Kiri Industries (NSE:KIRIINDUS) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to Kiri Industries Limited Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by Valorum Advisors. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Purwangi Jain from Valorum Advisors. Thank you, and over to you, ma'am. Thank you. Good morning, everyone, and a warm welcome to you all. My name is Purvanggi Jain from Validum Advisors. We represent the Investor Relations of Kiri Industries Limited.

0:48 On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the second quarter and first half of the financial year 2027. 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 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.

1:39 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. Jaish Hirani, Vice President, Account and Finance and Mr. Suresh Gondalia, Company Secretary. I now request Mr. Manish Kiri to give his opening remarks. Thank you, and over to you, sir. Good morning, everyone, and welcome to the earnings conference call for the second quarter and first half of the financial year 2027. I hope you are all keeping safe and well. Let me first begin with an update on our integrated copper and fertilizer project, which remains central to our long term growth strategy.

2:29 During the quarter, we made further progress on engineering, procurement and construction activities. Procurement of major plant and equipment advanced substantially with equipment deliveries commencing at the site. Civil foundation and structural works are also progressing across key operating units. In parallel, we continue developing the supporting infrastructure, including the dedicated jetty, desalination facilities and raw materials handling conveying systems. We are also advancing discussions with the international mining companies and global trading houses to establish long term sourcing arrangements for copper concentrate, rock phosphates and key raw materials for the project.

3:18 Our approach continues to focus on phased implementation with downstream value added copper fertilizer facilities planned ahead of the smelting complex. The project remains on track for Phase one commencing in first half FY twenty twenty eight. During the quarter, we also completed the acquisition of 40% stake in Makilala Mining Company in The Philippines and incorporated Andamina SPA in Chile to pursue mineral resource opportunities. These initiatives are aligned with our broader strategy of strengthening our copper value chain and securing long term resources availability.

4:07 With the update on our strategic growth initiatives, let me now run through to the performance of our existing dyes, intermediates and basic chemicals business. The operating environment for dyes and dyes intermediates industries remained supportive during quarter two FY 'twenty seven. With market prices of key dyes intermediates, particularly adjusted, witnessing a meaningful improvement, Prices of vinyl sulfone also remained during the quarter. However, a significant portion of our sales during the period was executed against the orders contracted earlier. Consequently, the benefit of improved market prices was only partially reflected in our performance and is expected to get reflected progressively in the realizations over the continuing quarters and the next quarter subject to the sustainability of prevailing market conditions.

5:08 On the cost front, operating profitability was impacted by higher input costs, particularly fuel, power and affluent treatment expenses that we spent in the quarter. While raw material cost increases across several product categories were effectively passed on to the customers, The narrower price cost spread in dice intermediates impacted the sequential material margin performance. We remain focused on improving operational efficiencies, managing costs and strengthening our product mix, while responding to evolving market conditions. On a stand alone basis, revenue from operations for quarter two FY 'twenty seven stood at INR288 crores, registering a growth of 48% year on year.

6:01 Material margin improved to 29.1% from 26.4% in the corresponding quarter last year. Stand alone EBITDA stood at about INR 7 crore with an EBITDA margin of 2.4% compared to the loss of INR 14 crore in the corresponding quarter last year. Higher operating expenses, particularly fuel, power and affluent equipment costs, continue to weigh on operating profitability. Loss after tax stood at INR 23 crore. For the first half FY 'twenty seven, stand alone revenue from operations stood at approximately INR $5.84 crores. The company recorded an EBITDA of about INR 30 crores during the period.

6:50 Profit after tax stood at INR $2.48 crores, largely supported by treasury related gains recorded during the first quarter. However, the second quarter performance was impacted by an unrealized noncash fair value loss on treasury investments. For the quarter, on a consolidated basis, revenue from operations stood at INR $2.99 crores, registering growth of 40% year on year. Consolidated EBITDA stood at INR 2 crores. The consolidated loss after tax stood at INR 39 crores before accounting for share of profits from associates. On a consolidated basis, revenue from operations for the first half of FY 'twenty seven stood at approximately INR $6.11 crore with EBITDA of approximately INR 19 crores.

7:47 Profit after tax stood at approximately INR $2.31 crores before the share of profit from associates. Reported profitability during the quarter was impacted by an unrealized noncash fair value loss of INR 57 crores on treasury investments, which was an indication of mark to market fluctuation on both the stand alone and the consolidated business. This was partly offset by realized treasury gains and other income. The company's share of profit from associates primarily contributed by Longshan Kiri Chemical Industries Limited, in which the company holds 40% equity stake, stood at INR 16 crore during quarter two FY 'twenty seven and approximately INR 37 crore during Q1 FY 'twenty seven.

