PI Industries Ltd

NSE:PIIND

Earnings Call Analysis

Q1 FY '25: Strong Export Growth and Improved Margins

PI Industries' Q1 FY '25 performance showed robust export growth and improved profit margins amidst challenging global agri-input markets. Revenue grew by 2.38%, driven by a 14% increase in agchem export revenue, while domestic revenue rose by 39% despite erratic monsoon effects. The company's EBITDA margin is expected to stay at 25-26%. PI Industries continues to diversify, launching new products and expanding its R&D pipeline. The company maintains a positive growth outlook for the year despite industry challenges.

Strong Revenue Growth Driven by Exports

During the first quarter of FY 2025, PI Industries reported an 8% year-over-year increase in revenue, reaching INR 20,689 million. This growth was predominantly driven by a 12% increase in export revenue, totaling INR 17,494 million. The domestic revenue, however, saw an 8% decline to INR 3,195 million. Despite the challenges posed by delayed monsoon showers and erratic weather patterns, the company maintained robust growth, particularly in its agchem export segment, which experienced a 14% revenue increase and a 24% boost in new product volumes .

Improved Margins and Strategic Focus

PI Industries managed to improve its profit margins due to a favorable product mix and a higher share of biological and operating leverage. This is reflected in the company's EBITDA margins, which have been strong at about 28% despite challenges in the Pharma segment. The company maintains a guidance of achieving 50-51% gross margin and 25-26% EBITDA margin for the full year. Improved working capital management has also played a crucial role, with trade working capital days reduced from 83 to 55 days and inventory days from 73 to 50 days .

Guidance and Future Outlook

For FY 2025, PI Industries has set a revenue growth guidance of 15-20%. The company anticipates that a lot will depend on the domestic season's performance, which was impacted by delayed monsoon rains. However, the outlook remains positive for the upcoming quarters, buoyed by new product launches and strategic adjustments, including two innovative brands: PRESSEDO and a super economical formulation for sucking pests .

Pharma Segment and Challenges

The Pharma segment experienced setbacks, primarily due to inventory levels with customers and deferment of revenues. Even so, the company is optimistic about the segment's long-term prospects. PI Industries is reviewing its order book and inventory levels and expects better clarity in the coming quarters. The long-term outlook and strategic integration of the Pharma segment remain aligned with the company's initial expectations .

CapEx and Capacity Expansion

PI Industries has outlined a CapEx plan of INR 800-900 crores for the year, focusing on optimizing capacity utilization and improving throughput through various technologies. The goal is to maximize capacity utilization and commercialize numerous new products without heavily investing in new ground facilities. The company's ongoing operational excellence initiatives are expected to provide additional room for improvement and capacity optimization .

Strategic Progress and Diversification

The company is making significant strides in diversifying its product mix and deepening its engagement with global innovators. PI Industries has commercialized two new products in Q1 and expects to launch 6-7 more products within the year. Notably, 50% of new inquiries are coming from non-active segments, highlighting the company's successful diversification strategy. The acquisition of Plant Health Care is also progressing well, promising to introduce cutting-edge biological products globally .

Positive Developments and Future Plans

PI Industries is optimistic about its future, spurred by positive developments such as the operationalization of its Hyderabad district facility and the near completion of the GMP Kilolab in Lodi. The company continues to strengthen its board, recently appointing a global industry veteran, Mr. Rafael Del Rio, as Director. Despite challenges in the global industry landscape, PI Industries remains committed to growth and innovation, fully expecting to maintain strong performance and seize available opportunities for sustained momentum .

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earnings Conference Call of PI Industries Limited. [Operator Instructions] I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir.

[Nishid Solanki]

Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries Q1 FY '25 Earnings Conference Call. Today, we are joined by senior members of the management team, including Mr. Mayank Singhal, Executive Vice Chairman and Managing Director; Mr. Rajnish Sarna, Joint Managing Director; Mr. Manikantan Viswanathan, Chief Financial Officer; Mr. Prashant Hegde, CEO, Domestic; and Mr. Atul Gupta, CEO, Exports. We will begin the call with key perspectives from Mr. Singhal. After that, we will have Mr. Manikantan sharing his views on the company's financial performance. Thereafter, the forum will be open for question-and-answer session.

Before we begin, I would like to underline that certain statements made on today's conference call may be forward-looking in nature. A disclaimer to this effect has been included in the investor presentation, shared with you earlier and also available on stock exchange's website.

I would now like to request Mr. Singhal to share his perspectives with you. Thank you, and over to you, sir.

[Mayank Singhal, executive]

Yes. Thank you. Good afternoon, and welcome to all of you to discuss the PI's first quarter '25 performance. Let me share my perspectives and the broader progress the company is making. As you already know, the global agri input industry is passing through a challenging time, due to extreme relevant inventory destocking, commodity prices and more. The overall trends and sentiments have take market [share].

While there is a very initial time of improvement, it is expected to take some time for the business as usual. On the domestic front, the monsoon showers were delayed, key cropping regions started in the [indiscernible] initial taking guarded approach for [indiscernible]. Against results, we maintained a strong growth trend during the fourth quarter, building higher base from the previous year. Overall, the revenue [indiscernible] 2.38%, mainly driven by exports. Agchem export revenue increased by 14% and volume by 24% in new products, where we are seeing continued strong traction.

