Insecticides (India) Ltd

NSE:INSECTICID

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to Q2 FY'24 Earnings Conference Call of Insecticides (India) Limited, hosted by Choice Equity Broking Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [indiscernible] from Choice Equity Broking Private Limited. Thank you, and over to you.

[Unknown Analyst]

Thank you, [indiscernible]. Good afternoon, everyone. On the behalf of Choice Equity Broking, welcome to the Q2 FY '21 Post Results Conference Call of Insecticides (India) Limited. I also take this opportunity to welcome the senior management team. On today's call, we have with us Mr. Rajesh Aggarwal, Managing Director; and Mr. Sandeep Aggarwal, the CFO.

Kindly refer to the safe harbor statement on the last slide of the earnings presentation. I will now invite Mr. Rajesh Aggarwal for the opening remarks to be followed by a Q&A session. Thank you, and over to you, sir.

[Rajesh Aggarwal, executive]

A very warm welcome from me, Rajesh Aggarwal, [indiscernible] the company to all the participants to today's investors call. I can happily say that IL has emerged as a leading technology-led agrochemical company, and we have announced a very good, very strong impressive financial numbers in this quarter. The revenue growth is led by our strategy. the strategy is very, very clear, which we have been discussing from quite some time that we are working on focused products, and we are targeting the focused products.

So what are these focused products? These are Focused Maharatna, which include about 30-odd products, which we are focusing. And we return to bring the new products into this segment actually. And at the same time, we are doing the sale cutting of the old generics where we see a lot of competition because the recent price fluctuations, which were seen post-COVID. So I felt that these are the products with the slightest movement of the market, they become unprofitable for the company.

So we targeted that we will stop the technical manufacturing of these products. We might continue with the brands, but we will not manufacture the technicals of these products. And we will shift to the new generation products. And that strategy is working out well because we are able to take all these technologies to the market in a beautiful manner, and all our moves have been very well appreciated by the market and the products are very well accepted by the market and got a good response.

So first of all, I would like to talk about our Japanese collaboration, particularly with Nissan, with whom we have launched several products like [indiscernible] were the beginning. From Pulsar, we made Izuki, a new mixture, again, a patented mixture here I would say, and from [indiscernible] we made Hachiman, again, a patented mixture, which included one of our technical and one technical from Nissan, but got we put back the IP out of this. And two another patented products are Shinwa and [indiscernible]. So all these products are moving pretty well. Izuki though, I would say it's a partial success in this year because the season was very, very short.

But I have very strong hopes, and we believe that all these products are going to be the big hit. And particularly here, I would like to talk about Silva, which is going to touch INR 100 crores of gross sales in this month, actually, it is going to gross INR 100 crores of broad sales. So very good response coming out of this product and Shinwa become our #1 product. That was the strategy also, though we have just touched the half way, but still it is going to become a very big product.

Along with this, I would also like to thank our R&D team because their moves of backward integration, new formulation development, new product development, all are doing very well. we are able to back many [ 9 3 ] registrations and bring these products to the market. And most of the things are very so successful. The beautiful part is by doing this, when we are making the new formulations, particularly the mixtures. So in these mixtures, we are backing the IPs.

So these IPs are helping us in providing the solution to the farmer and providing the monopoly to the retailers and distributors, so which -- given the edge in the market, and I can say clearly that these are all value-added products. Along with this, we are also doing a lot of backward integration. And in recent years, we have brought various molecules like Green level has been very, very successful product from our stable by doing the backward integration.

Dominant is very successful. This year, we have launched Torry. And Torry -- last year, it was not. But Torry itself is doing very well actually. And this year, we are able to multiply it's sales. Same way the mixture was launched into this year. So [indiscernible] granule and SC formulation. We have launched 2 formulations and at a very good response. If I add these two, then I also believe that we will be crossing INR 100 crores of gross sales, again, by the bank alone and apart from this, whatever institutional sales we are deriving that is extra.

So I mean to say that our strategy of establishing the new products is helping us a lot, and there is a lineup of products because now we are going to start our new technical plants actually immediately after the Diwali shutdown. As you know, that Chopanki expansion is already completed and Dahej expansion is almost completed now. And immediately after Diwali shutdown, we are waiting for the approval.

So the new plant will also be started and there will be many new AIs, which we are going to manufacture from this plant, which led to launch of many new products. And we are not stopping now. Whenever we get the registration and the product is with even at the slightest of season, we try to launch the product in time so that the product enters into the market, we can collect the initial feedback. And based on that, we can make the improvement into the season when they are a peak season and before that, people have started filling of these products.

So we had launched a product called Green expert in the past. So it could only touch the South market, but got a very good response. Similarly, a product like [indiscernible] was launched into the market. Just two months back in the last quarter, very good response. OPEC and [indiscernible] were launched and received a very good response out of this. Even now for wheat crop, we have launched [indiscernible]. So [indiscernible] is also going to wheat crop [indiscernible] going to basically meant for sugarcane. So some swing happens for sugar cane now -- so it is going into the market. So I mean to say that we have established ourselves as a player who can launch these products who is bringing choices products toward the farmer and bringing the new technology product at the affordable prices. And this strategy is playing very well, and I believe that our focus to work for Maharatna's, we are able to attain a reasonably good success in these difficult times, which was a year of [indiscernible] and most of the competition, they are not able to meet out a number.

