India Pesticides Limited (IPL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '23 Earnings Conference Call of India Pesticides Limited hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Tejas Sonawane from Dolat Capital. Thank you, and over to you.

From Dolat Capital, I would like to thank the management of India Pesticides Limited for giving us the opportunity to host their Q2 FY '23 earnings call. From the management team, we have with us today Mr. Anand Swarup Agarwal, Chairman; Mr. D.K. Jain, CEO; and Mr. S.P. Gupta, Chief Financial Officer. Without further ado, I would like to hand over the call to the management for their opening remarks, post which we will open the forum for a Q&A session. Thank you, and over to you, sir.

Thank you, Tejas. Good afternoon, ladies and gentlemen. I hope you and your family are staying safe and healthy. I take the pleasure of welcoming you all for the Q2 FY '23 earnings conference call of India Pesticides. I hope you all had the chance to look at the financial statements and earnings presentation uploaded on the exchanges and our website. [Audio Gap] [ 38.8% ] supported by increased demand of existing products and new product launches. Our margins were impacted by various macroeconomic factors across the group. Industry faced challenges in terms of raw material prices, with logistic constraints also creating pressure on the business. However, Indian economy demonstrated its resilience amidst such adverse atmosphere, and it continued its performance. All our recently launched products are performing well, and we expect their demand to grow going forward. Further to this, we have planned INR 70 crores CapEx for expansion at Sandila plant in FY '23. 4,000-metric-ton capacity at the our Sandila plant will be additionally added under phases over the coming quarters. One herbicides and one intermediate will also be added there. As of our update on Hamirpur project, EIA report was accepted by MOEF. And meeting with EAC is underway. During the quarter, our long-term credit facilities were rated A+ by CARE Ratings, which highlights our ability to manage capital efficiently. Management team is fully equipped and committed to drive growth with registration of new products, improving product mix and increasing brand business, which will help company to scale new heights. We are constantly working towards our vision of supporting chemical business and farmers across world by producing superior value chemicals by integrating quality and efficiency. Now I will hand over the further presentation to Mr. Jain. Thank you. Thank you very much.

Thank you, sir. Good afternoon, ladies and gentlemen. I thank you for taking out time to join this earning call for Q2 FY '23. During this quarter, we continued our journey of product development and customer acquisition. Our business continues to remain resilient despite external challenging environment. This has resulted in the highest-ever revenues during this quarter. However, our gross margins have been slightly dented due to the following major reasons: number one, carryover of the high-cost inventory; number two, increase in the operating and fuel cost. We are optimistic that prices should realize -- rationalize in the coming quarters. We have been able to partially counter this increase. We are sourcing most of our raw materials locally and backward integrated in most of our products, which has supported our operations. Having the ability to develop chemicals that can substitute and reduce our dependence on imports is an important part of our R&D capabilities. Government focus to make India Aatmanirbhar aligns with IPL's growth strategy of focus on backward integration. During the quarter, I am pleased to announce that we are in line with our expectations in terms of growth, CapEx expansion plans and product category expenses. Saying that, at the same time, we are constantly working towards customer acquisition, new product development and identification. As informed by Mr. Agarwal, our Hamirpur project is on schedule. The application has been accepted and listed for presentation tomorrow, that is, 15th of November, at the Ministry of Environment Expert Committee. We hope to get a positive result. We are optimistic on long-term growth on the back of our strong fundamentals and R&D at the core, leading to renewed focus on our new product development and head towards the era of growth and higher profitability. With this, I would like to pass on to Mr. S.P. Gupta to walk us through our quarter 2 FY '23 financial highlights. S.P. Gupta Ji?

Thank you, sir. Good afternoon, ladies and gentlemen, and thank you for joining the India Pesticides conference call to discuss Q2 financial year '23 results. Taking you through the financial highlights, the total revenue stood at INR 253 crores as against INR 182 crores in Q2 financial year '22, that is, Y-o-Y robust growth of 38%. EBITDA in Q2 financial year '23 stands at INR 55 crores. EBITDA margin was 21.7% in Q2 financial year '23. The PAT stood at INR 37 crores in Q2 financial year '23 as compared to INR 42 crores in Q2 financial year '22. The revenue from exports stood at INR 122 crores as compared to INR 78 crores in Q2 financial year '22, showing a healthy growth of 56%. And domestic revenue stood at INR 128 crores as compared to INR 100 crores in Q2 financial year '22. Revenue from Technicals and Formulation stood at INR 182 crores and INR 69 crores during this quarter. While our profitability is down, company is generating reasonable cash to support CapEx plan and increased working capital requirement due to higher level of turnover. We remain confident of continuing our growth trajectory while extending full support to our customers, suppliers and other valued stakeholders. With this, we would be happy to take your questions. Thank you.

