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Tarsons Products Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 and FY '22 Earnings Conference Call of Tarsons Products 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. The statements are not the guarantee of the future performance of the company and may involve risks and uncertainties that are difficult to predict.
As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Karan Khanna from AMBIT Capital. Thank you, and over to you, sir.
Thank you, operator. Good afternoon, everyone. On behalf of AMBIT Capital, I welcome you all to Tarsons Products 4Q FY '22 Earnings Call. From the senior management team, we have Mr. Sanjive Sehgal, Chairman and Managing Director; Mr. Rohan Sehgal, Whole Time Director; and Mr. Santosh Agarwal, CFO. I will now hand over the call to the management team for the opening remarks, post which we can have the Q&A session. Thank you, and over to you, Rohan.
Good morning, everyone, and a very warm welcome to everybody present on the Q4 and FY '22 Earnings Conference Call for Tarsons Products Limited. Along with me, I have Mr. Sanjive Sehgal, Chairman Managing Director; and Mr. Santosh Agarwal, Chief Financial Officer; and Company Secretary for Tarsons Products Limited and SGA, our Investor Relations advisers.
This is the first full year we have published post our IPO in November 2021. Firstly, we are delighted to share that our company has been able to achieve its highest ever revenue and profits in the history of Tarsons in FY '22. Our consolidated revenues have crossed INR 300 crores mark and profit after tax have crossed INR 100 crores mark in the financial year FY 2022. Let me speak about the industry first. We have been seeing increased demand for labware products in India on the back of greater frequency of chronic diseases, improved health care infrastructure and higher insurance penetration.
Furthermore, increased investments in R&D and the expansion of the diagnostic centers in India are all driving up the need for laboratory products. We have also witnessed higher demand for plastic labware products since it is easy to handle, it's flexible and the cost is lower as compared to other nonplastic labware products. We estimate the size of the Indian plastic labware market at least INR 1,200 crores and is growing at a range of 10%.
At Tarsons, we have outpaced the industry growth and our revenues have increased by 31% for FY '22. We are optimistic and hopeful of outperforming the industry growth in the years to come. Tarsons is one of the leading suppliers of plastic labware products in India with the 25% of market share for products which we are present into. Over the last 4 decades, Tarsons has been able to develop the brand and trust for its products, and hence, we are one of the preferred suppliers of labware products across the country in all end user markets. We work with almost all leading diagnostic pharmaceutical companies, contract research organizations, research organizations and academic institutions across the country. We have a strong distribution network of more than 140 distributors for our company across India.
Along with the strong distribution network, we also have more than 50 salespeople who are in constant touch with the final end customers for product sales generation and cross-selling of our wide product portfolio. Along with our domestic sales, we work with 45 distributors across the globe for our export business. Our export revenue is also picking up and has grown by 31% in FY '22 standing at INR 100 crores, which is about 1/3 of the sales of FY '22.
We have been able to increase our presence globally with more acceptability of our products across various continents. We have 2 pronged strategy for our export business, one being the branded sales, which are sold under the brand Tarsons and one is the OEM sales, which is the white label business of the company. For FY '22, our sales split between branded sales and ODM stood at 43:57 as compared to 38:62 in the previous FY '21.
We have been able to penetrate [ Deco ] in other geographies with the Tarsons brand and are very optimistic of huge opportunities lying ahead of us from this segment.
As mentioned in our previous call, we are in the expansion phase. We are working on expanding our manufacturing capacities for both existing and new products in a base manner through construction of a new manufacturing facility in Panchla, West Bengal. The project is on track, and we target the commission -- to commission new facility by H1 FY '24. The new facility will also manufacture, bioprocess and cell culture products, which has its own market size in India and abroad. With the addition of cell culture products and enhancing our capabilities and capacities for PCR products, we are optimistic of gaining the same dominant market share in India for these product lines as well in the years to come.
We are also planning to develop a new fulfillment center in Amta, West Bengal already to expand our warehouse operations. At the same location, we also aim to do backward integration in the manufacturing process by building an in-house sterilization center for captive consumption. Our target to complete this project is also H1 of FY 2024. At all our facilities, we continue to invest in automation and reduce human error and improve throughput and efficiencies for better productivity.
