Kiri Industries Limited (532967) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Kiri Industries Limited Q2 and H1 FY '25 Earnings Conference Call hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Nupur Jainkunia from Valorem Advisors. Thank you, and over to you, ma'am.

Thank you. Good morning, everyone, and a warm welcome to all of you. My name is Nupur Jainkunia from Valorem Advisors. We represent the Investor Relations of Kiri Industries Limited. On behalf of the company, I would like to thank you for all participating in the company's earnings conference call for the second quarter and first half of financial year 2025. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's earnings 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 results are based on management's beliefs as well as assumptions made by an information currently available to management. Audiences are cautioned not to place undue reliance on these forward-looking statements and making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in the conference call. We have with us Mr. Manish Kiri, Chairman and Managing Director of the company; Mr. Jayesh [ Hirani ], VP, Finance and Account; and Mr. Suresh Gondalia, Company Secretary. I would now request Mr. Manish Kiri to give us his opening remarks. Thank you, and over to you, sir.

Good morning, everyone, and welcome to the earnings conference call for the second quarter and first half of the financial year 2025. I hope you are all keeping safe and well. To start, I'll provide an overview of the financial performance for the second quarter of FY '25, followed by the operational highlights. On a stand-alone basis, revenue from operations during the quarter and the review was INR 146 crores, a 4% decline year-on-year with an EBITDA loss of INR 3 crores a net loss of INR 21 crores. The total revenue for quarter 2 FY '25, decreased due to a decline in the intermediate sales resulting from reduced demand and lower price realizations in Dyes segment. Operational expenses saw a 4.6% increase in power cost this quarter. Other manufacturing expenses were in line with the previous quarter, mainly due to close monitoring, while higher freight and legal costs contributed to the negative EBITDA, this quarter, compared to the previous one. Please note that the legal cost in this quarter continue to occur at a higher level. For the first half of FY '25 stand-alone revenue from operations were INR 313 crores, representing 7% year-on-year growth, while an EBITDA profit of INR 11 crores, a net loss of INR 23 crores post depreciation. On a consolidated basis, revenue from operations for the quarter under review was INR 272 crores, representing an 18% increase year-on-year. with EBITDA INR 22 crores and net loss of INR 13 crores before the share of profit of associates before consolidating DyStar. For Half 1 FY '25, consolidated revenue reached INR 537 crores, growing 17% year-on-year with an EBITDA of INR 40 crores and net loss of INR 15 crores before share of profit of associates. Operational expenses increased by 8%, mainly due to very high legal cost associated with litigation against Senda International Capital in Singapore Court. Other income included increase earnings from other joint ventures, Lonsen Kiri Chemical Industries Limited. Regarding the DyStar case, Kiri has filed an appeal against SICC order dated May 20, 2024, which did not award interest on the buyout amount to Kiri. Senda also filed an appeal regarding the awarding of priority payment to Kiri from the proceeds of sales of DyStar. The appeal hearing at the Court of Appeal was concluded on November 12, 2024, and the judgment was reserved. Furthermore, Senda International Capital has agreed to pay legal costs and disbursement over to Kiri along with interest in SIC 4 and related appeals including the principal amount and applicable interest at 5.33% per annum, until the payment is made. Senda has already given irrevocable instructions for this cost to be paid directly to Kiri from Senda's share of Enbloc sale proceeds from Kiri and Senda shareholdings in DyStar Global Holdings Limited. The Enbloc sales process is being conducted by Matthew Stuart Becker, Lim Loo Khoon, and Tan Wei Cheong of Deloitte & Touche, LLP, who has been appointed as a joint receiver and the process is proceeding according to the schedule and the time line provided by the receiver to the court. With that, we can now begin the question-answer session.

[Operator Instructions] The first question is from the line of Suresh from [indiscernible] Financial.

Suresh from Nellore, Andhra Pradesh.

Yes. Suresh Ji. Yes, yes. We know you well. Please go ahead.

Our Enbloc sale or tenders inviting date or any details you can mention last time conference calls. Any update?

