13 May 2024

Tirupati Graphite plc

('Tirupati', the 'Group' or the 'Company')

Response to Requisition Letter

Tirupati Graphite plc (TGR.L), the specialist Flake Graphite company and supplier of the critical mineral for the global energy transition, announces its response to the notice of requisition received by letter from Walpole St. Andrews Nominees Ltd on behalf of a group of underlying shareholders holding, in aggregate, 6,847,813 ordinary shares representing c. 5.8% of the issued ordinary share capital of the Company (the 'Requisitioners') on the receipt date. The letter requests the Company to convene a general meeting of the Company's shareholders pursuant to section 303 of the Companies Act 2006 (the 'Act') to consider resolutions to remove Shishir Poddar, Puruvi Poddar and Alastair Bath from office as directors of the Company and to appoint Mark Rollins, Leo Koot, Isabel de Salis and Murat Dogan Erden as directors of the Company.  A copy of the letter can be found appended below at Appendix 1.

The Company recommends that shareholders vote against these resolutions and provides shareholders with the following information in response to the proposed new Directors and issues raised in the letter from the Requisitioners.

SUMMARY

The Company recognises that its current board structure and composition needs addressing, to ensure it returns to QCA compliance with the appointment of wholly independent directors as soon as practically possible. The board is taking urgent steps to enhance this and is seeking the appointment of a new Non-Executive Chair, Non-Executive Directors, and a CFO.

The specialist nature of the graphite sector has meant that the Company transacts with related parties, achieved on highly competitive terms, which have been instrumental in shaping the Company's development.

The Company has successfully grown with minimal cash resources. It is making considerable progress in addressing the working capital situation which will enable it to successfully expand productivity and profitability.

The Company remains wholly committed to building a downstream business; to date, it has not been able to undertake this due to the impasse to the agreement with PranaGraf faced by the parties for reasons wholly beyond their control and, accordingly, the Company has not deployed capital to attempt to do so.

Deposing the existing board would remove it of critical sector and business knowledge, intellectual property and relationships.  The proposed directors have neither the sector skills nor experience to navigate the complex and specialist graphite sector.  Their appointments would be value destructive to the Company's prospects and fail to represent appointments of wholly independent directors.

VOTE AGAINST THE PROPOSED RESOLUTIONS

DETAILED RESPONSE FOR SHAREHOLDERS' CONSIDERATION TO VOTE AGAINST THE PROPOSED RESOLUTIONS

REQUISITION POINT 1: TO REVISE TG's CORPORATE GOVERNANCE FRAMEWORK

Priorities and endeavours of the proposed new Directors contained in the requisition letter

a.   "Establish clear independence between the roles of Chairman and CEO to ensure a balance of power and enhance corporate oversight.

b.   Undertake strategic recruitment including a Chief Financial Officer with proven experience in publicly listed companies.

c.   Create a high-calibre advisory committee with extensive knowledge in the relevant sectors and regions to provide strategic insights and guidance.

d.   Initiate defined reporting procedures including KPI definition and adherence for onsite operations and overall corporate performance."

Company's response

The Company has been working in accordance with the QCA Code of Corporate Governance as far as practical. Since its listing, it has had at most times 2 - 3 wholly independent NEDs and a CFO. The Company is in the process of undertaking the following initiatives:

Board structure/composition

1.         Targeted board composition change - The Company recognises the urgency of appointing a minimum of two independent non-executive directors. Concurrent with its own ongoing search, the Company may appoint an independent search agency targeting the appointment of wholly independent candidates with appropriate skill sets and experience.

2.         Splitting Chair and CEO Role - Since 2017, Mr. Shishir Poddar has held the dual roles of Executive Chair and CEO. Recognising shareholders' expectations, Mr Poddar will move to a CEO role upon the appointment of an Independent Non-Executive Chair. The Company confirms that it is currently evaluating potential independent candidates for this role.

3.         Seeking a CFO - The Company recognises the importance of a competent, preferably London-based CFO who can navigate equity and debt capital markets and manage relevant stakeholders. Such an individual is also important for project fundraising and overseeing the deployment of funds. The recent absence of a CFO has put additional burden on the CEO and other members of the team.