Our key strategies going forward will be to expand product portfolio, focus on branding and keep innovating new products, enhance our manufacturing capacities to leverage growth, increase our presence in overseas markets with a twofold approach of ODM and branded business. We intend to export to more than 120 countries in the next 8 to 10 years, enhance operational efficiencies through the use of higher automation.
Going forward, I would also like to reiterate that with multiple levers like growing [ leverage ] domestic market and huge addressable market by exports giving us a huge runway for growth, we are optimistic of the future to come.
Let me now hand over the call to Mr. Santosh Agarwal, our CFO, for operational and financial highlights for the quarter and 9 months ended FY '22.
Good morning, everyone, and a very warm welcome to our Q4 FY '22 earnings call. We have avoided our last investor in the stock chain for our Q4 and FY '22 regions. I hope everybody had an opportunity go through the [ release ]. We are delighted to share that we have been able to grow our ahead of the industry due to the trust and brand created for so many decades. On the revenue front, revenue from operations for Q4, FY '22 stood at INR 85 crores as compared to INR 68 crores in Q4 FY '21 above 26% on Y-o-Y basis. Our revenue growth was almost equal among the domestic and spot market. For FY '22, domestic and export market revenue grew by approx 31% for Q4 FY '22, domestic growth best grown by 24% and [ export ] grew by approx 31%. Our sales for domestic versus spot stood at 2/3 and 1/3, respectively. [ Our fields ] within the export market was approx 43% from the preventive sales and 57% across from [indiscernible] sales as compared to approx 38% for branding and approx 62% for ODM in FY '21. The sales growth was driven by higher demand across end user industry and [ export ].
On the gross profit level, our gross profit for Q4 FY '22 stood at INR 66 crores as compared to approx INR 52 crores in Q4 FY '21, a growth of [indiscernible] -- our GP portfolio, FY '22 is INR 28 crores and approx to INR 38 crores, a growth of [ approx 42% ]. GP margin for FY '22 stood at approx 79.1% as compared to approx 73.1% in FY '21, up by almost 600 basis points.
At the EBITDA level, EBITDA for Q4 FY '22 stood at around INR 44 crores, [indiscernible] INR 35 crores in Q4 FY '21, a Y-o-Y [ close of ] approx 34%. EBITDA for FY '22 stood at INR [ 153 ] crore as compared to INR 103 crores as in FY '21, [indiscernible] of 48%. EBITDA margin for Q4 FY '22 were 52.2% and for FY '22 EBITDA margin stood at 15.8%, up 550 basis points on Y-o-Y basis. At the PAT level, PAT for Q4 FY '22 stood at approx INR 34 as compared to approx [ INR 34.2 ] in Q4 FY '21, a growth of [ 25 ]%. PAT for FY '22 stood at approx INR 101 crores as compared to INR 69 crore in FY '21, a significant jump of 46%. As margin for FY '22 stood at [ 32.5 ]%, a growth of above 70 basis points as compared to the same period last year.
With this, I would like to open the floor for Q&A.
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of [ Mitesh Shah ] from [ ICICI ] Securities.
Congratulations for the stellar numbers. First of all, is there any one-off in this quarter's number because the Q-o-Q, the sales increased substantially around 21%?
No, we don't see any one-off in our revenues in this quarter. We believe that this is the base for the next year, and we expect to continue to grow in the same momentum in this financial year and beyond.
In the past 2 years, the company has grown around 30% plus almost 30%. Can we expect that kind of run rate would be continued by?
I think in the medium to long term, definitely, with the exception, there could be a few quarters here and there, but we have a large expansion plan, as we said in our opening comments. So 2 large facilities coming up, lots of new products coming up, lots of capacity expansions with the domestic market increasing rapidly as well as the international market opening up very well for us. We see the growth to be maintained in the years to come, at least in the next 3 to 5 years.
But the domestic market, you said, are growing at 10% and the company is growing 30%. So would be a substantial growth for the market? Have you said around 35%, right?
25% in the products we operate.
35% is a product...
25% in the products we operate.
