Kiri Industries Limited (532967) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '21 Earnings Conference Call of Kiri Industries Limited. [Operator Instructions] I would now like to hand the conference over to Mr. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good morning, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Kiri Industries Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the first quarter of the financial year 2024. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and being aware about the company's fundamental business and financial quarter under review. I would now like to introduce you to the management participating with us in the earnings conference call. We have with us Mr. Manish Kiri, Managing Director; Mr. Jayesh Hirani, Senior Manager, Accounts and Finance; and Mr. Suresh Gondalia, Company Secretary. I now request Mr. Manish Kiri to give his opening remarks. Thank you, and over to you, sir.

Good morning, everybody, and welcome to the earnings conference call for the First Quarter of Financial Year 2024. Let me first brief you on the financial performance of the first quarter of financial year 2024, followed by the operational highlights. On a standalone basis, during quarter 1 FY '24, Kiri ethane sales revenue of INR 142 crores and earned an EBITDA of INR 12.61 crores with a net loss on the quarter post depreciation of about INR 1 crore. On a consolidated basis, quarter 1 FY '24 revenue stood at INR 227 crores, with EBITDA profit of INR 2 crores and the net loss of around INR 15 crores. The sluggish demand for textiles during the last 2 years has impacted both volumes and selling price of dyestuffs. This is not allowing industry players to pass on the increase in input costs to the end consumers. Kiri has adopted a coherent approach in addressing the dynamic global business environment to beat economic contraction, with astute sales strategy for its entire range of dyes, dyes intermediates, specialty dyes intermediates. In the coming quarters, industry experts foresee rebound in demand for textiles, which shall enhance demand for dyestuff industry, enabling market players to strengthen business growth and improve markup in material margins. On a standalone basis, finance costs increased because company has availed loan of INR 66.79 crores in April-May 2023. EBITDA was mainly impacted because of the legal costs incurred in the litigation against Longsheng Group or Senda Capital for Kiri's stake in dyesuff. It needs to be highlighted that the legal costs would have to be incurred in coming quarters also. Since the legal proceeding is related to the enforcement of the buyout order has now been initiated against Senda. In quarter 1 FY '24, company earned material margins of 23.4% on account of pressure on selling prices and reduction in volumes. With regards to DyStar case in Singapore, Kiri has filed an alternate relief application with Singapore International Commercial Court for enforcement of values and judgment to recover $603.8 million, determined by SICC, with its judgment dated March 3, 2023, wherein it has applied to SICC for making Senda International Capital Limited and DyStar Global Holdings Limited jointly and severely reliable for complete the buyout [indiscernible], DyStar is to complete purchase of 17.57% of equity of DyStar held by Kiri at USD 282.37 million within 1 month of the date of the court order. Thereafter, Senda, or DyStar and DyStar either or both of them, by balance 20% of equity of DyStar held by Kiri at USD 321.47 million without -- within 4 months of the date of the court order, for which a receiver to be appointed by the court for limited purpose of executing this purchase by DyStar. In the event, DyStar and Senda fail to comply with the order of the court, Distra should be wound up by the court and pay the buyout order amount of $603.8 million and all interest and legal expenses in priority to Kiri from liquidation of DyStar's assets. Senda shall be liable to pay interest on final purchase price from April 3, 2023 at 14.85% per annum or any ultimate interest rate determined by the SICC until the completion of the purchase of Kiri shareholding in DyStar, or until Kiri receives the full amount of the final purchase price, whichever is later. Senda to be restrained from transferring charging or otherwise dealing with its shares in DyStar until full payment of the final purchase price and all interest and legal costs to Kiri. DyStar also be liable to pay interest at 14.85% per annum or any alternative interest rate determined by SICC on the amount of $282.37 million, from the date on which the purchase should be completed until the date of completion of the purchase of 17.7% of Kiri shareholdings in DyStar, or until Kiri receives its purchase price of remaining USD 282.37 million, whichever is later. DyStar shall also be liable to pay interest at 14.85% per annum or any alternate interest rate determined by SICC on the amount of $321.43 million from the court, from the date on which the purchase should be completed by Senda, until the date of completion of the purchase of 20% of Kiri shareholding or until Kiri receives its [ fate ] amount, whichever is later. So these are the pairs which have been submitted to the court. Additionally, the company has also commenced examination of the judgment date proceedings in SICC in relation to the cost order made in Kiri's favor by SICC, as well as by the Supreme Court of Appeal. Kiri has applied to examine Mr. Ruan Weixiang, the Chairman of Zhejiang Longsheng Group, the Chairman of DyStar, and Former Director of Senda International Capital; and Ms. Fan Jiang, Current Director of Senda International Capital Limited, for information on Senda's assets. Kiri is currently taking steps to affect service of the relevant court documents on Mr. Ruan Weixiang and Ms. Fan Jiang. With that, I would like to open the floor for any questions. Thank you very much.

