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Anupam Rasayan India Ltd
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Ladies and gentlemen, good day, and welcome to Anupam Rasayan India Limited Q4 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Krishna Batel from EY. Thank you, and over to you, Ms. Patel.
Thank you, Manav, and good afternoon, everyone. Welcome to Anupam Rasayan India Limited's Q4 and FY '24 Earnings Call. Please note that a copy of our disclosure is available on the Investors section of our website as well as on the stock exchange. Please do note that anything said on this call, which reflects our outlook towards the future or which can be construed as a forward-looking statement must be reviewed in conjunction with the risk that the company faces. .
Please note that the audio of the earnings call is the copyright material of Anupam Rasayan India and cannot be copied broadcasted at 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 now hand over the call to Mr. Anand Desai, the Managing Director, for his opening comments. Thank you, and over to you, sir.
Thank you, Krishna. Good afternoon, everyone, and a warm welcome to our Q4 and FY '24 earnings call. Hope you all are doing good. Let me take you through the updates for the quarter and the year gone by and how we are closed to the upcoming year. Despite short-term selling by the industry, the macroeconomic landscape over the medium term looks positive. Inflation and supply chain disruptions such as the reset prices and fluctuating raw material prices due to market dynamics have caused temporary challenges.
However, declining inflation, steady growth rate in India being a preferred economic partner provides a more robust economic environment over medium to long term. On the industry front, the agrochemical and pharmaceutical industry have been facing certain headwinds pertaining to subdued demand. Our agro business faced certain challenges in the year, and we anticipate that it will continue its current trend in H1 FY '25, after which we are still demand to its tandem. Our sustained efforts in expanding our pharma and polymer portfolio have started yielding users. Despite the challenges in the pharma industry, our Pharma segment has robustly grown, increasing from 4% in FY '23 to 9% in FY '24.
We expect the contribution of the Pharma segment to be in double digits in FY '25. Currently, the polymer sales in single digits of total revenue, which is expected to be in double digits in the upcoming fiscal year. This shift towards a more balanced portfolio with higher contributions from the pharma and polymer sectors will enhance our revenue stability and growth prospects. I feel 2025 will be a year of growth for us with our major focus on polymer and pharmaceutical space.
Now let me highlight our financial performance before moving on to the business highlights. Our consumer operating revenue for the quarter stood at INR 401 crores with a Y-o-Y degrowth of 16% whereas for the year our consolidated operating revenue stood at INR 1,475 crores, posting Y-o-Y degrowth of 7%. The degrowth pertains to a challenging demand conditions in agrochemical and a drop in raw material prices. The margins for the quarter have been strong, and we are able to maintain the same.
The EBITDA margin stood at 27%, which is equivalent to last year. For the quarter, the EBITDA margin stood at 25% on a consolidated rate. At Anupam Rasayan, we are committed to building a sustainable business. And over the years, we have invested in various initiatives. And now we have initiated an investment of INR 51 crores in building a hybrid power plant on mining solar and wind power with a 9.2 megawatt capacity. This initiative is expected to save oppositely INR 15 crores per year in our energy cost.
Coupled with our earlier initiatives, we will ensure that 65% of the company's electricity consumption comes from green energy in the coming years. With this, I would like to hand over the call to Mr. Gopal Agrawal to discuss the business updates. Over to you, Gopal bhai.
Thank you, Anand bhai. Hello, and good afternoon, everyone. Welcome to our Q4 and FY '24 earnings call. Let me discuss business highlights in brief, post which I will let Amit bhai take over to discuss the financial highlights with you. Anupam Rasayan has been continuously focused on expanding its product portfolio.
During the quarter, we added 6 new products to our basket set up to almost 20 new products during fiscal year before. All these products are a combination of our fluorination series and the LOIs and contracts signed. The earlier launch products have already begun ramping up and the remaining on scale are gradually in coming quarters impacting our numbers positively.
We have also added 2 new customers totally 4 new customers in this fiscal year, including 2 from Japan, which has helped us strengthen our polymer pipeline. Going ahead, we expect significant growth in the polymer business, achieving double-digit growth in the next fiscal year as stated by Anand bhai. Japan will become one of the major geographies of business in the next 2 years for us.
With this, to take you through the financial highlights, I would like to hand over the call to our CFO. Over to you, Amit bhai.
Thank you, Gopal bhai. Good afternoon, everyone. Let me take you through the financial highlights for the quarter. After which, I will let Vishal bhai to discuss the same further. Before getting into the financials, let me share an update related to presidential allotment. The amount collected from the fundraise was used to repay the long-term debt of INR 249 crores during the quarter.
Coming to the CapEx incurred as of 31st March 2024, we have utilized INR 40 crores out of the INR 670 crores CapEx. Balance CapEx would be incurred during the first half of FY '25. Our working capital remains stable in absolute terms, and we expect it to stabilize further by end of FY '25 with improvements anticipated in FY '26.
The new products launch will have relatively low working capital requirements. We are also focused on cost optimization and operational efficiency. Our strategic focus, coupled with our expansion plan position us well for long-term growth. With this, I hand over the floor to our Deputy CFO, Vishal bhai, who will take you through the financials in detail.
Thank you, Amit bhai. Hello, and good afternoon, everyone. Thank you for joining us here today. I would like to share some key performance highlights for the quarter and year ended 31st March 2024. And then we will open the floor for question-and-answer session.
