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Kiri Industries Limited Q4/FY24 Earnings Conference Call Summary
Submission Details • Date of submission: June 6, 2024 • Compliance with SEBI regulations • Conference call date: May 31, 2024
Financial Performance Highlights • Q4 Revenue Growth: 27% YoY to Rs. 200 crores • EBITDA Loss: Reduced to Rs. 11 crores • Full Fiscal Year Revenue: Increased by 5% to Rs. 633 crores • Net Loss: Decreased from Rs. 134 crores to Rs. 94 crores • Consolidated Q4 Revenue: Rs. 269 crores with an EBITDA profit of Rs. 5 crores
Legal Developments • DyStar Case Judgment: Kiri to receive Rs. 603.8 million from DyStar shares • Expected Fund Availability: Before December 2025
Future Plans and Investments • Majority of funds directed towards growth initiatives • Target IRR for new projects: At least 25%, aiming for over 30% • Ongoing review of specific allocations for shareholder returns
Shareholding and Financial Outlook • Promoter shareholding decline addressed; promoters keen to increase stake • Projected consolidated EBITDA growth for FY25: 5-10% • Anticipated revenues for FY25: Exceeding Rs. 1200 crores
Ongoing Litigation and Market Engagement • Litigation costs expected to persist but at a reduced level • Supreme Court timeline for DyStar sale: 9-14 months • Market hesitance attributed to prolonged litigation and fund realization uncertainty
DyStar Sale Process • Three-step en bloc sale process: Preparation, inviting bids, finalizing agreement • Expected timeline for sale: 9 months to 1 year and 4 months from February 2025 • DyStar's unique position as sole indigo producer in India highlighted
Operational Stability and Future Prospects • DyStar remains solvent with significant cash reserves • Potential for future buybacks once funds are available • Ongoing efforts to optimize operations and explore new projects in renewable energy and petrochemicals
Conclusion • Optimism about future projects and growth despite ongoing legal challenges • Follow-up expected in the next quarter
Kiri Industries Limited Q3/9M-FY24 Earnings Conference Call Summary
Submission Details • Date of submission: February 17, 2024 • Compliance with SEBI regulations • Conference call date: February 12, 2024
Financial Performance Highlights • Q3 Standalone Sales Revenue: • Increased by 6% year-on-year to 141 crore • EBITDA Loss: • Reported loss of 21 crores • Net Loss: • Total net loss of 29 crores • Nine-Month Standalone Sales Revenue: • Decreased by 3% to 434 crores • Consolidated Revenues for Q3: • Totaled 219 crores with similar losses
Management Insights • Reasons for Negative EBITDA: • High legal costs • Low capacity utilization • Inability to pass on cost increases due to sluggish demand • Industry Outlook: • Cautious optimism for a rebound in the textile industry • Ongoing Legal Proceedings: • Related to the company's stake in DyStar, with a judgment expected soon
Q&A Session Highlights • DyStar Case Recovery Timeline: • Supreme Court hearing completed; decision expected soon (1 to 4 months) • Key points discussed: auction of DyStar and recovery of $603.8 million plus interest • New Subsidiary in Singapore: • Established for managing expected funds and future investments • Net Debt Situation: • Current net debt at 115 crores with limited cash reserves • Dividend Payment from Joint Venture: • 8 crore dividend from Lonsen Kiri; smaller than expected due to board discussions
Legal Proceedings and Financial Implications • Recovery Process: • Anticipated initial cash tranche of 100 to 200 million from DyStar • Sale proceeds expected in 9 to 12 months • Total Receivable from Senda: • Estimated at approximately $670 million, including legal costs and potential interest • Valuation of DyStar: • Last year's EBITDA was $166 million; projected steady-state EBITDA of at least $150 million • Estimated valuation around $2 billion based on a 10 PE ratio
Future Outlook • Investments in Renewable Energy: • Exploring opportunities in the sector • Dye and Pigment Industry Recovery: • Optimism that the industry has bottomed out and is entering a recovery phase
Conclusion • Kiri Industries remains focused on securing owed funds and is optimistic about future financial performance and industry recovery.
Kiri Industries Limited Q2-FY24 Earnings Conference Call Summary
Earnings Performance • Q2 Standalone Revenue: ₹151 crores (7% YoY increase) • EBITDA Loss: ₹19 crores • Net Loss: ₹34 crores • Half-Year Standalone Revenue: ₹293 crores (6% YoY decrease) • Consolidated Q2 Revenue: ₹231 crores (5% decline) • Consolidated Net Loss: ₹27 crores • Management's Concerns: Sluggish demand, lower capacity utilization, rising costs
Legal Matters • DyStar Updates: Hearing scheduled for January 2024 • Recovery Process: $603 million already in court; no further enforcement needed • Legal Costs Impact: Significant effect on financials; company breaking even without these costs • Future Viability of DyStar: Exploring recovery options and potential sale
Industry Outlook • Dye and Pigment Industry: Significant downturn due to reduced textile demand and competitive pricing pressures from China • Recovery Anticipation: Expected in the second half of 2024 due to low inventory levels
Legal Compliance and Challenges • Senda's Compliance: Potential criminal liability for contempt of court if non-compliance is proven • DyStar's Cash Reserves: Increased and monitored closely; capital reduction request of $282 million
Conference Call Highlights • Manish Kiri's Assurance: Strong legal team and confidence in Singapore judiciary for resolution • Timeline for Resolution: Aiming for resolution by Q1 2024 • Challenges in Legal Proceedings: Issues with serving court documents to Ruan due to lack of legal representation
Conclusion • Call Closure: Kiri thanked participants and wished them well for Diwali.