[Operator Instructions] The first question is from the line of Manoj Bhura from Adinath Financial.

[Foreign Language] You have done a commendable job in the last 10 years, fought and won. [Foreign Language]. How far is the destination now?

Exactly, exactly. So as you can see now, after getting all the reliefs and all the orders in Kiri's favor from the Supreme Court, we have entered into enforcement stage. And as you are aware, enforcement stages, the final stage, court is already involved, court has been inducted on enforcing these judgments. So hopefully, the timelines, which would be decided by the court on the proceedings of enforcement would be known in the next few weeks. And we'll be announcing to all the shareholders for their knowledge, and this is very important question which you have asked. And now after almost 9 years, it's important that we have the definitive court line -- time line from the court to end this battle. So absolutely, we all are awaiting to have certain timelines on the prayers which Kiri has submitted to the court on alternate relief. So let's hope that we have some positive information from the court in the coming weeks.

Sir, maximum time how much it can take? What can be the maximum timeline in your opinion or in the opinion of our legal counsel? And you are also on the Board of DyStar also. There are 5 directors in DyStar, 3 are from Senda and 2 from Kiri. So don't you discuss anything? Do you attend those meetings?

Right. Right. We attend all the board meetings. Kiri is participating in every board meeting, which has been conducted by DyStar. And Kiri has been regularly following up with Senda, through Senda's Counsel from Kiri's counsel on a very, very regular basis. Now based on the legal advice that we have received, this may take anywhere from 6 months to a year, and it all depends on how fast court is acting to take the necessary actions, which Kiri has asked or prayed to the court. So I think that is what the timelines as per the current advice that we have. But I suppose as and when the court is progressing on enforcement, we'll have more clarity on the timelines, which would be fixed. But you can say that -- you can understand that this is the range and the limit which we are being advised as on today.

Manishji, Singapore is a very well-governed state. [Foreign Language].

I think they are dragging this matter, and I think they are passing as much time as they can. And you can understand that, when they haven't paid the legal cost, there is no trust left from Kiri's side on their intentions of paying correct? And if they had intentions to pay, we believe and it is Kiri's belief and the management's belief that they could have paid by this time. A lot of time has passed since March 3rd. We are almost after 5.5 months of the final decree and final order from the court, and having very strong financial health of not only DyStar, but as you've rightly said, also very strong financial health of Longsheng. And looking at those numbers, we can only interpret that the Senda side and the Senda has a lack of interest, trust or intention to pay this amount. Otherwise, we would not have required to file enforcements. Otherwise, on a normal situation and if we are dealing with a normal defendant or a rational defendant, to dishonor court's order was not what we would expect, and that also Singapore court orders. And I'm pretty sure we have full trust in judiciary of Singapore.

[Foreign Language].

Exactly. Even though they are behaving that way. So that's the reality. And the opponent...

I just wanted to know what is in their mind? Do you have any idea? Because in the board meeting we participate and discuss with them also. You are on talking terms with their directors -- other directors?

Correct. So the Senda stand till now is to inform us, as well as to inform to the court that they would pay. They have intent to pay, that is what the communication that we have been receiving at all levels, and they need some time to pay. That is the stand that we have. And that is what we have been conveyed by them till now, right? But we are -- we cannot read their inside mind, but this is what has been communicated to us.

[Foreign Language] You are very intelligent. I must compliment you on your intelligence sir.

Thank you for that, and that is the reason that we have been now requesting courts, and we have full trust in Singapore judiciary. You are very right to say that very reliable, merit-based and excellent judiciary we are dealing with. And I have full trust...

