Thank you @vh1, that was helpful.
I am summarizing the call below whatever I could capture for the benefit of all. There may be some errors or mistakes in my understanding, so please take your precautions before investing:
The management said they plan to appeal the judgment in NCLAT. They believe that they have a strong case and are confident of a favourable decision. They are hiring a new law firm and Senior Counsel. The appeal will be filed in 8-10 days and the NCLAT judgment will take around 6 months. Parent company RHI is very serious about the merger and is fully behind them in this. So there is no going back. They don’t have a Plan B at the moment i.e. what happens if they lose the appeal in NCLAT.
Regarding the reasons for rejection, the management said the judge has challenged the valuation on the ground of effective date of the merger (1-Jan-19) not being the date of the valuation (31-Jul-18) as the share price has changed between the two dates, making the swap ratio redundant. But in our application, we have already stated that the effective date could be this date or any other date as decided by the court. The judge has ignored that.
At the moment, nothing changes due to the rejection. They are working in close co-ordination with the two companies operationally already.
Besides the above, there were several other questions on regular business.
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Q1CY20 was turning out to be better than Q4CY19. Things were improving until the corona issue. So far there have been no RM problems or imports from China, shipments are moving. Don’t see any issue going ahead. RM prices have not gone up due to the Corona issue, but we are facing some delays & minor cost increases with shipping companies.
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The two previous takeovers viz., Manishri and Intermetal are proceeding well. We plan to ramp up the Manishri plant. Manishri has Rs.100 crore potential. With Intermetal also, we are planning to increase the production this year. Intermetal is very small but we plan to double production, it fits very well into our scheme of things.
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The two merging companies RHI Clasil and RHI India are complementary to Orient. RHI Clasil is into non-steel industries. RHI India does not have manufacturing, it is a trading company. It is into bricks. The pro-forma sales of the 3 companies jointly are Rs.1400 crores in 9M. (Said something here I did not hear clearly).
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Capacity is not a constraint, we are adding more in each of the companies. There is ample opportunity to grow in industries like ceramics, cement, glass, petrochemicals etc. We want to increase business in non-steel business. We can do new capex, but we don’t believe in huge capex. (Here something about tapping Magnesita business which I did not hear clearly). Technology will be Brazilian and equipment will be Indian. We also plan to enter foundry business in India.
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Europe steel market is shrinking but China market is growing, cancelling out each other.
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Consolidation has happened in the domestic Steel industry. Margins are under stress for everybody as steel companies have grown larger and have higher bargaining power. So we cannot command premium. But the advantage is also that bigger customers need stronger vendors, so it benefits us. With JSPL, we have made an Asia Pacific record. With Arcelor Mittal (former Essar Steel) we have business Rs. 8-10 crore per month, plan to increase it. We are also looking at PSU business closely; we will grow in that segment future.
(Disc.: Invested)