Laxmi Organic Industries Limited has announced that its shareholders have approved two special resolutions through a postal ballot voting process. The resolutions concern the reappointment of an Independent Director and a variation in the objects of the Qualified Institutional Placement (QIP) issue from October 2023.

Approved Resolutions

Reappointment of Independent Director

Shareholders approved the reappointment of Dr. Rajeev Vaidya as an Independent Director for a second three-year term.

Variation in QIP Objects

The resolution to vary the objects of the QIP issue from October 2023 was also approved.

Voting Process

The remote e-voting process concluded on December 6, 2023, with 424 members participating. Both resolutions passed with the requisite majority, demonstrating shareholder support for the company's proposals.

Director Reappointment

Dr. Rajeev Vaidya's reappointment as an Independent Director has been approved for a second term of three years. This continuation of his tenure will allow Laxmi Organic Industries to benefit from his experience in the chemicals industry, which includes his previous role as Global President at DuPont Building Innovations.

QIP Fund Reallocation

The approval for the variation in QIP objects relates to the company's proposal to reallocate ₹109.58 million of unutilized proceeds from its October 2023 QIP issue. These funds were originally allocated for the Mahape innovation center project but will now be redirected to the Dahej manufacturing facility project.

Conclusion

The passage of these resolutions demonstrates shareholder support for Laxmi Organic Industries' decisions regarding leadership and fund allocation. This development aligns with the company's previously stated goals of ensuring optimal utilization of QIP proceeds and accelerating project execution.

Laxmi Organic Industries , a leading manufacturer of acetyl intermediates and specialty chemicals, reported a 9% decline in revenue for the second quarter. The company's performance was primarily impacted by a significant drop in its specialty chemicals business.

Key Financial Highlights

Segment Performance

Specialty Chemicals

The specialty chemicals segment, a key focus area for Laxmi Organic, experienced a substantial 20% decline in revenue. This drop was attributed to three main factors:

1. A 10% decline due to the anticipated phase-out of an agrochemical product
2. A 7% decline from market price moderation
3. The remainder from deferred orders to the second half of the fiscal year

Essentials Segment

The Essentials segment, which includes the company's acetyl intermediates business, saw a 5% decline in revenue. This was primarily due to feedstock-linked pricing, although volumes remained in line with the previous year.

Operational Updates

Despite the challenging quarter, Laxmi Organic Industries reported several positive developments:

1. Dahej Facility: The company received consent to operate from the Gujarat Pollution Control Board for Phase 1 of its Dahej facility and has started supplying customers.

2. Fluorination Project: The project is ramping up according to plan, targeting 40-50% of peak revenues.

3. Hitachi Energy Partnership: Laxmi signed a contract with Hitachi Energy for SF6-free gas production, with a 60 metric tonne capacity and INR 75.00 crores capex. The project is expected to be mechanically complete by Q2 of the next financial year.

Management Commentary

Dr. Rajan Venkatesh, Managing Director and CEO of Laxmi Organic Industries, commented on the quarter's performance: "The global chemical industry backdrop remains very demanding, shaped by regional dynamics given the overall supply side overcapacities. The industry continues to be marked by targeted efforts towards cost optimization and restructuring of structurally subscale and non-competitive assets."

He added, "As Team Laxmi, we remain geared to win and geared for growth. We continue our focus on productivity, commercial excellence, execution excellence, cost discipline, and growth projects."

Outlook

While the company faces short-term challenges, particularly in its specialty chemicals segment, Laxmi Organic Industries is positioning itself for future growth through strategic investments and partnerships. The ramp-up of the fluorination project and the new capacity at the Dahej facility are expected to contribute to the company's performance in the coming quarters.

The management remains cautiously optimistic, emphasizing their focus on cash flow from operations and cost discipline to navigate the current demanding global chemical industry backdrop.