Domestic crop performance was [moderately] delayed showing erratic monsoon in the initial phase. However, improvements in our product mix and working capital management contained the financial impact. The domestic [indiscernible] revenue has grown strongly by 39% year-on-year. The profit margins have improved mainly in accounts of favorable product mix and a high share of biological and operating leverage. As the monsoon has progressed well, for the last 3 to 4 weeks, joined momentum in Karan and expected to achieve a healthy crop in Kharif.

Our long-term run rate, so they allocate the demand in India as such in German support, advanced innovation and technology used in the fields. Our product footprint [by large] arrive in year-on-year with Horticulture too, Jeevasol has been seeing good performance. We have consistently taken [indiscernible] track record in growth, backed by unique [ chance in ] relationship with global innovators and best-in-class business processes.

As the industry performance, PI stays ahead with a clear growth visibility on the expanded base. We are growing R&D pipeline, the early stage monitoring CSM that are progressing well and are getting commercialized. For the current Agchem and fiscal, we are already commercialized two macro in Q1 and looking forward the commercialization of 6 to 7 products for the sustained growth trend.

Our IP aligned service models or innovative allow us to go deeper in our engagement with partners for more collaboration opportunities. Out of inquiries, actually, 50% of them are coming from non-active segment, which is also has been diversified into adjacencies.

Now on the domestic front, we also see a steady stream of introduction for adding the farmer with the best and most advanced solution in crop protection. We have launched two innovative brands in Q1, PRESSEDO [indiscernible] broad-spectrum novel insecticide or [indiscernible] super economical [indiscernible] formulation for sucking pests. Our product pipeline for domestic launches -- Composite is objecting our products to mark a healthy visibility of growth in the coming years. An acquisition of Plant Health care is indeed, one where we provide in excess of cutting-edge peptide technology platform, allowing us to introduce new biological products globally.

We are on track with obtaining the requisite court [indiscernible] approvals and hope to complete this project in the current quarter. Now coming to [indiscernible], we are making strategic progress towards [indiscernible] and integrated CRDMO that aligns the global innovate initiative in terms of infrastructure augmentation business developments and [indiscernible]. The momentum will scale up gradually over the next couple of years. We contributed well to the overall picture. We have stable intention pages [indiscernible]. During this quarter, our inventory level with innovators in immediate business performance.

In a positive development, we are operational at Hyderabad district facility, while the GMP Kilolab and Lodi is nearing completion, then moving on to such [indiscernible]. All the procedures will be significantly enhancing our offerings. We are further strengthening our Board with an investment for global [indiscernible] as a Director, Mr. Rafael Del Rio, who has [indiscernible] long career in this industry, and the experience is well-aligned, perfectly aligned to a long-coming vision of expanding our global footprint.

While global industry landscape remains challenged, we maintain a growth outlook for the year [indiscernible] pursuing available opportunities for sustained momentum. We should have a close margin [indiscernible] and forego guidance in the coming month. With this, I conclude my remarks, and I invite our CFO, Mr. Manikantan, to continue with this discussion, and thank you, once again for being a part of this journey with us. Thanks. With that to you, Manikantan.

[Manikantan Viswanathan, executive]

Thank you, Mr. Singhal. Good afternoon, everyone, on the call today. I will summarize the company's financial highlights for the First Quarter ending 30th June, Earnings Call. Please note that all comparisons are year-on-year basis and refer to consolidated financial performance.

Seasonal share, our performance demonstrated a differentiated approach to doing business and a sharp focus on keeping operating parameters in line with our business. During Q1 FY '24, we reported revenue of INR 20,689 million and 8% over the same period last year. This was driven by a 12% growth in export revenue to INR 17,494 million and an 8% decline in domestic revenue to INR 3,195 million. The gross margins and EBITDA include mainly the favorable product mix and operating leverage. Profit after tax decreased by 17% to INR 4,488 million.

Our balance sheet and cash flows performed robustly in line with our clear financial strategy and disciplined execution. We are thereby imaging a superactive performance. Cash flow from operating activities increased 103% to INR 6,145 million. This was due to higher operating profit and efficient working capital management.

The trade working capital in terms of days of sales reduced to 55 days, that was 83 days as on 30 June 2023.

Inventory levels also reduced in terms of days of sales from 73 days as on June 30, 2023 to approximately 50 days. The [indiscernible] net of debt reached INR 44,655 million. Our balance sheets the strengthened during the year. Shareholder's Fund increased to INR 91,855 million, the adjusted equity ratio of 0.01.

Effective tax rate for Q1 FY '25 is 20.7% compared to 14% in the previous year. The ETR for FY '25 is a expected to be around 22% to 23%, with a tax exemption of our second [indiscernible] moving from 100% to 50%. This concludes my opening commentary. I will now request the moderator to open the forum for Q&A. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Abhijit Akella from Kotak Securities.