[Foreign Language]

Right. So that all depends on the financial liquidity that promoters have or the funds availability that promoters have. And I can assure you from promoter sides, and I told earlier also, we have been quite keen, we are keen. And if we are able to have the resources and arrange the funds, we will be very pleased to do so.

We move on to the next question. It's from the line of [ Satish Kumar ], individual investor.

Sir, for what purpose you have taken loan, INR 60 crores?

Well, the loan which has been taken specifically to pay the legal fees and legal costs. As you can see that Senda has failed to pay the legal costs to Kiri, the legal cost award and the final award, which Kiri received was November 2022. It has been a very long time and Kiri has to ensure we have to ensure, we pay to our legal counsels in Singapore to continue the battle. So the purpose to raise loan was to pay legal costs, and that is what we have done. Almost entire loan that we have availed, has been utilized to pay the legal cost at Singapore. And you can see that the profit generation and cash generation has been not there for a few years, and that's the reason that this decision is taken to continue battle at Singapore.

And one last question. Why [Technical Difficulty] to 5.5 months to file enforcement [indiscernible]?

Well, this 5.5 months, Kiri has been doing its best in pursuing Senda, in following up with Senda, and trying to receive this award from Senda. And eventually, after a lot of corresponds, after a lot of follow-ups, when we see that we are not having hope to receive these funds and time is running out, then we file the enforcement to the court. So we made all our efforts as per our ability and best we can do, before we went to court for enforcement.

One more question sir, in [indiscernible] concern, you are saying one of the reasons for last 3 years is not passing increase in the raw material price for the customer. When we are going to pass to the customers? How much time it will take? It generally 6 months or 1 year. For last 3 years, we are saying not passing the increase in the raw material prices to the customers?

So the fundamental reason for the situation is market demand. And demand in textiles, demand in textile dyes in the market has drastically dropped. And for example, if you look at the exports of reactive dyes from India has significantly dropped in last 2 years. Unless and until these demands improve, we will not be able to have the margin enough to pass on the costs, because there is a reduced demand and every one -- every player, every manufacturer is fighting for this reduced demand. And that doesn't allow the price levels to reach to a point, to pass on the fluctuations of the raw material prices. And I don't see that the demand would revive that quickly, but we strongly believe that in the next 2 quarters, at least the demand cycle may turn around. This is probably the longest low demand cycle we have ever experienced, since we started. So then -- and there are a number of articles, there are a number of newspaper articles where you can see, and you can read that one of the worst times and the demand that we have experienced. In the dyestuff...

Okay. So when will we expect the amount will credit to Kiri account, this [ $603 million ] and legal amount comparatively?

I think we are doing our best. And more -- it would depend on the cost, how fast -- on the court, how fast they are able to speedily take actions on the alternate relief that Kiri has requested to the court. Because we have lost trust on Senda that they would really honor the caught order after almost 5.5, 6 months. So we are dependent on the enforcement timings from the court. And we believe the earlier we get it, the better we would be able to give good news to the shareholders.

When we expect the court date, for this enforcement period?

I think next 2 weeks, we should have something from the court on fixing the timeline. So we are hopeful for that. We are also hopeful the next case management conference should come as -- or should be arranged as soon as possible. And there we would have more clarity. And we'll update you.

The next question is from the line of V.P. Rajesh from Banyan Capital.

First question is, regarding this loan that you have taken, have you taken it from bank or some other third parties? What is the interest rate associated with it?

The loan has been taken from an NBFC. And the interest plus the -- interest and let me put this way, and the back-end amount to be paid, all put together would cost us around 18%.

Okay. And you...

IRR that we would end up paying and it is in a structured manner. So we have linked the [ back-handed ] payment with the expected receipt from DyStar.

Right. So what is the tenure for this loan?

It's 2 years tenure.

2 years tenure, okay. And you are -- obviously, you will have more legal costs over the next 6 to 12 months as you earlier said about the time period it will take to enforce this. So how much more legal costs do you think you will incur and therefore, you perhaps may have to go and take some more loans as well? Is that the right way to think about it?

Yes. Yes. Yes, that is the right way to think about it. I believe so. And if you look at the current run rate, we are looking at least -- even if I, on a safer side, estimate for the next 1 year, somewhere between $4 million to $5 million.

Right. Okay. And then with respect...

