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Ladies and gentlemen, good day, and welcome to Aether Industries Q2 FY '24 Earnings Conference Call hosted by HDFC Securities. [Operator Instructions].
Please note that this conference is being recorded.
I now hand the conference over to Mr. Nilesh Ghuge from HDFC Securities Limited. Thank you, and over to you, sir.
Thank you, [ Visu ]. Good afternoon, all. On behalf of HDFC Securities, I welcome everyone to this Aether Industries conference call to discuss the results for the quarter ended September 2023. From Aether Industries, we have with us today, Dr. Aman Desai, Promoter and Whole-Time Director; Mr. Rohan Desai, Promoter and Whole Time Director; Mr. Faiz Nagariya, Chief Financial Officer; and Ms. Shubhangi Desai, Executive IR.
Without further ado, I will now hand over the floor to Shubhangi Desai to begin with the earnings call for Q2 FY '24. Over to you, Shubhangi.
Good evening, everyone, and thank you, Nilesh, for the brief introduction. Today on October 31, 2023, our Board has approved the financial results for the second quarter and half year ended on September 30, 2023. And we have released the same to the stock exchanges as well as updated the same on our website.
Please note that this conference call is being recorded and a transcript of the same will be made available on the website of Aether Industries Limited and Exchanges. Please also note that the audio of the conference call is the copyright material of Aether Industries Limited and cannot be copied, rebroadcasted or attributed in press or media without specific and written consent of the company.
Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are predictions, projections or other estimates about future events. These estimates reflect management's current expectations on future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied.
Aether Industries Limited or its officials do not undertake any obligation to publicly update any forward-looking statements, whether as a result of future events or otherwise.
Mr. Rohan Desai will begin by sharing April's business outlook. Then Mr. Faiz Nagariya will cover the financial highlights for the period and the review. And Dr. Aman Desai will share the ongoing expansions and strategy of the company going ahead.
Now I shall hand over the call to Mr. Rohan Desai for his opening remarks. Over to you, Mr. Rohan.
Thank you, Shubhangi. Good evening and a warm welcome to everyone. I hope everybody is doing well, and I'm pleased to connect with you all to discuss the performance of our company for the second quarter of current financial year 2024. The inventory destocking in Agrochemical sector has reduced, and we are seeing orders coming back for our products from the customers in this sector.
We see the trend improving in the Agrochemical sector, which we had anticipated few -- before a few quarters. The Specialty Chemicals business has enabled us to restand the challenges faced by the sector, and we have witnessed recovery in the overall business with improved margins aided by the reduction in the raw material prices.
The average selling price has been at the similar levels in quarter 2 as it was in quarter 1, which is approximately INR 1,600 per kilo. We expect a revival of business with China dumping reducing on month-on-month basis. With respect to the China dumping story, we have seen a depreciation in Chinese currencies, which is helping Chinese manufacturers.
Also, incentives and subsidies provided by the Chinese government is also helping the Chinese manufacturers for the exports. And this incentive subsidies as a percentage has increased several times in the calendar year of 2023. Coming to the Aether's business segments, we are seeing contribution of 66% of the total top line from large scale manufacturing, 18% from contract/exclusive manufacturing and 15% from contract research and manufacturing services business model during the half year of financial year 2024. Our exports accounted for 34% and our domestic sales accounted for 66%.
With that, I will conclude speaking, and I would request our CFO, Faiz Nagariya, to touch up on the financial highlights for the period under review. Faiz?
Thank you, Rohan, and good evening, everybody. I'm glad to present the financial results of Aether Industries Limited for Q2 and H1 of financial year '24. The total revenue of the company stood at INR 3,431 million in half year financial year '24 as against INR 3,127 million in half year financial year '23, resulting in EBITDA of INR 1,085 million in half year '24 as against INR 919 million in half year financial year '23, which is a growth of 18% in the comparing period. The EBITDA margin stood at 32% in FY '24 as against 29% in H FY '23.