4.         Search challenges - The Company has prioritised cash for operations. It has deprioritised payments to the Board members. For example, Shishir Poddar had outstanding remunerations from January 2023, with only GBP 12,000 paid to him during the financial year ended on 31 March 2024. Due to the Company's restrictions on paying in cash, some of the Board and Senior team members agreed to the settlement of part of their overdue remuneration in equity in January 2024. Understandably, the working capital restrictions have been a constraint in the search for new, and retention of, some previous board members.

Note - It should be noted that none of the proposed directors have any expertise or experience of running a mining company, let alone a specialist graphite producer. The Company will subsequently share a detailed note about the proposed directors.

REQUISITION POINT 2: TO ADDRESS RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST

Priorities and endeavours of the proposed new Directors contained in the requisition letter

a.    "Adopt a transparent approach to managing any conflicts of interest, including cessation of all transactions with entities related to Mr. Poddar and his family, unless conducted under transparent and fair terms.

b.    Conduct thorough investigations into previous conflicts of interest to ascertain if transactions were executed favourably, particularly concerning the integration of downstream businesses.

c.     Cultivate a culture that rewards merit, participation, and contributions, effectively aligning employee interests with corporate goals."

Company's response

5.         Transactions at arm's length in the usual course of business - After incorporation in 2017, the three founding directors, being Mr. Shishir Poddar, Mr. Christian St John Dennis and Mr. Hemant Poddar signed agreements for the Company to work with entities owned by them at arm's length. These were instrumental in enabling the company to facilitate its business plans and deliver value in line with the Company's strategy. All such agreements were negotiated by independent directors on the board. The Company rejects assertions or assumptions that Related Party Transactions have ever been to the detriment of the Company and/or have not been on fair arm's length terms.

6.         Related counterparties

A summary of counterparties in related party transactions in the usual course of business of the Company are set out below. The Company intends to provide further information to shareholders in a subsequent note.

i)     Entities related to Mr. Christian St. John Dennis

●     Optiva Securities Limited was appointed as the Company's broker since listing. All the external capital raised by the Company to date has been raised through Optiva Securities Limited.

ii)    Entities related to Mr. Shishir Poddar and/or Mr. Hemant Poddar

●     Tirupati Carbons & Chemicals (P) Ltd. ("TCCPL"), supplied plant & machinery and certain other inputs for building the Company's projects until 2020. It also procured the Company's flake graphite products from time to time.

●     PranaGraf Materials & Technologies (P) Ltd. ("PranaGraf", previously known as Tirupati Speciality Graphite (P) Ltd.) has provided the Company with back office and support services since 2018 including highly specialised recruitment and training and supplied key plant and equipment and certain inputs required by the Company at its projects. PranaGraf purchases the Company's finished products at market rates availed by similar customers and intermediaries in the USA, Japan, Europe, and India. No preferential treatment is offered to PranaGraf.

●     Haritmay Ventures LLP ("Haritmay") is a specialist equipment & machinery manufacturer for mineral processing. It has supplied the plant equipment and machinery needed to build the Company's graphite projects, and the Company's CAPEX & OPEX advantage is primarily due to this non-Chinese proprietary equipment. The Company enjoys these benefits owing to a common founder, wherein Haritmay exclusively supplied its graphite processing equipment to the Company and to none of its competitors.

Transactions with related parties have been instrumental in shaping the Company's ex-China focused development approach, and have been conducted at arm's length in the usual course of business of the Company, providing the Company with advantageous low costs and shorter development timeframes compared to its peers.

Note - The Company shall subsequently provide a supplementary detailed note on these separately.

REQUISITION POINT 3: TO ADDRESS LIQUIDITY ISSUES AND OPTIMISE CAPITAL STRUCTURE

Priorities and endeavours of the proposed new Directors contained in the requisition letter

a.    "Arrange a borrowing capacity to manage payable crises, restore commercial reputation, and invest in delayed capital expenditures (Capex) to optimise short-term operational capacity.

b.    In the medium term, pursue funding opportunities to enhance operational capacity and maximise returns."