[Abhijit Akella, analyst]

Sir, a couple of questions from my side. First one on the margins, which have been very strong this quarter again at about 28-odd percent. And that's, despite the INR 70-odd crore PBT loss in the Pharma segment. So given this and the fact that we've been maintaining an EBITDA margin guidance of 26% for this year, should we expect that this current quarter's margin sustain for the rest of the year? And would you sort of like to upgrade your guidance for the full year?

[Rajnish Sarna, executive]

Thank you, Abhijit. If margins are linked to the product mix, and as we have always explained that, the product mix changes from quarter-to-quarter depending on the supply schedule and also, our domestic season. So we maintain our guidance that we expect to achieve 50%, 51% gross margin, 25%, 26% of EBITDA margin.

And these variation quarter-on-quarter will keep on happening depending on the product mix. But we maintain our earlier guidance, of maintaining 25% to 26% market.

[Abhijit Akella, analyst]

The second one was just with regard to the Pharma segment. There's a -- I understand there's some deferment of revenues there. But if you could please help us understand whether this is coming primarily from the Archimica business in Italy, the API business? Or is it the CDMO shipments from Therachem in India? And given this kind of start to the year, a weak start, what kind of revenue number could we work with for the full year for pharma?

[Rajnish Sarna, executive]

Well, now we call them PI Health lines. So I would rather say that, it is a mix of both the product innovator and also one of the products which is being supplied from Italy, okay? And this is primarily because, there is a good amount of inventory with the customer, and they have kind of -- they are going a little slow down in terms of procurement.

In terms of subsequent quarter or the year, I think we are still in the review with our innovative customers. It will take maybe a little more time for us to get absolute clarity, that what is going to be the ongoing schedule of supply of these major products. So maybe by next quarter, we'll have better clarity.

[Abhijit Akella, analyst]

I appreciate it. Just one last quick thing from my side, if you still allowed me. Just in the CSM business, what would the contribution from new products have been in this quarter as a percentage of revenues? I know it has grown well, but if you could help us with the percentage contribution.

[Rajnish Sarna, executive]

It is more than 20%.

[Operator]

The next question is from Ankur Periwal from Axis Capital.

[Ankur Periwal, analyst]

Congratulations on a good set of numbers. First question on the CSM side. We are increasing our expected products launch to around 8% to 10% versus typical of 5 to 6 products for us. Will this be a mix of Agchem Pharma? And how about the other segments, electronic chemicals, et cetera, that we were looking to expand in?

[Rajnish Sarna, executive]

Yes. This is a mix of both Agchem, electronics, chemicals and other specific chemicals. Yes, it is all a mix of that.

[Ankur Periwal, analyst]

Will include pharma as well?

[Rajnish Sarna, executive]

Pharma will be in the pharma business, not here.

[Ankur Periwal, analyst]

Fair enough. On the gross margin expansion front, you did alluded to a favorable revenue mix here. And given that the new product had shown a good 24%, 25% growth, fair to say that incremental -- these new products are all margin accretive to us, which are the ones who will be driving growth?

[Rajnish Sarna, executive]

Yes. I mean on a blended basis, the margin expansion is not only from PSM products, particularly new products, but also the product mix at our domestic area, which is also driven by biologicals. So you see there is a favorable product mix on both sides, which is contributing in this.

[Ankur Periwal, analyst]

Okay. Fair enough. And sir, last question. On the pharma side, you currently suggested deferment in terms of revenue and, hence, a lower number here. Our overall guidance here was around 25-odd percent growth in revenues for this financial year, with gradual improvement in EBITDA margins. Any changes or any clarity you can provide there, given where we are now, in terms of a discussion with the clients?

[Rajnish Sarna, executive]

As I said to the earlier participant that we are currently reviewing the inventory and order book position for some of the key products, and we'll be in a better position in coming quarters, to comment on that.

[Operator]

The next question is from the line of Vivek Rajamani from Morgan Stanley.

[Vivek Rajamani, analyst]

Congratulations on a very strong set of numbers. Just one question on CapEx. I think in the presentation, you've mentioned the CapEx -- capacity expansion is in line with the plan. Just wanted to get a sense of what is the CapEx expectations for this year? And given that you see such a good ramp-up in some of these new products, which have obviously been growing well, is there a plan to maybe augment some of these new products with any kind of dedicated capacity? Any color on that would be super, sir.

[Rajnish Sarna, executive]

We have plan of close to INR 800 crores to INR 900 crores CapEx this year, and we are moving in that direction. Apart from fresh CapEx and building new capacity, we are also, as we have alluded in past, optimizing capacity utilization and also improving throughput by adopting various technologies. And that also gives us good enough room, to kind of maximize the capacity utilization, because so many new products are also now being commercialized. Obviously, in the initial phases, there will be relatively lower volume.

But our capacity optimization also helps us commercialize these many number of products, without very heavily investing still on ground. And that is a great achievement of the team over the last couple of years, which is also helping us in capital efficiency. But yes, for this year, we have INR 800 crores to INR 900 crores kind of CapEx plan as of now, but we'll also keep reviewing it as we progress.

