Advanced Enzyme Technologies Limited (ADVENZYMES) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Advanced Enzyme Technologies Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mukund Kabra, Whole Time Director. Thank you, and over to you, sir.

Good afternoon, everybody. First of all, I, along with the whole AETL family, would like to welcome all our investors and partners today's conference call for the quarter ending 31st March 2021. It is a pleasure to address to all of you again as we put up our quarter 4 results of the financial year 2020-'21. First and foremost, we hope and pray that you and your respective families are in good health and high spirit as we all had to be strong and endear such tough time together, we at Advanced Enzyme are regularly being updated with the current COVID-19 scenario as safeguarding our employee and customer health and their interest is always being our top most priority. In the first segment of this call, we will be briefing you on our focus area and the business highlights, and then we will open up the floor for the question and answers. Our focus area continued to be the same Biocatalyst for the API and also the Probiotics are our focus area as well as like B2C segments of our Nutraceutical areas. In the bioprocessing division, we still focus on the Bakery division, and we are expanding baking solution in U.S. and European markets. We are also focusing our Animal Nutrition business in the globe. Moving ahead with the call, we are happy and proud to announce that we are again positive on all the parameters and our goal for this financial year, we strongly believe in delivering long-term value to our esteemed shareholders. I'm glad to announce that we have a decent growth in profitability because of our product mix. Despite the tough time of COVID-19, our revenue grew by 13% to INR 5,018 million and maintaining our legacy of higher margin, our EBITDA margin and PAT margin stood at 46% and 30%, respectively, in financial year '21. Our business in India has delivered good results and has shown a growth of 20%. We have lost our top customer from U.S., which contributed to this INR 5.37 million. Despite that, we have delivered a robust growth of 12% in U.S. during financial year '21. And proving that our specialized business model keeps us risk free from large customer dependencies, the segment breakup of revenue is as follows: Human nutrition contributed 77%; Animal Nutrition contributed 9%; and industrial bioprocessing contributed 14%. We are committed to growth without sacrificing our margins and continue to create the stakeholders' value. During this quarter, we have acquired 51% stake in SciTech Specialties Private Limited, the company specialized in effervescent based products for consideration of INR 316 million, and the acquisition process has completed on 11th January 2021. This acquisition has contributed to 1.8% of our inorganic growth. This year, this acquisition also added 2 manufacturing facilities and 1 R&D facility to the company. Despite the sentiments around the world, we have moved forward in the right direction and your company is fully prepared to navigate the vagaries of the evolving macro situation and intricacy of the business environment, the company will continue to know by leveraging its strength and expanding further to capitalize the opportunity. To end with, I would like to say the outlook for financial year '22, right now it's difficult to give any guidance given this is a very dynamic situation with the corona still going. So as we get more clarity going forward, we'll be able to give you more clarity on the year should -- how the year should plan out. But we expect in such a tough situation, we are here to be decent. Now let me hand over to Mr. Raukaji, our CFO, who will walk you through the company's financial. Raukaji?

