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Nice to see that the company can produce a high quality product which is in demand by European customers. However, having a board composed of Shishir, his daughter, and a recent graduate is not a sustainable position for a listed company with ambitions to be a major player in the graphite space.
Shishir needs to get quality NED's in ASAP and to keep them for more than a few months. What the issue is here is beyond me, but I suspect he may be difficult to work with or isn't paying the non-execs for their time.
This is also particularly important for obtaining debt finance, as corporate governance is a key aspect for lenders when looking at prospective clients.
I’m currently on holiday but sold out at 9p once the previous director jumped ship. I still don't believe there’s any malicious behaviour here, but the inability of Shishir to maintain a functioning and committed board is a major red flag for me. It doesn’t matter how great the asset is, if it’s poorly managed then it’s doomed to fail in my books. A tough loss to swallow but onwards and upwards to greener pastures for me. Good luck to those that stick it out.
Suspect there's a few buyers waiting on the sidelines until there's an update on production numbers.
Once the business starts to generate free cashflow then I think we will see a sustained re-rate on increased volume. The ability to self fund new capex in Madagascar will be key to get to 30,000tpa, which should then help to unlock the debt finance for the first module in Mozambique.
So everything will flow from getting to that ~15,000tpa breakeven number. Then any future equity raises will be for value accretive transactions and not to cover working capital.
To be honest, I'm glad the team is in Madagascar trying to get everything running at capacity. Rather that than answering emails from Mumbai.
On the flip side, they probably need to invest in their corporate infrastructure so there is always someone monitoring investor emails. It would go a long way to rebuilding the brand with PI's.
I get that they are trying to run a lean operation but sometimes it can be too stretched and it starts to become an issue for the business and for us as shareholders.
I’m not sure there’s anything to debate about the family ownership - they currently own 26% as per the recent RNS. If you want to look up the definition of the concert party - take a look here https://tirupatigraphite.co.uk/pdf/TirupatiProspectus.pdf
New post from the company showing processing at Vatomina: https://x.com/Tirupatiuk/status/1757434639302418724?s=20
Clearly operations are ongoing and hopefully they're putting the recent equity raise to good use. Just need to be patient and wait for the next update.
hi boris - the auditors definitely check on the related party transactions and these are noted in the full year accounts. they will also check on the prices paid for goods to ensure they are fair and not under or overstated. tgr benefits from the private businesses in terms of specialist equipment provided by haritmay and sales for graphite through pranagraf. while the intercompany sales might be a large % of revenues now, i would be very surprised if pranagraf will be a major buyer once the tonnages start increasing to nameplate capacity. the relationship has been useful as the company has scaled, but they will certainly be seeking larger buyers to get through volumes above 10,000tpa.
i don't believe those indian businesses have anywhere near the same substance as tgr, so i do feel we are getting ourselves into a bit of a tizz about the whole thing. ultimately, we are shareholders in the key asset of the group.
just in terms of pranagraf, the prospectus details three "projects" which are owned by this company - 1) patalanga project, 2) specialty graphite project, and 3) tgmrc. patalanga is an operating business which produces the groups flame ******ant composite - carboflamex. the specialty graphite project and tgmrc are either only in their infancy or not operating at scale - so i don't believe we are missing out on much value there as it currently stands.
the original price agreed for the acquisition of tsg/pranagraf was £2.0m (refer patalganga spa in the prospectus) and this was to be paid for by the issue of 10.0m shares after tgr went public. however, they obviously had issues with the reserve bank of india and hence the delay in getting this completed.
there's a lot of information in the original prospectus and i would encourage all serious investors here to read it in detail.
Alright so I've been through the prospectus and the Concert Party is: Shishir & close family, Hemant & close family, and Tirupati Carbon & Chemicals ("TCCPL"). At listing, they held 43.02% of the company.
Per the latest RNS, the Concert Party has been diluted to ~26% due to the various equity raises since late 2020.
If anyone wants to cross check, the prospectus is easy to find if you give it a google.
You're right that the current SP is more sentiment driven than anything else right now. I'm sure the two mines are currently busy churning out steady tonnages, but unfortunately that's the day-to-day work we don't see as private investors.
If you take a step back and think about what TGR currently has in terms of production and potential production (i.e. Suni in Mozambique) I do scratch my head at the current valuation. If you take the latest balance sheet, the current market cap is a third of net asset value, which implies no value for the suni assets and no future cashflow generation for the business.
Personally, I think the shares are oversold and we could be in for a sizeable re-rate if the company starts to turn a profit and generate FCF. Just need some good news and a bit of volume - feels like small caps are dead at the moment.
Agree with the comments below. I believe Hermant was/is quite involved with the Indian companies (Pranagraf, etc.) so perhaps they agreed that he would focus there and reduce the Poddar representation on the board of TGR Plc.
We now have a much better balance on the board with the majority NED's. Hopefully they can also strengthen further this year.
How are the Poddar’s going to take the company private? Even at 10p, the business still has a market cap of £13M and the family (named as the concert party) only holds around 26% of the outstanding shares. Therefore, they would need to cough up at least £9.5M AND shareholders would need to vote for it.
There’s more chance of shareholders working together to get a new board than a take private transaction by the family.
Agree with you there HC.
Just on another junior miner - have you seen the gains in HE1 since last Wednesday? It's currently up 6x on an announcement of a potential Helium/Hydrogen play. They don't even know if it's viable yet and the market cap is currently over £40M...
And here we are languishing at a £13M market cap with two producing mines and another world class asset in Mozambique recently acquired. The mind boggles.
That being said, it does demonstrate how much faith has been lost by investors in TGR. At the current market cap, the Suni assets have essentially been discounted to zero and we are trading below book value. Any signs of profit and higher production numbers and we will be due a decent re-rate.
I actually think think TGR are well placed given their low cost of production. Time will tell though and hopefully they put the recent raise to good use. Given the major development work is now finished in Madagascar, this is the year for the business to show what it is capable of (or not) in terms of steady state production and sales.
GLA.
Interesting if you take a look at the import/export data for TGR itself: https://www.trademo.com/companies/tirupati-graphite-plc/40464231
Obviously Pranagraf is a large buyer but what struck me was the increase in shipments during November. Hopefully this bodes well for the next trading update and that they can keep the momentum up.
The delay in the VAT rebates certainly hasn't helped matters and I would hope that these can be collected this year.
I agree with you re: the share price and I don't see the Poddar's as being malicious in their intent for the company. They want TGR to succeed but the last twelve months has seen a litany of management errors and they need to regroup ASAP and start delivering.
They've got more cash now than they've had since mid 2022, so we just need 2024 to be a year of steady production and no major missteps. I feel like they stretched themselves with the Suni acquisition and I'd like to see a period of consolidation and focus on Madagascar. Cashflow generation is key and this should be their number one priority.
Time will tell and GLA.