[Vivek Rajamani, analyst]

Sure, sir, very clear. And just one small clarification. You mentioned that you've obviously been optimizing your capacities, and you've obviously benefited from that. I'm just wondering if you still have more significant levers to that extent, where you can continue optimizing for the foreseeable future? Or do you think you're kind of getting to a point of demand and how these products are getting accepted? You may have to start considering for some of these products. Just wanted to get a sense of where we are in that evolution.

[Rajnish Sarna, executive]

Atul, maybe you can add something on this?

[Atul Gupta, executive]

Yes. so I mean as we said that there are new products in the product mix portfolio. So there is always room for improvement through the operational excellence initiatives to improve the capacities by different [indiscernible]. So that's how we keep on continually working on optimizing the capacity on the new products, as well as the existing products by various initiatives. And that's how that's an ongoing process. This year also, we have similar kind of plans, by which we intend to improve our capacity utilization of the plants.

[Operator]

The next question is from Rohan Gupta from Nuvama Institution Equities.

[Rohan Gupta, analyst]

First of all, congrats on a strong set of numbers in specialty technicals. Okay, my question is on the pharma part of the business. You mentioned that there are high inventories with customers. Can you just explain it a little bit, because we understood so far that, the higher inventory will only problem in agrochemicals. So just in pharma, please, if you can explain and how long it may continue to impact our revenue?

[Rajnish Sarna, executive]

No, I don't think the inventory destocking is only a challenge with AgChem. I mean I've heard this is also a situation, even in pharma. But in this stage, in particularly, in our case, this is a long-term customer. And obviously, we have new drugs. And one of the products for this new drug, I mean in anticipation, they have already taken good enough inventory, and now they are positioning product. So obviously, going by that assessment, they are now going a little slow in terms of further procurement, till the time they kind of come to a reasonable level of inventory.

[Rohan Gupta, analyst]

So it was just only related to one product, with one customer?

[Rajnish Sarna, executive]

Yes. It's basically not one product, but two products, related to 2 different customers.

[Rohan Gupta, analyst]

Okay. Sir, in pharma piece of the business, we have been looking at and you have been guiding for over the next 2 to 3 years, that is part of the business INR 1,500 crores to INR 2,000 crores with the margin in line with the company's margin, that the kind of guidance you shared at the time of acquisition of -- we are almost already been 5 years over now. Just wanted to understand, sir, that how you see that the pharma piece of the business and your initial guidance and how it is progressing so far now given the current weakness included?

[Rajnish Sarna, executive]

We still maintain this robust outlook on Pharma. As we have always said, it is going to be taking a little time for integrating, building this differentiated model of completely integrated CIB, which is what we are doing. There are a lot of successes in terms of improving the setup into sector, monetizing that, getting in [indiscernible] new customers and [indiscernible], et cetera. So all that is going as per to plan. This temporary listed, I would say, this is all temporary and then this happens. But yes, in terms of mid- to long-term outlook, objective, visibility, everything remains in line with our initial expectations.

[Rohan Gupta, analyst]

Sir, second question is on our CapEx. You mentioned it's still roughly INR 800 crores to INR 900 crores, while we are sitting on almost INR 4,000 crores this kind of cash. And if you see that there is not enough deprival opportunity, because we have been looking at for the last 3 to 4 years. Do you see that the possibility of returning this cash to the investors in terms of the buyback or any other thing?

[Rajnish Sarna, executive]

Well, we are seeing a lot of opportunities. We are also actively evaluating several inorganic opportunities. So, I will not say that, there's bit of opportunities in the area of operations that we are in and the long-term strategic objectives that we have. There's no depth of opportunities. There are unfortunately, we are evaluating many opportunities. We have also taken action on some of these opportunities in the last 2 years. But yes, at an appropriate time, the Board will obviously take a reasonable view on both the cash situation and also the opportunities that would be in front of us, and we'll action accordingly.

[Rohan Gupta, analyst]

Sir, last bit from my side, and I'll come back in queue. Sir, despite a very solid gross margin expansion of roughly 500 basis points to 52% in the current quarter. Sir, you are still maintaining roughly 50% kind of gross margin guidance only. And so you see that would have been cautious or you see that there can be -- this quarter had kind of anomaly and higher margin because of this better product mix and will normalize in the rest of the quarter? Or are you just being cautious in sharing the outlook?

[Rajnish Sarna, executive]

No. I mentioned the same position, as I explained to the earlier participant, that these margins, gross and EBITDA are all linked to the product mix and the product mix is changing quarter-on-quarter. So our guidelines that we will maintain around 50%, 51% gross margin and accordingly, the EBITDA margin remains.

[Operator]

The next question is from Ajit Motwani from Diamond Asia.

[Ajit Motwani, analyst]

Congratulations on a good set of numbers. On the overall revenue guidance for the fiscal year '25, you had given a guidance for 15% to 20%. Our first quarter numbers are at about 8%. Would you be able to throw some light in the sense that, is it under review? Or are you still confident of delivering on those growth numbers?