8:45 Looking ahead, demand for diodes, diodes and intermediates is expected to remain stable throughout the second half of FY 'twenty seven, supported by continued activities in the textile sectors. Although our existing business, the integrated copper and fertilizer project represents an important part of our long term growth strategy, the long term outlook for copper remains favorable, driven by increasing demand from power infrastructure, renewable energy, electric vehicles and digital infrastructures. Domestic refining capacity continues to lag consumption growth, providing opportunities for domestic players.

9:30 At the same time, global commodity markets continue to experience volatility arising from geopolitical developments, supply chain disruptions and evolving trade dynamics, resulting in fluctuations in the copper prices, concentrate availability and treatment and refining charges. Against this backdrop, our phased project implementation strategy with downstream value added facilities being commissioned ahead of the smelting complex is expected to provide operational flexibility and cash flow to the company. The fertilizer sector also continues to present attractive opportunities supported by India's structural dependence on imports of phosphatic fertilizers and the need for enhanced domestic production capacity.

10:23 Our integrated copper and fertilizer complex is therefore positioned to participate in the long term opportunities across both the sectors in the country. The group's strong balance sheet and liquidity position continue to support project execution and future growth initiatives. Our focus remains on sustaining the performance of our existing chemicals business, maintaining financial discipline and executing the copper fertilizer project in a timely and disciplined manner as we build the next phase of growth for Kiri Industries. With that, we can now begin the question and answer session. Thank you. Thank you very much, sir.

11:09 We will now begin the question and answer session. First question is from the line of Priyank Lakotia, an individual investor. Go ahead. Hello, am I audible? Yes, please go ahead. Hello?

11:55 Priyansh, are audible. Please proceed. Yes, we can hear you. Please go ahead. Okay. Okay. Great. So my first of all, thank you for the present investor presentation. I think that was very well prepared, and we really like seeing the progress developments in the copper mine also. So thank you. The first question is a combination of few factors. So I wanted to know what is the latest price of H Acid and vinyl sulfone? And despite the 3x increase in H acid, and so what we explained in the last AGM that since Kiri sells H acid to Dicestar India JV, which consumes it as raw material. So the JV will be realizing higher profit on sales of its same product. But still after consolidating results of the LifeStar JV and even if, let's say, if we include the fair valuation loss of around INR 15.5 crores, there is still loss of INR 7 crores at PBT level. Why is this so? Is it because the expenses include legal expenses for The Philippine mines related matters?

13:00 If so, what is the amount of such legal expense and whether this is a onetime amount or will you also see this incurring in the next quarter three basically? So the legal expenses in this quarter is not much actually. Legal expenses in the quarter is less than INR 3 crores. So it is not the reason for the profit, which you see is comparatively lower with respect to the increase in the raw material prices, which have taken place. So there is there are a few factors which affect the price increases to get reflected with our performance, with Kiri's performance. The JV as well as large part of Kiri sales remain for dies for the finished products.

13:53 So the impact of increase in the prices of HSE to get reflected into increase in the dyes prices takes around few months' time, let's say, quarter time. So the reason why you see the profits comparatively lower is because of the earlier quarters and earlier orders, which are being executed mainly pertaining to dice as the prominent business of the company continue to remain selling dice. And that is main factor where the earlier orders execution have not got reflected the current profitability, but it's kind of a one quarter or two months delay. So you will see the impact coming in the current quarter, so where the significant changes have taken place, so which you will realize when you see the results of current quarter, which is going pretty strong.

14:52 Now with respect to the current prices of HAC and vinyl sulfone, vinyl sulfone cost has also substantially increased with the highest prices of sulfur as well as aniline going in the market. So that has not been reflected as an incremental multifold profit. So even though vinyl sulfone prices are above $4.50 today, the cost has also increased significantly. On the other hand, edge acid continues to get exported from India to China. Even till last month, the flow of products is continuing to get exported to China, and that has given exceptionally higher range of pricing currently. So adjusted prices are ranging from $1,600 to $1,800 for the last three to four weeks, and it is in this range bound. But this is still a decent higher level pricing, and we hope that this continues.

