Laxmi Organic Industries Limited has initiated a postal ballot seeking shareholder approval for two key matters: the re-appointment of an Independent Director and the reallocation of QIP funds. This follows the company's earlier confirmation of no deviation in the utilization of its Qualified Institutional Placement (QIP) proceeds from the stated objectives in the placement document dated October 10, 2023.

Director Re-appointment

The company proposes to re-appoint Dr. Rajeev Vaidya as Independent Director for a second three-year term from November 25, 2025 to November 24, 2028. Dr. Vaidya brings 33 years of chemicals industry experience and previously served as Global President at DuPont Building Innovations.

QIP Fund Reallocation

Laxmi Organic Industries is seeking approval to reallocate ₹109.58 million of unutilized proceeds from its October 2023 QIP issue. These funds, originally allocated for the Mahape innovation center project, will be redirected to the Dahej manufacturing facility project due to cost savings achieved in the Mahape project.

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:

Timeline Extension

The revised timeline for utilizing Dahej project proceeds has been extended to June 30, 2026. This extension allows for more efficient and phased deployment of funds, aligning with the project's execution schedule.

Project Delays

Both the Mahape and Dahej 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.

Shareholder Voting

The e-voting period for the postal ballot runs from November 7, 2025 to December 6, 2025, with results to be announced by 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.