India Pesticides Limited (IPL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to India Pesticides Q2 FY '25 Earnings Conference Call hosted by the Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Krushna Parekh from Dolat Capital. Thank you, and over to you, sir.

Thank you, Sheba. Good afternoon, everyone. On behalf of Dolat Capital, I would like to thank the management of India Pesticides Limited for giving us the opportunity to host their Q2 FY '25 Earnings Conference Call. From the management team, we have with us today Mr. Anand Swarup Agarwal, Director; Mr. D.K. Jain, the Chief Executive Officer; and Mr. S.P. Gupta, the 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, Mr. Krushna Parekh. Good afternoon. 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 '25 Earning 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. We continued our growth momentum in the second quarter of FY '25 and achieved a revenue growth of 13.6%, driven by increased volumes. This growth was further supported by favorable agriculture conditions, including above-average monsoon rainfall and higher crop sowing, which positively impacted our demand. Despite global industry challenges, including subdued demand and pricing pressures, we delivered a robust performance marked by significant margin expansion across our key metrics. This improvement in margin highlights the effectiveness of our focus on operational efficiency, high-quality niche products and disciplined cost management, which together enabled us to enhance profitability even in a challenging market environment. Our expansion initiatives are progressing as planned, is strengthening our growth capabilities and advancing infrastructure to support the production of specialty products. Looking ahead, we are focused on growth through expanding our customer base and enhancing our capabilities. Committed to continued R&D and innovation, we are building a robust pipeline of products to beat evolving customer needs and maintain our competitor edge. Driven by our commitment to customer satisfaction, operational excellence and social responsibilities, we are prepared to navigate uncertainties and emerge stronger, backed by unwavering support of our stockholders. Looking ahead at FY '25, we aim to do CapEx of INR 110 crores combining both IPL and SSL, SSL is Shalvis Specialties chemical. Further, we are poised to grow by expanding our customer base and its strengthening capabilities. We are committed to leveraging consistent research and development efforts, driving innovation and seizing new opportunities to fortify our market position. Despite industry challenges, we are confident in navigating them with our robust pipeline of innovative products and increased market presence, ensuring we meet the evolving needs of our customers and maintain our competitive edge. Thank you. Now I will hand over the further presentation to Mr. Jain. Thank you very much.

Thank you, sir. Good afternoon, ladies and gentlemen. Welcome to earnings conference call of India Pesticides for Q2 FY '25. I am pleased to report that India Pesticides Limited has continued its strong trajectory in the second quarter of FY '25. Our total revenue for Q2 reached INR 234 crores, making a 13.6% Y-o-Y increase with sequential growth of 4.5%. This was achieved amidst ongoing global challenges, underscoring our resilience and strategic focus on high-quality products. Our EBITDA grew by 25.2% to INR 39 crores, improving our EBITDA margins to 16.6%. Additionally, our net profit reached INR 26 crores, a 32.9% increase from last year reinforcing the effectiveness of our cost management and operational efficiencies. This quarter, we benefited from favorable agriculture conditions, including higher than average monsoon, and increased crop sowing, which drove demand across our product portfolio. Our margins expanded significantly, a statement to our commitment to operational excellence and disciplined cost management. As we grow, we remain focused on enhancing profitability through innovations in our product lineup and targeted cost optimization. We achieved significant progress in strategic initiatives particularly with the successful commissioning of our intermediate plant a vital step in backward integration for one of our core fungicides. This facility was developed using our indigenous R&D technology, allowing us to reduce reliance on imports and further streamline our supply chain. In alignment with our Make in India vision, this initiative strengthens our manufacturing independence and supports domestic growth. Our capacity expansion plans are on track with a total planned CapEx of INR 110 crores for FY '25. This investment will boost our infrastructure, particularly at our Sandila and Hamirpur facilities. We are enhancing capacity utilization and advancing production capability for specialty products. Additionally, the expansion of our customer base continues with a growing presence in regulated markets and over 25 countries worldwide. Our robust R&D capabilities remain a cornerstone for our success. We are continuously expanding our product portfolio to meet evolving market demands and reinforce our position as a leader in agrochemical technical manufacturing. Sustainability is a guiding principle at IPL. Through our ESG initiatives, we have made strides in waste management and promoting renewable energy solutions in local communities. We are also dedicated to supporting the farming community through skill development and knowledge sharing programs contributing to the growth of Indian agriculture. I extend my heartfelt gratitude to our dedicated team for their hard work and to our valued stakeholders for their unwavering trust and support. As we move forward, we are committed to maintaining our growth momentum fostering innovation and creating sustainable value for all our stakeholders. Together, we will be -- we will continue to navigate challenges and seize the opportunities that lie ahead. With this, I would like [ to pass on to Mr. S.P. Gupta ], CFO, to walk us through our Q2 FY '25 financial highlights. Thank you.

