Kiri Industries Limited (532967) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '25 Earnings Conference Call of Kiri Industries Limited. [Operator Instructions] Please note that this conference is being recorded. At this time, I would now like to 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 very warm welcome to you all. 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 all for participating in the company's earnings conference call for the third quarter and 9 months of the 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 statements are based on management's beliefs, as well as assumptions made by 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 bring awareness about company's fundamental business and financial quarter under review. I would now 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; Mr. Jayesh Hirani, Senior Manager, Accounts and Finance; and Mr. Suresh Gondalia, Company Secretary of the company. I would now request Mr. Manish Kiri to give his opening remarks. Thank you, and over to you, sir.

Good morning, everyone, and welcome to the earnings conference call for the third quarter and 9 months 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 third quarter of FY '25, followed by the operational highlights. On a stand-alone basis, quarterly revenue from operations stood at INR 156 crores, representing 11% year-on-year growth and 8% growth on a quarter-on-quarter basis. Net profit for the quarter stood at INR 25 crores due to higher other income on the account of dividend income from Longsheng Kiri Chemical Industries Limited. For the 9 months of FY '25, stand-alone revenue stood at INR 469 crores, growing 8% year-on-year. Net profit stood at INR 3 crores for the period. During the current quarter, the company has changed the accounting policy for the consolidation of joint venture. Therefore, the Longsheng Kiri is not consolidated in line by line. Only share of profit has been considered in the financial results, please be noted. On a consolidated basis, quarter 3 FY '25, revenue from operations stood at INR 179 crores, representing a growth of 12% year-on-year and 3% growth on quarter-on-quarter basis. Net loss stood at INR 14 crores before other comprehensive income and share of profits of associates and joint venture. Net profit after OCI and share of profit of associates and joint ventures stood at INR 153 crores for the quarter. For the 9 months of FY '25, consolidated revenue reached INR 535 crores, reflecting 9% year-on-year growth, while the net loss was INR 45 crores before other comprehensive income and share of profits of associates and joint ventures. Net profit after OCI and share of profit of associates and joint venture stood at INR 323 crores for the 9 months. The current quarter has shown strong operational performance. And looking ahead, we anticipate further strengthening of our margins once the legal costs are fully settled. Regarding the DyStar case, we have secured a monumental legal victory in a case that has spanned a decade, opening new avenues for growth and stability. On January 31st, 2025, the Court of Appeal of Singapore Supreme Court issued a judgment on the appeal filed by Kiri and Senda International Capital Limited against the SICC order dated May 20th, 2024. Kiri had appealed for not awarding interest on the buyout amount, while Senda had appealed against awarding priority payment to Kiri out of proceeds of the enbloc sale of DyStar. The Supreme Court ruled in favor of Kiri for both the appeals, granting a discretionary enhancement to the amount that would be paid to Kiri from the proceeds of enbloc sale at the rate of 5.33% per annum starting from September 3, 2023, on the purchase price of $603.8 million. Additionally, the court disagreed with Senda's appeal and upheld Kiri's priority payment for the receipt of purchase price of USD 603.8 million from the enbloc sale proceeds over Senda's share of the enbloc sale proceeds. The enbloc sale process is underway and is expected to get concluded in the next couple of months. With that, we are now beginning the question-and-answer session. The floor is open now.

[Operator Instructions] The first question is from the line of [ Vishal Prasad from ET Capital ].

Manish, sir, I have 3 questions. Could you talk about the first phase of CapEx, like the capacity CapEx, upstream and downstream products revenue, expected EBITDA?

You are referring to the new CapEx that the company...

Total CapEx, that's right.

Right, is going to -- it is in the process of implementing currently, right?

Right, right. So there are 2 phases you have talked about in the past.

Correct.

If you could just talk about the Phase 1 and yes, try to provide the details on what all things we are going to do there and the money that we are going to spend and the expected revenue and EBITDA, that would be great.