So that you already had a year back also 25% where you grew 30% and the market improves at 10%. So have you not gained the market share?
No, we are present in about 50% of the market, and we have 25% of that market. So there is another large market opening of cell culture, PCR, bioprocess products, where we are [ not present ]. So having a base of 0, we expect a very higher growths than industry standards in the first 3 to 5 years still be stabilized growth.
So your domestic market is around 200 [ crores covered ], right? And your market -- covered market is INR 600 crores. So it shows around 33% market share.
That is why we expect that we have 25% of the market in which we are present in. We are not present in the entire market.
And just said, whatever data we are talking about of [indiscernible] related to the prior year, right? And we are comparing with the number of this year. So that will not be good.
And the market has expanded as well. This is based on [indiscernible] report, which is dated about 12 months.
And is there PCR is contributing to our revenue?
That's right. Yes.
So it is a meaningful or the just a [indiscernible]?
No, it's a new product and it's not been present for a long time. So we will continue to see higher growth as the years move on. It is just -- it just -- was an effect -- of about a few months of revenue and this gone by financial year. So this is going to be the first full year for PCR products in FY '23, and I think we will keep looking at higher growths as we move ahead.
And another question on the cost front. So almost all the costs are elevated. So company using any issues or the company has passed on the cost to end user?
I think we are looking to pass on most of our cost to end users, but that cannot be aligned properly. Sometimes costs come earlier in the passing on comes a little later. So as you know, it's an inflationary environment with all input costs increasing, we are in a good space. So we might face a quarter or 2 where we might see certain cost pressures. But overall, in the long term, we are in good space because we will look to pass on most of all of our costs or all of the higher input costs, which we are facing all across the board.
Yes, margin has increased around 500, 500 which continuously from past 2 years almost. So would you expect that this would be a sustainable kind of margin or still we're expecting to be a growth increase in the margins of [indiscernible]
I don't think it's very possible to grow from these margins. I think we are at the peak of the margins. We believe that the margins will only grow based on the volume growth and the revenue growth that we have in the same ratios, we would -- we expect to keep similar margins to what we've achieved in FY '22 moving forward.
[Operator Instructions] The next question is from the line of Jaiveer from AMBIT Capital.
Firstly, could you highlight the extent of price hike that you might have taken for this year in both your domestic as well as the export market and in the export across both your branded and ODM [ sales ]?
So the domestic market price hikes were taken in first of April on an average million of about 5% to 7%. The thing is it's not a straight up price increase because there are a lot of ongoing contracts. So on first of April, the entire domestic market does not face the 5% to 7% price increase. It happens in a phased manner, and we see 100% in about 2 to 3 months, maybe around first of July. In the international markets, we have taken a price hike around first of March as well. And I think the time period across the globe would also be about 4 to 5 months because people and distributors have existing commitments and existing contracts, and it's not possible to pass it over on the very same day of announcing the price rises.
And so will the price hike be similar for both your branded as well as ODM sales because we understand probably you don't have a lot of pricing power when it comes to the ODM part because of the [indiscernible]
Absolutely. I agree completely, and it would be a mix, and we would like to balance that out so that overall, when you look at the higher input costs of the company, we try to cover as much as possible, endeavors cover 100% and I think we would be somewhere in and around that mark.
Also, Rohan now, you will note that Borosil has taken price hikes that you now 15% to 20% [indiscernible] Could you just highlight the reason why the price hike taken by partners have been lower versus the competition?
I think the thing about Borosil is that most of the product lines they manufacture in the glass line, so I'm not really aware of the input costs, which glass is facing since we are not present in that business. Similarly, for Fisher Scientific, they manufacture a very wide range of product lines, and there could be equipment, reagents and other product lines, which are offering -- which are needing a higher price hike as compared to plastics. For Fisher Plastics is probably 10% or lower of the entire business volume in India.
So probably I'll put the question around. Now given that we did not see much of the RM inflation impact during the fourth quarter, given you already hold roughly 3 months of inventory. But given that the price are already 25% to 30% as over the last quarter. So what kind of RM price increase are you witnessing since the last quarter? I mean, since the end of FY '22 or probably the new purchases you might have made?