Thank you, sir. Good afternoon, ladies and gentlemen, and thank you for joining the India Pesticides conference call to discuss Q2 and H1 FY '25 results. Taking you through the financial highlights for the quarter. Total revenue for Q2 FY '25 was INR 234 crores as compared to INR 206 crores in Q2 FY '24, showing an increase of 14% on Y-o-Y and 5% on Q-on-Q. We registered quarterly EBITDA of INR 39 crores with 17% EBITDA margin as compared to 15% EBITDA achieved in the same period last year. Net profit for the quarter stood at INR 26 crores an increase of 32% on Y-o-Y. On geographical split, domestic market contributed INR 155 crores, and export contribution was INR 74 crores to the revenue. Domestic market is in good shape, primarily driven by good sowing of crop in kharif season. Technical and formulations sales for Q2 FY '25 is INR 131 crores and INR 98 crores, respectively. Now moving on to half yearly performance. Revenue for H1 FY '25 stood at INR 458 crores an increase of 11%. Revenue from domestic market was INR 297 crore and export revenue was INR 151 crores. EBITDA in H1 FY '25 stood at INR 71 crores as compared to INR 57 crores achieved in the same period last year. EBITDA increased due to higher gross profit achieved on account of improved efficiency and stable raw material prices. Company is planning to fund this CapEx plan with internal accruals and during H1 FY '25 company incurred CapEx of INR 20 crores. Our cash and cash equivalent at the end of Q2 was INR 127 crores. With this, we would be happy to take your questions. Thank you.

[Operator Instructions] We have first question from the line of Ankit Gupta from Bamboo Capital.

When we look at the performance of the technical segment, it seems that our revenues have declined on a Y-o-Y basis. Sir, if you -- I think in one of your CNBC interview, you had highlighted that our volume growth...

Ankit-ji your voice is low?

Sure, I'll be a bit louder. Am I audible now?

Yes, yes.

Yes. So if we look at the performance of the technical segment of the company, it seems that there has been a Y-o-Y decline in the revenues. So if you can comment on the overall situation on the technical side. Even in our CNBC interview you highlighted that our volumes have grown by 35%. So if you can bifurcate it between formulation and the technical sales volume, that will be helpful. So that was my first question.

The formulation volume, they have increased by around 40% and technical volume they have grown slightly less. Our local turnover -- domestic as well as export turnover has increased from last year.

There is no decline.

So there is no decline as such in this quarter as compared to Q2 last year.

I think we have reported around technical sales of INR 137 crores in Q2 of this year. How much was it in Q2 of last year?

Last year it was around INR 139 crores.

So almost some -- almost flat is what we can say.

Yes flat, but it has not declined.

Okay. Okay. So how much -- like volume growth is how much in technical?

The volume growth in technical will be around 30%.

Sure. Sure. So there has been a significant decline in the prices?

Prices have declined on an average -- on blended basis, around 19% to 20%.