I'm sorry. Thank you very much, Mukund, and good afternoon, everyone. I will just take you briefly through the company's financials for the last quarter and the last financial year. So on year-on-year basis, our revenues increased by INR 578 million, which is about 13% growth from INR 4,440 million to INR 5,018 million. Our EBITDA has increased by INR 292 million, which is roughly 14% increase from INR 2,023 million to INR 2,315 million, and it is about 46% of our revenue. Profit before tax has increased about 17% from INR 1,792 million to INR 2,104 million. So a growth of -- an increase of INR 312 million. This is roughly from 40% of revenue to 42% in current year. Our PAT increased by INR 185 million, 14% from INR 1,330 million to INR 1,515 million via across 1,500 threshold assets for us. And it is about 13% -- 30% of our PAT. On year-on-year basis, this is more relevant for us. We have a good amount of growth in the company. Those numbers I would like to share with you. I mean, from INR 4,440 million to INR 5,018 million, and -- I'm sorry, there is some disruption. So this is -- I'm sorry, the numbers which I have given was on year-on-year basis, not on quarter-to-quarter basis, extremely sorry for my mistake. So that was for financial FY '21 to FY '20. Now I'm giving on -- year-on-year basis, this is quarter 4 to quarter 4 of last year. So revenue is increased by INR 229 million from INR 1,103 million to INR 1,332 billion, a growth of INR 229 million. And EBITDA has gone up from INR 487 million to INR 549 million, which is about -- from 41% to 44%. Profit before taxes increased by INR 46 million, which is roughly 39% and increase is of INR 46 million to -- from INR 432 million to INR 478 million. And our PAT is increased by about INR 11 million as compared to INR 327 million to INR 338 million. For the sake of better understanding, let me repeat year FY '21 numbers to FY '20 number. Revenue is increased from INR 4,440 million to INR 5,018 million, an increase of INR 578 million. And EBITDA increase is about INR 292 million from INR 2,023 million to INR 2, 315. Profit before tax is increased from INR 1,792 million to INR 2,104 million, INR 312 million. And PAT increase is INR 185 million from INR 1,330 million to INR 1,515 million, 30% of our revenue. Our R&D spend is at INR 179 million during FY '21 as compared to INR 144 million in FY '20. This is an increase of about 19%. And it's about 3.5% of our revenue in FY '21 and 3.25% in FY '20. Some of the data points on frequently asked questions. So our evoxx saless during FY '21 stood at INR 282 million and EBITDA of INR 52 million, and we had a PAT of INR 13 million during this year as compared to revenue of INR 264 million and EBITDA of INR 58 million and PAT of INR 22 million during the previous year. Sales in JC Biotech during this year is at INR 504 million as compared to INR 424 million and EBITDA of INR 149 million as compared to INR 119 million, and PAT is INR 78 million during this year as compared to INR 61 million during FY '20. And our largest product, which is anti-inflammatory enzyme stood at INR 1,134 million during FY '21 as compared to INR 1,035 million. So it has registered a growth of about 10%. And top 10 customers contribute roughly 38% of our total revenue in FY '21 as compared to 35% last year. On the last year, we have lost our largest customer, who used to contribute about 9% -- I think last year it has -- in FY '20, the contribution of the largest customer was about 9%. And the recently acquired subsidiary has posted a revenue of about INR 79 million and EBITDA of INR 22 million, which is roughly 26% and PAT of about INR 14 million, which is about 17%. So this performance is from 11th January '21 to 31st March '21 and full year revenue of SciTech stood at INR 379 million as compared to INR 306 million of last year. And EBITDA margin of INR 93 million as compared to INR 66 million during FY '20 and PAT is about INR 30 million as compared to INR 15 million during FY '20. That was from my side. And now, we would like to commence the question and answer session. Thank you so much.

[Operator Instructions] The first question is from the line of Rohit Sinha from Emkay Global.

Yes. So first of all, I think you have rightly dictated all the segments and subsidiary numbers. So few questions might not be clear on that. Just on this SSPL part, I think until FY '20, the margins of SSPL were 15%, and in 9 months, it was around 21%. So there, we have seen margin improvement in this quarter as well, whereas our overall margin for -- along the lines has come down. So is it all because of the raw material side and supply chain from -- for advancement, particularly? Or any comment on that margin contraction?

