Insecticides (India) Ltd
NSE:INSECTICID
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Ladies and gentlemen, good day, and welcome to the Insecticides India Limited conference call for Q3 and 9 months FY '23. [Operator Instructions] Please note that this conference is being recorded.
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 will move to the Q&A session. I now hand the conference over to Mr. Rajesh Aggarwal for the opening remarks. Thank you, and over to you, sir.
Thank you, and a very warm welcome to all the attendees of this conference call. On behalf of Rajesh, I would like to extend heartiest welcome to all the attendees of today's earnings call.
I'm extremely pleased to present before you the quarterly and 9 financial results of the company, ending on 31st December 2022. Let's begin today's discussion with a brief outlook of the industry followed by asset losses of the company's financial performance for Q3 and 9 months '23.
Looking at the current international trends, both COVID and the Russian [indiscernible], the international scenario in favor of the our country, and I believe that it's a huge opportunity for our country to produce and make it for the domestic market as well as we will because I believe that this more than 70 million crore people in the use of working in the working years today. And if you look at 2015, India is one of the economies where the number of workers are going to go up from 70 crores to 90 crores, which means that there is a huge opportunity of working in India. There will be a lot of domestic demand. And of course, lot of stomachs to feed. So we believe the world better. It talks about that the agrochemical sector is going to grow from INR 2,021 to 2,000 to INR 7.4 billion, so which moves a huge scope. And this sector has been recognized as one of the champion sectors in the industry with 12 industries which are going to take global leadership by 5% and 8% to 10% growth build to 2025 [indiscernible] also.
If you look at the groceries, India, yes, the increase in the domestic consumption. And if you look at Asia Pacific also, this zone is also the demand for agrochemical is going up because the food production is high, the food demand is high. And if you look at the modernization between agriculture, so somewhere it is going to go at par with the Western world. And hence, there is an increase in the demand for agrochemicals in this area in particular.
Today, as I was saying, India is the next exporter of [indiscernible] well. So there are various hematites to our country. Number one, like China platform pharmacy, which is very, very important because India is one company which can act as the natural supplier of petrochemicals at large because it's a low-cost manifested availability of technical manpower at aggressive pricing. Seasonal domestic demand is one of the reasons because there is overcapacity due to the sale later of business. And of course, in the better international market, sometimes you can take better prices and see is very, very strong into the product. So there's a huge opportunity.
In the recent time in '22, government has launched the sand growth for the crop assessment, which means that there is a good opportunity to expand the fungicide and insecticide. The government has allowed and the companies that are starting driving better. And we are also working in a big way that how we can take the growth to the market, and we are working with various own companies as we are working with pharma, all other network to take this technology and make it more production and practical for our farmers at large.
Today, the potential of agrochemical issues because despite of whatever usage we have to remedy, I believe that the usage is still very low because we look at on the world market, India consumption of agrichemical is just about -- so 5%, I can say, of agrochemical, et cetera, is feeding the 18% population of the world because our food production is not only good for our country, which is about 18%, but we are also exporting any food products, which means that very is huge scope of agrochemicals to go up. And even if you look today, 15% to 25% of the potential crops are listed due to the attack of tax yield and the yields. So that is available in all [indiscernible].
We're talking about the first half of this year, [indiscernible] were well related. So very challenging times because in certain areas. It was excessive rainfall, whereas a few areas normal, but deficit in many areas. So this erratic nature has led to the loss of trade in many parts of the country. And then there was delayed monsoons, which again delayed some of the crop. Shows like rig this year got impacted by 4% by 6% at 13%. Corn series increased by 5% cotton. So it is by 6%, but then there was [indiscernible] with black rise something, which is not getting the proper control. So there are issues. But overall, it has been a decent year basically. Talk about the [indiscernible], showed a good recovery and particularly the sovereign part of the country has shown a good recovery in [indiscernible] because there has been good rains. This good rain has led to the good water level in the reservoirs and the soils are wet, which means that there has been a good opportunity.
And we look about -- if I talk about the current Q4, even in Q3, we see that B2C metros has come from south. More than 50% of our business in the B2C segment or brand segment has come from the several, and rest of the world have been just felt actually of another 15%. So there is a good opportunity for the products. Good in demand. Like if I talk about this 9 months actually in particular this year, we saw that the product which we have launched recently this year and the products which were large in the previous year also, we have seen a good jump because they were part of our focus product range. And particularly, if I name [indiscernible], report this year, so all these products have shown a significant jump year-on-year, and they have been responsible behind getting a better market share for a 35 million India market.
