Kiri Industries Limited ($532967)

Ladies and gentlemen, good day, and welcome to the Kiri Industries Limited Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Ms. Purvangi Jain from Valorem Advisors for opening remarks. Thank you, and over to you.

Thank you. 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 fourth quarter and full financial year 2026. Before we begin, let me 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 belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any 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 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 conference call. We have with us Mr. Manish Kiri, Chairman and Managing Director; Mr. Jayesh Hirani, Vice President, Accounts and Finance; Mr. Suresh Gondalia, Company Secretary; and Mr. Ranjit Singh Chugh, CEO, Indo Asia Copper Limited. I 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 fourth quarter and full financial year 2026. I hope you are all keeping safe and well. FY '26 has been a very important year for Kiri Industries. The successful conclusion of DyStar Matter marked the end of a journey that has been part of the company for many years. With that chapter now behind us, our focus is firmly on the opportunities ahead and on building the next phase of growth for the company. As all of you are aware, we are developing an integrated copper and fertilizer project, which will form an important part of company's future growth. During the quarter, the project continued to make steady progress across engineering, procurement, infrastructure development activities, while several important milestones were achieved. Engineering activities across the copper rod, tube and refinery and associated utility facilities continue to progress under the supervision of Tata Consulting Engineers. We have completed key procurement milestones through the placement of orders for critical machinery and utility packages, while technical finalization and ordering activities for long lead equipment continued as planned. Construction and infrastructure development activities have gathered momentum across the project site. Progress was achieved across utilities infrastructure, including oxygen facility, sulfuric acid plant, associated facilities, while work continued on various civil and further infrastructure packages supporting overall project execution schedule. In parallel, we continue to strengthen the long-term operating framework of the project through the development of supporting facilities, including desalination plant, renewable energy integration, logistics systems, et cetera. We are also progressing initiatives related to raw material sourcing, supply chain development, which will support the project as it moves towards the next stage of execution. Overall, the project continues to progress in line with our road map, and our focus remains on achieving the next set of execution milestones. With that update on the project, let me now briefly touch upon the performance of our existing business and the financial performance for the quarter and financial year. On a stand-alone basis, the company delivered a strong performance during quarter 4 FY '26 with revenue from operations increasing by 29% year-on-year to INR 241 crores, driven by improved business volumes, stronger realization in Dye Intermediates segment as well as the lower legal cost, reflecting the underlying strength of the operations, the company generated an adjusted EBITDA of approximately INR 35 crores during the quarter post year-end closing adjustments. However, as part of the annual financial closing and finalization process, certain noncash closing period measurement adjustments aggregating to approximately INR 114 crores were recognized during the quarter. For the full year FY '26, the company delivered good performance with stand-alone revenue from operations increasing by 19% year-on-year with INR 778 crores of sales, supported by improved business volumes and favorable realizations across key product segments. The company generated an adjusted EBITDA of INR 79 crores in FY '26 post year-end closing adjustments. However, as part of the annual financial closing and finalization process, certain noncash measurement transactions were recognized during the year, which impacted the reported EBITDA. On a consolidated basis, the company delivered a strong performance during quarter 4 FY '26 with revenue from operations increasing by 22% year-on-year to INR 251 crores, supported by improved business volumes across key segments. The company generated an adjusted consolidated EBITDA of INR 33 crores during the quarter post year-end closing adjustments. Financial -- finance costs declined sharply from INR 8 crores -- to INR 8 crores during the quarter from INR 54 crores in quarter 4 FY '25, reflecting improving underlying operating performance. For the full year FY '26, the company delivered a resilient consolidated performance with revenue from operations increasing 14% year-on-year to INR 840 crores, supported by improved business volumes and steady business momentum across key segments. The company generated an adjusted consolidated EBITDA, which includes the joint venture in India to INR 127 crores during FY '26 post year-end closing adjustments. The share of profit from associates and joint ventures for FY '26 stood at INR 188 crores, comprising INR 58 crores from our 40% stake in Longsheng Kiri Chemical Industries and INR 129 crores from DyStar recognizing up to quarter 2 FY '26. The significant increase in profitability during FY '26 was primarily driven by the successful monetization of DyStar investment, which was recognized as an exceptional item during the year. Based on an independent expert legal opinion obtained by the management, only a portion of the award amount has been considered taxable, while the balance has been treated as a judicial capital received based on the judgment award. Accordingly, the company has recognized tax provision on the taxable portion of the award. On the operational front, the Dyes and Dye Intermediates business saw a meaningful recovery during quarter 4 FY '26, supported by improved business volumes and stronger operational activities across key segments. Dye Intermediates remained the largest revenue contributor at 52%, followed by dyes at 33% and basic chemicals at 15%. While raw material cost pressures continue to weigh on margins during the year, the strong volume recovery witnessed in the fourth quarter is an encouraging sign as we move into FY '27. We continue to focus on operational efficiency, cost optimization and pricing discipline to improve profitability and strengthen the business over the long term. The outlook for Dye Intermediates is becoming more constructive. China's supply of key intermediates have tightened due to environmental compliance measures and production curtailments, which is expected to support industry dynamics and improve realizations for Indian producers going forward. Our joint venture, Longsheng Kiri continued to deliver a steady performance during the year and remains an important contributor to the group's overall performance. Looking ahead, FY '26 marks the beginning of a new chapter for Kiri Industries. DyStar Matter is resolved. The balance sheet is transformed. Execution of copper and fertilizer project is well underway. Core chemical business is showing encouraging volume recovery and the external environment for Dye Intermediates segment is turning more favorable. We remain focused on disciplined execution, prudent capital allocation and building a strong foundation for the company's next phase of growth. With that, we can now begin the question-and-answer session. Thank you very much.