Yes. So margin, I mean, during this quarter 4 is mainly, number one, because of increased cost of the raw materials, input cost has gone up. And in addition to that, there is a couple of expenses, which has been included due to this consolidation because in the consolidation, all these expenses has increased in that sense, although there is an increase in revenue, I do understand. So gross margin erosion is there during this year -- during this particular quarter, sorry. And that is mainly because of increase in input costs. And in addition to that, as I explained you, some of the expenses are also up like if you look at the margin erosion, this is a substantial amount in that sense, which is roughly -- I mean, 59%, if we compare with quarter-to-quarter basis. And payroll cost is up by about INR 18 million. And the depreciation on account of, again, this company, which we avoided, this is higher. Other expenses are higher because of logistic costs has gone up. And a couple of other expenses like expenses on some of the studies, which we have got done from the outside external parties. So there is increase in that cost. And apart from that, professional charges because we have acquired the company, so had spend some money on that also. So some of the expenses have gone up during this quarter. And coupled with erosion in the margin. This is mainly because of change in the product mix and lower, you can say the, revenue during this quarter as compared with the previous quarter. Because this quarter, if we add the INR 79 million of SciTech in spite of that, we could see that there is a -- the revenue is lower by about INR 45 million. So we have a higher-margin in that sense. So INR 79 million, otherwise, we would have earned a very higher margin in that sense. So all this factor has ultimately contributed in lower profitability during this quarter as compared with the previous quarter.

There is also like some of the taxation effect. So this quarter, we have a higher tax because we changed the regime, with the new tax regime. So we had to wipe out like over somewhere around INR 2.7 crores, which was there as a MAT credit.

Okay. That comes a little lower [Foreign Language]. Okay. Secondly, as you said, on the depreciation side. I mean, there is a significant increase. So is it all because of that SSPL addition or is this...

Yes, yes. Mainly it is because of SSPL addition. Because in SSPL, they had again you know CapEx during that quarter has got capitalized, so roughly INR 90 million was increased. And then in addition to that, some of intangible asset has been identified. So we had to amortize for the -- proportionately on the basis of number of days since we have acquired this company so that amortization cost has also gone -- like added into the depreciation. So all put together, roughly, depreciation cost on account of SSPL is higher by about INR 15 million. INR 4 million is because of some additional capital expenditures, which has been capitalized in other subsidiaries, including Advanced Enzyme.

Okay. Okay. Okay. And going forward, I mean, this SSPL contribution, how we are now seeing this opportunity as obviously, for this quarter, it was hardly for few months. But going forward, how much kind of revenue growth we are expecting from this? And how the margin profile would look like for SSPL in particular?

Yes. So, I mean you know it is for about some 82 days. So if you see the full year revenue, it was about INR 379 million. So we expect that it will continue a very good amount. It will continue to be a kind of major subsidiary for us. So maybe they will be contributing about 10% to 12% at mix of our top line going forward. And as far as the EBITDA margin is concerned, we could see that the EBITDA margin has improved in the first quarter. But yes, we are looking for more integration and more optimization of level sources. So that will finally, we will -- as we progress, we will get to know that where we are and the kind of efforts being put by us as well as the team over there. We feel that the scope for improvement is, of course, there. So the EBITDA margin as well as the PAT margin, which is now -- I mean, we will always try to bring it in line. But yes, this is a kind of different business asset. But the improvement is, of course, will be there in due course of time.

Okay. And sir, last question as Mukund sir has also said, I'm not giving any particular guidance for next year in terms of growth. But overall, I mean, which segment we are seeing, I mean, better kind of traction or where we are seeing some kind of still some issues are there, which might not turn up into -- from revenue?

So Rohit, we continue to see that Biocatalysts is going to grow as we move on. This year, it should be a good growth in the Biocatalysts area as we move on. We continue to see that Probiotics will grow. We continue to see that Animal nutrition will be under pressure. And since like, again, the COVID situation is there. So we still feel that the food process business will be also like under pressure.

[Operator Instructions] The next question is from the line of Alisha Mahawla from Envision Capital.

My first question, I'd like to understand what is your current capacity utilization level?

Alisha, in our basis, it is very difficult to measure the capacity but roughly, it's still like somewhere around 55% to 60% is the capacity utilization.

Okay. Sir, it has been at this level since the last few years. Is this the peak capacity or can it go up to, say, 80%, 85% also? Because we've been at the sub-60% for the last 3 to 4 years.