Right. So for the Phase 1, we have already started and commenced the site development work as we speak today. Part of the construction and preparation of the site has already started. We already have been in the process of negotiating because one of our teams is sitting overseas continuously to negotiate and decide vendors. So we'll be placing orders to the vendors hopefully before the end of this month for the entire first phase of the project and advanced permits will be released to them. Land development would also get completed by March end, and then we would be able to start actual construction of the buildings of the projects in the financial year 2025, '26. So as we speak now, we have all the approvals in place. We have a consent to establish also in place. We have signed several agreements, including port operational agreements, and we are there now to speedily execute the project, in fact.

Right. So what's the expected CapEx and the products that we are going to have in the first phase?

The first -- as we mentioned earlier, the first phase of CapEx would be in 2 parts. The first part is around INR 2,500 crores and the second part is INR 5,500 crores. So we are talking about for the whole first phase, close to INR 8,000 crores of CapEx. And as we speak today, we are in the process of investing close to INR 1,100 crores. The first phase will generate -- will produce close to 500,000 tonnes of copper, which is 5 lakh tonnes of copper, which will generate somewhere in between depending on the market price at that time. But if you look at the current levels and assuming the same price would continue, it would generate around INR 45,000 crores of revenue, and it is expected to generate at least INR 4,000 crores to INR 5,000 crores of EBITDA.

The next question is from the line of Nikunj Bajaj from JM Group Family Office.

Sir, my first question is like when you are expected to receive the $603.8 million and from whom, given that you have already won the case in the Singapore Court of Appeal. Also, what are your plans for using that money in Kiri Industries?

Number one, right now, the sell process of DyStar is in the final phase. And there are selected almost 5 bidders, who are going through a second and the final stage of due diligence, expected the binding offer, the legally binding offer, along with the commitments of funds and proof of funds to go in by a deadline of March 7, 2025, which is almost like 3 weeks from now, post which the receiver is going to conclude the sale in the next month or so. And we expect that the sale proceeds should come from the quarter April to June 2025. That is the expectation and guidance given by us -- given by counsel to us. So that's when the funds would come in. As we already announced earlier, part of the proceeds, almost half will be used as an equity for the new project that we have already started implementing and commencing and already announced. And part of the sale proceeds would be remaining with the company. And then the Board will decide what to do with that additional cash that will be there with the company. So the -- almost half of the sale proceeds has been now decided to use in the projects. Almost half is going to remain with the company with later decision on the use. Thank you.

The next question is from the line of Jainam Ghelani from Svan Investments. Sorry to interrupt you, but we are unable to hear you, sir. Can you speaker a bit louder.

Am I audible now?

Yes, you are.

So sir, who would be a technology partner for the copper project?

The technology partner for the copper project is out of India. I would not be able to announce the name yet because there are certain confidentiality clauses involved. But I would say that they are the world's largest copper production company, very renowned, well known and one of the best globally. So please be rest assured that the technology partner, which has been selected has been experienced for more than 40 years in copper. So...

Okay. And sir, when do we expect the Phase 1 to actually commence operations? So can we expect revenues in FY '28?

2028, exactly. 2028 is the year in which we can expect the project would be commercially in operation.

The next question is from the line of [ Sanjay Mahajan from Welltree Capital ].

It's very encouraging to quarter-on-quarter understand what are the developments at Kiri Industries and hats off to the perseverance and the grit that management has been putting on. A couple of questions. I think -- yes. From our existing business point of view, so the questions are asked in the manner that what is the horizon for -- in first 6 months and 12 months. So how do we look at our current business? Is our current existing capacity for chemical is fungible? And since we are embarking on a new project into copper, how is the management planning to focus on the 2 different business verticals. So the question I'm trying to ask that since you have in a subtle way mentioned in the earlier on con calls that there is very less that we can do into the dye and dye intermediates segment and that's the reason that we are looking at newer avenues. What is our intent and plan for the existing business? Are we looking to hive off that or we are going to -- is the plan fungible and going to try to turn around? Do we have that bandwidth? So if you can give a 6 to 12 months perspective on both the business, that will help us understand how management is focusing their energies because we have not had in the past [indiscernible] the copper and the existing business.

