Insecticides (India) Ltd

NSE:INSECTICID

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Insecticides (India) Limited Q4 and FY '22 Earnings Conference Call hosted by Asian Markets Securities Limited.

This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks.

[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Kapadia from Asian Market Securities. Thank you. And over to you, sir.

[Saurabh Kapadia, analyst]

Thank you. Good evening, everyone. On behalf of Asian Market Securities, I would like to welcome you all for 4Q FY '22 earnings call of Insecticides (India) Limited. From the management we have with us Mr. Rajesh Aggarwal, Managing Director; and Mr. Sandeep Aggarwal, Chief Finance Officer.

We shall start the call with the opening remarks from the management, and then we will move Q&A session. I now hand over the call to Mr. Rajesh Aggarwal for his opening remarks. Over to you, sir.

[Rajesh Aggarwal, executive]

Thank you, Kapadia-ji, and a very good afternoon to all the participants and a very happy welcome to our financial performance of -- call for Insecticides (India) for this quarter and also for the whole year organized by AMSEC Securities. So I, again, welcome you, friends.

Agrochemical is a sector which has been growing at a decent pace within the country and also in the world. So it's a great expectation for the agricultural sector because of China-Plus-One policy, because if we look at the strange international scenario, people are looking at alternates which can supply to the world the agrochemicals.

And India, I would say, an immediate solution, and India can do very good in this aspect, and not only the domestic market, but also there is a huge potential due to this reason for the growth in the international markets from India.

So today, it is expected to be a market of about 6 billion plus, where the size of exports is higher than the size of the domestic market. Domestic market is set to be about a little below $3 billion. And the export market is believed to be $3 billion plus. Rather sometimes in the industry, we talk about INR 30,000 crores of the domestic market and INR 30,000 crores plus of the international market, which is already there, and it is expected to grow at a good pace in the short term about 8% to 10% as per the -- some industry reports. And some people believe that, again, there is a good potential actually.

So if we look at the season, during the last quarter, it was a low season for us in terms of sales, generally because it is the ending of the year. And -- but this year, there were good rains actually during this period, which fulfills the requirement of the range during this period and a good beginning like -- it ended to a good beginning for the rabi season.

So I would say that launches-wise, the expectations are quite good. The declarations about the monsoons are good, though there was a lot of heat, but in last few as 1 week, it has rained in many parts of the country. And overall, people are happy about the season and they are looking good.

And if we look at the crop conditions also or the crop cycle, if you look at the seed sales, that is showing a trend that people are increasing a lot of different crops actually and the farmer is excited due to the high price of the different crops, like, even in the dry area and also in the wet areas where they grow rice. So the farmer is excited. And overall, the trade is excited.

The raw material conditions are quite disturbed again because of the container shortages and also due to the freight issues and the international situations. And if you look at some of the Asian countries, which are the large suppliers of agrochemicals, China is disturbed, Korea is disturbed, Japan is disturbed. So we see disturbance all around in this disturbance, the prices have gone up actually, because it is not only the crude, but also the wood or metal, paper. Everywhere the prices have gone up, which has influenced the cost of our agrochemicals also.

So we are trying to pass on these costs to the market phase by phase. And as the cost of the company is going up, we are trying to pass it to the market, but season is yet to begin. Already, we have taken, on average, 10% type of price increase, because there are certain herbicides which have gone up by 30%, 40%, 50%. There are certain fungicides where the prices have increased.

And particularly from insecticides, particularly the organophosphorus compounds have shown a high rise in the prices and that is being passed to the market. But whereas there are some other products where it is a reasonable hike. So on an average, you can say that 10% hike has been gone to the market. And at this time, the sentiment is reasonable. So I don't see a further more hike till the beginning of the new season actually. Through seasonally, the monsoons and the demand when the market demand starts.

Talking about the performance of the company, first I'll talk about this quarter. The last quarter has been decent. We have closed a total sale of about INR 278 crores with a 9% growth year-on-year. The EBITDA also has gone up to INR 36 crores from INR 19 crores in the previous year. And if I talk about the year as a whole, the total sales of the company, the recorded sales is about INR 1,504 crores, which is 6% up to the previous year, which is INR 1,420 crores in the previous year.

The EBITDA has also shown a good increase. It has come up to INR 170 crores from INR 152 crores, which is 11.4% increase. And similarly, the PAT has also shown good increase, INR 207 crores against INR 94 crores in the previous years.

So that way, I would say that the performance of the company has been quite decent in these difficult times. And now since the expectation from the season is very, very good. And we are in the process of completing our projects, because we have done a lot of expansion due to -- in the corona period. And these expansions have been done in the technical, manufacturing, formulations and also in the terms of backward integration.

