Ami Organics Ltd

NSE:AMIORG

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Ami Organics Limited Q1 FY '24 Earnings Conference Call, hosted by Ambit Capital. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Prashant Nairfrom Ambit Capital. Thank you, and over to you, sir.

[Prashant Nair, analyst]

Thank you, Yusuf. Good evening, everyone. I am Prashant Nair from Ambit Capital. I welcome you to the quarter 1 FY '24 Earnings Conference Call of Ami Organic. From the management, we have with us Mr. Naresh Patel, Chairman and Managing Director; and Mr. Bhavin Shah, CFO. I will now hand over the call to Mr. Bhavin Shah for opening comments. Over to you, Bhavin.

[Bhavin Shah, executive]

Thank you, Prashant, good evening, everyone. We are pleased to welcome you all to our earnings conference call to discuss Q1 FY '24 financials. Please note that a copy of our disclosure is available on the Investors section of our website as well as on the stock exchanges. Please do note that anything said on this call, which reflects our outlook towards the future or which could be construed as forward-looking statement must be reviewed in conjunction with the risk that the company faces.

The conference call is being recorded and the transcript along with the audio of the same will be made available on the website of the company and exchanges. Please also note that the audio of conference call is the copyright material of Ami Organics and cannot be copied, rebroadcasted or attributed in press or media without specific and written consent of the company.

With that, I would like to hand over the floor to our CMD, Mr. Naresh Patel, for his opening statement. Over to you, sir.

[Nareshkumar Patel, executive]

Thank you, Bhavin. Thank you, Prashant Bhai. Good evening, everyone. I hope you all are doing well. A warm welcome to our Q1 FY '24 earnings conference call. Before I discuss the business performance of the company, I will take a couple of minutes to discuss some important economy and investor [ trend ]. Global economy has grappling with inflation except for China, which is experiencing deflation, which had led to reduce internal demand and pricing pressure. The oversupply issue in China penetrated through the sector has -- export excess production level.

As a result, solvent and key raw metal prices has decreased along with lower cost of pharmaceutical and agrochemical intermediates. So the supply side situation has improved significantly and I anticipate demand side challenges to normalize in few quarter, which building about a balance. And with the current status -- current state of the chemical industry piece is transient and we expect a bit recovery ahead.

Coming to the performance of Ami Organics during the quarter. As you all know, Q1 has historically been a weak quarter for us. Our revenue from our operations for quarter was INR 132 crores, which is 9% growth in -- growth over Q1 FY '23. I'm extremely pleased that we have been able to deliver sustained growth during the quarter on the wake of decrement in new pricing environment in the chemical industry. I will let Bhavin discuss the numbers in detail later.

Coming to the business segment. The pharmaceutical intermediate business grew by 5% during Q1 FY '24. This lower growth was due to sluggish demand in the export market, which was balanced by a robust transit fund in the domestic market. To give you reflection of our diversified portfolio, which always help us ride through difficult quarter.

Moving on to speciality chemical business, we have been highlighting this throughout last year that our focus through that period was on streamlining operations, optimizing capacity, upgrading process which took a huge time. Our guided -- as guided earlier, this year, we will start bearing the fruits of these efforts. In fact, the results are visible in Q1 where the business has already picked up and our revenue for speciality chemical business has jumped by 25% year-on-year to INR 27 crores. Now please understand this is a in the backdrop of very challenging environment that the industry is going through. And we are still able to deliver on this front.

I would like to highlight here that we have some validation samples to the customer new product during Q1, and we have now received commercial orders for the same. I will disclose more about these products once we start commence the supplying in coming quarters. While the product will ramp up gradually, we will capitalize the speciality chemicals growth further. Overall, I believe we will see robust growth in speciality chemicals in FY '24.

Coming to the [ electrolyte business ]. We are very close to signing contracts with few customers and update in detail as soon as and how we progress. What I can say is the size of these contracts will be larger than what we had anticipated. I believe we will see the numbers coming in our books during our half year to FY '22 -- to FY '24.

On concluding note, I believe even as the external environment remain challenging, we are confident delivering strong continued growth during the year.

With that, I request our CFO, Mr. Bhavin Shah to discuss the financial review. Over to you, Bhavin.

[Bhavin Shah, executive]

Thank you, Naresh Bhai. Good evening, everyone. I would like to briefly touch upon the key performance highlights for the quarter and year ended quarter ended 30th June 2023. And then we'll open the floor for question and answer. I will begin with quarterly update. Revenue from operations for the quarter was at INR 142 crores, up 8.7% as compared to INR 131 crores in Q1 FY '23. The gross profit for the quarter was at INR 63.7 crore, which was flat when compared to same last -- compared to same period last year.

The gross margin for the quarter was at 44.8%, lower gross margin was due to change in product mix during the quarter. EBITDA for the quarter was at INR 25.2 crore, up 9.7% as compared to INR 22.9 crore in Q1 FY '23. EBITDA margins for the quarter were at 17.7% compared to 17.5% in Q1 FY '23. EBITDA margins grew by 20 basis point in Q1 FY '24 compared to the same period in last year. The growth in EBITDA margin was somewhat suppressed on account of higher employee costs, which was driven by annual increments, performance bonus as well as higher wages.

Please note that as per Government of Gujarat increased minimum wages of the workers by 25% for all category of workers, which has impacted the employee cost during the quarter. PAT for the quarter was at INR 16.6 crore, up 12% on Y-o-Y basis. The PAT margin for the quarter were at 11.7% as compared to 11.3% in Q1 FY '23. Exports for the quarter was at 37%, whereas domestic business was at 63%.

I would like to highlight that the export business looks low during the quarter due to 2 main reasons. First, Naresh bhai has also alluded in his opening remarks that demand in export market was sluggish in Q1. And second point is that one of the formulators changed their API supplier from overseas to India. Therefore, those products, the supply was in our domestic business during the quarter.

Coming to balance sheet, we have net debt-free balance sheet with net cash balance of around INR 28 crore as at 30th June 2023. Before I conclude, I would like to highlight that Q1 is always weak for us but I believe that we'll witness a strong growth sequentially from Q2 onwards, which will be coupled with upward trajectory in EBITDA margin. And therefore, we are confident to deliver 20% to 25% growth with more than 21% EBITDA margin for the financial year 2024.

With this, I conclude my remarks and request the moderator to open the floor for a question-and-answer session. Thank you.

[Operator]

[Operator Instructions] First question is from the line of Chirag Lodaya from Valuequest.

[Chirag Lodaya, analyst]

Congratulations on good set of numbers. Sir, my first question was on intermediate business. So we grew around 5% and the growth in this challenging environment, et cetera, you already alluded to that. If you can just help us understand what exactly led to this? Is it more volume pressure, pricing pressure you are seeing? Or increasing competitive intensity in some of your products. So some color on that would be helpful.

[Nareshkumar Patel, executive]

So you mean to say that 5% growth is lower because of competition in all, is it correct?

[Chirag Lodaya, analyst]

We're trying to understand what exactly led to this weak result?

[Nareshkumar Patel, executive]

So current market scenario is like this, where pharmaceutical market is little bit growing or taking actions and it is moving faster. Again see the other pharmaceutical intermediate market, right. Our major business is in Europe or European market and our generic market is based in Asia and in India. See because of the current price decremental of the key raw material and one of our customer is also of -- trial manufacturing started in India, our domestic sales has increased.

And overall, our domestic sales margins are 2% to 3% lower than the -- our exports. So that is also directly impacted on our margin. Whereas growth point of view because key raw material price go down, our top line is also have a decrease because our domestic is always spot basis. So on a current raw material price, we have to take an order. So this is the reason why it has become on a lower side growth compared to we're expecting.

[Chirag Lodaya, analyst]

So if I just look at remainder of this financial year, we are still confident of achieving 20%, 25% growth. So from where we are driving this confidence? Is it new product addition, which will drive the growth or existing products you see much better ramp-up in coming quarters?

[Nareshkumar Patel, executive]

The growth is -- the beauty of Ami Organics product distribution is so that we have a versatile distribution. It is not impacting with any product go down or any customer go down. So -- and one more thing is that there are a few products which we have done validations and approvals in last few years, now it's becoming metric, and we are expecting the order of that in Q3 -- Q2, Q3 and Q4. So that will bring us a new growth in our -- and our existing current business is also having visibility in which we are getting confidence that still we can able to manage the 20%, 25%.

And that is also one of the reasons that rather than giving a fixed number we have given this range because we are expecting there will be a price pressure on the top line, and that's how we have changed our guideline last quarter by 20%, 25%.

[Chirag Lodaya, analyst]

And sir, this change in mix, which we have seen towards export versus domestic. Is this going to continue for remainder of the year or this was one-off which has happened?

[Nareshkumar Patel, executive]

No, it will be change back to the normalization because our -- few of our long-term contract customer as switched their production from half year from H1 to H2, and that is the reason why our export was little bit lower in Q1, but it will be -- from H2 of them will be incremental. So that will go back to our normal 60-40, 55-45 like.

[Chirag Lodaya, analyst]

55%, okay. And Naresh Bhai on electrolyte, you have mentioned that we are very close to signing up the contract and the contract size would also be much larger than earlier anticipated. So in this context, what kind of readiness we have because we need to create capacities and you also have some lead time. So if you can throw some color on the kind of capacity that we need to create and the kind of CapEx it will incur.

[Nareshkumar Patel, executive]

Yes. So basically, right from beginning, we have always saying that [indiscernible] is not part of our guideline and that to our statement was we had always stood with them. The reason for, [indiscernible] getting an order because of we were targeting of IRA of U.S. related market. And now we got in this last 2 months, we had a very good development in the deal line and these are placing a large order customer is expecting to reuse our facility and [indiscernible] go for the large agreement, and will start supplying.

Related to the capacity, yes, we need to have a pick of capacity, larger capacity once we start. Initially, we start with a lower demand. And then slowly, slowly it will be picked up to the larger. And for that, we may have to put up additional capacity which we dedicated manufacturing site for [indiscernible].

[Chirag Lodaya, analyst]

What could be the quantum of CapEx?

[Nareshkumar Patel, executive]

It's very sensitive in terms of information and all. So I'm not right now disclosing the things, but when time comes we will proactively give you all the information related to CapEx and quantum and also the future guideline of the business.

[Chirag Lodaya, analyst]

Got it. Got it. Just one question, Bhavin Bhai, then I'll come back in the queue. Other expense were quite low in this quarter. What could be the reason for the same?

[Bhavin Shah, executive]

So in other expense, as we have more domestic supply, we are able to save on export logistics also we have changed the fuel in Jhagadia from A4 to coal that has given us some benefit. As well as we have able to save something on our effluent treatment cost also. So cumulatively, all this is giving us a better other expense.

[Operator]

Next question is from the line of Nilesh Ghuge from HDFC Securities.

[Nilesh Ghuge, analyst]

So my first question on our Fermion contract. So as per our presentation, that commercial production is expected to start from 4Q of FY '24, and correct me if I'm wrong. So we have contracts for 3 products, right, sir. And so out of these 3 products, how many products we are planning to launch from 4Q, and what kind of revenue do you envisage from this contract? So any color on this, sir.

[Nareshkumar Patel, executive]

First of all, let me correct that we have a contract of 1 product, the other 3 are under [indiscernible] 1 and 1 we are already supplying since [indiscernible] since the clinical trial. So only one that was the final product contract we have and then there are 4 intermediates go to the final product out of that 3 we are developing one is one of the -- one is either supplied or maybe some other indigenous company may be supply to us. But the final product, which we have done the contract with them, it will be long-term 10 years contract with the Fermion.

[Nilesh Ghuge, analyst]

Okay. And sir, potential revenue in FY '25?

[Nareshkumar Patel, executive]

Potential revenue, as per the agreement with them, we are not allowed to disclose the revenues and all. Similarly what we have said about [ in the past ] because the company which is -- we are very cautious about the discover. So they don't allow us to disclose revenues and potentiality. But that will be a sizable in terms of from Q4, and it will be matured. In FY '25 is fully matured. We already received the order -- commercial orders for supplying in Q4.

[Nilesh Ghuge, analyst]

Sir, my second question is on our electrolyte additive business. So here also, if you can -- I know that the ramp-up will -- we also hear also will be very gradual. So what kind of revenue you envisage not just near term, but to 3 to 5-year perspective. And I know that you are adding products also in this. So but still if you throw some light on this?

[Nareshkumar Patel, executive]

The current development in last 3, 4 months and current agreement LOI sanction and all, that will be -- it will be much bigger than what we are doing right now. So it will be -- I'm not guiding you, I'm not giving you any predictions for that, but that will be as expectation of the we've got the reports from the some research, it will be much bigger than -- bigger than what we are.

[Operator]

Sorry, for that sir.

[Nareshkumar Patel, executive]

Hello? So I don't know up to what was my answer up to what he could able to hear. Hello?

[Nilesh Ghuge, analyst]

Yes, sir, I can hear you.

[Nareshkumar Patel, executive]

Okay. So did you get my answer?

[Nilesh Ghuge, analyst]

Yes, yes. Now my last question to Bhavin, what was the revenue of our Baba Fine Chem during this quarter? How much revenue you reported?

[Bhavin Shah, executive]

So let me tell you that we are yet to do this. But just to give you a ballpark number, it will be around INR 12 crore.

[Nareshkumar Patel, executive]

Bhavin, it is not yet merged with us. So how can you disclose the number.

[Nilesh Ghuge, analyst]

Hello? Sorry.

[Bhavin Shah, executive]

So we'll disclose the number of Baba Fine Chem when we complete the transaction and merged in our balance sheet.

[Nilesh Ghuge, analyst]

Okay. So this quarter number, consolidated number does not include Baba Fine Chemicals numbers?

[Bhavin Shah, executive]

Yes. So this does not include Baba Fine Chem.

[Operator]

Next question is from the line of Sudarshan Padmanabhan from JM Financial PMS.

[Sudarshan Padmanabhan, analyst]

Sir, my question, if I, again, split the business into 2 parts, the Gujarat Organics and the core business, we have been seeing some kind of an improvement in Gujarat Organics. So what is the margins that we are working today with, and where do we see the margins by the end of this quarter and probably in FY '25?

[Bhavin Shah, executive]

So Mr. Padmanabhan, for specialty current margin is 11.1%. And as we mentioned, that we will improve this margin by 100 basis point, 50 to 100 basis point every quarter. So we would like to take this margin up to 18%, 19%. That is 3% to 4% lower than our peak pharmaceutical -- peak pharma intermediate margin.

[Sudarshan Padmanabhan, analyst]

Sure, sir. Sir, with respect to the pricing environment, so what we are saying is, I think in your opening remarks, we talked about a deflationary environment. So I'm just trying to understand whether we are working on EBITDA -- somewhat around EBITDA per kg basis or an EBITDA margin -- fixed-margin basis. Just trying to understand whether in a deflationary scenario, our absolute EBITDA outlook would change in any way?

[Bhavin Shah, executive]

So see EBITDA margin is the net outcome of everything, primarily, as you know, that for our export business, we have a long-term contract and domestic business work on a spot basis. So it is not as a thumb rule, we will fix a fixed percentage of EBITDA. It will depend on the product to product, and it will change based on the long-term contract and agreement with the customer.