So sure, sure. Very important questions you have asked. Let me ask your second question first -- answer your second question first. So the 2 different projects have no relevance, no relations with each other. Copper project is operated, handled, managed at a project level as well as later on the operational level by a separate key management team, which is very experienced for decades. The new management team of copper has been having experience for more than 20 years. There are many new members being added in that team. It's a separate team headed by a separate CEO, and he will be implementing, running, operating the copper business. So there is no management interconnected between the 2. That's the first answer to your question. Now second answer, as far as the dyes and intermediates are concerned, currently and last 3 to 4 years average, if you see our disclosures, the capacity utilization has been less than 50%, correct? We have been having ample capacities in this business. And we have been trying to improve the operations on -- even though there has been a lower demand for these years post-COVID, we are still trying to revive, trying to improve our product mix. And you have seen the results that we have been turning EBITDA positive, now profit positive also. And that business is going to continue as a profitable business, that business is going to grow to our efforts to make sure that we utilize at least 80%, 90% capacity of the dyes and intermediates business. So if you look at this -- look at the stand-alone basis, our objective would be to grow ourselves to at least INR 1,500 crores per year with existing capacities without any new CapEx. And there is no new CapEx plan for this business. It will continue in the auto mode. There is no debt on the business. Most of the plants are almost depreciated besides the new maintenance CapEx that we had done recently. Otherwise, there is no major CapEx has taken place. So with that, that business, you can say as long as stand-alone reaches to around INR 1,500 crores, Longsheng Kiri also reaches to around INR 1,000 crores. We still have a room to grow up to INR 2,500 crores to INR 3,000 crores on the existing invested capacities only. So that's the reason you can understand that both the companies, Longsheng Kiri, as well as Kiri are being now in operations without any debt. So that debt-free business is going to continue. It will generate more equity value for the shareholders. It will generate more equity value for all of us and we hope to improve those operations with legal costs going down now from this quarter onwards because the court process has ended. And once DyStar sale is concluded, we will see that the legal cost would be very, very minimum going forward. That would also allow us to have more profits at EBITDA level as well as profit after tax. So that would be a good outcome post June, post first quarter 2025, '26 that our legal cost goes down drastically, which then get reflected into increase in profits for the year 2025, '26. So we are positive for the year '25-'26. Sales is going to go up. Profits would also be better compared to last 3 years. And that's how we see the business. There is no plan of hiving off, selling, exiting. There are no such objectives at all for the dyes intermediates business. We still continue to maintain leadership position for the exports of dyes from India, and we still continue to remain and to grow that business, but more in a non-CapEx way. So that's the plan for the management going forward.

The next question is from the line of Sandeep Raj from Oculus Capital Growth.

So I had a question for the copper business. Last time, you mentioned that raw material is a challenge and there is a shortage in supply. So I just want to know what is the update on the feedstock tie-ups?

So we have signed about 3 offtake agreement with 3 suppliers in Africa and South Africa. We are continuing to scout for more and more miners, second layer miners, not the top layer miners. And those efforts are continuing. By the time we are able to tie up 100% of our feedstock, it would still be about close to 6 months or a year because it's not only the quantum, we are also trying to balance the best and the most discounted prices on the feedstock with a formula-driven linked to LME pricing. So our efforts for the next 1 year because we still have time before the project goes operational, and we will try to secure not only the entire quantum of feedstock, but also at the best discounted price with a mix of first, second and third tier miners and suppliers in various countries. So that's the prime priority for us, and that is what we are trying to work on the expeditious basis.

And any status on the offtake agreement on the customer side, any ties-up there?

We have not done intentionally because today, the market is in a situation of a seller's market and not the buyer's market. So the pricing on a long term for selling might be detrimental based on the analysis and the detailed market assessment that we have made. So we will be selling in line with the market when the sale takes place. And please remember that the entire output is going to replace the import in India. So being import replacement, being enough demand in the country itself and the nature in which today the seller side is quite strong in selling the products, we actually are not requiring to do any price commitments or any offtake on the long-term basis.