[Operator Instructions] We take the first question from the line of Harshit Khadka from RoboCapital.

Am I audible?

Yes, Harshit, please go ahead.

Yes. Sir, we had earlier commented that the Phase 1 of our plant will start in April 2027, and we will do revenue of, say, INR 20,000 crores to INR 25,000 crores in that year. So are we still on track? Are we maintaining those comments?

From '27, '28 financial year, we will be operational. The first part of the project will be operational. But it would be operational unit by unit. So it would be downstream products, then the refinery would be operational, secondary product line operation, all will be operational in 2027, '28. And we continue to have, based on the pricing, somewhere around INR 20,000 crores plus revenue in this year as well.

Understood, sir. And sir, just wanted to understand what is the debt outlook for FY '27 and '28?

Depending on how much drawdown we take on the CapEx debt, there is no other debt right now. The prior debt has already been paid. So even if we withdraw half of the debt, it would still be somewhere close to INR 4,000 crores to INR 5,000 crores of debt on the CapEx.

In FY '27?

FY '27, '28.

And '26?

Yes, '26, '27, we'll have very minimum debt, maybe less than INR 1,000 crores.

All right. Understood. And what will be your working capital debt?

The debt will keep increasing year-on-year. Working capital debt will not be there on '26, '27. But yes, from '27, '28, working capital debt will also be availed and will be used.

Understood, sir. And sir, one of our peer company's CEO said that the import dependency for copper products will be reduced this year or will mostly be over this year. So what are your comments on that?

Well, based on the current increasing requirements of copper in the country with increasing use of -- and the sale of EV vehicles, electric vehicles and also the increasing requirements for AI data centers, our assessment is that country is going to remain for copper processing still import dependent, not to the extent we have been earlier, but till 2030 to 2035, irrespective of the increasing capacities and production facilities coming up in India, still we will continue to be import dependent. We would not be completely self-reliant before 2035. We would still continue to import.

We take the next question from the line of Surya Narayan Nayak from Sunidhi Securities & Finance Limited.

So just wanted to know that we were telling that from the legacy business, we would not be taking a hit because all the legal expenses are behind. But still, if you look at the last results, I mean, the other expenses part has swelled. So what is the reason for that, which has led to the losses?

I think that is what I have explained in my speech earlier. There were certain noncash year-end adjustments, so the EBITDA for the year ended is INR 79 crores on a stand-alone basis and INR 127 crores on the consolidated basis. So operational performance has significantly improved. What you saw and what we had to account for was the year-end impact of certain adjustable items. Otherwise, operational performance has drastically improved.

So shall we mean that going forward on the stand-alone business, the other expenses component will be significantly lower?

Yes, it will not be there. It's only year-on adjustment. So if you look at INR 778 crores of sales and INR 79 crores of adjusted EBITDA, which is 10% EBITDA, in line with our earlier projections.

Okay. Any guidance for the stand-alone business EBITDA margin?

I think we would target somewhere between 10% to 15%. So if we are at 12% during this year, we'll be happy.

Okay. 12%. And sir, in this year, we'll be taking some INR 1,000 crores of debt, you said. And next year, term debt and working capital debt, both put together will be INR 5,000 crores. So shall we...