[Sudarshan Padmanabhan, analyst]

Sure, sir. And sir, when we are talking about this 20% to 25% growth. I mean it is quite heartening because your 9 months growth should be at least 25%. Is it coming from your confidence on the Fermion contract, which you are going to execute in the fourth quarter or is it more on some of the parts where you believe across the board, you're seeing a fair amount of growth coming in electrolyte, your base business in pharma intermediates as well as the Fermion contract, all the 3 put together.

[Nareshkumar Patel, executive]

Electrolyte business is not a part of this growth. But yes, there are -- some portion is from the Fermion contract and some portion which is we got an approval and commitment -- formal commitment from the customer based on that we are right now guiding 20%, 25% growth. For the time being, it is not necessary to revise the growth target because we have on confirmation and on book, sufficient projections in which we are discussing with our customers.

If something will be changed, we will upfront come and inform you. But for the time being, we are confident that we will be increasing 20%, 25%.

[Sudarshan Padmanabhan, analyst]

Sure, sir. One final question before I join the queue is a little bit more from a strategy perspective on Baba Fine Chem, not necessarily asking the number. But since this capability can be extrapolated in terms of newer avenue of growth. One is what is -- when can we expect visible numbers to start flowing through and; number two, what is the kind of quantum in terms of jump that we can expect from this business over 2 to 3 years?

[Nareshkumar Patel, executive]

Numbers will be started coming in from Q2 -- end of Q2. And jump will be, we will see in FY '25.

[Sudarshan Padmanabhan, analyst]

In terms of magnitude of numbers, would it be quite substantial to our size, sir? I mean just qualitatively trying to understand.

[Nareshkumar Patel, executive]

Bhavin did you get the question?

[Bhavin Shah, executive]

So right now, as we have not merged, we refrain to answer this question. But already, we have mentioned that what was the last year transaction and their growth rate.

[Operator]

Next question is from the line of Akul Broachwala from Ocean Dial Asset Management.

[Akul Broachwala, analyst]

Two questions from my side. First, on Ankleshwar CapEx. So in terms of the contract with Fermion, can you probably share as to like how many lines or what proportion of the CapEx that we are doing would be dedicated towards Fermion contract. I'm not looking for exact quantification, but qualitatively, what portion of our capacity will get occupied because of that contract at Ankleshwar?

[Nareshkumar Patel, executive]

So in Ankleshwar, we are building 4 blocks out of that 3 is for manufacturing and 1 block for the solvent recovery and hydrogenation. So out of this 3 main block, 1 block is already dedicated for Fermion, rest 2 blocks are fully available for our future product as well as with some other customers we think we are right now taking similar kind of arrangement.

[Akul Broachwala, analyst]

Understood. And basically, the kind of products that we are going to launch would be similar to what we manufacture today. Is that understanding correct?

[Nareshkumar Patel, executive]

No, it is that new 3 blocks are -- we are building for our future product coming into the pipeline as well as an opportunity to have a contract like Fermion which we can. We are in discussion with few of the customers.

[Akul Broachwala, analyst]

Okay. And like in terms of CapEx, are we progressing as per the time line at Ankleshwar.

[Nareshkumar Patel, executive]

Yes speaking as per the time line there are some delays because of the monsoon, but we are expecting to catch it up in time.

[Akul Broachwala, analyst]

Understood. And secondly, on your comments that the expectations from electrolyte, the customers are sort of getting ready for a larger LOI. So like -- what has really changed, like? Is it purely based on volumes? Or do you expect that the realizations eventually will be much better than what we would have estimated earlier?

[Nareshkumar Patel, executive]

See earlier, we were talking with the [ utilizing ] formulator now end customer of the battery are interested and they are signing the contract and they are -- it's a tri-party or four party agreements are happening where we -- we are having a long-term signing supply contracts. So that's how supply chain establishment was happening. So once everything will happen, then we will commercially start.