The PAT amounted to INR 680 million in half financial year '24 as against INR 578 million in half financial year '23, which is also a result of growth in 18% of the PAT in the compelling period. The PAT margin stood at 20% in half financial year '24 as against 18% in half financial year '23.
The total revenue -- now the comparison between the Q2 of current financial year and Q2 of last financial year. The revenue of the company stood at INR 1,793 million in the Q2 of financial year '24 as against INR 1,466 million in Q2 of financial year '23, resulting in EBITDA of INR 612 million in Q2 of financial year '24 as against INR 433 million in Q2 of financial year '23, which is a huge growth of 41% in the comparing periods.
EBITDA margin stood at 34% in Q2 of financial '24 as against 30% in Q2 of financial year '23. The PAT also increased and it is INR 378 million in Q2 of financial year '24 as against INR 272 million in the Q2 of financial year '23, resulting in an overall growth again a good one, 39% in the comparing period.
The PAT margin stood at 21% in Q2 financial year '24 against 19% of Q2 financial year '23. The debtor cycle of the company still stays, but we have been able to bring it down -- bring down the debtors marginally from 145 days as on 31 March '23 to 139 days as on September 30, 2023. And we are continuously working on this and expect to improve the ratios much better by end of financial year '24.
Our inventory days have increased more due to demand from agricultural customers -- agrochemical customers, which can make and for the delivery of this material to be done in Q3 and Q4 of financial year '24. And hence, the raw material was procured and also the production [ process ] has been high. The overall normal raw material inventory has been 5 months only. The increase in inventory days is also attributable to Site 4, which will be up and running in the last quarter of financial year '24 for which the validation quantities are being manufactured to be dispensed in Q3 and Q4 of financial year '24.
Now I will request Mr. Aman Desai to say updates on Aether's ongoing expansion plans and strategies going forward.
Than you, Faiz, for the financial highlights. Good evening, everybody, and I hope this finds everybody doing well. I will speak today about our strategy, specifically our CapEx and expansion plans going forward. Our strategies in CapEx plan for our greenfield manufacturing sites 3 Plus Plus, Site 4 and Site 5 have been advancing well as previously announced and laid out. We continue to advance our CapEx plus on all fronts in an aggressive manner.
CapEx on Site 3 plus and 3 Plus Plus underway as planned with the machineries and equipment being procured and all the regulatory approvals have been applied for already. Upon commercialization of the Site 3 Plus and 3 Plus Plus, production of 3 to 5 products in the field that agrochemicals and pharmaceuticals have been planned.
These sites 3 Plus and 3 Plus Plus are planned to be commissioned and operational by Q3 of fiscal year '25. We expect the plant to be stabilized by Q1 of FY '26. CapEx on our upcoming Site 4 is also progressing as planned with the ongoing civil work and procurement of equipment. With the commissioning to begin shortly, this Site 4 is expected to be operational by the end of this current financial year. This Site 4 will be initially dedicated entirely to contract and exclusive manufacturing, and the initial construction and plant direction is going to align with our strategic agreement recently announced with the leading oil field services company based in the U.S.
Secondary construction in the near future on Site 4 will be towards the recently announced commercialization agreement with Saudi Aramco Technologies Company on the novel converged polyol platform.
At manufacturing Site 5, we have applied for all the necessary regulatory approvals, along with beginning the fencing and the initial civil work. Planning towards Site 5 is accelerating now. This is the Panoli site, with the vision of a massive industrial estate with more than 15 production blocks. Each production blocks to be ground plus 4 structures with more than 500 reactors combined in these 15 production blocks.
This Site 5 will incorporate global best practices toward sustainability, carbon neutrality and renewable energy-based resources. This Site 5 will also be designed and built well above global engineering technology and safety design standards and will represent the ultimate phase of Aether's production capabilities and will be a milestone step in Aether's transition to a major global specialty chemical manufacturer.
