Kiri Industries Limited — Q3 FY25 earnings call

Call held 14 Feb 2025

Management summary

Kiri Industries reported strong Q3 FY25 standalone and consolidated revenue growth, with significant net profit driven by dividend income and the favorable DyStar legal outcome. The company is actively progressing its large-scale Copper project, with substantial CAPEX underway and commercial operations targeted for 2028. The DyStar sale is nearing conclusion, which is expected to provide significant funds and reduce legal costs, while the existing Dyes business aims for continued profitable growth.

Highlights

  • Q3 FY25 Standalone Revenue: Rs. 156 crores, up 11% YoY and 8% QoQ.

  • Q3 FY25 Standalone Net Profit: Rs. 25 crores, driven by dividend income from Lonsen-Kiri.

  • 9M FY25 Standalone Revenue: Rs. 469 crores, up 8% YoY.

  • Q3 FY25 Consolidated Revenue: Rs. 179 crores, up 12% YoY and 3% QoQ.

  • Q3 FY25 Consolidated Net Profit (after OCI and share of profits): Rs. 153 crores.

  • DyStar Case Victory: Court of Appeal ruled in Kiri's favor, granting 5.33% interest per annum on US$603.8 million from September 3, 2023.

  • DyStar Sale Conclusion: Expected in the next couple of months, with proceeds anticipated in Q1 FY26 (April-June 2025).

  • Copper Project Phase 1 CAPEX: Total ~Rs. 8000 crores, with ~Rs. 1100 crores currently being invested.

  • Copper Project Phase 1 Commercial Operation: Expected in 2028, targeting 80% capacity utilization in the first year.

  • Existing Dyes Business: Aims for Rs. 1500 crores standalone revenue and 7-10% EBITDA margin without new CAPEX.

Key financials

2 periods

Headline

  • Standalone Revenue
    ₹156 Cr
    YoY +11% QoQ +8%
  • Standalone Net Profit
    ₹25 Cr
  • Consolidated Revenue
    ₹179 Cr
    YoY +12% QoQ +3%
  • Consolidated Net Loss (before OCI & share of profits)
    ₹-14 Cr
  • Consolidated Net Profit (after OCI & share of profits)
    ₹153 Cr

9M

  • Standalone Revenue
    ₹469 Cr
    YoY +8%
  • Standalone Net Profit
    ₹3 Cr
  • Consolidated Revenue
    ₹535 Cr
    YoY +9%
  • Consolidated Net Loss (before OCI & share of profits)
    ₹-45 Cr
  • Consolidated Net Profit (after OCI & share of profits)
    ₹323 Cr

What they filed

Q1 FY27: revenue up 54.5%, net profit up 2810.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue173 179 205 202 213 +23%174 −3%250 +22%312 +54%
EBITDA-5 -44 -5 -16 -14 −180%-49 −11%-142 −2740%16 +200%
Net profit80 177 -85 10 20 −75%5,023 +2738%514 +705%291 +2810%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Other

  • DyStar Sale Proceeds Receipt Other · Q1 FY26 · High confidence April to June 2025
    Expected the legally binding offer along with the commitments of funds and proof of funds to go in by a deadline of March 7, 2025... and we expect that the sell proceeds should come from the quarter April to June 2025.

    — Manish Kiri

  • Total DyStar Proceeds (including interest) Other · By DyStar sale conclusion · High confidence $685 to $700 million
    So, all put together, you are looking at somewhere around $685 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.

    — Manish Kiri

  • DyStar Interest Component Other · By DyStar sale conclusion · High confidence $70 million
    assuming that by the time the sale is getting concluded, would be 2 years, and that 2 years' interest would give us close to $70 million.

    — Manish Kiri

  • Warrants Conversion Other · Post-April this year · High confidence 5%
    5% converted last year, 5% would be converted post-April this year.

    — Manish Kiri

Capex

  • Copper Project Phase 1 CAPEX Capex · Phase 1 completion · High confidence Rs. 8000 crores
    the first phase of CAPEX would be in 2 parts. The first part is around 2500 crores and the second part is 5500 crores. So we are talking about for the whole first phase close to 8000 crores of CAPEX

    — Manish Kiri

  • Copper Project Current Investment Capex · Current · High confidence Rs. 1100 crores
    we are in the process of investing close to 1100 crores.