[Operator Instructions] We have the first question from the line of Satish Kumar from SK Investments.

Sir, my question is regarding the dependence of raw materials -- dependence for India Pesticides for raw materials from China. See, the latest credit rating report released by CARE as on 6th October '22, they say that we are dependent on captan raw materials from China. And based on annual report also, it's -- we could fairly say that around 40% of our raw materials we are importing. But what we were told that the company is fully backward integrated for all the products that they are selling. And it is basically they're procuring the commodity type of chemicals from the domestic market. So can you clarify on this?

Yes. Thank you, sir. Actually, the captan raw material, we are not sourcing from China. We are sourcing very miniscule, if any. But more than 90% of our raw materials -- the critical raw material, we are sourcing outside China. And it is not a commodity product, but all other chemicals required for captan production are sourced locally from India itself. That is number one. And the dependence of us, our raw materials on China for some other products are there because we are backward integrating some of the products, what we are making. And there, we are trying to reduce the dependence on China imports.

But are you saying that for 90% of raw material requirements for captan, you are sourcing it locally?

No, one of the raw materials we are importing but not from China.

Okay. Sir, earlier, we had around 6 molecules -- sorry, 8 molecules -- no, it's correct, 6, and then we have launched 8 more, correct?

Yes.

So once we are start completing the CapEx work at Sandila, so how much percentage of that are completely backward integrated? Like out of 14 molecules, how much we are completely backward integrated and we can procure the raw materials from the domestic market?

Sir, in many of the products, we are fully backward integrated. We don't import anything from anywhere. We are totally buying from India itself. And such products are, at least -- if I understand, at least 5 products out of this list of 14. And in the remaining products, one critical raw material in each of these, we are importing from China. And this, we are trying to further reduce this import by developing our own technology and doing still backward-integrated product. But there are some few very bulk products, which is completely out of our range that we try to import from China or other sources.

So out of 14, you are saying 5 we are completely backward integrated and 9 partly we are procuring it from China or other countries?

Yes, Sir.

All right, sir. Sir, is it possible to quantify how much percentage of our total raw material requirement we are still dependent on either China or other countries?

Around 35% of our total raw material purchase is imported, and dependency on China is around 20%.

20% of 35% or 20% of our total requirement?

The entire purchase.

Okay. Fair enough, sir. Sir, second question is on the operating margin. See, if you see after March '22, the net -- operating EBITDA margins have been less than 30%, whereas before that, it used to be in excess of 30%. Now we claim that we are fully backward integrated. No other Indian company makes this product, and there is a huge demand from the existing customers asking for additional quantities and all that. So in spite of that, I understand there is increase in power cost or logistics, all that. So we expect there is a drop of 1 or 2 percentage. But here, the operating margins have fallen by more than 10% for a period of 3 quarters. Can you give some clarification on this?

Sir, you are right. The margins are slightly -- they have certainly reduced. That was number one, that during the last quarters, there were serious problems of logistics. Whatever raw material we were buying from outside India, that -- the logistic problems were too many. So we had to order a bit more of the raw material to avoid any production loss. So at that time, the prices were high. So now we have to carry over those inventories, which is resulting us in the reduction in the margin. That is the number one. And number two, even in the Indian market, the Indian raw materials, they have also increased. There has been a serious increase in some of our basic raw materials, what we are using like carbon disulfide and alkali. There has been almost more than twofold rise in the prices of these commodities. Though we could pass on some of these to our customers, but full pass-on was difficult. And number third major reason was that there has been a tremendous increase in the energy cost, the fuel what we are using. We are using -- though we are using green fuel. We are not using any fossil fuel. That way, we have a green certification, but we are using green fuel. But the cost of this fuel has also increased almost 3x, which has seriously dented the overall profitability during this quarter.

Sir, now I understand this increase is there generally for all the companies. We've been making import-substituted product and there is a huge demand from the customer. Are we not in a position to pass it on entirely to these customers?