Before I proceed, I hope you all have had the chance to go through the detailed presentation and the results submitted to the exchanges and uploaded on our website. And handly note, our numbers for the quarter are on consolidated bases, and they include 10 numbers as well and the same for the year as well. Let me first discuss the consolidated financial highlights for the quarter ended 31st March 2024.
Operating revenue for Q4 FY '24 was at INR 401 crores as compared to INR 480 crores in Q4 FY '23, down 16% Y-o-Y. EBITDA, including other income, was at INR 105 crores in Q4 FY '24 as compared to INR 142 crores in Q4 by '23, down 2% Y-o-Y. This would translate into a 25% EBITDA margin in this quarter. Profit after tax was at INR 40 crores in Q4 FY '24 as compared to INR 73 crores in Q4 FY '23.
Coming to the full performance. Operating revenue for FY '24 was at INR 1,475 crores as compared to INR 1,602 crores in FY '23, down 8% Y-o-Y. EBITDA, including other income was at INR 411 crores as compared to INR 440 crores FY '23, down 7% Y-o-Y and this would translate to EBITDA margin of 27%.
Profit after tax was at INR 167 crores as compared to INR 217 crores in FY '23, down 23% Y-o-Y. Top 10 customers contributed 77% of our revenue, and there were 25 products that we provided to them. With that, we open the floor for Q&A. Thank you.
[Operator Instructions] We have a first question from the line of Ankur Periwal from Axis Capital.
First question on the margins for the quarter, and I'm referring to the stand-alone numbers here. So we have been maintaining that our margins will be. But any specific reason why both gross margin and EBITDA margin have contracted here?
Ankur, this is Vishal. Let me take this question. So Ankur, yes, our margins have been in the range of 27%. If you look at it on a stand-alone basis. On a stand-alone basis, the margins have moved a bit only because of the product allocation and nothing really anything different than we would have seen. So if you look at our margins have been consistently healthy.
Yes, it has been a little lower than what we expected last year, which was 25.4% this year. On a consolidated 26.6% on a stand-alone. So if you look at on a stand-alone basis, we collected by 1, 1.5 percentage points, which is normal that we would have expected when we see the kind of mix that are there. But nothing otherwise or directionally that can see over.
Sure. On a volumetric basis, will we be -- where will we be in terms of growth or degrowth and by what magnitude in this financial year?
So we are talking about the past year or we are talking future year?
FY '24. We have around 24% decline in revenues. So how much of it is pricing? How much of it is volume?
So largely, if you see the largely the revenue volume is the large contributor to that. And as you can imagine that, that has been the reason where our customers can in 2 cases, the minimum volume uptake only rather than the expected volume that we would have expected them to pick. And that's one volumetric reason may I wouldn't.
Okay. Sure. So -- and from a utilizing perspective, we will be sub 80%, 85% odd levels from the aggregate capacity?
So Ankur, I would say that if you look at from a revenue point of view, we should be able to do around around INR 1,600 crores to INR 1,700 crores of revenue. If you look at from a volumetric point of view, it will be -- if I don't include the new CapEx because that's under execution, around 70%, 75% is the kind of volume that we would have been using of our capacity. But as I've told in the past also, this is only a volumetric, but when I -- when my plans, the plants are really multipurpose plants, and I can do multiple products. So if I look at my ideal product portfolio, eventually, I can do anything between INR 1,600 crores to INR 1,700 crores of revenue from here.
Okay. And on the working capital side, we were guiding for a reduction in working capital for the full financial year. I understand the revenue degrowth and the macro behind there, but the sharp jump here in working capital, if we can put some light there across inventory.
Sure. You're right that the working capital has not gone to the levels that we had expected assets to grow. And I would put it into 3 buckets for that. One, if you look at it, my debtors have expanded, and that debtors has responded because of the sluggish growth. We had to offer our customers a longer payment cycle and that has led to increase in the debt level, which we expect to get corrected over the next year, 12 to 18 months' time and bring it back to more normal numbers one.
Two, if you look at it, we had expected that we were to grow reasonably. We started the year, we had expected a double-digit decent growth that we are expecting. And at that point in time, we expected the inventories to be unwound and being utilized well enough to do that. However, because of the degrowth, you have 2 specific challenges that you come to. One is that my inventory velocity goes lower and the unwinding was slower. And two, if you look at it was also because of the numerator-denominator situation where my numerator has -- denominator has shrunk and that has also led to a higher number of days. And the third is I have launched 17 new molecules for which there is a part of the inventory, which also gets added back to it. And that is a significant number that also adds to it because when you start a new molecule, your inventories are higher and as an moves in you smoothen that number. So I think it's a combination of these 4 things, debtors, lower unwinding of inventories to lower revenue, which is making it the payers and the four is these new molecules, which were showing and shows that my inventory levels a little higher on. But going forward, our expectation is twofold. One, we would be able to focus -- we are highly focused on this, and we should be able to try and bring this to a more reasonable number over next 12 to 24 months. This year, we will see a decent correction. But -- and our targeted numbers we should be looking at it by the FY '26 because by that time, the sufficient number or sufficient revenue or volume would have come in and my new products would have also stabilized. And I don't need to -- at that point in time, I would not need to give credits, which also will. So if you look at all put together, I think 12 to 24 months is where you will see a very -- so this year will see the improvement at the final number, probably by '24, '26 financial, we should be able to see the target.