So we would have witnessed a lot of cost pressures in Q4 FY '22 itself, but because of supply chain disruptions, we maintain higher inventory levels and hence, we had a lot of spill over inventory from earlier periods because of the huge inventory levels. I think raw material prices escalated right from September and end October till about March, April. And right now, we see a little bit of a cooling off. Prices have begun to taper off, started falling a little bit, have maintained constant levels.
So at this moment, input costs for us have remained stagnant or have started cooling off a little bit, but it isn't in the same speed as what it was 3 months ago.
So would the quantum of price hike that you've taken, would that be able to offset all of the RM increases are you facing?
Yes. Mostly, it would be able to take care of raw material as well as packaging to the main input cost increases for us as a company.
Sure. That's really helpful. And lastly, in terms of your peak revenue potential, could you just highlight where the current capacity stand after all the CapEx that you have already incurred? And how is it related to where the capacities were, let's say, a year back in FY '21?
So I think our current capacities in our current facilities would keep us in a good position to maintain a good growth for this year as well as half of next year before our facilities come into place to aid growth moving forward. As I said in my earlier call as well, it's very difficult to define capacity because we have 1,700 SKUs spread over maybe less than 5% of that in machines, 50, 60-odd machines. But I could tell you that about top selling of our products, which are top 25% of our products, I think the available machine hours will be less than 5%. And on the remainder products, it could vary between 15% to 30% of machine hours available.
So we still have enough bandwidth in our current setup as well as new capacities coming in, in our current setup over the next 12 to 18 months to manage growth for us until the new facilities come on and take over for the next phase of growth.
[Operator Instructions] The next question is from the line of Praveen Sahay from Edelweiss Financial.
So just to clarify that, sir, you also said that you're able to maintain your margin as well as you are saying that the RM pressure is there and now which the low inventory RM had already utilized. So how to maintain this margin?
So RM pressure has been there now for the last 6 to 7 months, but over the last 2, 3 months, we've seen the pressure tapering off and we don't see further increases. In some places, we have started seeing a decrease in pricing of RM as well. I think we will be able to maintain our margins moving forward by having due price increases, which we've already started implementing from 1st of April and which we expect to be 100% implemented in the next month or 2 and I think with improved efficiencies in manufacturing, larger volumes, larger output, we will be able to maintain our margins in and around the level where we are currently today.
And the second thing, you pointed out around contract -- ongoing contract business. So how much is the contribution from the ongoing contract and how much of the price hikes you are able to pass on there?
So most of our business is contractual, and we have very few noncontractual businesses. You have customer contracts, you have customer commitments and sometimes when the contracts are -- have a very, very long extension period, maybe 12 months, 16 months, 18 months from now, we have no other option but to implement price increases in the middle of the contract because you cannot wait 18 months, but when you have a price implementation increase on 1st of April and the contract is expiring on 1st of June or 1st of May or 1st of July, you give that 3-month leeway period as a strong relationship gesture because we've been working with these companies -- we've been working with these companies for the last 1, 2, 3 decades.
So it all depends from case-to-case basis. There is no 1 fixed [ thumb ] rule.
So it's like a 3-months lag is there to pass on the prices at least?
No, it's not a 3-month lag. It is not a 3-month lag. It basically depends from case to case. So if it is expiring soon and there is a liability for us to hold on then it's [ fine ]. Suppose I have a contract today, which is expiring in June of 2024 or June of 2023. It's too long a period for me to continue with old pricing. So I have to look at it from case-to-case basis.
Next question is related to the margin difference between the branded and the ODM business.
The margin difference between the branded international business and the ODM International business is almost similar. The difference between the gross margin of the international business and the domestic business, domestic business is slightly higher. And the international business is slightly lower. But overall, on the EBITDA levels, the business is almost equal because overhead costs in the domestic business are relatively higher than that of the international business.
And can you give that for this year, how much revenue generated from your top 10 clients?
No, we don't have that information on hand. But what we have is that since most of our business in India and international has contributed through distribution, we believe that the top 10 distributors accounts for about 15% of our business.
And lastly, on the plant expansion, [indiscernible] August '23 that will come in.