Yes. Yes. So the time line has been now decided, presented and committed. And as the nonbinding offers, would be due on November 27, 2024, which is next week and binding offers to acquire DyStar would be due by end of January. During this time, 2.5 months, the detailed due diligence of Phase 2 would be conducted by prospective buyers. Already, there has been a lot of interest presented by the prospective bidders. And Phase I due diligence is going to get completed by next week. And assuming that by January end, the binding bids are turning in, then February, March, we are expecting our sale process agreement to be executed and sale of DyStar to be concluded.

Sir, after completed the agreement, you can receive fund how much time takes, sir?

I think the execution of agreement and tendering our shares or giving our shares to a new buyer will happen simultaneously. So shares would get exchanged with the payment against the share. So I don't think it will take more than 2 to 4 weeks. So we are highly hopeful that before the end of this financial year, which is 31st March 2025, we can expect the inward funds from sales proceeds.

Sir, next year, you can buy back any shares in the open market or only preferential issue, you can increase the stake? Any open market...

The preferential issue has already been made, which the announcements have been made. Warrants have been issued by the -- only to the promoters. And there is no plan currently to buy anything from the secondary market by the promoters because promoters do not have that much of room. Promoters doesn't have more than 5% ability to purchase in secondary market. So no, it's not possible also legally.

Okay. Any mutual fund buying happening in the shares interested?

I think several funds, what we have seen and you would also be able to see from the list of shareholders that we see the new funds, new FPIs are coming in. So we see the participation increasing currently.

Sir, another question. Actually, you can propose the new copper plant and fertilizer plant. We can -- environmental clearance is coming, copper plant is clear?

It is clear.

In future projects, copper plant has clear the environmental clearance?

Yes, completely. Cleared.

Completed. It will start the company, further update?

The implementation of project will start very soon. And next quarter or a quarter after onwards, when we are in the process of building the plant, erecting factories and executing the project, we will definitely keep you updated on our quarterly announcements. We'll definitely do so. If there is any significant event in between, also, we'll be pleased to announce. But the company is already in the process of implementing the project and the required steps, actions have already been taken to start that new plant as soon as possible at the earliest in 2026 in the first phase.

November 2 is Enbloc sale update? We can inform the exchanges.

Yes, we see -- we will review the communication which we receive from the receiver. And based on the communication that we receive, we'll be pleased to do so.

The next question is from the line of [ Yash from Dante Equity. ]

Yes. Just wanted to understand a couple of things, right, especially on the preferential issue that you've done. I just wanted to understand for a conviction -- just to understand your conviction on the company itself, what percentage of your net worth have you deployed through the preferential issue because it's a substantial amount of money, right?

Yes.

Yes. So what percentage of your net worth have you deployed into the preferential issue? I'm trying to understand the conviction. I'm trying to understand your conviction on the company itself because you've doubled your stake...

Yes. What we did is whatever personal assets which we had, besides our house, everything has been put into. We have doubled down by investing everything which promoter had in the company.

But are these shares going to be pledged? Have you taken out bank loans to finance this? Because pledged shares...

No, there are no shares pledged. Let me clarify. There are no shares pledges of promoters. Nothing has been pledged, Okay? And if you go -- if you -- so there are no shares pledged, there is a commitment given to the lenders for the new project by the promoters that they would not reduce the stake, right? So the announcement which we have made is the commitment from promoters not to reduce the stake and no pledge of any shares of promoters have taken place. That clarified number one. Number two, the $130 million has been raised in Singapore, out of which both expenses paid, $120 million is, as we speak now, would be invested into copper project, and we are already in the phase of executing that project since last 3 weeks, in fact, right? So we are investing and saving 1 year to start the new facility earlier. So for that, the borrowing was made by the Kiri subsidiary in Singapore, and that subsidiary has injected a permanent capital, FDI into a copper project which is Indo Asia Copper Limited, right? So there is an equity infusion, which has already been done by Kiri subsidiary to kickstart the new growth project that we have concern.

How have we raised that money? How have we raised that money? Is it a loan?