We continue to make significant investments towards R&D. R&D expenses for the first half of fiscal year '24 stood at Indian INR 273 million, i.e., 8% of our total revenues for the first half of fiscal year '24. The strength of R&D team grew from 262 to in Q1 fiscal year '24 to 270 in Q2 fiscal year '24. Our major expansion project of the new pilot plant and the land, which was procured on long lease is in full momentum with ongoing procurement of equipment, along with the corresponding commissioning activities.
This pilot plant expansion is built upon what is already in all probability, the largest pilot plant in the world. We have further initiated an additional expansion of our R&D infrastructure with a brand-new R&D center to be built over the next 1 to 2 years to complement our existing R&D center.
Needless to say, such aggressive expansion of R&D and pilot plant footprints, which are the workhorses of our CRAMS business model is firmly on the backing of numerous inquiries and additional tie-ups with the top [indiscernible] of global innovators across the industry spectrum. Various contracts are in the pipeline for this, and these are being executed as we speak.
We are in process of further enhancing our technical team by employing CXO level people, the announcement of which we will be doing in the next quarters to come. These additions will add significant value to our company's core competencies and capabilities, and we'll be able to accelerate our vision of being a leading global specialty chemical manufacturer.
The fundamental base of Aether remains strong and uniquely positioned, and we continue to augment this base with our aggressive expansion in infrastructure across R&D, pilot plant and production by attracting and retaining the best scientific and engineering mines globally through our 3 different business models of large-scale manufacturing, exclusive or contract manufacturing and CRAMS and with our focus on competencies and capabilities applicable across the industry spectrum.
So with that, thank you all for your time and attention today, and back to you, Shubhangi.
Thank you, Dr. Aman. We shall now request the moderator to open the forum for question and answer.
[Operator Instructions] First question is from the line of Vipraw Srivastava InCred Capital.
I had a couple of questions. Just wanted to understand that -- has the newer product portfolio, wherein you have launched molecules like for the [indiscernible] and all that, they have started contributing to the top line or it will happen later in this financial year?
Yes, we have started contributing to the top line.
Okay. Okay, cool. So just wanted to understand then why is the average selling price not going up? I mean they have a higher realization, right, compared to the existing portfolio?
Yes, because all the overall product portfolio has seen a decrease of approximately 25% in terms of the selling price. So you're not seeing that average going up rather it is stable and reducing. This approximately reduced from 2 quarters which has reduced by INR 100 approximately.
Right. Right. Just one more question. So your agreement with Otsuka for 4 NEP, for that, so are we seeing any -- so last year, according to the annual report, the volumes, which you did was 560 metric tonnes. So we should see a significant improvement from this site for this year because you are also manufacturing for Otsuka.
Yes. So the volumes will increase on a gradual basis. There are 2 molecules which have -- one was mentioned in the RSP and other was not mentioned in RSP. So both have started contributing. In the Q2, we have dispatched 7 quantities already. And as they are migrating from the existing manufacturing capabilities of in-house manufacturing capacities, it is taking slightly more time for the approvals, but it is going on very well, I mean, we expect this to fully migrate by the end 2025.
Right. Right. And last question. So for bifenthrin and methoxyfenozide, these faced some pricing pressures in last quarter. So has the situation improved? Or how is that flaring up these 2 molecules?
The bifenthrin is still facing pricing pressure, especially because of the Chinese aggressive dumping. In case of the methoxyfenozide, the pricing has stabilized quite a bit and is on the upward trend currently.
[Operator Instructions] Next question is from the line of [ Satadru Chakravarthy ] from [ Chakravarthy ] Family Office.
Congratulations on a good set of numbers. It's very happy to see the margin profiles are one of the best, also finally some positive cash flow from ops. I just had 2 questions. So on the blended realization, we spoke earlier to be INR 1,600 per kg. And I believe last quarter, crude prices were down and then Chinese dumping was there. I believe you mentioned [indiscernible] dumping still continues. But crude prices are now really high up.