We've shown a growth 20% into this quarter, and I would thank here the new products only basically, which are supporting the products, which were launched into the recent past. So these are majorly Maharatna -- Focused Maharatna products, we all value-added products. with which we are able to go or sell. So we are continuously going to focus around our innovation because I always believe that it is the solution, which attracts the customer, not the product. So we need to continue this innovation regularly so that we can increase the pipeline of such value-added products, which are value for money for the customer and they give the effective solution to the [indiscernible].

Here, I would also like to talk about the team because once we establish the products, you need the team to market these products. So we have been regularly enhancing our team. Today, if I talk about the sales team. then our total team in the sales have crossed 100. So these are the techno-commercial people who are into sales and marketing, and there are more than 900 CAs who are actively working for us in the market. So it's a very big expense into the market of more than 1,600 people in the field. And at the same time, if I talk about the distributor or distribute a regular working distributor number has also crossed 8,000 actually. So I can talk that we have a very penetration into the market and at the same time, to establish [indiscernible] connectivity, it's not only ERP where we are focusing, but also focusing on the CRM, which we have started with Salesforce, and the sales force was also launched into the market during the [indiscernible]

We have taken it to our staff the staff at the moment they connected with the distributors and retailers, but the idea is that we bill to establish our last mile connectivity with the retailers [indiscernible] and also the farmer who will not be part of my ERP program. So they will be covered by CIM. The idea is that we should establish a 2-way communication with the company with the people who are not directly collected like retailers and farmers so that we can increase our reach and our bandwidth and we can have the understanding of the requirement of the farmer and the retailer directly from the market so that which can help us in enhancing the brand value and enhancing the sales of these products. At the same time, we are also enhancing our manufacturing facilities. As I told you that [indiscernible] expansion has already rolled out in full, and we are going to add some more technical share. In Gujarat plant also, we -- I believe that we will be fully active by month of December, and we should roll out more products from this plant also. There will be new AI. There will also be certain backward integration or certain technicals, which will be the Insecticides [indiscernible] in particular, so that will also help us and be more cost effective into these markets.

So there will be about a half a dozen addition of new AIs by these two plants. So at the same time, we are also strengthening our submission facilities by rationalizing the products. And we have a very clear set mission that we have to like across the industry growth target, like the industry's showing a single-digit growth, but I definitely wish to outgrow this -- actually for this complete decade, for which I'm establishing my manufacturing facilities also and continuously investing in this and like [indiscernible] investment, which is going to come now.

So we have already acquired land. Shortly, we'll be finalizing the plans, and then we will start the construction here. And I believe that this plant should also be active in early 2025, with a full strength, and this will be doing both technical manufacturing and formulation activities. Again, strengthening the company for next 5 years for growing at a good CAGR.

At the same time here, I would also like to talk about the JV. The JV also is making new applications for the patents, and we are receiving some patents also. And we -- I view the first product coming out in the next 2 years because we have generated a lot of data. The Japanese have generated a lot of data. We have done the pilot scale trials, very successful trials of the product and most part of data is already generated. Now we are waiting for the bio efficacy trials, official trials for the Indian market. And once the trial results are out and we will be ready for making this application, we will apply for the registration of these products, which means that the new discovery of India will come from IIL through the JV. So that also is playing out well.

Along with this, we are also focusing in the biological segment because I believe that biologicals are the upcoming segments. And a lot of work has not happened into this direction, but it has got a lot of potential. So we'll be targeting this also. Now I'd like to talk about the results.

Particularly, we have shown a growth of about 20% in this quarter. And if I see the half year, then complete half year shows about 17% growth, which is INR 1,336 crores compared of sales. It is not only the sales growth, but the good part is, along with the sales growth, we are able to do the sales growth in the Focused product segment. If we look at Maharatna, Maharatna's from 56%, we are able to grow it to 64% in the half year. I believe this is a big achievement. And while growing our sales we have maintained our finances very well.

We are able to work out -- cut down our working capital days. We are able to cut down our borrowings strongly, like the borrowing has come down by almost INR 100 crores working capital days. From 169 has come down to 112. And we are also able to cut down the inventory for more than INR 250 crores. From INR 850-odd crores, it has come below INR 600 crores, more than INR 260 crores of advantage in the inventory also. So I believe that our strategy of 90, 90, 90 days, which means that we don't want to buy the inventory for more than 90 days, and we wish to exhaust everything within 90 days, it will keep our finance is also under control within 90 days. It is playing out well.