[Akul Broachwala, analyst]

Right. So considering these factors, like from Jhagadia 500 tonnes? Like do you expect and like you mention that FY -- we can expect revenues to kick in from FY '24 itself. So do you expect at least that 500 tonnes to be sold out this year?

[Nareshkumar Patel, executive]

Yes.

[Akul Broachwala, analyst]

Understood. Fair point. And lastly, just taking the question forward. We've mentioned in our past calls that we are looking at a market share of 5% to 10%. So that would be roughly 10,000 to 15,000 tonnes. So like do you expect this initial phase of investment to sort of move forward, like -- or do you still expect that this would be the initial size of the capacity that you would be adding up?

[Nareshkumar Patel, executive]

There are several things involved in this. So if we do -- very honestly, I'm saying that the quantity which I'm looking for in the past was maybe it will be violated and will go up or maybe it will be in [ net debt ] size. So currently, we are waiting for so many things which has to be concluded.

[Operator]

[Operator Instructions] Next question is from the line of Jason Soans from IDBI Capital.

[Jason Soans, analyst]

First of all, I just want to mention that, why sir your voice is actually very muffled, I'm sure a lot of other participants are also facing the same issue. We're not able to hear you clearly. I don't know why this was not highlighted before. So yes.

So yes, in the same respect, I just wanted to ask you, first sir, what was -- what's your outlook on the spec chem business? I know you have invested a lot in flow chemistry into various chemical methyl salicylate and other avenues as well. Just wanted to from you an understanding on where you expect the specialty chemicals business grow from here on?

[Nareshkumar Patel, executive]

So my point of view specialty chemical business has a good potential, but currently it has a little bit pressure from international market, mainly from China especially from agrochemicals and some color chemicals. So it's a high pressure from China. But it [indiscernible] the company which is working on a technology upgradation, process innovations and commanding on the cost, we'll definitely grow in that. Ami Organics continuously work -- we had converted our methyl salicylate process from those to continue. That has made us sustainable in this difficult period as well.

Similarly in parabens as well as we are working with some innovative process which is leaning us also commanding position in parabens as well. And then we already introduced some new molecule segments like [indiscernible] in our paint industry as well as some polymer additives and [ Odomos ]. So that will bring us the growth as well as our specialty chemicals will be having a sustainable months in the future.

[Jason Soans, analyst]

Okay, sir. And as far as the advanced intermediates business, have you seen in this quarter, Chinese competition increasing considerably in that aspect and probably that's why growth has been moderated to some extent?

[Nareshkumar Patel, executive]

I'm not getting your question. It's echoing for me. I don't know.

[Jason Soans, analyst]

Yes. What I was asking is, in the advanced intermediate business, just wanted to know that from a Chinese perspective, do you see the competitive intensity increasing and probably that's why growth moderated there in this quarter to some extent. Is that also a factor? I understand you mentioned other factors such as lower raw material prices and lower prices, sluggish growth as well. So is the increase in Chinese competitive intensity also one factor for the moderated growth?

[Nareshkumar Patel, executive]

Yes. For overall pharma market, yes there is some issues related to allocating in China, but particularly for Ami Organics, we mostly of our products we are dominating in the market. The growth it can be retarded because of the pipeline -- price revision versus the current market price. But that will [ be looking to go ] back to the normalization because sooner or later it will be going to the normal prices because raw material price, current raw material price will be giving us an advantage to our top line. So it will be reduced, we will improve our margin and our output.

[Jason Soans, analyst]

Okay. And sir, just finally, this Fermion contract. Of course, you have backed that -- that's a milestone for you. Any more color on how you can probably expand to other intermediates and expand the scope of the contract there?