It can grow, it can grow. It's not like a peak level, but what happens is like you also like work on the improvement. So we are in a very good industry where 2 plus 2 is not 4 or 1 plus 1 is not 2 but 11. So you continue to increase your productivity and that is how like some of the capacity is always free. In this quarter also, we worked on the few products, and we could free some of the capacity. So we continue to be on the same level at this point of time, and we hope to be continuing.

Okay. Okay. Sure. And sir, like you said that this quarter, margins were impacted because of increase in raw material prices. So maybe you can just comment on where do you source it from and going forward for FY '22, where do you see the margin, especially because contribution from SSPL will also increase. So do you think you can maintain it at FY '21 level or a bit better utilization? Can it improve? Just some color on that.

We always feel that our margins should be between 40% to 48%. We still continue with that guidance. Yes, there are certain pressure on the raw materials. For example, if you really go with the soya flour or the soya oil, the prices are more than double. Some of the raw materials are double. But we expect 22% impact on the margin, but that may be improved with the -- that can be improved with the capacity utilization. So net-net, we feel very small portion that should really impact us on the bigger picture. We don't know how long the prices will be up. It's seasonal as well. But currently, we are facing the same situation. And then if you really look at it, logistic cost has also gone up. So we need to see, wait and watch.

Okay. Sir, just some -- where do you source your raw material from?

Sorry?

Where do you source your raw material from?

So 99% of the raw materials are sourced from India, most of them are like the agriculture origin, and some of them are the salts. But the salts in terms are being like sourced -- their basic materials are being sourced from the China. So we are dependent indirectly in the China, but not directly because most of the chemical industry is dependent on China. So if the prices of logistics and other things goes up, all the costs goes up.

Got it. And just 1 clarification. You said that the prices have almost doubled. So is there any scope to pass on these prices or normally, it is absorbed by the company only?

On a -- we don't like pass it on unless until it becomes a permanent feature. So we wait and watch because it's a very competitive industry. You generally don't go and just pass it on because 1% if cost is gone up, about 2% the cost is gone. So you wait and watch. If it is continuous, then you'll go and pass it on.

[Operator Instructions] The next question is from the line of Aditya Khemka from InCred Asset Management.

Mukund,sir, you said Animal Nutrition business, there was some impact. Could you elaborate a bit more what impacted the Animal Nutrition business and how -- why do you feel that it can continue to be under pressure?

Aditya ji, if you really look at it because of the COVID situation, we expect like a lot of animal feed business come from the export market. Right now, you cannot travel. This is like under the development stages. A lot of like things where like with distributors and all of those things were under the process. But because of the COVID situation, you cannot travel. Secondly, if you really look at it, the logistic costs have gone up dramatically. This is a business where you sell the product at $1 or $2 a kg. And when the logistic cost goes up, it really impact you. The third thing what has happened is with the logistics, it's not only the cost, but the timely deliveries are also affected. And because of that, like you lose some of the customers and some of the customers don't want to trust you. So like you cannot travel. So these are the real challenges, which we are facing at this point of time. Last year, this was a bigger challenge. Even like when you look into the first quarter or the second quarter, all the hotel industry was closed. And the animal feed industry or the livestocks are like dependent on the hotel industry as well, and their consumption was lower. If you again, look at it like the soya flour or the corn prices has gone up dramatically. And these people are more under the stress to produce than to sell. So overall, if you really look at the situations, animal feed industry is going to be under pressure.

Understood. And that is predicated upon this COVID situation continuing, right? I mean the pressure is basically related to COVID, not really demand because you are saying 2 different things. One is obviously, COVID is not allowing you to travel. COVID has the hospitality industry under pressure. So that is one part of the pressure you're talking about. And the other part of the pressure you said was that your consumers don't want to order again because they don't trust you or we have not been able to supply. So while COVID impact may be more transitionary in nature. Obviously, nobody knows how long COVID will last, but it is transitionary for sure. The other impact, which is your customer trust getting lost on you or customer not wanting to source more locally from somebody like Novozymes other than sourcing from you. That is a -- that could be a more structural impact. So the sense I'm trying to get is, which is more -- which is the 1 factor out of these 2, which impacted more. Is it the loss of contract from the consumer? Or is it the COVID situation?