That would be the additional loan, if this thing continues, unfortunately, that we might end up even taking more. Again, purely to make payments on the legal costs, and none of these fronts are being utilized for the operations of the company.

Right. And the other question is, do you -- is this a secured or unsecured loan?

This is a secured loan.

It's a secured loan. Okay. So if you can just talk about a little more about the process that will go in Singapore, with respect to the enforcement that will be helpful? Because you have written it in the slide, but it was not very clear why it has been split into 2 portions and whether they will appoint a banker to liquidate the assets. Just if you can give some more color on that side, I think will be helpful.

Sure, sure, sure. Very importantly, let me -- if you summarize essentially what we are requesting court or praying court is quite simple. We are telling court, that we have lost trust in Senda, so as an alternate relief, the first thing you should do or we propose to do, is to transfer some of the DyStar's cash and cash reserves to Kiri. And we believe that there is enough cash, which is more than $400 million at DyStar and out of that, at least $282 million to be transferred to Kiri, and to that extent, do a capital reduction. That's what we are requesting court. And to do this, we believe that even if court decides and even if court gives order to Senda, we don't trust Senda, that they will honor the judgment, because they have not honored any of the judgments earlier, right? So if we want to make this effective, we prayed court, that also send a receiver along with the order and give a definitive time line to receiver to execute the cash transfer from DyStar to Kiri, and to execute capital reduction at DyStar level. And we have requested thought that 30 days would be enough time, because cash is sitting there. It shouldn't take longer than 4 weeks to collect this cash and transfer to Kiri. So that is the first option we are giving to court, with sensible reason, that DyStar is a running company, DyStar is a strong financial company. It is not an illiquid company. It is only because of Senda's default, DyStar would need to be utilizing its cash to justify and to fulfill the legal obligation of Senda, because DyStar at the end of the day, 62% of it is Senda's asset, right? So that's why the first request is. Now is the first request by any reason, not ordered by the court, or if the receiver is not successful in executing the first prayer and the first request, then no choice but to wind up Senda. So we are giving DyStar a chance to survive before it is being wound up. But unfortunately, if it doesn't happen then, well, then DyStar goes for liquidation and put a liquidator at DyStar, sell either as a going concern or in the pieces and the assets, whatever liquidator decides, and whatever fronts are received by liquidation, to fulfill the legal obligation of Kiri, transferring to Kiri for the buyout order for the pending legal cost, for the interest, if interest is awarded, interest on the legal costs, transfer all this to Kiri and whatever the timing amount would go to Senda. So if DyStar sold at a higher value or a lower value, doesn't matter. We have prayed to the court, that ours is a fixed amount, if DyStar is sold at $3 billion or $1 billion or whatever amount, whatever is left after that, all will go to Senda, as simple as that. So essentially, this is what we are requesting and praying to cost. We have also, by the way, recommended who should be the receiver and who should be the liquidator to save court's time correct? So we want the next order from the court, which sets the next alternate relief options and alternate relief order from the court, along with the enforcement and execution step. Because only order, we don't trust that Senda would do anything. So whichever order comes, it has to come with an enforcement steps, included as a part of the order, that is what we are doing right now. I hope that, that gives you more clarity on what we have paid to court.

Yes. No, this is extremely helpful. Just a quick follow-up, so what has been the precedence in Singapore with respect to some situations? Or this is the first case that -- where they are going to go for enforcement or potentially liquidation. That's one. And then in terms of liquidation, will the control of the business go in the hand of the liquidator, as opposed to the current management and the Board of the DyStar will be suspended? How will it work in the court system?

To answer your second question first, once the liquidator is put by DyStar as per the liquidation regulations, as per the liquidation rules of the court, the management control would go to liquidator, liquidator would supersede the Board and liquidator will decide what to do next for the company. As simple as that. So there would not be management control with Senda. It would be then all with liquidator. That is second answer. The precedence regarding court, Singapore court specifically in its act has both the options that we are requesting through court, right? And there are precedences, some precedences in Singapore court, some precedences in U.K. also. In 2020, there was a case in U.K., where the cash of the company -- 50% cash of the company was transferred to the sufferer, in a minority operation case. So precedences are there. And particularly, Singapore Act is so nicely covering both the options that we have mentioned. So there is in the act, and there is nothing novel or nothing innovative that we are praying to court. So hopefully, that helps to have the quick decision from the court at the earliest possible.