15:51 Now because of that, the prices of dyes have also increased, and those increased dyes prices have now got reflected in the market as well. So these are the factors which have contributed the reflection of profitability or delays compared to the instant effect. Got it. So looking forward to the next quarter, sir, then. Yes. You will see a big difference there. Amazing. My next question was since Kiri has now acquired, I think, 40% equity in the Makilala mines in Philippines. We know that as well established, let's say, go to business practice, whenever a company acquires such a significant stake in a JV, then there's definitely we will also take a position of a senior CXO, for example, CEO or CFO for that matter, so that we have operational control over the business and we prevent any worse situation wherein the JV other JV partner can mismanage the business or size of the funds, let's say. So I wanted to know what is the time line there or what is the plan there for Kiri appointing the CXO or CEO or CFO in the Makilayar copper mines?

17:06 Kiri continues to be the minority shareholder in Makilala Copper Mines. But Kiri continues to participate in the management of the company at the Board level deeply, regularly and continuously. With that, the entire team, the key management team of Makilala Mining has already been changed. So there is a new transformative team, which jointly Kiri and Sodor have appointed, and the new management have taken a flagship and have already started running and operating the development of the mine with very, very experienced, credible new CEO. His name is Uroparais.

17:53 He was a leader with Carbon Copper, the largest operating mine of copper in Philippines. And we are pleased to welcome him, and he has joined to lead the project of Makilala Mining. So the team has been transformed. The new team, the new CFO has also taken place, has resumed. And again, Kiri was involved in selecting and choosing each of these new key management individuals who have now been appointed and they are running the company at the moment. So if I heard you right, then basically these key AMPs are neither from Kiri but also not from the other partner.

18:39 They are from, let's say, the other cities and they have selected them a joint management. And also, Kiri has already made the subsidiary of Kiri operational, where Kiri is deputing its own persons there, which is called Karabao Corporation, which is, again, a wholly subsidiary of Kiri, another subsidiary of Kiri and which is operating well there as well. Okay. Got it. My final question was what is the status of the preferential allotment of shares? And it will be better if you open, let's say, a band in the preferential share to be INR $4.25 per share? And is that make a right issue to our shareholders so that all the shareholders are benefiting, sir?

19:25 Point is well taken. The process of preferential share allotment is ongoing right now, and it will be completed on its due course. But your point is well taken. As far as I know, the preferential allotment price is what is the price, Suraj? INR 75. INR $4.75? Yes. That's the price of preferential allotment. INR $4.75. Okay. Yes, I hope you take this into account. Thank you. Thank you. Thank you. Next question is from the line of Sudesh Baramchati from Baramchati Financial. Please go ahead. Good afternoon, Manish, sir. You remember Sudesh from Indore Andhra Pradesh? We always remember you in every call. You are welcome.

20:13 Thank you for attending the call. Sorry, sir. One question I am asking, don't misunderstand. Sir, I sir, I invested in fifteen years ago, sir. I bought at 800 rupees. But you are in in in my place. What is it to transition? I I I hope the... All my age is completed around 53. But I actually, generally, stock market investor, already stock market investors sold all shares after the share price increases, sir, normally. Yes. I am... I'm I'm sorry. I am also send off you, sir. I I will...

20:59 Today, I will dispose of all shares, sir. Sorry. I have wait for fifteen years around, sir. I lose lot of money. But you you are not a reason. You are not a... I am not blame you, but I'm... I I hope this generally stock market things... I will badly leave it to your company. Sorry for this. Any any... Actually, I am before case, you you are court case after you will give due then and that that time I will hope, but you will not have any due then. So he said, I'm not asking this type of questions. Please give any guidance or any suggestion? Let me not understand.

21:50 Yes, yes. Let me first address your first concern, okay? You have as you have mentioned, and I take it what you just said, that you have been with company for a very long time, right? So you have been a strong supporter for many years, right? Now looking at the time, the point which is, I would call, the inflection point where the growth has triggered, the company has embarked on something that will change its performance, profitability and future outlook as well. So you have come to a point after so many years where we have started the growth journey.

22:36 My request to you, and if I were at you, please wait for a few more years, let the fruits of our investment because the investment phase has just started. All the litigations time that we spent of more than eleven years and post investment of DiaStar fifteen years, we were all deprived of growth. That growth journey has started. So growth journey will continue now and will be on a fast track. If you continue to be associated with the company and enjoy the growth coming, you would definitely benefit. Market would reward when the results and the performance of the new initiatives and our new projects come in the next few years.