Sure. Okay. Okay. Sir, if you can talk about how is the situation currently in our key geographies in exports? And also, if you can talk about the pricing pressure that we see, like as you were saying that the price decline continues, are we near to the end of the price decline or the pricing pressure from China continues even in this quarter?

Pricing pressure from China still continues because they are trying to dump the material as much as possible at unreasonable prices. But we see -- we are also well equipped now to take on the Chinese competition. We are working continuously on innovation of our products to reduce the overall cost. That is why we are able to maintain and there this is almost 30% growth in the volume of technical because of these efforts. And this we will continue to do.

And how is the demand scenario in our key markets?

Key market demands are -- demand is there. Of course, for some products, seasonal demand would be there. And for some products, the demand is quite good.

Okay. And how is the -- how has been our performance in some of our key products like Captan, Folpet and all if you can talk about it? Have we seen growth there also?

Captan, we are doing reasonably good and Folpet also going as per our planned production capacities.

Okay. So the earlier -- like I think both these products have very limited competition. Even from China, I think there was not much competition in this product. So has there been some new entrant in China, which has also started manufacturing these products?

That's what we keep on hearing that some new companies has also started but their presence is not significant.

Okay. So -- and how much has been a decline in some of the...

So China it is slightly confusing. Many a times there could be a trader, which -- it becomes very difficult to understand whether he is a real manufacturer or not. But we keep on hearing that though, but they are not very critical.

So how much has been the decline in prices of these products, Captan, Folpet and other top products?

They have also declined sir almost 15%. But similarly there has been reduction in the raw material prices also.

Sure. Okay. Okay. And sir, post Hamirpur, as you have said in your CNBC interview that Hamirpur plant will commence operations in Q1 FY '26. So post it starts operation, how much revenue can we expect that full utilization from our existing facility and Hamirpur coming in, like what -- let's say, optimal capacity utilization of 80%, 85%. If the prices of the technicals don't increase from here on and remain at this level?

Yes. See, our revenues from our existing plant, we expect an increase of about 15% to 20%. And from our Hamirpur facility next year, we feel that we should be able to get around INR 50 crores, INR 60 crores because one product we will be starting in first quarter of FY '26. And second product will be in the next quarter. So second product revenues will not be full, but first product revenue, I think we should be able to get in next year FY '26.

Okay. And at full capacity utilization, let's say, if not '26, '27 or '28, how much can the Hamirpur plant contribute to -- like how much revenue can you generate?

Ultimately we would be spending another INR 200 crores, INR 300 crores in our Hamirpur facility because we will be building the facility block by block. So we -- initially, we have planned 2 blocks, similarly, we will be keep on adding. And we feel that we should be -- there is a scope of adding almost 9, 10 -- 10, 11 blocks. So the total capacity maybe after 3 years or 4 years, we should be able to generate almost about INR 700 crores, INR 800 crores. But that is at the full -- when it gets full.

Sure, sure. Got it. Any plans to start construction of third and fourth block in Hamirpur or will first stabilize this 2 blocks and then move on to construction of the other blocks?

Sir, because we are planning all these expansions through our internal accruals. So we have planned 2, 3 blocks per year. So now presently, we have finalized 2 blocks. One block is in very advanced stage of completion, which will take another 3, 4 months because we already ordered the equipment, some equipment have already been received at the site. And the infrastructure work is going on there. So we expect it to be commissioned in the first week or first quarter of FY '26. And the next block would be commissioned in the second quarter of next year. And then by that time then we will finalize some more and then try to start work on there because we have our own R&D. So we would be -- our R&D work has already been done. The pilot plant work is going on. And our design team is -- the project engineering team is ready. So it will go to the project engineering, that would take 2, 3 months to design the plant and then we go on the floor.

Sure. And sir, last question on the formulation side. We've seen a very good jump in the formulation revenue in this quarter. So if you can talk about like, we have also seen a lot of other formulation companies doing well. So if you can first talk about the industry, how the formulation industry is doing? And secondly, for us, our formulation revenues have seen a very significant jump in the first half of this year. So how do you see growth for this year and next year in the formulation segment?