So if you look at it because of the situation -- both the situations play. Just to give you an example, last year, we lost a very big customer on the Russian side because of the logistic delays. And then we stopped like really promoting very aggressively because we are not sure what will happen on the deliveries and other sides, right? So we stopped a little bit, we paused because it's more important for us to -- not to lose the name rather than taking the business, right? So, yes, some of the structural damage is already being there. But right now, we are like more -- we are playing more waiting game rather than the aggressively moving forward.

Understood. Understood. And in terms of the enzymes business overall, right, the biological catalysts business overall, how do you think the market is moving forward. So again, COVID impact aside. I'm talking more on a broader market growth basis. So we noticed Novozymes delivering single-digit growth. So what is the broader overall growth of the enzyme market? Can you throw a bit of light on that?

So I don't know like the overall market growth, yes, like I can talk about our segments, particularly if you really look at it like the Biocatalysts area where we're really focusing on the enzyme side, we grew last year somewhere around 78%. Of course, it was on a smaller base, but it is like really our growth area. Again, this year, we continue to work on the COVID drugs, which uses the enzymes, we are continuing to work on the different APIs. So this year, again, we feel that we should have a decent growth into that area, particularly. If we talk about Human Nutraceutical, yes, there is a lot of awareness, which is being there right now because of the COVID, that's a positive impact. We can see that the Nutraceutical industry is growing somewhere around 8%, 8.5% right now. And maybe it will be more. Because of the COVID, everybody wants to have a better immunity. Everybody wants to be fit. So that is a positive impact. When we go to the food industry, yes, there is a lot of cautious that -- there is a mixed response. The same thing is happening like a lot of hotel industries closed or hospitality industry is closed. And again, if you really look into the baking areas, those are like Europe area. And again, there, if you do the look at it, there is no travel. And people don't want to change at this point of time because it's all the delivery and other things and logistics comes into the picture. And again, if you can't travel, you can't like meet the customers. You cannot like create the new customers, right? So this is where it is happening right now. But yes, moving forward, we still see that the Nutraceutical, Probiotics. Probiotics is also playing a very good role right now because it is also the immunity play. We've done certain clinical trials, and we figured it out that our Probiotics as well as our enzymes capsules are really working well against the COVID, just the trial was done on the fatigueness. And within 3 to 4 days, all the fatigueness after COVID has gone even if you are COVID impacted with your regular medicines like your recovery time can be reduced by 1 day. So yes, the Nutraceutical industry is shipping very well. Right now. Biocatalysts industries is shaping very well. Probiotics is shipping very well. But yes, there is a pressure on the animal feed industry as well as on the food industry.

[Operator Instructions] The next question is from the line of Lakshminarayanan from ICICI Mutual Fund.

My questions are related to kind of recruitments you have done on the sales front and on the R&D side. In the last 1 year, what has been the addition of salespeople in India as well as in Europe and U.S., any major changes? And in -- and also in terms of R&D, how many people we have now. And will we add any this year?

Lakshmi Narayanji, last year, it was more like a status quo situation, but we're starting -- started adding the people this year. We are seriously looking to expand our marketing team, particularly into the animal feed areas and the food areas. But last year, because of COVID, we were like more or less stagnant. On the R&D front as well, like we are on and off, we've operated in few of the months and few of the months, we had to close down. Currently also like we are operating somewhere around 1 or 2 days, just to take care of whatever is urgent rather than really focusing in a bigger way, but yes, we are adding the team. I think, Raukaji, can you give the R&D number? How many people are there?

R&D, we had total strength of 105, Mukund, and 80 stand-alone. But overall, we have about 148 people. So, in addition, as you already explained about this, the total working is -- about 105 people are working over there.

Okay. And now you said 148 or 105?