Minimum INR 5,000 crores, it could be even more than that. So it depends on how we are able to expedite and speedily execute the project as well as the commercial operations of the plants which are getting established. So it could be even higher than that also.

I mean if that is the case, what would be the minimum or let's say, maximum, we can say, working capital debt out of INR 5,000 crores plus debt in FY '27, '28?

So the INR 5,000 crores debt, what we are projecting is the CapEx debt. It's only the debt which goes for the hard CapEx. Working capital, which we would be able to withdraw would also be around INR 3,000 crores to INR 4,000 crores if not INR 5,000 crores. So you are looking at total debt increasing to INR 8,000 crores to INR 9,000 crores in 2027, '28, not '26, '27. Not the coming financial year, the year after. That is the year in which the debt is going to be maximized.

Okay. Sir, in that case, are we -- will you be seeking any kind of moratorium for debt?

Yes, there would be moratorium, correct. So debt serviceability is not going to be an issue. Let me address your question.

I mean yes, serviceability will be from the day 1, but the repayment of the principal will be starting from 2 years after the debt taken?

Correct. 3 years after the debt taken.

After 3 years. So 3 years moratorium we are seeking. Okay. So what kind of interest rate we can presume for INR 5,000 crores or INR 6,000 crores of debt?

At around 8.5% to 9% in that range.

Surya, I will request that please join the queue for follow-up questions. [Operator Instructions] We take the next question from the line of [ Suresh Bharamshetti ] from [ Bharam ] Financials.

Sir, don't misunderstand. I'm asking investors have been waiting for 10 years. So they deserve at least some returns. You are generating funds and doing well. But you must also remember your responsibility to take care of the investors who supported you, sir.

The promoters, the management team of the company, everyone is working hard to improve the performance of the company, which you have seen, operational performance of the Dyes chemical business as well as to transform company to the new level, right? And we all strongly believe that, that is what is going to create immense value for the shareholders, right? All the activities and all the progress that we are trying to achieve here, and it's all for the benefit of the shareholders and to enhance the value of the shareholders only, correct? Now any specific I can address, let me know.

Actually, before conference call, you told after winning the case, you do some benefit in dividend or any buyback. Shareholders have received amount, sir, but shareholders is not creating any wealth after 10 years of case winning, you can at least -- you can consider my request, sir. Shareholders is not any create wealth. You can understand. Don't misunderstand.

No, no, I fully understand. And currently, the company is going through a significant growth execution phase right now. And that is why the Board and the company decided to reserve and to keep the cash in the company to support the initiatives of growth that we have embarked upon, right? And it's a long-term commitment from the shareholders, as you rightly said, and long-term commitment from the promoters, long-term commitment from the -- for the management of the company as well to continue the journey after almost 10 years of no growth to very high and significant vertical growth that we are trying to achieve in the next 3 to 5 years. So I think that journey would create a lot more value. And based on the prudent use of cash for the growth of the company, that is what the Board and the company has decided to focus on right now. So that is -- that was mentioned in the last Board meeting as well. And it was already conveyed in certain terms to the market and to the investors as well. So we request you to please keep patience to see where the company is going in terms of performance. The objective of all of us is to give you results and give you performance, right? And if you -- as long as you see that performance, it's up to the market then what value that everyone is able to give in terms of the capitalization of the company in the market.

Actually, investors are already waiting for 10 years, you can consider any dividend in this year.

As conveyed earlier, we will further deliberate during the course of the year. But this year, the dividend has not been declared and is not going to be declared. I would be certain and clear for that. So that's the decision of the Board, and that has been already conveyed earlier as well.

Any buybacks, sir?

Well, there is no decision as on yet. During the course of the year, there could be further calibration on various options that the company has on everything on the platform, but nothing has been decided yet to be conveyed.

We take the next question from the line of Shivang Joshi from Motilal Oswal Principal Investment.

You mentioned in your opening comments that you took some expert opinion and the tax that you had to pay, I mean, the recognized tax provision that you have done is only on part of the consideration that you received. Can you quantify if it is possible, how much exactly is the tax provision? And what is the net proceeds after taking care of the legal expenses and tax provision that we have accounted for?

Right, the tax provision has reached to around INR 160 crores, which has already been paid by the company. That was the initial assessment. However, based on the legal opinions that we have received, the award that the company has received is a judicial award, which is the judgment receipt and judgment receipt is exempted from the taxes. And that is the stand that the company has taken on the larger portion of the receipt from the court. So it is court awarded judgment receipt, judicial award as per the laws, which can be excluded from the obligation of the taxes. So I think based on that, INR 150 crores has already been paid by the company till date.