So we have been focusing around this strategy and also the strategy of working on all these new value-added products. So both these strategies are playing out very well. And also here, I would like to talk about our brand ambassador again, the campaign has been very, very successful into the market, particularly the new launches with the photographs of Ajay Devgan have been very well appreciated, particularly the product mission. So it has helped us in establishing the reach and the credibility and the image of the company. And here, I can say again, it has helped us in establishing the last [indiscernible]. Again, I would like to reiterate that we are very, very clear that we'll be focusing around the Focused Maharatna,which is 11 products. But out of the 11 products, the main focus was around 7, 8 products, Shinwa, [indiscernible], Hachiman Green Label [indiscernible]. So at least first 5 have been very, very successful. And I can say stand dominant are partially successful. But our lineup is very, very strong. As I told before, [indiscernible] are already launched [indiscernible] is launched. Even two more biological products, [indiscernible], which is our [indiscernible] selling product. We are going to lean [indiscernible]. [indiscernible] is also on its way to the market. So I can say that we have got a very strong pipeline of products and a good opportunity into the country.

At the same time, there is another good news, which is about the stability of the raw material prices. because there was a very high fluctuation into the market that lead to a lot of confusion, but we see the prices settling down now, and I believe that almost the bottom is touched though there may be light fluctuations because nobody can predict the exact bottom, but I believe that the market will rationalize now, and it will start either -- it will stabilize at the current level or start moving up in a short [indiscernible] here. But overall, I see a very good opportunity. And with our focus around our distribution to innovation and growth, farmer engagement, retail engagement [indiscernible] training. So I'm very, very confident that we'll keep on receiving a very good response. And today, if I talk about the gross sales of the company, which is INR 2,000 crores-plus that there is not far when we'll be touching INR 2,000 crores-plus of Maharatna product sales. So we wish to work in a very focused manner, and I'm very confident to receive a very good response.

Talking here, I'd like to talk about two more points, which I've not touched. So this is the hedge [indiscernible] incident. There was a small fire in the [indiscernible], which we had announced in the previous meetings. So that repair work is completed. We had estimated a loss of about INR 4 crores. We have completed within INR 3.5 crores, and [indiscernible] be filed with the insurance company soon. So the plant will be up and functionally immediately after Diwali, because at this moment, this is under the routine maintenance also. So once the routine maintenance is complete on 17th of November, the target is to restart the plant.

Here, I would also like to talk about the new building, which I just told that the new project is also ready at the head side. So new project, we are waiting for the final approval. I believe that we should be able to start it in early part of December. So this will be also up and function, which means that with a very strong range of products and very strong backup of the technical manufacturing and formulations, we are going to touch the new season, and we should be able to get the full advantage of the new products in the year '24, '25 itself.

Along with this, I would also like to talk about the export. This year has been very, very difficult for export because [indiscernible] had a very bad impact. Apart from [indiscernible], there were various challenges because the demand visibility was poor. The finance conditions of different markets was very, very tight, but there is a huge potential because India plus 1 policy -- sorry, China plus 1 policy, Europe plus 1 policy is playing out well, and there is a huge potential. We see a huge recovery in the demand. And I believe that our target of INR 150 crores what we have the revised target was kept for this year.

We should be able to reach very near to that target because most of the exports happen in the second half of the year. So the time has come where we should gear up -- we'll be able to gear up our exports also. But in future, I believe that we should be able to register a good growth in the export number also along with the domestic numbers. So with this, I would like to thank everybody for listening to me, and I would request the CFO to give the exact numbers and the details about our performance of Q2. Thank you.

[Sandeep Aggarwal, executive]

Thank you, MD, sir, and welcome all the participants. Though the major highlights of the results has already been discussed, but -- one after the good performance of the company, for the shareholders or you can say the faster of the company. The company has declared an interim dividend of INR 3 per share or you can say 30% of the face value of the share of INR 10 each. So the record date will be 10 November. So this is the interim dividend declared by the company.

So no, the main highlights have already been discussed. So I will tell you the key performance where the company has shown the growth. So category-wise sales breakup, we say Insecticides, herbicide, fungicides and [indiscernible], have quarter 2 FY'23 23 versus quarter 2 FY'24, the insecticides contribution has come down from 51% to 49%; the herbicides contribution has increased from 29% to 34%; and the fungicides from 16% to 13%; and biological [indiscernible] at the same level of around 4%.

If you see the sales segment-wise, B2B, B2C and exports, the B2C sales contribution is around 71% of the total sales. 26% is contribution from the B2B part and 3% is the contribution from the exports. If you see the major strategy on which the company is working, the Maharatna product sales in B2C segment versus other products. So in FY'23, the Maharatna contribution was around 59% and others are around 41%. As in FY'24 quarter 2, the Maharatna contribution is around 65% and the other is 35%. And the growth has already been discussed, so there is a 20% growth. The revenue has increased during the quarter from INR 583 crores to INR 696 crores.

There is a growth of around 20% in EBITDA also. The EBITDA it has grown from INR 68 crores to around INR 82 crores. You will see the quarterly comparisons. The sales has grown from INR 582 crores to INR 696 crores. The EBITDA has grown from INR 68 crores to INR 82 crores, and PAT has grown from INR 45 crores to INR 53 crores. If you'll see the working capital day though already discussed by the MD sir. So in FY'23, the total working capital days of 169 days. And in H1 FY'24, it is around 112 days. So we'll hope that we'll maintain this or improve this in coming time also.