So I was very curious as to can you shed some more light on what exactly you have to your raw material and your finished product prices assuming the Chinese dumping continues for the rest of the year? And if crude moves up or down by 10%, 20%, are we saying that this is completely inelastic and we cannot really increase our realization? Or how do you look at it?
So it's too early to tell Mr. [ Chakravarthy ] on this -- I mean, to comment on this. What we are seeing is that because of the Chinese currently devaluing and being at USD 1 equal to CNY 7.32 right now, which is fairly stable and not appreciating in any manner. We are still facing this problem. And this -- it will still continue that the pricing will still have a pressure in Q3 because it's the end of their financial year.
The December is the financial year ending for Chinese. So post that, I believe the pricing will tend to change, and there would be some appreciation of the prices which will happen. There are certain raw materials, which have improved because of the crude going north. However, the prices of the -- of our competition and of our finished products are fairly stabilized now and bottomed out. So I don't think it will reduce further in any way, but let's see in this quarter and wait and see this quarter.
Okay. That's helpful. My second question is really around the inventories. So I probably must say this, yes, the receivables and payables picture look very good, much better than the previous quarters. I think the inventory is stabilizing, but I heard on the commentary from Faiz that the agrochemical customers are asking for more. So anything that you can add? What exactly is causing this? And when do we expect this to start clearing in the next 2 quarters? Or how are we looking at this together?
Yes. So in my commentary as I said that in the first quarter, agrochemicals was down and the orders were there, but they delayed the delivery. So the manufacturing took place in the quarter 2 and the finished goods and the [ maintenance ] process is high in this quarter. And in this third and fourth quarter, we'll be supplying these quantities to the agrochemical customers. So we expect that the inventories will go down, of course.
And then because it will be a continuous process of the [indiscernible] coming from them and we'll be supplying them on a continuous basis. So we will not be able to -- we will not be required to hold more inventories and [indiscernible] come down. Another reason is the Site 4, which is coming up, which is -- which -- for which the validation quantities are being supplied from our industries, and for that raw material to be procured and the quantities are being manufactured. Because in the third and fourth quarters, we have to send the validation quantities to the U.S. based [ oil and gas ] company.
[Operator Instructions] Next question is from the line of Rohan Gupta from Nuvama.
Sir, first question is on your initial comment. You mentioned that you have started witnessing growth coming back from the agrochemical customers and quite confident in the second half. However, the contradictory statement, like now that you mentioned the Chinese dumping still continues and the pricing pressure will continue at least till year-end. So if the inventories in the systems and the Chinese dumping continue, their inventories are still at a higher level, how we are expecting growth coming back from the customers in agrochemicals?
Yes, Rohan, let me clarify, we are very small for -- our contribution of agro is lesser than pharma as of today. And we are operating on exclusive manufacturing, contract manufacturing in the agrochemical space, whereas we are operating on large-scale manufacturing in pharmaceutical space. So we have received this contract. So we are limited -- we are limiting the statement of the demand of agrochemicals coming back for Aether basically, not for the whole world or [indiscernible] the people around. So we have received that orders. And so we are just communicating that. And the contracts are firm and it has to be delivered in the next 2 quarters. So that is the reason why we have said this statement.
Okay. Fair enough. So our new product launches is primarily focused on agrochemical. And over next 3 to 4 quarters, we will see -- we are supposed to see multiple products coming in. Do you see that any delays happening from your customers, any spill over in any of the product being better to the customers? Any delays?
No. We don't anticipate any delays in either the new launches or in the existing contracts that we have and the -- so yes. And we also anticipate to be making a couple of announcements shortly in this upcoming quarter related to the Site 4 specifically and the launch of a couple of partnerships and a couple of programs that you're talking about. No delays and we have online.