Okay. Vishal bhai, two follow-ups. So one, you mentioned because of the receivables we have started giving longer credit to customers. So which hopefully should in reverse. But on the inventory side, is there any slow-moving product which has got stuck here and due to which the overall inventory looks bloated?
I'm looking at the absolute numbers, we were at INR 860 crores in '22, and we are INR 990 crores now in FY '24. So even if I look at absolute numbers, the inventory number has not gone anywhere in sync with the revenue number.
No, you're right. You're right. I'm not want to say that it is not on the other way around. The only thing I'm saying is that is is there any slow-moving or dead-moving inventory, the answer is no. Slow moving in a sense is just that what I had expected them to move, they have not moved at the speed that we had expected. But is there any risk on those inventories? The answer is no. We do not see any risk because these are contracted volumes for the inventory, so which I'm not worried on that. I'm worried more from the velocity of this movement and the management of the organization is really focused on in terms of absolute risk.
I'm not too worried. And looking that you saw the inventory was also because of the that we 17 products would also lead to a decent size of inventory that's been coming on. So I think together and that's where we are, but happy to explain further if you need.
[Operator Instructions] We have our next question line of S Ramesh from Nirmal Bang Equities.
Sir, two main thoughts in your business. One is on this working capital, you responded to some questions earlier. But structurally, when do you think can bring down your overall blended number of days net working capital to maybe something comparable to a peer group company. So 90, 100, you are way higher than that. And when you say the new products are going to be having lower net working capital, so what is the kind of net working capital we have for the newer products?
And when do you see the current portfolio giving you some reduction in net working capital in terms of the structural direction. If you can respond to that, then I'll go to the next question.
Sure. So see, if you ask me for when I can -- when we can see a more levelized kind of numbers, are you clear saying that my peers or we are talking about a target of 90 is kind of a working capital? I don't see that to be happening anytime sooner. But if you're talking about, let's say, we are talking about 180, 200 days of that kind of a time frame, which is where we feel that we will have a more sustainable number in terms of our return ratios and otherwise.
I think that, that is where we are targeting for that in the next 18, 24 months, we should be able to reach. I'm trying to -- I'm saying it a little on the longer side is also because if you look at it the next 6 months are looking not very, very favorable. And hence, your room for maneuverability on this side will be limited. And hence, I'm saying so.
And we have newer ones will have a little lower intensity in terms of inventory. But also, we'll have to see how the data cycle plays in the Indian market because some part of our revenue will start coming from the Indian market, a little higher because of the pharmaceutical and that's where we would try to be more optimal. And hence, I would say that let's take an 18 to 24 months kind of a time period for us to achieve that.
Okay. Sir, can you talk about the Indian business and pharma increasing the share, what is the current split between domestic and exports in fourth quarter and FY '24? And do you see this domestic exports it moving, say, in the '25, '26?
See, '25, '26, if I look at it historically, we have been around 65-odd 65%, 70% my revenue from the exports and the balance from a domestic. And that mix for a little -- sometimes it will remain in that range. The only thing is pharma's contribution is going to increase. So my domestic from agro to pharma will be a move, if I were to say. We are moving a little bit of demand. We can see the demand of Indian agro to move to Indian pharma side. So that's where I'm trying to say that my receivables is there Pharma next year is looking like around about 50-plus coming revenue contribution coming from pharma. That's where it would be. But mix, I would put it at 60-40, 60-40 plus or minus high percentage point depending upon how the each segment -- how quickly segment responds over the year.
Okay. So on the segment, pharma, specialty, so can you just give us the details of the split between exports and domestic for 4Q and FY '24 through '24 and export FY '24?
So FY '24 is -- okay, FY '24 is around 60:40 and Q4 will be in the 55%, 50, 52 or some kind of a I think export.
6-2, 62.
50, 5-0.
Okay. So that means your domestic business as. So in the fourth quarter that.
I would -- so Ramesh, I would not want to read that 50 as a percent. I would read that as a pure product. If you look at the annually, historically, we were at round about 60, 65 and we will be in that range, but probably to about 60 rather than towards this, right?
That is fine. That is fine. So we're just trying to see how the overall portfolio is moving? How the domestic business is then because of that, you are saying receivables are going up. I'm just trying to understand that. So within this portfolio, if you can share some thoughts, like your overall, your agro is more than given some data on how the pharma and specialties will increase, right? So what is the of pharma and specialities in 4Q and FY '24? And how do you see that pharma and speciality is moving, say, in FY '25, '26?
So if you look at my agro has been around about 65 -- 63%, 65% of my revenue, 9% coming from agro sorry, pharma, 9% coming from other and 17 coming from the life science. So that's where it is for the FY '24. And I think what will happen is that the pharma will add to around about 15-odd percent and other specialty, including polymer will go to double digit. That will have a reflective on the agro and personal care, which will be in that range, right? The remaining will be in that.
You're saying agro will be 75.
No, agro will not be 75, agro is 65 this year, and it should get a little lower because pharma growth will be higher than the agro's growth. And so would the polymers growth be higher than the agro's growth, and that is where I'm saying that pharma and agro will be 15%, probably 15 and agro will be -- sorry, other specialty polymer will be a little on the double-digit side. So you may see that the personal care may go down by a couple of percentage points and agro will give up on a couple of a few percentage points. In my folio, but on an absolute side, I don't think too much will be changing in terms of agro and personal care.