Understood. And then on the business side, even in the last call, we talked about that the industry is bottoming out and things will get better. But unfortunately, it hasn't played out like that. And I know initially you talked about, that this has been a very long down cycle. But what are the sort of markers you are monitoring to see when the industry is either about to turn around or it is turning around? Like is the capacity going out of the industry? If you can just give some color on the state of the industry and how you see it progressing over the next 12 months, in terms of the kind of competitors you [ are ] out there, et cetera.

2 major indicators that we continue monitoring. #1 is the textile utilization capacity of the units and the textile processor, who we sell our products and who we supply our products. Not only in India but also outside India. So when we see that the capacity of textile processor has been continuously at a very low side, they are operating less than 50% of their installed capacities. That's the first indicator, which shows if there is an improvement in the demands for textile, because majority of these dyes are used in textile. And unfortunately, that's where the dependency is. Second is the demand for dyes intermediates and dyes related chemicals. All group, which serves chemicals to textile. And somehow, even though we have been quite hopeful, practically, we have not seen even export to be picking up and also the domestic demand to be improving. So that's the second indicator. The moment we see our order book is building. The moment we see that the inquiries from the major buyers and for the various stock points are improving or increasing, we do not see that we will have a major turnaround. And unfortunately, we haven't seen till date. Now we usually in the past, in a normal year, for example, used to have at least 2 months order book or 3 months order book, right? Now we are running a weekly order book. So after the current week, we do not know what we will be getting orders and shipping in the next 2 weeks, correct? So when we see our order book keep building, when we see that the inquiries are increasing, when we see that the capacity utilization at customer level is improving, these are the realistic indicators, we would not be able to say firmly, that the demand will improve.

That's very helpful. Just a quick follow-up Manish, about the competitors. Are you seeing some of the smaller or weaker players shutting down their capacities, et cetera? Any color on that or everybody is just going after that small pie of business that's left?

It's already happening, right? In the last 1 year, I think I have seen at various levels, more than 120 small manufacturers to sell their business, to exit from this business. For example, I have seen there are at least 4 H-acid manufacturing plants have been permanently shut down or exited from H-acid business, right? We see the on and off plants, including ours, running at extremely low capacity and on and off, some are stopped, then some are opened again, again stopped, again restarted. So we see this on and off also happening on a temporary basis. But as you said very rightly, some of the players who may not be able to survive, would be permanently closed down and that consolidation is happening not only in India, but also in China. As on today, as we speak, only 4 plants are operational, manufacturing H-acid in China. The impact is even more. At least 9 to 10 plants are already closed, some temporarily maybe and some are closed permanently too. So we see that, that shrinkage and that consolidation is happening in the market.

The next question is from the line of [ Venkat Sureshkumar from Gurram Financial ].

Sir, actually, can -- do you remember Suresh from [ Gurram Financials in Nellore ]? I participated in last conferences also. Sir actually, you have updated the case frame mostly. But one doubt, sir, actually, our chemical industry is suffering from orders you [ can pull ], but DyStar -- what is DyStar position in order book or business-wise? How is the DyStar holding?

So DyStar is also being impacted. If you look at the quarterly numbers of DyStar, which we have just announced for the same quarter, which are much lower than the earlier quarterly numbers, right? And DyStar's gross margin has gone down by at least 6%, especially EBIT running has gone down by 60%, correct? So because of the sluggish market, because of the demand being lower, DyStar's number are impacted and similarly, other companies' numbers are also impacted. But please keep in mind -- and we have been disclosing this in every quarter for the last 5, 6 years, that whatever DyStar's numbers are today, even though we are statutorily obligated to consolidate with Kiri's books, those numbers have nothing to do with the DyStar's performance, DyStar's value and DyStar's status today, to affect Kiri's award from the court. So $603.8 million is only plus whatever further interest and legal costs, only Kiri has a right to get from DyStar. Whether DyStar makes bumper profit and bumper value -- reached to a bumper value or deterioration on the value, Kiri has nothing to do with it. Kiri is only entitled to receive this number. This number is decided based on DyStar value, as on dated 3rd July, 2018, right? And that is what we are entitled to get. But we continue to monitor DyStar's value. We continue to monitor DyStar's cash. We continue to monitor the performance because at the end of the day, as our alternate prayer stipulates, depends on when the DyStar is sold and if it eventually needs to be wound up, the sale price, whatever would be received, the priority should be to Kiri to pay the dues to Kiri, and remaining go to Senda. So whatever fluctuation on the valuation, we believe that the -- Senda is the one who would be impacted at the end of the day and not Kiri, up or down.