We have done a lot of expansion in our Rajasthan, Chopanki plant, where we'll be almost doubling our technical production. In Rajasthan and Gujarat, we have increased our production capacity by almost 40%, but a lot of things is going into backward integration, where we are trying to backward integrate the raw materials for some of our technicals, which will increase our strength in the international market, as well as in the domestic market. And I see a lot of support coming from the large companies across the world in buying some of those molecules actually, and that will be very, very helpful in establishing India or establishing IIL as big player in the technical market, in the international markets also. So we are expecting a lot of support in that direction.

So we will be completing these projects in this quarter itself. In June, we have the target of completing both Rajasthan as well as Gujarat projects. So Rajasthan will be completed in full and Gujarat also will be 80%, 90% complete during the first quarter itself, and we will start getting the advantage of the production from this plant.

So we have expanded, this is one direction. The second direction is we have also made the expansions within the plant actually, and the results have already started coming. Because in the last 3, 4 months, we have launched several products. And here, I would like to talk about particularly 2 big products, which are launched recently, which is Shinwa, which comes from a Japanese collaboration of Nissan. It is a patented molecule. And this product is doing very well. We are -- Nissan has shared this with 2 partners. We are 1 of the 2 partners. And from the very -- in the last 2 months itself, it is showing very good signals of good sales, actually.

And similarly, we have developed a product called Torry, which is coming from -- which is a herbicide actually. And this comes from our R&D center, first time manufactured in the country. This is also showing a good sales, actually, and we have very high expectations. And I can say these 2 brands itself will contribute more than INR 100 crores, and we can also think about the institutional change of almost similar size in the first year itself, which means that these brands will not only help us in growing with the domestic market and -- but also help us in B2B sales.

So I need to say that there is a huge potential because if I look at the pipeline, the pipeline is coming from Nissan, Japan. The pipeline is coming from our own R&D center, where we are backward integrated and we are trying to sell -- make some more technicals. And of course, we'll be converting them into the formulations also. So there is a very big expectation.

So we are going to launch about 5 to 6 products, new products actually in these recent months, actually, in the current season and they should contribute in a big way to our growth, actually.

And along with this, there are certain products which are launched in the previous corona time, and we were not able to take them into farmers -- to the farmers in a big way because of the restrictions. Our teams were not moving in the market. So there also I see a big improvement coming. So I can say that 2023 should be a robust year for growth. When I say robust, I presume that the growth of the company will be a strong, double-digit growth, actually, because of the launch of these products, because of establishing with capabilities, capacities and getting the new production from the new plant. So all these things are going to give a big support to the company's sales, actually, and I see all around growth.

If I talk about the exports, exports, we have doubled our rate this year from INR 60-odd crores, we have, first of all, INR 130-odd crores. And this year, there will be a target of again, general, 50% which means -- so we are going to cross INR 200 crores in the international business also in the coming fiscal -- in this current fiscal '23.

Along with this, we will improve on our B2B sales, because by virtue of some of our products, which are coming now. And also, we will be improving our B2C sales.

So I see the growth in all 3 directions. And I can say that we'll have the growth, not only in the top line, but also in the bottom line, and we expect the EBITDA increase of minimum 100 basis points on this increased sales.

So a lot of registrations are in pipeline, and they are coming. And I would say that it's a continuous effort by the companyand our R&D that we are working on newer and newer technology, newer products, because we believe that the consumer want a solution, you don't want a product. So we are trying to patent some of the new formulations, actually.

So when I say new formulations, we make the scientific mixtures, where we are able to prove the synergy of the products and we prove that there's -- our product can give better results than the existing commercial products. So we are able to bag some patents. And we have been recently granted some of these patents in this range. So there are products which are expected to be [ long ] down and some are launched.

So a lot of launching, which are coming in these days are [ MindTree ] products, actually, which are being launched for the first time, either we are the technicals manufacturer for the first time or the formulations R&D, if I can refer on formulations again. We are getting this advantage. So a strong pipeline we are going to bring to the market. And in the -- our [ CRs], actually, we are seeing that our top brands, particularly Thimet and Nuvan has been [ in doubt ] of the market, but we have recovered the entire sales on the entire market, actually.

So whatever was the effect of this Thimet and Nuvan, it has been taken care by Lethal Granules and also Lethal Gold, 2 new launched products. And there are many new products which have been launched into this period, and a strong pipeline which is coming in the year '23 that is going to cover this in totality.

So friends, at one part, we are focusing on productivity, we are focusing on R&D, we are also focusing on sales and marketing, because I believe that when you have a strong pipeline of products, you also have to have a strong pipeline of customers. And today, the major focus of the company is the develop the last-mile connectivity. Because now we are selling our products to the distributors and distributors are really to be the ultimate customers. But we are not my customer, we are the network from the distributors of materials going to the retailers and retailers are -- from the retailers, it is going to the farmers.

So we are trying to connect all these knots through the help of the system, actually, and we are trying to install the new CRM system, which will incorporate or which will include the total [ PayPal ] in 1 ecosystem, where we'll be able to have better dialogue to and fro with this -- with the entire network, actually, entire chain, I would say, from consumer to the company, from company to the consumer so that we begin on the company of launching these new products and making them as the top brands will come alive, actually, and we are trying to connect with the network more and more.

So this is the development which is happening in India. And similarly, we are getting good response from the international markets, because more and more, registrations are coming and we are signing more and more contracts. And particularly, in the last quarter, we have Board registrations in South America and also in the first beginning in Europe. So I would congratulate the international team. And I would like to thank you that we are bagging the registrations also in the advanced economies now and which, ultimately, is going to increase our international sales and sales over some of our technicals also.

In the same way, the company is also working on the environment a lot. We are working on establishing the new systems, and we are trying to sell the electricity cost. We are trying to save the power and definitely the steam cost. Actually, we are working a lot on that. We installed 2 solar-powered systems in 2 of our plants, 1 in Rajasthan, 1 in Gujarat. And we are working towards the environment and we try to minimize the water, which is used in these systems and trying by reusing it and we are trying to reduce the affluent as much as possible and we are working with a very, very positive mindset. And I believe that there is a very good future for the agrochemical industry and also for Insecticides (India).

With this, I thank you very much, and I would request the CFO for explaining the results in detail. And give me a break for just 2 minutes, actually. I'll have to move through the loops, so I'll join you in 2 minutes actually. I'll be available on the call, but I'll -- my wife will listen. Please, so Sandeep, would you please explain the results in detail.

[Sandeep Aggarwal, executive]

Yes. Good afternoon, everyone. And the results are -- you had already shared the results and the brief has already been told by Rajesh. So let me tell you about some breakups like segment sales and other sales.

So category-wise sales, if you see the insecticide portion during date was around 53%, herbicide was around 33%, fungicide, 11% and biological was around 3%.

And if you'll see the reason why sales in South, we had 36%; in East, we had 22%; West, 21%; and North contributed 21% of the total sales. If you'll see, the segment-wise sales of B2C contributed 65%, B2B contributed 26% and exports contributed around 9%. And as far as the bifurcation of Maharatna and other branded sales in B2C segment, the Maharatna contributes around 55% and other branded sales contributes around 45%.

During the year, if you'll see the in-licensing products through in-licensing product, we did around INR 114 crores of sales during the year. And from the patented product also, during there, we did a sale of around INR 65 crores from our patented product.

And if you'll see the new launches, there is a graph also. So during the year, whatever the new launches were there, we did INR 25 crores -- around INR 25 crores sales during -- for those new launches during the year. And the product which we launched last year from those products, we did INR 49 crores of sales during the current year from the launches we did last year. And if you'll see the launches of around 4, 5 years, then the total sales from the 5-year launch product is around INR 244 crores.

I think we are working towards this thing only to improve our Maharatna sales and to focus on patented product, in-licensing product and definitely on the new products, which are now focusing to our story and Shinwa also. Thank you from my side.

[Operator]

Sir, shall we open the floor for questions?

[Sandeep Aggarwal, executive]

Yes.

[Rajesh Aggarwal, executive]

Yes, please. Yes.

[Operator]

[Operator Instructions] The first question is from the line of Prashant Biyani from Elara Capital.

[Prashant Biyani, analyst]

Sir, just 100 basis point expansion in margins despite completion of a sizable CapEx. Are you under guiding? Or if you're not, then don't you think that this is a very small expansion for the investments that we have done?

[Rajesh Aggarwal, executive]

Okay. Your point is very valid actually, but the season has already started, and the plant has not started yet. And the guidance is on the increased volumes, actually, where we are saying that there will be having a strong double-digit growth in the top line. So this would be over and above and taking care of that [ power ] portion also. So yes, you can say it's a conservative target, but I want to be reasonable actually at this moment. I don't want to sound very aggressive and say that it will be a 40%, 50% growth in the bottom line actually if you compare in absolute terms.

[Prashant Biyani, analyst]

Okay. And sir, can you name the intermediates that we are going to manufacture in the technical plant?

[Rajesh Aggarwal, executive]

It will become public actually in just 1 month's time. So I would say that let's believe. We'll wait for 1 month or we'll have another investor call actually, which we'll have for Q1, because it opens up the strategy in the market. I don't want to go [ bank ] from the house and lot.

[Prashant Biyani, analyst]

Sure. Sir, how much was the volume growth in quarter 4?

[Rajesh Aggarwal, executive]

Volume, we don't compare basically because since last 20 years, the volume value has grown by ten folds. It was a INR 2,000 crore market, which has come to INR 25,000 crores, and volume is continuously declining. So the volume in terms of the AI usage will continue to keep on decline as we come up with a new product.

