Kiri Industries: Loan reduction and demand surge

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546

I don’t know but this is (Kiri ind) is straight forward case of mentality of not sharing rewards with minority shareholder. Even they become successful in new businesses (like copper etc) it seems they will not share wealth with retail shareholder.

Investors hoping for some kind of “magic” should study the case of Lloyd Electric & Engineering Ltd (LEEL).

LEEL sold its Consumer Durables (CD) division to Havells in 2017 for approximately ₹1,600 crore in cash, at a time when the company’s enterprise value was significantly lower than the cash received. However, after the CD division sale, Lloyd Electric did not pay any special or meaningful dividend to shareholders, nor did it conduct a buyback.

As the saying goes, “History doesn’t repeat itself, but it often rhymes.”

Check LEEL discussions in the ValuePickr thread:

Also refer to Screener for financial data:

Disc: I am not a financial advisor. This is not a buy/sell recommendation. Please do your own research.

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547

Thanks for sharing this. However, LEEL emerged as an outright fraud, especially in the manner in which the promoters blatantly siphoned off money. They did not even talk about long-term value creation, etc.

A more sophisticated approach or example of minority suppression looks similar to what may have transpired at Hinduja Global. They received a large windfall after selling their healthcare arm. They also conducted a buyback and paid some dividend, but it was quite obvious that the intent was not to share the bulk of the proceeds with minority shareholders. The usual approach in such cases focuses on investing the major share of the proceeds. These investments eventually show up as capital misallocation, albeit with a time lag. Commonly adopted approaches are “expensive” M&As or investments in new or unrelated growth areas with a long gestation period.

Aster DM, on the other hand, shared the bulk of the proceeds from the sale of its GCC operations even though it operates in the capex‑intensive hospital business and had visible growth opportunities, whether through acquiring smaller setups or greenfield/brownfield expansion in India. Their reasoning was that existing investors had to live with suboptimal returns for a prolonged period (as the business was still scaling up), whether in the form of no dividend or limited share price appreciation, and hence they wanted to pay this dividend to compensate for that pain. I am sure taxation would have been a consideration and was communicated accordingly by funds/investors, as is the case with a few Kiri investors as well (something that Manish Kiri has alluded to, i.e., that investor feedback convinced him to invest a large part of the proceeds in new growth areas). However, good managements manage to fund their enterprises through multiple modes, without suppressing minority payouts, e.g., internal accruals, debt, or fund‑raises (if needed).

In any case, M&A or investments in unrelated areas just because you have excess cash usually end up destroying shareholder value. As they say, “Invest when you have to, not because you can.”

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548

Are many aware about the quantum of algo trading going on in this company’s share? Could it be with a definite motive to scare away many existing holders?

Here it is - Kiri Industries Bulk and Block deals on NSE and BSE Kiri Industries Bulk and Block deals on NSE and BSE

What could be the motivation behind this?

549

Algo traders have an intraday time-frame so doubt they will focus on long term objectives of “scaring away existing holders”. Of course, they thrive on uncertainty / speculations which results in very high volumes on either side thereby making the ground fertile for high volume intraday driven strategies. If the stock continues to trend weaker post receipt of cash then it is distrust in future management actions that’s further fueling uncertainty / speculative activity. With management holding at ~30%, there doesn’t seem to be enough skin in the game for them to address these concerns.

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550

It is a sad state of affairs. After getting INR 5,200 cr in cash, the company is trading at a market cap of INR 3,280 cr.

The market seems to be encoding:

  1. Forget creating additional value, the promoters will destroy value either through questionable ethics or poor capital allocation decisions. That is why the company is valued below the cash it received
  2. The existing business is worthless

That is why the current equation is:
Existing business + 5,200 cr cash - some 1,200 cr debt = market cap of 3,280 cr

Btw, the company has already transferred INR 1,500 cr out of the Dystar receipts into 100% subsidiary Claronex holdings, to repay outstanding debt + interest. That debt itself was USD denominated and at some outrageous interest rate (15% odd if I recall correctly). That begs the question…was the debt itself taken so that it becomes easy to move out the INR 1,500 odd cr? So out of the 5,200 cr, 30% of the amount is already out of the game. This transfer was not even part of a capital allocation discussion. It was already set in motion long ago.

My thoughts on governance at this company have been consistent throughout this thread. It was always: Chance of Kiri getting the money was high; chance of minority investors seeing anything material in their hands was remote.