Actually, DyStar already is sitting on cash, you told that. But your liquidator hand over the company after the case -- actually, DyStar is going to liquidate -- the court to go to liquidator. After you can -- any chance is there you have hand over the management of DyStar, 51% above stake, we can value and you can hand over the DyStar. Any chances is there? You are interested to hand over to DyStar?

No, there is no chance for that. There is 0 chance for that.

Why sir?

Because Kiri's award from the court -- Kiri's remedy to the court is buyout. And buyout is ordered against Senda, which is the majority shareholder. So it's very clear, court direction is very clear, court order is very clear that Kiri has to receive money and Kiri has to sell its shares to Senda. So there is no other order from the court. There is no other -- Kiri is the sufferer, Sendai an oppressor, so that's the only order and that's the only resolution that Kiri receives its funds, Kiri transfer its shares to Senda, and Senda has to buy Kiri shares, if court order is to be honored. And whatever is the court's next order, how Kiri is to receive the funds is what the next order would be, because that is what the remedy has been awarded by the court. And remedy is not the reverse, correct? So that we will have to follow the court order. So there is no such chance, zero chance for this. Of course, when the liquidator goes in and if DyStar ends up getting wound up, then liquidator would need to manage and control the company meanwhile, and neither Senda nor Kiri would be in the management control, it would be in the hands of liquidator to do the next course of action, as per the court order at that time.

Actually, after Senda is not honor the court case, but goes for liquidator to manage DyStar. After that, DyStar, their liquidate purpose, you can -- interested buyers are there sir, DyStar assets are DyStar private limited?

No, no, no. Kiri has no interest. Kiri is a receiver of the liquidator proceeds. Actually, other parties are interested to DyStar buy -- DyStar stake. Even Kiri's stake. I'm sure other parties would be interested to buy DyStar, to acquire DyStar. There would be enough interest of such a company, right, which is zero debt, financially strong, very good standing in the market, world's largest dye distributor. So there would be enough interest from the market to acquire DyStar. And it's not about acquiring Kiri shares. Kiri shares are to be sold to the buyer decided by the court, which is the oppressor, which is Senda only. But if Senda fails to fulfill its obligation, Senda's assets are DyStar shares. So Senda's assets, which are DyStar shares in Singapore to be sold. Along with it, the buyer would also get Kiri shares, and the whole company is to be sold. That is the only remedy that we end up with or liquidated. And in that scenario, whatever proceeds are received, Kiri is the recipient of the proceeds. And there is enough interest, I believe, outside in the market.

Actually, you can after the -- what is the time expected that this is the process, you can expect at least minimum or 1 or 2 months or it can take more time sir?

I think, as I indicated earlier, based on the legal advice, anywhere from practically 6 months to a year depending on how eventually alternate remedy is enforced, is the timeframe that we can expect.

The next question is from the line of [ Priyansh ], an individual investor.

Sir, my question is that, in the like PPT submitted on 10th of July -- what I'm saying is in the PPT submitted on 10th of July to the stock exchange, it was mentioned that, that the court has -- sorry, that the Sheriff of Singapore has taken the possession of shares to recoup or to recover the cost of the -- to recover the legal costs. But then on 25th of July, like in another -- this letter issued by your good company to the stock exchange, mentioned that, that you have applied for this examination of Mr. Ruan and so and so. So why there is a change of this like, this change of fact? Because...

There is let me explain to you. There is -- because it's a very important question you have asked, and there should not be confusion here. There are 2 different actions taken, right, for the objective to enforce the legal costs. So when the shares are attached, shares are attached under the application of writ that Kiri filed to seize and sell their shares, to the extent of legal costs, correct? So those shares are attached by court, to the extent of legal cost, by taking actions from the court, right? That is to attach the asset of the defaulter. Number 2, the judicial examination, which is what has been now triggered, is the part of the beginning of the process that Kiri has filed, which may -- which relates to the contempt of court, correct? So attaching asset for recover money is one action, correct, which is not a judicial examination of the judgment debtor, is a second action, correct? Both are different actions. Second action leads to the criminal offense at the end of the day, if that has been proven. And the first is, it relates to the recovery of the legal costs. So these are the 2 actions taken, not at the replacement of each other, but both the actions on the applications for the same objective, to recover the legal cost award.