You have to understand, the older technologies, we were using 1-liter, 2-liter, 5 kg, 3 kg of the formulation with 40%, 50%, 60% type of load. But if we talk about the newer technologies, in the newer technologies, AI is 3%, 4%, 5%, 6%, 7%, 8%, and the dose is 50 ml, 20 ml, 100 ml. So the volume will -- for this industry will keep on declining, and it will be the value which will rise as the patent products come in. As we need, translation technology is going to come in, the volume will continuously decrease. So we don't measure in terms of volume exactly.

But Sandeep, you will have the numbers. He can tell you the numbers.

[Sandeep Aggarwal, executive]

Yes. Practically, if you'll see the -- out of the total growth, around 3% to 4% is volume growth and rest is from price growth.

[Prashant Biyani, analyst]

Sir, have you passed on the entire cost inflation? Or some is yet to be passed on?

[Rajesh Aggarwal, executive]

The cost is passed on, actually, because in terms of profitability, you'll see the increase in the -- from the first quarter itself. So when you see the development, which means the cost is passed.

[Prashant Biyani, analyst]

Okay. And sir, lastly, can you highlight something about the product for which we have got Nissan for our joint venture, the technical? Is this an innovative molecule?

[Rajesh Aggarwal, executive]

In India, unfortunate parties, nobody was investing in the product discovery. I started this journey in 2013 and for the first time in the country, similar companies said that we're looking in for a discovery. Luckily, we have filed 9 patents, 9 international patents from the JV, and I think this is the first one. I'm not sure first or second.

But yes, we have already identified the products. We have worked up on the products, and we, like -- we are developing all the technologies to launch some of these products, actually, in the market. It's a little longer-term gain because with the with the Japanese, I don't think there is a chance of launching the product before '25, '26 actually. So it's a little long term. This product was invented in 2017, but it took a long time in developing the -- I would say, the technical, then the formulation and then needing of data. And a lot of data still is in process, actually.

Since the data will be generated with the international standards, so it will take some time. But this will be the new molecule discovery. First molecule from Indian side actually, which will be going to the international market with a huge potential. And of course, there will be the patent exclusivity for 10, 20 years, but it starts from the day we had filed the patent.

[Prashant Biyani, analyst]

Right. And sir, whenever we commercialize it, even for the international market, the JV or Insecticides (India), in particular, will have the selling rights or Otsuka itself will market in the international market?

[Rajesh Aggarwal, executive]

JV with a company, which was set as a partnership between the 2 companies. The main aim of JV is just to discover the molecule and file the patent. The JV transfer the patent in the name of the 2 companies in their respective areas. So we have about a dozen countries and the rest of the world business, Otsuka. Now it is called OAT.

So the first right of refusal is on us. When I say right of refusal to manufacture because ultimately, we are developing the plan, we are developing the technology together with them. And we will be making it in India. So I believe that we should be able to supply it to the entire world. Of course, in the OAT area, it will go to OAT partners. In my area, it will go to my partners at my price.

[Prashant Biyani, analyst]

But whatever OAT supplies, that also, we will only manufacture?

[Rajesh Aggarwal, executive]

It's not an exclusive contract, but it is an understanding that, yes, they would give the preference to us.

[Operator]

The next question is from the line of Varshit Shah from Veto Capital.

[Varshit Shah, analyst]

Rajesh, I think happiest congratulations to you on this performance for the quarter and kudos to management...

[Operator]

Sir, sorry, but your voice is not very clear. Can I request to speak through the handset?

[Varshit Shah, analyst]

Actually, I'm using my headphones. Am I audible now?

[Operator]

Slightly better than before.

[Varshit Shah, analyst]

Okay. Am I audible now?

[Rajesh Aggarwal, executive]

Yes. Yes. Please go ahead. Go ahead.

[Varshit Shah, analyst]

Yes. So Rajesh, I think, happiest congratulations to you and your team for the performance, because it's not just about [ revenue ] growth, but the EBITDA -- absolute EBITDA growth of 20% for the quarter shows the effort which you have done on the product mix and into new molecules. So I think the last 2, 3 years of extreme hard work is finally paying off, we've seen, in the numbers. So once again, happiest congratulations.

Sir, my question is, first, given that you have not fully passed on in the B2C segment, a lot of prices, while consumers had seen your reported a Y-o-Y improvement in the gross margins. So this is largely a cumulative chain in product mix. I think that will be the single largest reason for change in -- or improvement in gross margin on a Y-o-Y basis. Is my assessment correct?