Yes. So 60%, 65% is agro, 9% is pharma and specialty is 9. That is about 74%. So balance out of the balance, 25%, how much is it now? Or where does that come from?
Let me make the statement again. Agro is 65%. Personal care is 17%, Pharma is 9% and other specialty, including polymers is 9 today.
Okay. So Personal care is 17%, Pharma is 9% and speciality is 9%. Okay. But when you see the pharma and specialty is growing faster. Understood. And when you see this kind of growth and you are talking about the share of fluorination increase. So what is the share of fluorination in FY '24? And how does the share of fluorination move in the next 2 years, '25, '26?
So fluorination is around 20% in FY '24 and that would grow further. I don't want to guide today in terms of the absolute number, but it will grow by at least 5 to 10 percentage points is where I'm looking at.
And this will be mostly in pharma, right?
No, no. It will be across polymers, across pharma and also agrochem because fluorination is used. See, I'll tell you what you -- we try to look at it from a segment to segment point of view, Ramesh, but if you really look at it, what am I doing? I'm doing a very simple deal. I have a value chain, I work on that value chain with my chemistries. And then it goes into the end markets like agro, largely, it has been historically agro. But now I am now moving into -- if I do a couple of more steps I get into pharma. If I do a couple of more steps on the slide, I get to polymer. And the fluorination coming in, my raptor has expanded, and that is where it is coming to. So I -- it is a single differential that we are talking. But if you really look at it, it is purely a whole value chain that is playing out. And then that's where we would have to see for ourselves because my fluorination goes in all the 3 applications.
Okay. So just to round up the discussion.
Sorry to interrupt, sir, may I request you to rejoin the queue as there are several participants.
No, no, it's okay. Let me ask this question and then we can. So please go ahead, Ramesh.
In terms of your operating cash flows and growth from the new products, and the movement in debt, how do you see the net debt for the company, say, in the next 2 years, which could possibly offset this relatively higher working cap we're going to have. So can you shed some light in terms of your thought process on how you operating cash flow will help to reduce debt and manage your overall balance sheet to a reasonable size, even with the high working capital, so that your ROCE can improve?
Sure. Ramesh, it's a fair question, and I think -- let me answer it in a different because I don't want to guide to a specific number because that may not be the right way of doing it, but let me give you directionally and the thought that the management has in terms of it. One, whatever working capital we have today, we should be able to do at least a reasonably higher number of revenue from the same working capital. And in fact, on the receivable side, we may be able to improve a better here.
So if you look at it, the simple thing that can happen is that do I need any more working capital? See, CapEx I'm practically done, right? So I don't need any investment in CapEx for next 2 years. So that is one thing which is solved for. Second, if you look at I have invested a significant amount in working capital, which will be utilized for the next 2 years growth.
So if you look at it next 2 years revenue or the EBITDA and should be practically getting free cash flow in that sense and that EBITDA less the tax and interest would be a free cash flow for me. And that will be used to just reduce the balance sheet size in that sense by reducing the debt. And also, please be mindful that I have the pref and warrants money, which will come in, in next 12 to 18 months' time, which will be also used to pay out the debt, especially long-term debt.
We have our next question from line of Krishan Parwani from JM Financial.
A couple of questions from my side. First is a clarification on the CapEx. Sir, did you mention INR 190 crores of incremental CapEx you would incur during FY '25?
So I'm saying that, no incremental CapEx in terms of anything new that we are going to do. I'm saying that whatever was committed, which was INR 670 crores of CapEx, part of that, which is left out for the completion is going to be used to pay out -- to be executed. That's all. Nothing like any additional new CapEx we are announcing.
Yes. I mean, I meant incremental?
Yes. It's 180 then. It's 180 then, which is sitting in my cash today.
Okay. So you would be utilizing that cash towards the capital?
Exactly. So if the question is, do I need any external financing? For that, the answer is no.
Okay. Secondly, the INR 1,600 crore, INR 1,700 revenue guidance, that is on the stand-alone capacities, correct? And that's not in FY '25, but in totality, it can give you the INR 1,600 crores, INR 1,700 crores revenue. Is that correct or no?
Yes, you're right. I was -- that's exactly what I was saying. My capacity that I have today can support a revenue of INR 1,600 crores to INR 1,700 crores. Not that I'm guiding you for that. Absolutely, right. Thank you for helping me clarify that.
Otherwise, I think it would have looked more like in FY '25.
I would love to have that number, but I would not guide for that.
But do you want to give any guide for FY '25 in terms of range, particularly as an on-sold basis?
Okay. Let me answer it in this manner. This year, a year of growth, I believe the answer is yes. But what is that number? Give me a quarter or so to do that because we've been that the first 2 quarters are looking -- we look at our headwinds for that. And the second to third and the fourth quarter is we see a decent growth, especially if you look at it agrochem is one that is the -- there's headwinds coming in. My polymer and pharma will contribute, and that will contribute to the growth. But the net effect is something that I want to see for a quarter or 2 before I guide that. I hope you will be patient with me on that.
Sure, sure, sir. No worries on that. And one, two small clarifications, if I may. So on this working capital front, so if ideally, we should be looking at the stand-alone inventories, I think, which has gone up to INR 990 crores or in days of sales 321 days.