Yes. Approximately, that's the end mark. It could happen slightly before that. And the problem is that our -- we have been completely successful, and we are on track to complete the entire civil infrastructure and build the entire partial building by January, end of February of 2023. But most of our equipment and most of our machineries are being imported from various parts of the world and as you know, components, [ TLCs ] and various other electronic components, that is a global shortage and it is only the machine deliveries, which would delay the project and take it up to July or August 2023. If everything was in line in terms of imports, then we would have started much earlier because our infrastructure and our construction would be ready by February 2020.
Okay. The last one is...
Mr. Praveen Sahay, may I request you to please rejoin the queue? We have participants waiting for their turn.
The next question is from the line of Mitul Mehta from Lucky Investment Managers.
And congratulations on a very good numbers in difficult times. My question is on your gross block turnover. Historically, we've been operating at less than 1 closer to 0.7, 0.8x. Is this the intrinsic -- I mean, inherent nature of the business? Or do you believe that there is a scope of improvement as we move along and get our new capacity is [ ticked ] because the reason why I asked you is that in the event of slowdown or any adverse impact on the business since it's a very high fixed cost business. It could affect us significantly as far as our margins. So can you please tell you on this particular point?
Yes. This is the nature of our business because we build our facilities and our infrastructure based on global leaders from Europe and the U.S. We have a very high level of top end automation and robotics, which drives up the fixed assets. If you did not do the business at this level and did it highly manually with low-end tooling and low-end machines, then the fixed asset level would be very, very low and variable costs, such as cost of laborers working in the factory and other costs would be significantly higher.
Sir, but do you -- is this globally the parameters are similar or we are slightly better than most of it?
The top 5 companies in the world -- the top 5 companies in the world in terms of technology turnover and size, their fixed asset would be in the range of 0.55 to 0.65. So we are marginally better because we take advantage of certain economies of scale of cheaper manpower and resource at our facilities for certain applications, but that's because of the geography and the place where we are presented.
And do you foresee any kind of slowdown in your business as we go along? I know that you are expanding your capacity. You're putting up a new factory. That, of course, comes with a lot of visibility. But given the fact that the world has become very uncertain. If there are any issues as far as our slowdown is concerned, then can it hit us very badly because of the sheer lower asset?
See, we are in the business of actually health care or research diagnostics. These are areas which continuously expand because this is one of the biggest concerns of the world at this moment and from the last 24 months. So at this moment, I do not see any external risk factors which would slow down our business. Of course, there had been a huge spike in the business during the period of COVID, which has now completely tapered off. But luckily for us, we did not have super normal growth during COVID period and grew at only about 28% to 30% year-over-year because of limited capacity.
So our basis what we have achieved in the 2 COVID years continue to remain as the base for further growth in the years to come.
And how much money are we investing in the new plant?
It's -- we had discussed about the CapEx, which was about INR 410 crores, which included all infrastructure as well as machines and equipment, but I expect that to go significantly higher by about maybe 25, 20, 25-odd percent because of increased cost of equipment because all of that is made out of metal, stainless steel prices at an all-time high. And similarly, infrastructure and construction costs at both our facilities have gone exorbitantly high over these last 12 months because of higher input costs and construction materials.
Sorry to interrupt Mr. Mehta, may I request you to please rejoin the queue. We have participants waiting for their turn. [Operator Instructions]
The next question is from the line of Harshil Shethia from AUM Fund Advisors.
Continuiung the previous participant question, you said that our CapEx cost is going to increase by around 20%, 25%. Does this mean that our asset turnover will go down going means reduced from 0.8 [ 0.7 ] due to the increase in costs?
It may not decrease that much because we are seeing with higher input costs, pricing of a lot of these products increasing as well. And since this is a global phenomenon for all manufacturers who are doing capacity expansion, which most of the manufacturers globally are as our industry is experiencing unprecedented and much higher growth levels. So I see that realization costs might increase slightly. So there would be a decline in the asset turnover levels, but not -- I don't feel that significant decline.
Our major raw material as of today is the crude oil prices, which would impact, right?