So that's the money which has been raised as an advance against the judgment order. So there are funds in Singapore, which have done judgment funding to Kiri subsidiary. Basically, against the judgment order.

So if anyone is going to do a judgment funding, they're pretty sure that you're going to get the money, right? Is that the correct assumption?

Exactly. That's the correct exemption. So when they have done judgment funding, they have gone through the legal diligences. They came to the conclusion that it's only a matter of time and Kiri is going to get money very soon. So when they got this confidence, there were 4 funds in Singapore, which were prepared to give judgment funding to Kiri and we availed from 2 funds. And there was legal due diligence, the detailed due diligence conducted by these funds when they came to conclusion that the money is secure for Kiri.

Right. And also in your P&L, you're getting some sort of associate profits. Those are not cash profits, right? Those are just book entries, right? Can you clarify that?

No, these are the -- as I mentioned earlier, the associate profits are only book entries. Kiri is not entitled to any profit of DyStar and any economic interest of DyStar. Correct? So it's only because Kiri continue to hold shares of DyStar, statutorily we are required to consolidate this associate profit, but there is no liquidity which relates to that.

Right. Last question. You've hired somebody from Birla, right, from Aditya Birla or Birla Corporation? I'm not sure. Can you throw some light on that, like who you've hired? What is their background? When are we going to hear them on con calls? What is their [ rule ], et cetera, et cetera?

Yes. So right. So we have hired Dr. Sanjay Sarkar, who was -- who is basically leading the Copper Project. He is the CEO and Executive Director of Copper Project. He has come along with key management team, who have long experience in Copper. And he was Chief Operating Officer of Birla Copper for more than 10 years. And then before he retired, he was a Board member of Hindalco. So very long years in Copper and very knowledgeable and expert in the field, which we have taken on board to execute, operate and run this sector and run this business sector for Kiri.

The next question is from the line of Arun from Grow Capital.

Just wanted to check, you have taken the warrants and diluting the existing shareholders. Will this also trigger the open offer?

No, it doesn't trigger the open offer.

Because the stake will go beyond 5% -- will increase beyond 5%?

No, the warrants are converted over a period of 18 months, which covers 3 financial years.

Okay. So you [ will time it ] in such a way that it doesn't trigger the open offer.

Yes. So it doesn't trigger and conversion will take place over a period of 18 months.

And any reason why you didn't give this opportunity to the existing shareholders, diluting the existing shareholders?

I think the existing shareholders' opportunity would be entitled for the rights issue. And Kiri's Board didn't feel it appropriate right now to have that much of capital required to do a rights issue. But in future, if need arises, definitely would consider.

Yes. Because my only submission was, sir, that the company did not require capital because anyway, it is expecting capital of $600 million. So there was no need to raise capital anyway. Second question was, sir, what is -- are we inclining towards strategic or a financial investor? That's part one. And second, you mentioned about the status of appeal. I think there was some disturbance. Can you repeat what is the status of the Senda's appeal in the court?

Yes. Sure, sure, sure. So the -- there was an appeal hearing took place on November 12 where 1-day hearing took place with the same judges who have heard Kiri's cases in court of appeal earlier. Senda first argued on the priority payment to Kiri to overturn the priority payment. And Kiri made arguments for the interest, post-judgment interest because post-judgment interest has not been awarded to Kiri. And we strongly believe that we deserve post-judgment interest at least. So there was a 1-day argument in which we strongly believe that the possibility of overturning the priority payment to Kiri are extremely less, while we are very hopeful that the court would do justice and award interest to Kiri post judgment post March 2023. So when the outcome comes of this appeal in the next few months, we are expecting based on the prior experience that the judgment should be out by January beginning 2025. And if Kiri is awarded interest, that would be overturning the SICC' decision not to award interest to Kiri. And depending on what interest rate court is deciding, it may add somewhere between $60 million to $100 million on the current award. So all court trials have been completed now. All court appearances for Kiri has been concluded and no more court submissions would be required now.