So just can you please give a breakup of that raw material, WIP and finished good inventories for the stand-alone business for this financial year?
Sure. So raw material is around about 30-odd percent of my product. My WIP, FG will be the balance. So we can answer that offline because I don't have it ready right now to answer that, but I can give you that offline on this. Let me check if I can get you during the call. I'll get back to you.
Sure. And lastly, if I look at the stand-alone receivables, which has increased by almost INR 170 crores. So -- and while our stand-alone sales have declined, so if that wasn't for the higher receivables, the actual top line would have declined by a much higher number. Is that understanding correct?
How you see it, right? See, there is a bit of a -- see, have some obligations to take offtake after particular level of volume from like, right? Now I have a choice to incur higher paying to them or a lower paying to them, okay? Because they also in a difficult situation as of now, right? So one way is to say that I don't want this volume and in the terms only that we have agreed upon. Or to say, okay, fine, I also take a bit of a pain for you as you are also taking a pain and that's where we have a compromise, we are saying that we will take the volume. They will take the volume pain and I'll take the fuel pain. So it's a business decision. But -- is it a one-to-one relationship or not? I don't think so it is about one to one relationship. It is purely and probably how you work with your customers, especially high-quality customers who are really working with you for so many years, you would tend to that for them, and that's what we have done.
We have our next question from the line of Rohit Nagraj from Centrum Broking.
Sir, first question is on the stand-alone. So sequentially, we have done pretty well. There could be a seasonality impact as well. But given that at the start of calendar year for most of our export customers and they will be starting the year off rise given that last year, we had inventory issue, et cetera. what is the kind of dialogue that we are having? So whether they're related inference in terms of lifting up the volumes given that last year, those volumes are impacted because of inventory drawdown and they were taking on the minimum quantity. So what are in the dialogue, particularly from the agro perspective, given that the other segments we have already mentioned that there is a strong growth expected going ahead.
So Rohit, let me answer this. You are right that the Q4 has a reflection of the seasonality also. And a bit of a little strengthening than the last quarter. Yes, there is a bit, but are we saying that we are out of woods, the agrochem cycle has now started picking up. I would put it, I would be having a very cautious view on that, that the first 2 quarters, yes, looks little not very, very buoyant. I would be far more comfortable and confident to say that their CY and my FY '25. So their CY '25 looks more -- I'm more confident on that than the CY '24 of the international players. However, it's a little early in the day for me to really comment on the full year there.
But I would say that as we're cautious for the first 2 quarters before I really say that the demand -- demand has come back strongly. Is there a strength? Maybe a bit of a strengthening, but I would wait for 2 quarters, honestly.
Fair enough. Fair enough. Second question is in terms of the LOIs out of that INR 9,000 crores of LOI, how much has the condition in FY '24? And if I'm not wrong, earlier for FY '25, we expected close to about INR 300 crores, INR 400 crores. So does that guidance remains?
Perfect. So let me divide this LOI piece into 2 different packs and then we can talk about it, and I'll answer that fully for you. LOIs to get commercialized, we would take it 18 to 24 months kind of a time period. And two is, typically, they -- once you commercialize it, it takes you another 18 to 24 months or 24 plus or minus 6 months kind of a time period for a fully full ramp-up in that sense because the volume takes time to ramp up fully.
So if you look at my the LOIs and contracts that we signed in 2022, they have started yielding revenue. I -- this year, we should have done a little less than 200 from the LOIs and contracts. And next year, it's just -- it should do reasonably well. Will it be -- it should be in the range of 300 and 300-plus crores is what I would look at for those numbers.
Sure. And just one last clarification. So we've been -- when I understand I don't want to give a guidance on the top line front as is now. But given that the raw material prices have alleviated stabilized, so would our margins will be in the range of 26% to 28% as we have guided earlier from stand-alone basis?
Yes, margins, I think we should be looking at around 26-plus kind of a thing. So what we have been guiding, I think it's something that we should be looking at.
No worries. Sir, any guidance.
I'm just using the rumor here.
Just any guidance on FY '25 and working capital days that we want to put up assets now?
Give me 2 quarters. It was I assure of that. We need 2 quarters to answer that. So that is the quarter or 2 to see how it is moving. I said why I am saying though, because my revenue mix is changing significantly. And the velocity that I am expecting from the cycle to come back with something that I want to see before I really comment on that.
We have our next question from the line of S Ramesh from Nirmal Bang Equities.
Yes. Just a couple of follow-up questions. One is in terms of the number of shares you reported in the filing, does that include the number of shares equivalent the warrants or for dilution, should we take the entire conversion of warrant that 39 million.
So number of shares does not include the warrant share and so you should count for the dilution of that.
Okay. Second thing is now somebody asked this question on the share of revenue from the LOI. So how do we look at the impact of the bunching of some of these what is getting maybe 3 years down the line, say '27 to '30 to take a 3-year view beyond '26, what would be the kind of run rate in terms of revenue addition from the order book you have as of date?
So Ramesh, let me put it this way. I would not want to say that -- let me tell you that, let's say, we have INR 9,000 crores of -- a little less than INR 9,000 crores of order book, right? So if I just divide it by even 6% as an average because there are some at 7 years and some at the 5 years, 9,000 divided by 6 will be in the range of INR 1,300 crores to INR 1,400 crores of number. And that's the kind of a number that you should see, but also you are to be mindful that there are some which would have started in 2023, '24, and they would be tapering it off at that funding then. But as of now, I would say that, that should have contributed INR 1,300 crores to INR 1,400 crores of revenue from there.