The base rate for poor ethics/ poor capital allocation in such windfall situations with an Indian promoter was already quite high. Kiri’s actions since receiving the windfall had only caused me to update the probabilities even more unfavourably. Accordingly, I exited my trading stake. The day Manish Kiri mentioned that he intended to distribute <10% of proceeds was the signal to exit, and frankly, I waited longer than I had planned/ should have. I still hold a smaller portion that I entered between 300 & 400 level - am able to hold (emotionally) because that part has some margin of safety. That part will exit too, at a stop-loss point.

I hope Manish Kiri proves the market wrong. All the best to investors who choose to hold.

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551

There have been multiple instances of large-scale dumping in this stock over the past three years. The first major episode I observed was in 2023, when the share price halved and remained in the ₹250–300 range for most of the year. This was driven by the market’s assumption that Kiri would not receive the arbitration proceeds from the Chinese counterparty, which had initially refused to pay the court costs, even though the court case and assets were located in Singapore.

At those levels, the stock presented an opportunity to buy an upcoming cash inflow of approximately ₹800+ per share (expected in 1–2 years) at roughly one-third of its value.

One consistent shortcoming of the management has been overpromising on timelines—particularly in areas beyond their control, such as court case resolutions and regulatory approvals. For example, the court case / enforcement was resolved more than a year later than management’s expectations, and final clearances for the copper project were received only in November–December 2024.

The copper project itself is an interesting long-term bet. If successful—though it will likely take a year or two more than management estimates—it could be highly value accretive. Global copper demand continues to rise due to EV adoption and broader electrification trends. At the same time, there is increasing reliance on China for copper refining, as few countries are willing to host polluting industries locally. The Sterlite Copper closure in Tamil Nadu is a clear example. Only bigger challenge would be availability of copper concentrate which also is in shortage along with refining capacity. For copper, any commentary on large revenue is immaterial, its the refining margin that matters whenever the the project gets completed.

All major approvals for the copper project were secured by November–December 2024. However, due to funding constraints and the process of offering multiple alternative site options during the Environmental Clearance (EC) stage, the company might have opted for land acquisition rights rather than outright purchases initially. According to the last concall and compliance disclosures, the land was acquired, boundary wall constructed.

In last concall, they mentioned having hired technical consultants, engineering consultants (TCE) who had implemented PT Amman and Adani copper projects recently. They have come up with timeline of 2027 December to finish the phase I and 2028 full year for dry run, trial productions and scaling. It is expected to take more time.

To bridge the funding gap for copper, the company raised an unsecured loan backed by the expected judgement proceeds. The only condition attached was that the promoter would not sell shares in Kiri until the debt was repaid. While this represents an indirect encumbrance (though not a formal pledge), the unsecured nature of the loan reduced risk to the company and the copper project. However, this came at a higher interest rate, largely because management assumed the funds would be received within a few months. This is where 1500 went out for USD130 Million loan. If anyone is reducing 1500 Cr into calculation, they have to take into account ~1100 Crore that was invested in copper subsidiary via this loan.

To best of my understanding, claims that large part of dystar proceeds would be distributed as cash was never the case. Mangement did mention rewarding some amount. Especially when company is planning such large Capex for last three years, in anticipation of proceeds, distributing doesn’t make business sense for a small company which will get debt at higher cost.

On the investing side, there are times when people undersell in panic, and there are times whey they pay anything.

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552

Very well summarized @abhisr the entire timeline and developments. Also issuing of warrants, increasing stake by promoters, even when funding was not in, showed there confidence in the future prospects. The underlying intent of the management is to create good business otherwise for them it was very easy to do nothing and keep waiting for the funds and on receiving funds - reward themselves and others and enjoy the life :)

Disclaimer :- Biased and invested

554

Seems the media channels have finally got a whiff

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555

Hype around the stock due to stake sale was being created for last 7-8 years and now it is done and dusted. No special one time dividend will be announced which is 100% clear. The money recieved will now be spend in Copper project which is at least 3 years ahead and will be reflected in P&L only after 4 years. Till this time all ratios will be depressed.
Summary : As there is no immediate trigger, the stock should ideally go in consolidation mode for next 2-3 years and all short term investors will exit. The project is unrelated diversification with no proven track record of management. The project is very big and hence there will be execution risk and delays.
I will definitely not invest in this stock for at lest next 2 years as there are several other opportunities and will review the execution capability of the promoter.

Disclosure : Not invested but following from last 3 months for academic purpose.