Formulation growth also would be, sir, similar at least 20% per year. And India has been growing almost 9% to 10% per year overall consumption because India at present consumes very small amount of agro chemicals per hectare. So there is a lot of scope now as the farmers are getting more informed about the proper use of these chemicals, the overall usage will increase. So we feel formulation business will increase at least 10% per year overall in India. And we keep on adding more products to our portfolio, and we plan to have more than 20% increase every year.

Sure. But sir -- any if you can talk about are we expanding our field force and entering new geographies. I think like we -- and we are expanding our product basket, if we can talk about that on the formulation front.

No, sir, presently, we are present in 15 states. We are expanding our footprint to other states also. And we are adding more products because the -- our technical manufacturing of the recent past has been slightly domestic oriented. So we are trying to get a big volume in the technicals of what we produce.

We have next question from the line of Pradeep Rawat from Yogya Capital.

So I have first question regarding the pricing trend. So can you just highlight on the pricing trend from the first quarter to second quarter?

From first quarter, prices had declined nominally. First quarter also there was a decline as compared to first quarter of last year. They have declined slightly. But raw material cost has also declined on a similar range.

Okay. And sir, post-second quarter, what has been the raw material and selling prices trend?

They are on the similar level. What was prevailing at the end of second quarter, they have stabilized, raw material as well as finished goods prices.

Okay. And can you also highlight on what is the current inventory days?

Current inventory days is around 150. Inventory level are slightly higher. Since we have decided to build up stocks of few herbicide technical to be sold in next kharif season.

Okay. Understood. And can you highlight what could be the...

Sorry for interruption. I would request you to rejoin the queue for a follow-up question as we have more participants. We will take next question from the line of Dhwanil Desai from Turtle Capital.

Am I audible.

Yes, sir.

Sir, my first question is, we've seen a very decent improvement in gross margin this quarter Q-o-Q. So is this because of the increased formulation component or is it because of the raw material prices have come down or the product mix, if you can give some sense to that? And whether going forward for the next half, how should we look at the gross margin?

Price, the rise in EBITDA margin is because of our improved efficiency and there is no inventory loss. You must be aware last year in this quarter, prices of raw material declined significantly. So we have to take inventory loss. Now we have not taken any inventory loss. Raw material they have stabilized at a lower level and improved scale of operations as well as improved yield, it has contributed to our improved -- this EBITDA level.

Okay. Sir, I was referring to the gross margin, which is our revenue minus the cost of raw material where we have seen significant improvement. So you are saying one part is we have not taken any inventory write-off this quarter or this first half? And anything else that you want to point out to, whether it is the product mix or the formulation has higher gross margin and hence, the contribution of that is higher this quarter. So anything else other than the inventory loss?

Formulation has slightly less gross margin because of this, there is no inventory loss as well as improved efficiency in our technical products. Our R&D is doing a lot of work. We have done some backward integration projects for our technical, this has contributed for improved gross profit.

So how -- so is this number something which we intend to continue to get for next half year if the prices remain at the same level on the technical side? Is that how we should look at it?

Yes, we will -- this will be in the similar range.

Sir, second question is, I think we gave one notification yesterday to the exchanges saying that one of the technical product has got the European approval. So if you can talk a bit about how large this product can be for the Europe market? And any time lines around there? Are we planning to commercialize it from Hamirpur plant or you can commercialize from the existing setup?

We have received the technical equivalents for one of our insecticide. This is a niche insecticide side. And in Europe, it is already registered with other companies also. And we have already producing this product for our domestic consumption. So we would be selling this product to our European customers whenever they require. And the procedure is that after we get the equivalent, we have to give the letter of access and letter of supply to these customers who they will apply in the authorities there, and they will get permission that they can buy from us. So it will take another 2, 3 months of time before they can buy to us.

Okay. And how large that can be for the European market? Or do we already have some soft commitment from customers on that product? Or we still have to kind of push this product to the customer?

