Laxmi Organic Industries Limited has confirmed no deviation in the utilization of its Qualified Institutional Placement (QIP) proceeds from the stated objectives in the placement document dated October 10, 2023. The company is now seeking shareholder approval for a proposed reallocation of funds and timeline extension for one of its projects.

QIP Fund Utilization

According to the monitoring agency report by India Ratings Research Private Limited for the quarter ended September 30, 2023, the company has adhered to its stated objectives for the QIP funds. The QIP raised ₹2,591.21 million for three main purposes:

Proposed Changes

The company is now seeking shareholder approval for the following changes:

1. Reallocation of Funds: The unutilized ₹109.58 million from the Mahape innovation center project is proposed to be reallocated to the Dahej manufacturing facility project.

2. Timeline Extension: The company proposes to extend the timeline for utilizing the Dahej project funds to June 30, 2026.

Reasons for Changes

1. Cost Savings: The Mahape innovation center project has been completed at a lower cost than initially budgeted, resulting in the unutilized balance.

2. Additional Funding Requirement: The Dahej manufacturing facility project requires additional funding.

3. Efficient Fund Deployment: The extended timeline for the Dahej project allows for more efficient and phased deployment of funds, aligning with the project's execution schedule.

Project Delays

Both projects have experienced delays of more than 18 months due to various factors:

• Mahape Innovation Center: Limited workspace in the existing structure delayed sequential activities.
• Dahej Manufacturing Facility: Delays in obtaining government approval for consent to establish (CTE), which was received on May 23, 2024.

Management Commentary

The company states that the proposed changes will ensure optimal utilization of QIP proceeds, accelerate project execution, and maximize long-term returns for shareholders while supporting the company's growth plans. The management emphasizes that this variation does not introduce any new objectives and remains within the scope disclosed at the time of the QIP.

Financial Impact

Post-utilization of the reallocated proceeds, the company expects an improvement in earnings and operating cash flows over the long term, driven by earlier commissioning/ramp-up and better asset utilization. No adverse impact on liquidity or leverage is anticipated, and there will be no change in the accounting treatment of the proceeds.

Shareholders will vote on these proposed changes through a postal ballot, with e-voting scheduled from November 7, 2025, to December 6, 2025. The results are expected to be announced on or before December 9, 2025.

Laxmi Organic Industries Limited continues to monitor its QIP fund utilization closely, ensuring transparency and compliance with regulatory requirements while adapting to changing project needs and market conditions.

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.