Now that's very good. So then where do we stand on the possession of the shares taken by Sheriff Office? Did it start like to look for the buyers or whether Kiri has formally or informally engaged any investment banker to look for the buyer for the shares?

See, these shares are already been attached, and shares are in the process of selling them. We have requested -- we have communicated, that you see those shares are less than 1% of DyStar shares, correct? And if you look at the Kiri's alternate relief application, which also includes selling of DyStar shares. DyStar shares owned by them and also DyStar is owned by Kiri. So it makes sense to sell the shares all together as a one lot, when the legal cost is to be recovered, when the valuation award also is to be recovered. Rather than a 2-step process, we request the court to sell everything, all shares of Senda to recover both, because the chances for the buyer to buy DyStar as a whole, are much, much brighter, than buying DyStar's less than 1% share. You see what I mean?

That's logical, but like then how much we like...

[Operator Instructions]

Madam, it's very important. Let me continue -- it's very important for let me continue, please. So sir, what I was saying that you know that like, taking together for example, $603 million plus $10 million, $15 million [indiscernible]. $630 million approximately, how much -- like if you translate to the equivalent percent of the holding of the company of the DyStar?

Well, if you look at $603 million, which was 40% -- 38% of Kiri share. And the total value of what I remember correctly assessed by the court and decided by the court was $1.632 billion, right? That was the value as on July 2018. So that was the value assessed by the court, as $1.6 billion approximately. And then $603.8 million not only includes the 38% of Kiri, but also include the amount of the oppressive which Senda had conducted on Kiri, and the amount which got decided on several oppressive acts, are part of and are including -- are included in $603.8 million.

Sir like -- suppose like 38% if we are going to sell or the court will want to sell, so it means the bill is also tantamount to the open offer -- ability also to trigger open offer to the local laws of Singapore?

DyStar is not a listed company, so there is something like open offer. It's an unlisted private company and the -- and it is the failure of Senda, it is a default of Senda, and Senda is having more than a $1 billion asset, which is DyStar shares. So logically, a defaulter's asset is to be sold, along with that, Kiri shares are also to be sold, because the buyer would then buy the whole company and the liquidation has to take place because of the default of Senda. So when we pray to court to sell everything, is basically to liquidate everything. And the liquidation can happen as the sale of the whole company or liquidation can also happen by selling the assets and pieces, depending on how the liquidator is going to decide, what is the quickest end method in the reasonable time to realize whatever value is realized. So when we talk about liquidation, it may not tantamount to selling DyStar only as a going concern. It could be a part of it. But also selling the assets and the pieces and in whatever manner liquidator can liquidate the company and wind up the company, as simple as that.

Did we request a court to sell [indiscernible] also?

We requested court, if you look at the announcement, liquidate the company, the word is the liquidation and winding up of DyStar, correct? So liquidation process includes any means that can be used to wind up the company, either PCs or full or whatever, in whichever manner, however liquidator can get the realization at the earliest, is what liquidator will decide.

So they have said, it's very important that we -- like vested party, should look for the buyers now itself. Because as you know, there, the liquidators are the government officials, their business acumen is not as sharp as you people have. So I think it's prudent to look for the bias right now, and getting investor banker. Let's say you know, for example, just like...

Very true. Very true. And now the market knows that this kind of actions could be there from the court. Now market knows that Dystar could go for liquidation and that allows the potential buyers to already keep their eye on this happening. And to be honest with you, we also have got few inquiries, that well there is interest. There is an interest in the market. There is interest in the business, and there are interested parties already there. So we'll see how we can help and facilitate such process, when the liquidator is already appointed by the court.

[Operator Instructions] The next question is from the line of [ Arshid Koti ] an individual investor.

Yes. Sir, just a couple of questions. One is assuming as and when that fund will come, you will deploy that fund and whatever. But I think a couple of quarters back or maybe a year or 2 back, you had said that we are also exploring other options, other opportunities we have recruited a number of people, and we are kind of shortlisting new activities and new plants. I'm assuming that those -- everything is on hold, as we do not have a positive cash flow right now.