The inventory days has come down from 227 to 105 days in FY'24. And you'll see the return ratio, though it has been annualized for half year, the ROCE ratio has improved from 6.9% to 16.4% and ROE ratio has improved from 10% to 21.6%.

[Operator]

[Operator Instructions] We'll take our first question from the line of Bharat Gupta from Fair Value Capital.

[Bharat Gupta, analyst]

First of all, many, many congratulations to Rajesh and Sandeep for a fabulous performance. It is really heartening to see company's performance like after out of time, which we have seen [indiscernible]

So a couple of questions, sir, from my side. So as you have said that we have been outpacing peers over the quarterly performance. So any color like particularly which you want to say whether it is probably distribution-led or particularly like the products which we are working upon. So there is a mismatch, which is there in the market where PS does not have a similar set of products. And how are we incentivizing your channels? So can you throw some light over it?

[Rajesh Aggarwal, executive]

Yes, the entire focus is around the 9 3 products because whatever [indiscernible] are bringing in now, so most of these are 9 3 products itself, so which gives you some type of monopoly into the market. Though when you are making a new AI, anybody can do a 9 4 and bring it. We know that. But we the first mover advantage in case of AI. And then in case of [indiscernible], we are trying to make the mixture out of these formulations where we can bank the IT. So that gives the strength in the market because, ultimately, you are able to build the competition by bringing this technology along with our R&D, our collaboration is also helping the Japanese collaboration, particularly [ Nissan ] annuity and bringing us the new products. So with Nissan, we have a very strong pipeline of products which are going to come in future. We are expecting -- we have more than half a dozen products already into the market with Nissan, which are doing very well. And we are expecting to launch one product in the new year again, which will be a monopolistic [indiscernible]. So these are all patented technologies, which are coming from Nissan also now. So that gives the edge. Regarding incentivizing the network, we have to keep a reasonable incentive for the network. And now for the key distributors, we have formed the two clubs, the Maharatna lab and [indiscernible] for our distributor. And definitely in these clubs, they will have a personal meeting with me and they will have the incentive, some incentives better than the other distributors. And regarding -- I believe in today's day -- in today's time, connectivity is the major support. And we are trying to connect the distributors through SFDC because they will not only have their account information and working information, but through our [indiscernible] program, we'll be also able to watch the -- their retailer demand and they can fulfill their retailer demand on our [indiscernible] platform itself by receiving the order that they can make the. So that type of convenience also we are trying to bring in, and we are also trying to finish the farmer. So when the farmer gets connected, we commissioned to the retailer, to the distributor and the distributor will be able to see what is happening below him. So this type of connectivity on training programs also we are conducting. The idea is that we should help the distributor to grow and there should be mutual growth into the market. So that is [indiscernible]

[Bharat Gupta, analyst]

Right, sir. Sir, secondly, if we look at the outlook of the rabi season, so do you expect the momentum to remain over [indiscernible] the reservoir levels across the [indiscernible] region, so that has remain on shortfall. And so particularly, if we talk about the second half of the year, so how do you see our company growing over -- in the coming quarters as well?

[Rajesh Aggarwal, executive]

The growth which we have shown across the B2C segment, it's across the country. And I'm happy to tell you that South has achieved the target 105% so far. So the time has been tough for South in particular from the very beginning, but they are about their target. Y-o-Y, if I say that we are growing by almost 15% to 40% actually state to state. Yes, you're correct that reserve situation particularly is bad. But you have to see -- you have to lower the opportunities and [indiscernible] so it is bad, particularly two areas of [indiscernible]. In other places, we took there will be some loss of rabi crop. It depends because the rains are expected to touch South area, particularly the state [indiscernible]from Telangana and also [indiscernible] during this month. Tamilnadu so far has been raining regularly actually. So no issues of rains in Tamilnadu. But these 3 states, particularly [indiscernible] and Karnatka are the biggest suffer. Telangana is a reasonable suffer so far. So I think that we should be able to achieve the target. We have been so far doing fine actually in this area. So I'm not much [indiscernible] but yes, there might be a loss of [indiscernible] crop by 2.5 to 3 [indiscernible] actually, which is not very huge, actually, if you see as a whole.

[Bharat Gupta, analyst]

But sir, post [indiscernible] comments any kind of a revision to our SMEs earlier we were talking about reaching out 2% kind of a growth with a 9% to 10% kind of a margin. So is there any kind of a revision which we want to make...

[Rajesh Aggarwal, executive]

We don't want to make any revisions actually, and I don't want to give any target, but I believe that we have been working around the target, and we are definitely going to cross the market performance. So whatever competition is going to do will be much above the competition. That is the only commitment I can give. My performance is visible actually, and you can see it quarter-on-quarter also.