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

I just had questions based on the recent conclusion from the court. What are you seeing? There is a balance of $100 million that I think the litigation was still going on for. Is that concluded also in this?

Yes. So if you look at the latest order, the amount that we were expecting from our last call, if you recall, was the interest amount. What -- that was the enhancement that we were expecting and court has awarded that in our favor. So assuming that by the time the sell is getting concluded would be 2 years. And that 2 years interest would give us close to $70 million. So $604 -- $603.8 million to be precise is the award. And then there is a legal cost, which is about $8.5 million plus interest, so close to $10 million roughly. And then $70 million would be the recent awarded interest, which we were expecting. So all put together, you are looking at somewhere around $685 million to $700 million by the time the sale gets concluded, depending on still how long it takes to get concluded for the next several months and Kiri receives its funds. Please note that on the daily running meter, the cost is incurring on Senda on the Chinese partner. So the longer it takes, the more they are going to pay to Kiri.

The next question is from the line of Vignesh Iyer from Sequent Investments.

So my first question is on the comment you made earlier, where you said the initial money that needs to be invested as of now is INR 1,100 crores. Can I understand what is the mix of this INR 1,100 crores? And would we be using any funds that we raised from pref and warrants out of the equity money that we will be putting in this INR 1,100 crores?

So there are 2 factors to it. This INR 1,100 crores is mainly coming from the funds that we have raised and infused and started infusing. So that is one part of it. And second part is also coming from the warrants issue, as you rightly said. So it's a combination of both. The warrants proceeds, as well as the pending warrant proceeds are also going to be infused more into the project. But combination of both are being used right now.

And what about on the debt side, sir, the commitment -- I mean, a major chunk of the money that is 70%, if I'm not wrong, that you said earlier would come from debt. Do we have that commitment from the bank to fund this project as of now? If I'm not wrong, the first phase is divided into 2 lakh tonne and 3 lakh tonnes, right? So...

Correct, correct, correct.

Yes.

Yes. So we already have got the in-principle approvals from the overseas bank and that process is still continuing. So once we reach the financial closure on the final commitment from the lender side, we will immediately disclose. But I think in principle, we are there, and we have got the commitments from the lenders, mainly from overseas lenders. And we are also trying currently to tie up the domestic lenders to a domestic institution. So we will do the combination of both. And we don't see any problem with respect to the financial closure in a short time.

I this in principle approval is for 2 lakh tonnes or 5 lakh tonnes.

[Technical Difficulty] Entire 5 lakh tonnes.

Entire 5 lakh tonnes. Okay. So as of now, out of this INR 1,100 crores, primarily it is your equity money that has been infused and some amount of debt might have been infused, right?

Yes, correct.

The next question is from the line of [ Sanket Thakar from Vibrant Walk Capital Advisors ].

Sir, I just wanted to check on this Longsheng Kiri business. So there, since we are receiving the regular dividends, so this year and next year, how is the business forecast there? And what kind of dividends we can continue to receive from that?

I think if you see the average for this year and next year, we will try our best to have at least in the range of INR 30 crores to INR 50 crores of the dividend comes for the next 2, 3 years every year.

Okay. Okay. And secondly, sir, in terms of time line, like you March 1st week, which you mentioned, so that is basically a time line for receiving the binding bids, right?

Yes. March 7 is a deadline, where the selected about 5 bidders, who have been going through the final due diligence process would need to submit their legally binding bids along with the commitment of funds and proof of funds. Yes, exactly. And then whoever is the highest bidder, whoever the receiver thinks is the most certain bidder to close the deal, then the receiver is going to choose one of those exactly.

The next question is from the line of [indiscernible] from [ Financially Free ].

