Concall transcript
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Any update on by when the cash is likely to be transferredâŚin the transcript it says Marâ22?
Probably till q1 23, the fund should should be transferred. In Dec, there would be final judgement from court, during which time will be announced
why promoter shareholding is declining?
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because of fccb conversion
prashant
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If you check, most of the profit from associates. Profit on standalone basis is very less. The included profit from Dystar may not be materialised as the Court case is going on in singapore court.
There are 3 scenarios.
- Profit from Dystar will be given to Kiri
- Only interest will be paid from 2018. In this case, whatever profit considered from 2018 will be deducted.
- Nothing will be paid. In this case, whatever profit considered from 2018 will be deducted.
Verdict is expected around end of January 2022. Until then, announced profits are illusoty/unreal.
Went through the entire thread and following were the main concerns regarding the company
- Standalone business contribution is very less overall.
- Pending conversion of FCCB.
- Final valuation of DyStar.
The FCCB have already been converted into equity and on 06-07-2022, the Supreme Court of Singapore has given the final judgement in the favor of the company, which means that the $481.6 million compensation will actually be enhanced.
The newsflow is pretty good and now the concerns are
- When will the company receive the money.
- What will the company do with the money. Will it take into consideration the interest of the minority shareholders?
- There are still questions on the Standalone business.
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A quick calculation from yesterdayâs court order is that Kiri will receive
481.6/81%= $595 Million due to removal of DLOP Discount
(+)
A sum to be decided by the SICC Singapore for the wrongful use of A patent by a company related to Senda.
So, even if we calculate the sum to a minimum of $5 Million. The total compensation is about 600 million USD. And this has been decided by the Supreme court of Singapore.
Current market cap is about 350 Million USD.
So basically the company will be getting cash almost 1.5 times its market cap even after paying taxes.
What am I missing here?
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Even if you take all FCCB conversion into account the fully diluted share holder count is 5.18 crore.
so $600 Mn, assume some 10% tax (am assuming there is going to some tax on proceeds, and taking 10%) , comes to $540 Mn or INR 4239 Crore net (USD RATE 78.5).
so this comes to roughly INR 818 per share, while current share price is INR 518.
I think the only worry investors probably have is what happened to LEEL after the sale of assets to HAVELS. But there is a difference, in LEEL, there was an abrupt management change as the CMD died.
The standalone business also hasnât shown growth, but my guess is because promoters are busy with the court case, which is a massive effort on its own.
But despite all the information, the market is not yet ready to re-rate KIRI. And honestly, its a mystery. Hoepfully someone in this forum can answer this.
Discl: have invested in Kiri.
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I am invested in Kiri for more than 4 years, though added small quantities on market corrections. This stockâs behaviour is a total mystery to me. It also appears that management is not very farsighted, though deserve credit for fighting doggedly with Senda and others. With recent Singapore Supreme Court verdict, award is final. But it may take some time before the Company actually receives it. The long legal process has infused some scepticism into investors mind and they anticipate further delay. Moreover, past experience with some other company promoters is not good. So it remains to be seen, what the management decides. If they decide to buyback 50% shares @1000 each or distribute dividend @500, depending upon what is more tax neutral, will benefit shareholders. So lots of patience is called for.
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As per my understanding, all the FCCB have been converted into equity.
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SICC is very strict, so post verdict, SENDA has to pay.
Else, they will be barred from business outside China, and they are too big a company to risk such damage. So there will a deadline for executing SICC order of Kiri 's Dystar stake buyout, and so the money may come sooner than we think.
I feel past experience with other promoters (like LEEL) is the main stumbling block.
There is simply no other reason, why KIRI is not trading at 800 to 900+ at the moment.