[Bharat Gupta, analyst]

Sir, my next question [indiscernible] like you were mentioning in your opening remarks that the RM prices have started to stabilize. So already, we are sitting on INR 600 crores of higher cost of inventory. So do we expect that the positive traction in the margins can particularly happens once the RM prices remains on a stable drug going forward?

[Rajesh Aggarwal, executive]

Yes, we can expect that actually because most of the high-priced inventory is already taken care actually in the second quarter. So it will be very small old inventories line with us. So those loss which has come on account of the high-price inventory will not be there any [indiscernible]

[Operator]

We have our next question from the line of Rohan Gupta from Nuvama.

[Rohan Gupta, analyst]

First question is on our new product or freshness index. It's very enlightening to see that the product launched in last 2 years is basically in your presentation, the green and orange have done very well in FY'24 so far in the first half. So just wanted to understand that this product despite this very heavy contribution in terms of revenue, at least in the first half, the margins have not been as we would have expected otherwise with such a large contribution coming from the new launch product. So any particular reason or it is impacted because of we have to take some write-off on our high cost inventory in first half, and we may see a significant margin expansion in the second half?

[Rajesh Aggarwal, executive]

Yes, you have answered correctly actually. There is a problem because in Q2, we had to start with the old baggage actually because you have seen that I started taking the hit from quarter 4 of last year. Q1 also was showing the stagnation in the profitability, and that was all on account of the old inventories. With -- by selling these products in a better fashion, we are able to cover the losses what would have been otherwise visible on the balance sheet. So now I'm happy that our quarter 2 results are quite positive. We are able to surpass the profitability of the last year. But I can, at the same time, say that we have come out the pressure of old inventories, what was there on the company. So now we are on a level playing field where we can make while we can show the performance and some of the products like Torry, Mission, Shinwa, they still have the market in the rabi season. And we have -- apart from this, we have launched two more products actually which are going very well on a wheat herbicide, one is [indiscernible], one is [indiscernible]. So these already [indiscernible] market. And for -- as I told you, [indiscernible] also a herbicide for sugarcane. So all these products are for the rabi season and they are going to see the market in the rabi season again. So a good fortune for these products also. So I'm very, very confident that these new launches and some other products of the -- which were launched in the past, they are also going to support us in the season. So we should be able to register the growth in the second half of the year also.

[Rohan Gupta, analyst]

Okay. Sir, can you quantify any number the kind of write-down we had to take in the first half or in Q2 because of the high cost inventory liquidation?

[Rajesh Aggarwal, executive]

Very difficult to because the [indiscernible] calculations are not made. But definitely, there is a hit if you would want, then I can make a request to the CFO to work out because we have not worked that out.

[Rohan Gupta, analyst]

Okay. Sir, second is, once again, on the new product launches only. So with a roughly 20% plus revenue contribution is right now coming from the just product launch in last 2 years itself, so any margin difference you would like to guide that what kind of margin difference we have in this newly launched product in last couple of years? And also for next year or even the rest part of the year, what kind of product launches we have in plan?

[Rajesh Aggarwal, executive]

Actually -- generally, when we are launching the new products, they are in the Maharatna range. And Maharatna range products already there our margins relating to the other products. So we have a 2-point strategy that we are cutting out the old generic where the interest is not much, interest of the market or the profitability is lower and they are losing the market share. So we are cutting down those products. And where there is a stiff competition, those products also, like I announced six technical I'll be curtailing. So this is a very strong statement in our opinion because the sticks were very, very big products, #1 product, which I used to manufacture actually in the past and stopping technical manufacturing of 6 products in 1 go is a very difficult announcement for anybody, I believe, in my industry, in particular. So since we have got the decline of new products, which we will start manufacturing and replace these 6 products with the 6 new products. So I'm not worried much actually, and I can announce it openly that we are doing this [indiscernible]. So definitely, these new edge products will have better margin than the older generic.

[Rohan Gupta, analyst]

Okay. Sir, next is we are also in a B2B technical manufacturing business selling in a domestic market. Recently, we have seen that China has been [ dumping ] many products and the prices have been under pressure, which would have impacted our B2B business as well. Can you give some highlights that how was the utilization level of our plant in B2B? How is the scenario now? And do we expect any near-term improvement given the China situation still [indiscernible] alarming or remain there from coming from China?

[Rajesh Aggarwal, executive]

This competition is always going to [indiscernible] was always there, and it has always been to remain because still there is a correction in our national policy that we encourage the domestic manufacturing and discourage the imports because we are encouraging domestic manufacturing, but we are not discouraging the ports because in many other countries, when a domestic company is manufacturing something, people are not allowed to do the import registrations. Whereas in our country, where the government sometimes is giving the preference to the importation even if something is being made here. So they are giving data given data relaxation many a times to make the product full sale buses, which is made in India. So this competition is going to remain, and we have to live within this competition and find out our win forward within this competition. So here, the branding strategy is always going to play. The first mover advantage is always going to play whenever we are bringing these generic product sector. In that case, the only solution in B2B segment is #1 solution is cost we give only [indiscernible] products. Second is we start giving the formulation. Third is we start making the technicals. But the new strategy which is coming in patenting the new formulations. So if I can make the patents and we can strongly establish those products into the market, then we can give our mixtures in B2B, that is a new strategy, which is working out. And this year, we are going to share many mixture products into the market into B2B segment so that we are able to maintain our -- into this segment also.

