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Anupam Rasayan India Ltd
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Ladies and gentlemen, good day, and welcome to Anupam Rasayan India Limited Q2 and H1 FY '25 Earnings Conference Call.
[Operator Instructions]
Please note that this conference is being recorded.
I now hand the conference over to Mr. [indiscernible] from EY. Thank you, and over to you, sir.
Thank you, and good afternoon, everyone. Welcome to Anupam Rasayan India Limited Q2 and H1 FY '25 Earnings Call. Please note that a copy of the disclosure is available on the Investors section of the website as well as on the stock exchange. Anything said on this call, which reflects the outlook towards the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risk that the company faces. We note that the audio of the earnings call is a copyrighted material of Anupam Rasayan and cannot be copied or rebroadcasted, attributed in press or media without specific or written consent of the company.
Today, from the management side, we have with us Mr. Anand Desai, Managing Director; Mr. Gopal Agrawal, Chief Executive Officer; Mr. Amit Khurana, Chief Financial Officer; and Mr. Vishal Thakkar, the Deputy Chief Financial Officer.
With this, I would like to hand over the call to Mr. Anand Desai for his opening comments. Thank you, and over to you, sir.
Good afternoon, everyone, and a warm welcome to the Q2 FY '25 earnings call of Anupam Rasayan. I would also like to take a moment to wish you all a very happy Diwali and a happy New Year. As we have indicated in our earlier calls, the demand in other chemical business has continued to be subdued in Q2 as well. [indiscernible] we are seeing a good recovery in this segment from Europe. Our Pharma segment and polymerase that our new growth programs have continued to increase its share in our revenue. For the full year, we expect both segments to continue to total revenue. This trend is asserted to continue through FY '26. We put towards a more [indiscernible] portfolio with increased contributions to pharma and polymer sectors is expected to provide stating from super impacts.
Now let me highlight our financial performance for quarter and half year end year. Our consulted operating revenue for the quarter was INR 204 crores, which was 16% higher than Q1 FY '25 and gaining a lower than PerFR24. This year-on-year growth, as you know, is on the back of a challenging demand from comes [indiscernible]. The EBITDA margin continued to be at around 28% in Q2 FY '25. On a yearly basis, we recorded a revenue of INR 58 crores. is crossing to around 37 gigas which are the same period last financial year. The margin from the FY '25, concerning its EBITDA margin stood at 24.5%. As you are recent requiring from auto onwards, we expect our numbers to be better from Q2 FY '25. It increased conclusion from polymer business this year. On to new letters of intents and contracts, we titrate similar revenue in '15 compared to FY '24. And back from the momentum we are seeing on the demand pickup and for cash offtake from our customers. We believe our FY '26 be back to a goat we are seeing in past during last year and this year. Amusing, we're connected to building the customer business. And over the years, we are investing in various initiatives, including a recent INR 69 crores investment in a 9.2 megawatt hybrid power plant that combines solar and energy. These stores have been commercialized in 2024. We the demand picking up coupled with higher conditions from pharma and polymers, we are telling for acala considered to bring back to a center.
With this, I would like to hand over the call to Mr. Gopal Agarwal, the Chief Managing Officer of our company and the business orders. Over to you, Gopal.
Thank you, Anand. Good afternoon and wish you a very happy and prosper the ore to all of you. I will begin by briefly discussing the business hides, which will be followed by financial [indiscernible]. Anand mentioned, we are nearing the end of challenges teas in the Agro segment. While Pharma and polymer segments have been experiencing strong growth, driven by the recent launch of our 17 in FY '24 and [indiscernible] H1 FY '25. We anticipate contributions from this segment as the [indiscernible] fashion. Additionally, a launch of 3-plus new molecules that a plan in coming months shall further accelerate the growth in the segment. As you know, we are seeing strong momentum in Japan, particularly in our chloroform segment. Thanks to our decrement, we are resetting capitalizing on these opportunities and expanding. Also, we have already started stated in our is that within next 2 to 3 years, around 1/3 of unfun will come from Japan. In major of the business secured through long-term contracts. So that we have multiple new points in R&D and pilot aims for the US market as well. Our digital integration with [indiscernible]. It is purchase has been a key in securing this contract. Keeping the strong demand in mine, we are also glad to inform you that we have inside standard of [indiscernible] plant capacity from 14, 50 metric tons to 29,200 market. and the plant has been commissioned from October 22. I mentioned [indiscernible] this call, keeping all the action mine, we believe that we should start seeing strong performance going forward.
With this, to take you through the financial highlights, I would like to hand over the call to our CFO. Over to you, Amit.