[Rajnish Sarna, executive]

Well, a lot will depend on how the domestic season pans out. As we have explained in our presentation also, that the first quarter, due to the late monsoon and scattered rainfall, the sowing got delayed and accordingly, the season also got delayed. But now things are progressing well. But yes, I mean, we'll have to walk that how the whole farming season pans out in the next couple of months' time, and that will also help us build better visibility that where we will land, in terms of our overall growth in coming quarters. Prashant, you may want to add something. Prashant?

[Prashant Hegde, executive]

Yes. For us, second quarter is positive. First quarter, you already highlighted. Our focus was basically in terms of placement, but we also made some strategic adjustment as well, because a couple of -- we reduced strategically our dependency on some of the old generic products and we launched two products in the first quarter and a couple of products in second quarter.

Our focus will be on scaling up these products as well. So all this should have a positive momentum in Quarter 2.

[Ajit Motwani, analyst]

Sure. On the CSM business, I think this quarter was 13%. That business, in a sense, you have some visibility because of the order book. On that business, do you see you're delivering on those hiking numbers or...

[Rajnish Sarna, executive]

Yes. So that business certainly has much better visibility, because there we have the order book position. There, we have schedules. That business surely has better visibility.

[Ajit Motwani, analyst]

Sure. And one last question on the pharma business. From the time we acquired, the revenues have come off very sharply. I know you alluded to issues in two products. But apart from that, the discussions or the deferral of the client. Can you just elaborate to us, is it beyond products? Is it discussions on plant restructuring, process restructuring, people recruitment or some sort of insight into the way the business is shaping up? Because INR 25 crores revenue a quarter looks pretty [indiscernible].

[Rajnish Sarna, executive]

Yes. As far as revenue point is concerned, that has already been explained. But, as I said earlier, that on all fronts, whether it is integration, whether it is upgrading the manufacturing setup, building additionally kilo plant, setup in Italy, commissioning our R&D, pharma, R&D setup in Hyderabad, also investing leadership teams, both in research development areas as well as in manufacturing areas, business development areas across the [indiscernible]. There have been a lot of initiatives and [successes] across.

So let's not look at only from 1 quarter INR 25 crores revenue as the benchmark of the progress. There are so many things have been done. And we are progressing very well in terms of our plan, overall long-term plan. And we shall certainly be diving the business in becoming.

[Ajit Motwani, analyst]

And the development of team there in terms of building out headcount to ramp up there, that is going on track or that will follow the precedent through the plant integration and all?

[Prashant Hegde, executive]

Now your question was not very clear to me. Can you please...

[Ajit Motwani, analyst]

I'm saying you had alluded to that you will need to build a pharma team as well. So today, you're, let's say, trading some planted integrations you're doing. So the development of the team or, let's say, increasing headcount for the pharma piece of the business, that will follow once the integration is done, or that is already in place?

[Rajnish Sarna, executive]

No, no, this is already done. I mean this is what I was alluding to, that research team, business development team, even process research team, all that is already in place, very much in place.

[Operator]

The next question is from S. Ramesh from Nirmal Bang Equities.

[S. Ramesh, analyst]

Is it possible to share the breakup of the order book of $1.75 billion between agri and nonagri chem? And similarly, in the share of new products, would it be possible to share the breakup between agri chem and new products and non-agri chem segments?

[Rajnish Sarna, executive]

Well, orders would be normally of, mostly the agchem only. There is nothing like non-agchem, because those are at initial stages, and those order books are -- the model there is the purchase orders for the year or 2 or something. So those are not part of our so-called order book solution.

The other question of yours that -- which are the new products. So I think, more than 40% of our products, new products that we are commercializing are all non-agchem. Even at R&D scale, if we look at our R&D pipeline of various molecules that we are scaling up, more than 40%, 45% products are non-agchem.

[S. Ramesh, analyst]

Okay. Secondly is on the domestic business. Despite the strong growth in Bio, there is a decline. I understand there is a seasonal impact on the other portfolio. And if you see the balance sheet details given in your annual report for Jivagro, while the gross margins have improved, the revenue has gone down, and it's partly earning less than 10% net margin in ROE. Jivagro, do you see any measures you're taking, which will help to improve the performance over the next 1, 2 years? And similarly, in terms of the new product launches for the domestic business, what is the kind of pipeline you have for the year in the domestic formulation, excluding Jivagro, and how many new products are you planning in Jivagro?

[Rajnish Sarna, executive]

My friend, you have so many questions in this point. But let me, have to answer one by one. So you said about our domestic business growth, yes, it was subdued. But let me also clarify that if you look at our brand business, the domestic brand business, it is almost as far as maybe 1%, 1.5% down compared to last year.

The other impact is coming because of the domestic supplies of some of these products that we are executing. So the domestic business, brand business, there's nearly 1%, 1.5% down compared to last year. In terms of introduction of products, maybe Prashant, I'll request you to kind of enlighten in terms of what -- how many new products we are producing this year, how many we are introducing in Jivagro also.

[Prashant Hegde, executive]

Yes. So we are -- we have launched two products in quarter 1, and we are launching another 5 products for rest of the year, that spread across both the agrochemical side as well as even [biological] side. Even on Jivagro as well, first quarter, we did not launch any new products. But rest of the year, we have six products, including three in quarter 2, and then three in H2. So this is what which we have planned for Jivagro. Your question on Jivagro growth. Jivagro, we have registered a growth even quarter 1 as well. And on a full year basis, again, the momentum is good, and we are expecting a good growth for the rest of the year.