23:26 So that would be my request to you as the promoter of the company and also the Chairman, Managing Director of the company. So you should continue to keep trust. You have done it for fifteen years and few more years will get you the fruits of what you have implanted all these years. That would be my request to you. Sir, actually, I will dispose some half of today in my portfolio. But actually, I have taken MDF stock. These are my personal reasons. Actually, I will also, but actually, price will continually decrease. The last time also, 380 or 03/30, it will come in. In future, it will be any support in your side in market. You are also taking $4.75 before call.

24:30 Actually, opinion on how growth will continue? How much time wait for it? After I will try to... After some time, I will try to accumulate. You have taken how many years you have taken, sir, in growth prospectus? Please tell me. If you look at the execution plan of the growth initiatives that we have started, it is the window of next two to three years, correct, number one. Now number two, for the next two to three years, as and when the project execution of various milestones get completed, the project risk, the perceived project risk would reduce.

25:24 And I'm sure the market participants would reward all the shareholders, including me and you, once we see the project risk diminishing, once we see the execution of various milestones getting succeeded. And that would be the time where I think market should reward all of us. Again, this is my personal opinion, which I'm sharing with you, and this is what I believe, which I'm transparently sharing with you. Again, it's your call, your decision at the end of the day based on your personal circumstances, which I would not involve with. But as far as the growth of the company is concerned, that is going to come in the next few years.

26:14 Sorry if I may disconnect. Will will and we we wish to give you confidence, and we understand your concern. I I... And actually, I'm not I'm not handling that holding, but that's why I'm open. At least I hold 1,500 shares. I I will try, sir. Thank you. Yes. Thanks. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address all the participant in the question queue, please limit yourself to two question only. Should you have a follow-up questions, please rejoin the queue. Next question is from the line of Pradeep Rawat from Strategic Alpha. Please go ahead.

27:04 Good afternoon, and thank you for the opportunity. Am I audible? Yes, Pradeep. Yes. Can you hear you? So my first question is relating to HR side disruption. So we know that HR side the supply for HR side in China was already thin and the environmental norm exacerbated the situation. I just wanted to know if you can provide further color on these norms. If it is hard to implement by Chinese producers without increasing the cost of production and whether you are seeing a cost advantage against Chinese players due to these new regulations? So there are certain regulatory reasons because of which the disruption has taken place with regards to HS.

27:56 One, the Chinese production has drastically reduced. And that has happened because of the implementation of the new regulation, which requires the nitration to be conducted as a continuous nitration rather than a batch nitration. And that has caused reduction in production in China that has not allowed the Chinese producers to produce as much quantity as they used to produce earlier. Based on our latest information, they are not able to produce more than 50% of their requirement. So approximately 100,000 tonne of copper of HSE is produced in China, and current production is less than 50,000 tonnes. So that leaves a huge gap, and suppliers from India is trying to bridge that gap.

28:54 Now is this a continuous phenomena? Our opinion is no. There would be a time where all the players and all the producers, at least majority of them would try to come on stream. They will implement the new regulation and comply with it. We learned that the continuous nitration process in China is advancing with various producers to get implemented in their plant. Once it happens, once the production comes on stream and the regulatory consents are given to them, whoever implement the new guidelines in China, the production in China will resume.

29:43 Whether that will happen in three months, six months, we don't see a visibility of this getting stabilized at least before next March. So our this financial year would continue to see the disruption till the end of the financial year. We don't have nobody has visibility what would happen from the next three to four months onwards, but we would learn as the time passes. So let's see how the Chinese producers are able to comply with the new guidelines and how fast they are able to increase and bring their production on stream compared to what the quantitative production used to be earlier.

30:35 And then we will be able to see the prices stabilizing, dropping and bringing it down to the natural prices. Again, those natural prices, which we would expect to happen would be higher than the earlier prices, may not drop as below because the raw materials have also increased significantly. So in line with how the raw materials have increased, the prices of HSE may stabilize by half year 2027, I mean, the calendar year. So let's hope and continuously evaluate the situation evolving in China, and we'll keep you updated.

31:23 Yes. So sir, for the cost of production for continuous process as compared to batch process is higher or lower? And if... So the... Yes. The technical inputs indicate that the cost would not increase, the capital investment will increase. So the producers will have to put more CapEx to implement and restructure their plant for this particular step. But the raw material cost is not going to change much. Our raw material cost at India as well as at China are going to remain in parity and which are in parity today. So we are not expecting the operational cost at a higher level with Chinese producers. We expect that they would remain at a similar level at which we are and the same situation was earlier as well.

