Kiri Industries: Loan reduction and demand surge

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410

I assume about why they took the loan could be understood and may have been utilised if financial closure of the copper project would have been on track.

What the management has failed to address, accept and take responsibility in the concall is that the copper project has in fact been delayed due to multiple reasons (Dr. Sarkar and the management’s missteps. IMO, yes it is a joint responsibility). They have made the delay apparent via their ROC filing and loaded the entire blame on Dr. Sarkar but in the concall all of that delay rhetoric was hushed.

In Q2 FY25 concall they had stated this regarding the interest on the loan (quoting from 19 Nov, 2024 published transcript ) -

Manish Kiri: As I mentioned earlier, these are the, you know there’s the judgment funding and the funds who do these kinds of activities, they are based overseas, out of India, in Singapore and it would cost back ended IRR based almost 15% to the company.

Ayush: So, it would cost around 15%, you say?

Manish Kiri: Correct.

Ayush: And that would be 15% on dollar or INR?

Manish Kiri: On dollar because the it’s all dollar linked, the reserves dollar linked, the investment linked, you know the borrowing is dollar linked.

The figure of ₹1143 cr doesn’t seem to add up to include the principle and the accrued interest over the period. May I request someone to help make sense of this calculation at 15% interest from September, 2024. is in the PPT and is till FY25. So we must wait for FY25 annual report as the exact date of receipt of funds into Claronex is not known.

To summarise, here’s what the management stated regarding the copper project’s timeline and status:

• The project implementation is on track

• Technology supply agreements have been executed, and project work has already commenced at the site

• Orders are being placed to various vendors, and the project team has significantly strengthened, increasing to almost 25 people and expected to grow to 40-50 people by the end of the current quarter

• Partial revenue from the copper project is expected to start from FY27 , with full capacity installed by 2028 and fully operational by 2029-2030

• The company will provide updates on the project’s progress, timeline, and key aspects in their management notes starting from the next quarter

The management’s statements indicate that the project is progressing as planned rather than facing delays.

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411

He is doing high level of overseas payments to lawyers loans etc then getting some kickbacks i think fooling investors and indian gov.

412

Who raises 15% usd loans?? And that too 130 million and then warrent issue and then leave all funds unutilized

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413

The timing of payment for the warrants and this loan…there is an overlap i feel.. it has been given to an overseas subsidy.. they can easily reroute these funds to the promoter entities who then subscribe to the warrants and pay up as well.. you can calculate the amount required to convert warrants into shares and there is the utilization.. these MoUs are signed dime a dozen.. they need to sign agreement for procuring raw material and not for constructing smelter plant in Phillipines…what for they have procured 160 hectares in Lunsapur and got the EC…
Putting the dystar funds in government bonds would have fetched kiri shareholders more money in the next 4 years than what the promoters have managed to earn for the company in its lifetime

417

Absolutely probable…how can this be confirmed / investigated? By a liquidity waterfall analysis, if anyone here can do it? I just got this term via AI but did not probe further as I have no knowledge of how to validate the same.

But also since the financial reports state that the funds are there at Indo Asia Copper Ltd and the auditors have audited it, do we still remain in doubt? Won’t it be suicidal for the management and the auditors to wrongly report this?

It is for exploration, mining and raw material only and not for a smelter plant. I have shared the details herein. But yes, it is just a non-binding MoU as of now.

422

Net amount available = 600M – (130M + 19.5M) = US$450.5 million

423

Numbers not adding up of prinicipal and Interest, not sure where they are booking, 192 cr loans on consolidated given not being specified, giving loan after taking loan @20% interest odd is mighty weird. On consolidated so cant be to subsidiaries. But all this was known so not as a complete surprise

424

This will be like LEEL Electrical, promotor will siphon off a single paisa out of it and leave. Purinju like investor lost 64 Cr in LEEL Electrical, look for some other good scripts.

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425

I have updated my view about the 1143 crores borrowings figure in my post above.

Next immediate monitorable as per my understanding is the FY25 annual report.

426

Kindly re-read your post above written 3 days before on the MoU. In particular yoir 2nd paragraph where you habe mentioned “copper smelter and refinery in Phillipines.” You may want to modify it.

Screenshot_20250813_183234_Chrome
Screenshot_20250813_183234_Chrome720×1600 218 KB

With regard to the exact date of the loan one can go through the company filing informing of this loan being taken by clarinex and charge shareholding charge creation … assume the maximum period given by sebi to listed companies for such material intimation disclosure to be the start of the loan

427

My queries were unanswered in concall and I was asked to email so here are my questions:

  1. The interest on judgement finance is being accrued but not paid, so under which line item of balance sheet does it appear
    What is is principal loan outstanding and what is accrued interest to be paid separately?
  2. Rs. 1932 million is loans given by company on consolidated balance sheet (Pg 15 of Investor Presentation), To whom are they given and what terms.
    This has coincided with receiving of judgement finance so seems a bit curious so asking for details
  3. Which Financial Institution has this judgement finance been taken from and at what rate?
    The management has never answered this question straight so asking again
  4. An update on copper plant capital allocation will be helpful

I have asked these questions, will update if I get reply.

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428

My incorrect interpretation.

It became clear after this resource from the London Stock Exchange that I have shared immediately after, was uncovered.

The core focus of the MOU with Makilala Mining appears to be Kiri’s potential investment in the MCB Project to secure copper-gold concentrate, which would then be used as raw material for Kiri’s smelting operations located in India.

I stand corrected.

A lot regarding the loan, the interest, the project advances till March 31st 2025, thereupon will all be clear when the FY25 annual report is published.

And I suggest we arm ourselves with “well educated queries” for the AGM thereafter.

I feel a lot of emotional outpouring is happening here by many participants which may not be helpful for making a balanced judgement for a serious investment.

429

@startupfundas

Do you use notebooklm?

I have created the above notebook with almost all publicly available documents from Kiri. Try asking your queries therein and you will get fantastic answers with citations.

Especially ask your query related to the judgement financing and see the response. You may be amazed. I encourage others as well to interact with the chat in the notebook and you may be amazed at the clarity it provides.

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431

Thanks for the very detailed analysis. But, sorry to say the calculation is dead wrong. It is equating million and lakhs. Example it says:

US$670.62 million * 83 ≈ ₹5,5669.46 Lakhs

It should be 556694.6 lakhs in rupees. As one million is same as 10 lakhs

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433

So the ai is not able to caculate this only

434

AI is not at a level where it can be trusted blindly. Verification by human is necessary.

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435

Absolutely, some documents may be scanned images or audio files that may have miniscule transcription issues, hence as one cannot trust an intern or an assistant blindly until some amount of training, feedback loops and trust is established, one should not trust AI blindly. Use it to speed up your analysis but don’t budge from cross examination and conversing with it till you get an answer that makes real sense. I would do that with my financial analyst intern.

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436

My excel for book value attached, Have excluded some assets just to be conservative
Kiri.xlsx (10.2 KB)
Simplifying assumptions 6.03 million taxed @15% and 70 million at 30%, USDINR 84 for cash from Dystar Calculations
=603x0.1x84x0.85+70x0.1x84x0.7

437

Indian firm eyes copper refinery in the Philippines - Manila Standard

438

Your calculations of Dystar are wrong. Amount they would get including interest would be ~$696mn, LTCG would be 12.5% and USD to INR is 87+ = ~5,300 Cr which pushes book value higher.

Plus you have not factored in the other Lonsen Kiri JV with Longsheng which is also included in fixed assets but KIL only owns 40% stake

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