[Rajesh Aggarwal, executive]

Like, it's a continuous effort actually. We have made our clear range now. Our range is known as focused Maharatna, Maharatna gold and silver. So silver are the tail cutting products. I mean to say they are the range products we are just providing to the market to just fulfill the requirement. And there are more than 50 products in silver, you will be surprised to know. And these 52 products are contributing less than 5% to our total sales.

So everybody is very, very clear that we are not focused around this, and we are working towards focus, like, establishing the new technologies, which we are bringing through our partners and also through our R&D center. So we are simply trying to change this product mix, actually, because, as I told in the previous commentary, that we are bringing in a lot of new formulations, new mixture products actually. So all these are value-added products and very beneficial for everybody, for the customer, for the company, for the farmer. Everybody has benefited out of these products actually.

So newer technology, yes, the focus is on bringing the newer technologies. We have to work more in the market. We have to be associated more with the market. But yes, they will give the return. I can say we are trying to create our [ motion ].

[Varshit Shah, analyst]

Sure. That's helpful. And secondly, I mean, if I were to see historically also, it's not like you have achieved 30% plus gross margin. Given the change in product mix over the next 2 to 3 years, I'm not asking a particular number for the next year, but if I were to kind of a map or path for 2, 3 years, can you sustainably have a gross margin of 20%, 25% by the time you allow the shareholders, that we know from the new molecules also beginning. Is it possible to guide of broad range internally what you must be working with something?

[Rajesh Aggarwal, executive]

Like it's a very -- I would say, it's a very strong target which you are talking about because it will be almost doubling my PBT or the gross margins also. Almost doubling -- its like doubling these gross margins. So you will see a definite improvement. It will be a big improvement, we'll surprise also, because by virtue of the new launches, actually, this situation is going to change in totality. But I don't want to put up the target which will conclude the market.

So we have given a conservative target of 100 basis points improvement in the PBT margin -- EBITDA margins and a good growth, like, you can expect a good double-digit growth this year, and that will be even in from the first quarter itself. Please see our first quarter results and make an assessment.

[Varshit Shah, analyst]

Absolutely. So I think that's really helpful. And sir, my last question is on the CapEx. So I think I probably missed your commentary in the earlier part. When did you -- are you starting commencing the technical plant? You mentioned that it's not yet started?

[Rajesh Aggarwal, executive]

These new technical plants are being constructed at both the sites, Rajasthan and Gujarat, and we are expecting to complete both the plants in the month of June. So June, we'll complete the Rajasthan plant in totality. And 80%, 90%, Gujarat plant will start functioning. Actually, we are trying to do it in full. But yes, it should start functioning. So both my plants will start yielding results from the June itself. So July onwards Q2, we should get the full advantage of this expansion.

[Varshit Shah, analyst]

And sir, one more question, what is our balance -- usually, capital -- working capital, pretty tidy, even in this kind of environment. So is it the strength of the product itself allows you to kind of dictate your terms to the partners? Or is it something else?

[Rajesh Aggarwal, executive]

Like, we are working in a very strong fashion where we are trying to control our creditors and trying to control the other things. So yes, we work very strongly. Then we will see that our outstanding are not starting this season, though we had a very bad experience 2 years back, actually. And the people are on the wrong bar and we are fighting a forecast war, what happened in the Central India, the central eastern part of the country, actually, with us.

It was a remote, I would say, or chance which happened actually. But we very rigorously monitor our outstanding actually, and we work in the market in a fashion so that we don't dump it. So we try to create the demand from the field actually. First from the farmer, then retailer, then distributor and then we place the product, actually.

So due to this strategy since we are not dumping, like if you see my quarters, my third quarter and fourth quarter will be lower from competition. Because we are not facing the material just without the season, actually. So we are not doing that at all. We are trying to collect my -- for me, as we shared, generally is a collection period, actually, than the selling period. So the idea is like we don't dump any products, and we try to clear the accounts on the market, and that will be hedged.

And of course, the new product, we believe, products will launch. The R&D, our R&D is functioning, the collaboration is functioning. So everything this year will be marketed, actually, and helps us. So the tractor brands' popularity in the market is going up actually, and that is helpful.

[Varshit Shah, analyst]

So sir, just one more, if I could squeeze in. See, if I see our inventory days are still above 1, 2, 3 days, as on 31st March as a percentage of sales. And generally, at least I have fortunately observed, because I've worked in many companies, that whenever they implement this kind of CRM and technological initiatives, generally, a lot of companies are able to bring down their inventory levels, both at the raw material being at a fully good level, because they have better visibility because of the technology.

I'm not asking your number, but will -- is this also a part of your plan that when you implement this whole CRM, for -- till the end consumer, there was -- probably it will help if you would plan your demand better for development in good demand as they could further improve your inventory levels between 3 year even?