32:26 The price increase may reflect the proportionate increase in the raw materials, but incremental exceptional margin will go away the moment the production stabilizes in China. And as far as India's capacities are concerned, we are already overcapacitized as of today. So the consumption in India is somewhere around 3,000 tonnes a month, around 30,000 to 40,000 tonnes a year. And our production capacities are close to 60,000 tonnes a year. Okay. And is there any facility in India or in China that use continuous nitration as of now? None.

33:12 No facility in India as such. And as such, no facility in China. It has not been established yet, right? So none of the facilities that we are aware about is using continuous titration anywhere, particularly for HSE. For other products, yes, but for HSE. My second question Sorry to... Is, I'll Okay. Join back with you. Thank you, sir. Next question is from the line of Ishaan Bhawi from Fident Asset Management. Please go ahead. Hello. Can you hear me? Yes, please proceed. Perfect. Could you help me understand of your current capacity for die engineering projects, how much percentage would you have locked in the prices for the in the previous quarters for the coming quarter?

34:08 And let's say, much is sold at the spot price? And within the same realm, have the increases in die prices been in tandem with the increases in the die intermediates tandem? The crux of the question is, do you plan to shift from using the capacity in house to selling the dye intermediates as a predominant product in the market? The answer is no because the primary business of the company is to sell dyes, and the long term established customers are pertaining to the dye sales and which are used in textile, leather and paper, predominantly textiles.

35:00 Now intermediate selling is not the business of the company as such. Whatever intermediates that we produce, today more than 90% of those intermediates are consumed in house in our own group units. So that's the business model. And that is how we have been operating for years. Now the consumption, if it's lesser, then we opt to sell the remaining intermediates in the external market outside. Selling dies is a long term business as a long term phenomena for the company, while selling intermediates is not a long term business model for the company. There is a long term business model for some companies who are not producing dyes or who are not present in dyes or the dice business is minimum.

36:02 So there are certain peer group companies who predominantly operate in selling intermediates, which we don't. Now how much is in house consumption or captive consumption of intermediates, around 95% is the captive consumption of intermediates. Now spot prices sales of intermediates is could be temporary, opportunistic, which we could do, but that can happen once our long term die supply orders get completed. So we have a running order book of at least two to three months of dyes. And those products which are being sold to dyes players, they are one of the global prominent players, including DaiStar.

36:57 Even though Kiri exited from DaiStar, DaiStar continue to be a major customer. And for DaiStar, long chain Kiri continues to be the single largest supplier globally, correct? So that relationship is still continuing. And that other customers as well. This is an example. So there are prominent players, global players who rely and who depend on Kiri Group for the supplies of dyes. And that reliability, that trust needs to continue because it is a long term business model that we have. At the same time, we try to increase our production of intermediates.

37:45 Your another question was how much capacity which we have been able to produce at intermediate level. So with the combination of shortages of raw materials and our efforts to increase the operating capacity of intermediates, we are still operating overall intermediates less than 60%. So we have room to increase, and that is what the management is trying to implement for the last two, three months to increase the production and the operating capacity of intermediates to have more quantities that we can sell outside, even though we fulfill our entire requirement captivity, right? And those efforts would get reflected in the coming quarters.

38:44 Sir, within my previous question, I also wanted to understand, have the die prices moved along with the intermediate prices? Yes, yes. Dice prices have moved along. Now reactive dice prices are around in the range of INR 1,500 to INR 1,600 of HSC base, correct? So dice prices always move based on the increase or decrease of intermediate prices. It's only a time factor. It takes time to get reflected in dyes to get implemented because there are pending orders. Majority of the dyes are exported, at least 50% exported. So there is a transit time of export.

39:30 There are dyes, which are in inventory sitting in the overseas warehouses as well. So there is a supply chain, and there is also an order book and the pending running orders of large and various customers that allows the price increase get reflected with a time lag. And that time lag ranges from two to three months. That's the only matter. Otherwise, it always gets reflected into increase in dice prices, and it has always been passed on with the time effect. Sir, so my final question to you. As you just said a moment ago, still have a two to three month order book ready to be shipped and delivered to.

40:21 So Q3 might not see a big impact on these asset prices. Q4 is when you might realize the full amount, right? And continuing on the question of new high places to invest in, could you please help us understand a bit more as to how the copper mine is going to play into the whole copper and fertilizer expansion that we are getting at? Right. So just to address your first question, with regards the price increases, right, with quarter three and quarter four, the quarter one and quarter two, these two quarters were good enough to complete the increasing cost and continuing orders to get completed.