No, not really because we do -- we manufacture from 75% of our raw materials is a specialized grades of plastic and these are dependent more on the demand and supply are in the crude oil prices.
Secondly, going forward, earlier, you said that the whole global market has an upward of INR 50,000 crore market for us. How do we see ourselves making a mark in the global market?
At this moment, our entire focus over the next 18 to 24 months is to successfully implement, integrate and make both these new facilities self reliant and ensure that the output levels are ready to speak. And once these 2 -- both these new facilities are stabilized over the next 18 to 24 months, we will look at different strategies to grow our international markets.
The next question is from the line of Rishabh Parekh from Sunidhi Securities.
Everyone, congratulations on a stellar set of numbers. Just a couple of questions. The first one being our capacity is getting on stream in H1 FY '24. And as you said, the 25% of our top-selling products have machine availability of less than 5% so what kind of revenue growth should we assume in the interim? I appreciate the fact that you will have a 5% to 7% price hike across your business, so that will aid in the revenue growth. But from a volume perspective, what is the volume growth that we can see from current capacity?
It's -- in terms of volume growth, we have enough bandwidth at this moment in our existing facilities to aid us in similar growth levels to what we've achieved in the last 2 to 3 years. That means around 20% to 25-odd percent. But the more important factor would be to see how we'll be able to execute the same and how the market would look like in the next 8 to 9 months, the world is a little bit unstable at this moment with a lot of supply chain disruptions. Importing and exporting has become more difficult with lesser container availability.
So there would be these sort of things, which will be more challenging rather than achieving growth. I think internally, we have all the resources, but we have to depend on a lot of external factors like container availability, import of raw material and such factors will play a greater role than our internal capacities.
And my second question is you [indiscernible] CapEx being commissioned, which is cell culture. Can you just speak a little more about the segment, what are the products? What is the competition? What is our strategy to gain market share? And just some more color on that.
I wouldn't want to speak much on the cell culture and bioprocess because that's a little -- it's competitive and there's a competitive industry, and that would be a little sensitive information at this point of time. But the major players would be Thermo Fisher Scientific, [ Corning ], [indiscernible]. These would be the 4 big players globally. And the cell culture market is divided into 2 markets. One is the academic market, which is used in research and academic institutions, product lines. And the other one is the bioprocess market, which is used in industries and it is more larger volume product, which is actually used for bioproduction or which is used in industries. I think in a phased manner, we look to enter into the complete line of culture products.
And it's a fairly sizable market today in India, I believe, about 35% to -- 30% to 35% of the total market size in India belongs to this entire culture line. And globally as well, it's a very significant market with about probably 4 or about 25% to 30% of the total market belonging to these product lines.
And margins for this would be superior to our current consolidated margin?
I think, again, it's too early to comment whether it would be superior or not, but I believe it should definitely be in line with what we are achieving today. Overall, with the volumes, the bioprocess could be slightly lower because it's production related and the academic could be slightly higher since it's research-related. But overall, it keeps us in good stand as a company and should be in and around where we are today.
And my last question is around your working capital intensity. You've done a great job in managing it through a difficult period. Do you think that -- can we pick out any more improvement in capacity? Or do you think that this is a good [ mark to cope up ] What is that?
No. I think this is a good level and the only improvement what we can expect is because customer credit periods cannot be contracted anymore and I think we're doing a good job in our customer collections. Most of our vendors because of the SME will be able to pay within a certain time period and raw materials, about 75% to 80% of our raw material is imported from the Western part of the world. And I think the only way we can slightly improve our working capital cycles as the supply chain gets back to pre-COVID levels.
At this moment, the supply chain is slightly disrupted so we feel there will be longer delivery periods for products that we've paid in advance and cash. And that could be one factor and the other factors, if there could be local availability of specialized grades of plastic being produced in India, which I don't see it as a possibility in the near or medium term. But when that happens, that would drastically bring down our working capital cycles. At this moment, we are heavily reliant on import.
The next question is from the line of Hardick Bora from Union Mutual Fund.
Congratulations on a good set of numbers. Rohan, just last call, you had indicated that I did speak COVID was contributing about 30% of revenues. What part of financial year '21 was that? Would it be the first one?