[Rajesh Aggarwal, executive]

Yes, your observation is correct, but the unfortunate part is that ours is a cyclical business. And then the transit time has become a problem because in these days, we are planning the transit time of 2.5 to 3 months. Actually, these things are not being discussed. So at this time, if I have the inventory, I'm lucky. So we are trying to build up the measured inventory in Q1 also see the inventory rising at once.

But it will come down because if I don't have the inventory, I cannot sell. This is the time where there are acute shortages to form a purchase or -- this is a very difficult period when the prices of everything is going up and nothing is available. So difficult...

[Varshit Shah, analyst]

Absolutely, sir. Absolutely, sir. These are only...

[Rajesh Aggarwal, executive]

[ Getting rid ] of inventory is good. But yes, we'll have better controls. We have already developed the system in [ VIBO], the new dashboard, right, developed -- they have been given to all the departments to see their visibility, to see their performance, to see the company's performance. So all these things we have already started actually.

So It's not going to come through CRM. CRM, we are working for the connectivity, and it will be meant for the -- basically, the sales team, the development team, connecting with the consumer, connecting with the farmer, dealer, distributor. So that will be the main theme of CRM.

But the other part, we have already started taking care actually. My dashboard is functioning very, very nicely actually. And already, the 60 managers of the company have got the dashboard access. And we are trying to make some more reports, because there are more than 200 managers in the company on different departments.

So we are trying to provide them the information directly through these dashboards on a daily or, like, twice a week basis. So that becomes automatic and they are informed about everything about other departments, about their departments, whatever information is necessary should be available. So we are trying to troop our team that everybody is informed and everybody can perform better.

[Operator]

[Operator Instructions] The next question is from the line of [ Samir Desai ] from PhillipCapital. Samir Desai, may I request you to go ahead with the question, please?

[Unknown Analyst]

Yes. As you mentioned, you are going to launch 5 to 6 new generation product in FY'23, which is -- so what is the expected turnover from these new products? And whether these product will be for international, domestic market? Or we have done any ties with the multinationals? Or we are going to sell it in the open market? These are 1 question. And second is, can you give any guidance for the top line for next 2 to 3 years?

[Rajesh Aggarwal, executive]

Okay. So I would go step by step. First, I'll talk about the products. There are a lot of new launches, actually, which are going to come this year and mostly the products are 19 products. So the first support I get is the B2Cs because, of course, these are all meant for my brand. But at the same time, there is a high potential that I can market it through the competition or B2B business in the domestic market. So we are getting a lot of inquiry into the domestic market, and we have already started selling to some of the partner companies, which include the multinational company. Hopefully you said multinational, I will say multinational.

Otherwise, yes, we are partnering with some of the companies who are co-marketing some of our products, and they are interested into other products also. So this business opportunity is arising. And there are companies which are talking about the international markets also. But here, I would like to tell you that every market -- to open any market, you have to register.

So yes, we are working on the data. Today, we are one of the companies having the huge data -- data means international data. I have about the complete data packages for more than 40 products in totality, including technical and formulations, but we are working on a similar number. And I want to have more than that of more than 1.5 dozen technical products actually in totality so that I can register them around the world. So that is my vision for '22, '23 that I have to generate data on further more products and enter to these markets, but it takes time virtually.

So the first, there will be entry from the domestic market, then to the international market. So regarding the order books, yes, the partners who have signed with us, they have already placed the orders and they have given their estimates for this coming season and also for the -- of course, when you sign, you make a commitment for 2, 3, 4 years, actually. So that type of commitments are very much there. We don't estimate the exact numbers which are coming.

But I would say that from B2B, I should gain a sale of more than INR 100 crores from these new products, which I'm launching. And of course, the B2C sales will also be more than INR 100 crores, because I told INR 100 crores is going to come from INR 2 crore and there are another INR 4 crores, INR 5 crores which are going to come. So another INR 100 crore I can expect from there.

So we are keeping our fingers crossed because the pipeline is strong, and we are trying to launch these products and go in a big way in the domestic market. From the international market, I have already given a guidance of INR 200 crores, which may not include these new generation molecules in this fiscal. But in times to come, yes. There is an opportunity.

[Unknown Analyst]

Yes, what about the revenue guidance? Any for Q2 for -- is there anything?

[Rajesh Aggarwal, executive]

I would request CFO to give those numbers, actually, because I don't want to sound very aggressive on that. Sandeep, if you'd please.

[Sandeep Aggarwal, executive]

Yes, we are expecting, for this year, around the growth of double-digit strong growth. And definitely, the double-digit growth would be expected for coming 2, 3 years also.

[Rajesh Aggarwal, executive]

I think the message is clear. So the CAGR we'll be expecting in the next 2, 3 years will be double digit, strong double digit for years to come.

[Operator]

The next question is from the line of Yogesh from Arihant Capital.

[Unknown Analyst]

Congratulations, sir. Actually, last year, as a part of strategy, we had decided to launch a product called Lambda. So can you give...