41:27 You will see a moderate reflection into realization of price increases in this quarter three, which is the running quarter, and also even higher in quarter four, right? Similarly, when the prices start going down, there is also a one quarter lag. That means the quarter even after the prices go down, for the die sales, it will reflect relatively better compared to the drop in intermediates. So quarter three and quarter four, both will have significantly higher performance compared to quarter one and quarter two, where the absorption has taken place. So that's your first question, right? And I hope I have addressed it properly. Now the second one with regards to the mining.

42:21 The Makilala mining is our first experimental investment into upstream. Now it will produce 140,000 tonne copper concentrate, and around 100,000 tonne copper concentrate would come to India to our facility out of our 1,600,000 tonne of requirements of copper concentrate. That means that the current expected capacity of Makilala mining coming on stream by 2028, 'twenty nine would get us close to 6% to seven percent of our total requirement, right? It's a small portion compared to what we need as a whole, but we would be able to learn during this process how we are able to handle and manage the upstream operations.

43:17 So let's see but the dependency on Makilala mining compared to the total requirement is relatively much lower. Thank you. Thank you so much. Next question is from the line of Sandeep Raj from Oculus Capital Growth Fund. Please go ahead. Hi, sir. Good afternoon. Happy Diwali and happy Dantiras to you. You too. Thank you. So sir, my question was regarding this mining. So what is the CapEx that we will have to do in this mining to get it started? Hello?

44:12 The line for the management got disconnected. Please stay connected while we reconnect them to the conference. Okay. Thank you. The line is reconnected. Please repeat your question, sir. Hi, sir. Am I audible? Yes, please go ahead. Sorry. Sir. So my question was right, no worries. So my question was regarding what is the CapEx that we will have to do for the mining for the 40% that we required? So the CapEx which is going to take place at MCB project for Makilala mining is about $280,000,000 That's the total CapEx which will be invested there in Philippines, right?

45:01 Now how much equity, how much debt, all those factors are still under evaluation. But as per our assessment, Kiri might have to invest a little bit more than $40,000,000 as a whole for the equity part of the total CapEx requirement. So balance will be as a debt? Balance will also be the strategic equity for the domestic partner equity and the debt. Okay, okay. Offtake, you mentioned like 100 tonnes of 100,000 tonnes of copper, right, every year? Yes, which is 70% of the output there.

45:55 Okay, okay. Understood. And secondly, regarding this one, the 40% stake that we have acquired, is there anything that Celsius can do? Is there any basically any hangover that we have for the stake? You know, there were a few arbitration awards which have taken place. There are many disclosures at various platforms, including Philippines, on Australia stock exchange by Celsius. So and there has been litigation involved as well. Now the court awards, the arbitration awards, till now are very positive for the development of the mine and for our investment as an overseas investment into Philippines.

46:41 Celsius has what we expect has gone to appeal, and we will continue to deliberate and continue to address the appeals court in Philippines whenever the hearing takes place. But we our council and we are committed to the project. As far as the project operations are concerned and the new management team focus is concerned, which would not be related to the litigation or the legal disruptions, which the management would not be involved in. So but yes, the Celsius would contest and Celsius would go to appeal and we will also represent ourselves in the appeal.

47:35 Okay. And sir, just one more thing. So what is the timeline for downstream and what is the timeline for the upstream products? 2027 to 2028. So next financial year, almost all of our downstream products will be operational, right? And then 2028, 'twenty nine, then the smelter, fertilizer, precious metal refining, the other units will be operational. But next financial year, almost all downstream will be operational. And all downstream combined together would be around 2.6 lakhs than copper would be operational.

48:22 That is the total capacity, right? No, that's the downstream capacity. Downstream capacity. Okay. And what would be the production guidance for the next three years, like once we start? So once we start, there will be 500,000 tonne, five lakh tonne copper, 1,100,000 tonne, 11 lakh tonne of fertilizers. Okay. All right. Thank you so much, sir. Thank you. Next question is from the line of Ruben from Equity Intelligence. Please go ahead. Yes. Hi, Rajesh. I just wanted to know with regards to copper cathodes, we've been hearing that we have been purchasing a lot of them from Japan, and now it's in short supply. So Sorry to interrupt, Brobat, your audio is not clear. Request you to please use your handset.