    — Manish Kiri

Revenue

  • Copper Project Phase 1 Annual Revenue Revenue · Post-commercialization · Medium confidence Rs. 45,000 crores
    it will generate around 45,000 crores of revenue

    — Manish Kiri

  • Dyes & Intermediates Standalone Revenue Revenue · Per year · Medium confidence Rs. 1,500 crores
    our objective would be to grow ourselves to at least 1,500 crores per year with existing capacities without any new CAPEX

    — Manish Kiri

  • Lonsen-Kiri Revenue Revenue · Per year · Medium confidence Rs. 1,000 crores
    Lonsen-Kiri also reaches to around 1000 crores

    — Manish Kiri

  • Dyes & Intermediates Total Revenue (Kiri + Lonsen-Kiri) Revenue · Per year · Medium confidence Rs. 2500 to 3000 crores
    we still have a room to grow up to 2500 to 3000 crores on the existing invested capacities only.

    — Manish Kiri

Profitability

  • Copper Project Phase 1 Annual EBITDA Profitability · Post-commercialization · Medium confidence Rs. 4,000 to 5,000 crores
    it is expected to generate at least 4,000 to 5,000 crores of EBITDA.

    — Manish Kiri

  • Legal Costs Profitability · Post-June (Q1 FY26) · High confidence drastically down
    legal cost going down drastically which then gets reflected into increase in profits for the year 2025-26.

    — Manish Kiri

Capacity

  • Copper Project Commercial Operation Start Capacity · FY28 · High confidence 2028
    2028, exactly. 2028 is the year in which we can expect the project would be commercially in operation.

    — Manish Kiri

  • Copper Project Full Operational Capacity Capacity · 2028-2030 · High confidence 5 lakh ton
    somewhere between 2028 to 2030 we will have the entire 5 lakh ton to be operational commercialized and running.

    — Manish Kiri

  • Copper Project Capacity Utilization Capacity · First operational year (2028) · High confidence 80%
    I think with the first year itself we are trying to hit 80% capacity

    — Manish Kiri

  • Copper Project Capacity Utilization Capacity · Subsequent years · High confidence 80 to 90%
    then we will run on the conservative side somewhere between 80 to 90% capacity subsequent year.

    — Manish Kiri

  • Dyes & Intermediates Capacity Utilization Capacity · Ongoing · Medium confidence 80-90%
    our objective would be to grow ourselves to at least 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 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 that has taken place. So, with that, that business you can say, as long as stand-alone reaches around 1500 crores, Lonsen-Kiri also reaches to around 1000 crores, we still have a room to grow up to 2500 to 3000 crores on the existing invested capacities only.

    — Manish Kiri

Margin

  • Dyes & Intermediates EBITDA Margin Margin · Now onwards · Medium confidence 7 to 10 percent
    you will see EBITDA positive operationally at least in the range of 7 to 10 percent, if not in double digits. But it would be higher single-digit that we expect.

    — Manish Kiri

Dividend

  • Lonsen-Kiri Annual Dividend Dividend · Next 2-3 years · Medium confidence Rs. 30 to 50 crores
    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 30 to 50 crores of the dividend comes for the next 2-3 years every year.

    — Manish Kiri

Tax

  • Capital Gains Tax Rate on DyStar Sale Tax · Upon sale · High confidence 12.5%
    Because interest income would be related to more of regular income, while 12.5% would be on 603.4 million.

    — Manish Kiri

  • Tax Rate on DyStar Interest Income Tax · Upon receipt · High confidence Corporate tax rate
    Got it and the interest component would be taxed at the slab wise rate, correct? The corporate tax rate? Correct.

    — Manish Kiri

Risks & concerns

  • Raw material sourcing for Copper project

    medium

    Management stated they have signed 3 off-take agreements and are scouting for more miners, aiming for 100% feedstock tie-ups within 6-12 months, balancing quantum and discounted prices.

    Analyst addressed

  • Chinese partner's resistance to Lonsen-Kiri dividend distribution

    medium

    Management stated they 'struggle' and 'have arguments' with the Chinese partner who has majority on the board, preventing distribution of significant cash sitting in Lonsen-Kiri.

    Both acknowledged

  • High legal costs impacting profitability

    medium

    Legal costs were Rs. 45 crores this FY and Rs. 30 crores last FY, with total costs over 10 years exceeding $60 million. Management expects these to become 'very, very minimum' post-DyStar sale.

    Both acknowledged

Areas of evasion (1)

  • Specific name of Copper project technology partner (due to confidentiality clauses)

Q&A highlights

3 direct
DyStar proceeds timeline and utilization for new Copper project Direct
right now the sell process of DyStar is in the final phase... we expect that the sell proceeds should come from the quarter April to June 2025... part of the proceeds, almost half will be used as an equity for the new project that we have already started implementing and commencing.

Provides critical timeline for cash inflow from the DyStar sale and confirms strategic allocation of funds to the major Copper CAPEX, impacting future growth.