Sir, customers, they are also under severe pressure because they don't get so much of price increase at their end. So they keep on requesting us to partially adjust here and there. So we have to -- somewhere in between, we have to settle because we are working in a long-term basis. So there, sometimes, you may get the better margins, so at least try to adjust this time. So like that, we have to keep on slightly adjusting the prices, considering the long-term association with the customers.

I want to further add on this issue that one big multi-industrial company was with us and we were getting better margins. But because of the increase in raw materials, we were not gaining anything, but we remained -- continued with the customer in hope that, in coming years, we will make some money. And that came through. Now the prices are going down, so we are comfortable with that company.

Sir, I understand the company's, what do you say, [ keeping those tactics ] or the managing the customers, keeping the long-term relations in mind. So if this is the scenario with the new CapEx, new products are coming up, is it possible for the company to go back to 30% operating margin? Or will it be at a relatively lower level, which is sustainable, let me say, keeping 3 to 5 years in mind?

Sir, 3 to 5 years, keeping in mind, though, 30% is slightly optimistic. We feel that it should be around 25 -- around 25%, we should be able to manage because the new products, what we will be launching initially, there we have little higher cost and will take little time to stabilize. So that would be there, but we are very quite hopeful that, in the long run, we should be able to manage around that level.

Minimum 25% we should be able to handle. We are hoping for more, but we are committing 25% at the moment.

Sir, my next question is regarding...

It's the operator here. Requesting you to kindly come back in the queue for follow-up questions. We have the next question from the line of Karan Shah from GeeCee Holdings.

Sir, my question is regarding the price pass-on and raw material inventory. So I assume we have high-cost inventory that was procured in the previous 2 quarters and that has impacted our gross margins in this quarter as well. So what portion of this inventory would still be there that has been carried forward towards the third quarter and where we will be facing this pressure? And secondly, if you can quantify the amount of inventory loss that was there in this quarter.

The high cost inventory as on 30th September was around 55%, which we have purchased earlier. And there is no inventory loss as such. We are selling our product on profit only, but only margin has declined since we have consumed high-price raw materials. So our margin has declined, but there are no inventory loss we have booked.

Got you, sir. Okay. And sir, the remaining 45% of the inventory will be utilized in the third quarter. Is it safe to assume that?

Our entire high-cost inventory will be utilized in the -- it will be in this quarter only. It will be consumed and sold.

Okay. Sir, and how was the price passed on across majority of our top 5 products?

In herbicides category, we could not pass on the price rise fully.

And in the other categories, price rise was possible to full extent?

To majority of the extent, we have been able to pass on in other categories. But in herbicides, we could not pass on the -- we could partially pass on the raw material increase.

Okay. And sir, what was the utilization for the current quarter?

It was 78% on Technical products.

And what would be the approximate volume growth in the coming quarters?

Volume growth by around 32%, and value-wise, it is around 39%.

[Operator Instructions] We have the next question from the line of Rahul Jain from Credence Wealth.

Am I audible?

Yes, we can hear you.

Sir, with regards to the gross margin, earlier, we have always maintained that our gross margins will remain at around 50% plus. Including, you had mentioned in earlier calls, the new molecules, the new products which we are adding, we will have -- we will all have a 50% plus gross margins. Last 2 quarters, we have seen, for the first time, after almost 4 or 5 quarters, when the margins -- gross margin fell from -- fell below 50%. In first quarter, it was around 48.5%, and in the current quarter, it is around 43%. So in medium to long term, say, next 1, 2, 3 years, how do we look at our gross margins?

We are expecting our gross margin to stabilize around 50%.

So -- okay. And that could happen in, say, next 2, 3 quarters?

Yes. This quarter, it will -- it may not happen since we are carrying a high price in raw material and other inventory. But next quarter onward, we are quite hopeful.

Okay. And in terms of gross margins, can we assume that the 43% could be among the worst margins, which is possible, so from here on, you may see some improvement or maybe stable gross margins for next 1 or 2 quarters but not further deterioration?

Further deterioration will not be there, but it will improve gradually in next 2 quarters.

Sure. And sir, with regards to the CapEx part, so in the current year till date, how much we have spent, we were expecting to spend around INR 70 crores in the current year on our existing premises and around INR 20 crores for the Hamirpur facility in the current year. So till now, how much has been spent and...