[Rohan Gupta, analyst]

Sir it possible to share...

[Operator]

We have a next question from the line of [indiscernible] from Counter Cyclical PMS.

[Unknown Analyst]

Sir, firstly, on behalf of all the shareholders, I want to congratulate you and your team for all-time high quarterly revenue and operating profi and sir, also, our net worth has INR 1,000 crores for the first time. Sir, so many congratulations to you, especially considering the industry environment. Sir, so sir, and also our inventory has gone down like you mentioned, sir, but our receivables have doubled from March till now to INR 611 crores. Sir, are these receivables again expected to come down at around INR 300 crores levels going forward?

[Rajesh Aggarwal, executive]

It's a routine actually. Whenever you will see our September numbers, the pattern will be the peak because July, August, September, July and August, particularly are the main selling months. And November, December, January -- October, November, December are the collection months. So in this quarter, my collection will beat my sales. So the -- I cannot discuss the numbers, but the collections can be about 20% to 30% No, not even 30%. I think up to 50% higher than the sales numbers.

[Unknown Analyst]

Okay, sir -- also, sir, now that sir, our stock price is still at where it was in 2017, whereas our net worth has doubled. So any thoughts on a share buyback considering our growth prospects? And sir, secondly, you had given a guidance of INR 2,000 crores revenue for FY'24, whereas sir, even on trailing 12 months, we have reached almost INR 2,000 crores. So for this, the second half, sir, are we expecting any growth year-on-year in our top line? And sir, if so, then what kind of top line you think is achievable in the current financial year? And sir, what kind of margins you think we can read?

[Rajesh Aggarwal, executive]

I'll not share the exact numbers. But here, I would say that we are going to grow in quarter 3 and quarter 4. In my previous replies also, I mentioned about the new introductions and our very Focused approach. So with this focused approach [indiscernible]

I'm very, very confident that both these quarters will be the quarters of growth and it won't be record growth in the top line, but bottom line also, and we'll beat the [indiscernible] or will be the industry, I can say. So I can just say that we'll be beating the industry. So now I don't want to give any aggressive targets. I want to be reasonable. I want to show the performance. And the share prices and all actually like it's very difficult market has to [indiscernible]. So once the market will start trusting once the my performance will show definitely why not I'll get you value.

[Unknown Analyst]

No, I'm trying to say, sir, that we can do a share buyback and so that our earnings per share will increase faster than our profits going forward. So all shareholders will benefit. And sir, you already did a buyback 2 years back at [ 575 ] and today the share price is...

[Rajesh Aggarwal, executive]

CFO can go workout actually something. If there will be something that we can put it to [indiscernible] in front of the growth.

[Unknown Analyst]

Sir, just one more thing, sir you mentioned that 6 technicals, which have become commoditized, we have stopped them. So in this business, we keep on coming out with new products, whereas the old products keep on getting basically low margin. And so any thoughts on licensing our own -- our old products to others so that we can earn at least some royalty for the hard work that we have done in the past to build the reputation and those brands.

[Rajesh Aggarwal, executive]

I've talked about discontinuing the technicals. I have not said that I will be discontinuing all the brands. I think 90% of the brands will continue because they were all big brands. But I'm stopping the technical many because there is tough competition from China, and there is high price for fusion, which is not helping. So many of my competitor friends are manufacturing these AIs. We'll continue to buy from them or from the importers. So I'm stopping the technical manufacturer because I see that there is no much value addition. So the people who like to do that type of business, they can continue with that business, and we'll continue buying from them. So whenever [ lease ] opportunity comes, we'll definitely lease our brands also to people. But I believe that product goes, the brand never goes. So we believe in the strategy of multiplying the brand multiplying, I mean to say, by using -- increasing the usage of the brand or the leading brands. So we try to make more brands from the same brand because of the image of the product. If I talk about my [indiscernible] brand of [indiscernible], so I have more than half a dozen variants of [indiscernible] today, [indiscernible] about 3, 4 variants for [indiscernible]. So I do that strategy. So the brand will always remain actually. Brand will never die. The product may come and go.

[Operator]

We have our next question from the line of [indiscernible] Mehta from [indiscernible] Securities.

[Unknown Analyst]

We are increasing our newish products under [indiscernible] and B2C contribution of sales from year-on-year has increased. So how would you say for the next [indiscernible] that [indiscernible] be.

[Rajesh Aggarwal, executive]

You asked about B2B in particular, Q3 only is a dull quarter for B2B sales, but B2B sales start picking up again from quarter 4 because January onwards, we can sell a lot of product to the other companies. So 2, 3 will be a little smaller, but Q4 will be very strong for B2B sales. So [indiscernible] sales have lied almost 25, 26 for this year. This quarter, it [indiscernible] the first half of the year, 26%. I believe that percentage will be -- is visible to me into this actually. And in the next years also, I believe we will be able to maintain this percentage.