Thank you, Gopal, and good evening, everyone. I'll begin by outlining the financial highlights for the quarter. After which, I'll hand over the call to Vishal bhai for a more detailed discussion. Starting with our CapEx update as of September 30, 2024, we have completed CapEx of INR 601 crores. The remaining CapEx will be completed over the next 2 quarters in FY '25. Our working capital has risen slightly on account of launch of new molecules as well as anticipated growth in the revenue from Q3 FY '25. Further, we anticipate the working capital would stabilize by the year-end and will have significant improvement in FY '26 and going forward. As mentioned by Anand, in his opening remarks, the new hybrid project of 9.2 megawatts has been commercialized in October 2024. This initiative is projected to save approximately INR 15 crores annually in energy cost. This combined with our previous investment of INR 65 crores in 17.9 megawatts would contribute to aggregate savings of INR 28 crores. Together with our earlier efforts, this will enable 65% of the company's electricity needs to be made by green energy in the future. We remain focused on cost optimization and operational efficiency. This strategic focus, along with our expansion plans positioned us well for sustained growth.
With that, I'll turn it over to our Deputy CFO, Vishal, to provide further insights into the financials.
Thank you, Amit. Good afternoon, everyone, and wish you a very happy Diwali and a prosperous New Year. Thank you for being with us today. I would -- and thank you, especially on our holiday. So again, we appreciate your participation there. I would like to share some key performance highlights for the quarter and half year end September 30, 2022. Before we open the floor for Q&A session. I hope you have had the opportunity to review the retail presentation and the results submitted to the exchanges posted on our website. having not our numbers for the quarter and half year are on a consolidated basis, and they also include 10 numbers.
Let me first discuss the competitive financial highlights for the quarter ended September 30, 2020. Operating revenue for Q2 FY '25 was at INR 294 crores as compared to INR 392 crores. in Q2 FY '24, down 25% Y-o-Y. EBITDA for the EBITDA, including other income was INR 8 crores in Q2 FY '20 as compared to INR 111 crores in Q2 FY '24, down 26% Y-o-Y. This would translate to an EBITDA margin of 28% in the quarter. Profit after tax was at INR 31 crores compared to INR 49 crores, a growth of 37% and would contribute to around about 10% of the top line. Our top 10 customers contributed 91% of our revenue in Q2 FY '25. Talking about the half yearly financials, our operating revenue was at INR 548 crores compared to INR 779 crores. EBITDA was at INR 142 crores as compared to INR 225 crores, which would translate to an EBITDA margin of 25% for the period. Profit after tax was at INR 43 crores compared to INR 101 crores annual growth of 58%.
With that, we will open the floor for Q&A. Thank you.
[Operator Instructions] We have a question from Mr. Tushar from Kamaya Wealth Management.
New to the company, recently started tracking. I could see that you got some good orders, good order and we've seen good growth going forward. I just wanted to know the inventory levels considering the revenue, if I consider the inventory as a percentage of sales, which was in the range of 50, if you consider the street middle, it picked out. But currently, it at 70% of your entire the revenue. So just wanted to understand the business prospect, why that is so and what are the measures that we're taking in order to keep a check on the working capital?
Thank you, Tushar. I'll try and answer this question for you. So Tushar, you are right that the inventory losses and the working capital intensity has increased. And that has been primarily due to 2 major reasons that I would say in and is that the revenue that we had anticipated, which we had expected to happen in this half has not materialized in this half and has been pushed out to the next half, which has lower liquidation of the entry. Along with that, there have been new molecules which have been launched, which has also added to the for the inventory, which would be further recovered back renews plan once we at the ramp-up of those products. So these 2 has led to the higher level of inventory and with a lower revenue, this number has been accentuated further because if you look at it at a you would see that that's the same inventory also my turn days would go up by 25% to 30%. So that is the 2 reasons. What we are looking at is that one, if you look at the -- once we stand the revenue, the pickup happens, these funders will start getting more in the normalizations. And if you look at over the next 2 years that we have been in like in 18 to 24 months' time, we would see that those numbers are more similar to what we have been seeing in that historical ones around 2021, '23 kind of a time frame. So FY '21, '23 kind of a time frame. So we are actively working to optimize on this. And I appreciate your observation on this.
Okay, sir. So I just wanted to know like you acquired I think you invested 24, 25 in the [indiscernible]. Sir, how do you see the growth prospect going forward in terms of your product in the flooring can going forward, like there are players in the market who are in the flooring chemistry. So our product is different from those? Or like how do you see the competition in India?