So talking about the company's performance in particular. This quarter was a modest quarter in terms of the financial performance, then the market acceptability of the new molecules because the [ credit ] season [indiscernible] it was the pending of therapy season, which was delayed due to the effect impact of the monsoons. But I believe that it is going to back up in the fourth quarter. Both have been a positive quarter for us because if you talk about the top line, INR 356 crores has been the total sales and EBITDA has been INR 232 crores. If you talk about sales, which is 13.6% higher than last year and EBITDA 25% higher than the previous year. So if you can talk about Q3, it is 60 basis points in the EBITDA. And if we talk about 9 months, then roughly in 9 months, we have received around INR 1,500 crores of sales and about to INR 150 crores of EBITDA margin, which is 107 basis points in 9 months.
So in Maracas also, we have got a good contribution actually. Though in this quarter, it was INR 133 crores. And if you look at the year as a whole, it is INR 596 crores, roughly 55% was the contribution from the market at. And I was saying [ Shinwa ] and also Hachiman were the main into for the main products, which need to resolve.
If you look at the insecticide distribution, insecticide was the highest with almost 44%; herbicides, 41.6%; and 10% of herbicide in 9 months. If I talk about the 3 months once of more or less figurative, the fungicides are ready lower at 8% in the free segment. And I was telling if I talk about the distribution area, more than 50% has come from soil. And the west [indiscernible], I would say, show, and we are contributing another 50% even. On the Hachiman and Shinwa in particular has contributed in a big way year-on-year in terms they have contributed about INR 100 crores of the turnover, these 2 products in particular.
As I was discussing about [indiscernible],these projects have also given a good job, about INR 60 crores has come out of store and it put together the jump year-on-year. If I talk about the 9 months in, roughly INR 700 crores have come from inventory. And you see we got a very small window to market this product, about INR 12 crores has come out of it. And we are expecting further [indiscernible]. But all these products are going to invite in the year future in a big way.
So this year, company has given the bonus, and we have a very stable current rating. The credit rating has removed sale. And in this quarter, Q3, we had one product called Stellar, a decent beginning. And I would say that this is -- this quarter is again going to multiply into next year. We have recently sold some quantities, small sales, roughly about INR 4-odd crores. but we made our big into the grit segment with this product, and it is going to contribute in a big way for us in the later future in FY '24.
Talking about CapEx. So first of all, I will discuss about this, the LMP project. So here, the CapEx was planned at about INR 1,110 crores. It is against the ratio, it has gone up INR 250 crores. We do see that. Number 1 is delay and net is the increase in the cost of steel and some other materials sector, which has led to the increase in the project cost. And we have also planned to introduced 2 more boilers actually to have a solid fuel here, so we has also led to the increase in the project cost for this right side. So this project is expected to commence by March '23. So this means that all our capital expenses or the projects will be completed by March '23 running projects.
So for the cost savings, we have put out 1 megawatt solar panel at the Barik site and also 200-kilowatt solar panel at the Silet side. And also, as I was discussing, the solid fuel in the easing of stead of gas, which will be a big saving because with the increased plant, the consumption of gas or the consumption of steel for the company will double. So the only way how to keep the expenses under control is solid fuel, which runs at almost half or less than half of gas actually. So that is the reason actually we should be able to introduce the new dollar by the end of March. So the project will complete at this time, and the new bonus will also start. So which means that keeping the same expense ratio, we'll be able to maintain do more production, which will be to savings for the company.
I would like to talk about Rajasthan. In Rajasthan, we have completed our projects. And now we are coming up with the new sites in Rajisthan. We have bought one plant in Rajasthan again because we believe that proximity to blind on the highway, it is going to help us in a big way in consolidating our formulation facilities. And not only the formulation, there will be scope of setting up the new R&D center because we have started the loop of the [ alpaca ]. So the R&D center for the [indiscernible], the plant for the [indiscernible] area and also the plant for insecticide idea will be made at the same site at large site of more than 30 meters of life, and this will come into the position of the company in the month of March. And we propose to start the phase 1 of the site very soon because it's a accepted side, and we are going to start with the formulation tenant. And later on in half 2 or Phase 2, we'll come up with the technical statistics plant here, which will be a project again, but that will start after some time actually in the later half of 2023. So first, we'll complete our project and we start taking out of the Bharik side and Capa site, then we start with their Barodh site, which is a new site for the company.
Talking about the Maharatna and focus more Marakesh. So as we know that we have 11 products into focus Maharatna segment, and these products have continued to contribute well. And you put together focused Maharatna, more than 51% of the business so far has come out of this project. And I believe in the last quarter, we are going to pass all Maharatna products, particularly both on B2C segment as well as B2B also and expect a good jump into the sales of Maharatna segment and also a good bottom line due to the, I would say, increased sales in the B2B segment out of these products. So we are getting very good response and very good order books for some of these products, and this is going to support our quarter 4.
