Quarterly interst outgo is 250 Crs,with no plan for debt reduction in site. Mr. Pabarai’s dream money manager has been an empire builder running high on debt with no end plan in sight. Debt doesn’t care whether you have holidays,Mr. Trump ,wars or anything. The interest and depriciation outgo eats majority of earnings. What the company or its management has been betting on is exponential rise on comodity prices for aluminium which will soar its profit in one particular year and then they will pay off their debt. Basically if we need aluminium prices to be higher we need a demand boom. I do not think that is coming anywhere in the near future. This company is run like a pvt enterprise. They haven’t asked us to come onboard. We acted on the tune of the pide piper( Mr. Pabarai). Disc- Sold off at 25% loss after holding on for 3 years. Was 10% of pf,lost a lot on oppurtunity cost.
I sold my holding after reading this post. It helped me get rid of my bias and also made me realize that we should avoid Godfication of star investors(Mr. Pabarai) in this case. what is going on in their mind,or what facade they are wearing ,it may bever be known. I often thought when Mr. Pabarai was constantly parading his closeness to Mr. Munger,he would have ran the idea of Rain Industries and what a great manager Mr. Jagan Mohan Reddy is with Mr. Munger. If further strengthened my resolve in holding Rain Industries. This blog is much nuanced and I came to realize that turnarounds seldom turnaround.
There have been 3 announcements so far -
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The Original JDA (Oct 2024): Rain + Northern Graphite
Goal: To prove that Rain’s LIONCOAT® coating technology can be applied to natural mined graphite to make it perform as well as (or better than) the more expensive, less-green synthetic graphite.
This was the “proof of concept” to establish their technology in the traditional supply chain. -
The First Grant (Oct 2025): Rain + Green Graphite Technologies (GGT)
Goal: To create a circular economy for batteries by using GGT’s proprietary technology to recycle graphite from end-of-life batteries.
This was the “recycling” pillar, tackling the end of the battery’s life. -
This New Grant (Nov 2025): Rain + Northern Graphite
Goal: To create value from mining waste. This 24-month, 2.2 million project(aided with government grant money) is specifically designed to take a waste byproduct from the graphite milling process—called “low-value natural graphite fine fractions” and “upcycle” it into high-performance, battery-grade material.
Impact -
- Will help with the ESG Narrative. This project, which is explicitly focused on reducing waste, minimizing mining, and lowering the carbon footprint of battery production, is a powerful counter-narrative against their “polluting” character of business.
- But otherwise its not going to move the needle. Market is completely focussed on its debt and return to profitability and margin improvements. Nothing else matters at this point.
- IMO, I see all these initiatives and validations as an intelligent strategic play to move up the vlaue chain in the circle of their competence.
Disc - Part of my biggest holding. Invested and biased.