Kiri Industries Limited Q1 FY24 Earnings Conference Call Summary
Financial Performance • Standalone sales revenue: ₹142 crores • Net loss: ₹1 crore • Consolidated revenue: ₹227 crores • Consolidated net loss: ₹15 crores • Loss attributed to: • Sluggish textile demand • Increased legal costs from litigation with DyStar
Legal Proceedings and Stake in DyStar • Kiri pursuing a court order for a buyout of its stake in DyStar (~$603.8 million) • Timeline for legal proceedings: 6 months to 1 year • Concerns about Senda's delayed payments affecting trust • Recent Rs. 60 crore loan taken to cover legal fees due to Senda's non-payment
Market Conditions • Challenges in passing on increased raw material costs due to low demand in the textile dye market • Weak order book and stagnant demand for dyes • Over 120 small manufacturers exited the market in the past year
DyStar's Financial Situation • DyStar facing significant decline in gross margins and EBIT • Kiri's financial interests protected by a court order • No possibility of Kiri taking over DyStar's management; buyout directed from Senda
Legal Strategy and Valuation • Seeking court approval to transfer $282 million from DyStar to Kiri • Estimated additional legal costs: $4 million to $5 million over the next year • Kiri's 38% stake in DyStar valued at ~$603 million (total valuation: $1.632 billion as of July 2018)
Operational Updates • Kiri has turned EBITDA positive despite operational losses • Focus on optimizing product mix and reducing costs • Commitment to keep shareholders updated on developments
Kiri Industries Limited Q4 FY23 Earnings Conference Call Summary
Financial Performance • Q4 FY23 Results: • Standalone revenue: Rs. 157 crores (down 52% YoY) • Net loss: Rs. 27 crores • Full FY23 Results: • Total revenue: Rs. 602 crores (down 47% YoY) • Net loss: Rs. 134 crores
Challenges and Optimism • Challenges: • Rising raw material costs • Increased operational expenses • Management's Outlook: • Focus on cost control and market expansion for recovery
Legal Dispute Updates • DyStar Stake: • Ongoing enforcement actions against Senda (Longsheng Group subsidiary) • Management confirmed legal battle won; recovery phase ongoing • Investor Concerns: • Regular updates promised to address investor sentiment
Industry Insights • Dye and Pigment Market: • Significant downturn in demand, especially in exports • Anticipated recovery signs from major retailers by year-end
Legal Costs and Recovery Timeline • Ongoing Legal Expenses: • Estimated at Rs. 40-50 crores annually • Legal costs expected to persist until buyout funds are realized • Enforcement Actions: • Timeline for enforcement: 4 to 6 months
Shareholder Concerns • Share Price Decline: • Promoters committed to increasing their stake despite fluctuations • Senda's Compliance Issues: • Enforcement proceedings initiated due to missed deadlines
Future Outlook • DyStar's Financial Position: • Over $500 million in cash and inventory • Proposed compliance options for Senda • Capital Expenditures: • No significant Capex planned for FY24 or FY25 • Market Rumors: • Management denied any advance knowledge of announcements
Conclusion • Next Steps: • Expectation of around six months for liquidation processes • Management thanked participants and indicated a follow-up in the next quarter.
Kiri Industries Limited Q3 FY23 Earnings Conference Call Summary
Financial Performance • Date of Call: February 13, 2023 • Sales Revenue: • Q3 FY23: Rs. 204 crores (down 16% QoQ, 53% YoY) • Nine months FY23: Rs. 723 crores (down 33% YoY) • Net Loss: • Q3 FY23: Rs. 34 crores • Nine months FY23: Rs. 87 crores • EBITDA Loss: Rs. 17 crores due to high legal costs and inability to pass on costs to customers. • Management Outlook: Cautious optimism for FY24 despite ongoing challenges.
Legal Matters • Senda Litigation: • Legal costs of S$8.11 million unpaid despite court ruling. • Kiri pursuing enforcement actions for recovery. • Potential buyout amount exceeding $600 million expected. • DyStar Financials: • Unpaid legal fees of S$8 million. • Valuation of shares held over $600 million. • Court actions to recover unpaid fees anticipated.
Competitive Landscape • Dye Intermediary Market: • Concerns about resurgence of Chinese competition due to relaxed regulations. • Acknowledgment of pressure on Indian manufacturers from lower-priced imports.
Shareholder Concerns • Ownership Structure: • Questions about major shareholders linked to the Adani Group. • No single entity holds 49% of Kiri's shares. • Dividends: • Small dividend of Rs. 6.86 crores received from Lonsen Kiri. • Future dividends hoped for.
Legal Proceedings and Future Actions • Timeline for Legal Actions: • Liquidation proceedings for DyStar could take 6 months to a year. • No interest from 2018 will be received as per court's decision. • Complexity of Legal Cases: • Ongoing legal proceedings are among the most significant in Singapore's history.
Conclusion • Future Discussions: • Management expressed hope for improved financial conditions and future discussions with stakeholders.