So 50% of revenues was the entire FY '21, which was the 12 months and so in that, we saw the first 5 -- 4, 5 months was the lockdown period followed by a little bit of cooling period towards Q3 of FY '21, followed by peak COVID again in the Q4 around Jan, Feb, March of FY '21.
So overall, I think about 25%, 30% of revenues in the entire FY '21 came from probably COVID -- but -- it's very difficult to give you an exact number because we don't sell to end customers. We sell through distribution. So the data cannot be as clear as selling to the partner customer.
No, this is very helpful. But I'm going to assume that fourth quarter FY '22 had very [ little COVID ] as such. And in that backdrop, this growth appears very strong. Core basis, the business has grown even faster. Can you comment what has driven this growth? Is it largely I mean would be a very strong growth. Can you just put some more backdrop on this?
I think it's not any particular product line, which has triggered this growth. As I've mentioned in the previous earnings call as well as a lot of investor calls that the market has been left in a better position post COVID. COVID has expanded the market forward and maybe 60%, 70% of the demand was one-off, but it has left back about 30% or 25% of industry expansion.
So there is greater focus on research, greater spending, there is greater focus on health. So overall, the market is in a better position than what it was pre-COVID, and it's the expanded market, our expanded product line, our greater penetration in the Indian market, our growing strength of our brand as we come into more and more complex products similar to what was only available for multinational companies. I think it's a factor of a lot of combinations, which is playing to our favor and this is giving us an expanded growth.
So you will maintain this guidance of INR 500 crores of revenue by FY '25 [indiscernible]. So nothing changes on that?
I believe so. Yes, nothing changes on that.
So just one more question for Sanjive, the PCR market. So would our aspiration be to have similar market share like what we have had in the other larger markets for long-term perspective, would we expect that to be also a target?
Yes. I think we've had a very successful launch of our PCR products. It has been well received. And we have almost 85% to 90% of the PCR product line in the plastic consumables segment available with us as we speak today. And I believe that as per past history, it takes us about 4 to 5 financial years in most product lines, we have a dominant or a market leadership position in the country and we expect more different from the PCR product line as well as expanded growth in the international markets as well.
I just have one big more keeping question. This INR 70 crores noncurrent asset, can you just highlight what is that? It seems like a large increase -- what is it pertaining to for financial [ intensity ]?
Am I audible?
The next question is from the line of [ Shriram Kapoor ] from [indiscernible]
Can you hear me?
Sorry, to interrupt the line of the participant got disconnected. We'll move to the next question, which is from the line of [ Hardik Doshi ] from [ Vital Partners LLP ].
[indiscernible]
May I request Mr. Doshi to speak louder, sir, we cannot hear you clearly.
Is it better?
Yes.
I had a question about the addressable market. So I think you mentioned that of the products that you manufacture, you have about a 25% market share in the domestic side. So are we planning to kind of introduce new ones to kind of expand to the rest of the addressable market in India? That's number one. And number 2 is, where do you think this market share actually caps out? I mean, you're already at 25%, how much higher than we go?
I think for both the new facilities are targeting to expand our product line and get us closer to about 100% of the addressable market in India. 100% would never be possible, and I believe that we will always be 5%, 10% lower than the complete addressable market in the country. So the realistic target would be 90% and I believe that with the new products, there would be an expansion in the newer product revenues as well as it would boost up the older product revenues as well because our basket grows.
At this moment, it will be very difficult to place a number, but I believe that we will continuously expand this number from the 25%.
I mean, I guess what I was trying to get to -- are there any structure of caps in terms of just -- do you think I mean can we get to 50%, for example, or that would be too much of a stretch in terms of market share for [indiscernible]
I don't see any problem in getting to 50%. But as I said, it's very difficult to place a number with what the future holds in the next 5 years. Looking at the current scenario, the current competitors, I feel that it's very much achievable as our product line grows and being the only premier player in the country to manufacture such a wide range and a product line which is acceptable to the top end, pharma research, diagnostic segments. I think we're in a very good place to continuously grow our market share.