[Operator]

Sir, sorry to interrupt you. The mic is too close to your mouth. Can I request you to speak...

[Rajesh Aggarwal, executive]

Which product? Can you name the product again, please?

[Unknown Analyst]

Lambda. Lambda...

[Rajesh Aggarwal, executive]

Lambda is a product I've been doing for now many years actually. We have been manufacturing that technical from 1 decade. And now we are getting the international registrations also, and this is one of the products which has already got my European registration actually. Yes, please go ahead.

[Unknown Analyst]

Sure. So can you throw some light on what is the demand scenario for this product?

[Rajesh Aggarwal, executive]

Like the international market, size is very, very strong because it is doing good in America and Europe, particularly. Also good in Africa and Asian markets. For domestic market also, our various formulations, which are based on Lambda, and they are doing good actually. So the growth of CAGR is not very, very strong in the domestic market, but international market, yes, and B2 business, B2B, yes. I'm always whetted with orders. I'm not able to make it, and I'll be doubling my capacity of Lambda technical, and I'll be making some intermediates also for this.

[Unknown Analyst]

Sure. And my other question basically is it's like you have seen a strong growth in exports almost double. And next year also, you are guiding for a very strong growth in exports. So where is the demand coming from? And if you can also share some color on which products are basically raising their demand?

[Rajesh Aggarwal, executive]

Like, there seems to have -- initially, when you are exporting, we are going to nonregulated markets more. But now there's more regulated markets where we are getting the demand. Of course, Middle East and Africa, they play an important role in our sales. But now we are starting to see the markets of South America and Europe. The demand has also started coming from there.

So we are selling a lot of products. The major sales happens to herbicides and insecticides. We try to sell the maximum of our own technicals, which we benefit them. So we supply [ specials ] also from our own technicals. So a lot of products are in demand actually, as witnessed. So particularly in all my technicals like Lambda, Thiamethoxam. So we see a sale coming out of all these products.

[Unknown Analyst]

Sure. And finally, we are targeting about 5 to 6 products -- product launch every year. So if you can give me an approximate breakup of how many would be in the pyrethroid range and how many in organophosphates? And what would be the current mix of pyrethroid and organophosphates in your total revenue? What would be the approximate mix?

[Rajesh Aggarwal, executive]

Actually, generally, we are not working on organophosphorus-bound These are all generic products which we have in our portfolio, so they are existing. So I don't see any new increase of the OP compound, even in the mixtures. We are trying to [ award ] the OP compounds, but one of our products called Lethal, which is very, very popular for termite control and also moving to agriculture. It's an OP compound. We manufacture the technical also for that called chlorpyrifos. So that is doing quite well. So that way, we are there.

In terms of synthetic pyrethroids, some of my technicals like Lambda, Bifenthrin, these are relatively new generation. And [ deltamethrin ] [ Fendona ], synthetic pyrethroid, you can see. These products, yes, they are contributing to my international business, and there is a good demand because they are relatively newer generation products actually, and they are not objective in the world. So they are doing very well. Even in the list of the [indiscernible], none of these were present actually. And recently, well, we've heard from the Ministry that OEs will follow the industry. We will defend our being brand and the rest, they are trying to give us some more time to generate data and they will be free. So no issues I see in the domestic market also in the short term and the midterm.

And that number, if you want, then that can be shared, actually, you can drop your question and then those numbers can be given to you. If you're asking for the numbers.

[Unknown Analyst]

Sure. Sure, sir. And just one clarification. So I heard that about chlorpyrifos. So that -- the news basically was that it was banned in Europe and U.S. So is there any demand challenges for this product globally?

[Rajesh Aggarwal, executive]

Actually, my major sales of chlorpyrifos is only in the domestic market. So in the domestic market, this is doing very well. And we do see a challenge there, actually, in the domestic market. There were some issues in U.S. I'm not sure about that actually. In Europe, there may be some issues because Europe is a different type of weather, and they will need many products which are manufactured in the U.S., and this was the U.S. invention. So generally, for the insecticide of the older generation, U.S. and Europe have difference of opinion. It happens sometimes. But for difference of opinion. It happens sometimes. But for me, since it's our domestic market filling, I don't see any challenges actually.

[Operator]

[Operator Instructions] Next question is from the line of Saurabh Kapadia from Market Securities.

[Saurabh Kapadia, analyst]

Sir, my first question is on the raw material pricing or the availability. So has that improved in this quarter or maybe in the month of May with China opening up slowly?

[Rajesh Aggarwal, executive]

I'll not say that it's a big improvement because 2 days, it looks that it has improved. The third day, it looks like it has gone down again. So China is still playing actually, I would say. So it has improved a little, because their currency has also declined. So it has helped in certain products to reduce -- in the price reduction. But in many other products they were listed, there is no price reduction. In some products, again, after the reduction, they are trying to increase. So it's a continuous feature. Still, the market is not very clear and not very smooth, I would say. Reasonable. In some products, yes, the availability has smoothened a little, not awful extent.