[Operator]

[Operator Instructions] We take the next question from Tarang from Old Bridge.

[Tarang Agrawal, analyst]

Three questions, all on PI Health Sciences. One, of the 700 R&D staff or 700 scientists that you have on your roles, how much would be dedicated to PI Health Sciences and how many to PI industries?

Second, in the current nature of the PI Health Science business, is it more indexed to generic APIs or generic intermediates? I mean, if you could just give us a pulse of what the current structure of the business is? And how do you intend to transform this business over the next 2 years or 3 years as you achieve the $200 million, $250 million run rate.

And number three, what are the internal milestones that you have. If you could just give us some sense, qualitatively, to calibrate the traction in this business. And considering that it's been about 14, 15 months, how have you progressed, in terms of reaching those milestones that you had set out initially? And what are the milestones going forward? So three questions from me.

[Rajnish Sarna, executive]

Yes. So coming to your first question, so this 700 research scientists you mentioned, in fact, these are all for our extend area. For pharma, we have another I would say, 100, around 100, 110 scientists specifically working in the pharma space, both at Hyderabad and Jaipur. Your second question about the business model. I would say it is mix of it, mix of both. So we have a lot of projects working with pharma innovator in a similar kind of a business model that we have in Agchem, which is CDMO or CRIMO kind of a structure.

But, as the legacy, we also have certain generics that we are doing in our API setup in Italy. That is continuing. The long-term objective is that, we will only be kind of aggressively growing this CRDMO model, and leveraging our integrated service facilities, both in our research and development, and also kind of raising traction for CMO kind of business as well, by leveraging our API set of U.S. FDA approved setup in Italy.

Coming to your third question, what kind of milestones and this is what, I guess, I have already answered that question to the earlier participant, that in terms of integrating, modernizing, establishing our research setup in Hyderabad, also modernizing our research setup and development setup in Jaipur. Also kind of setting up below pilot plants in Italy. Also kind of establishing systems, processes, upgrading those systems and processes, what we have acquired to a global level. Strengthening our teams all across research area, development area, business development, also on the other service areas, manufacturing side as well, supply chain side as well.

So all that -- all those initiatives, all those milestones that we had set in the first year, I mean, they are almost -- almost all of them have been achieved. During this year, we have already, as I told earlier, we already commissioned Hyderabad [indiscernible] setup, which is also has been built a good pipeline of new customers, new inquiries, new businesses at the R&D stage. And likewise, I mean, even on manufacturing side, we have been able to kind of demonstrate a lot of these upgrades in our facilities to invite many of these new pharma customers and demonstrate the potential of collaboration with them and all. So that all is progressing well and satisfactory.

[Tarang Agrawal, analyst]

Okay. Sir, just a follow-up. Sir, is this business index to cater to big pharma? Or is it indexed to cater to the requirements of EVPs? And second, are you looking at focusing on specific therapeutic areas or specific technology platforms, right? I mean, just a follow-up on...

[Mayank Singhal, executive]

Yes. So let me -- the fact is the big pharma Indian certain capability in the big pharma. We're clearly looking at strategy, we get technological levers as you last form of [indiscernible]. Clearly, we are a evolving, as we are right now building the basic infrastructure, which in any strategy. And as we appreciate in this business, getting the [indiscernible] resources the process lending work before you approach customers has its own gestation. That's the stage where we are. And once we're able to put this together, we obviously be differentiating ourselves with [indiscernible] capabilities. That's strategic broad outline for now.

[Operator]

[Operator Instructions] the next question is from Siddharth Gadekar from Equirus.

[Siddharth Gadekar, analyst]

Just first on the PHC acquisition. Can you throw some light in terms of how should we look at the revenue shaping up over the next 3 to 5 years? That is one. Secondly, in terms of manufacturing, as per PHC's annual report, they were outsourcing the product our European. Are we looking to start manufacturing those products in-house now, once the acquisition is completed?

[Mayank Singhal, executive]

Well, let me put it this way. Right now, it's too early to keep -- to make comments on this. I think strategically, we have acquired a technology platform, which has potential of growth and excellent good signals of growth. And we have already mentioned that we're looking at the 20% CAGR over the past year. So the idea is that, once we have the full grip and the strategies, we will evaluate and debate once we get a deeper understanding before we do [indiscernible]. Hope it answers...

[Siddharth Gadekar, analyst]

Secondly, is on the product that we have launched on our own, any talks, we have started with any global innovators to tie up that product? Or how should we look at the product progressing over the next 3 years?

[Mayank Singhal, executive]

Yes, we are in dialog with the fuel. And I think that's where we are, right now.

[Operator]

[Operator Instructions] The next question is from Naushad Chaudhary from Aditya Birla Sunlife.

[Naushad Chaudhary, analyst]

Congrats on a decent set of numbers. Two clarifications, sir. Firstly, on the Agri CSM business. We have talked a lot about this division. Just wanted to understand, given now the size we have reached, do you think the size is now -- size and base is now a problem for us, to keep enjoying the past growth run rate we used to enjoy?