So once the plant -- the Phase 1 is live for 200,000 tonnes of the copper plant, so when do we expect that plant to be live first? And second, till what time do we see that plant will reach 80%, 90% or 70%, 80% of the capacity? That's the first question.

So the first operational year we are expecting is 2028. And by the time the entire 5 lakh tonne becomes operational, it would be another 2 years. So somewhere between 2028 to 2030, we will have the entire 5 lakh tonnes to be operational, commercialized and running.

Okay. And sir, the capacity, so how do we expect the capacity to ramp up? Like will it be like 80% in next 1 year itself? Or how does it work out?

With the first year itself, we are trying to hit 80% capacity. And then we will run on conservative side, somewhere between 80% to 90% capacity subsequent year. But yes, it would be full capacity utilization that we have planned and envisaged from the first year itself.

Okay. And sir, one more question. So when in the copper process when we are setting up the...

These are continuous plants, right, and commodity plants. So efficiency is very important. And those numbers can only be generated if we run the plant, operate at adequate capacities and start high capacity utilization from day 1, and that is what we have targeted.

Understood. Understood, sir. Sir, the second question that I wanted to understand is like we are setting up a copper smelter, and in that process, the copper -- and the intermediate product is like slurry that is produced, the waste product, and there are some of the rare earth metals in that like gold and silver and something. So for that, we have to do additional CapEx just to make that process work. So are we going in that process also like making the refining of the slurry.

Yes, yes, yes. It has already been done. So our total CapEx, which we have announced is also included the silver as well as gold, both refining. That CapEx is part of our total CapEx. It has already been planned, yes.

Perfect. Perfect, sir. And just last question that I had. On the dye...

There is no waste out of the premises. The entire premises is having very high ESG profile, and it will have not a single drop of [ effluent ] pollution to go out of the premises. So it has been conceived and designed, as a zero liquid discharge facility. Go ahead.

Perfect. Perfect. Yes. And on the dye segment, just sir, I wanted to understand. So we are having like EBITDA improvement. So just wanted to understand if we exclude the legal cost from EBITDA of the dye segment, what is the actual dye segment EBITDA that we are looking at?

So if you take out the legal cost, which has been a heavy toll, then for last 3 years, the EBITDA was a little bit on a lower side, but it was positive. And now onwards, you will see EBITDA positive operationally at least in the range of 7% to 10%, if not in double digits, but it would be higher single digit that we expect.

The next question is from the line of Himanshu [indiscernible] from [ Stylus Analytics ].

So I have 2 sets of questions. Firstly, on Longsheng Kiri. Sir, could you just elaborate on the reason for the change in policy -- accounting policy I mean?

Yes. I think that has come mainly from the opinion from the auditor side. So we have changed the way the accounting was done, what they call Ind AS?

Ind AS 28.

Ind AS 28. So when we implemented Ind AS 28, that required us to -- yes, that required us to consolidate based on the equity method rather than the joint venture method. So legal opinion from the auditor came that the statutory requirement requires us to do the consolidation by equity method, and that is what we have adopted from this year.

Understood, sir. The other part on Longsheng Kiri is -- so like you mentioned that you're expecting this INR 30 crores to INR 50 crores kind of dividend to the previous participant.

Correct.

But what I see from the balance sheet is they already have, I think INR 200-plus crores of cash as of March '24. So any plans withdrawing that as well from the Longsheng Kiri given the growth plans, et cetera, in Kiri stand-alone?

You see the biggest challenge over there is the same Chinese partner who we have at DyStar, correct? And also, they have a majority on the Board. So even though we have a lot of cash sitting at Longsheng Kiri, which is not required in Longsheng Kiri, there is no further CapEx plan in Longsheng Kiri and which is not dividended out is many of the times we struggle, we have arguments, and we try to convince the other Chinese shareholder to distribute as much as this cash as possible. And our endeavor in future would also be try to convince and try to discuss with the Chinese partner to allow as much dividend as possible because there is no use of cash there. It is just sitting as fixed deposits in the banks. So we 100% agree with you. That is the attempt. We see that balance and cash every day. And our attempt is to dividend out as much as we can. Again, because it depends on the majority directors' approval on the Board. We are dependent on Chinese and that's the constraint that we have been trying to struggle with.