Thank you for that. If you look at urination rationation-based products have a vast majority. If you look at the last 20 years, the number of new molecules that have been launched [indiscernible], Parma and Agricen, all 3 sectors as 40% of those molecules have flooring as a molarity okay? And that means that it is so there's a market, which is a very, very large growing market of litigation-based trucks. So when we say nations, we don't mean to say I'm only going to do only fluorination process. I have a multiple chemistries that I'm doing, and I have my valuation. In that value chain, if I add formation is 1 of the processes, my target market expands significantly. And just to give you an example, like flouropolymer market, today would be around about $8 billion with a lower polymer market. Of which, if I were to look at what my peers are doing, they are largely into the segments wearing PTA, PVDs and other kind of applications. If I take that off, I would be ending up with around about $3 million market, which is the core elastomer fluorosurfactants and other kind of play I'm just talking right on volume. Is there -- if you say, if I convert it into the intermediates that we play in, like we are not into production aviation, we don't do polymerize donor in that also, if I look at it, I'm talking about a $600 million worth of market. Now that is a large market for me to address. There I'm not having any competition. I'm not trying to compete with my peers here. Here and the products that we are trying to focus are these products where we have our own niche, where I'm working on my own value chain. There are products that have by value chain in which if I add this chemistry, I get into product application, which goes into this application. Similarly, if you look at the same approach happens in pharma side and same approach happens with the adipocyte, where I'm leveraging on the current supply chain current value chain and having this offering to give this new product application to buy customers. So I -- we do not see any major competitive intensity on this side. Two [indiscernible] is something that we have been doing for the last 5, 7 years. It's not that we're doing [indiscernible] now. Even before acquisition of an around 10-odd percent of my revenue used to be -- had been [indiscernible] products. Now the transit coming in, what happens is that I'm able to demonstrate to my customers that I have supply chain assurance and the supply chain has been very well taken care of, especially when we come to the HF, which even Gopal had mentioned in his opening remarks, that availability is an assumption because in the country, there are only core manufacturers of etch and Tampa is 1 of them. So having access to that ensure that I'm able to capitalize on that supply chain and which is the reason you are seeing a lot of traction that we have been able to demonstrate in terms of my product inquiries and product conversions in LOI. If you look at the last 5 NOI, 4 LOIs have fluorination is 1 of the process in this offering.
Yes, exactly.
So I hope I...
I just wanted to know, like apart on the contracts, what would be the revenue? Like you mentioned in your IP, the number of contracts. So if you consider over the next 3 years, how much would be the contracts and how would be the other revenues?
So are we talking about LOIs contracted revenues?
LOIs.
Okay. So LOIs, if you look at it, if you look at the total LOIs is around about INR 9,000 crores worth of approximately INR 9,000 crores or tell. If you look at -- if I were to divide it by 5 or 6 years on an average, which is every time of the contract period, we're talking about INR 140 crores to INR 1,500 crores of revenue from there. What we anticipate is that typically, it takes you a number 2-odd years to really commercialize from LOI to commercialization is 2 years on an average, plus or minus 6 months. And then there are under 2 to 2.5 -- 2 to 3 years for a ramp-up. So we believe that over the next medium term, we should be able to get INR 100 crores to INR 1,400 crores of revenue on an annualized basis from these products.
Got it, sir. And sir, just wanted to know like for the midterm, what are our EBITDA margin target and what are our ROC target internal targets. So just wanted to know an update on that.
See, historically, if you see, we have been always been in the range of 22% to 28% EBIT margin. And we believe that we should be in the range of that number, maybe a percentage plus or minus, maybe the -- that's the aim that we believe that EBITDA we should be able to expect today, in this market, I would say 25% to 27% is EBITDA margin that I would be comfortable with guiding though we have delivered a little better. But on a kind of a number I would go back. In terms of ROCE, historically, [indiscernible] look at it, we have been able to do high teens to the ROCE. It's seen that 2 major events has led to a lower number, a higher CapEx and lower CapEx asset utilization, which is now ramping up. And 2 is also my working capital intensity, it has expanded, which we expect to get more into my normalcy. These 2 will ensure that with the kind of EBITDA margin that we have and an asset of late. We should be coming back to the kind of ROCs that are more meaningful to us.
Sir, for this [indiscernible] contract, do you see that adding to your ROC going forward?
Absolutely, absolutely. If you look at it, I have -- we have done CapEx their coordination process will also be included and then the new molecules of ordination will also be processed. And just that this structure, this will always add to the performance of the company in terms of revenue and in terms of margins and translating into the return ratios.
so you guided for good H2 earlier, just wanted to know your view in terms of volumes going forward?