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Q1 FY23 Concall is available
On Dystar case
Aug last week written submission on license issue to be given to SICC⌠end award may increase from 1-40 million $. (1 being senda submission and 40 kiriâs submission)
As per mgmnt 3-4 weeks may be taken by SICC to decide on final valuation and then recovery process by Kiri is expected to start
As per dystar and senda financial reports, Enough financial strength with them to pay kiri 600m$+
Mgmnt confident on legal battle coming to its end
End proceeds majority will go to capex in non dye business and some part may be used for special dividend/buyback based on boards decision
Legal expenses may reduce from Rs.16 cr to close to Rs. 5-6 cr in Q2 FY23
On standalone basis:-
Volatile raw material prices and cost of production cheap in china by 15-20% than india
Expected to better the performance in Q2 FY23
Fellow Valuepickr members - would love ur views on price pressure from regular selling by LGOF in open market at the fag end of legal process
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Please pardon my lack of knowledge and thus this query.
Promoters hold only 26.7%, with a bounty coming shortly, why arent they increasing their stake. (assumption as i couldnt see any bulk deals by promoters)
FPIs together own 48%⌠are any of these funds indirectly owned by the promoters?
Why would LGOF be liquidating their 6% at the time of positive verdict?
Is there a feeling that promoters wont be accountable with the compensation once recd?
Since promoters way lesser than 50%, there could be representation by the funds on the board and hence some amount of safety with respect to the allocation / distribution of compensation proceeds.
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What are Kiriâs non-dye businesses? are these separate businesses of Kiri promoters or 100% subsidiaries of Kiri?
LGOF got their stake via conversion of fccb warrants⌠which was at a very low price. So any price above 400-500 will be huge profit for them.
Also, basis whatever data available, LGOF had 6.15%, and now have 5.57%. So they liquidated 0.58% from 7 June to 17 Aug. Who knows why? maybe they needed some cash urgently?
We canât decide on any investments basis what other players do or donât do.
Most FPIs are continuing to hold their Kiri investment.
I feel, Kiri story has a long way to go. My view, the only reason Kiri is stuck in the 450-550 zone, is due to lack of management clarity.
DISC: invested in Kiri.
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As per Nov 2021 article, in Vibrant Gujarat Global Summit (VGGS) Kiri Industries committed for investing Rs.2900 Crs for manufacturing Aniline, Nitrobenzene, Nitric Acid, m-Phenylene diamine at Dahej under its MDI complex project.
Attaching link for reference below:-
https://www.business-standard.com/article/economy-policy/state-attracts-mous-worth-over-rs-24-000-crore-ahead-of-vibrant-gujarat-121112201026_1.html
In CY 2021, two companies were incorporated by Mr. Kiri - Indo Asia Copper and Kiri Renewable Energy Private Limited. In June 2022, there was news related to Kiri acquiring 81% stake in Indo Asia Copper.
In Nov 2021, in the same investment summit, Indo Asia Copper signed an MOU for investing Rs.8500 Cr for a copper smelter plant and fertilizer complex in Ningala village of Rajula Taluka of Amreli district of the state.
Article Link:- Gujarat government has signed MoU with many companies | NewsTrack English 1 (newstracklive.com)
It will be interesting to follow the path chosen by Kiri industries as and when they receive bulk cash inflow from senda case
Disc:- Invested, Not an Investment Recommendation
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It appears that my worst fear may come true. Manish Kiri wants to have the cake and eat it too. See the language mentioned in Q1- presentation. Money received will go towards capex of non core business and some amount may be paid as special dividend/buyback as per Boards approval. It is âwillâ in case of capex and âmayâ for payment to shareholders. How can it be? Who is he to decide when he has a minority stake?
Or may be he has more stake through FCCB ? Minority shareholders must prepare ground beforehand, otherwise it will be too late. We must be united and fight to safeguard our interest. In my opinion at least 50% of the amount received should go towards buyback.
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Finally the good news is here! Singapore international Commercial court has confirmed the final value of companyâs 37.57% stake in Dystar Global Holdings. Buyout order now to be executed at $603.8M by Senda International Capital vs the previous $482$.
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