556

I have been advocating this view for some time. One should be logical in investment decision. And more important is not to be emotional. After all investment purpose is for return. It does not matter whether you get it from A or B or C company. So any investment in Kiri for long-term is foolhardy according to me. But it is a difficult choice for current shareholders.
Another question has come to my mind. Why Manish Kiri is so gong ho for investment in Copper and Fertiliser. I request experts to give their judicious opinion whether this is a good decision. Any opinion will be highly appreciated.

557

Ritesh Jain’s recent New world order video is a wake up call to investors. He had mentioned we should not expect SIP returns of last 20 years in next 20 years. He suggested investing in commodities, electrification theme etc. Kiri industries i think perfectly fits the new trend if they secure copper concentrate supplies. To develop a copper mine, it requires 18-20 years. Kiri had non binding agreement with Celsius Resources Limited MCB project. Since it is non binding, nothing concrete as of now. Mine development process started in 2006 and expected commercial production in 2027. So if Kiri secures equity in the project, it will be big boost for prospect of the company. fingers crossed.

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558

I sent this email to Kiri Mgmt:

Dear Members of the Board and Senior Management of Kiri Industries Limited,

I am writing as a long-term shareholder to respectfully follow up on my earlier communication regarding capital allocation after the successful completion of the DyStar en-bloc sale.

First, I would like to reiterate my appreciation for the management’s persistence in concluding the DyStar transaction and securing cash inflows of approximately ₹6,200 crore, a landmark outcome after several years of litigation.

However, despite this transformational event, the Company’s current market capitalisation of approximately ₹3,250 crore remains materially below the cash received, even after accounting for taxes and debt repayments. This persistent valuation gap indicates that the market continues to apply a significant discount due to uncertainty around capital deployment.

In this context, I would like to propose a balanced and confidence-building capital return strategy comprising:

₹300 crore share buyback + ₹300 crore cash dividend

This combination, in my view, offers the most effective way to unlock value while preserving long-term financial flexibility.

Rationale for the Buyback + Dividend Combination

1 Immediate Shareholder Returns with Prudence A ₹300 crore dividend translates to approximately ₹50 per share, offering a compelling yield of ~9% at current market prices. This directly rewards patient shareholders and validates the cash on the balance sheet.

2 Material Per-Share Value Accretion A ₹300 crore buyback at prevailing prices would retire roughly 7% of the outstanding equity, increasing cash per share, earnings per share, and intrinsic value for remaining shareholders.

3 Balance Sheet Strength Maintained Even after a ₹600 crore capital return, Kiri Industries would retain over ₹4,000 crore of net cash, ensuring ample resources for:

◦ Core business growth

◦ Strategic investments

◦ Further debt optimisation

◦ Future shareholder distributions

4 Stronger Market Signal Than Either Action Alone While dividends prove cash availability, and buybacks signal undervaluation, the combination removes ambiguity around both intent and execution. This dual action would significantly narrow the discount between market price and intrinsic value.

5 Alignment with Best Practices in Capital Allocation Indian markets have historically re-rated companies that adopt disciplined, shareholder-friendly capital return frameworks following one-time monetisation events.

Expected Outcome

Such a calibrated approach would:

• Reduce downside risk for shareholders

• Improve confidence in capital allocation discipline

• Accelerate market re-rating toward intrinsic value

• Preserve flexibility for future strategic decisions

Importantly, this proposal does not preclude future dividends or buybacks, nor does it compromise long-term growth aspirations.

Closing

Many long-term shareholders, including myself, strongly believe that a measured capital return strategy at this juncture would meaningfully enhance trust, transparency, and value creation. I respectfully request the Board to evaluate this proposal in the best interests of all stakeholders.

Thank you for your continued efforts and for considering shareholder perspectives.

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559

Indo asia features in it with investment commitments of aprx 250 crore- i guess primarily they are going to manufacture copper tubes for Air conditioners as import substitution vision which Manish kiri ji talked about in last interview.

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560

No payout in dividend or buyback, project size now seems 13300 cr, 4000 cr planned as equity.

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561

Exited today little bit above break-even because management has decided not to give a single penny to their shareholders. I was skeptical of people’s hostility in the thread but it seem justified in hindsight.

Regarding the copper project:

  1. This is a landfill where management is going to dump and lose all the money. Copper processing is a net negative business to be in, they face all the headwinds if copper prices rise but none of the benefits if they fall. Companies are actually paying ore producers money to process ores due to scarcity of copper ore in the world. Horrible business
  1. World is facing a big scarcity of copper ore due to one of the biggest mines in the world being shut down. Do note that India’s ore capacity is 2.5% of demand and ore quality is poor
  1. Even Adani is struggling to get supply, Kiri is so far behind the pecking order globally

They could have made themselves and everyone rich instead of this stupidity. Market heavily discounts businesses who sell other business and then sit on cash - see Paul Merchants after selling their gold loan business to IIFL, more example you can find.