So yes, so if you look at it the last half, the volume -- lower volume has been the reason for the lower realized lower revenue. And we believe that what our understanding with customers has been in the communication from them in October, is that the volume are going to pick up from the for the next time. And hence, you would see a use volume uptick on this -- in this matter.
We have a question from S. Ramesh from Nirmal Bang Equities.
So if you were to look at the second quarter numbers and how to read the prospects for the second half, how much was the decline in volume in second quarter. And secondly, was there again, additional sales to domestic customers where you have to give them credit like in 1 of the earlier quarters?
So one, thank you for the wishes and same to you, Ramesh. And if you were to ask in terms of volume. So Q1 to Q2, if you see there's been a growth. So we are seeing that there is an uptick happening. Yes, on a Y-o-Y basis, the numbers have been lower on account of the lower volumes compared to the last year. So that is clear. Yes, there has been some bit compensation company in the domestic market, especially from the pharmaceutical industry, which has typically a longer working capital cycle, both in terms of -- as a geography and as an industry, both is the case. So there has been an expansion that has happened. However, what we are now seeing is that the agro and my international business is expected to pick up in the second half, which will have a better impact in terms of volume, revenue and working capital.
Okay. So would things in perspective, if you look at the statement ablate about achieving FY '25 revenue close to FY '24 ending, you are talking about a run rate of around INR 750 crores in the second director both [indiscernible] crores? That's a very, very high growth compared to the base of FY -- the second half of FY '24. So what are the levers that to drive this sort of growth in the second half? Is it just the existing business, increasing volumes? Or are you also seeing some of the new LOIs and new molecule kicking in, in terms of growth with higher realizations? How do you -- can you explain how you expect the second half growth?
So Ramesh, I will not comment on the reduction that you have made in terms of the number for the H2. But the directionally, let me answer the question on the directional point and that is what has. So I'll put it in 3 or 4 buckets. That's where we see the traction coming from. If you look at my H2 23, if you looked at my H2 '23 and if you look at the run rate of I would have done a similar kind of a number is what could be there. But let's forget about that. And let's talk about the trends from now on. Where are the 3 or 4 big trends that are coming from. One, that my lower demand from the agrochem cycle is now looking better for. So we are seeing now the offtake request coming from the -- from my existing customers and my volumes are going to pick from their side.
Second, what you rightly identified that my molecules that we had launched last year, are now picking up and it is gaining momentum as that is the second part of the demand that we've seen that. And along with that, if you look at it, price, I don't see too much of a price movement coming in here. I think prices, we feel that it will be in the stable range. This is our estimate. And as per my understanding, that numbers will be the similar range. But volume of tech is where the revenue is going to be coming from. That's my understanding on the projections.
Yes. So just a couple of thoughts more. One is when you talk about the agrochem customers, giving you confidence in terms of buying more volumes from our company in the second half. This is something which is totally different from what international companies are saying in other domestic peers are saying in terms of customers actually deferring orders, both in Agrochem and pharma, and they are also made with excess inventory. So what is exceptional in terms of your set of customers? Are they not having this inventory situation? And are they building up for new launches? So what gives you the kind of confidence that they will actually give you the kind of volume growth you are talking about? Because it is totally contrary to what we are hearing from the market from other companies.
So Ramesh just to draw a profit, if you look at the last 2 -- last 4 quarters, my last 4 quarters has been where I have had a very I would say that 1 of the lowest demand from the agrochemical sector, if you look at in the recent time. So I -- when we look at that and when I contrast it from there, there is rolling uptake that we can see from the customers. okay? Now also we appreciate that on an annual basis, my demand is there of the total volume, right? That, let's say it was it has dropped by some number. But this 2 quarters, if you see, that number has been even lower than that. So on an average, if you look at it, we see that the customer are looking at picking up at least there is demand that elite demand is picking up. Are we coming back to the normal growth rate. That's what we are saying the 26, right? And this is where the NGO also will take it will. So the is the NGO fixed in and also please appreciate that H2 is a very classic year quarter or half because Q3 of mine is Q2 of my customer, but Q4 of mine is Q1 of tears, which where the year changes as the budget changes as well for them. So they have a very comfortable situation in that sense to accommodate our level of volumes that are meaningful to both of us, right? And that's where we are coming and seeing that number. Are we saying that are we out of the woods fully answer is no, that I think will be in '26 '25 ending, I think should give us a bit of a reason to feel confident about this is what I'm saying.