Total 148 -- is like we have some in our subsidiary at Hyderabad, then U.S. company, evoxx has some 20 people working, and recently we've added SciTech, so there are about 11 employees in R&D in SciTech, so all together is about 148.

Got it. And in terms of the Animal Health, right, what is the sales split across India and outside India for the Animal Health?

Yes. Animal Health overall number is INR 470 million during FY '21 as compared to INR 548 million last year in FY '20. Now in terms of like sales in India, you want the geographic wise distribution of this numbers?

Yes, broadly, because you touched upon the fact that there has been a decline. So I just want to understand which geography it is declined? And what is the sales split broadly between geographies?

Yes. Give me a minute please. Meanwhile, if you have any other question, please go ahead, I will give the numbers.

On the JC Biotech, right, I think we have an option to acquire up to 100% or we can actually acquire only up to 85%. And when compared to our earlier acquisition price, what has been the increase in -- was there an increase in valuation of JC Biotech ever since we first acquired it?

Yes, of course, there's an increase. Yes, Mukund, go ahead.

Yes. So initially, like when we acquired JC Biotech, we acquired it at INR 35 per share. The current acquisition cost is INR 58 per share. We do have option to buy 100%, but we still believe that there should be some part of the promoter. So the operation becomes more smoother. At the same time, it gives you more leverages to come up with the new, new products and you can still add -- you can use your capital much better. Instead of like just keeping in the mutual fund or in the bank. So that was the objective to go ahead and acquire like 15% of stake. But we do have options to buy all the 100%.

Okay. Okay. And there has been an increase in JC Biotech sales, especially last year. This was a big significant jump from INR 42 crores to almost INR 51 crores, right? So what drove that change? Because from FY '16, it was fairly around INR 40 crore-ish, right? There has been a jump in JC Bio. So can you just elaborate as to what drove that increased sales?

So currently, like JC Biotech is whatever we're actually seeing, more or less, they're supplying to Advanced Enzyme And it's mainly into the inflation product. Right now, like whatever the -- if Raukaji has already explained that there is a growth of 7%, 8%. So there is a jump. Some of the time like it's like inventory build of situations or like maybe like, I don't know exactly, but in the initial stage of the year, there might be some more inventory last year than this year. So there is somewhat plus/minus. But moving forward, we are trying to make JC Biotech multiproduct rather than just 1 product. At this point of time, it is more concentrated to just 1 product. But moving forward, maybe after 2 quarters, we will see that JC Biotech produces more products and that we can utilize much better way because there we do have capacity. And we feel that we can utilize that capacity much better way moving forward.

Sir, in the initial remarks, you mentioned the sale of your top product as INR 110 crores. Did I hear it right? Just...

It was something INR 113.4 crores.

Yes, INR 113.4 crores. Okay. Okay. And also in the initial part of the conversation, you mentioned that the U.S. top client, which was around 9% in FY '20, right, had actually withdrawn or is -- that account is not active now. So what percentage of revenues of 21% came from that client, which was 9% in...

Nothing. See -- no, no sales to that customer.

No sales, 0 sales in FY '21?

Yes. Yes, U.S. business grew by about 12%.

Despite this client was not -- okay.

Correct.

Bad news.

And as far as the numbers you were asking about, AHN, right, Animal Health Nutrition, so it is -- the degrowth is mainly in India. And international market is about, I think, INR 170 million last year, INR 170 million this year. And the remaining is in India market. So we have seen that there is a dip in the sales in AHN in India from INR 370 million to INR 300 million. So INR 70 million means INR 5 crore -- INR 7 crore is a lower number.

Sorry, sir. I didn't catch it. So you said international is around INR 170 million for Animal Health this year.

Yes. And domestic is INR 300 million.

Okay. And what is the number in FY '20 for this -- these 2?

Yes. So it is INR 170 million in FY '20, international. And domestic, INR 370 million.

Okay. So the entire decline has come from India?

Yes, right.