[Nareshkumar Patel, executive]

The Fermion contract is a long-term contract. It requires a lot of regulatory approvals, lot of validations, and it is not a 1-day job. It will take time. Customer has to make their APIs, APIs has to make their formulation. Formulation has to be approved worldwide. So it will take time. But whatever good thing is that we achieved first contract, which is a very large contract, which is a hand product which is 4 intermediates out of them 1 we're already making, 3 we are supposed to be supplying sooner or later, then we do that validation. So it will be a good opportunity for Ami Organics to add this new molecule inside the book.

[Operator]

Next question is from the line of Rikin Shah from Omkara Capital.

[Rikin Shah, analyst]

So at this point, the specialty chemicals business is geared more towards parabens and methyl salicylate, which is not very high margin at this point. So going forward, where are we in our journey to add more products, which are more value-added.

[Nareshkumar Patel, executive]

Definitely, we are working on that, but we can't stop current product and wait for the new product to take care. So we have to be -- it's a phase wise program we had made where we will [ replace ] the old product with a low margin by introducing the new product with high margin.

[Rikin Shah, analyst]

So I'm asking that whether -- so the sort of blurry time line would also help a broad, maybe if you can share..

[Nareshkumar Patel, executive]

We are saying that we want to go to 19% margin -- EBITDA margin that cannot be achieved with these 2 products. So we can have a 1 or 2 years program where we do improvement in the profit margin of the current activity product and also introduce new high-margin product. And by this way, we can utilize our capacity as well as we can increment our revenue and EBITDA margin.

[Rikin Shah, analyst]

Got it. Okay. So my next question is regarding the electrolyte part of it. So considering the inflation reduction at which we have spoken about before, by the U.S. government. So with the new contracts in electrolytes, are we expecting a better pricing than current VC prices?

[Nareshkumar Patel, executive]

See, the pricing [indiscernible] in China is with the benefit of the [indiscernible] and that's how it will $9. And if we ask them their commercial price, if they have to export, they have export it around $11, $12, $13. So which is a price which we are -- we want to have a better pricing then because customers which want to sell to you at some of the market China -- from China. So that market we are targeting where we can get $1 or $2 better pricing than them.

[Operator]

[Operator Instructions] Next question is from the line of Gagan Thareja from ASK Investment Manager.

[Gagan Thareja, analyst]

I hope I'm audible. Sir, the first question is on your sales, is it possible to understand year-on-year how much would prices have gone down? And how much would volume have moved up in your sales, an inch moved up and price going down, if you could split the sales growth into that.

[Nareshkumar Patel, executive]

And for detail question, I can -- we can give you 1-on-1 if you want. There are some product which goes up, some products which go down, not -- because the number of products we sold is 80, 90 products which are difficult to say the answer on...

[Gagan Thareja, analyst]

Okay. But your input prices would also have corrected, in key raw material prices have come down quite sharply. Is it possible to understand how much would the KSM prices that you use or would have come down?

[Nareshkumar Patel, executive]

Gagan Bhai, we import only very few percent, 20%, 28% only we import [indiscernible]. So data is helping us. We do most -- a lot of our raw material in house. We try manufacturing and then we use in house. So definitely, there is some reduction there, but that reduction is the reduction of the commodity price is much higher. So that's how we have to address our prices accordingly. But if you want detail, we can give you the detail on that. I think Bhavin can able to...

[Bhavin Shah, executive]

So we can connect separately and we can provide you this.

[Gagan Thareja, analyst]

Okay. Sir, may I just sort of request if you could possibly repeat the last part of what you said, your voice is not very, very clear or sometimes it's difficult to understand what you're stating. I couldn't get the whole of your reply, but I'll connect separately with Bhavin and you to get the details.

The final question is on the -- in the Fermion contract, another Indian company has also been awarded a contract by Fermion. Just want to understand if it pertains to the same molecule, would you have any understanding of whether it pertains to the same molecule as the one that you were going to supply for or is it a completely separate drug for which they will be supplying?