So just to -- as to just add to what Vishal just said Danish I think as you marked, our growth in order, let's say, the higher growth in disc based on to, let's say, kind of a month that we are seeing a decent amount of growth in pharma and polymer, which roughly will be really like 15% plus each of my revenue. So that segment is contributing and growing at is. So that's 1 level. The second line is as is that on the green side I may not be all able to comment on some of our peers in terms of what we are seeing. But as we said, we are getting enough and more, I would say, concert some of them even in terms of future purchase orders to say that the customer it asking for a higher volume than what they are, let's say, last 3 purpose. So our, I would say, what we call H2 Avention are basically based on the 2, wherein we are seeing some bit of a recovery from a train customers who are basically making higher volumes and other and second is the increase growth on polymer and pharma piece.
That's useful. So just to get a perspective on '26 and '27 growth, if you see your order book, some of them have been commercialized and then there are some which are being commenced in '26. So if you take these 2 buckets in the LOI already commercialized, how do you see that ramp up in percentage terms on the value of the order book it is well to divide it by, say, 5 or 6 years, say it's about INR 400 or INR 800 crores. So you see the value of the LOIs already commercialized, you take it over 6 years, about INR 800 crores. How much of that would you expect to book say, over in terms of actual deliverable. And similarly, whatever you are talking about commoditizing in 2, if you take a about another INR 200 crores? So on that, when it starts picking up how much of that would we be able to actually monetize say, from FY '27 and over 28 ballpark numbers you can give, that will be useful for us to reach our assumptions on this LOI monetization?
Sure. I think on the line, I would put it simply, and that's where I would put it for now. And that you're right, the large commercializes that has happened on the FY '22 LOIs that we had signed, which is around INR 2,600 crores worth of nice right? Those INR 2,600 crores would mean that INR 450 crores to INR 500 crores is the revenue coming from that? We believe that of that we are doing around about 50 kind of a number and that should ramp up and should be peaking out by so that's the number that we can see. So you have to look at it in 3 different buckets.
The second bucket is the 1 that we have signed in '23, principally, which would be in the range of total, if I were to add the total it is around INR 1,000-odd crores more. So 1,000, if I divide it by 6, you would be doing around about INR 1,500 crores, INR 150 crores a month. which should ramp up by -- it should start in '26 and ramp up by '27, '28, and that's how you should train that's where I would put it. And then the balance, we should be starting to see the commercialization in '26 and '27, and then you see 2 years of ramp-up from then on. So I would put it very simply 2 years for getting into LOI 2 years from commercialization another 2 years LOI to ramp commercialization to ramp up. Now give an allowance of a 6 months on which happens because of either the validation, anything about the environment, all that plays out in maybe 6 months of average in give or take on that.
We have a question from Pradeep [indiscernible] from Last House.
So sir, we are doing CapEx of close to INR 600. So I just wanted to know when this CapEx is going to compete? And can you also highlight on the ramp-up of this particular facility?
So see, we have done a large part of the CapEx. And the balance, whatever is left out, we should be able to do it in the next 2 quarters. So this year, we should be able to finish the CapEx on it. Then -- and of that, a couple of the plants, we have started with the trial runs. So typically, once the plant is ready and is constructed, you have your dry run that you have a customer audition and then your commercialization happens. So typically, it is anything between 6 to 9 months that you will see as kind of a time frame on this? And that's what I would put it on. 6 to 9 months from the commercialization of the plant. From completion to commercialization because you have your plan, you will have your variation and then you -- then the plant starts for the large operations.
Okay. And what kind of peak revenue can we expect from this facility?
So total, if you look at my total CapEx that I have done till date and if I look at the open, I think I should be able to do 1.5 to 1.7x the asset block, which will be around about INR 3,000-odd crores kind of a number is what I can based on the current product portfolio, as I even the product portfolio, the number is changing because the plant volume remains the same, but the revenue changes on the pain basis as well. So that value engineering and the revenue optimization can happen that today when you look at the portfolio and the plant portfolio, we can go up to that level. I would suggest.
Yes, sir. And what is the peak revenue of our current facility?
That's what I -- if you look at it today, it is about INR 12,000 to INR 14,000 cores of my log and you can add 1.5x to that because this is where I have a lot of other CapEx also like the extra land and my R&D PP and my other ties. So the [indiscernible], I would put it at 1.5 and not higher. But for the new one, the sector will be high.
Okay. That was helpful. And how much revenue are we inciting from Pharma and Polymer segment going forward, given our existing commitments?
So pharma and polymers are today also if you're paying, they are contributing to mining double digit for me in terms of teams, I think pharma and volume should contribute more than quarter to 1/3 of my revenue at least going forward. Probably Pharma will be first, which will contribute in '20 in medium term and Polymer should follow on that.
Next question we have is from Krishan Parwani from JM Financial.