Okay. So net is only INR 150 crores. Secondly, on your copper -- on the entire copper integrated complex, if you can give me what will be the phase-wise CapEx? I mean, what are you planning for the CapEx in this year, next year? And I believe your plant will be operational by the end of next calendar year -- sorry, in calendar year '28, that is what you have mentioned, even in your presentation. In the interim, what is your plan? I mean, till the time you start making primary copper and fertilizers, how will be the ramp-up in the interim? Or we'll see the numbers only from next year? So some guidance, sir? And additionally, because of copper scenario globally, what is the current situation of your raw material tie-up, your concentrate tie-up...

So let me take one by one the questions that you have raised. Number one, from 2027, April onwards, you will see quarter-on-quarter, the facilities keep getting operated, getting in operations, and you will see the numbers start coming. So from April 2027 onwards till March 2028 and March 2029, over a period of 2 years, you will see first the secondary production line to be operational and then the primary production line will be operational. So both the line will be commercially operational during these 2 years. And the capital investment this year by end of March 2027 would be at least close to INR 4,500 crores to INR 5,000 crores. Again, in the next year as per the current plan would be almost equivalent another INR 5,000 crores. And then we'll have another INR 2,000 crores to INR 3,000 crores by March 2029. So just to give you a high-level number, you can say [ INR 5,000 crores ] and then [ INR 2,000 crores to INR 3,000 crores ] finally in March 2029. So that is the overall investment wherein INR 13,000 crores to be infused in. So that's first part. And the numbers you will start seeing from April 2027 onwards next financial year. So that's the overall project. Now when you talk about copper concentrate, as on today, we have -- for the primary line, we have -- our requirement is about 1.5 million ton. And we already have visibility of more than 1 million ton of copper concentrate tie-ups. So we still have more than a year, and we are fully confident to have it completely organized up to 1.5 million ton by next year for sure. So that is where we are on -- but that is the most difficult part that the company has been working on.

Sir so just confirming, so in the current year, FY '26, '27, there will not be any secondary transaction. There is a copper being integrated, complex will not have any revenue accretion in this year?

Not in this year, not in this year.

And what would be rough expense run rate that you would have already started from an OpEx point of view in that division? Obviously, part of which will be capitalized, but what will hit the P&L? Just trying to understand that.

So Indo Asia Copper Limited for FY '26 has been capitalized. So still it's basically EBITDA neutral or PAT neutral, let me put it this way, correct? And going forward also, this year, there would be some expenses, but not to a large extent because a lot of investments would need to be capitalized in this year as well because the commercial operations would not get established before 31st March 2027. So FY '27, you would not see any large number on the loss side. It may be some expense nature that could have limited negative earnings, but not much. It would be insignificant.

Shivang, I apologize to interrupt you. Could you please join back the queue for follow up. We take the next question from the line of Manoj Kumar Bhura from Adinath Financial Services Private Limited.

My question was regarding, can you throw some highlight on the government incentives which are receivable in both our units, Indo Asia Copper as well as the fertilizer plant, say, in terms of the subsidy, GST subsidy or GST reimbursement, PF reimbursement and electricity duty, all those things are available under the government incentive schemes. Can you throw some light?

So all -- so the company has already applied for all these incentives, which Gujarat State has been providing as per the current industrial policy, the Atmanirbhar incentive schemes and both the legal entities, copper as well as fertilizer have been in the process of receiving the final confirmation and the approval from the state government. But we would receive roughly 30% -- somewhere between 30% to 35% of eligible CapEx over a period of 10 years, right? And in absolute number, it would be in the range of INR 3,000 crores to INR 3,500 crores to be received yearly within a period of 10 years from the date of commercial and operation beginning for both the plants. So that is the rough estimate which we will -- the company would get.

My second question was regarding the revenue guidance for the current business, that is our Dyes business. And further, you elaborated in one of the last con calls that you will start some trading in copper in India to familiarize with the process and to establish the network. What is the status on that?

So just to address your second question first, the trading has not been commenced yet. We have not been in the process of commencing trading soon as well. Even though we have contemplated several possibilities, we explored several opportunities in the past, but to avoid any market risk, and we are glad that we didn't start trading 2, 3, 4 months ago. So we haven't done that yet. But during the course of the year, we will have a few opportunities, which is secured for profiting for the company. When we see that we will do so. And the company would also start trading fertilizers during this year, this financial year. So fertilizer distribution would start probably from next quarter onwards within this year as well for the trading part of the company.