[Rajnish Sarna, executive]

It's not really. This is what we have been telling that, while size is but over the years, we have diversified into [indiscernible] into other specialty chemical areas. And that's what is driving growth. And apart from the other specialty chemical areas. I mean we have also kind of deepen our business model into process innovation as well, which is also giving us additional lever to grow in -- even in the agchem CSM [indiscernible].

[Naushad Chaudhary, analyst]

Let it -- let me put it this way. In your entire agri season basket, in your entire commercial, which you have done roughly 40 -- 39, 40 commercials. How many of them do you think have a visible potential to be INR 700 crores, INR 800 crores plus revenue in the next 3, 4 years? How many of them you have some visibility?

[Rajnish Sarna, executive]

No, I didn't get your question. So what 30-40 you are referring to here? .

[Naushad Chaudhary, analyst]

A lot of commercials we have done in the last couple of years. How many of them do you see have a potential to be INR 700 crores, INR 800 crores plus revenue for you in the next 3, 4 years?

[Rajnish Sarna, executive]

Well, many of them. First of all, I don't think we have done 30, 40 products in the last couple of years. I mean, 30, 40 products we would have done in maybe last 7, 8 years. But what I can say is that there are many products which we have commercialized or those we are currently evaluating, scaling up R&D scale have this potential of more than 500 million kind of a global opportunity, yes?

[Naushad Chaudhary, analyst]

Just last one. In the domestic biological segment, what kind of opportunity you see in this piece of business the next 3, 4 years? And what kind of edge do we have here versus our competition?

[Rajnish Sarna, executive]

Well, I think this question is already answered to the previous participant, that it would be too early. But what we see here is cutting-edge unique technology platform in the side. And then this will open up huge opportunities for us to kind of build products, keep coming up with new biological products. And also, we get the access to some of these large global markets. We use this unique approach of getting into those markets through these unique technologies. It's going to be a differentiated sector for us.

[Operator]

The next question is from Madhav Marda from FIL.

[Madhav Marda, analyst]

I just had one question on the CRDMO business, which we are looking to build. If I just understand, looking at the landscape in India on just how companies evolve, it probably seems like from your commentary that in the CRDMO business, we are more in the earlier stage of scale up, where we're trying to build out the inference resources. And it's a fairly long gestation business is what I understand at least. So would it be fair to say that next 2 or 3 years, we're just going to look to build out sort of the client engagement and build out the pipeline and then scale up is a bit more beyond that? Or in the next couple of years as well, do you expect very strong scale-up in this business? Just wanted to understand where we are in the sort of scale up journey for this segment.

[Rajnish Sarna, executive]

Yes. So you're right. It is one, it starts from correct, the gestation is longer. But the only difference here is, that since we had acquired these two businesses, along with a set of customers and products, portfolio and pipeline, et cetera, it would be relatively faster. But yes, you are right that in terms of large scale-up, it will take a little time. But yes, we will be in a better position, because of leveraging some existing customers and pipeline of products that is there.

[Madhav Marda, analyst]

Understood. And is it also fair to understand that the kind of pipeline we want to build here would be for like solving molecules, which sort of customers have. So we would have at some point certain number of projects in Phase I, Phase II, Phase III. And then, as we kind of move through the development cycle, we would look to scale up as some of them commercialized. So is that how we should think about this business point going ahead?

[Rajnish Sarna, executive]

Broadly, yes.

[Madhav Marda, analyst]

Okay. So today, could you share how many projects do we have in the pipeline today? Like is that something that you could help us understand? Like do we have 20 projects, 30 projects, something around that?

[Prashant Hegde, executive]

Yes. So we would have many close to 12, 15 projects, all in all.

[Madhav Marda, analyst]

Okay. Any skew towards Phase I, Phase II, Phase III?

[Rajnish Sarna, executive]

That, I do not have in front of me.

[Operator]

[Operator Instructions] The next question is from Krishan Parwani from JM Financial.

[Krishanchandra Parwani, analyst]

Firstly, since you've maintained 15% full year revenue guidance and 26% EBITDA margin guidance, that translates to about a 12% Y-o-Y EBITDA growth for the next 9 months. So are you being conservative? Or is this a realistic guidance?

[Rajnish Sarna, executive]

It is realistic given the current industry scenario.

[Krishanchandra Parwani, analyst]

Got it. Got it, sir. And secondly, on the tax rate, do you still maintain a 24% tax rate guidance, or any changes there?

[Rajnish Sarna, executive]

We just indicated that as per the current estimate, we see close to 20%, 23%.

[Krishanchandra Parwani, analyst]

Got it. And lastly, if I may, can you please highlight what led to a sequential decline in other expenses?

[Rajnish Sarna, executive]

Mani, maybe you can explain this if you have in front of you?

[Manikantan Viswanathan, executive]

Yes. In the last quarter, we have one-off expenses. That is the reason for that.

[Krishanchandra Parwani, analyst]

How much was that one-off? .

[Manikantan Viswanathan, executive]

INR 25 crores.