[Nareshkumar Patel, executive]

Particularly, I don't know who has done the contracts and by legally, I am bound not to talk about that. We are doing a read of the contract. We will get the orders and we have order of sizable amount in our hand, and we will supply [ that bonus ] what we are...

[Gagan Thareja, analyst]

And when you guide for the top line that you're giving 20% to 25%, does it assume any improvement in the prices of the products that you are now selling. I understand that they are depressed currently, and that's not a sustainable phenomenon. But -- are you already presuming any change in them when you give the guidance? Or are you presuming that the irrespective of what the current prices are, if they sustain, you can still manage that growth.

[Nareshkumar Patel, executive]

I'll try to give my honest answer on that because whatever the commitment in -- projected requirements from our customers, what we have on hand, we can able to grow up to 20%, 25% growth in our revenue. Suppression in the price -- top line, maybe it's little phenomenon maybe it will be settle down and then it will go up definitely because raw material prices will not be remaining in this level. In that case, we can have an advantage of that. But -- we have to considered all our projected forecast what we receive, what are the orders are in RM. And which are the new products, which is going to be launched this year. Based on that, our projection 20%, 25% of the growth on FY '24.

[Gagan Thareja, analyst]

Okay. And on the specialty chem -- sorry, on the pharmaceutical intermediates business, if I reference your last conference call, you indicated that Q4 of last year, you exited at almost 23% margin, if I remember it correctly, and you indicated that for FY '24 for the whole year, you should be in a position to maintain that. I understand that things have changed and input prices have changed and output prices have changed. But is it possible to sort of further break down your EBITDA or margin guidance? And give us an indication of what you're looking for in terms of possible margins for the pharmaceutical piece specifically?

[Bhavin Shah, executive]

So Gagan for the quarter, it is 20.2% for pharma intermediate and it should improve from here on. And what we achieved last quarter is the best quarter for us. So it should steadily improve from here. And on a yearly basis, we should say that we should improve 50 to 100 basis points from last year.

[Gagan Thareja, analyst]

Okay 50 to 100 basis points from last year. And on the electrolyte business, I presume for the 2 products that you had earlier disclosed, you subsequently disclosed 2 more. But for the earlier 2 products, the prices have also moved and moved in a fairly volatile fashion. Given the current prevailing prices, would the margins on those products as and when the contracts are brought to fruition. Would the margins compare and being similar to what you're being able to generate currently on an aggregate basis? Or would the margin profile there is very different from this?

[Nareshkumar Patel, executive]

No, margin will be low as we stated our cost is [ as dependent ] Chinese cost, so the margin will remain [indiscernible] what we are doing right now.

[Gagan Thareja, analyst]

I'm sorry, you were not very clear. Are you saying that the margins will be similar to what you're doing currently?

[Nareshkumar Patel, executive]

Yes, or better than that.

[Gagan Thareja, analyst]

Okay. All right. And if I recall correctly, 1Q of last year, Bhavin Bhai, you had indicated there was a INR 70 lakhs sort of a nonrecurring or one-off expenditure in the other expenses, if I refer back to the commentary then. The numbers that you currently given out are inclusive of that number in the other expenses?

[Bhavin Shah, executive]

Yes. And when you compare that, so that one-off other expense of Q1 last year includes that number.

[Gagan Thareja, analyst]

Okay. All right. And could you also give the FX variation loss or gain for this quarter and for the comparable quarter last year.

[Bhavin Shah, executive]

So FX variant, for the quarter is at INR 48 lakhs, and it was negligible last year.

[Operator]

[Operator Instructions] Next question is from the line of Bharath Chandra an Individual Investor.

Ladies and gentlemen, as there was no response from the current participant, we'll take that as a last question. Thank you very much, members of the management.

Ladies and gentlemen, on behalf of Ambit Capital Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

[Bhavin Shah, executive]

Thank you. Thank you, everyone.