That's great. Okay. Just my other question is on your average realization that you mentioned, it's roughly maintained at INR 1,600. However, on the old product, it has come down by roughly 20% to 25%. It is just only the new high value-added product has contributed and maintained the realization at INR 1,600. Our business model is more related to the China supply than the products which are first time made in India, but definitely we are facing the pricing pressure from China.
So in our old product basket and the realizations have come under pressure by 20%, 25%, is it in line with the cost coming down in the similar or there is a margin pressure on our existing or old product basket? Have we not seen these new product launches, then you have -- do we expect that there would have been a margin pressure otherwise?
No. We are not seeing the margin being in pressure at the moment because the raw materials have also moved in the same direction. Also, this is -- the 25% is on the blended products, that is the new launches and the old product portfolio. We have prepared a very detailed summary for the old product analysis and we can discuss on this all offline basis, which can showcase you that on the blended, this is approximately 22% to 25% reduction has happened in terms of the selling prices.
Okay. Rohan, if you can give some number, what was the volume growth for the quarter on Q-on-Q basis, any indication on that?
Just a minute. I'll give it to Faiz.
Yes, the volume has almost approximately been at least same. It is the same as it was. It is the same. It is because as we say that if you see the revenues have been on the same -- on the same lines and the quantity is also same and because average price is same. There's no -- it's a very less increase, not so much increase also. So there is no deduction -- there's no deduction as such.
Q-on-Q. I'm telling Q-on-Q.
Yes. I was also asking Q-on-Q only.
Just a small clarification, and I'll come back in queue. There is a significant increase in dry cost. So any one-offs are there? Or it is a normal growth rate we are expecting?
No, there is a normal growth rate because when we are taking the first quarter results, certain times annual increments and other thing is pending. So we do a very -- we do kind of a provision and then there is actual incremental happens, then we had also done -- and the resources were granted in the month of May -- at the end of month of May. The impact has not come in the third quarter that much, so that has come in the second quarter more. That is one of the things and then other provisions which are increased because of the increments. So there is a normal trend. There is no abnormality in that.
Next question is from Rohit Ohri from Progressive Shares.
A couple of questions. First one, we -- if we see the gross margins have gradually moved from 48% to 49% to around 50% to 53% kind of range right now. Do you anticipate that going forward, you will reach around 55%, 56% in the next 2, 3 years?
Yes, of course, that is our target, and this is our benchmark for us. And that's why when you -- when you heard Rohan and Aman speaking, the raw material prices also have gone down along with the finished goods also. And we anticipate that this will help us increase our margins going forward because the finished good prices are now on the rock bottom. And we see that with the China dumping story, and we would see a revival in the finished good product prices also. So we should increase from here.
Okay. In terms of Aether and fluorination, you'd like to say something -- I know that you're taking some baby steps, but if you would like to share it working towards on specialized chemistry over year in this domain for fluorination.
You meant fluorination, right?
Yes.
Yes. So our intention is to enter solely into metals fluoride, so KS and the likes and not to enter into HF or F2. And so we are very specific about which fluorination we would like to do as for our competencies. And because in the -- it's a whole different world of fluorination -- in fluorination And so we are very clear about what we'll do and what will not do.
So [indiscernible] it will go in Site 3 Plus Plus or will it go in Site 5?
It will go into Site 3 Plus Plus as well as into Site 5. [indiscernible]
Dr. Aman, currently we are at 8 x 8, by when do you think it will be 10 x 10?
Good question. It's a work in progress. In fact, we have at least 3 more capabilities that we are working on right now in addition to the fluorination. And it's a constant endeavor on our end to expand this and also subtract this, take away things which are not contributing as much we do it -- continuously [indiscernible] and it's a work in progress, yes.
Okay. My last question as I fall into the queue. Post the timing of the LOI, we were working on some 2, 3 products. And do you think that you'll be able to launch them this year or will there be still over the next year?