[Unknown Analyst]

And also under B2C, the Maharatna banks [indiscernible] 65% [indiscernible] And we are increasing production under that brand. [indiscernible]

[Rajesh Aggarwal, executive]

It is almost similar, actually. In the B2C segment also, the Maharatnas are contributing roughly 65% and B2B also, they are contributing 65%. So it is our focus sales. We are targeting the same focus product into B2B segment and B2C segment also. As I told that our discontinued 6 product technical manufacturing, this will stop selling 6 quarters into 2 segments already. So I'm introducing the new products and coming out of the generics.

[Operator]

We have our next question from the line of [indiscernible] from [indiscernible] merited.

[Unknown Analyst]

Congrats on a good set of numbers. Just wanted to understand how much have we invested total in the Dahej plant and in the Chopanki plant?

[Rajesh Aggarwal, executive]

Sandeep, you will be able to give the exact numbers, but roughly we have made an investment of about INR 300 crores in last 3, 4 years, which has gone into the 2 plants. So exact numbers can be given later or maybe now, I'm not sure. And we have a proposal of investing INR 150-odd crores in [indiscernible] project, which is going to start in the next calendar year.

[Unknown Analyst]

All right. And and what would you say the capacity utilization of the existing assets? I mean, apart from the Dahej, Chopanki plant and the...

[Rajesh Aggarwal, executive]

Like if we look at the existing assets, then we use these assets to a level of about 70-odd percent. Again, we generally calculated formulations on the basis of 8 to [indiscernible] technicals on 10 months of working. So since the product mix is changing, the new generation technique of the quantity, which is coming out of that technical plant is much, much lesser, but the value is much, much higher. So we have made an assessment because before the -- I mean annual maintenance -- because in the annual maintenance, we also need to set up the target for the new technical manufacturing, new product lines and everything is set. So I had one round of question so far. In that round, we understood that we have used [indiscernible] to about 75% plus levels actually in this last fiscal.

[Unknown Analyst]

So the future growth will have to be -- will come from these new plants?

[Rajesh Aggarwal, executive]

Definitely, it will be -- new plants will be very much instrumental actually and the product mix change is also going to be instrumental. And since we are making the new formulations. Again, we are focusing on sustainability. To make the thing sustainable, we are focused on the new formulations, which are water-based formulations, WP formulations, [indiscernible] WP formulations, like we are putting down the solvers to water and also, along with this, we are trying to make new products. So yes, we have to strengthen our formulation base also and that we have been doing regularly.

[Unknown Analyst]

And what would you say will be like the fixed asset turns from this new plant, Dahej and Chopanki?

[Rajesh Aggarwal, executive]

Again, the number is not consulted yet. If not, but generally buyback [indiscernible] is the type of return.

[Unknown Analyst]

And roughly -- okay, for the next -- and roughly, what are we targeting to make? Is it more of technical or formulation for this new plant?

[Rajesh Aggarwal, executive]

When I say 5x, 5x is for the technical.

[Operator]

We'll move to the next question from the line of Pallavi Deshpande from [indiscernible] Capital.

[Unknown Analyst]

I just wanted to understand the asset turn for the technical is 5x that for the new one, I guess. And what was it earlier for the old ones which you're phasing out?

[Rajesh Aggarwal, executive]

Generally, the industry average is about 3x, but we have always been successful in crossing those [indiscernible] because we keep on shopping the molecules, the molecules which are in high demand, which are large value-added products, we try to bring those products. So I believe in the past also, we are able to maintain such numbers. The exact things can be submitted by the CFO in the -- maybe later, but we are somewhere always between, I believe, 3 to 5x actually, and we are near to 5x rather.

[Unknown Analyst]

Right. And so the old ones that we had the old technicals, they were also doing 5x turns?

[Rajesh Aggarwal, executive]

Some plant may be doing 5x, some plant maybe a little lower than that. But old plants were going fine actually. There was no problem in continuing those products. The quantity I was doing were very, very big. But the problem was of the margin because of the market fluctuations, we are not able to deliver the results as per the expectation of the state. So strategically, we targeted that we would stop those [indiscernible] and we'll target to do the new things.

[Unknown Analyst]

Right. And sir, the new technical R&D with the JV with Nissan. So I just wanted to understand, would the how the arrangement works in terms of sharing of [indiscernible]

[Rajesh Aggarwal, executive]

No, I would clarify. I'm not making any technicals [indiscernible] all the marketing some of the Nissan products, half a dozen products are there, which are marketing already. And there will be a new addition. But in these cases, Nissan supplies of the product, we either make a formulation or packet. So this is done by us. Yes, the technicals which we are going to make, all these technicals will be back to work of [indiscernible] integration by our technical R&D team. So this is the all in-house R&D team, which will be responsible for making these technicals. And we, in the past, whatever we have introduced, we have made many technicals for the first time in the country very successfully. And I believe we are going to we should be able to repeat the same success for this new technical also.