Got it. And any intimation towards strategy for a financial investor, a PE kind of a guy or initial thought... ?

You mean for the new project?

No, no, for the bidding, which...

For the bidding, there are multiple participants, a huge number of interest came for the expression of interest. The numbers went above 17, right? And now when the [indiscernible] next week, I think the participants are going to be just based on my own opinion, at least more than 20 to go to the next round of detailed due diligence. The interest is very high. DyStar has now by end of September, filed up to $607 million cash, and it has touched $1 billion of net current assets. Looking at this financial strength, it looks like there are many financial private equity investors have jumped in.

That's wonderful to hear. And lastly what is the status of the DyStar financials this year? How has the P&L been behaving?

I think if you look at the first 9 months, $90 million is the EBITDA. And at the same run rate when the year ends in December, it can touch to about $120 million of EBITDA this year. And this is post taking out management fees, post extracting related party transactions and post all kinds of fees that they expect out. So it is post that. The reported numbers could touch close to $120?

The next question is from the line of Pradeep Rawat from Yogya Capital.

So first question regarding the borrowing that we have increased. So what was the interest cost for the borrowing?

The interest cost is about 15% on the borrowing, which is back-ended, which would be paid back along with the interest from the sale proceeds of DyStar.

Okay. So it would be concluded once we get the cash proceeds from DyStar?

Correct. Correct. There is no debt serving required. There is no payment required. It gets concluded. So essentially, it is an advance against the judgment order.

Okay. And what is the planned CapEx for this financial year?

This financial year, we will see how much we are able to deploy out of total close to $120 million, but I assume that it would be at least half of that, $60 million, we should be able to deploy before the end of the year.

Okay. So I'm assuming that we have raised $120 million, and we have to -- we will pay back this once we get the amount. So the amount would be -- we will receive the amount by March 2025. And we have at now planned to invest only $60 million. So my question is, why have we raised so much money, $120 million as we have planned only $60 million as of now?

No, no, no. The $60 million, we would be able to deploy, right? But whatever funds we have raised $130 million, out of that $120 million would be deployed in the new project, part this year, part next year financial year because we don't know at this time how much suppliers we would be paying advance, what kind of machinery we would be tying up, right? So essentially, the funds have been kept to make sure that we don't have at least for 1 year, short of cash when we start the project. We don't want to start the project if something goes wrong and you are halfway hanging there, right? So we have secured the amount. We could have raised up to $200 million, right? But the first phase of the investment where Kiri's equity requirement would be $91 million. So looking at that $91 million to be precise, we have now ability to invest $120 million. And that would allow us to have our one product line operational by 2026.

Okay. And what I understood that $90 million is the requirement for CapEx. Is that correct?

Yes, correct. $91 million, correct.

Okay. So we raised $120 million. And in addition to that, we have cash from warrants. So it is approximately INR 300 crores.

Yes, yes. So right? So if you look at now balance sheet of Kiri on the next quarter, as per the requirements, as per the warrants, all the debt of Kiri is paid off, right? So by close to INR 150 crores of debt, which we had on the books, everything is going to go away next quarter results, all paid off, finished, right? So Kiri would be completely clean balance sheet, debt-free balance sheet going forward. And not only that, with accumulated losses, you have seen that the working capital was stretched and our quarterly newsletters also highlighted the crucial issue of working capital. So we have strengthened our working capital and funded another INR 100 crores plus only in the working capital. So that would help to improve the profits of the existing business also going forward. So please understand that there were certain loans which Kiri had raised earlier, and those loans need to be paid. That loan was raised to make payments to the Singapore lawyers. Now those loans were getting due by October this year, starting from October. So we had to raise this money to make sure that we don't default on any loan. That's number one. Number two, at the same time, to continue to have the better operations, working capital was required to be infused. And those are the preliminary objectives and remaining funds is again going back to project as an equity. So those are the reasons because of which it was necessary to raise some funds domestically and also to start new projects. So both the objectives got served with that and completed.

Okay, sir. That was helpful. And one last question that how much of the legal fee reimbursement that we are going to receive from the Enbloc sale?