So if I just look at the stand-alone numbers, your inventory at inventories are somewhere about INR 15 crores. And if I calculate the inventory days in the stand-alone business has jumped to more than 550 to 600. Can you elaborate, please, what is going there?
So first, thank you, Krishan, and I wish you also a happy Diwali. In terms of simple, I would say, you're right, my inventory has expanded. I'm not saying that it has not expanded. Now what we are seeing is only from the -- you would have done it from a TTM basis. And I mean, if you look at these are the 4 quarters, which are unleased quarters and if you use that as a tics, these numbers will be in that range. Now we can look at this. But to my mind, 2 things will happen from here on. There is an additional inventory which you are seeing, which will get liquidated over the next 2 to 4 quarters, which is the volume that have manufactured but not so. So that will happen. And 2 is when the -- and it is the same when I sell it out, that converts into revenue and gets into my denominator also. So when you do numerator reduction and denominated addition, you will see that the numbers will start getting more opportunities with in terms of what we have seen in FY '24 at the end of FY '25 and '26 is where you will start seeing the reduction from the FY '24 numbers. Further significantly because I'm expecting a decent growth in FY '26, which will further allow me to liquidate inventory and also becomes the base for these calculations. So both will happen. But today, you are right, it has expanded and there is a very sharp focus from the management side to ensure that [indiscernible].
Understood. And but if I just look at the second half of last year to second half of, let's say, FY '25, do you expect a growth in top line?
Second half to second half -- just a minute. It would be -- it would have a growth. The second half of last year was a weak quarter half. And from that perspective, yes, it should -- I would expect from.
Okay. So even if, let's say, even if you assume a growth of 20% over the second half of FY '24, then also your top line or just the stand-alone top line could be meaning of anywhere earnings of INR 950 crores, INR 960-odd crores. Even then -- so let's say you have liquid is more like INR 100 crores, INR 120-odd crores of inventory. Even then if the stand-alone inventory days is going to be much higher than 360 days, so how do you kind of propose to reduce the net debt, which is kind of a loan to almost INR 1,200-odd crores in September '24?
Sure. So Krishan, let's answer it in 2 parts. Okay. One is the inventory you rightly elevated. So when I do that, what we are doing is we are opportunate the lower revenue that I Q1, Q2 H1 also into this calculation. But when running the business and if I'm doing, let's say, INR 350 as a revenue on a quarter. Let's say, because if you -- the numbers that you are speaking, if I add that as it here, I'm not guiding for that, but just for the reason of Latam sampling, that number. If you look at it from that perspective itself, that's the kind of annualized revenue that I'm seeing going forward, right? When I'm saying that inventory has to be because see, unfortunately, retake the historicals of the financial, and we take the transaction of the balance sheet to do it, and that's how we all have been doing it. That's all the most scientific way of doing it. But when you look at it from a business point of view, there is this discussion like I would look at the going forward revenue and accordingly, I will have my balance sheet. But let's take that -- so that's 1 part. I would want to.
And second, when you come back to the, let's say, the net debt part of it I believe that I would be far more profitable as you go because the second half, if I were to do whatever number you are saying and if you -- if I make a 25% EBITDA margin, let's not even talk about 28% that or 30% that I'm doing on a stand-alone basis also. We are talking about a sizable contribution that is coming from there, right? Open more to take care of it. And if I'm saying that I'm going to reduce the working capital intensity and not increase, then there is no absorption of working capital, right? And so some of cash [indiscernible]. So my CapEx turn and CapEx is perfectly okay. So that's the second part of it, right? So there is no cash deposit that is there over and above servicing of the debt, which is largely a largely working capital and the CapEx on. So to that exam, have nothing more comfort there. And then FY '25, 6 is then my preference of preferential shares of INR 270 also comes in. And that will further ensure that I have -- reducing the loan much -- if I take that off, I am very comfortable from the quarter performance half 1. And that's how the management's internal management plan is that we don't need any further external debt to really finance micro for at least near term.
Okay. Got it. And just the last quick for me. It's like on your guidance that you mentioned like the long-term guidance of INR 300 crores with whatever capacity that you have with your current product profile. So does that include the 10 revenues? Or if that's...
[indiscernible] the reason, I would say, 1.5, 1.7x is [indiscernible]. So you're right. No, this is not including tax, if you add name whatever their revenue will be over that period will be added on top of it.
Okay. So -- and this is the guidance you're giving on right? I mean -- or you said that [indiscernible].
Sorry. No, no, sorry. I could hear you well. So if you can this FY '28, '29 or how is it? I would put it in the medium term, which is to 3 to 4 years, and I'll leave it there, Krishan. As we get there, I can really come and comment better on.