Yes, we spent INR 35 crores in half year, first half.

Do you expect further INR 35 crores will come in the second half?

Yes, yes, yes.

Sure. And in Hamirpur, do we expect to spend some CapEx in the current year given the current situation at which we have already got the EAC approval?

We have spent some money on land. And as soon as we receive the approval, I think, in the last -- first -- fourth quarter of current year, so we will be spending more on our budgeted INR 20 crores to spend INR 20 crores.

Sure. Sir, last -- in the last quarter, we had mentioned about utilizations at around 80%. And current quarter, you mentioned to the previous participant, we are at around 78%. And we have had almost 30% volume growth. So I'm just a bit confused in the 3 things put together because there is no capacity increase in this current quarter, right?

Yes, there has been no capacity increase.

Okay. Sir, I'm not able to understand in spite of a volume growth of 30%, our capacity utilization remains almost the same.

In some products, seasonality is involved. Actually, we have commissioned new products for which the season starts from the fourth quarter to first quarter of next year. So some products, they are seasonal in nature for domestic market.

Sure. Sir, one last question. So we continue with regards to the new products which we have introduced. You expect further 2 molecules to be introduced in the second half. So these 8 molecules, they will all be around 50% plus gross margins, number one. And number two, what could be the contribution from these products in, say, FY '24?

Sir, we would be adding these 2 new products during the remaining period of this year. And the overall revenue, we expect to be almost about 2.5x asset turnover, what we are expecting. And we have done the CapEx of about INR 70 crores last year, and INR 70 crores this year, we will be doing. So we can expect accordingly revenue increase next year compared to last year based on that.

So next year, we could -- we are well on course to achieve our stated INR 1,000-plus crores of top line?

Yes, certainly.

We have the next question from the line of Ayush Mittal from Mittal Analytics.

First of all, congratulations on the growth in business. Sir, I have 2 questions, sir. One, when we see the balance sheet, we are seeing a consistent increase in the inventory levels, inventory value. Can you share what is happening on this front and why?

Ayush Ji, there are few reasons. One important reason is we have purchased a lot of inventory in Q1 in -- there was a lot of disruption in logistics and due to our raw material prices were increasing. So we have contracted a lot of inventory for our production, high-cost inventory. Secondly, in last quarter, we have started one herbicide, which will be used in fourth quarter of current year and first quarter of next year. So we are building up stock of that herbicide since it is a big herbicide in India. So the inventory has already started declining. In October and November, inventory in absolute number has declined.

Okay. Okay. So they should come back to your normal levels of like usual -- I think inventory they used to be 70, 80. I think that is the level you will bring it down to. Or this will remain elevated?

By March, I think it will be at that level only.

Okay. Okay. Sir, second, on these new products that we have been introducing, do we have any metrics by which you can share how much of contribution these new products are contributing in absolute -- in overall revenues or what is the progress on the same, something on those insights from these new products?

Around this quarter, new products have contributed INR 30 crores of revenue.

INR 30 crores, okay. That's very good. So for this year, these new products will be doing more than INR 100 crores?

Around INR 100 crores. Already, we have achieved INR 52 crores of turnover.

That would be more than INR 100 crores what we anticipate, Mittal Ji. But we want to be very conservative.

Okay. And sir, there's some more capacity addition that we'll be doing in Sandila?

Two more blocks, they are coming up. One block will be operational by November end. And another block will be operational by -- in fourth quarter. That will be for intermediate. And this one block that is expected to commission in this November, it is herbicide, and it's intermediates.

Okay. Great, sir. So hopefully, in FY '24, can we expect that, from Sandila, we can grow beyond INR 1,100 crores to maybe closer -- more than that once all these projects come online and they get stabilized?

Sir, last year, our revenue was INR 650 crores. And after that, we started on the journey of adding these 8 products, wherein we have added INR 70 crores plus INR 70 crores, INR 140 crores of CapEx. And we expect an asset turnover of at least 2.5x. So we can expect the turnover to be in that range, so the INR 140 crores, the 2.5 plus INR 650 crores. So it will be INR 1,000-plus crores this year-end. And next year, FY '24, it will be certainly more because at that time all the units will be in operation.

We have the next question from the line of Rohit Nagraj from Centrum Broking.