Talking about the future outlook. So overall, if I sum up the year FY '23, I would like to say that the top line will be the double-digit growth, in similar will be the bottom line. We should see a better result in Q4. The EBITDA growth, which we have achieved in Q3, we'll try to maintain that EBITDA growth. And there will be some decline in the export target because export our INR 150 crores, but there have been various leases, which are still the export markets. Number 1 is the petition in the various currency and nonavailability of dollars, which has impacted many countries who are our customers in Africa, Middle East and LatAm countries. And also as we are finding paucity of dollars and due to nonavailability of dollar, we are not able to supply it to them. Some people are maintaining the balance sheet in their banks, but the banks are not able to allow of the payments in what we are supposed to. So we have somewhat a little on this export front, but I believe that we should be able to make it up soon. And this year, we may close the export sales around INR 100 crores and INR 115 crores, giving it a heat of about 30%. But I can assure you that next year, we should cross INR 100 crores plus in the international market because of various reasons actually, not only the registrations of some of the products which we are getting into these markets. But we'll have some registrations of technical also in the advanced markets of Japan, Europe, America, some countries. So this is also going to give the push to our export sales. And we're also looking at the opportunity of grams coming into in the export market, which will again strengthen our business into the international market, will give a good boost to the export business also.
So for the next coming year, we see the strength in our B2B business because the introduction of new plants. And with the new plants plus, we are also going to introduce new molecules. So these molecules will also go to go to the B2B segment can to be B2C. So I see the growth coming from B2B, B2C and export front, all the sectors in the next year, and we like again the expansions coming in, I would like to keep the target of 25% growth for the next year also.
So here, the new products will come to this will be recent 2 years. And the new introductions, which are going to come now because still we have the plan to introduce 4 more products into this month itself in the month of March, which is mission targets express, Tornado, [indiscernible] Superior SP. So these are the 4 major launches with mission and value for CTR. We may also come up with the recent formulation of this product vision, which is the #1 in certified in the country selling today. So we are coming up with the technical manufacture of this product, and we'll bring the formulation to the market going to be part of our top 6 products, and we expect a big jump with this product sale also. So at present, Shinwa in '23 will be our largest project, which is a definitely patented molecule, and we are expecting to go close with good numbers in this product. In the next year, again, it is expected to multiply along with some other products like Sari, Hachiman and some others like we have selected 6 products, which are going to go do good so a very good expectation from Q1 itself of the next year '24. And I'm very, very confident that with our focus on the Maharatna products and focus Maharatna products, we shall be able to deliver the good numbers as per the expectation of the steel.
So our dialogue, we'll be doing good, and we'll intervarious products under this segment. And along with this in the additional also with some of the products like Shinwa, Tori, will be getting some sales and some gold products, also we'll be doing good to see them and then be launches as I was discussing on these 4 products. So there some quantities of this particular relation and [indiscernible] some quantities that we also move to the market and will help us in building up the sales of quarter 4.
So in the -- we are also working for import substitution if I talk about the right expansion. There, we are better integrated, particularly for the 3 technicals, Landa [indiscernible]. So we are going to make the intermediates for this product, which strengthen our site in the international market. We have already increased our ability, almost doubled our [indiscernible], benefiting the state technology plan. And now once we start facing the raw morals for this product, which will assemble and our capacity and capability to the market and we give the confidence in the international market of our consistent supply, quality supplies, and it's oing to help the company in a big way because we are generated a lot of data for these molecules and the [indiscernible] being registered in all the advanced markets for the world. So our export gets boosted when the new technical like we are investing a lot on registrations, not only into Argentine Middle East, but also in Europe, rainmaker countries and the Latin countries, Canada, et cetera. So a lot of these markets are going to become our new markets, actually. And we are going to go to further away from Africa and Middle East, like Europe, LatAm countries, all these companies are going to support us in the review. So the export revenue for this year is from 1,500 million, it has come down to 1.5 million projection, but we are going to make up in a big way for the future.
Meanwhile, we are going to continue our focus around the R&D because in the R&D, we are doing various types of activities. One is the biological R&D, and then legal R&D. In the biological R&D, we are hoping produce some more products which are going to come in the biologicals. So there will be 3 for expectations. We can have products launch expectation we can do in the biological segment. And similarly in the chemical segment, there are certain listed, which are getting the registration. And all these new mixtures and of our new products will be coming soon, where we are going to make certain need, we are going to launch certain formulations. So all these are going to give a good edge into the market, and the launches are expected in less 4 months actually. So this is going to happen. And in growth also, we are going to enter this core for using our insecticide and also [indiscernible]. And these new products also are going to support events.
So with this, I thank all the participants, and we are open for questions.
[Operator Instructions] We have the first question from the line of [ Jatin Padala ] from -- an individual investor.
So what says from my related news, try a lot of tons to understand about their conflicts. So if I ask a lot, so you may just tell me. So first as a percentage of balance, our consumables are very high. So what is the reason of the impact? Is that because our business nature? Or you can throw some light on that.