Okay. But sorry, just a clarification there. So your current asset base in the stand-alone business is about INR 17 crores, right? And then 1.5 turns at INR 2,500 crores odd. So is there incremental CapEx that you are adding in the stand-alone business?
It is INR 1,900 crores is my block will be once I commercialize everything. So there will be something in the base period. That's the reason you might not be seeing it? I think INR 83 crores. Yes, the 190 into whatever that multiple you will take it at, we will be in the range of 3000. That's what I was saying.
[Operator Instructions] We have a question from Rohit Nagraj from Centrum Broking.
So in our Slide #12, we have given the business vertical wise up by 20% and other specialty 10% during the first half of FY '15. So other specialty is only polymers or excluding polymers. And a live question to that is from the total LOIs that we have, how many of them or if you can just quantify how much of that is from [indiscernible]. And how much of that is from pharma and how much of that is from polymers? I mean out of that 9,000 outlets.
So let's go with the first question that you asked. Other is practically for polymers. So you can case you can use polymer as a renter other products, okay? So that's 1 clarification. Second, if you look at the first 1, 2, 3, 4, 5 and 6. The 6 LOIs that I signed in 2022, they all are agro-based product, okay. And then the 2023 LOI, that is also a growth one. Then the balance, if you look at it, the 1, 2, 3 and 4, the 4 next are polymers and engine included application and 1 of them is also pharma applications also. And then the last but 1 is agro and the last 1 is a polymer. So maybe I believe that next time, whenever we are putting up the slide if you add it, it will be more comparable for us to understand Definitely, we'll do that. No problem. We'll do that.
Sir, just 1 question on the...
Okay. Okay. I think we see the problem -- we will do that because we report into 2 segments only Lifetime is another the specialty and hence, you're not seeing it as especially whatever are you paying around on polymers. so you wouldn't be able to answer it simply. And the life sciences practically are all agro because pharma very limited have a long-term oil kind of a contract. There are more domestic market with typically, you have a long-term relationship, but not a contractual relationship largest.
Okay. So no other question which comes into mind is that. So during the first half, whatever growth we have seen in pharma and other specialties, which is nothing but polymers, this is predominantly from the legacy products and non-Li products. Is that assumption right?
Polymer. So I would say there is some bit on the polymer that you would have seen, but legacy -- it's not legacy, there are new products which have been launched in pharma, which is really. So last year, I launched 17 new products like death revenue, that 17 products is giving me the revenue as well, right? So it's a combination of right.
Sorry, I mistaking that, legacy business, I just wanted to bifurcate between the products and now.
So I'm saying that this year also my LOI revenue would be in the range of 20% of my -- 20%, 20-plus percent of my revenue. I will say [indiscernible] quarter-to-quarter when we see there is always a schedule. There is always a lot of other pass-through. But if you look at on an annual basis, I should be there.
So FY '25 will be around 20% plus minus from the LOI?
From the LOI, yes. Yes.
And another question in terms of the outlook or probably deviate from the NMC customers, given that most of the scheduling for 2025 calendar year is already done. So what is the visibility that currently we have from the legacy portfolio and the ramp-up of the new products which are being launched for the LOI focus.
So what has happened, if you look at my legacy products in the last 4 quarters have been pretty low compared to what average should have be even in a tepid environment however -- so that the combination of 1 is the seen a little bit of buoyancy coming up. Now that balance is Q3, Q4 or Q1 that we could debate about. And second is there is a bit of a tendency on the demand, which is also looking to pick up. So from that side, we see that Q3, Q4, else we have a reasonable confidence in terms of the volume uptick right? Now -- and when I'm saying quantity, you would also appreciate that -- for us, the business is in continuum. We review ourselves on a protection of a time. But on a continuum basis, when I see, I can see that there is a buoyancy in the conversation, buoyancy in terms of forecast given by the customer and there is buoyancy in terms of now the uptake that they are doing.
Sure. That is sensing. Just 1 last clarification. When we are talking about the alloys in terms of RF contracts. However, given that there has been pricing pressure in most of the products currently next year when we are talking about? Is there a compensation on the pricing part or in terms of volumes to attend that particular contract value over a period of time.