Okay. That's a delta from the new orders, right?
From the day it started. So you would say that some of it has been reflected in this year's number also. And I'm talking about total like that.
Plus what you will get the revenue from the current portfolio, which is you need to run of whatever?
Exactly. Yes. So current portfolio will expand. Their LOIs which will expand. And then also my pharma and polymers will also have their contribution. So yes, true, this is not the only delta. This is not only delta revenue that we were expecting.
So but pharma and polymer will be part of the LOA, right?
Some of them, not all of them.
Okay. That means there will be -- you're saying there will be sales outside the LOIs? It's an annual business.
Yes, it would. Yes, it would.
[Operator Instructions] We have our next question from the line of Madhav from Fidelity.
I just had one question on the working capital side. So I remember the last couple of years, we've been highlighting that we want to change the pricing contracts for many of our customers. I think it's usually a yearly contract or 6 months or lower. Could you help us understand like from the IPO time 3 years back to now, what percent of our customers or revenues have shifted to a lower sort of pricing duration, if you can help us with that. And also just curious, if we have 320 days odd inventory in the stand-alone and 70% is finished goods, carrying like 200 days of finished goods inventory on the balance sheet. Just wanted to understand, why are you carrying more than 6, 7 months of inventory of finished goods in the balance sheet? Just just trying to understand the sort of.
Okay. So Madhav, around 60-odd percent is coming from the 6 months kind of contract, fixed comes pricing. And when I say 60%, 70% of it, which is not the finished goods, but it is finished goods and WIP. I was talking about 30% from the raw material and balance is WIP and finished goods and that's put together, it is there. And just to give a little that, there are products where we have multiple steps that we do around anything between 8 to 12 steps or more. And there, each of the steps, you will have a particular level of inventory within the WIP that can be counted. So that is the reason it is that. The exact details I can share is I don't have it handy, but I can share which is what I promise.
Sorry, the 60% revenue, which is from the 6-month contract, how much was this like during the IPO time like 3 years back, how much -- what is then?
At IPO time, if I remember the number was 15% to 20%, which we have now gone up to 60%. But mind you, what has happened is that another thing is that because of the kind of volatility that has been there, they have been interesting on holding higher and that is what I'm saying. But as we grow, we want to go back to the numbers that we have agreed with them, which is where we hold lesser inventory and lesser working capital. And all the new contracts that we are signing, we were conscious of keeping it at about 6 months kind of a pricing rather than 12 months kind of
pricing. Please go ahead. So I was just saying that.
So my question was that, given that the customers have been destocking globally, we like a phenomena across the agro value chain, given the customers are destocking, why do we need to keep higher inventory on our balance sheet?
So I think, see Madhav, the only thing I can say is 2, 3 points and let me put it in this way. One is earlier, we all were keeping it on the whole value chain. Now they have started destocking, but we have been keeping it and we expect that this destocking for us will also happen in next few because, see, the customers will drive the first leg of the destocking and second will come from us.
So we are insisting or we are keen on doing it So only that two things are happening: A, the slower growth end means that lower destocking happening. And two is when your customer is destocking, your leverage to the stock will be that much limited. But as we go, that number, we'll have a better line of sight on that, a better ability to do that.
Okay. And sir, the Pharma business, which is expected to go up. What is the working capital cycle there for that part of the sort of revenue?
So there, the inventory levels will be lower, but there will be a little bit of a higher receivable cycle because in India because that revenue will come from India and the India working capital -- debtor cycle is a little longer than what we see in the international market. So you will see a little bias, higher bias towards debtor, but on the inventory side, you will have a correction. So net-net, I think we should be on the positive side rather than on the negative side.
How different is it, sir, broadly agro, let's say, our target is to be 200 days by FY '25, pharma is at what level?
So the pharma, I would put it, let's say, there is a 120 days of receivables, let's say, no, they may be the right 90, but they may end up in doing, let's say 120 and I will have our 60 to 70 days or 60 to 90 -- 60 to 75 days in terms of payables. So -- and then inventory will be, let's say, 90 to 120 days. So I should end up around 150 or a little less than 150 that I would target. For now, initially, when I'm starting my business a little bit of aggression and then you will try and work on that.
Okay. And margin profile is probably similar for pharma versus agro revenue for?
See typically, margins will be in the range of 25%, 26% kind of a thing. Is my -- that's what we are hitting at. It will be slightly a percentage point a little lower. But today, we are on the KSM side. So KSM we have a decent strength there. In terms of pharma, maybe a percentage point, you may want to take it lower than the agro side.
The only thing I want to add is polymer may have an interesting play, but I don't want to find on that for now.
We have our next question from the line of Yash Shah from Investec.
Sir, my first question was regarding the current LOI, which we have, the LOI which we have of nearly INR 9,000 crores. Have we basically witnessed any kind of dialogues with the customer wherein the customer has asked to wherein there has been pricing renegotiations due to the overall decrease in the prices throughout the value chain.