So that is SGD 8.5 million, not U.S. dollar, plus the interest. So interest has been running for more than 2 years. So I think it would be north of SGD 10 million.

The next question is from the line of Manoj Bhura from Adinath Financial Services. [Foreign Language] The next question is from the line of Vivek Joshi, an individual investor.

Congratulations on finally ending this long court case. Wish you all the best for your new projects. Yes. I had a couple of just housekeeping questions. So for the warrants, half of INR 492 crores has already come in and recently you have converted a little more. Is that correct?

Yes, correct.

And the rest will be converted over the next 2 financial years. Is that correct?

Yes, correct.

Can you just give me a little more detail on what exactly this copper project is? Is it like getting ore, then smelting produce...

To explain you briefly, the project is about producing 0.5 million tonne copper, right, in 2 phases. First phase would be to produce 200,000 tonnes, right, 2 lakh tonne copper. And second is to produce 5 lakh tonne copper, right? We would be able to feed both. We would be able to feed copper concentrate, which is produced from copper ore. So there is a smelter of 300,000 tonnes in 3 lakh ton capacity. And there is a scrap in both, and blister furnacing -- blister process in furnace and then refinery. So it would be a recycling line, production line as well as a smelting production line. Totaling together is 500,000 tonnes. The entire premises is going to be completely internationally ESG compliant. So it will have a 0 liquid discharge, not a single drop of affluent will go out of these premises. And because of that, we are converting all the waste into various products. So fertilizers are produced as a byproduct. So fertilizers are planned along with the copper. And there will be some board with some blocks. So there are a number of byproducts which will be produced by this plant, which would be ultimately as a copper and fertilizer production facility near [indiscernible].

And what is the total CapEx? I'm sorry, I missed it, if you already told. What is the total CapEx for this?

So the total CapEx in 2 phases, right, which would be reaching the first phase and second phase together, would reach close to INR 8,000 crores and will be funded both by equity as well as debt from the bank.

What debt equity ratio are you comfortable with as a long term? Just to understand the balance sheet play.

Balance sheet would be approximately 1/3 equity and 2/3 of debt.

Okay. 1/3 equity and 2/3 of debt. And when is the production expected to...

So that 1/3 of equity will take away almost 50% of sales proceeds of DyStar. Just to tell the math for you.

I understand that, and this INR 8,000 crores will be going for which time?

This would be over a period of 2 years.

[Operator Instructions] The next question is from the line of [ Aniket Gara ], an individual investor.

I just wanted to ask a couple of questions. Regarding the DyStar sale, is the sale proceeds capped at $600 million or we might get additional cover money?

Yes, it has been capped and crystallized at $604 million plus the legal cost. So as I just mentioned, the legal cost would be close to another SGD 10 million, that 604 million is U.S. dollar. And then if interest is awarded from the judgment for which the appeal just got concluded 2 days ago, then interest would be added to it and interest would also come out of the sale proceeds on priority. So based on the judgments, these amounts are all crystallized and kept. So irrespective of what price DyStar is sold, it is going to get the fixed amount decided by the court.

And another question is regarding the copper plant. As you mentioned, it's basically the raw materials could be like from copper mines as well as scrap, right, for the copper plant?

Correct. Both the feeding, copper scrap plus copper ore, copper concentrate.

Okay. When commercialization happen after approvals and all?

Sorry, can you repeat, please?

When will the commercialization of the plant happen?

In 2 phases, one phase in 2026 beginning, that's the target and second phase 2027 beginning.

The next question is from the line of Prakash, an individual investor.

My first question is regarding this -- our new expansion also like new projects. So for the copper project, you mentioned 200,000 is the first phase. So what is like capacity for the fertilizer and which fertilizer we are going to produce?

So there will be 2 fertilizers. Total capacity of fertilizer production would be about 1 million tonnes, and it would include DAP, Diammonium Phosphate and NPK. These are the 2 products that we have considered to produce.