So see, pretty appreciate that might -- as we have said the input raw material cost is at -- you're right that pricing across revise up and down. So you're also preceding 22 the numbers -- the pricing of 22, which will be the sizing reference of 31 and there are contracts which are signed in '24, which will be pricing tenor early part of 24. So there is a whole cycle in it. And also, please petites a 5-year contract or a 7-year contract. So today, prices may be lower tomorrow, there are -- there will be higher price rises. So we believe that there is an average thing that happened across the time frame. In terms of revenue per ton. Now is that how we will answer it. The way we do it is very simple, that the costs are passed through. But when I say that in 7 years or 8 years, I will do so much of our revenue from this contract, it is an assumption of an average price that I would have seen over a period of time right? And hence, and we are not trying to say that if I would -- so I'm not doing mark-to-market if I would use the word Mascomarket, it will be that, but every quarter, the mark-to-market number will change then, right? And it doesn't help in terms of understanding how the business is going well.
We have a follow-up question from Mr. Ramesh from Nirmal Bang.
When you discuss the growth for the existing molecules and the new molecules incrementally, what are the working capital terms in terms of inventory days and results for the new allowance and the new molecules? And to what extent will that help you reduce your working cap cycle?
So see, if you look at it, my current burning is out of ordinary, then my normal business working capital should be. So the new NOIs are also the alloys where I tend to have a control on the working capital side. On the new demand from a aside, if you look at pharma side, Indian pharma side tends to have a little in working capital, especially on the better side. But maybe on the inventory side, I would have a lower number because I don't need to stop because the pricing is more life in that condition. So to mind the new contracts should be in the range of historical, not the recent one, but the historical working capital cycles of 2020, 2021 [indiscernible]. So that on a blended basis also will be helping and also when I start liquidating my working capital, I would have a double effect on this. So how much of that can you expect to repay over the next 2 years from the current debt level. So first, anyway, I will be repaying a number 200 plus of net in the H1 of stake because I will have my QIP, sorry, by plead warrants money come in and where I have announced to 2 retailers. So that [indiscernible]. So largely, my time there be largely done except for a little bit if that is left out, but then on a net cash basis, it will be practically in the 0 scenario that which I had mentioned earlier also. And on the working capital side, basically, I don't have CapEx going forward. Any significant CapEx and I do not have a more adoption of working capital because there is nothing more working capital, which will ensure that the current working capital is sufficient to take care of the growth, which if you look at it had happened in 2022 versus 2023. If you look at it, my working capital, even after a growth of 25%, my working capital was same and hence, my whole growth was followed by the same working capital. And I believe that that's kind of a similar effect will happen going forward as well. So One there will be free cash flow, which comes in like that will help me lower by working up my debt. But from INR 1,200, the debt would be in the 3 bits by the next middle of the next year.
That's useful. And then 1 last 1 on the HF expansion done by [indiscernible] will be your average sourcing or 1 say, per annum that it's 2 to 3 years based on the expanded capacity?
So see, even if you look at it, I'm not the largest consumer of them because my input into them my adoption of Ken is limited. But if you really ask me, I will be -- I'll be in the top 5 to 6, but there'll be many other players also who will be consuming this product. So today, whatever is the demand that is -- whatever is supplying to their customers, they will continue to additional volume, I will be able to absorb it, but that's okay.
We have a question from Siddharth Gadekar from Equirus.
Now 1 of our slides, Slide #14, we have highlighted new chemical where we highlighted 3 themes. What are we exactly doing in that formation? I'll go to that slide and then we can talk about it. So we are saying we have highlighted radian chemistry.
Yes. So we are using this premium chemistry for manufacturing of a couple of our products, which will be going into the pharma application right? Sir, 2 manufacturing tenor we will be forcing coatings from No, we are on manufacturing perish -- we'll be on the derivatives poses on trade.
Okay. Got it. So secondly, in terms of the photo chemistry, how many molecules are we doing in that technology as of now?
So there are 3 to 4 molecules which are in the pipeline where we are doing it in the photochemistry.
Okay. Sir, lastly, just on the working capital. If I want to look at it from FY '23 perspective, where should we look at the working capital days, given that we have been guiding to lower working capital for the last 2.5, 3 years, but we haven't seen that playing out?
So on the working capital side, again, I'm saying that I would say this year will be similar to last year, 26 will be a significant improvement. I'm not wanting to fastest right now, but I would try and recommend guide that probably in the next coming 2 quarters. because I want to look at the volume uptake and the revenue uptake ramp-up before I guide on that.
That was the last question for the day. I now hand the conference over to management for closing comments.
Thank you, everyone, for your active participation and for your questions. We hope we have been able to answer most of your queries. In case you have missed any questions that will not address it sufficiently, please reach out to our IR partners ENI, and we will be happy to get the answer to you. Once again, thank you very much for participating. Thank you for coming on our holiday and wish you a happy Diwali. Thank you.
On behalf of EY and Anupam Rasayan India Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.