Okay. Fair enough. And this -- when you supply this to India, right? So is it consumed in India? Or is it again exported in some form outside?

No, I'm talking about India only, that means India only.

95% or 98% is like...

Yes, those are all Indian customers and they are ultimately consumer in that sense, all poultry companies, who are integrated players, pharmas...

Got it. 2%, 3% is like exported to the Bangladesh or -- fair enough. Sir, 1 last question from my side, in terms of the B2C Nutraceutical business, which you were selling through either Amazon or also through your direct-to-consumer channel, right? What is the sales of that for this year? And how...

We touched INR 5 million, like as whatever our target was. It grew from INR 3 million to INR 5 million this year, I mean one by...

Yes, so it is up to INR 3.85 million to INR 5.27 million.

The next question is from the line of [ Shantanu Chatterjee ] from [ Mount Intra Finance ].

My only question is, sir, you have got a number of products for registration under EFSA, that is European Food Security Authority. You have already got registration for 3 products. Now I want to know about the status of the rest of the 9 products, when we can expect that those products will get registered?

It's difficult to say. Currently, there are like 4 products, which they are sent for some questionnaires. We've already replied to that. But when they will go through all the other products is very difficult. But once like we have submitted all of those products, we are open to sell.

Is there any tentative time line, sir, within which you can expect that those things will actually turn up.

If you really look at it, it's very difficult. We have submitted the first dossier in 2014. And right now, still they are evaluating. So it's very difficult for me just to tell and give you the time line, how long they will take.

[Operator Instructions] The next question is from the line of Rajiv Sen, an individual investor.

Just can you tell me about the positives of the company this year, sir? And what are -- what will be the negatives for the company this year, sir?

So I already explained, Rajivji. The positive is like -- our Probiotic sale is -- in India is more than double between like 128% or something. Our Biocatalysts business has grown up by more than 78%. Our U.S. business, Nutraceutical business has grown up by 11% despite losing the largest client. Our B2C segment is growing. These are all the positive sides of it. The negative side is we still like going through the COVID impacts. Our business, since we are presenting to the so many different areas, we cannot like go and really talk about quarter-on-quarter. But yes, some of the quarters you get some business. In some of the quarters, we don't get the business, right? And if you relook at it, we are still going to be under pressure on the annual Nutraceutical business at the same time on the food business. So these are the negatives at this point of time.

The next question is from the line of Lakshminarayanan from ICICI Mutual Fund.

So I see that the bioprocess business, which has been fairly flat for the last 1 year. Can you just elaborate a bit on how do you look at that business? And what has been the changes in the last 1 year either from the customer side or from your own product side on the bioprocess business?

So the bioprocess business, we divided into the 2 categories, food business and the nonfood business. If you really look into the nonfood business, it mainly comprises of like textile business and you are like detergent business. Here, our revenues were more or less flat last year. If you relate into the first quarter, our revenue was almost 0. It was just like hardly INR 5 lakhs, INR 6 lakhs. Similar situation is happening this quarter as well as we move on because of the COVID situations. So it does have a lot of impact on the COVID. Despite that, like we could like cover up the first quarter in the last 3 quarters, I would say. Moving forward also, we don't know how long the COVID will last and how that business will grow this year. Whether we'll be able to take some growth or no. But we expanded a little bit into the -- some of the export markets and some of the orders are coming into that segment. Moving into the food business. Food business, we are really, really focusing on the Europe side. We had a good impact on the food business in Europe because like you couldn't like make more conversion of the clients. At the same time, the consumption was on a lower side in the initial phases of the COVID. So first 2, 3 quarters were really slow than what we anticipated. Last 2 -- last quarter and this quarter is moving ahead again, but we don't know how it will pan out as the COVID situation -- will pan out. So difficult to say. So we feel that this year also probably we'll be revenue neutral. But we can't predict too much at this point of time until the COVID situation is no...

And how the business fits between food and nonfood broadly, bioprocess?