49:16 With regards to copper cathodes, we've been getting U. S. Has been importing a lot of them from Japan. And now it's in a little bit of a short supply. Can you give us an update on that, please? Copper cathodes from Japan with a bilateral treaty between India and Japan are duty free, right? So Japan is the only country that can provide duty free cathodes to India. So Japanese cathodes are preferred. And Japanese cathodes are not sufficient enough to cater the entire requirements of India to import cathodes. So Japanese cathodes are always going to remain in scarcity because of the duty free agreement.

50:07 So the cathodes are also available from other origins where the duty is implied, but one has to look at the combined cost of cathode. We would not be able to, as a country, get all the cathodes that we need from Japan duty free. So then whatever is available from Japan, what I understand is the Japanese cathodes coming to India is around two lakh tonne, 200,000 tonne. But our requirement is much, much larger than that. So then the cathodes come from other parts of the world where the duty factors are involved. So one has to like us, has to estimate the blended average cost of cathodes once we start using cathodes.

50:59 But then when the furnaces are operational, in addition to cathode, as we will be making cathodes ourselves, so the blisters, anodes, scraps, lot of secondary material available in the market would be sufficient to process. Okay. So there will be sufficient supply. So that should not be an issue once you start. Okay. No, It's only the cost factor that you have to balance out. Balance out. Okay. Okay. And with regards to the guidance, I'm going to ask you to rejoin the queue, sir, for the follow-up. Thank you. Okay. Thank you. Next question is from the line of Harshita Kharka from Robo Capital. Please go ahead. Thank you for the opportunity, sir. Am I audible?

51:48 Yes, Harshita. Yes, sir. Thank you. So just wanted to understand, sir, what can be the peak revenue that we can achieve from a die business? We would be able to achieve on consolidated basis right close to about INR 1,300 to INR 1,500 crores of revenue in that range. That would be the peak revenue. And sir, I think that how much of that would be adjusted and Vinyl's telephone? Would it be around INR 800,000 crores? No, no, no. It's 1,200 to INR 1,500 crores and almost everything, I would say more than 95% would be die sales.

52:36 HSD and Vinhel Cell Phone would be consumed by us, whatever we produce. But the sales which get reflected on a consolidated basis is all die sales. So one is the die sales of Kiri Industries Limited and then the die sales of JV. So the consumption between Kiri and the JV put together is around more than 95% of our own production. So everything is consumed in house. And the finished products as dyes are sold in the market, domestic as well as exports both. Understood. And what kind of EBITDA margins can we make on this INR 13 crores to INR 1,500 crores top line?

53:26 Well, right now, if you look at the last quarter, it was hardly 3% to 4%. But I would say, going forward, we'll be able to have at least 8% to 10%. The target is to have that. 8% to 10%. All right, sir. Thank you. Thank you. Next question is from the line of Pradeep Ravad from Strategic Alpha. Please go ahead. Yes. Thank you for the follow-up. So my next question is relating to our dye business. Given the die staff manufacturing also involves polluting processes, so can we expect potential or less intense adjusted like disruption in die manufacturing business as well in China?

54:14 So the edge acid, as you very rightly said, producing edge acid is not only a matter of installed capacity. And all plants across, at least in Gujarat, are all zero discharge plant, right? Every adjusted products producing company is limited by the quantum of affluent that it can treat and zero discharge, which means that treat and evaporate. So that defines the capacity. It's not the installing vessels that define the capacity. And same thing is now prevailing in China as well. So if you look at over the years, because of the environmental sickness in China, in the last ten twelve years from 2014 till now, we calculated I mean, the numbers which we calculated earlier were 16 to 17 plants producing HSA.

55:15 Today, it's hardly three plants in China who have survived and who are producing HSD in China. So they've also gone through this consolidation process over the years. And the consolidation was driven by the market forces and especially the regulatory norms, which continue to get strengthening in China as well. So there are limited players globally from next year onwards who would be operating in making HSS, in fact, in India and China, both. Yes. So the HSS part was quite clear. So I just wanted to understand that similar thing could happen in die manufacturing as well because similar to HSF, die manufacturing also involves hazardous I don't think so because die manufacturing is not that much of affluent generating.

56:24 Die manufacturing is also vastly in India being done at unorganized level with large number of MSMEs present in the market as well. And it's relatively easy to treat and to recycle the affluent of dyes, and CapEx is also lower. So what you have seen at adjusted level can happen with other intermediates, but synthesizing dyes across India as well as in China doesn't require that much of the capital investment on the treatment. And the treatment itself, the process and the technology is pretty easier because the pollution load in the ice manufacturing is much lesser.