7.         Alternative advisors working to raise gap funding - The Company has raised c. GBP 24.8 million gross proceeds since December 2020 to build its Madagascar projects and acquire its Mozambique assets. The Company remains engaged in raising working capital funding and development funding through appointed financial advisers.

8.       Development finance discussions are advancing - The Company appointed an advisor to engage with certain Development Finance Institution ("DFIs") to address working and development capital requirements.                                                                                                                                                                        

9.         Managing cash tightly in difficult circumstances - From 1 April 2023 to 31 March 2024, the Company achieved revenues of GBP4.9 million whilst, as announced, managing significant financial constraints, resulting in its highest annual production and sales to date.

10.       Pressing for VAT refunds - As reported, the Company, alongside in-country British diplomatic teams, is firmly engaged with Madagascan authorities regarding the US$2million VAT refunds due.

11.       Optimal capital structure - The Company's financing approach has been to fund project development, to positive EBITDA stage, primarily through equity capital. As is standard practice in the industry, further expansion will be made through an appropriate combination of debt and equity.

12.       Current directors invested and aligned - All directors have demonstrated significant commitment and are aligned with shareholders by investing their personal capital in the business, taking their salaries in shares in lieu of cash, and contributing to company's growth without any equity-linked incentives being put in place to date.

REQUISITION POINT 4: TO EXECUTE THE OFFTAKE STRATEGY

Priorities and endeavours of the proposed new Directors contained in the requisition letter

a.    "Seek partnership opportunities with entities not currently associated with the Company, focusing on expanding the downstream business.

b.    Explore sustainable downstream business strategies for building or acquiring opportunities to secure and enhance the value chain.

c.     Seek downstream business partners that would further facilitate financing and development of the upstream assets, particularly the Mozambique resources."

Company's response

13.       Prudent offtake and marketing strategy demonstrably in place - Despite subdued market conditions, the Company has sold all its flake graphite products successfully to date, under the leadership of the Chair & CEO, whose 33 years of industry experience have been critical to achieving this. Engagements with prospective customers, who serve the global energy transition, continue to grow.

14.       Vital to incorporate downstream activities - The incorporation of downstream activities has been pursued by the Executive Chairman with the board since incorporation in 2017. The Company remains committed to progressing its downstream strategy following extensive engagement with various national governments and international funding groups.

15.       Previous downstream deal was unsuccessful - As announced, and as determined by a Company subcommittee of independent directors, and with advice from a top tier independent Indian law firm, a regulatory impasse has frustrated the Company's business combination transaction (governable under Indian Law) with PranaGraf under the 2018 agreement.

16.       Options evaluated for alternate arrangement with PranaGraf - The 2018 agreement with PranaGraf failed for reasons reasserted in the Company's 10 May 2024 RNS. The Company's subcommittee determined the following options as the way forward:

●     continued pursuit of regulatory approval for business combination with PranaGraf in the form originally envisaged by the 2018 agreement;

●     exploring potential commercial arrangements with PranaGraf;

●     exploring potential participation in alternative investment vehicles for investment in PranaGraf.

17.       Commercial arrangements are the most feasible option - Possible alternatives for a commercial arrangement were tabled by PranaGraf first in May 2022 and again in August 2023. The Board believes that progressing downstream discussions with PranaGraf, following review of the independent Indian law firm's advice, towards commercial arrangements, is the most appropriate way forward. In consideration of good governance and its commitment to best practice in the context of a related party transaction, outside the usual course of business, the Company has appointed independent advisors to support its commercial interests in these discussions. Any final agreements will be considered after the future appointment of independent directors.

In summary, the Company continues to believe that its pursuit of a downstream integration is critical to shareholder value creation. The Company is taking active steps to keep negotiations with PranaGraf ongoing in the best interests of pursuing its downstream strategy. The Company has previously explored other downstream partners and is also exploring potential new partners.

The proposed board lacks any mining experience whatsoever; furthermore, expertise in Flake Graphite which is a highly specialist and niche sub-sector. The proposition of appointing an expensive advisory committee with the requisite skills and experience while proposing to remove the current board  with its unique extensive sector experience and know-how is viewed as counterproductive and value-destructive for shareholders.