[Saurabh Kapadia, analyst]

Okay. Sir, if the price suppose comes down or soften in the month of June, so is it that we will benefit at least in the Q2? Or we are, like, almost part of our inventory for this upcoming season?

[Rajesh Aggarwal, executive]

You do never buy for the full season. It's really for the -- always, you'll have 2, 3 months inventory. So that inventory always remains. And since it's a variety, because the decline is never on every product increase, and never, on every product, in the same percentage. It varies from product to product. It depends what your status on that product.

And since we are aligned with the industry -- in the industry, we are not odd. I have not -- both expensive than the industry. So the industry cannot reduce because if every everybody has bought at INR 100, then they have to sell accordingly. If I buy INR 100, people have bought at INR 90, then the situation is difficult. So if everybody is on the same page, there is no difficulty anymore.

[Saurabh Kapadia, analyst]

Sir, now in terms of the product placement, so -- how has been the placement for the upcoming season? And also, we heard that there were some difficulty in North India because of the seasonality and also now monsoon getting slightly delayed in the southern part. So any impact, what we could then sense on the consumption?

[Rajesh Aggarwal, executive]

So far, the demand has been good, actually, because we have launched many new products. Actually, we see their sales in vegetables and in some other crops. So this is keeping us active in the market, the new launches. The team is very, very enthusiastic and very, very bullish. So we are already on a strong double-digit growth, actually in the last 50, 55 days. . And I believe that the performance is going to get better in June.

So July, quarter 2, we'll talk later, but Q1, at least I see a wonderful future, actually. And we should do a good -- we should restore a good growth in Q1 actually. And of course, Q2 going to be good because the season is going to start, but all your questions will come in Q2, not for -- not required in Q1, actually, I believe.

Because by the beginning of Q2, we'll see the onset of monsoons and everything. People were sad because of the high temperature. But in the recent rains in last 1 week, it had rained down a lot actually. And I believe things are going to improve and we are improving.

[Saurabh Kapadia, analyst]

Okay. And sir, my last question is on CapEx. So what will be the CapEx for FY '23? And where -- by when we should be debt-free?

[Rajesh Aggarwal, executive]

We are almost debt-free actually. So there is no, I would say, the long-term bonds would be -- the utilization of the -- these limits also is very reasonable level. So I say we are almost debt-free these days. The entire investment in the business is a business we see. The entire investment in the expansion is being carried out from the internal accruals.

We have already, like -- we are already on the path of completion. So under INR 15 crores, INR 20 crores, whatever is the balance or do we take 2 different vendors, we'll go. So this will complete the 2-meter expansion in Rajasthan and in the hedge.

After this, we are planning one more small expansion in Asirgarh, so which we'll buy the land now, but we will start investing after Diwali because during this period, we cannot construct in Gujarat. So we are not going to start with construction activity before Diwali. So that project will target to complete in 6 months. And that will be one expansion, and there will be a little expansion.

So this year, budget cannot be like -- we cannot expect a big budget. It will be less than INR 50 crores for '23, believe. We complete -- for the completion of the older projects, setting up the new plant, our new things and people must be -- they are listening, actually. So 2 good announcements, which are further to make. Our third plant has received NABL. So our plant in Level 3 in Samba. So now our Chopanki, Rajasthan plant is Level 3 NABL. Our Gujarat Level 3 is NABL, and also the Samba Level 3 is NABL. So 3 out of total 6 sites, 3 sites, laboratories, are NABL accredited. And recently, the final inspection of the GLP also has taken place in the last week in Rajasthan, and we expect the GLP submission also soon.

[Saurabh Kapadia, analyst]

Okay. And sir, this new plant you mentioned, it would be the formulation plant?

[Rajesh Aggarwal, executive]

The new plant in Asirgarh will be the formulation plant, yes.

[Operator]

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments.

[Rajesh Aggarwal, executive]

Thank you. So we thank all the participants for attending the virtual session. We believe that we have satisfactorily ran you through our company and business model and address every arising questions there on, put on to the fore 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, backward integration initiatives. We remain focused on bringing new products, exploring new markets, creating value to all our stakeholders. Please follow up with the Investor Relations team, [ Vanakh ] and [ Kunal Shah ] from [ CapitalVia ] if you have any following questions, which weren't covered up in the session and hope you have a great day ahead. Stay safe. Stay healthy. Thank you, everyone, once again. Thank you.

[Operator]

Thank you very much. On behalf of Asian Market Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

[Rajesh Aggarwal, executive]

Thank you.

[Operator]

Thank you.