So Yash, our model on pricing is very simple. I -- we build it from a raw material to all inputs and then say I want a particular level of margins. So that's where it is. So it's a very, very fluid -- it's a very, very transparent pass-through kind of an approach. So for me, the key value -- key important number is EBITDA rather than my revenue in terms of a contract, I'm saying right? So volume is assured, margins are assured. Now the volume -- price revenue is a pass-through in that sense to me.
So if the raw materials increase, my revenue may increase the fair bet and to that extent, the percentage of my revenue will be equal to EBITDA and same other way around. But -- so for me, we don't have that conversation of what is going to be the price? Do we renegotiate the price because that's we adjusted every 6 months going forward.
Understand. Got it. Sir, my second question was regarding, again, you actually guided that the revenue from LOIs for FY '20 should be in the range of somewhere between INR 320 crores, INR 370 crores. So far, as of FY '24, these commercialized contracts were INR 2,700 crores. And for FY '25, we had guided to basically, except for the INR 2,200 crore contracts from Japanese customers. So we'll be basically commercializing INR 4,200 worth of contracts in FY '25. Will you be able to provide a broad breakup as of the contracts which have been commercialized before this year and the ones which are going to commercialize in FY '25 of how are we basically expecting INR 350 crores?
So I'll tell you, so you can take that the FY '22 contracts have been commercialized. And the latest one that we have signed is what we have commercialized. So these 2 -- these are the ones that we have commercialized. And now next year, we may commercialize the other few of them, which are coming. Other 3, which will be -- which are the ones that we signed in FY '23 or later half of the FY '24. Sorry, later at the early part of the '24.
We have our next question from the line of Siddharth Gadekar from Equirus.
I just have one basic question. When we look at our contracts, which are annual, given that in CY '23 if a customer had indicated they would be picking up x quantity by year-end, how -- how much lower was that uptake from those customers? If you would give a fair sense in any way?
See so if you look at it, typically, there is an NGO and there is a forecasted volume. So typically, forecasted is, let's say, 100, then the NGO will be in the range of roughly around about 70% to 80% of that number is an NGO. And typically, that's why we are talking about.
Okay. So basically, it would be fair that the offtake was 20% lower than what the customers have indicated in CY '23. Would that be a fair understanding?
Yes, you can say around 20-odd percent. Yes, you can say that.
For CY '24, how has that number shaping up like in terms of the customers, how have they indicated for CY '24? Is it to worry to give any indications so even there put the whole?
See, that's what I'm saying, what I had mentioned, and I don't want to get deeper onto this because there are a lot of moving parts here. But as I said, first 2 quarters look a little tepid and the next 2 quarters will be here and there. And overall, we expect that there should be growth. So I think that would really indicate to you the kind of conversations that we have had with our customers.
Okay. And sir, for CY '25 also, have we received any indicative orders from the customers or that will happen once we are closer to the end of CY '24 or CY '25 looks a year, we will see a very healthy growth.
That I can tell you that, yes, that's where people have been. So our customers have been saying that CY '25 looks far better than CY '24 for sure. For sure. And CY '24 looks better than CY '23 also is a statement I can say. And yes, the buoyancy on '25 far more than the buoyancy on '24 compared to the previous year.
Just one last thing on this. So if CY '25 volumes higher than CY '23 or it will be in that same ballpark range. On the existing order, not on the new orders?
Just to get a fair sense of how our customers are looking?
It should. No, it should be better. It should be better. We should have caught up. We should have caught up if that is the question.
Okay. Sir, secondly, in terms of margin.
Please see because I'm noted and I want to make it clear that these are our estimates and expectations. Please be mindful of that.
Yes, it is. Secondly, like in the previous comment, you had mentioned that we work on a percentage margins. So do we work on a per k margins on a percentage margin because we have in.
Percentage.
In way where raw material prices are moving up, our absolute EBITDA is technically much higher than what it should have been. Is that a fair understanding?
You're right. But see, you would always understand that if you look at my raw material cost is what, 40% of my 30% to 40% -- 35% to 40% of my revenue, right? So that population is limited and you will see over a period of long term, over 5 to 7 years' time period that everything levels out. So yes, quarter-to-quarter, you may see a bit of an up and down on a long-term basis, you will see that everything levels out for that. That's a business that we would want to talk about. That's the business that we want to build that over the next 5 years, 7 years, 10 years, how does it look like?
We have in from the line of Rohan Gupta from Nuvama.
Sir, a couple of questions. First is on is if a and other fluorination business, if you can give some what is the current capacity utilization? And in FY '25, FY '26 looking at the current product pipeline, what kind of utilization level you are looking at?
So one, in fact, if you see it had a capacity on the asset side, which was 20% to 80% utilized, but they've gone up and expand the under the expansion phase right now and the just capacity by double in next year. And hence, if you see there is enough and more capacity available for us and also for transactor supply to the market. So to that extent, the availability of would not be a challenge to.
No, sir, my question was other way around that in HF, you still have a surplus availability and are we able to sell in the market, what are the capacity utilization win for HF access we have seen at Tanfac. I mean is there a market in HF right now because earlier the Tanfac used to sell significant amount of HF to outside. How is the market now? And once we are moving up in the value chain, then what are the expected utilization level for Tanfac next year?
So I think for Tanfac, if you see the volumes as per the plan has been achieved in terms of capacity -- sorry, in terms of volume if you were to talk about. Yes, there has been a little bit of size movement here. But typically, the volume side, they have been able to do need some enough there. Do we see that there is an overcapacity and today doesn't look like because this year, as we have started the numbers look decent for now. But let's see how the demand pans out later in the year.