See, some of those activities are not stopped but still continuing, okay? Because we continue to look at the options. We continue to explore the opportunities. We continue to keep a good staff, a good management team, which is mainly involved in assessment and evaluating various projects, correct. We strongly believe that the funds are not uncertain. Funds are going to come. This issue would be resolved eventually, it's only a matter of time. And we should be prepared when the time comes that what options Kiri has to invest, so those activities are ongoing currently also.

How much are we spending on that, is one part. And second is our current business. I mean, say, for last 2 years or 3 years or maybe more, I will have to go through again all last 10 quarters or 12 quarters. But we are making operational losses.

So please understand the...

So in that scenario, no change in product mix or no change of activities within -- moving away from commodities and trying -- with the existing infrastructure, trying multispeciality products -- cash positive.

Let me tell you, this quarter, right, the quarter which we are discussing today, has turned to cash positive, okay? This quarter is EBITDA positive, right? So there is -- #1, there is a change there. And the result is itself showing that we have turned positive cash on stand-alone as well as on consolidation basis, both, #1, okay? #2, there are several changes in terms of product mix, in terms of cost reduction, which has reflected the improvement in this quarter compared to earlier quarters. Right. #3, when you talk about investment on the future possibilities of projects or acquisitions or whatever Kiri would invest for this amount when it is received, correct, we are not putting money into plant machinery or any CapEx-related investment as on today, right? What we are investing and what we continue to invest is in the people, okay? On the people, because we want to make sure that we hold on to good people, good project analysis is to be done, correct, and which is in the best interest of the company, right? So those expenses are the expenses, which ranges every month somewhere in between around INR 15 lakh to INR 20 lakh, and that continue to incur as of today. Because eventually, when we arrive to stage, we don't want to be a blank, that well now money is coming tomorrow morning, but we have no idea, not at all, to inform our shareholders that we have no clue what we will do with this. You don't want me to say that, when -- after 6 months or a year, correct? So that's the reason that we continue -- remember this, we only invest into people and the management bandwidth right now, but not in the nature of putting CapEx or buying machinery or doing anything like that.

Okay. Sir, if you could throw some light, more light on change in product mix and change in business plan on existing structure of our...

See, what we have done is, we have been trying to sell lesser and lesser intermediate in the open market, right, and try to consume more within the group, which means we try to consume more at dyes plants at Kiri, also dyes plant at Lonsen Kiri, right? And lesser sell on outside as far as intermediates are concerned, where -- and the biggest negative earnings today is not at a dyes level, but at an intermediate level, because those plants at a lower capacity utilization, generates -- the nature is such, that it generates more losses compared to dyes plants, that's number one. #2, we have changed our patent on making certain specialty products for certain days, and then putting on hold. So for example, if we run 10 days a month, we operate 10 days a month. We produce specific products and then we reduce costs for the next 20 days and then next month, we run 10 days again, correct? And that all relates to optimizing our steam cost, optimizing our power cost, optimizing our people cost and switching people from one plant to other, all those things which we can do, to improve efficiency and to manage our costs with the optimum level, we are doing so. But please remember, when India's export of reactive dyes, which was ranging somewhere from 17,000 tonnes to 20,000 tonnes, is today in between 10,000 tonnes to 11,000 tonnes for the last 1.5 years, correct? So that drastic reduction is at all product level, not like some are impacted, some are not. And that's the reason that we have to make all these changes, which I just mentioned for us to survive. And I can tell you one thing, if there is no legal cost incurring, right, we have -- we would be EBITDA positive. We have been EBITDA positive for about a year. As far as operations are concerned, operations are managed in a way that we can survive and sustain, correct? The biggest impact, which you'll see in happening, is the legal cost impact, right? So legal cost impact would -- is driving the margins down. And legal cost impact is the only reason that Kiri ended up borrowing money and paying to the lawyers. Otherwise, we would not have done so.

Thank you very much. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for closing comments.

I would like to thank all of you to participate today in the conference. We would continue to update our shareholders and the market, with the material changes, which we will come to know in the next days and weeks. I wish you all the best and see you in the next call. Thank you.

Thank you. On behalf of Kiri Industries Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines.