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Ladies and gentlemen, Good day, and welcome to Insecticides (India) Limited Q2 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [indiscernible] from Captive IR Strategic Advisors Private Limited. Thank you, and over to you, sir.
Thank you. Good evening, everyone. On behalf of Captive IR Strategic Advisers, I would like to welcome you all for the Q2 FY '22 Earnings Conference Call of Insecticides (India) Limited. From the management, we have with us Mr. Rajesh Aggarwal, the Managing Director; and Mr. Sandeep Aggarwal, the Chief Financial Officer of the company. .
Before we begin, I would like to mention that some of the statements made in today's discussions may be forward-looking in nature and may involve risks and uncertainties. A detailed statement in this regard is available in the earnings presentation shared on the exchange today. We shall start the call with the opening remarks and then we'll move to the Q&A session. I now hand over the call to Mr. Rajesh Aggarwal for his opening remarks. Over to you, sir.
Thank you very much. On behalf of IIL, I, Rajesh Aggarwal, Managing Director, extend the heartiest welcome to all the attendees of today's earnings call. I hope you all enjoyed the rebounding festivals. And on that note, I'm extremely pleased to present before you the quarterly and the half yearly results of the company. Though I'm joined with my CFO, Mr. Sandeep Aggarwal, and he'll be supporting me and talking about the results, but I would like to begin with the industry outlook -- the industry overview.
The agrochemical industry is expected to grow at a rate of about 8.6% from 2021 to 26%, and it is expected to touch about $7.4 billion by 2026. The Indian government recognizes the agrochemical industry as the 12 top industries to achieve the global leadership and is expected to grow from 8% to 10% through 2025. This is the report of [indiscernible].
So Indian agrochemical market is a significant contributor, particularly the -- there is a good growth of the industry in the [indiscernible] zone because this zone or this area is growing at a very fast rate. There is a huge demand for food. And if you look at the international scenario, people look at India as the alternate supplier. So there's a huge opportunity for our country to manufacture and to supply to the world. And with the China Plus One policy of many companies across the world, the opportunity overall is multiplied.
Today, India is the net exporter of agrochemicals and 13th largest exporter of pesticides and disinfectants in the world. There are various reasons, low manufacturing costs, availability of technically-trained manpower, seasonal domestic demand. So overcapacity is also there. We can offer very good competitive prices. And yes, there is a very strong presence of the Indian company in the generic market that also with the edge.
And nowadays, the companies are also entering into the new generation of generics, which is giving a different like a huge opportunity for the Indian companies in the international market as well as the Indian market. So our country has a large population. And the income, both the rural as well as the urban income, is growing at a big speed. And there is a growth in the demand for agriculture products.
There are various government policies like Paramparagat Krishi Vikas Yojana, Pradhan Mantri Gram Sochalay Yojana, Saansad Adarsh Gram Yojana. So there are various schemes where the government is trying to promote agriculture and -- which is giving a big boost to the agrochemical industry. The latest initiative of our Prime Minister about the Krishi drones is also catching up. All the companies are putting in a lot of effort, most of the companies, to develop the products as per the requirements of drones and they are in the data generation stages. And a lot of trials are happening across the country.
And here, I would like to say that IIL also not far. We are working a lot on the drones, and we are registering various products, specifically the new generation products for the drones. And government itself has given the permission for all generic insecticides and fungicides in particular, which can be used on the risk of the company. So companies are trying to do that. But I believe that with this new technology, a lot of sales is going to happen for the new generation molecules, where the companies are going to use this advanced technology for the fastest sprays, for touch-free sprays. So this technology is catching up. But yes, it's still under development and a lot of effort is happening because a lot of new drone companies are also coming up or they are into the Krishi drones, a lot of agrochemical companies, they also are putting a lot of pressure.
At the same time, if we look at the world, about 15% to 25% crops are lost due to the pest and weed attacks and also the diseases. So we need to save this crop. So the demand for agrochemical is going to go up. And if you look at the international scenario again, then yes, world is talking about food shortages, which means that we urge to protect every morsel food is important actually. And definitely, the demand for agrochemical is going to go up.
Q2 was a little challenging because of the adverse monsoon pattern because we have observed that there were heavy rains, untimely rains, unrequired rains in many areas. And then the -- some of the areas were very, very dry. If we look at the rains, even in Southern part of the country, even now, it is raining actually in many areas. So the monsoon has been excess in many parts of the country, particularly Central India, South India, and there were short monsoons in many parts like Eastern India and some parts of North India.
So the monsoon has been quite erratic, which has disturbed the cropping patterns actually because many of the crops like sowing of various crops like rice, the pulses, oilseed, coarse cereals, everything got affected. Even cotton got affected. And at the time of harvest, because this is the harvest season, the harvest also got delayed actually, and there was loss to the farmer in the yield actually which has come due to the delay in harvest and the rains -- the thunder storms, they have hit the crop.
But if you look at the opportunity, the opportunity in the rabi season is looking good. Why? Because there is good water storage. Water levels in the reservoirs are very, very high. The soil has good moisture. So the opportunity during the rabi season is huge. And so the crop prices are going up. Even if you look at the vegetable prices and if we look at the other crop prices, they are all up. So the demand for agrochemicals is there, and it is decently good demand actually. And I hope that we should get a good season in the winter or the rabi season also.
I see a lot of opportunities because along with the chemicals, the biologicals things are also coming up actually. And a lot of innovative products have also started entering into the sector. Previously, when we talk about the generics, it was [indiscernible] the single products, which we're selling. But now the trend of IP clearly the IP for the mixture and launching these mixtures because industry has started believing that if consumer is looking at the solutions and is not looking at the products. So everybody is trying to make scientific mixtures and put them into the market. And this has opened a new era of new products into the market. And when people are able to claim the IP, so it gives an edge into the market.
And along with this, the biological things are also coming up. And biological products though are in the [indiscernible] stages, but they are stretching up into the market. Now before talking about the results, I would like to talk about the scenario. In this quarter, in particular, there are some notable developments, which I would like to discuss with all the attendees.
Number one is the GLP certification. Yes, IIL has received the good laboratory practice certification from the Government of India. And we were the 52nd company to receive it across all sectors. When I say across all sectors, I mean to say any sector, we were the 52nd company to receive the GLP, which is a big feather in the cap actually very, very important because the data becomes acceptable worldwide when you have a GLP accreditation. So this -- your company has achieved.
Here, I would also like to talk about IIL Biologicals Limited, which is a new arm of Insecticides (India) and is a fully owned subsidiary of Insecticides (India), which we are going to set up now. And good news is that we have also decided and finalized a new site for this because now we are coming up with a new project or a new factory in the midway of Delhi-Jaipur Highway, where we are going to set up the plant for IIL Biologicals. And we are also going to set up the plant for IIL.
Here, we are going to consolidate our formulations, and we'll have the advantage of the location. And also, we are going to set up a technical plant in Phase II, and we'll have our R&D center both for the biologicals as well as chemicals, separate R&D centers, which will be set up in this location actually. And I hope this will give a good edge to the company.
So 2 new products were launched during this quarter, particularly namely Izuki and [ stunner ]. So Izuki is a product of, I would say, it's a mixture, which is extension by Nissan. So it's a product from Nissan's portfolio. Very good response we have got in the first year itself. We believe that we should be -- it should be contributing good numbers. And it should -- it would be -- it should be becoming a INR 50 crore plus product in the next year itself -- in the second year itself.
And then our R&D center also launched one product called [ stunner ] so first time manufacturer in the country. So this is a new product, which we have made for the first time. So the demand is limited, but we got a very good response actually because this was a fungicide, which is good for grapes and also tomatoes and some other crops, expensive fungicide. So we got a decent response for this product also.
So the ideology of the company is that we wish to bring the new generation molecules, new products. So new generation for molecules include some of the off-patented products and some of the patented technologies with our Japanese partner. So there are a lot of products underway. From here to next 6 to 8 months, I see about 1 dozen products coming out of our R&D and also with the Japanese partner. So a lot of new products are underway actually, which we'll be making for the first time in the country.
There will be certain technicals, formulations. And all these launches, as I get the registrations, we will be launching these products and as the plants are going to get ready, so these will be launched. So now I would like to also update about the CapEx. First, I would like to discuss about Dahej because Dahej is a big product or -- project where we are investing on about 70-odd reactors.
So we believe that we should be able to bring the plant in operation from January, and we should be able to complete this expansion in full by that time. So here, we are setting up the utilities, new reactors and everything is on. And this plant is expected to give us the advantage from the next kharif season itself, and we'll start looking in advanced investments. We are going to do the backward integration also here because we'll make some new molecules, new technicals, which we have already started doing partially here from this expansion, but we are going to utilize it in full and make the new technicals out of this.
And this will give us help in 2 ways. Number one, it will help us in launching the new products. Number two, it will -- since it is a reverse engineering exercise, where we'll be making certain raw materials, chemical synthesis actually, so this will help us in reducing the imports. So this will help us in saving the cost and increasing the margins in the products -- in some of our leading products.
Along with this, we have also set up a 1-megawatt solar power plant in the Dahej unit actually. So which I would like to discuss. So there has been some delays, actually, which happened majorly due to COVID, and now we are in the verge of completion of this plant. So some issues, which are delaying it by some days because the rains were huge again at Dahej actually. And when rain comes, actually, the road is not there, you cannot work actually. So it becomes difficult. So the expansion got a little delayed, and there is some price increase also.
So 2 two major reasons of price increase. Number one is this solar mega plan, which was not there in the initial stages. And we also made 1 big godown in the plant, we are making about 9,000 square meters, which was not planned initially. And then there was an increase in the price of all building materials, particularly in the steel, both SH and MH and other metals, actually, which has impacted the increase in the costs and the cost, I think, has increased by about 25%, 30%, Sandeepji, roughly.
Yes.
There is a cost escalation of about 30% from our estimates because those estimates were of pre-COVID period actually, and the situations have changed in this period. So here, I would also like to talk about the new facility, which we are discussing about Rajasthan. So this is the midway of Delhi-Jaipur. We have invested into the project. Project means, this was a old factory, which we are trying to purchase through NCLT. So this deal should be through by December, and we should get a position by that time, and we would start doing the renovation into this plant, and we should use this plant to set up our formulation unit first, then the R&D center.
And then in Phase 2, we'll enter into the technicals. And simultaneously, we will also decide for the biologicals because this is a huge site, and there is a lot of construction, which would help us in doing this. One more good news here, I would like to share that we were also actually doing an expansion of over 30-odd reactor in Chopanki. So that expansion is complete, and we have brought the plant into manufacturing just recently from this 1st week of November.
So the production has started coming from this plant. And like -- the benefits will be visible shortly out of this plant because here, we are almost increasing our capacity by more than 50% plus. So this advantage will shortly start coming. Talking about the product range. So the product was further divided to Maharatna and Focused Maharatna this year. So this has given the advantage to us. The advantage is 2-point advantage.
Number one, by dividing our range into Focused Maharatna, we have put about 11 Focused Maharatnas, and we have achieved about 30% sales from these Focused Maharatnas, and 30% of our brand sales have come out of the Maharatna, which means these products we are doing more focused and which is increasing the sale. And this increase looks like 6% year-on-year, but is not 6%. Along with 6%, there is a 25% increase in the first half of the total revenue of Insecticides (India).
So that 25% is the additional thing, which has also come in from the sales item mentioned that actually. So the -- this will, of course, be -- we expect that this will support in -- not only incremental sales but also in incremental margins. And a lot of products like this was the first year after COVID where we could promote some of the products which were launched during the COVID period this year. Though this year, as I mentioned before, was -- has a very erratic monsoon because some areas were dry and some areas have extra rains. But despite of that, we have shown a robust growth of about 25% into the top line. And the major contribution is coming from our key products actually though the generics are the essential part. We are following up a policy of tail-cutting where we are trying to cut down the old products because new ones are being launched actually and many are in pipeline.
Our pipeline overall is very, very strong, thanks to our partners and also our R&D activities by virtue of which we are able to launch these products, and our development and marketing team is carry -- able to carry these products to the market. But yes, like -- I'm very, very hopeful and very, very enthusiastic about this year. So talking about the future outlook, here, I would like to mention that we will continue with the growth into this fiscal actually, and we should saw a very strong double-digit growth in the top line in this year.
EBITDA growth will also be there. But yes, there are various reasons, which has impacted the EBITDA growth. Particularly, I would here like to say 2 major reasons. Number one is international disturbance due to which the crop price or -- the prices of the chemicals have changed a lot. There were acute shortages. There were shortages of containers [indiscernible], which we were forced to buy some products at expensive prices actually, and we could not get the same price from the market. That was first impact.
And the second impact was due to the currency because all the currencies across the world have depreciated in front of dollar, which has given a very negative impact actually on the margins of the company. So both these 2 things have impacted actually in the half year. But I believe that in the future, we should be able to make a recovery actually into the cycle and we should come out of this.
So the working capital cycle got increased a little, but I believe that, that situation is going to become normal because we are very, very working very -- in a very focused manner around our products. And we are trying to like achieve good sales number by reducing our purchases. But yes, the future is looking very, very lucrative because China, in last 20 days, has started showing a very good opportunity because the prices of many of the raw materials are becoming very, very cheap. So the reduction in prices giving the opportunity, and we are again rethinking to start our purchases. So that will be there, but it will take time.
So we should be able to reduce our total stocks in a big this quarter actually by increasing our sales further and reducing the purchases in this quarter at least. So I believe that this impact is not -- is going to be improved. So the new products are contributing well in the margins and sales of the company. The key products we are working in a very focused manner. And I already explained that Focused Maharatna and Maharatnas are the products about INR 30 crores are put into this range where we are working hard. Definitely, these products have better margin and better future growth, actually, we expect. And we are trying to launch the new generation products into these ranges, which should be able to fit in themselves in 1 to 2 years' time into Focused Maharatna and Maharatna range so that we are able to come out of the old generics and we market either the patented generic technologies which are going to become -- when I say patented, I mean to say there will be the mixture product, there will be 2 products mixture , 3 products mixture. And also, there will be technologies from our Japanese partners, particularly Nissan, which will be the patented technology.
So these are going to help us in a big way in our future program. And along with the IIL Biologicals is also going to support us in a big way because now we are going to open our second R&D center -- biological R&D center, I would mention, in the IIL Biologicals, which should be able to give us a big advantage because there are certain technologies on which we have been working. And in my recent international tour also, all the companies are showing big interest on the biologicals in particular because people believe that it can be a good future strategy. Though in the initial stages, but these biologicals parallelly are also going to get a good market size actually. And the expectation on -- from the rabi season is quite good because of the availability of water.
And with our strategy of import substitution and backward integration and with our marketing strategy, I believe we are going to do pretty well during this year and also in the future years. I have very good growth target in mind by because all these expansions, which are going to get completed now, they are going to support us in increasing the market in the future years also. So I can say, at least 2 years are taken care. And with our additional investment, the new investment in Rajasthan, which is going to come for the new land and the plant will be available for the formulations in this kharif season also, that is also going to give us a big boost and a big help in increasing our market share, both in the domestic as well as international market.
Now I'd like to talk something about the international market. International market, the response has been mixed this year. Why? Because in India, we are not finding the dollar, I would say, shortages. But in many parts of Africa, the demand is good, but the currency deterioration is very, very high in many Asian countries, American countries. Many countries, the currency depreciation is high. And at the same time, there is dollar shortage also due to which many orders are there, but they are stuck. But still, we have started. I think the situation has started normalizing. And a lot of opportunities are there, which are going to support us in a big way.
We had initially kept the target of INR 200 -- INR 2,000 million, means INR 200 crores of export sales, which had revised, INR 250 crores. I believe that I'll still keep that target in mind, and we will be working -- our international team will be working for this target, though we have to work pretty hard because many companies are shortening their orders, they are delaying their orders. But still since the discussions are on, I'm very, very hopeful that we should be able to make a good recovery in the international markets also. And this year, we will stabilize and next year, we'll grow in our exports in a big way.
Updating on the R&D program, Here, I would like to mention, like we do different type of R&D, everybody is aware. So the JV R&D, the new [indiscernible] R&D is doing well actually, and they are filing their new patents And one of the products which is squeezed between the 2 companies OET and IIL. So that also is into the final stages of the registration. It takes time. But still, I'm very, very hopeful that since the product is made and well designed, and we are on the scaling process. So the enthusiasm goes up and definitely this product is going to help us in a big way to enter into the domestic as well as international markets.
This GLP accreditation, which has come to company, has given it a good edge into the market actually. And the edge, particularly to, I would say, the image of the company, both in the international as well as domestic market. And our program of reverse engineering is definitely going to support us in a big way. You will find that new announcement about the drones and the spraying of different agrochemicals and fertilizer products is going to come from IIL because we are also working with this direction actually in a reasonably better fashion. And I look at the opportunities of bagging the big orders from the international companies actually in form of cramps both for formulations as well as technical. So there is a good opportunity.
We have been working on registering our products in the international markets in a big way, and we are expecting that these registrations should click into the advanced markets of America and Europe. Actually, already, we have started exporting our -- one of the key products [indiscernible] various European countries because we have registration in Europe, which is valid in 17 countries. So these countries are registering the product, and we have started bagging some small, small orders actually and -- small and big, I would say.
So my expectation is that we should -- our products, which the quality is very well established in many countries actually where we have supplied. And in many other advanced countries, I'm not selling it directly, but through the exporter, these products are going. So the quality is very well established. And with our backward integration program and our capacity expansion program and the registration program, all these programs are going to support us in a big way in increasing our presence in the international market also.
Last but not least, I would also like to talk about the fraud, which has happened in the past, actually, in the state of Chhattisgarh with us. We had filed the case and the case is still on in court. There has been some partial recovery, but about INR 10 crores plus is still stuck in the market, and we are trying to recover it through the legal proceedings. Legal proceedings are on. 1% is still behind the bars. And there are several cases, which our team is attending actually, and we are very, I would say, efficiently trying to work around this and make this recovery.
And at the same time, we have also made a lot of improvements in our system so that there is no repeat of such instance in future, actually. And we are working, I would say, in a big way in changing the product mix and launching the new products. And whatever launches have happened in the recent year,have been very much appreciated, actually. And if you look at the new products, I would say, the performance, so there, you will find that the interest of the market in our new products is increasing, and we are very successfully able to take these products to the market, and we have achieved very good sales for particularly Hachiman, Shinwa, Torry, which are our big launches in this year, and there are many new products which are lined up.
So with this, I thank you very much, and I would like to hand over the call to Mr. Sandeep Aggarwal, CFO, to talk about the financial results. Sandeep
Good afternoon, everyone. So a lot of things have already been discussed. So let me have a small lift on the financials. If you see the second quarter the revenue from operations has increased from INR 444 crores to INR 582 crores, showing a jump of around 31%. if you see the EBITDA, the EBITDA has improved from INR 64 crores to INR 69 crores, the jump of around 6.68%, and the PAT has increased from INR 42 crores to INR 45 crores, so an increase of around 6.35%.
So the major reason for the increase in the revenue is through the new product launches. The products which we have launched during the year has contributed approximately around INR 80 crores during this first half. The products which we have launched last year, they had also made a good contribution. So during the first half, the contribution from the products last year is around INR 95 crores. And the in-licensing products contribution is around INR 83 crores in the first half, and the patented product contribution is around INR 93 crores in the first half.
So basically, we can say the major growth is volume growth. But yes, there's a 5%, 6% price rise growth also. So the basic reason is the good growth in the new launches and the product launch last year. So now we can -- this is from my side, so we can now turn [indiscernible].
I would also like to add something, Rajesh Aggarwal again. Like particularly, if you see the growth in the H1, the major growth you will find that it has happened in insecticide and herbicide range. Incidentally, we have -- happened launched all like herbicides, insecticides and fungicides. But in the insecticides side, Shinwa, I would like to still talk about Shinwa because Shinwa is a big launch for this year, actually. And we see Shinwa as to -- as our #1 product in the next year, actually, which would cross INR 100 crores sales, I can mention, next year.
If I talk about herbicides, there are 2 herbicides I would like to mention, though both of them were launched in the previous cycle -- previous year. But Torry was launched in, I think, March or April. I'm not sure about the month. Torry was launched this year. Hachiman got launched last year. So we got very little sales last year. But yes, these products are doing very fine, and they will be our top 3 products, actually. You can write down, Shinwa, Hachiman and Torry, they will be our top 3 products actually in the new cycle.
And I would like to -- like -- my vision will be to cross INR 100 crores with each products individually. But I can say at least all these 3 products put together, we'll be crossing INR 300 crores for sure in the next fiscal itself. So I mean to say that some of our products got obsolete or banged actually in the past like [ Monocil and Nuvan ] we lost our sales of about INR 250 crores when these products moved out. So we have made 100% recovery. And next year, we will find that these 3 products, in particular, they will be our top new products actually.
So here, I would like to mention Hachiman is patented by us. It's a mixture product of Nissan, but we hold a patent for this product. Shinwa is a patent product of Nissan again. And Torry is first time manufactured by us in the country. The brand was very well accepted in the market. We made some partners also. I'm not talking about the partner sales. But our brand sales itself were quite good, actually.
And next year, I wish to see all these products multiplying their sale. And the new fungicide, which we have launched, which I talked recently, both Izuki and [ Stunner ] they are both fungicides. And I see their sales also multiplying next year and contributing in a big way in our portfolio. So thank you very much. Now I open the house for the question and answers, please.
[Operator Instructions] Our first question is from the line of Bharat Gupta from India Insight Value Fund.
Couple of questions from my side. So first, in regard to the quarterly performance, so could you just elaborate like what has been the volume growth and what has been the value growth for us during the quarter?
I'll give it to the CFO to give the exact numbers. But here, I would like to mention actually, as our strategy, we are trying to work for the new generation molecules. New generations will not give that much volume, but they will give the value. So the value will be both in the top line and as well as the bottom line. But since he has the numbers in hand, so he will share the number.
The price growth is around 6% to 7%. And the balance is volume growth. And volume growth is also majorly due to the new launches and the launches of last year.
Sir, if I look at the margins, so definitely while price realization has been like on a strong side. So just wanted to understand what kind of inventory impact we would be having in terms of like you have already highlighted that there has been a couple of impacts. One is in regards to volatility, which you have seen in the RM prices along with the currency headwinds. So I just want a quantification on the same. Like what can be the inventory impact on the margin? And secondly, what has been the currency impact related to the profitability?
Like talking about the currency, I can say like we have got a hit of about INR 13 crores due to currency. So since that number was already I've mentioned. Inventory impact, I don't see any impact on the inventory because the sales is on, and we are very aggressive on the sales side. So we should be able to liquidate the thing. But yes, there will be some impact because when the margin -- market is fluctuating, because, previously, the market was continuously going up, and now it is showing the signals of little weakening.
But we don't know, like this weakness is going to remain for [ goods used ] for quite some time or it is temporarily because this is super offseason and very low demand across the world actually. So maybe this impact -- this has impacted into some fall in the prices. But yes, the correction in the Indian market has not started in a big way as yet. So I don't think that at the moment or at least for this quarter, there will be an impact of the inventories.
Sir, generally speaking, how is the inventory level out there in the market? Like how has been the channel inventory position?
Channel inventory means, what happens is like this is the end of kharif season. So when the season ends, actually, nobody keeps the inventory and whatever is there, they will try to return it to the company. And if the companies don't take it, then your payment gets stuck. So as a strategy, we don't leave anything in the market. So our inventories will not be there actually in the market. So whatever are to be lifted back, they are either lifted back or there will be -- something is remaining, that will get lifted by the end of the season.
So in most part of the country, apart from South India, the season -- the kharif season will be over by November actually, and the new sowing has already started. So with the new season, the type of products which are required are different, actually. And then it goes to regular insecticides and other things. So I don't see any bad inventory situation in the market because the season is ending and companies will be lifting as a strategy, I believe that.
Right. Sir, even if I look at the receivables in the balance sheet side, so that has been on a very -- since on the higher side. So is there any kind of issue in terms of collecting cash from the distributors or anything like that?
The collections are coming fine. Since there has been the increase in sales, that has impacted. And now since it is the harvest period, so generally quarter 3 is a collection period actually. So our collections generally match the sales numbers or this even surpass the sales number actually in this quarter. So this quarter is very, very important for collections.
And I believe the collections in the previous months have been fine. And this year -- this month's target are also good actually. So the things will improve actually. We'll find the things improving in the -- by December balance sheet, I would say.
Also, like you highlighted on the biological space, so just wanted to understand what would be our actual market size for this in India? And who are the other peers who are also -- you can say who have also introduced [indiscernible] in this kind of market.
Like what is happening...
Also, sir, what kind of CapEx requirement we would be having with regard to taking up the biological facility over there?
Okay. So I would answer one by one. When you say about the market size, the market size is pretty small. It is less than 5% of the size of the agrochemical market, less than that at the moment. Across the world also, it is not -- it has not touched 2 digits. So it's very, very small, and it is in the nascent stages. But a lot of developments are happening actually. And now companies are focusing around this because of the international pressures, number one.
To answer your second question, regarding -- in the past, the agrochemicals were not taking much interest actually, and they were concentrating majorly on chemicals. But now some of the companies have started focusing like all the multinational companies, they are thinking of doing something. Japanese companies are talking a lot -- taking a lot of interest. Some of the Indian companies are also investing either through different companies or in the same companies. So people have started acting for biologicals.
So I would say like we had entered into biologicals about 5, 6 years back, actually. But at this time, we have only maintained our R&D center and our team, we are doing the manufacturing at the leased facility actually. So -- but now I think that there is a need to set up our own company, so that facility will continue. There also, we have done 1 expansion, like we are making a new trial field, and there will be setting up our R&D for doing the development of these products actually.
So at Shamli, we have done some expansion or it is underway. And in Rajasthan, we are going to open this biological, I would say, activity. So here again, the expenses will be divided. We have not budgeted. In total, I'm thinking that Rajasthan project might be a project of about INR 150 crores, the new project, but we have not allocated. Here, again, biological will not take much budget because there is 1 pre-constructed building, which I wish to allocate to this IIL Biologicals. So the expense will be majorly renovation.
And yes, there is an investment in plant and machinery, which we have not estimated. But if the total budget is INR 150 crores, then biological is not going to eat up more than INR 20-odd crores actually, just for the initial numbers actually, but we'll be coming out with the detail numbers in the later stages. It's too early. We have just given a token advance and cleared it just yesterday in our Board meeting actually.
Also, like in the opening remarks, you alluded that China Plus One strategy remains key theme in this particular domain. So how are we pleased like in terms of [indiscernible] opportunities. And what steps you are taking? Because one of our peers is already in the -- manufacturing the technicals, particularly synthetic pyrethroid. So we're setting up on manufacturing facility out there. So where are we in terms of being -- on that particular front where we can ultimately take advantage of this ongoing [indiscernible] efforts.
Okay. We have been manufacturing -- synthetic are being manufactured only 2 synthetic pyrethroid namely lambda-cyhalothrin and Bifenthrin, which are relatively new generation products. Lambda-cyhalothrin worldwide is in huge demand, even Bifenthrin is in good demand. And then I have another synthetic pyrethroid, which is called [ Dinotefuran ] which is relatively a very new generation product. The newest of, I can say, the synthetic pyrethroid. So all these products are doing fine, and we have invested on the data generation. And now we will be backward integrating and making some of the basic chemicals which are required to manufacture these products, actually that will be the import substitution.
And also, we can say that dependence on us for the world is going to go up because we will be a very reliable supplier because when the raw material is also made in the company, it will give us the edge into the market. So I think that we are very well placed for some of our products actually where we are already manufacturing technicals and investing on the registration. So that is going to help us in a big way in the international markets.
Like we have a tie-up with Japanese, right. And frankly speaking going forward can CRAMS be a good play for us in terms of like is there any kind of a specific CapEx we would be doing or incurring later on probably in next 2 years?
Our entire expenses, which we are doing like on the technical plant, the basic thing we have in mind was CRAMS actually. So we -- our investment is like that, that whenever the opportunity comes or whenever we crack a deal, we can convert into the CRAMS business easily, number one. Number two, the type of plants which we are going to manufacture now for -- to establish now at the -- the new one, actually. So that will be like the idea is to establish the world-class formulation facility and at the same time, to establish a world class for technical plant also, which I don't know, today, we have not planned the size and the number of reactors.
But yes, that will be a world-class thing, which will be majorly being done with the view that the companies -- the multinational companies, the largest companies in the world are going to approve it actually. So that will be made with that idea. So the future investment will be with that idea in mind. So our many products are very interesting to [ develop ] because we are coming up with many new technologies. When I say new technologies, of course, they are all patented technologies. But when we develop these products in India, there are 2 focuses in mind. Number one, that I have to better the technology. Number two, I have to get good [ PI ]. Number three, also the impurity profiling because my impurities have to be lesser or better than what the original manufacturer had.
So I have to work in all these directions. Our R&D team works in all these directions and develop the products accordingly so that the same is suitable even for the inventor of that molecule. So not necessarily that only the inventor is interested but other large international companies are also interested in various molecules. So we are seeing a lot of opportunities. We have signed contracts, and we have also started doing our registration.
But until the practical business happens, I don't want to make any announcement. We are working with various Japanese companies also. We are with multinational companies also. So people have interest in us, people have interest in our molecules. We are developing the products. But yes, there is no significant thing which I want to announce today. But yes, in future, you would see that.
Just a last bit from my side in terms of margins. So as you alluded that 3 products, which you've highlighted that, that can cross a revenue potential of near about INR 300-odd crores. Sir, like going forward, the kind of margins we want to [ sort of ] seeing at. So what kind of a sustainable level, frankly, do you look at like -- I think product changing so, your margin trajectory should be near about 16-odd percent. So what's your take on it?
I would say like we have been working around the margins. The products like the economies of the scale is going to help. The product mix is going to help because this is not only 3 products. I made announcement of 3 products because I was funding them on the sheet. But there are all the new products which we are going to launch, they will be around good margin strategy products actually. And we are going to come out of the old generics where the margins are not there actually or which the product size is becoming smaller.
So the idea is that we wish to provide the large, good products to the customers actually, and we'll come out of the technologies which are getting obsolete. So that will also improve the margin cycle. So I was expecting a good margin increase in this fiscal only, but the 2 things have impacted. But you will find that we should be able to make a good recovery in the next fiscal because not only we have to make the recovery for the next fiscal but also what -- so I'm not going to make any announcements today.
But I would like to tell that you'll see that recovery happening from Q1 of the next year itself. And in the H2 of this current fiscal also, we are very, very bullish on our top line and the EBITDA also will improve from here, the EBITDA percentage.
