri Harsh Pati Singhania
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Hi!
Can you please send me your research on the paper sector or any of the stocks that you have researched in the paper sector?