The board of LSE-listed Tirupati Graphite has decided to explore other routes to achieve its objective of becoming a vertically integrated graphite and graphene business, as there remain outstanding regulatory hurdles and uncertain timelines in the company’s acquisition of Tirupati Speciality Graphite (TSG).

Tirupati entered into a sale and purchase agreement with TSG in 2018 to capture the benefits of vertical integration. The agreement related to the acquisition of the then issued share capital of TSG, by way of a share swap.

TSG was established to develop downstream flake graphite projects, as well as a research and development centre for graphene, advanced materials and mineral processing technologies.

The completion of the acquisition has remained pending owing to it requiring the approval of regulators in India, under the Foreign Exchange Management Act, since it classifies Tirupati as an “overseas direct investment”.

The board has also determined that the independent valuation report used to establish the share swap ratio is no longer valid and necessitates undertaking a new report.

As such, the timing for obtaining regulatory approval and the consideration of the proposed acquisition remains uncertain.

Tirupati will, therefore, explore alternative sources of capital to maintain its development.

To continue developing a downstream and advanced materials business, Tirupati will possibly participate in alternative investment vehicles for investment in TSG, as may be permissible with participation of Tirupati shareholders, and explore possible commercial arrangements with TSG.

Tirupati executive chairperson Shishir Poddar says the company remains committed to the development of a downstream and advanced materials business – to enable it to take advantage of the benefits of being a vertically integrated graphite and graphene business.

“Ideally, this would be through the completion of the acquisition of TSG, but in recognition of the outstanding regulatory hurdles and uncertain timeline to completion, the board has taken the pragmatic approach of exploring other routes to achieve our ultimate objective while continuing to push forward with the previous arrangement."