Yes, yes, roughly FY '20, the Bioprocess segment is about 15%. And 12% is food and 3% is nonfood. And the same is the situation in FY '21, it's roughly around 14%. 9% is food and 5% is nonfood. So here, this is nonfood, which comprises of domestic as well as international market. So domestic, we have seen low growth as Mukund as already mentioned in the first couple of quarters, there was no lose. Subsequently, COVID situation was like as such it was norm -- I mean, a lot of improvements and normalcy. So it is peaked up. And our sales during FY '20 is about INR 90 million in India. And that was only -- the same number was about -- in FY '20. From INR 90 million to INR 92 million in FY '21. But the good part is this year, we could sell a higher -- revenue from this particular segment in U.S. has improved and we could see that it has witnessed a very good growth, I mean, in terms of absolute number. Last year, we had about INR 55 million. But this year, it has gone up to INR 140 million. As such the impact...

Sorry, you said -- I didn't capture.You said INR 55 million?

INR 55 million was last year. And this year, it is about INR 140 million.

This is which part of the businesses. This is the bioprocess, food in the U.S.?

Nonfood, bioprocess, nonfood.

Okay, okay. Got it, got it. And what is driving this? Is it -- when you look at the bioprocess nonfood in the U.S., what is driving this?

No. They have been working on -- since last 3, 4 years and probably we could get a couple of customers over there. So that has resulted in higher sales during this year.

Sir, in terms of your R&D expenses, what is the CapEx? And what's the total outlay for FY '21? And how much is capitalized and how much is taken through the P&L?

Okay. So FY '21 our revenue expenses is about INR 125 million as compared to INR 115 million in FY '20 and CapEx is about INR 54 million as compared to INR 29 million last year. So it's about INR 179 million in FY '21 and INR 144 million in FY '20.

And what is the plan for the next 1 or 2 years in terms of R&D expenses?

Yes. I think as far as the revenue expenses are concerned, FY '21, as Mukund has mentioned several times during this con call. Because of COVID, the hiring was really very, very tough and very challenging, and we also feel that there's no point in hiring unless until you know the person can really work on floor. Because R&D is like one has to go and work on the -- physical presence is very, very important in that sense. But yes, another thing, I think, a couple of times we have mentioned about it. We have a plan to expand our R&D at Nashik, which was also kind of stand-still during FY '21. Now FY '22, I mean, at least 2 months are gone like that. So, I mean, we have plans to spend some amount on CapEx side of it, including hiring has already started. But yes, I mean, the overall basis, this year probably there could be an outlay of maybe about INR 100 million to INR 150 million on CapEx side. And revenue expenditure is likely to go up. Generally, we spend about 3.5% to 4%. So it will be in that range only.

[Operator Instructions] The next question is from the line of Alisha Mahawla from Envision Capital.

I just wanted to understand, you were mentioning to the earlier part that in the bioprocessing segment you're expecting it to be sort of flat for FY '22. And we've also seen some headwinds in the Animal Health Care Segment. So where are we seeing the growth coming from? I know you mentioned the Nutraceuticals and the Probiotic, but will it be enough for us to maintain the kind of growth rate that we have over the last 2 years? Or are we expecting it to be a slightly softer year?

Alisha, we can't comment at this point of time, how much will be the growth and what it will be, but we can see that there should be a decent growth into the Biocatalyst area. We feel that there should be a decent growth into the Nutraceutical area particularly. But numbers, I cannot speak at this point of time because it's very difficult for me to really carry it. What I can say is we will be positive, no matter what, whatever happens. And then that is what I can say at this point of time.

[Operator Instructions] There are no further questions. I would now like to hand the conference over to Mr. Mukund Kabra for closing comments.

Thank you, everyone, for your questions. I hope everybody for a better health and I pray for everyone. We feel that this COVID time should be over, and everyone will be healthy. Thank you, everyone, for your participation. Thank you.

Thank you so much.

Thank you. On behalf of Advanced Enzyme Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.