We have -- some customers have shown great interest in this product. And they say that they would be buying to us. But the volumes, they are not yet indicated, but maybe during 1 or 2 months, we will be meeting them. So then the total volumes and the price, et cetera, everything will be worked out. But they have already shown commitment that they would be sourcing it from us.

Can you name the product sir?

Pardon.

Can you name the product?

It is insecticide.

It is an insecticide, sir.

We have next question from the line of Viraj from SiMPL.

Just 2 questions. First is on the volume growth in technical. If you can just give some color in terms of the volume trend of old molecule versus the new product scale-up?

Pardon, we could not understand your question, please. Could you repeat, if you don't mind?

Yes. So can you give construct of volume growth in technical or the technical sales, how much of growth coming from old molecules and what kind of growth we are seeing in the new molecules?

Growth in individual molecules.

Old molecule, we have achieved higher growth this time. And even for newer molecule, we have achieved more than 10% growth. But for older molecules, we have achieved slightly higher growth.

Okay. Second question is, if I look at your commentary earlier, you said that the RM prices have kind of stabilized and whatever fall in RM prices we are seeing we have passed on in terms of the end product prices in technical to the market. But when I look in terms of the gross margin or the contribution margin for us, it's still much lower than what is used to before the overall supply impact of the last 1, 1.5 year. So just trying to understand what factors do you think you need to see for the gross margin to normalize?

Sir, the market price -- our selling price is driven by the existing market prices, okay? And if we are able to produce at a lower cost, it will add to our margins better. And what we need -- we have to pass on to the customer, the raw material -- suppose if the raw material costs are reducing, of course, customers are also well aware. Now they are well educated. So they will certainly ask for the reduction in the price. So that we need to do, keeping our margins more or less intact.

No, I understand that. What I'm trying to ask is -- so last 1, 1.5 year, we would have seen an impact of inventory provision, sales return and whatnot. But all of those impacts are now behind us. Now we are seeing an environment where the RM is low and RM prices are stable. And whatever gain we are earning in terms of the lower RM prices, we are sharing with the end customer. But the spread, which we used to earn on products earlier, it seems you are no longer earning that spread despite a stable RM environment. So just trying to understand what factors do you need to see for it to normalize?

Actually, the demand in -- firstly, the demand in the export market has declined. Our share in export was around 50%, now it has come down to, say, 37%, 38%. And there has been excess supply from some countries. So the pricing environment in international market it's slightly subdued. So this has resulted in overall gross profit margin reduction across the industry. It is not our company, it is across the industries. In export market, there is excess supply from some countries and inventory levels were also higher there. So there is a demand and pricing environment is subdued there.

Okay. And going forward, in terms of the major molecules for us, if you can give some more color which molecules we are seeing some recovery either in terms of prices and demand and where -- in which molecules you see the pain still lasting?

Our main molecules, technical molecules are under herbicide and fungicide. Both are seeing -- mainly they are seeing a good volume recovery. Pricing, which we have already told you, there is decline across the molecule and even raw material prices, they have also declined.

We will take next question from the line of Damodar Baliga from DB Investments.

Am I audible.

Yes, sir, you are audible.

Sir, first thing, I want some clarification on Hamirpur plant. One, you said you're planning to add 2 blocks will get commissioned next financial year and keep on adding 2 blocks every year. So my first question is what would be the capacity of each of this block?

Sir, each of the block will have a particular product -- with some particular product in mind, we would be putting the block. And the capacity will depend upon the size of the product. For example, the first block, what we are constructing now, it is 300 tonnes per annum capacity. And similarly, second block is also 300 tonnes per annum capacity. So that depends upon the product what we choose and how much volume we feel that we should be able to sell in the market depending upon the overall market size of the product.

Okay. So based on the whatever the current land that you have, can we put only 10 to 11 blocks only or can we add more there in future if it is required?