In the current liability in the balance sheet side, I see a huge figure of INR 332 crores trade payable on a purchase of around [indiscernible], which is almost 6 months of purchase. Why it is so? Why we are paying very late to our creditors?

The average credit paying cycle is 90 to 120 days. But sometimes it gets extended because we also get paid late from the customers as well, right? So it is all linked with each other. So sometimes almost for dyes and chemical business, more than 95% of customers are textile customers, which are in textile sector. And you might have observed in the market that the payables from textile units have been getting extended. And that is the reason that our linked payable from our side to the vendors also get linked and extended to that extent. So that's passed through.

That increases our cost, sir. Don't you think so? If we pay our creditors -- we have the money, if we can pay our creditors, we can get a discount -- substantial discount in our purchases.

Well, it depends on both the sides. So if we keep infusing more and more working capital in existing business, right, those purchases, again, are linked with the sales in terms of how much we charge to the customers as well. So when we purchase it a little more, we sell also at a little more pricing. But if we keep infusing more working capital, whether that more funds and more working capital would attract and would be able to earn enough returns or not. That is a question mark. If it is not going to earn the discount significant enough to have an incremental return, then why to do that, correct? So that is where we continuously keep measuring, right? If I'm getting 3% discount and I need to invest INR 100 crores on the working capital, we'd rather not do it if we are getting 10% discount, okay, no problem. Tomorrow morning, we'll [indiscernible] INR 100 crores. So we are being very conservative here.

And sir, revenue guidance you have not given for the current year for the Dyes business?

So the target is to cross INR 1,000 crores out of -- so we are expecting 20% plus growth this year. So hopefully, we will cross INR 1,000 crores in this financial year on a stand-alone basis. And the joint venture is also expected to cross INR 1,300 crores, which has already done INR 1,100 crores this year. So that is how the revenue should look like in 2026, '27.

Any proposal to take over Longsheng Kiri?

Yes, nothing, nothing. No discussion yet, no -- yes nothing yet, nothing yet.

We take the next question from the line of Sandeep Raj from Oculus Capital Growth Fund.

Am I audible?

Yes, please.

Just wanted to check what is the update of the MCB mine regarding the Celsius arrangement that we had?

Right. So as we announced earlier, the company has already entered by financing and by making arrangements of taking over certain loans pertaining in Philippines at MMCI. And we are in the process of negotiating offtake agreement right now. So the entry of the company has already taken place. We are now involved with MMCI and our objective is to conclude the offtake agreement as soon as possible.

Okay. So nothing -- the percentage is not yet finalized, how much you're going to take?

No, no, no, nothing, nothing, not finalized. So we want to first ensure that we lock in the offtake. That's the sole purpose. I hope I'm clear on that.

We take the next question from the line of Shivang Joshi from Motilal Oswal Principal Investments.

Sir, if you can give some color. I know you have mentioned a couple of times the closing period measurement transaction that you have recorded fourth quarter impact of INR 114 crores. What exactly is the nature, sir, rolling and whether any -- every quarter end or year-end, this will be a repeat phenomenon, what exactly are these noncash, sir?

No, no, these are noncash items, which are mark-to-market related, right? And they would not be coming in closing every year or every quarter.

Yes, mark-to-market investments are these ForEx hedging transactions or any -- some nature here because the amount is pretty large in context to your overall...

It relates to the temporary parking of the funds that the company has received, which are significantly large, as you know, obviously, so which is...

Okay. So we are just trying to understand the funds that you parked temporarily, they are parked in debt instruments, equity instruments within India, outside India...

No, they are all within India, and -- they are within India, and they are all parked in various instruments, which includes debt, which includes equity, hybrid, depending on the financial instruments that we have taken, but which is nothing which relates to the operations, correct? So that's all relates to the investment activities temporarily that we have done.

Okay. Okay. My other question though was on trading, which I think you clarified that you will not do any copper trading per se during the year and only fertilizer will be commenced. So this will be branded under Kiri or Indo Asia Copper?

It would be branded under Indo Asia Fertilizer Limited. Yes. So the approvals have taken place. All the licenses have been received. Arrangements have been made at the port. So we'll be buying bulk and then bagging it and distributing it.

Okay. Okay. And how good is your distribution team? I mean, if you can give some color on how is the team setting up, both on your copper and fertilizer business?