I'm assuming you mean this by the oilfield services agreement that we made a couple of months ago, and that is anticipated to be, as I mentioned in my commentary that about 25% of Site 4 is being erected and commissioned currently exclusively for that particular customer, scheduled to be launched by the last quarter of this fiscal year. So by January, February, March, and we anticipate these revenues starting off, cautiously optimistic about being significant, but starting off for sure in the last quarter of this fiscal year.
But the issues related to the [indiscernible] region or retention of [indiscernible] that has not affected the order which we were working on for approximate estimation of INR 300 crores of 1,600 metric tonnes, which we had kind of projected earlier.
None. And these are initial anticipated volumes only for the initial set of products. We hope that this partnership will be much deeper than that. But no impact from those events that are currently happening.
[Operator Instructions] Next question is from the line of Rohit Nagraj from Centrum Broking.
So my first question is on the demand side. So earlier Rohan explained that on the pharma front and agrochemicals front, we have firm orders from customers. So generally -- just a generic question, generally, how much of our quantities are contracted on a yearly basis for each of our segments where we have a relatively higher visibility? And are these calendar year contracts for 1 year or maybe more than 1 year or so?
So we have -- on the contract or exclusive manufacturing, we have multiyear contracts. We state the minimum quantity offtake. There is no take off in that contract. However, there is an indication this much minimum quantities will be procured from Aether, and that is how we run by it. Every year, we renegotiate the pricing based on the trends -- current trends of the raw materials, and we get -- we take the orders.
And so we have that visibility on contract/exclusive manufacturing. On the large scale manufacturing, previous year, we had good visibility and order book, which we are currently not taking big orders from the customers because of the pricing changing quite drastically, which then leads to renegotiation in terms with the customers.
So currently, we are -- until the pricing of the raw materials stabilizes and the finished good product stabilizes, we are not taking long orders on to it. That is our idea where we are not taking a huge hit on any kind of raw material inventory or in process inventory. So that's the strategy which we are using right now.
Rohit, does it answer your question?
Yes, yes. Second question is on the -- so basically, we have been hearing that on the industry side, there has been a pain in terms of the inventory destocking and all. However, you explained that we are having firm orders at hand. But do you foresee that inventory destocking or inventory issue may crop up if the customers are not able to release their inventory at their hand, which has been a problem from past several quarters? So any such indication that you are getting on the agrochemical side particularly?
No. So we have limited products on the agrochemical side, and we are not seeing this kind of issue in our products. We are not speaking -- we are on general terms. General terms would be true because a lot of people are still giving a commentary on that on -- the destocking issues are still ongoing. And we do not deny that. We are just talking about our call -- our market of products.
Next question is from the line of Chirag Shah from Dalal & Broacha.
This was regarding the shareholding pattern. Sir, do we have any time line by which we need to comply with the minimum shareholding of 75%?
Yes. So we have time until May '25. So we have still 2 more years to go -- 1.5 years more to go. So we have still some time to go for that.
Okay. So by May 2025, we need to be at 75%, correct?
Correct. Correct.
[Operator Instructions] We have our next follow-up question from the line of Vipraw Srivastava from InCred Capital.
I just had one follow-up. So regarding the intermediate for [indiscernible]. So this [indiscernible] called the [indiscernible], which is capturing market share in U.S. So are you guys seeing any drop of sales because of that has -- is [indiscernible] losing market share? Or how is the market shaping up on the ground?
Yes. We have seen a drop of 40% on the demand side, but that was well expected on this product.
A drop of how much, please come again?
40%.
40% and price?
Price is approximately 20%, 25% lesser [indiscernible]
Yes. So let's say, the [indiscernible] 100 is now 60, right?
Yes.
Next question is from the line of Inderjeet Singh Bhatia from HDFC Securities.
Congratulations, Aman, Rohan, Faiz. A couple of questions from my side. First is, if I look at the CRAMS contribution, that has kind of come down, is it because products have kind of migrated out of CRAMS into more large-scale manufacturing? Or do you see there is some bit of softness in that business model?
