Kiri Industries Limited (KIL), a leading player in the dyes and dye-intermediates industry, has reported a mixed set of financial results for the second quarter of fiscal year 2026 (Q2 FY26). The company demonstrated strong revenue growth but faced challenges in profitability, largely due to ongoing legal expenses and input cost pressures.

Revenue Growth Amid Industry Recovery

KIL reported consolidated revenue of Rs. 213.44 crore for Q2 FY26, marking a 6.00% sequential increase and a robust 23.00% year-on-year growth. This performance underscores the company's strong market positioning and the gradual recovery in the dyes and dye-intermediates sector. The standalone revenue stood at Rs. 194.62 crore, up 8.00% quarter-on-quarter and 34.00% year-on-year, driven by volume growth in dyes intermediates and basic chemicals segments.

Profitability Challenges

Despite the revenue growth, KIL faced significant profitability headwinds:

• Consolidated EBITDA for Q2 FY26 was negative at Rs. 13.05 crore, compared to a positive EBITDA of Rs. 18.56 crore in the previous quarter.
• On a standalone basis, the company reported an EBITDA loss of Rs. 9.92 crore, down from a profit of Rs. 17.35 crore in Q1 FY26.
• The EBITDA margin declined to -6.10% on a consolidated basis and -5.10% on a standalone basis.

Factors Impacting Profitability

1. Legal Expenses: The company's profitability was significantly impacted by non-recurring legal and professional costs associated with the ongoing DyStar matter.
2. Input Cost Pressures: Rising raw material costs continued to squeeze margins, with the material margin percentage declining year-on-year from 34.80% to 26.40%.
3. Currency Fluctuations: The company reported other comprehensive expenses of Rs. 47.19 crore, primarily due to currency translation adjustments from foreign subsidiaries.

Joint Venture and Associate Performance

• Lonsen Kiri Chemical Industries Limited, KIL's joint venture, maintained healthy operational performance, contributing Rs. 16.98 crore to the consolidated results.
• The share of profit from associates included a significant Rs. 82.13 crore contribution from DyStar, although this does not impact overall profitability due to the ongoing en bloc sale process.

DyStar Case Update

The company provided an update on the DyStar case:

• The purchaser failed to fulfill conditions precedent for the transaction by the extended deadline of November 3, 2025.
• The receiver has further extended the deadline to December 1, 2025, subject to an additional deposit of USD 5,112,156 into the escrow account.

Copper & Fertilizer Project Progress

KIL's diversification into the copper and fertilizer sector through its subsidiary, Indo Asia Copper Limited (IACL), is progressing:

• The project aims to establish a 5 Lakh TPA copper smelter and an integrated fertilizer plant in Gujarat.
• Key milestones achieved include partial land acquisition, environmental clearances, and initiation of the physical execution phase.
• The project is designed to meet India's growing demand for refined copper and fertilizers, with a focus on environmental sustainability.

Management Commentary

Manish Kiri, Managing Director of Kiri Industries Limited, stated, "Despite the challenging macroeconomic environment and temporary cost pressures, we are encouraged by our strong revenue growth and market positioning. Our focus remains on operational excellence, strategic diversification, and long-term value creation for all stakeholders."

Outlook

While Kiri Industries faces near-term profitability challenges, the company's revenue growth and strategic initiatives in the copper and fertilizer sectors position it for potential long-term growth. The resolution of the DyStar case and the successful execution of the IACL project will be key factors to watch in the coming quarters.

Investors and stakeholders will be closely monitoring the company's ability to improve margins, manage legal expenses, and capitalize on the recovering demand in the dyes and dye-intermediates industry.

Kiri Industries Limited (KIL) has announced that the planned sale of its 37.57% stake in DyStar Global Holdings (Singapore) Pte. Ltd. to Zhejiang Longsheng Group Co., Ltd has encountered another setback. The Chinese buyer has failed to meet the conditions for acquiring KIL's stake, valued at USD 676.26 million, primarily due to delays in obtaining necessary regulatory approvals.

Transaction Details

Delays and Extensions

The transaction, initially announced on May 30, 2025, has faced multiple delays:

1. The original completion deadline of October 2, 2025, was missed.
2. An extended deadline of November 3, 2025, was also not met.
3. Court-appointed receivers have now granted a further extension until December 1, 2025.

Financial Implications

To secure this latest extension, Zhejiang Longsheng Group is required to make an additional deposit:

• Previous deposit: USD 3,482,739.00
• New required deposit: USD 5,112,156.00
• Total escrow amount: USD 8,594,895.00

Next Steps

Kiri Industries has stated that it is seeking legal counsel to protect its rights in this matter. The company's management is closely monitoring the situation and will likely provide further updates as the new deadline approaches.

The repeated delays and the need for additional deposits raise questions about the transaction's eventual completion. Stakeholders will be watching closely to see if Zhejiang Longsheng Group can secure the necessary regulatory approvals by the new December 1, 2025 deadline.

Kiri Industries has assured shareholders that it will continue to keep them informed of any developments through appropriate disclosures on the company's website and to the stock exchanges.