Got it. On Kiri stand-alone, I have 2 questions. Firstly, if you could just talk on the tax rate part. I think we have been taking some of the benefits of the previous nonrecognition of losses. But can we see now probably FY '25 or FY '26 also continue to remain that way? Or once the cash comes in, probably we'll have to pay a high amount of tax. I'm talking about the DyStar stake sale. If that comes in, the kind of tax also that we may have to see.

Exactly. Once the DyStar sale proceeds come in, we will be paying quite a high amount of tax exactly.

So after then, we will have the -- like we will be completely utilizing our existing losses, right, by then? Or there will be some buffer on that also?

No, no, there won't be any buffer. The past losses will be completely utilized and still we will end up having a huge tax even after that.

Understood, sir. Last question was on the working capital side, sir. Like when I look at your balance sheet and with the stand-alone revenues and the overall business, there seems to be a disproportionate the working capital side, like especially the trade payables, which is almost like 50%, 60% of the overall revenues itself. If you could just talk a bit on that also, like what gives you that kind of comfort on the payable side?

Well, I don't think 50%, 60% hold on, one sec [Foreign Language]. See, I think the current quarter numbers, when you will see the average payable has come down to less than 100 days.

The next question is from the line of Nitesh from Burman Capital.

I have a question on the copper front. I think you mentioned that the pricing environment right now is not favorable for you to get into long-term contracts. I just wanted you to give some sort of macro commentary on what is happening basically on the copper dynamics in terms of current supply-demand utilization levels, where prices, et cetera, are trending. Also, you expect a high level of utilization from FY '28, '29, right, 80% plus kind of util. So any risk of incremental capacities from competitors coming in, for example, Adani Phase 2 or I think JSW had also announced some plans earlier. So just wanted your overall perspective on how the current supply-demand utilization scenario is and how it can pan out over the next 3, 4, 5 years?

Right. See, when you review several reports on the copper requirements of the country and also the way the growth is expected for the use in the country, current consumption in India is around 1.5 million tonnes, against which 0.4 million tonnes is the only existing production besides the new capacity coming in this year for 0.5 million tonnes. Our capacity, the first phase would be 0.5 million tonnes, correct? By this time, it would be 2028. And by 2030, country's requirement is expected to grow to at least 2.8 million tonnes, only 5% of our vehicles get converted into EV. If more vehicles get converted into EV, you are expecting the demand for copper to grow beyond 4 million tonnes. So even if 2 new facilities of 0.5 million tonnes come into picture from Kiri as well as from other announced projects, still India would continue to keep importing. By the time 2035, based on our renewable energy targets and more EV vehicles expected to get converted, you are looking at the demand projection of north of 6 million tonnes. No way even if JSW plant come, even if all other facilities come by 2030, 2032, based on the trajectory of the growth, we would continue to import even after absorbing all these capacities to produce and sell in India. Also, you must understand that there is a thrust to make as much product as possible in India for our own consumption to become self-reliant. With that objective from this year, as you have observed that the government has made the duty 0 not only on copper concentrate, copper ore, but also copper blister, copper scrap. So all those what we can import to process and use in India, the import duty very rightfully to support the entire industry, government has brought down to 0, correct? That shows the growth trajectory till 2035. And even after all these announced capacities are operational, still you will not be able to cross more than 60% of the expected demand by 2035 for the country to consume. So you can still expect more capacity to come, get announced and still get absorbed by this time. So there is enough and plenty of room based on our strong growth in India to have excellent market for the next 10 years for this product.

Thanks a lot for this elaborate reply. So as I understand, the things on the demand side are quite positive. And as you are explaining, even if incremental supply comes in, it will not be sufficient to fulfill incremental demand. So I just wanted to understand on import competition perspective, will we be more competitive versus imports from a pricing angle? And also, versus existing players, what sort of right to win do we have? I mean, because there are a number of players, who have been doing this business for a long, long time. So I wanted your perspective on us being a new entrant, how easy will it be to solidify your position?