THE COMPANY'S RESPONSES TO SPECIFIC ACCUSATIONS IN THE REQUISITION LETTER

RESPONSE 1: The resignations of previous independent directors and subsequent immediate appointments of Puruvi Poddar and Alastair Bath as executive directors

Statement contained in the requisition letter.

"The beginning of this year marked a worrying trend when all non-executive directors resigned in quick succession. Their departure was attributed to unresolved issues relating to the company's strategic direction, governance practices, and overall individual performance. This development coincided with a significant drop in TG's share price, eroding the market capitalisation to a mere fraction of what was initially invested by many valued shareholders."

Company's response

The Company strongly denies these allegations and contends that its strategic direction is well defined and has been successfully executed over the years, with governance practices guided by the QCA Code to the extent practicable considering the stage, size and financial constraints of the Company.  The Company further states the following:

18.          Boardroom pressure - Over the past c.12 months, the Company has remained under boardroom pressure for various reasons including director's fees not being paid in time to all directors including non-executive directors and senior management, prioritising cash use for operations.

19.          Drop in share price - The drop in share price of the Company has negatively impacted the Company's progress despite it still retaining an advanced operating position among ex-China graphite companies. The measures enumerated in this document, amongst others, are targeted towards rebuilding the Company's share price.

Statement contained in the requisition letter.

"Prompting significant concern, the resignation of the non-executive directors was followed by Mr. Poddar appointing his daughter, Puruvi Poddar, aged 27, as the joint managing director and Alastair Bath, a 28- year-old associate employee and staunch supporter of Mr. Poddar, as an additional director. It is notable that neither has any previous experience at the PLC Board level. This manoeuvre has resulted in the absence of any independent non-executive directors, further centralising power within the Poddar family and their circle."

20.          Legal Obligation - The Company is under legal obligation to have a minimum of two directors at any given time, thus necessitating the immediate appointment of at least one more director on its board upon resignation of Mr. Murat Erden. The Chairman preferred to appoint both Ms. Puruvi Poddar & Mr. Alastair Bath simultaneously. Bringing on new NEDs requiring allocation of capital towards their search as well as their remuneration has been  a challenge. In this situation, both Puruvi and Alastair not only stepped up to help steer the Company in tough times, but also did so without any increase in their remuneration for their increased responsibilities.

21.          Governance Obligations - As stated above, the Company has a clear plan to address the structure and composition of its board, and is in conversation with suitable candidates to fulfil these requirements.

RESPONSE 2: There is a strong level of leadership and operational oversight

Statement contained in the requisition letter.

"Moreover, the Company's operational ventures have seen minimal oversight. Notably, it recently became apparent that Mr. Poddar's engagement with TG's primary operations in Madagascar was limited to only two visits: the first occurring before the IPO in 2019, and the second in February 2024-five years later. This sparse oversight raises significant concerns about the strategic management and operational focus necessary for the Company's growth."

Company's response

22.          Baseless accusations of oversight arrangements - Any allegations of deficient oversight linking this to the number of visits by Mr.Poddar to Company projects are made with a lack of understanding and insight. The Company's management is composed of highly competent persons and Mr. Poddar has spent no less than 3 to 4 hours every day overseeing the on-the-ground development and operations of the Company's projects, including on weekends, by various means of communication, and additionally executing all his other activities, including but not limited to planning, design, engineering, corporate development, corporate finance, marketing and Board activities amongst others.

REPONSE 3: There has been no financial mismanagement

Statement contained in the requisition letter.

"Equally alarming is the issue of financial mismanagement. Despite raising GBP5 million in 2021 to integrate the downstream business operations-also owned by the Poddar family-there's been no progress on this front. Instead, TG continues to face a constant cash flow crisis affecting its staff, suppliers, and reputation. There are significant signs that the Company no longer has access to the London debt and capital markets."

Company's response

23.          No investment in Downstream - The funds raised in 2021 for downstream business were not deployed in the target entity, and so for wholly understandable reasons the transaction failed.