So like by 2026, what will be the CapEx for this one for the first phase? And in first phase, how much will be like you are saying 1 million. So 1 million is like taken together both fertilizer, right? And then again, the ratio of like 2:3 [indiscernible]?

So total CapEx of INR 8,000 crores will be split into 2. First phase would be INR 2,500 crores. And then the second phase would be INR 5,500 crores.

Okay, sir. So can you please give us some more detail on the status of the implementation, like, for example, the appointment of consultant or like by which quarter we are going to place all the orders? What about, for example, this land, leveling the land...

What we will do is we will be pleased to give quarterly updates to update you where we are. And we would try to disclose as much information as we can. But please be rest assured that all our team would be targeting seamlessly to achieve the numbers and to start commercial production because the site is ready as we speak today. All the approvals are in place. For example, technology tie-ups are completed, technology agreements have been executed. Memorandum of understanding for the raw material supplies have been executed. Agreements with the port has been executed. A lot of things have been completed when we speak now. So the timing is such that once we enter into now implementation of the project, once the orders are placed, advances are released, we have then fixed time line for each machinery, and we will definitely provide all the substantive information when the project is...

In the presentation. Yes. So here, the question is, sir, like as of now, all the existing copper smelter companies have announced their expansion. I don't want to name here, but I'm sure we all know it. So like...

Many are expanding because the demand-supply gap in India is very high.

Yes. So sir, my question is that, will there not be any paucity like of the required raw material because everybody will be jumping for the same pie. So how are you like just going to -- how are you going to tie up your raw material, whether from import or are we looking from import also or like it should not be the case that like we have built up a plant and then like this raw material is not available or is available, but at a very high price. So like the delta doesn't make sense?

Yes. So these are the critical parts of business aspects. And we would definitely make sure that all these aspects are covered in the process when we are about to start our facility, raw material tie-ups, tie-ups with the mines, agreements with them, tie-ups with other vendors, machinery contracts. So all would be tied up and it would be done -- the implementation would be done sophistically through the project implementation process. And there would be one of the best people, technology provider, project executors, BMC companies, a lot of people will be involved in the process, right? So all the aspects which you are correctly mentioning now, I can give you assurance that every one of those would be taken care. Number two, when you look at the India's demand and India's current production, we are at 1.5 million tonnes of consumption in India, while production is only 0.4 million tonnes. There are several plants announced in our facility, some expansion with existing people, one more project just started. When you put together, it would all be by 2027, '28, 1.5 million tonnes, you'll be able to barely cover. By the time India's demand is expected to rise to almost 3 million tonnes, correct? Even at 2013, even after all the announced projects are operational, right, the way we have pledged the solar and renewable energy to reach to 450 gigawatt and the speed at which the electric vehicles are getting popular and converted in India, this number may exceed beyond 3 million tonnes. So you -- so there is still a room and everybody is seeing this room. And that is why other players are also jumping in because there is a demand-supply gap, which is favoring not only one, but still multiple players to come in India and which is good because you are replacing all the imports of billions of dollars, which is happening into India even today. So there is an opportunity that everyone is trying to embark upon, right fulsome.

No, sir, like my question was not regarding the sales part. My question was regarding the raw material part because when so much capacity is coming...

The raw material part happens to be the most challenging among all, right? So everyone is going through struggle. And here, the -- because most of the current supplies are tied up with China, right? So not only us, every Indian producer is going to struggle, and that is where the most challenging requirement we will have to come across, right? You said very correctly, but we are confident that we would be able to tie up. More than half of the requirements are already, as we speak now, signed with MOUs and offtake agreements are under drafting. So well before our facility starts, we want to ensure that the entire feedstock is tied up. But there is still more and more shortage from the supply side, you will be able to see when the smelter are... I agree with you. Earlier we tie up, the better particularly for us.

Yes. That was my question. So sir, here, I have one humble submission because now these -- considering the size of the balance sheet of Kiri and the magnitude of these 2 projects, like these are by way like highly material like things the company is going to execute. So whenever any significant item is done, like, for example, any technology type is done or any MOU signs, please kindly ensure that the corporate announcement is done to the stock exchange so that all the [indiscernible] masses can be aware of that, particularly in the company.