See, there are 3 factors which you have rightly asked, which will play a role on defining who can get the competitive advantage. Number one, the new facilities, the facilities, which are coming now, whoever is putting up, the improvement of technology based on today's level of availability in terms of the better yield, the better emission norms, right, the better consumption norms. So the new facilities and new plants are going to get benefit of that, number one. Number 2, as I mentioned, the domestic consumption in India is so much enough that there is a room without any price competition too much on the sales side. But the most important factor would be to secure the availability of copper concentrate and copper ore. And that will -- that would be very crucial for everyone, not only for us, but whoever is coming, starting operational and the supply and the mining has not been growing and increasing at the pace of the smelters capacities are growing. So that creates more challenges. In fact, [ RC and TC ] also are reducing to that extent. So securing and going backward to other countries to secure the requirement of India has become very crucial. And that would be the defining factor that the margins plus the operational capacities that one would be able to run and it's not the competition between the Indian players only. The competition is more to do with the highest production, which is taking place in China. We are talking about today 0.40 -- another 5 million tonnes, 1 million, 2 million tonnes, while the other counterparts have been making 15 million, 16 million. Their ambitious target is to reach 20 million tonnes. And with those kinds of numbers, the global suppliers of copper ore and concentrate are all aligned and are all allocating a huge quantum to China. To take away from that, and to have it allocated for Indian production and Indian smelter, whoever does it here is also a task with the help of the government is in a play with all these countries. So there are important factors, which are right now being handled to secure the country's requirements, whoever using it, whoever is the final producer in India, but at least to get that flow to the country from outside and diverting that flow from the highest consuming country, which is being less favored now for the finished products, that's what the target is. And that's where the efforts are being [Technical Difficulty].

[Technical Difficulty] Ladies and gentlemen, thank you for patiently holding your line. The management is reconnected. Thank you, and over to you, sir.

Yes. So just I was trying to conclude the last question where the challenging task, which we all have been facing is to divert the supply of copper concentrate and copper ore to India to Indian smelters and the diversion from the world's highest consuming country. So there are efforts going on at the higher level, at the government level, at the individual business levels, and we hope to get positive results to get more and more supply of the natural resource come to India.

The next question is from the line of [indiscernible].

Yes, I just wanted to check what kind of taxation will is the capital gain of this DyStar stake have? Will it be 12.5% or 30%?

12.5%.

Okay. So 12.5% will be the tax, which you will all will probably pay in the next financial year?

Yes, exactly. Yes. Correct.

The next question is from the line of Vibhor from [indiscernible].

My question was just asked, which was with respect to the tax to be paid on the proceeds. This 12.5% would be on the initial proceeds, right, sir, of $603 million and whatever is the interest and all that would be more related to 33% and 35%.

Exactly. Exactly. Exactly. Exactly. Because interest income would be related to more of regular income, while 12.5% would be on $603.4 million, correct.

And on the interest income, you can claim the past tax losses on the [ 12.5% ] [Technical Difficulty] expenses, is that also correct?

Very precise.

I'm sorry to interrupt you, sir, but we are unable to hear you. Sir, there is a lot of disturbance from your line, Mr. Vibhor. Sir, we are unable to hear you. There is a lot of disturbance. Can you please repeat your question?

I have asked already my question.

The next question is from the line of [ Ankit Shah from AudaCity Capital ].

So my question is regarding the valuation of enbloc sale. Can you throw some light, if not the exact number, if it is upward of $700 million since it is a priority payment to Kiri?

Yes, based on the feedback that we received from the market, again, this is not coming from the receiver or from the -- from that side, but what we got a sense based on the market values, we expect that the bid has come from $1.3 billion to $1.9 billion, much higher than $700 million actually for the equity value of DyStar.

The next question is from the line of [ Sanjay Mahajan from Welltree Capital ].