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562

The most troubling aspect in this whole saga is the ever shifting project size every two months. God save those who lend to this project. The bottleneck is ore availability in the world not smelter capacity.

This has been a humbling experience for me. I was too caught up in my own narrative to smell the coffee. Heavy tuition fees paid, hopefully lesson learnt

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563

Glad to see things plying out the way I apprehended. Yet losing money due to my investment. But I have learnt a big lesson in this entire episode at Kiri. Liked the persiverence of Manish Kiri in the legal tussle against a giant and ultimately wining. Sad to find avarice destroying a god send opportunity. Very few companies in India find themselves in a situation where Kiri is presently, sitting on a pile of cash. But a series of foolhardy decisions will ultimately kill the company which Dystar could not do. As I have said earlier, I will say again that the copper business is a wrong decision, probably based on miopic idea of fund diversion/ embezzlement from a big capex. Because it is crystal clear that Kiri had no business to be in copper business. Is it their expertise? Did they have anything up their sleeves for this business except some crores of cash? Probably they think themselves to be the richest company. They should have learnt from Bill Gates, who after Microsoft, did not throw the billions in Sanco Panza hallucinations.

But why investors are not opposing? Manish Kiri does not own the company. What other investors are doing? Seeing their money going down the drain is a gut wrenching moment. I am sure that the shares will visit 2 digit zone much before completion of copper project, if at all copper project is completed.

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564

If accumulating shareholder votes was easier, this is case of gross mismanagement which could be taken head on. I threw in the towel today after the concall. sold about 22% today. Exiting a large position at a large loss is always tough but having seen it go from large profit to large loss since 31-Dec-2025 makes it doubly hard

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565

same here. exited at loss. lesson learnt in sizing and in narrative based investing. Veterans always tell management is the make or break. Ignored it trusting the numbers. but hand a mercedes to a bad driver, car still crashes. learnt it hard way.

566

Everyone is exiting at a loss because of the lack of dividend in con-call with Manish Kiri.
Lots of doom and gloom and extreme cynicism…

I have a contra view and am extremely bullish on Kiri.
Had in the past exited when there was possibility of default by Longsheng even after they lost case, but re-entered AFTER Dystar money came into Kiri bank account. That has completely changed the game. Feel Kiri has structurally changed.

My personal reasons are below (this is just my view, others are free to disagree):

  1. Kiri has taken ambitious calls earlier too. People forget it was the same management that risked entire networth of the company by taking $ loans and BUYING the Dystar stake along with the Chinese partner Longsheng. What did Mr Market do? they sold kiri till it came to single digits.
  2. Kiri and Longsheng together turned around Dystar …. and when kiri was getting screwed, it went to legal battle against a giant and after a decade of fight, WON.
  3. Now, Kiri is showing ambition again, by decisively going into copper. This is the right time to take the risk. Copper demand is only going to skyrocket. Only risk I see is managing copper ore supply, and that risk am ok to live with. Whole world is taking that risk.
    AND KIRI knows supply issue is there, but it also knows, like many investors, that supply shortage this year is due to series of unfortunate mining accidents / floods…no reason why shortage would continue 2027-28.
    PLUS, Kiri is negotiating a partnership with Celsius MCB copper gold project. Am confident they will strike a deal as Kiri is EARLY in the queue there. And it has the cash to back its buying commitment. If it gets 40% stake it will be insane, but will be happy even with a 20% one.
    Another bonus advantage is that KIRI is going to be building a new state of the art facility, as tech has progressed. It can achieve higher copper extraction from same 1 tonne ore as compared to older cos.
  4. Money is IN THE BANK ACCOUNT. This makes Kiri decisions easier, and they have Tata engineers as a consulting partner, and they are professionals who know their business. So have no doubt about expertise. One doesn’t need to be an expert in every sector one ventures into, as one can hire professionals and incentivise them to do the job.
  5. Kiri has been EXTREMELY TRANSPARENT about their investments, their loans, EVERYTHING.
  6. Dividends in current tax regime is the ENEMY OF GROWTH. I fully support Manish Kiri in not wasting cash on huge dividends. Kiri has lost a decade, and now it’s time to run ahead towards a fast growth phase.
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