Yes. I think 10 to 12 blocks could easily be accommodated there because the land is almost 25 acres of land. And so 33% we have to leave for green field because the government regulation is there, 33% there should be greenery in the plant. So what we get is actually 67% of the actual area. And in that, because we would be constructing plant for herbicide as well as fungicide. So they need proper separation because herbicides the contamination should not be there from herbicide to fungicide or insecticides. So like that, we have to plan, and we feel 10 to 12 can be easily accommodated. If there will be space left, then we can add a little -- some more also.

But in future, let's say, down the line after 3, 4 years, in case if the land additional required that is available readily there?

Additional land is available in that area because that is an industrial area, additional land should be available. In the existing site in Sandila, for example, our adjacent land was available, so we readily bought that. That is just 2.5 acres of land, but that is quite useful to us in our existing Sandila plant.

Okay. Sir, the -- whatever the product that we are going to launch, let's say, you're saying it will be block wise, is it multipurpose plant? Or is it a product exclusive these blocks would be?

Primarily, we construct these blocks for a particular product but they are fungible. Support, for example, if we are not able to sell the product or there is some problem in the product, it gets banned or something then we can switch over to another product. But normally we avoid making two products in the same -- in the same equipment because of contamination issues. It requires a lot of energy and effort to decontaminate the plant from one product to another product.

Okay. Sir, in the last call, you had said one product you don't require the registration whereas for the other product you have already applied for it and waiting for the registration. So has these registrations have already come?

This is for our existing facility at Sandila. We already received the registration of that molecule, already received.

For Hamirpur, I'm asking for whatever the two products you are planning for next financial year, we have received the registration?

One product we have already received and another product is only for export, that registration also we have received.

So there will not be any more constraints to commercialize them during the next financial year?

Yes, sir. Yes, yes, yes.

Sir, for this Hamirpur total, what is the total capacity for which we have received the EC approval, sir?

EC approval, what we have received is almost about 30,000 tonnes per annum.

So that means for future growth, there is no need to go back to EC for any approvals, right?

No, no, no, there is no need. There is no need to go back to EC approval. We have had a very wide range of products included in the EC. So that should work. But if we decide to go for production of some other molecules, apart from this list what we already submitted then we need to go to our local pollution people, and we have to just certify that there is no increase in the pollution load, and we are just changing the product mix. So they give us the approval.

Fair enough. Sir, my second question is regarding, I think, some 6 months back or so...

Damodar sir, you can rejoin the queue for follow-up question.

Madam this is my second question. Can I just complete this?

Okay.

Sir, there was a discussion with Japanese company for some tie-up or so. So thereafter, nothing we have heard, if you could give us the latest status of that?

No that is already there, sir. We have already signed an agreement. And they will be buying the product from us. And they would be buying every year maybe in January, February, I think. So they should come now. We have already scheduled a meeting this month with them.

Okay. So how much revenue we can expect sir?

Revenue is not very big sir. I think it is about -- overall revenue would be around INR 20 crores.

But can we expect some more tie-ups?

Once we start working with the Japanese company, they have confidence in us. There is always a future possibility of more number of products, and there is a very good scope because that company is a very big company. So we expect good volumes and good products from them in the coming future.

And the EBITDA margin should be in the range of 20% or so?

Margin would be sir, slightly better than these.

It is better than 20%?

Yes.

We will take next question from the line of Pradeep Rawat from Yogya Capital.

Regarding my earlier question, you said that our inventory days are near 150 days. So going forward, what kind of normalized inventory day are we assuming?

They will be in the range of 125 to 130 days by March.

Yes. So in earlier years, like in 2020 and pre-COVID years, we have an inventory day of below 80 days. So what could be the reason that we are having a normalized inventory day of 120 and 130 now as compared to 80 days earlier?

Earlier our pre-corporate days contribution for technical was around 80%. Now it has come down to 68% to 69%. And we have also introduced many products, seasonal products for local market. The local market season is slightly small. In export markets, we have -- we are exporting to geographies across the world. So entire year, we used to export. Now the export turnover has declined and our product mix has changed. So we keep -- we have to keep inventory level high to meet seasonal demand of these new products.