Manish ji, my question is from a enbloc sale perspective, for a layman to understand, are there any base price or reserve price for bidding that's been put in place? And where do the management get comfort from that this happening and we're receiving money despite launching or the Senda has not been cooperating for a long time and is let going off this asset out of his hand. So some things which we cannot declare on corporate disclosure, but anything that is interesting for our investor or community to know about it. That will be helpful.

Sure. See, number one, there is no reserve price. When court made an enforcement order in February 2024, about a year ago, court had explicitly mentioned and accepted Kiri prayers that there is no reserve price selling DyStar. So whoever bids the highest bid, whoever bids the most certain bid sell the company and pay Kiri. So that's how the order has been structured. That's how the receiver has been functioning. So there is no reserve price. There is no bottom price, there's nothing. And that secures the position that on a one round of bidding, the company gets sold. Number 2, the court has also very rightfully in its order, given clear instructions to the receiver that both the shareholders, including Senda, must cooperate on the directions and on the instructions of the receiver because receiver is the officer of the court. And so, receiver is here the one who makes the decision regarding the sale of the company. And the cooperation of the management to the extent for the sale process to help for the due diligences to give answers to the questions of the prospective bidders, all that has been happening, and it has been happening for a year. There could be some [ cooperation ] issue on the way, but I think Deloitte has done an excellent job. The receiver has managed very well to seek and to get the cooperation from the management of DyStar, what we understand till now. And that is the reason that the sale is coming to the conclusive position in a few weeks' time.

The next question is from the line of Abhishek Nayak from Hexagon Assets.

Congratulations on a successful verdict from the court. I just had a bookkeeping question. If you could quantify the amount of legal cost associated with this ongoing case for this financial year and the previous financial year. Would you be able to share that number, please?

For this financial year and the earlier financial year, hold on one second, all put together. So this year, it is around INR 45 crores, and last year, it was with lawyers and [Foreign Language] right. So around INR 30 crores. By the way, for 10 years, the total cost has gone north of $60 million.

Understood. Thank you for sharing that number as well, sir. So the expectation is, obviously, this is a nonrecurring cost going forward because you are almost at the end of our journey, I would say, right?

Yes, exactly. That's correct. So this is -- and we hope to see, and we will see that this cost will go down and nullify once the DyStar sale is commenced -- completed.

Understood. And sir, second one is also a bookkeeping question. So specifically with regards to the tax amount applicable on the sale proceeds. So the amount of actual capital gain would be less than $604 million, which is the sale value. That's -- is my understanding correct? Or is there any gap there?

Well, I mean, the -- if you see our original investment in 2010, correct, which was just $16 million, right? And no matter what you add from that as a cost, almost entire $604 million is coming as profit only. So the tax amount would not be significantly lower, but almost in line with $600 million. Got it. And the interest component would be taxed at the slab-wise rate, correct, the corporate tax rate?

Correct.

The next question is from the line of Nitin Gandhi from Inoquest Advisors Private Limited.

Sorry it took a little long to [ get there ]. Just assuming this scene extends beyond March, there will be probability that you can acquire 5% again on a creeping acquisition, right?

See, there are pending warrants to be converted, correct? And with that creeping acquisition, 5% regulation, the warrants would be converted, yes.

So that will be under[ 11.2 ], right?

What is that? [ 11.2].

The section because you have 2...

There is already outstanding warrants to the promoters. 5% converted last year, 5% would be converted post April this year. Correct.

I was -- that means you can't acquire from the open market.

No, can't acquire from the open market, correct? Exactly.

Thanks. I just wanted to clarify that. And sorry, just one second, that warrant conversion is at what rate?

I think [ 368 ]. Sorry, [ 369 ] to be precise.

So that much money will come in the company, which you will be using for another second phase requirement?

Yes, yes, exactly. That company is going to be infused for the project, absolutely.

Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you all for participating on today's conference call. I'll be pleased to see you next quarter. Thank you. All the best.

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