Right. So on both the sides, we are trying to now increasing our management team month-on-month basis. So in all categories of the requirements for all the business areas, we are recruiting both senior as well as junior level. And the distribution, sales and marketing and the individuals, the commercial head, the Chief Commercial Officer is joining, Chief Operation Officer has already joined and a few other key management people are also joining in the next few months. So team is heavily strengthening. And see, let me divide our management team into 2 parts, one which relates to project and project execution and the other, which would be involved in operations, right? So the team which would be involved in operations even post completion of the commercial date, those operational individuals are also being taken on board gradually one by one, right? But the project teams are not being increased to an extent because the way we have worked out is given a large part of responsibility to TCE, Tata Consultancy Engineers, correct? And over a period of time, TCE is going to deploy a large number of project team members from their side, correct? So then the company doesn't need to employ 200, 300, 400 project people and then relieve them after the project is completed. We don't want to do that, correct? So we have then relied more on Tata to strengthen, and they have done a fantastic job till now, and they keep strengthening, deploying more and more team members on the project side.

Okay. Sir, on the project side, I think I missed one -- I mean I had a patchy line in the -- someone did ask this question. How much is the incentive -- I mean you are eligible for PLI or any other kind of incentives for your overall...

Yes, yes, yes. So the copper and fertilizer, both are qualified for large-scale industries, large-scale sector, which the incentive policies of government of Gujarat is providing a general policy, a standard policy, in which we will get almost 30% -- between 30% to 35% of our CapEx over a period of 10 years, correct? So the expected amount over a period of 10 years could be in the range of INR 3,000 crores to INR 3,500 crores.

And you've got the approval or the letter from all the relevant authorities already?

It is already in process right now, and it is in final stage of approval. We may expect it any time. And copper tube plant, copper tube facility has been qualified in PLI. That is in addition to that.

We take the next question from the line of [ Aniket Gada, ] an individual investor.

I just wanted to ask, could you provide me the overall physical completion percentage of the copper and fertilizer project separately? And what percentage of the total cost has already been spent like we were like -- we already have a CapEx of INR 5,000 crores this year and INR 5,000 crores next year. So what is actually spend right now?

So INR 2,500 crores is already mean as we speak right now in various forms, [indiscernible] advances, machinery and further is getting infused as we speak. So that's -- the guidance which I have given, those are the numbers which will happen over a period of 3 years, 2027, '28 and '29, which I said earlier. So that is the CapEx which will incur. The operations of the plant will take place unit by unit. It will start becoming operational downstream first from April 2027 onwards and then going upstream on refinery, then furnaces, the smelter and the fertilizer. So by the time everything would be operational, it would be 2 years from April 2027 to 31st March 2029. So you will see phase-wise commercial operations getting established, phase-wise revenue getting started. Phase-wise, you will see numbers coming.

So how much of the physical construction has already been completed in percentage terms, if you could just let me know?

The civil construction for the entire site, including all the units would be till now close to 25% to 30%.

Got it. And sir, you just said like we have 1 million visibility on the copper concentrate. So is it already covered through agreements and also...

Yes, this is already through the -- yes, the nonbinding agreements, correct.

And rock phosphate included in that?

Aniket, I would request you to please join back the queue for follow-up question.

Yes, rock phosphate is additional. This is only copper concentrate.

And do we have agreements for that?

Rock phosphate is fully tied up, 100% secured.

We take the next question from the line of [ Farrukh, ] an individual investor.

My first question is with respect to recent judgment finance you had taken. During the span of 5 quarters, we have paid almost INR 300 crores as interest on INR 1,100 crore loan. So the rate of interest approximately comes to around 22% plus. So despite having the facility of withdrawing in tranches, why did we take it in one go?

Sorry, I couldn't understand. Can you repeat what exactly you're talking about the end of the year?

Interest on judgment finance, yes, sir, on INR 1,100 crores, You had paid almost INR 60 crores per quarter as interest. So on a 5 quarters -- in the period of October...

Right. So the loan was taken in dollars, if you remember, correct? And this payment includes the -- because the entire loan was paid at a one shot, at a one go, right? It was not paid back in phases. It was onetime payment. But by the time till December -- I mean, till -- end of 2024 till January 2026, rupee depreciated, right? So the effect which you see also includes the effect of foreign exchange cost, I mean, in terms of rupee that we had to incur to pay -- to make the repayment in U.S. dollars. So it includes the foreign exchange effect in the payment.