[Unknown Analyst]

Right. So I understood that. Now in terms of the understanding with the JV partner, Nissan, in terms of the pricing of these technicals, which will [indiscernible] Will you market this.

[Rajesh Aggarwal, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rajesh Aggarwal, executive]

[Foreign Language]

[Unknown Analyst]

Right, right. Sir, second question was on this new products. [Foreign Language]

[Rajesh Aggarwal, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rajesh Aggarwal, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rajesh Aggarwal, executive]

[Foreign Language]

[Unknown Analyst]

[Foreign Language]

[Rajesh Aggarwal, executive]

[Foreign Language]

[Operator]

We have a next question from the line of Rohan Advant from [indiscernible] Capital.

[Unknown Analyst]

Sorry, am I audible?

[Rajesh Aggarwal, executive]

Yes, yes.

[Unknown Analyst]

Sir, my question was on your gross margin. If I see our current gross margins are around 25%, raw material cost is 75%. And our higher-margin products are growing faster for the next, say, 2 years or so, where do you see these gross margins headed? Because related to the industry, we've had lower gross margins for some time now. So I'm sure you are thinking of taking your gross margins higher. So where should those be headed, say, FY'25, '26?

[Rajesh Aggarwal, executive]

We are on a part of [indiscernible] development. I don't want to give any margin figures, but here, I would like to sell you. If we improved the Marata sales a lot this year, we are going to further improve into the next 2 years. So you can see the margin growth should be visible actually in both these years and we'll keep on growing our margins.

[Unknown Analyst]

And sir, secondly, this year, you've launched products and you've grown really well related to the industry. but maybe all products have not enjoyed a full season. So for FY'25 and FY'26, do you foresee this momentum of significantly higher revenue growth than industry to continue. And if you could give us some numbers, will it be like 20% growth? Or what are you looking at?

[Rajesh Aggarwal, executive]

Again, I don't want to quote though I've told in the past that we are working with a mission of a CAGR. In the past year also, we have grown by 20%. This year also, we are growing almost at the same pace with little difference. So we'll keep on growing, and we keep on performing. And our numbers will be visible continuously by virtue of the products the product mix improvement, you should be able to see the progress continuously. So many of our products, which have not shown so far because they did not get the season, but the response is quite very interesting from the market. People have very well appreciated all our new launches actually, which has gone to the market. So we expect that many products have already shown and other products will also be showing. So the response is wonderful.

[Operator]

We'll take our next question from the line of Bharat Gupta from Fair Value Capital. We request you to restrict to one question, please.

[Bharat Gupta, analyst]

Sure. Sir, I just wanted to check like since we are there in the B2B space, so are we in active discussion with any Japanese player with respect to contract manufacturing for any technical? And how do you read the CDM opportunity given out the China plus 1 trend, which is there in the market?

[Rajesh Aggarwal, executive]

The opportunities are always there, and we are always in discussions actually. So I don't see anything visible immediately. So once we are near to something, we'll make an announcement. But yes, always, we are in talks, and there are many things in process, and we expect a positive response.

[Operator]

We'll take the next question from the line of Pallavi Deshpande from [indiscernible] Capital.

[Unknown Analyst]

In terms of this margins for these technicals, they would be higher than the formulation -- sorry, they would be lower than the formulation?

[Rajesh Aggarwal, executive]

Again, Madam, it depends on the product. If it is a Maharatna product, it will have always a good margin even if it is a technical or a formulation or a P2P. So our industry is very, very different in the generic product. Nobody is going to pay the margin. But for the specialty products, everybody agrees to pay.

[Unknown Analyst]

And those 6 patented products -- I mean the -- for the new technicals that you are doing, they are all patented, they're not the generic, right, the technical you're making now?

[Rajesh Aggarwal, executive]

Again, not necessary because when we make the technicals, so these [indiscernible] are not the patented technicals. Why? Because we make them for the first time in the country, but very rarely will bring the totally new product to the country for the first time. So we are able to bring such technologies through Nissan only. With Nissan, I have brought some technicals which were presented or which are still patented like if I talk about Shinwa, I talk about [indiscernible], the new product, which I'll be launching with Nissan next, it is going to be patented -- patent. We are able to claim more in terms of formulations than the technicals. But yes, when we are making new generation technicals, we are the first company after the inventor who bring this technical to the country or sometimes we are the second company. So being less competition area and more margins. We are able to focus around these brands and establish these brands very well into the market, which gives us the edge into the market.

[Operator]

I would now like to hand the conference over to the management for closing comments. Over to you, sir.

[Rajesh Aggarwal, executive]

So thank you very much to all the participants. You have asked very, very relevant questions, and I would thank you again for sparing your valuable time and your suggestion, which always [indiscernible] and I would assure you that with our outlook on the new technologies, innovations, we should be able to continue with our strategy very well into the market and will continuously outperform the market.

[Operator]

On behalf of [indiscernible] Equity Broking Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.