24.          Use of Funds - Matters related to the transaction impasse and the opportunity to progress the downstream are detailed above. As was prudent, and as announced, all funds raised have instead been deployed for the development of the Company and its projects.

25.          Access to capital - The accusation of the capital markets being closed to the Company is incorrect. The Company is engaged in upfront resolution of the working capital gap including with DFIs for longer term large development financing.

ENDS

For further information, please visit  https://www.tirupatigraphite.co.uk/  or contact: 

About Tirupati Graphite  

Tirupati Graphite Plc is a specialist Graphite producer and a supplier of the critical mineral for a decarbonised economy and the energy transition. The Company places a special emphasis on green applications including renewable energy, e-mobility, energy storage and thermal management, and is committed to ensuring its operations are sustainable. 

The Company's operations include primary mining and processing in Madagascar where the Company operates two key projects, Sahamamy and Vatomina with a combined 30,000 tpa of currently installed capacity, producing high-quality flake graphite concentrate with up to 97% purity and selling to customers globally. 

The Company also holds two advanced stage, world class, natural graphite projects in Mozambique. Work has already commenced to optimise the economics for development of the Montepuez graphite project, which is permitted for 100,000tpa production and where substantial construction work has already been undertaken by the predecessor. A table of the Company's projects is provided below: 

APPENDIX 1

COPY OF THE REQUISITION LETTER (DATED 23 APRIL 2024)

In accordance with section 303(1) and section 168 of the Companies Act 2006, we, the undersigned, require you to proceed to convene a general meeting of the Company, within 21 days from the date you receive this requisition, for the purpose of considering the removal of all of the current directors of the Company and the appointment of four new directors to the board of the Company, and for the purpose of considering and, if thought fit, passing the following resolutions, all of which are being proposed as Ordinary Resolutions:

1.   THAT, Shishir Poddar be removed from office as a director of the Company with effect from the end of the meeting

2.   THAT, Puruvi Poddar be removed from office as a director of the Company with effect from the end of the meeting.

3.   THAT, Alastair Bath be removed from office as a director of the Company with effect from the end of the meeting.

4.   THAT, having consented to act, Mark Rollins be appointed as a director of the Company with effect from the end of the meeting.

5.   THAT, having consented to act, Leo Koot be appointed as a director of the Company with effect from the end of the meeting.

6.   THAT, having consented to act, Isabel de Salis be appointed as a director of the Company with effect from the end of the meeting.

7.   THAT, having consented to act, Murat Dogan Erden be appointed as a director of the Company with effect from the end of the meeting.

8.   THAT, any person appointed as a director of the Company since the date of this requisition up to the end of the meeting and who is not one of the persons referred to in the Resolutions numbered 1 through 3 (inclusive) above, be and is hereby removed as a director of the Company.

In accordance with section 314 of the Companies Act 2006, we also require you to circulate with the above resolutions the following statement on the subject matter of the resolutions:

Tirupati Graphite plc 'the company' or 'TG') - Requisitioning Statement

For the avoidance of doubt we have been instructed as nominee to the other underlying beneficial shareholders to make this requisition and requisition statement

Dear Shareholders,

In recent times, a growing concern has emerged regarding the leadership and governance practices within the company, under the stewardship of TG's Chairman, and CEO, Mr. Shishir Poddar. This concern is rooted in a series of events and decisions that have undermined shareholder confidence and led to a noticeable decline in the company's market performance and valuation.The beginning of this year marked a worrying trend when all non-executive directors resigned in quick succession. Their departure was attributed to unresolved issues relating to the company's strategic direction, governance practices, and overall performance. This development coincided with a significant drop in TG's share price, eroding the market capitalisation to a mere fraction of what was initially invested by many valued shareholders.

Prompting significant concern, the resignation of the non-executive directors was followed by Mr. Poddar appointing his daughter, Puruvi Poddar, aged 27, as the joint managing director and Alastair Bath, a 28- year-old associate employee and staunch supporter of Mr. Poddar, as an additional director. It is notable that neither has any previous experience at the PLC Board level. This manoeuvre has resulted in the absence of any independent non-executive directors, further centralising power within the Poddar family and their circle.