Sir, we have done a commendable volume growth during the quarter and first half. Did we see any demand side challenges from, say, domestic market or export market, given that there has been a lot of issues in the European market, which is going on, plus U.S. has inflationary pressures? So any demand-related setbacks that we are currently facing or any order where postponements or cancellations of that sort any happening?

Sir, we have not yet received any cancellation of orders up till now anything. But there are some challenges in Europe because Europe this year has been very dry. But now people are planning for the next year. So we have not received any cancellation of the order. And on domestic front, there has been erratic monsoon all across India. And that has resulted in somewhat different utilization of our capacities at different -- in different regions. And these have slightly affected us in a few of the molecules in the domestic sale. But internationally, we have not found any challenge until now. Even the Ukraine-russia war because we don't have a serious business in Russia or Ukraine, so there is not much of effect at all.

Right, sir. Got it. Sir, second question is in terms of the price pass-on. So are we facing challenges in terms of completely passing on the prices in the domestic market or international market or it is equally across both the markets?

Sir, passing on -- passing of the increase in prices, that is always a difficult task because the customer, they also have their own limitations. And though we have good discussions and then at least partial increase, we are able to effectively do, but some costs, no, we could not pass on, especially the energy cost, et cetera. And as informed by Mr. Gupta, in one of our herbicide products, we could not pass the full increase because considering the long-term relationship with the customer and we hope that we will get compensated in future for that.

All right, sir. Sir, last question on the projects which are currently ongoing. So are we facing any delays from the project commissioning or everything is on track and will be commissioned as per the time line so that our future growth will not get hampered?

They are more or less in the same time line is on track, except there is slight delay in commissioning one of our herbicide plant, which we expected to commission in September and October, which is going this year because this month, it will be commissioned. That was because of one of the critical equipment we got at very delayed time. That was the problem because it is a very special equipment requiring Hastelloy lining, et cetera. So that took a little more time for us to decide and to procure that equipment. But now that equipment is in place and all the raw materials have been already ordered, which are expected to be received by next week, so we would be commissioning this plant by end of November or first week of December. But otherwise, all other projects are on schedule.

We have the next question from the line of Rohan Gupta from Nuvama.

Sir, first question is on the current capacity utilization. Sir, if you can just give some number, what is the current utilization rate?

It's around 77%, 78%.

Okay. And sir, we have plans close to INR 70 crores more CapEx with the 3,000 tonnes addition -- 4,000 tonnes, I think, additional capacity, right? That takes our total technical capacity to close to 28,000 tonnes or...

27,500 tonnes.

Right. So on this -- the new plant also, the new product also which you mentioned on the herbicide product, which has been launched in this current year with the INR 100 crores turnover. On that, sir, if you can just give some more clarity, what is this product and whether it's export market and how much potential you see going forward on this?

Sir, this product is a herbicide, mostly used on rice, and majority, it will be sold in India. It is for the domestic sale, and it is a very big product in India. And we are already commissioned this plant, and we are producing this product regularly. As Mr. Gupta has told now the season starts late fourth -- third quarter, and it continues to the fourth and first quarter of the next year. That is a major season for this herbicide. So we are stocking this product presently. And we hope that we would be able to get more than INR 100 crores revenue from this product when it goes full capacity.

Is this a 9(3) registration? Or the product has already been there in the market and [ herbi, too ]?

No, no. The entire product has been in the market. Product has been in the market, and it is there since quite some time. It is not 9(3), but majority of the intermediate has been imported up till now. But we have started making this intermediate also in our plant. That is the backward integration of what we told now that this intermediate is a very critical intermediate and -- which has more than 90% was being imported up till now. So that import will get reduced. And we -- having backward integrated our system, we would be in a better position to compete in the market.

Right, sir. Sir, in terms of our backward integration, you mentioned that roughly out of the 14 products, roughly 5, you are fully backward integrated and balance 9, you still are import-dependent up to the extent of 35%. How do you see that, in this balance product also, we can be backward integrated in what time frame? And what can be the investment requirement for that? And will it enhance our margin further?

Sir, we are trying our best to reduce the dependence on imports. But still, there are a few products and few intermediate, which nobody is making in India and which needed to be imported. And we are trying to reduce this dependence by developing technologies for these intermediates also. So the one we've already done in other products, we are doing. The plant is under erection. Similarly, we are working on 2 more intermediates which can be used here itself rather than importing.