I think residuals are very much under control as it happens in regular years. And even with the increase in the sales, our collections are quite good. And by the March end, the 3 will be very good, actually. I don't see any big threat over there. So our collection so far are doing very well.
Okay. And what kind of market share we are having currently in this business amongst our various competitors?
Actually, it's a difficult number to tell, but we live somewhere between 4% to 5% of the market share.
Okay. So I see that you are launching new products every year. So are they just extend some of your old products or they are giving something new? You can explain that by some example. I had the call tied to extend by using -- so that I would like to understand some more detail.
We, as structural brand 55, who is providing the company's solution to the farmer. We're believing when this company was not in '21. So at that time, I picked up everything, whatever was there in the market, and we launch everything into the market. We catalog. Then I realize that we have a bundle of gel products, which are leading their charm and the new generation solutions are coming. Then we started adopting new generation solutions a big year back.
So almost since then, we are trying that how we can balance our risk because the number of products are going added up. And we are -- it's become very difficult to reduce the molecules. So now we pointed out that all the molecules which are below a certain size, we pointed out the molecules, and we are trying to take at about 30, 40 -- more than 40 formulations or 40 brands out of our total range.
The idea is the genes which are not getting big share, they should grow. But our stent is that we produce the company's solution to the farmers, so we are working regularly to provide the new generation solutions. Now there are 3, 4 ways in which I provided to generation solutions to farmer. Number one, we work with the Japanese partners and we bring the patented technologies through the Japanese, particularly in farm. So number two, we work in our R&D center, and we better integrate for the new generation. Then when I say new generation, there we're not presenting molecules, which are a monopoly in the country. So we make the AI, and we bring them at commodity price for the farmer and the brand there. Number three, we made new generation formulations, the massive formulations, which means a mixture of 2 or more products or a new formulation, which is different than the past with this better results to a consumer. Simple example is grossing versus, what do you call that, combination, which is a mixture of 2 solutions.
So we try to bring a ready mixture for the consumer so that one medicine can give better results. Precosts come down. The medicine is a scientific mixture, can bear our IP on this and we give the edge into the market. So it's a win-win situation for all. So we bring this type of [ foods ] also. And apart from that, we are doing the biological solutions also to farmer. So these are the 4 ways which we are bringing molecule. So when I bring the molecules, for some of the molecules have to make new technical also. So that would integrate and we make the new areas also. And in some of the areas, we are doing the integration so that we can reduce the dependence on China.
So these are various gas products, we are trying to build the new solutions to the farmer, and we are continuously working on bringing the new solution because we want to change it because now I believe that we have come to a point where there is no use of selling all these blended products or only smaller products. So generics, which are moving their channel, we are trying to cut them by ourselves and bring the new solutions, which have more value. Thank you.
Excellent. Now the question is regarding CapEx. So whatever CapEx we are doing, that is I think some CapEx we are doing to have some record integration, and platform is capacity expansion like that. So I mean margins, we will be back -- I mean incremental margins and incremental revenue.
There will be -- like we have given a projection of 25% growth in this year. We are already 20% less. We have given the projection for 25% growth in the next year also. And I believe for a few years, I'll be able to maintain this. So we are trying to -- by continuous expanding, by launching new products and by doing the backward integration and making the new AIs, we continue this type of growth. So I don't want to give a very good number, but we should continue to grow by 25% for next 2 to 3 years by the virtue of investments we have made. And we'll continuously on into new technology, which we have developed over a period of time and definitely says this will be value-added technology, so they will support us in increasing our bottom line or bettering our bottom line more than the top line. So that will be the reason.
Okay. And the patents that we have are really only in India, right?
I would suggest like patent our India, but some of the patterns are also internationally. But yes, at the moment, we are focusing legally on Indian patents. We have also had a JV, which discovered the molecules for the world. So in that case, we are looking for international patents. So major contribution is Japan and minor with us. So I would suggest that a lot of questions, I will reply to you. You can come back in and be you, please.
We have the next question from the line of Paris Gupta from Fair Value Capital.
Three questions from my side. While we look at the overall revenue contribution coming out from the B2C space, margins in this quarter has also remained on the muted side. So I just want to understand more on this. Can you throw some light like what has been the family region for muted margins in this quarter?
There has been a very like big impact on the prices in the market because of the market fluctuations. The prices in the beginning were very, very high when they became a little modest and still the currency -- a lot of machines are there prevailing already. The currencies have gone up. The crude was high when crude is reasonable at the moment.
So the international markets are highly fluctuating. So due to these fluctuations, we have to give the impact of those fluctuations actually on the vents and everything. So it has impacted. And otherwise also, like if you look at the second half of the year, it is a small business for us, and it was very difficult to make good margins into this business. But still, I believe that Q4 is going to outperform Q3 for us because we are expecting a lot of good sales of the generation molecule, which is going to support. And this trend is going to continue throughout the next year, which will support us in building up the bottom line. At the moment, yes, it has got impacted. So I've already explained the international market trend, the pricing pressure, the currency pressure both has impacted it.
Rajesh, just on the number side. So what would be the rough impact on the currency side, like currency fluctuation? Have you taken any ForEx?
Forex sites or regular thing, because the way we -- like the process, if you do the hedging also, you have to put it in the cost of this -- the currency hit. So our currency was the -- about INR 13 crores is the currency rate of this year actually. We have already made up import of more than INR 500 crores. So we are or the total cost of INR 13 crores. You can see plus including the loss in currency is INR 13 crores. We are already hedging market.
Any sales on the volume growth for this quarter? .
Volume, yes, some products, we'll be increasing the volumes. For some other portals, there will be the fall in that actually. So volume is not very important because it will be value, which is very, very important. When it comes to lead generation, in the new generation, the volume is continuously coming down and the value is coming going up actually. So I think that in times to come or if I look at the 20 years of agrochemical industry, continuously, the volumes are coming down, but the value year-on-year is going up.
It gives you a small comparison by 2005, this industry was about just 2 billion, which has not even 2 billion, about 2,500 crores. Today, it is -- Indian market is more than 3 billion. And the quantity over this period has declined actually. So continuously, the volumes of the end products were very, very high, the prices were low. The new generation products are value is high and the volume is low actually. So slowly, we are going to low volume products. And as we keep on tainting the generic molecules, the volume will continuously keep on.
In the current quarter, like the pricing hikes across Harita. So what would be the figure?
There was no price hike in this quarter. There was an impact. I told you already that the international market was highly fluctuating. So there was some decline. There was no increase in prices actually a little decline in certain products as per international investments.
Sir, in terms of the inventory situation, which is there, so like how is the situation in regard to the challenge in '20 resin?
I don't see a challenge actually because some products here, the inventory prices have fallen but that impact has already happened actually. And we are expecting a good season, good start for the new year because a lot of new molecules. So we have to then we will be investing. So for the new year, we'll have to reinventing, and that process is on. .
Right. And so, Rajesh, in terms of the guidance, like you've given a strong -- more than 20% kind of a growth for the contributing. But in terms of like if I look at the margins, so any particular internal target which we have in mind like in order to maintain a particular level of margin?
Like I don't want to give any direct to that, but I will tell you that if I grow by 20%, the margins will be growing better than that, and that will be evident from the first quarter performance itself. And this Q4 also, we should be positive, actually year-on-year, we should be positive in terms of percentage.
All right. So our focus is towards improving on the margin tail getting the lower-margin products, right?
Yes, we are tempting the lower margin products. And whatever we are introducing and the generation solution with better margins.
Also in the presentation, there has been a reference regarding a 9 registration for, I think, last place potassium sold in -- so just wanted to understand the market size for these products in the applications across the crops.
These are all new products actually for the country. So glass protection or will be a new formulation for India. Internationally, it is very, very popular. But yes, we have recently noted. We got the [indiscernible] in hand just yesterday. So we are going to introduce this product. This will be 1 of the 4 molecules, which are going to come in. Again, there is another product called Thistle, which we are going to manufacture in the month of March. So we are going to introduce Supremo SP, which is again manufactured in the country for the first time. So Glass production is called Bose. The again, there is Tornado, which is a mixture of 2 formulations. You have tested this already. So it will be launched at turned then the mission is CTP, which is the largest selling in 5 in the country. So we have already made the technique, and now we are in the volatile formation. This also will be launched in the month of March. So there will be various launches in March. And even after March, there will be a few launches.
Can we have the inset. So we are looking to target more than 5 products in the coming year?
Yes, there are maybe about 4 including the biological kind of the 4, 5 products actually, maybe lag for that. And these 4 projects have been launching, which are going to happen in the month of March itself.
Just last question from my side in regard to the backward integration. So you specified that the work has been progressing like it has been come by March 23, right? Like what kind of a captive consumption we'll be incurring from mid and in terms of margins? So will there be a good amount of impact for it, like in terms of our overall margins for?
When I talk about the consumption, like we should be able to make the 100% usage of the backward integrated things by ourselves, and then there will be some products will be sold also. So I'll not be able to declare the loans of all the ties. But yes, the idea is like some products will consume 100% by ourselves and some quantities we sell into the market.
Number 2 is the question about the increase in the margin. So that is very, very subjective because it depends on the market conditions when the prices go up at the kind of contribution is more when the prices are dipping. At that time, the contribution is lower, but still debt will be positive and will be very, very helpful in building up a stable supply at a stable price. So it will be very helpful.
It will be curtailing the exposure which you'll be having towards China, I think.
Definitely, it will be a big help. But at the same time, imports of China is growing because of the introduction of new volumes, a lot of things have to come from China. So I don't see the total overall imports coming down. But yes, this will be helpful. quite helpful.
[Operator Instructions] We have the next question from the line of Dhruv Muchhal from HDFC Mutual Fund.
Sir, I have a question. Some of our new products have done reasonably well. If I look at the presentation that you have uploaded, the 2 products, which were launched, I mean the products which you launched in FY '22 and '23 are driving a part of our growth. But coming back to the earlier point that the margins have not improved. So sir, just wanted to -- and probably that the reason is because of the high technical prices in the generic as you mentioned earlier. So if I probably have to dissect in 2, your new products that you have launched and the legacy product, is there a trend that your new products are delivering significantly better on contribution margin versus your legacy products? Can that be a difference? And once the high prices situation normalizes, you can see that reflecting in your overall numbers also then? Any...
I will respond one by one. It's not easy to establish a new product to the market. Because you cannot go by price, you have to work with the farmer and establish it. So whatever is happening, it has happened by the strategy, number one. Number two, is we talk about the -- our classic products, actually, which are a hit in the market. They are always a hit, and their number is also going up. Their sales is not coming down.
In terms of number, if you're talking about the volumes the volumes of all the classic products, which are more than a dozen, it is going up year-on-year. It's not coming down extra, and it's only us that we are not increasing the sale of certainty when it is under control. Otherwise, there is still killing those products. We are killing the other range of products which are, number one, not delivering quantity; number two, not be leading in margins; number three, they are not buying lifted from the market.
So only those ports are being cut. So this change in market has already started coming for last 3, 4 months actually. And the change in inventory because [indiscernible] you have to note, and it is already happening into the market, and that impact is already happened mostly, I believe, in our inventories. So due to this, the overall margins look a little impacted. So there is no risk which I see because already the low-cost inventory as we started entering into the system. And since it is there, so the prices have rationalized, and we believe where the new season has to be a good season.
So it is by strategy and by choice. It's not automatic. It's with the new product alone cannot go until you put a full pressure. So since you have worked so hard, you have to spend 5 years to 10 years on bringing a molecule. And after investing so much money and if it is a good model and if you don't work for that, then you are not doing justice with that. So this comes with very hard work and very big efforts actually of years of scientists. The teams and marketing team, development team, sales team, all the teams have to work hard when only the molecule gets established in the market. So nobody can say that you have the product, the products are gone or multi situation. Now new molecule is coming in, the new molecule is taking this year. So these are sheer something which competitors talk about actually and nothing more than that.
Sure. But I was also trying to just understand. So your new products probably will be delivering better on margins because they are...
But you cannot cut down the small products. if you are maintaining a Russian shop. You can't say that I will stop selling sugar, I'll not sell salt. So the large items, you have to like specialized in the large item, like [ lecal ]. Lecal is a key brand actually. So I'll continue selling lecal and keeping the -- making the variance of lecal, and I'll continue doing it even at a smaller market. But the new generation of things which comes, it comes at a margin, actually. So I'll do withdraw molecules also. So we'll work at Gen with the generics at one range and especially at another range, and we'll keep on increasing both. Yes, please. .
I think my question got a bit misunderstood. So what I'm trying to say is that you're launching a lot of new products. Some of these products are patented also, so they will deliver higher on margins. But benefit is not probably reflected in the current quarter or last 9 months number. It's because of the impact of higher technical prices and some of the products, which was there because of the inventory issues and all those things. I'm just trying to understand a better way to understand this will be probably, is, if I can probably get some sense on what your contribution margin will be on some of the newly-launched products and the newly-launched products? Because next year when the technical prices or everything normal from China technical...
You talk about generally, when it is focused-Maharatna products. The margins are time of like gross margin, I'm talking about 35% plus. In the generics, sometimes, we sell at 5% margins. So these are the gross margins actually. So that difference is very much there.
[Operator Instructions] We have the next question from the line of Rohan Gupta from [ Nima ].
In the line of margin and margin profile. I think that your presentation says roughly 9 months, almost INR 400 crores kind of turnover on INR 1,500 crore. Turnover would have come from the new product launch. That roughly good 30% kind of numbers are. I think that this probably will be the best mix in the industry in terms of the revenue contributed from the new products. Despite that, sir, once again, I'm harping on the same issue, despite that this is not getting reflected on the EBITDA margins.
So just want to understand that do our strategies are like in terms of in the launching of new products, the generic and compete with the many other products already in the market and where the pricing is not higher or significantly higher and then the existing products in the market? Or we have to just only compete in the market and keeping the prices low that that's where even the new products also, the margins are more or less in line what we get in our existing product basket? Give me something, sir.