Right, sir. But when a product mix is improving, so can we just for our -- you can say, for modeling purpose, also, we can take EBITDA margins profile to be greater than 15-odd percent in the coming years?
Definitely.
Right. Is there a good amount of difference between the formulations as well as in terms of the export margins like if we look because, frankly, if I look at INR 250-odd crores revenue retention from the exports, which will be coming in. So what kind of a margin -- is there a significant amount of difference in the margins profile between a domestic or in the export business?
Yes and no. Because if you are doing the generics sales actually of the export, and you are working on just a high single-digit margin or a 2-digit margin, our 10% is the maximum margin which you plan. But yes, if you are able to export new generation molecules, if you are able to sign the grant agreement actually with the big large companies, and you can save some costs, then you have additional margins actually and then there are low expenses for marketing. So that gives an edge.
So if you are able to set your patented technologies, if you are able to set new generation technologies, yes, definitely, the margins in the international markets also goes up actually. And people have successfully displayed that and there is a good chance. And I also think that it is going to help us in a big way in future.
[Operator Instructions] We have a question from the line of Anurag of Roha Asset Managers.
Sir, out of our ongoing CapEx, how much is attributable to technical plants and how much to formulation?
If we talk about the ongoing expansion, the expansion formulation is bare minimum actually because we have done some expansion in Chopanki and a little improvement in Dahej. So I think -- I don't have the exact numbers in hand, but that will not be more than INR 5 crores, I believe.
So apart from the godown we made because godown was about INR 10 crore investment. And the solar thing was again INR 6 crores, INR 7 crores investment, which has happened actually. I forgot to mention that we also have put 200-megawatt solar plant at -- 200-kilowatt -- 0.2-megawatt -- 2.2-megawatt plant in Dahej SEZ also. So that has also happened actually. So Dahej SEZ was closed previously. So no big investment this year, a nominal. So we can say about -- if I talk about SEZ also maybe INR 10 crores so far in the formulation, not big. But yes, it's a new site, we will be spending.
Okay. Sir, and what will be the revenue potential of this ongoing CapEx post completion?
We'll share it actually. So I don't have it handy. But yes, we'll share these numbers.
We'll take a next question from the line of S.A. Narayan from Capricorn Research.
Rajesh, I must compliment you the way you've been sharing the company. I have been with the company for 2 decades and I must register my appreciation -- admiration the way you do it. I have two small questions. One, how would -- in terms of percentage terms, if you could tell me, how would H2, second half would be better than -- you've done well in both the quarters of June and September, the first half over year-on-year. How would the second half be better than year-on-year and half year-on-half year? That's my first question.
Okay. So I'll be very, very specific since we have been very specific. So H2 generally is smaller than H1. So it is going to be smaller than H1 only. But yes, I believe that we should be able to continue with a good number actually in this quarter, and we should register a good increase. So if you are very, very specific, I say -- I can say we can grow by 20% plus, but exact percentage mentioning will be little difficult actually.
Okay. Fair enough. Second thing, minor accounting one. You have been moving towards sales without offering credits in the last 2-odd years. And now I find the receivables have jumped up. Is there a change in policy? Are we now on to receivables instead of cash and carry? You had done this after the mishap in...
Chhattisgarh.
So is there a change in policy?
Not the change in policy, but actually to implement just cash and carry model is little difficult. So we are very successful in implementing that model in totality in South India. In the 5 South Indian states, I'm trying to do cash and carry. But in other states, I have to pass on credits also actually. And since this year, we were very, very bullish. And this -- all the new products were there, so I had to extend credit, but these credits are not long credit. We should be able to make the recovery -- a good recovery in this quarter itself, actually.
And by the end of the year, the thing should look very clean. So yes, some credit extended because market was adverse, and there were new products which had to be sold. So there has been some credit extension, that's true.
As there are no further questions from the participants, I would now like to hand the floor back to Mr. Rajesh Aggarwal for closing comments. Over to you, sir.
We thank all the participants for attending the virtual session. We believe that we have satisfactorily run you through our company and business model and address every aspiring question there on put upon the floor by the participants. We continue to see growth in our broad product portfolio and witnessed a strong momentum across our business, supported by R&D and backward integration initiatives.
We remain focused on bringing new products, exploring new markets and creating value for all our stakeholders. Please follow up with the Investor Relations team, Vinayak and [ Naman ] of Captive IR. If you have any follow-on questions, which weren't covered up in this session and hope you have a great day ahead. Thank you, once again. Thank you very much.
Thank you. Ladies and gentlemen, on behalf of Insecticides (India) Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.