[Operator Instructions] We have the next question from the line of [ Jay Shah ] from [ Capital CMS ].

Congratulations, sir, for a good set of numbers. Sir, my question is more on the broader side because of these prices in Europe and because agrochemical demand is also increasing. Are we getting inquiries from export markets more for contract manufacturing or CDMO kind of inquiries or even you don't do white labeling from them? Is there any kind of savings that we are seeing on that front? And...

We are getting a lot of inquiries from overseas with multinationals, and they keep coming to us, and they keep on asking new products. And we have regular discussions with them. And we are open to any contract manufacturing also if they require. There is no doubt about it. And we are in discussion with many multinationals on this account. And we have identified few products with them, and we are already working on those products, which we will be implementing at our Hamirpur site.

Okay. That's great to hear. And sir, secondly, from the new products that we'll be introducing over the next few quarters, are they majorly going to be domestic-focused? Or it has a good split between export-regulated market and the domestic market?

One of the products, which will be commissioning this month end and early next month, it will be completely for export. And the one intermediate what we will be making, that would be mostly for indigenous requirements.

Sir, on the export side, could you throw some light, what kind of market cap would that product have? I mean what is the total requirement that's there?

Sir, we are putting up a plant, which can give us a revenue of initial next year, at least INR 50 crores to INR 60 crores. And when we get full utilization of the plant, it can give revenue of almost about INR 100 crores. And this is also a herbicide, which is registered in Europe and U.S.A., et cetera. And we are already registering our products there.

Okay. So sir, going ahead for the next, say, 2 to 3 years, will it be fair to assume that the next leg of growth will come more from the Technicals and herbicide and led from the Formulation? Would formulation, as a percentage of total revenue, be stable or flat or probably decreased because...

No, the percentage of Formulation would also increase in line with our increase in Technicals because the Technicals what we make now that will be used for our Formulation, we are trying to expand the basket of our formulated products. So the growth expected in the Formulation business is also similar to our Technical growth. So the ratio will remain more or less the same.

We have the next question from the line of [ Hemanth ] from [ Navig Data ].

I just have a couple of questions, sir. One is like this quarter, we have done good sales that has increased. Is it due to exports or domestic? I just want to understand a little bit about the mix of export versus domestic this quarter and what is projected, sir. Do we expect growth coming from exports or domestic growth?

This quarter, our export has grown by 56%, and domestic, it has grown by 28%. So more on domestic front -- sorry, more on export front.

Okay. And sir, what would the future hold like, let's say, 1 year from now, is that ratio -- what is like export versus domestic this quarter or this year? Would that hold? Or do we have any specific focus on export or domestic? Just want to understand that.

We are projecting around 50% from export and 50% from domestic in medium range.

Okay. Okay. Sir, that was first. Second question, sir, I have is like this quarter, we have our cost of goods sold increase rate. I just want to understand, is it due to the imported raw material or domestic raw material growth? Is it like, across the board, the raw materials prices have increase? Any specific price, which is probably imported- or domestic-specific item for which the prices have increased?

It is for both the imported and as well as for domestic for both the raw material. Price rise was all across the different raw material.

We have the next station from the line of Satish Kumar from SK Investments.

Sir, in the opening remarks, you have mentioned the environmental meeting is expected to happen tomorrow. And in the investor presentation, you have mentioned that you are confident of commissioning the Hamirpur plant by Q4 FY '24. So one question is, are you confident of getting this approval by this quarter? And once you get that, are you confident of commissioning? Because you had mentioned you will do it in block-wise commissioning of the plant at Hamirpur. So you would be able to start the first block before Q4 of next year?

Yes. Sir, if we get the clearance in tomorrow's meeting, then certainly, we should be able to start something by quarter 4 '24 because we feel that it will take almost about a year for us to put up the infrastructure and 1 or 2 manufacturing blocks. And then we will be adding block-wise every year. And tomorrow is the meeting, and let us see if they -- if we don't get any serious questions, then we should get it cleared. So that is what we are hoping. If we are stuck up here, then probably it will get slightly delayed. But if we are able to clear that, then we are quite hopeful that in third quarter, last quarter of FY '24, we should be able to produce something. [ We have already ] line of few products, where the products are already there in the design stage.

I know. Sir, in case if this doesn't get through in the tomorrow meeting, how often these meetings happen, once in a month or once in a quarter, sir?