Last year, what has happened like the new generation ages, we are a lot of products that are very expensive price because that was the situation. These are gestations at last moment, very small market, very small window. And we were forced to do that actually, which is capital like which led to a very high cost of some of the products.
Some other generic products, also the prices in the market were very, very high, and we were supposed to buy at those prices. So last year, my purchase cost was relatively higher. And this year, we are trying to keep the tender central, and this is going to help us in building up the margins for the new year actually. So this year, buying has been at much better prices than we think this year. So this is going to support the building of the markets.
Okay. So basically, you're saying that the raw material costs have been pretty high and that has been very...
In last year, December, January, February, the cost of raw mats was very, very high, and we were supposed to pursue a higher price. And now this year, purchase is whatever happened after Diwali, they are at very aggressive prices. So this is going to help us.
Okay. So that is one, and second is in terms of -- in general trend also, we have seen that the revenue contribution from the new products. So when -- just clarifying your presentation. So there -- should we assume like that the INR 400 crore revenue, which has been coming in -- which has come in 9 months. It is all the products which we have launched since FY '13? Or it is only like in the last 5 years? Or how you track it? Like what we see that the products are in the blue shade that FY '19, the revenues from the..
I don't have the collection, like this sheet shows weak years. We are very, very clear in the year. So this shows the first from FY '19. If you look at the FY '19 products, there is hardly an increase year-to-year, it is a decline. If you look at FY '20 products, again, last year it was INR 55 crores. This year, it is INR 48 crores. The increase comes from FY 21, 22 and 23 products on day these colors are very, very evident actually. So...
So what we should see that the blue color, I mean that probably the product launch in FY '19 that they are flat now and the come from those.
Yes, this shows that not the color actually. So the major increase in green and oil color, which are on the top. So orange is this year launches. INR 130 crores has come from this year launches. INR 117 crores has come from last year on. Last year, the same from this was INR 54 crores. This year, it is INR 170 crores so far.
But what I want to understand that when in FY '20 when we have launched the product within FY '20 revenue was INR 30 crores. The growth in the next year should have been exponential growth or should go on at least next 3 to 4 years. But it just led to you that INR 30 crores and INR 43 crores and INR 55 crores and INR 47 crores.
So one, we cannot generalize anything. It depends on the product, what the product, what the response, how they're doing. So I don't have the product in hiding. You can discern about specifically. But now like, if I talk about this year, so last year, we had launched 2 products. Both are big launch. And actually, they are going to increase further into the less fiscal again, they are going to go up thereafter, they might stabilize. And 2 products which are launched in this year, they are going to go up for at least 2 years ago, and then they might stabilize. So I'll say because...
Now this year has been -- so like this year has been fantastic in terms of the ramp-up of the revenue like in both in green and orange. There has been significant ramp-up of almost INR 270 crores, INR 220 crores kind of revenue has come from the...
if I talk about this because these words are low. So I see the increase in the revenue coming in the next fiscal also for both these colors.
Okay. And then the raw material costs have now normalized. So we should get a...
The normalization of what it has led to because when I'm purchasing the cheaper raw material and if I get the stocks of higher price, then I have to make that investment. So that investment has already happened in the balance sheet, and it gives the opportunity for making money in the future, yes, because it is all M2M losses, they are not real losses.
Right. So one is that higher raw material costs. And second, you mentioned that INR 19 crores is the ForEx loss, right?
ForEx is INR 15 crore, not INR 19 crores.
Sorry. So portal showing the product loss and high raw material costs, that has also impacted our current year profitability, which should then be the pace going forward in FY '24. Am I right, no?
Yes.
Okay. And the 25% revenue growth which you are targeting, I believe that is coming from the further new product launches or we are still seeing that on the industry product itself being these and also in the export market? So all...
All the products which were launched in the last year and the products which are launched in the new year, there are certain euro products. We have selected 6 products for the next year. So out of the 6 products, there will be a few on launch only, which is going to come. There are already launched into the market in the 2 years in. So all these 6 products will be the focus for us for us in the next year. These are going to contribute in a big way for us in future. So at least for the next year, we have very high targets on these 6 products. So 6 will take a 1 quarter.
Right, sir. Sir, a broad idea in terms of the margin difference in the new products like spot or the 0 product in FY '23. What could have been the cost margin?
When it's a focused Maharatna, the gross margin at 35% plus. And when it is a crore, the margin are 10% minus or 10% plus minus, I can say, because in everything and at every stage, it can't be been. It's in [indiscernible].
So we're seeing that -- I mean, beyond these together products to up Maharatna, our gross margins are roughly 10% below 10% on the generic product.
Maharatna, no. Marakas and Maharatna are on 35% range, and the gold range and below our 10% cost minus range.
What could have been the contribution of the revenues on the products which contribute below 10% gross now, sir?