So you are saying that the INR 60 crores -- yes, please go ahead.

Yes. So INR 300-something crores that you are seeing has 2 components. One is the interest factor, which was computed in dollar terms and then the dollar difference. Similarly, when we received dollar, we also received more rupee when it was converted into rupee.

Understood, sir. Understood. But the second question is on the recycling facility. So you are starting -- all of a sudden, you are starting with 1.5 lakh ton capacity. So [indiscernible] like Hindalco is setting up only 50,000 ton capacity and others are coming up recently. Significant capacities are being coming up. So do you have any thoughts on the raw material procurement since it's very...

I think what we have been seeing is a lot more scrap is coming in the country and also getting generated within the country. That is one area, correct? And secondary for this is not only accept the scrap, but also ingots, blisters and those kinds of actually copper semi-finished products, correct? Now the reason you see this capacity is coming because in global market, there are availabilities of ingots and blisters as certain countries, which are -- which were earlier exporting copper concentrate, they ban exporting copper ore and copper concentrate. So then in Africa, in Indonesia, so they are getting converted into semi-finished copper products, and that can also be fed into the secondary lines, right? So that's why the secondary lines increasing installed capacities, which you are seeing.

Understood, sir. One last question, sir. INR 13,300 crores, does that include interest component or not, sir, during the moratorium period?

It does include interest during moratorium.

We take the next question from the line of Ajay, an individual investor.

Am I audible?

Yes.

Sir, my question is that whatever the funds you have received, so where you have deployed all these funds right now in the form of [indiscernible]...

Yes, they are in the form of various instruments, diversified instruments in debt, fixed deposit, equity, certain mutual funds. So it's in a lot of things. And the average return is more than 10%.

So basically, whenever we require this fund, so we are deploying this fund in this new project, right?

Yes, yes. So whenever we need, we can withdraw within 3 days notice.

Okay. Okay. And the thing is that whatever the interest you are generating for the period, so are you able to provide that in the form of dividend to the investor where already you have marked that fund to be utilized in the -- for debt. So you have already considered that interest to be also deployed as a project funding?

So the -- right now, based on the current covenants and based on the financial commitments that we have for the next 2 years, whatever additional funds that the company is going to generate are going to be there in the reserve, which could then be used as a margin for working capital facilities because working capital facility margins would also be ranging close to INR 1,500 crores to INR 2,000 crores, which the company has to provide, right? So currently, till any of our phases become operational, right, and the cash flow to the company starts generating, right, the decision from the Board and the company is to be a little conservative and try to ensure that we fully succeed and don't face any lack of funds in the next 2 to 3 years. But of course, once any of the first phase or second phase start operational, cash generating takes place, extra cash remains in the company, we will definitely consider your request as well.

One more question. What is the -- what do you expect for the main line of business [indiscernible] EBITDA positive for the current financial year?

It's already EBITDA positive ended 31st March. It will be...

Q4 itself shows that it is EBITDA minus INR 88 crores.

So I -- this is third time I'm explaining in this call. I already explained 2 times earlier. Now I'll explain again third time. The EBITDA was positive. The entire year EBITDA was INR 69 crores. Consolidated EBITDA was INR 127 crores. I also explained the kind of year-end adjustments that we had to make. I also explained what those adjustments were pertaining to once you take that out, which are not operational items, noncash item, when you put that, the operational numbers are INR 69 crores of EBITDA out of INR 778 crores sales and INR 127 crores of consolidated EBITDA, the JV generated INR 1,100 crores of sales. These are the numbers.

Whatever the net profit you are generating for the main line of business, that fund also is deployed for the new project, right?

Right. So this is -- what I have said is all from the main project -- main line of the project. This is -- there is nothing from copper fertilizer or anything else. Whatever I just mentioned is from the main line of the project -- main line of the business, sorry.

We take the next question from the line of [ Ankit Singha, ] an individual investor.

Can you hear me?

Yes, please go ahead.

Okay. Sir, what is the status of financial closure? First question is this. And then second is, since you'll be taking so much of debt, will you be able to service the interest or like the interest has to be paid from the first year itself or from -- after 3 years, as you said earlier?

Correct, correct. So it would be a moratorium of 3 years, so no need to pay from the earlier. Financial closure has not been taken place yet, but we are pretty near to that. So once everything -- all the documents are executed, we will disclose the financial closure in the next few months.