No, the meetings happen every month. Meetings happen every month, but they would be requiring some clarifications or some additional work or some additional calculations need to be done or something to be done. So that requires some time, again, to resubmit the modified thing, whatever additional information they ask for. So if that we are able to do immediately, then probably it can come up in the next month or so.

Okay. Fair enough, sir. Sir, my second question is the CapEx that you are doing at Sandila around 4,000 metric tons for the remaining 6 months of this year, after -- my first question is, one is, can we expand -- further expand after this expensed the CapEx or there is no more space there?

Sir, there is no more space, maybe a very small plant here and there, INR 5 crores, INR 10 crores, that could be added but not much because the site is more or less full now. And we don't want to get too much congested here again from the safety reasons. We want it to be a relatively very safe plant and with a reasonable spaces between the different production grounds.

Okay. Sir, you said one new herbicide during this month or next month and the intermediate next quarter. That new intermediate is for this product only or for any other products that we are already selling?

No, this is for other products, for some other products, not for these products. But this product, which is this herbicide, what we are having, it is already from a backward-integrated plant we are already putting up. We are starting from, again, CS2 and chlorine, et cetera. And this is a 7-, 8-step process. So it is a relatively big plant.

Okay. Sir, with all these CapEx commission, you said that we would have added 6,000 metric tons during the current year, which will take us to 27,500 capacity at Sandila. Correct, sir?

Yes, sir. Yes, sir.

Okay. Sir, my last question is about the launching the new products. So with all this, we would have launched around 8 new products since the IPO. Now whatever the new products, that will entirely depend on the commissioning the Hamirpur plant. Is that assessment is -- I mean, the understanding is correct?

Yes, sir, except maybe some smaller products, which doesn't require a lot of CapEx and requiring very small space, we may add up in Sandila where we already have some registrations. So from that point of view, we may add 1 or 2, but majority of the major products will come at Hamirpur site.

But that smaller products, the volumes may not be that much, correct?

Volumes could be reasonable, sir, at least 400, 500 tonnes. Some special molecules may be requiring very small volume, but they are good margins -- good at margins.

Good at margins. We may [indiscernible] better among [indiscernible].

So if that is the case, if 400 tonnes, how much it can contribute to the revenue, sir?

400 tonnes, it can contribute to the revenue of almost about INR 30 crores.

So why I was asking this is the growth in FY '25 would be solely dependent on the commissioning of Hamirpur plant, no?

FY '25? FY '25 majorly, it will be from Hamirpur site. And the utilization of this existing because now we have added 8 products, they will get established and at the full capacity. So they will also contribute.

So how many new products you are planning to launch at Hamirpur, sir?

Sir, Hamirpur site, we would be launching almost in 4 years, 4 to 5 years, at least 15 products.

These are all new products?

New products. It is new. Some are existing, and some are -- will be new in the sense it will be only for export, which nobody is making in India or very few people are making in India.

But all these products, as you have told us earlier, they will have a 50% gross margin and a minimum 25% EBITDA margins?

That is what we are calculating, sir. Then again it depends on the market scenario at that time. [indiscernible]

Okay. Sir, other than this INR 20 crores, which you may do during the current year, over a period of next or 2 years, how much CapEx is planned for Hamirpur plant?

Sir, we have planned almost about INR 100 crores to INR 125 crores every year for the coming 4 years.

And here also, can we expect an asset turnover of 2.4?

Yes, that is between 2.25 to 2.5.

Okay. And there also, the ramp-up can happen over a period of 1 to 2 years?

Sir, we will be adding, as I said, in block-wise.

I know, sir, as and when you keep adding, can we expect to run over 50% in the first year and maybe 100% in the second year?

Of the total plant?

No, sir. Let us say you add some 2,000-metric-ton capacity in FY '24, that can we expect 50% utilization in FY '25 and 100% in '26? That's what I said.

Yes, yes, yes. You are right.

For a period of 2 years, based on their date of commissioning or year of commissioning, it will take around 18 to 24 months?

Yes, sir. Yes, sir.

That was the last question. I would now like to hand the conference over to Mr. D. K. Jain, CEO, for closing comments.

Thank you, everyone, for your participation. For any further queries or clarifications, please do get in touch with our Investor Relations team. Thank you once again, and have a nice day.

Thank you. And on behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you. Thank you.