About 40%, 40-odd percent, 45%.
So we still have a 45% revenue, which actually probably is pulling our margins down. So...
Actually, we are kind of bring it down to 35% in the next system.
Okay. So the reason for doing the business of this product is basically to keep the SKUs alive or basically at the bottom line, it does add something at an absolute EBITDA? I understand you can maybe...
There is contributing the market, it is not easy to cut down a product of rent because there are inventories the are invested in trade, they're invented in [indiscernible] of particular material. So you have to plan the fees and do it in the next 2 years or 1.5 years. So we are only -- we are looking at about 40 products. I wish to take up more than 40 actually at this moment. So we started that last year. So I think I should be successful in cutting down for both 40 more this year.
So what can be our target over the next 2 to 3 years on this product, so the revenue contribution.
Which products?
I mean on the products, which are contributing below 10%, which you are in 35% next year. I'm asking over the 2 to 3 years, what is the target?
We'll go slow actually. So next year we'll capitalize when we target 30%. Hello? .
Yes, sir. I'm there.
We'll target 35%, 25% is the target , 30%.
Okay. Sir, second is on our launches like our CPR and all, which are the completely new product and are seeing a huge demand within the market. So we have already got the registration and we will be launching this product and will also be the doing the B2B sales for these products, sir?
Yes. We are planning to do that actually. So in February, we launched our brand. And of course, we are working with some partners. So we'll decide and close the partner success.
So we have got the registration, sir? .
The launch is going to happen in February.
So answering the CPR provocation is improve.
On the restriction, I cannot do launch, been 6 months back. I was sitting on it, I was working with the company, I was trying to decide that how we have to proceed. So now we have decided we are going to make the technical by ourselves.
So sir, if I understand rightly, as of now, there are only 3 to 4 players like Natco and Best Agro and DSP crop, who has got the project registration, have also got the product registration almost 6 months back. So there are already 4 to 5 periods who have got this project registration, and maybe the market is going to be pretty crowded. Do you see that in next year? And what kind of market share you think that or revenues we can garner on the CTR in next couple of years sir?
We have difficult to talk about a couple of years. But this year, I would like to establish it as one of the key products. I kept this in the top 6 products of our list. So definitely, we'll be targeting a big number out of this core .
Where we will be in our competitive intensity on these CPR, so we are completely fully backward integrated or we are still buying some raw material from outside for CTPR?
Raw material definitely are going to come from China for everybody. So it hardly matters. So we are competitive with everybody and anybody. So it should be a good contributor to us because we are making our whole on formulation. So we should be aggressive in there.
Okay. Sir, in our business of B2B, what is the revenue share right now? If you can just give that number?
B2B, exact number, I'll just share.
Not exact number, sir, any number.
Roughly about INR 400 crores is something we have achieved so far, so net of GST. So another roughly 500 minus in totality this year.
Okay. So for now, INR 400 crore is B2B and roughly INR 100 crores is from the exports. So roughly INR 500 crores is...
I'm not talking about 9 months, I'm talking about 10 months now, almost 12 months. It's not an [indiscernible].
So roughly, on an annual basis, it will be roughly -- we can safely say that 35% revenue from B2B and exports and 2/3 is B2C.
Yes, yes.
We are also on a war of commissioning the new facility, and you have in your opening remarks mentioned that a strong opportunity and import replacement in B2B market. So where we see that our B2B business panning out and with the mitotic investment? Where do you see that our B2B business can go? What kind of molecule can pick up?
If I talk about this year, current year, we are targeting roughly about INR 500 crores B2B. Here, we can see a INR 200 crores on in B2B segment actually. So B2B and B2C, both our target INR 200 crores, INR 200 crores. And there will be a small jump in the export segment, which will be INR 100-odd crores this year. Next year, we'll be targeting INR 200. So the target will be of roughly about INR 500 crores, then to INR 200 crores, INR 200 crores roughly. So in totality, how it turns out INR 400 crores or whatever oil declare in total. But roughly, the broad target will be like that.
And sir, margin profile will be similar in B2B, what in B2C or I mean, at EBITDA level.
EBITDA Level, this is more or like similar because when you start selling the new general margins in the new generation molecules or better than the old agenda products, actually. So since the sales is going to grow from the specialty person, so I believe that it will be more or less similar.
[Operator Instructions] As there are no further questions from participants, I would like to hand the floor back to the management for closing comments. Please go ahead, sir.
Yes. So I would like to thank all the attendees for the -- for attending this virtual session. We believe that we have satisfied -- satisfactory run you through our company and business model and addressed every arriving questions there on.
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.
We follow with Investor Relations team, Vilayat and Naman from Katie if you have any questions, which want covers up in the session, and hope you have a great day ahead. Thank you once again. Thank you very much.
Thank you, members of the management. 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. Thank you.