Yes, sure. Understood. And my second question is regarding the INR 110 crore CapEx that we are projecting for FY '25. So can you segregate that CapEx between Sandila and Hamirpur?

It was INR 50 crores for Sandila and INR 60 crores for Hamirpur projected CapEx.

Yes. And what CapEx we did for both the blocks for Hamirpur?

We have incurred only INR 15 crores up to September. But in the second half, we will be incurring more since the equipment will be reaching our site.

Yes. So what would be the total CapEx for both the blocks?

Both the blocks. See the total CapEx would be -- both the block would be around INR 40 crores, INR 42 crores. And around INR 25 crores to INR 30 crores we have spent already on the infrastructure.

Okay. Understood. And what would be the revenue potential from both blocks?

The revenue position from both the blocks would be around INR 70 crores, INR 80 crores.

The management will be taking one last follow-up question from Damodar Baliga from DB Investment.

Sir, the INR 70 crores, INR 80 crores revenues that you are saying is for Hamirpur plant 2 blocks, no?

Yes. Yes, sir. Yes.

Okay. Fine. Now the next question I have is about the Sandila plant. One is we had acquired a small plot of land there. I think 1 or 2 acres.

Yes.

Now after completion of whatever the intermediates that you are planning, would you have some more spare capacity or it is all completely utilized?

No, we will have some more space available, which we will be utilizing for expanding our formulation setup. Because formulation is slightly growing, we need some more space for formulation because it requires lot of space, packing and so many storage areas and different type of formulations are there. So we are trying to expand our formulation set up a bit in Sandila.

So now taking into account this new capacity also, so what would be the total capacity of the Sandila plant now?

Yes, Sandila, our capacity for technical is around 20,000 tonnes, 22,000 tonnes per annum and formulation will be increasing there. So that work is still going on, so exact capacity, our formulation team would be able to tell us exactly that number, we have not yet finalized.

Okay. But what is the current capacity of the formulation?

But we have given that area for formulation expansion.

I agree. What is the current capacity of formulation there?

Around 3,000 tonnes is there, and we will be expanding by, say, around 2,000 tonnes this year.

Okay. This 22,000 of the technical, what is the capacity utilization?

Around this capacity utilization will be around 60% to 65%.

Okay. So that means when it is run at full utilization, peak utilization, how much revenue, I think sir has mentioned I could not hear properly. How much revenue it can generate only Sandila plant technical, sir?

Our existing plant can generate revenue of INR 1,100 crores, including formulation.

Including formulation, but you're excluding the new capacity that you're planning?

Correct. Yes.

Okay. Sir, my last question is yesterday in the CNBC interview, it was mentioned that there was a drop in prices by more than 25%, is it Y-o-Y or quarter-on-quarter?

It is Y-o-Y. Y-o-Y there has been drop in the prices.

So there is no -- you're not holding high-priced inventory as on date?

No, no, no. No inventory. No high-priced inventory.

Yes, we are not holding them.

Now sir given 18% to 20% EBITDA margin for H2. So what gives you the confidence to achieve a higher margins in the second half, sir?

As I explained even on CNBC yesterday, that we are focusing now on our process optimization. And that work our R&D team is doing continuously day in and day out. And we have achieved some success during this quarter. And in the coming quarters also, we expect more news from them, that will give us a little more margins.

Okay, sir. And lastly, sir, any CapEx finalized for FY '26?

And if all the prices remain same.

Sir, any CapEx finalized for '26?

Damodar sir, I would request you to connect off-line for more questions. We will take that as a last question for today. I now hand over the conference to management for closing comments.

Thank you. Thank you, everyone, for their participation. For any further queries or clarification, please get in touch with our Investor Relations team. And they can contact us again. Thank you very much, and have a nice day.

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

Thank you.