And just related to this from the export perspective, I mean, now it's become about 1/3 of our overall revenues. Obviously, there's a much bigger addressable market. If you had to look 5 years out, do you think exports will be a majority of our revenues going forward?
I don't think in the next 5 years, it could be a majority of our revenues because there is a huge runway of growth available in the Indian market and it's a market where which is -- which we are closest to because we are present in India, and it is a market where we have a dominant leadership position.
So I think Indian business would continue to grow very, very strongly over the next 4 to 5 years, and it would be very difficult for international business to topple this and become the majority of our business. And at this moment, we will continue to work with agents, importers and distributors in international markets, and we do not have any inorganic presence or subsidiary presence in any of the international countries.
So unless we move into that phase of growth, I don't see the international market changing over and becoming the dominant portion of our revenue.
The next question is from the line of [ Shriram Kapur ] from [indiscernible].
Sorry, I dropped off -- just one question.
Mr. Kapur may I request you to speak little louder, sir.
Yes. Am I audible?
Yes.
Sorry, I dropped off earlier on the call. So I see one of your strategies is increase your brand awareness as mentioned in the investor presentation. So do we see any increased marketing spend or some sort of that, which could more than normal or which would have an impact on the margins?
Not at this moment because, as I mentioned in my previous answer, we still continue to work with agents and importers who do the bulk of our marketing and representation of our brand in their respective territories. But in the future, if we decide to move inorganically or organically through our own subsidiaries, there will be increased expenditure not only in marketing as well, but as well as in people and remuneration but at the same time, most of that would be offset by higher product realizations because we get closer to the customer and don't rely on importers and distributors in those particular geographies.
So overall, in the short term or interim, when we do that, they could be lowering margins. But in the medium term, the margin would fall back into place and at the same time, give us a larger access to those markets.
And another question on your focus on exports and also you mentioned you're trying to capture on the [ Making ] India team. So where is most of the international competition from? Is it in a particular country or region, like, for example, China? And are you benefiting from any trends in kind of the China plus 1 theme?
So in India, the -- surprisingly in India, the competition is not from China. It has moved from Europe, the U.S. as well as Indian players inside India. For internationally, there's a very strong competition from China, especially for the top-tier Chinese manufacturers. There are 2 or 3 very strong companies, which manufacture a very high-quality level of products and we see increased acceptance and increased entry into larger accounts were dominated by the Chinese because of the Chinese person strategy coming into play.
[Operator Instructions] The next question is from the line of [indiscernible] from [ ICICI ] Securities.
Did you say the COVID is approximately 25%, 30% of the anti industry revenue?
No. It was about 25% to 30%. It was 25% to 30% in FY '21 of our company revenue. I did not say of the industry revenue.
And what about the FY '22 there?
That would have probably contracted to about 50% because apart from Q1 in FY '22, we spent most of the year without very little or negligible COVID revenues.
So we have 30% of the revenue contribution approximately from the COVID in FY '20? Is it right?
Right. That's what we believe.
As the COVID is winning now, in FY '23 because we have a higher on FY '22. So we still believe that we have such kind of growth in FY '23 as well?
No. But the thing is just like we grew 30% in FY '22 when corporate revenues halved in FY '22 from FY '21. Similarly, we expect the same thing to happen in FY '23.
Only about your gross margin, gross margin in FY '20 to increase around 600 bps, despite the export and the domestic contribution remain same, so what would be the reason for such high gross margin improvement, cost is really elevated in FY '22?
Certain product mix changes, I think larger, higher-margin products would have contributed at a higher level. As compared to the previous year as well as certain value-added services like more related products as compared to non-sterile products. I think looking at the business from an EBITDA level would be a much stronger viewpoint. We aspire to maintain same EBITDA levels of around late 40s touching 50%. And that's what the aspiration is. The gross margin could always change based on geography mix as well as product mix.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Rohan Sehgal for closing comments.
I would like to take this opportunity to thank everyone for joining the call. We will keep updating the investor community on a regular basis for incremental updates on your company. I hope you have been able to address all your queries.
For any further information, can get in touch with us or SaaS from Strategic Growth Advisors, our Investor Relations advisers.
Thank you once again, and stay safe.
Thank you. On behalf of AMBIT Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.