[Operator]

The next question is from Lokesh Garg from UBS.

[Lokesh Garg, analyst]

Just wanted to ask you a few questions on the CSM business, just to that a little bit more clarity of it looking at differently. You have shared 24% growth in new molecules. Similar to what you reported in 4Q presentation, could you also report of the 14% growth that you have reported in total in active business, what proportion of that growth sort of comes from new molecules?

[Rajnish Sarna, executive]

I really don't think I understood your question.

[Lokesh Garg, analyst]

Basically, look, the growth that is coming, which is, let's say, 14% that you have reported, you're originating from two parts. One is legacy molecules and other is sort of new molecules. Last year, FY '24 presentation, you presented a breakup of what -- of absolute percentage, like of the 19%, you had broken up into 14% from new and 5% from, let's say, older, more than 3 years old. Is that something like that possible this quarter also?

[Rajnish Sarna, executive]

We don't have that. But I think -- I mean I responded to an earlier participant. But I think close to 20% is coming from these new products.

[Lokesh Garg, analyst]

Yes, that is the revenue share today. I was asking about the growth share, basically. The incremental 14% that you have grown -- incremental, something like 2 50...

[Rajnish Sarna, executive]

I think on the pipeline, if you can please discuss because we may not have right now in terms of it.

[Lokesh Garg, analyst]

Sure. The other way to look at it is this new product is a rolling number, right? Because you define it at 3 years. So basically, every year quarter, it's a rolling number. If you were to sort, if you have that number possible, if you were to do it, let's say, at 6 years, what would be that proportion today of the molecules being done?

[Rajnish Sarna, executive]

No, not in front of us. It's not readily in front of us yet.

[Operator]

The next question is from Narita from Antique Broking.

[Unknown Analyst]

Yes. My first question is regarding the order book. Given that we have not mentioned anything on the order book this time, do we assume it to be sustained at around $1.75 billion?

[Rajnish Sarna, executive]

Yes, it's around $1.5 billion, $1.55 billion, yes.

[Unknown Analyst]

Got it. Okay. For the domestic part of the business, how much would be the domestic branded business? And how much would be the B2B part of the business, if you could give a contribution? .

[Rajnish Sarna, executive]

It's mostly -- brand is very low. Maybe I think a few percentile would be the institutional.

[Unknown Analyst]

Okay. Why I was asking is, because mentioned that the domestic brand business saw a decline of nearly 1%, 1.5%, whereas the domestic business actually has seen a growth -- a decline of about 8-odd percent.

[Rajnish Sarna, executive]

Yes. The reason that is not the domestic, so-called domestic business, but it is, sometimes the products that we are exporting, the customer also wants delivery in India. Now that, because of the definition that [indiscernible], which is basically not domestic business or brand business.

[Unknown Analyst]

Got it. Got it. And what would be the biological contribution to the overall domestic business for FY '24 and first quarter '25?

[Rajnish Sarna, executive]

Prashant, do you have these numbers? .

[Prashant Hegde, executive]

Yes. As of for now, it is 10%. But the biological is growing faster than the agrochemicals. This may change at the end of the year.

[Unknown Analyst]

And what would this be for FY '24?

[Prashant Hegde, executive]

So we are basically -- biological definitely grow in double-digit number, and our aim is to at least which should contribute around 15% of our total revenue in domestic bank.

[Operator]

The next question is from [indiscernible] from Bajaj Finserv.

[Unknown Analyst]

Two questions from my side. Of this AgChem CSM business of INR 7,500 crore, INR 8,000 crores odd annually. We did around INR 2,000 crores this quarter. So how much would be non-AgChem? I understand that the out of the new molecules, almost 40% is non-AgChem. But on the revenue side, is it meaningful yet?

[Rajnish Sarna, executive]

Not really. It will be less than 5% as of now, but it has a significant potential for scale up and growth.

[Unknown Analyst]

Sir, any ballpark number, let's say, from 5 years from now, how big could be this non-AgChem, non-pharma business?

[Rajnish Sarna, executive]

It would be more than 2 million -- $200 million.

[Unknown Analyst]

Okay. And then going ahead, can we expect a separate segment from your side in the reporting? We already have AgChem and pharma. Can we expect this?

[Rajnish Sarna, executive]

Well, again, the manufacturing setup is the same. The -- all activities being done or handled by the normal team. The -- even plants are the same. So it is all common. There's nothing like even R&D, scale-up development, everything is the same, or common. So unless and until we get to a point, where we have kind of built up a completely independent setup, et cetera, then yes, then it would totally make sense to kind of separate. But at this point and in foreseeable future, we do not see that independent setup happening. But we will surely keep reviewing it.

[Unknown Analyst]

Okay. And in terms of gross margin or EBITDA margin profile, will it be very similar to the...

[Rajnish Sarna, executive]

Yes, broadly similar.

[Operator]

That was the last question for the day. I would now like to hand the conference back to the management team for closing comments.

[Rajnish Sarna, executive]

Yes. Thank you for all your support and guidance, and look forward to better quarters going ahead.

[Prashant Hegde, executive]

Thank you also.

[Operator]

On behalf of PI Industries, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.