Of course, of course, of course. And we'll definitely do so. Every development, we will ensure that we update the shareholders.

My last point is regarding 604...

Mr. Prakash, please fall back in the question queue for further question. The next question is from the line of Suyesh, an individual investor.

My question is regarding the existing dye Intermediary position. How is the industry looking right now? You mentioned in the last few calls that we have seen a durable bottom being formed and things looking up. So is that -- has that trajectory picked up?

I think the demand side has improved a bit, right? But looking at last quarter and looking at the current situation also, demand is improving slowly. not what we expected. There are a lot of external factors which influence dye exports and also depending on the textile producers and textile player situation in India, the recovery has been actually slow. What we have been trying to do is improve our product mix so that even at a lower capacity utilization, if you look at our capacity utilization across the plants today, less than 50% even today, right? So unfortunately, we are not seeing the rapid influx of demand that can allow us to have adequate level of the capacity utilization, which is not happening yet, in fact, unfortunately. So that's why the subdued demand is still continuing for the [indiscernible] business.

Okay. And sir, my next question is regarding the copper plant. What kind of products are we going to make? And what is the ballpark EBITDA margin that you're looking and asset turns out of this INR 2,500 crores of first phase CapEx that you're looking to do?

The products are various categories of copper, copper cathodes, copper rods, copper coils, copper tubes. So these are 4, 5 categories of products that we will be selling, different products. Number two, if you look at the smelters all around, right, and the new technology, which we are also going to implement now, it would generate somewhere in between 10% to 12% EBITDA. And -- and at the first phase of 200,000 tonnes at the current price, you are looking at almost INR 16,000 crores of revenue.

The next question is from the line of from [ Yash form Dante Equity ].

Am I audible?

Sorry, you got cut off last time, you were asking the next question. Go ahead.

Yes. So I think most of my questions have been answered through the previous callers. But I think one more thing that I really sort of want to understand is if there are any sort of regulatory changes with regard to copper, right, whether it's from the countries that we are importing to -- sorry, if it's from the countries we're importing from and India's own regulations that might change. I don't think they will, but have you factored that in? Just want to understand.

Absolutely. We have factored in not only the local regulatory compliances, as I mentioned earlier, we want to build and we are in the process of building the best ESG profile. For example, the way we have planned over the next 2 to 3 years, things will spill out, would be to have one of the best global, the acceptable ESG profile of this smelter. So that's why I said the entire premises would be nonpolluting, zero liquid discharge. We are not putting a coal-based power plant. We will be transiting to the solar, right, to have renewable energy. Ammonia, which we are using as a brown ammonia initially, it would be, again, a transition phase where it will be changed to green ammonia. So there is a game plan which will drive us to the highest level of compliances, not only locally, but whatever is the best practices globally, and that is what we have targeted.

Right. And...

In case we end up targeting export markets, these are quite essential factors, which we'll have to incorporate it now onwards.

Right. One more thing I'd really like to understand is what percentage of your revenue, let's say, post 3 to 4 years is going to come from the copper vis-a-vis the fertilizer, like what is your target? Like what part of your business is going to be copper?

Yes, the copper division, the copper subsidiary is going to have the biggest numbers, right? At the full stabilization of both the phases, you are looking at close to $5.5 billion of revenue. So that amounts to somewhere close to INR 50,000 crores of revenue. Now these numbers look too big, but it takes 3 years compared to the size of the company currently. So then this project and the successful execution of this project will completely change the profile of the company as a whole, right? And then the EBITDA generation would be multiple times higher than what the current line of business is generating. So you are essentially transforming the whole company to the new platform.

So fertilizer via copper, is it okay to assume that copper is going to be 80% plus and fertilizer is going to be 20% or lower?

More than 80%.

That's the number I wanted.

Fertilizer is just a byproduct to make sure that you convert all your waste to reusable products. That is the only purpose, not to enter into per se the fertilizer manufacturing as a different segment. That's not what we are doing.