Asked by Nikunj Bajaj

Copper project CAPEX, products, revenue, EBITDA, and operational timeline Direct
the first phase of CAPEX would be in 2 parts. The first part is around 2500 crores and the second part is 5500 crores... will produce close to 500,000 ton of copper... will generate around 45,000 crores of revenue and it is expected to generate at least 4,000 to 5,000 crores of EBITDA.

Details the scale, financial projections, and timeline of the company's most significant new venture, crucial for future valuation and understanding growth drivers.

Asked by Vishal Prasad

Strategy for existing Dyes & Intermediates business and management focus on two verticals Direct
the two different projects have no relevance, no relations with each other. Copper project is operated, handled, managed... by a separate key management team... As far as the dyes and intermediates are concerned... our objective would be to grow ourselves to at least 1,500 crores per year with existing capacities without any new CAPEX.

Clarifies the organizational structure for managing two distinct businesses and outlines the growth strategy for the legacy business, assuring investors of continued focus and profitability.

Asked by Sanjay Mahajan

3 min read 6 chapters

Detailed narrative

Q3 & 9M FY25 Financial Performance Overview

Kiri Industries reported a robust Q3 FY25 with standalone revenue reaching Rs. 156 crores, marking an 11% year-on-year and 8% quarter-on-quarter growth. Standalone net profit for the quarter stood at Rs. 25 crores, significantly boosted by dividend income from Lonsen-Kiri Chemical Industries Limited. For the nine months of FY25, standalone revenue was Rs. 469 crores (up 8% YoY) with a net profit of Rs. 3 crores. On a consolidated basis, Q3 FY25 revenue was Rs. 179 crores (up 12% YoY and 3% QoQ), leading to a consolidated net profit of Rs. 153 crores after accounting for other comprehensive income and share of profits from associates and joint ventures.

DyStar Legal Resolution and Financial Impact

The company achieved a 'monumental legal victory' in the decade-long DyStar case. On January 31, 2025, the Singapore Supreme Court ruled in Kiri's favor, awarding a discretionary enhancement of 5.33% interest per annum on the US$603.8 million buyout amount, effective from September 3, 2023. This interest component is expected to add approximately $70 million, bringing the total expected proceeds from the DyStar sale to $685-$700 million. The sale process is in its final phase, with legally binding offers due by March 7, 2025, and proceeds anticipated between April and June 2025.

Strategic Copper Project Development

Kiri Industries is aggressively pursuing its new Copper project, with Phase 1 CAPEX estimated at Rs. 8000 crores, split into two parts of Rs. 2500 crores and Rs. 5500 crores. The company is currently investing approximately Rs. 1100 crores, with site development and initial construction already underway. Commercial operations for Phase 1 are targeted for 2028, with the entire 5 lakh ton capacity expected to be operational by 2028-2030. Management projects this project to generate around Rs. 45,000 crores in revenue and Rs. 4,000-5,000 crores in EBITDA annually post-commercialization, aiming for 80% capacity utilization in the first year.

Existing Dyes & Intermediates Business Outlook

The existing Dyes and Intermediates business is planned to continue operating in 'auto mode' without new CAPEX, leveraging existing capacities. Management aims to grow standalone revenue to at least Rs. 1500 crores per year and Lonsen-Kiri revenue to Rs. 1000 crores, totaling Rs. 2500-3000 crores. The objective is to achieve 80-90% capacity utilization and an EBITDA margin in the range of 7-10% (higher single-digit). The company expects profitability to improve significantly in FY26 as legal costs, which were Rs. 45 crores this financial year and Rs. 30 crores last year, are anticipated to drastically reduce post-DyStar sale.

Lonsen-Kiri Joint Venture Dynamics

While Lonsen-Kiri is expected to contribute around Rs. 1000 crores in revenue, the company faces challenges with its Chinese joint venture partner regarding dividend distribution. Despite Lonsen-Kiri holding substantial cash (over Rs. 200 crores as of March 2024), the majority Chinese shareholder's approval is required for dividend payouts. Kiri Industries aims to receive Rs. 30-50 crores in dividends annually from Lonsen-Kiri over the next 2-3 years, acknowledging ongoing efforts to convince the partner for higher distributions.

Taxation on DyStar Sale Proceeds

Management clarified the tax implications of the DyStar sale. The capital gain on the US$603.4 million sale value will be taxed at 12.5%. The interest component, estimated at $70 million, will be treated as regular income and taxed at the corporate tax rate (approximately 33-35%). The company expects to fully utilize its past losses, but will still incur a 'huge tax' liability on the proceeds, indicating a significant net inflow after tax.

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