Okay. One more question. Like since you are doing so much of CapEx, why don't we acquire companies? Why don't we do the inorganic growth? I know like there are companies who are transforming, who are just selling their old businesses. And then they are acquiring new businesses, like they are going into data center or maybe per se, defense and aerospace. And they still -- they already started reaping profits. And even the market has started rerating them. So they are like 4x now. I can just name them also. The company name is like Megasoft. They now sold their IT business, okay, and acquired aerospace and defense. Now they are like 4x from 52 weeks low. Why don't we do such things? Why don't we do -- acquire businesses? Or even if you want to get into copper business, why don't you start at a small level? Why are we so interested to take so much of debt?

So let me just explain to you. The fields which we have chosen, the investments which we are making in the greenfield projects, right? The CapEx, these kind of facilities are global sized facilities, number one, correct? So wherever new smelter or wherever new copper production is set up, now with economy of scale, which has been there established, they are in the kind of a modular approach of 500,000 ton copper each, right? So it has become a benchmark whoever wants to enter here. Number two, there are no such companies either in copper or fertilizer, which are up for sale in India at least. So that limits us from the acquisition opportunity, right? Now our focus is on something which we have already embarked upon, and we are right now proceeding. But at the same time, on a smaller size, we keep looking at the acquisition opportunities, correct? We keep evaluating them. We have a separate team, which looks at the M&A availability in the market as well in various chemicals areas and other areas. If any such good opportunity comes and company decides to do it, we'll be pleased to go and to do such acquisitions. So please be rest assured, we are working on this kind of opportunities available in the market as well.

Sir, at least we can do CapEx with the capital that we have right now, okay? So the concern is the Adani, they already are into copper, but then they are not able to generate that much of copper because of the concentrate quality or maybe the concentrate is not available, what they require. So that's what I'm saying, like even if after 3 years, if you -- like you will have to pay the interest. And in that case, in case if you are not able to generate the copper output, if you're not able to save that much, how will you service this. So in that case, can we not start at a small level with the capital that we already have from the DyStar?

So here for copper sector, there is nothing like small level, yes. And that is why you have seen we are taking 2 years' time, correct, from April '27 to 31st March 2029 to have step-by-step our various units getting established, stabilized, and become operational. So with that in mind, this time which we have just provided to you, it is what internally we have decided to ensure that we have a total output. Now as far as copper concentrate is concerned, today, 5 years from now, even 10 years from now, right, it is going to remain a challenge. As a country, it is going to remain a challenge. As a critical metal required for the country, it is going to remain a challenge because we are dependent on import, right? So the -- and the mining has not been increasing with the speed at which the demand of copper has been increasing, including AI, including electric vehicles, renewable energy, look at the global requirements increasing sharply and mining has not gone and increased to the extent it has been required. So because of that, we have to do processing in India. We have to serve the requirement of the country. We have to build those facilities here and try to secure go upstream and secure those sources. Now if we are not in processing, then we would not attempt to even secure those sources. But securing those sources, reliable sources, good quality sources to have long-term connectivity with the mining, that is the need for the country as well. It has to be done, either Adani does it, other players do it, we do it. But if we want to have this kind of requirement of copper with the emerging sectors in the country, we ourselves need to go and secure these natural resources anyhow, whether it is difficult or whether it is easy. So we are going to do that difficult job. We are going to succeed in that. We are confident that we will be able to secure what the plant needs by 2027.

Sir, one last question. I understand you are really confident. But any backup plan, like if in case if the plant does not work well or after the plant is operational and you are not able to generate that much of copper and -- or you are not able to sell that much of copper. So any plan to service the interest part at least because ultimately, you will be EBITDA negative.

The backup plan is already there, okay? The sales is not a challenge, let me put it this way, right? And if it doesn't happen, even if the plant operations remain below 50%, still we would be able to service the interest and service the debt. But we have to touch 50%, right? If I operate 30%, we cannot service the debt. So that needs to be there. So in that case, there is a problem. Then there is no solution. Then we all have to face the same problem if it happens.

In that case, we can go at least low or at a small level.

So that is the risk...

Or rather we concentrate on copper than fertilizer and all other factors.

All these options, we will see when the time comes.

Ladies and gentlemen, with that, we conclude the question-and-answer session. I now hand the conference over to the management for their closing comments.

Thank you all for participating in this earnings conference call. I hope we were able to answer your questions satisfactorily and at the same time, offer insights into our business. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations managers at Valorem Advisors. Thank you and wishing you all a great day ahead. Thank you.

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