This situation is further complicated by Mr. Poddar holding the dual role of CEO and Chairman, creating a culture where decisions go unchallenged and potential conflicts of interest are neither identified nor addressed.

Moreover, the company's operational ventures have seen minimal oversight. Notably, it recently became apparent that Mr. Poddar's engagement with TG's primary operations in Madagascar was limited to only two visits: the first occurring before the IPO in 2019, and the second in February 2024-five years later. This sparse oversight raises significant concerns about the strategic management and operational focus necessary for the company's growth.

Equally alarming is the issue of financial mismanagement. Despite raising GBP5 million in 2021 to integrate the downstream business operations-also owned by the Poddar family-there's been no progress on this front. Instead, TG continues to face a constant cash flow crisis affecting its staff, suppliers, and reputation. There are significant signs that the company no longer has access to the London debt and capital markets.

The requisitioning shareholders believe that appointing these new directors to the board will seek to rectify the situation. We are therefore proposing the removal of the current board and the appointment of the new directors as per the requisitioning resolutions. Please note, Murat and Isabel (previously been non-executive directors of TG) have no relationship with the Requisitioning Shareholders and neither Leo nor Mark are Requisitioning Shareholders.

In light of the concerns noted above, we believe that the proposed directors will if appointed work to put in a stringent corporate governance regime and adopt a proactive and transparent approach in addressing these challenges. Furthermore, we believe the proposed directors' focus will be on realigning the company's governance with the best interests of its shareholders and enhancing value for all stakeholders.

We believe that the proposed directors will prioritise and endeavour the following actions:

1. Revise TG's Corporate Governance Framework:

a.    Establish clear independence between the roles of Chairman and CEO to ensure a balance of power and enhance corporate oversight.

b.    Undertake strategic recruitment including a Chief Financial Officer with proven experience in publicly listed companies.

c.    Create a high-calibre advisory committee with extensive knowledge in the relevant sectors and regions to provide strategic insights and guidance.

d.    Initiate defined reporting procedures including KPI definition and adherence for onsite operations and overall corporate performance.

2.      Address Related Party Transactions and Conflicts of Interest

a.    Adopt a transparent approach to managing any conflicts of interest, including cessation of all transactions with entities related to Mr. Poddar and his family, unless conducted under transparent and fair terms.

b.    Conduct thorough investigations into previous conflicts of interest to ascertain if transactions were executed favourably, particularly concerning the integration of downstream businesses.

c.    Cultivate a culture that rewards merit, participation, and contributions, effectively aligning employee interests with corporate goals.

3.      Address Liquidity Issues and Optimise Capital Structure

a.    Arrange a borrowing capacity to manage payable crises, restore commercial reputation, and invest in delayed capital expenditures (Capex) to optimise short-term operational capacity.

b.    In the medium term, pursue funding opportunities to enhance operational capacity and maximise returns.

4.      Execute the Offtake Strategy

a.    Seek partnership opportunities with entities not currently associated with the company, focusing on expanding the downstream business.

b.    Explore sustainable downstream business strategies for building or acquiring opportunities to secure and enhance the value chain.

c.    Seek downstream business partners that would further facilitate financing and development of the upstream assets, particularly the Mozambique resources.

For the reasons above, we urge you to vote in favour of the resolutions we have proposed at the general meeting of the Company.

Sincerely,

Walpole ST. Andrews Nominees Limited

(on behalf of the underlying beneficial shareholders)

End of Requisitioning Statement                                                                                                                  -

We confirm that we are members representing at least 5% of the total paid-up capital of the Company carrying the right of voting at general meetings of the Company.

We undertake to pay a sum which is reasonably sufficient to meet the expenses of the Company in giving effect to the requisition to circulate a statement pursuant to section 314 of the Companies Act 2006. However, we note that as the statement is combined with this section 303 requisition, which the Company must bear the expense of, the only additional expenses arising as a result of the section 314 requisition would be the printing of the extra page(s) of the circular containing the statement.

Date: 23^rd April 2024