No. The levels are -- have come down a little bit, but it's more or less the same. And we don't -- we anticipate -- it is a solid business model. We are very upbeat and robust about this business model, and we anticipate quite a bit of additional projects and programs to be started here as well. And so not at all concerned about this business model that we are very upbeat and very positive about this one.
Second question is on [indiscernible] kind of contract that we have. We expect full fledge implementation next year, right?
We expect full fledge implementation in the next fiscal year. In the last quarter of this fiscal year, we'll be commissioning the plant and moving the plant and fulfilling -- we actually in the receipt and are carrying out the trial orders across the products right now as we speak. And so the idea is to have reasonable transactions and revenues in the last quarter of this fiscal year, but definitely full fledged in the next fiscal year years. Yes.
So Aman, since this is like an entry into a new segment, new industry for us, is there an expectation that this will lead to kind of more products from the same client, which can come through in, say, FY '25 later part? Or we are likely to see more customers from the same industry kind of approach, which is also likely to kind of come through in the next 1, 2 years?
So we -- certainly -- most certainly, yes, for the first part of the question. So we expect to see -- this was expected to be only the first 4 products or 3 products that we mentioned in the letter of interest with this particular customer. And the intention and ongoing discussions already with this particular customer about additional products to be added to this basket. And so as soon as in the fiscal year '25, we should be able to see additional products to be added.
In terms of the second additional customer in this space, that remains to be seen, but this is one of the top most oil field services company based in the U.S., and we are very happy to be in a strategic exclusive kind of arrangement contract manufacturing with this customer.
Congratulations, once, again.
Next question is from the line of Dhruv Muchhal from HDFC AMC.
Just to clarify, you mentioned that the realizations are down 25%. This is on a Y-o-Y basis, right, the whole business?
Yes, Y-on-Y basis.
Okay. So you're still growing 17%, so that's because all driven by volumes?
Yes, it is all driven by volumes.
Okay. And see, about 50% of our business is pharma. And you mentioned that probably -- it's only agro, which is more impacted in terms of what we understand at least is impacted because of this inventory issue and all those things. But still the realization is down about 25-odd percent. So it seems the pharma business is also seeing some reaction in terms of -- probably, I'm not sure why, just trying to understand this. Is this because of the crude price recorrection or also there is some higher intensity from Chinese even in the pharma segment?
Yes, obviously, the dumping is happening across the industry spectrum. So pharma is also facing the same problem.
Okay. So it's not only inventory issues that we see in aggregate, it's also because of new capacities are probably, I'm not sure, just getting more aggressive because of incentives and other things.
Yes, Chinese.
We have our next follow-up question from the line of Rohit Ohri from Progressive Shares.
In terms of the geographic breakup, if we see, we currently have around 66% from the domestic business. Do you expect this to be maintained going forward? Or do you think that the domestic pie would be [indiscernible]?
No. Moving forward, we would see more of exports coming in and the pie will be again the same as 50-50, which was being passed.
Okay. Okay. And in terms of developments for the businesses apart from Spain, Italy, Germany, are you looking at some Southeast Asian countries that comes from the annual report, where you say that you are looking at Singapore [indiscernible], Norway and South Korea, which have about really strong growth trajectories. Have you been able to kind of get some orders from these regions?
Yes. So basically, we are focusing on certain fields, which involves Korea, Taiwan being powerhouses in those specific fields as well as the oilfield services area that we are discussing and there is some presence in Singapore as well that we are currently evaluating. And so these are 2 different sides of the industry spectrum, 2 different industry applications that we are currently evaluating, which are located in these regions and very promising discussions going on. So that is discussions going on, not significant business revenue transacted yet, but hopeful for it to initiate in the near future.
[Operator Instructions]
As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Thank you, everyone, for participating in the call. We hope that we have addressed almost all of your questions. If you still have any further questions, please feel free to reach out to us. Have a great day. Thank you.
Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.