57:18 Okay. That was helpful. And one quick question. Sorry to interrupt, Mr. Rawat. May I please request you to rejoin the queue, sir? Thank you. Okay, sure. Next question is from the line of Pushkar Jain from Milli Capital. Please go ahead. Yes. Hi, sir. Am I audible? Yes. We can hear you, Pushkar. Yes. So I just wanted to understand why despite such huge price hikes, our margin will be 8% to 10% when our peers are doing substantially higher margins. Can you give us some clarity on that? And also, you said reacting by prices are like $300 right now, 1,500 to $1,600 So what was it before the guidance started, you know, at where at the normal level?

58:11 So regarding your first question, I already explained, I think, two times earlier in the call, and I would humbly request you to go through the earlier transcript, yes, where we explained with regards to the margin, yes? We explained with regards to the time lag it takes to get the price. Sorry to... Sorry to... No, no, I got that, sir. But we're just completing our deals, our fixed margin profile via our margin, you know, cap that it could then. Because I understood that we'll pass it on a lot. Because we put yes, if you heard earlier conversation, we our business is to sell dyes and where the price increases getting reflected few months later than the intermediate prices when they actually happen, yes? Correct. That's one part, right? Second, before the price increase in HSE started, the stability of HSA was around INR 400,000,000 to INR $450,000,000, maximum INR 500.

59:21 So that was a range, INR 400,000,000 to INR 500,000,000, where HSA has been hovering for almost five years, in fact, before the price hike started. So that's the normal range. And that also is defined by the prices of naphthalene, prices of sulfur and prices of caustic, prices of methanol. So methanol prices have gone up. Caustic has relatively gone up. Naphthalene has doubled. Sulfur price has gone up 7x to 8x. Of factors have affected increase in the adjusted cost as well.

1:00:07 So but the price increase from INR 500 to 1,600, INR 1,800 is much larger height than the increase in the cost. So the incremental margin is higher. Okay. Okay. Thank you very much. Thank you. Next question is from the line of Ishan Bhave from Fident Asset Management. Please go ahead. Sir, last time in the call, you had talked about going to the LME event to secure copper sourcing for the downstream project. Could you elaborate a bit more on that? Yes. So we, along our entire team participated in LME event, LME week about last month, very, very productive, very informative, copper's future, metals future, right, how the supply demand looks like, how the price ranges are getting defined for next year supplies, which are the quantities available from which mines, which processor, right, what is everyone's outlook on next year particularly, all important information, along with the networking of major players in the market,

1:01:38 took place when we were there. And now we have fairly good visibility. We will have almost 80% of our requirement to be secured visibility on copper concentrate as well as other copper semi finished products. So we have got better visibility. We have got few more quantitative assurances from these suppliers, and we are satisfied to come to almost 80% of our total requirement to get almost lined up or our book for sourcing is stacking up to the needs, so which is quite positive, in fact. Also, one last thing.

1:02:27 With these changing copper prices that are happening at a very regular basis, what do you think might happen if copper prices go down? And how would it impact our new ongoing projects? So the most important part, there are two things which when we started and when we conceived this project, the copper price was around $8,000 LME. Today, it is $14,000 correct? And the processing business of copper is pretty standard business where you get a spread between LME minus sourcing and LME plus sourcing.

1:03:18 Just to answer your question, the spread between LME minus to purchase and LME plus to sell, depending on products you sell, right, that spread remains constant irrespective of the LME prices, number one. Number two, the risk what you carry is an operational risk between buying the raw materials and selling the finished goods. And I think all the seasoned players in copper globally, there is an established process to do hedging, and there is a separate desk for hedging, and we will have the same. And every purchase is hedged with a price, with the time, with every sale that we are going to make, correct? So it's completely hedged.

1:04:04 It's 100% hedged business on the purchase and sales side so that you don't either make anything on the higher fluctuation on the higher side or you don't lose anything on the lower fluctuation on the lower side. But your spread continues to remain constant and consistent. So that is the business model. Thank you, Thomas. Thank you. Thank you. Ladies and gentlemen, we will take this as the last question for the day. I now hand the conference over to the management for the closing comments. Thank you all for participating in this earnings conference call.

1:04:50 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 you like to know more about the company, please reach out to our Investor Relations Managers at Valorum Advisors. Happy Diwali to all of you. Thank you. Wishing you the greatest day ahead. Thanks a lot. Thank you. Thank you very much, sir. On behalf of Kiri Industries Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.