Right. Of course, today, also the capacity is limited for HF and the utilization is only increasing.
And sir, second question on about agrochemicals. 60%, 65% of our business is still coming from agrochemicals there. We have been seeing that very poor visibility as of now, whichever you are also agreeing that maybe first half may be slightly uncertain and things should pick up in the second half. That is an expectation across the industry right now. Sir, with that, keeping in the mind though, do we have been signing multiple LOI and a lot of LOIs was supposed to go on stream from -- I mean, in this first half also. Do you see that from the client interaction right now, which you are seeing, there can be further push of, further delays how the contracts are -- I mean, have been chalked out that in case of any significant delays are we covered because the capacities have been invested? So are we covered in terms of client compensation, any of such thing because our business over the next 2 years is a lot of dependent on LOIs. I'm just worrying I'm trying to understand the risk is associated with that? If any delays, how it will be panned out in terms of the compensation to our profitability?
So Rohan, let me answer it in three parts. First part is if you look at it, I don't have any dedicated plan for any product or any customer, okay? Each plant has multiple usage and in the multipurpose. And if you look at the product portfolio, I have a decently large of portfolio. So to that extent, any one product really impacting my utilization of my revenue is limited to that extent that impact of that is limited. If you look at this year itself, I've launched 17 new products. Next year, I'm looking at another 6-odd -- 6 to 8 products. So if you look at it total portfolio, if you look at it, I'm talking about 30 to 80 products that is there now, yes, there may be some plus or minuses on any 1 or 2 products that could happen. That may happen. I'm not saying it could not happen. But there -- but that is also budgeted in and put out. And two is also the ability to impact my total capacity utilization or my revenue or my -- that's much more limited. That is all I'm trying to say. And the third part is that are we expecting if we delayed right now we don't see any. A quarter or 2 really doesn't swing into the gain. If you look at from a complete -- a broader perspective. And that's where I would put it, Rohan.
Sir, I was trying to understand more from the contractual perspective from the customers. I mean, if there are further delays customers don't give the material maybe for another 6 months, 1 year. Are we protected? Is there a take-or-pay kind of contract? That's what I wanted to understand how the contracts are laid out?
The Contracts are take-or-pay. Contract has a minimum offtake, right? So that anyway now, that always kicks in, but how you solve it is you have multiple ways of solving it, right? I can ask for compensation. I can ask for a bit of a price adjustment. I can ask for a different product. I can ask for a higher volume to compensate for it in the next quarter. So there are various ways to solve it because these are all long-term customers, who are saying I'll honor what I've said, but let's find a win-win solution. And that's what we will always do that. But the question is, if you're asking is, am I getting compensated, yes, one or the other way, I'll get compensated. And contractually, as a compensation clause that is there and that I use it to get what I want. In fact, when I give one, I get too many times from.
We have our next question from the line Meet Vora from Emkay Global.
We mentioned that the peak revenue potential from current gross block will be around INR 1,600 crores to INR 1,700 crores. Now including the fluorination block that we are putting in, what would be the total peak revenue potential that we are envisaging?
Yes. So all put together, I think we should be in the range of plus 3,000 plus sorry. Sorry, I didn't get your question. Can you ask me again?
So I was saying that currently, we mentioned that the revenue potential from current gross block will be somewhere around INR 1,600 crores, INR 1,700 crores. Now including the fluorination block that we are putting INR 1,700 crores CapEx, what would be the peak revenue potential from the combined gross block?
Okay. So first, let me clarify on one thing and that's the reason I asked you a thing is that the new CapEx I'm putting is not only fluorination, it is fluorination plus other products also. So put together, INR 670 crores is 3 plants. of which 2 are more supporting the fluorination and one is supporting and other products. So add all put together, the revenue potential that I can generate from that, I'm not guiding for the revenue, but I'm guiding for the capacity that it can generate revenue, we should be looking at around about INR 3,000 crores of revenue assumed with the current kind of a revenue mix that we have.
And this would include the LOIs, all the LOIs that we have signed?
Yes. So I'm saying that all the products that I have today that I'm thinking about the one will be catered from these plants.
Correct. So at peak, we made around INR 3,000 crores, around, say, INR 1,300 crores to INR 1,500 crores would also be from LOIs.
Yes, you're right. Correct.
Sure. And also in terms of the that we have signed, do we need to incur any new CapEx or largely everything is done this CapEx?
No. So with this CapEx, we have practically done this plan.
Sure. And also just one last bit. What would be our -- so our CapEx guidance for FY '25 will be the balance CapEx that we have guided INR 180 crores. And like FY
Plus a maintenance CapEx.
And what would be that number for FY '26?
More on the maintenance side, I would put it at that number, because I have right now no plan on the CapEx.
As there are no further questions, I would now like to hand the conference over to Mr. Vishal Thakkar for closing comments.
Thank you, everyone, for your active participation and your questions. We hope we have been able to answer all your queries. If there are any that I've missed out, please reach out to EY, our IR partner, who will be able to help you. And we are happy to connect with you offline as well if there's any questions that you have. Thank you very much for joining and taking time out for us. Thank you.
Thank you. On behalf of Anupam Rasayan India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.