Please highlight that. I mean, when you say copper and fertilizer, right, it seems like you're trying to do different -- 2 very, very different things. I would really request you to highlight because fertilizer is not a very...

That sometimes misleads, that we are entering into 2 different things, something like that.

Exactly. So I would please request you to sort of mention that you're doing copper and fertilizer is just the byproduct or whatever, like however you can sort of mention it to the investors. That would be great.

The next question is from the line of Arun from [ Grow ] Capital.

Just wanted to submit that as a minority investor, we have been invested in the company, and we were expecting this big inflow. But disappointed to see that there is no mention of any big dividend or a buyback at a much higher price that rewards the minority shareholder. Rather the management has gone ahead and committed big capital towards projects that are uncertain, that have a lot of riskiness and there is no past experience. So there is a big disappointment on that front. Any comments you would like to make there?

I think the company has not been able to grow for 10 years, right, number one. Number two, when the company is changing drastically its business operations and diversifying heavily into a new sector, there has always been a risk involved, right? And we are taking all essential steps to mitigate that risk. You are right, the risk is there. But if we succeed to overcome all these risk factors and we deliver and execute the business performance what we have planned, then as a shareholder, if you are prepared to be in a long term, you will be rewarded immensely, right? So let me put it this way. So when you see the company, which is growing somewhere close to 40x where it is today, right? And if you are prepared to wait through the challenge, there would be a long-term view and there will be a reward on the long-term view. Please remember -- all shareholders have suffered, and I apologize, I'm sorry that the litigation continued 10 years. So we couldn't grow, we couldn't invest. We couldn't do certain things, which we could have done in these 10 years. But now the time has come where things can change and growth trajectory can start. Understand Yes, please understand that the commitment of capital in equity as we speak now is about 50% of proceeds coming in, right? And proceeds will be coming in by March. So dividend buyback, nothing is closed. So please be rest assured when the time comes, when the money comes, when we talk maybe the quarter ending March end, we would be speaking with different objectives at that time. So all these options are still open, please be rest assured. And committed capital is almost half of the incoming capital, which still company has other. So there are possibilities to do other things. And we'll definitely look into what you just said. The shareholders have been waiting for 10 years and there is something that can be given and that's very well taken.

Sure. I just want to reiterate that we have waited too long, 10 years, while the markets have risen but we have not been rewarded. So this is the time for us being rewarded. Please do consider and the Board and do consider a buyback or a higher dividend amount. Thank you for that.

We will definitely.

The next question is from the line of Ayush, an individual investor.

I have a couple of questions. So on the borrowing side, this $130 million facility that we have availed, who is the lender in this facility? Is it a litigation finance sort of fund? And what are the interest rates that we are bearing for this?

As I mentioned earlier, these are the -- this is the judgment funding and the funds who do this kind of activities, they are based overseas, out of India, based in Singapore. And it would cost back-ended IRR based almost 15% to the company.

So it would cost around 15% you said?

Correct.

And that would be 15% on dollar or INR?

On dollar. Because the -- it's all dollar linked. The resolve is dollar linked, the investment -- the borrowing is dollar linked, it's all dollar basis.

Okay. And on the planned expenditure side, sir, basically, the -- are we using the same land facility that are already there in the company? Or are we planning to buy a new land or we already purchased new land for the project that they are going to build?

We already purchased a substantial new land already, which is there with the company and some more new land would also be purchased in the future.

Okay. Understood. So it will be very helpful if you can -- as a follow-up, if you can share a detailed presentation of what is the status of end use of funds because if we are bearing such a huge interest...

Sure. Sure.

[indiscernible] we will be updated on that.

Definitely do so. we'll do so. We'll do so. We'll share a brief presentation in that...

Ladies and gentlemen, this was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments.

Thanks to all of you for participating in today's conference call. All the best. We'll speak next quarter. And meanwhile, whatever is the significant development, we'll keep all the shareholders updated. Thank you so much.

On behalf of Kiri Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.