Insecticides (India) Limited (532851) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Insecticides (India) Limited Q2 FY '22 Earnings Conference Call hosted by Asian Market Securities Limited. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Saurabh Kapadia from Asian Market Securities. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. On behalf of Asian Market Securities, I would thank you -- on behalf of Asian Market Securities, we welcome you to the Q2 FY '22 Earnings Conference Call of Insecticides (India). We have with us today Mr. Rajesh Aggarwal, Managing Director; and Mr. Shrikant Satwe, International Business Head. We shall start with the opening remarks from the management, and then we will move to Q&A session. I now request Mr. Aggarwal to lead the opening comment.

Thank you. Good afternoon, everybody, and welcome to all the participants. I thank you very much for joining our earnings call. So as you are now aware that this is the COVID time, and the pandemic has created havoc all across the world and the other countries not less actually. So I can say that it has been our journey all through since last 2 years, which has continued also during the first half of this year, actually. And still people are afraid and worried about the COVID pandemic results. So first of all, I will talk about the industry overview. There were heavy rains actually in most parts of the country. Initially, when the rains were required, they were not there. So April particularly, I would like to talk about June and July, June was in Q1 and July was in Q2. Both these months we were very, very aggressive, and we were leading like a good sales in these 2 months. But August sales, generally August, this July or it is almost at par with July, but August and September again fell further because there were heavy rainfalls. There were a flood-like situation particularly in the eastern part of the country and also southern part of the country. So many areas, they had difficult times. So ultimately, the things were very difficult in many parts of the country. Now the economy has started reopening, and we have started looking at the increased demand due to the [ interactive ] scenario, as you are aware, that China has -- like the production has come down in China due to the electrical issues, the coal issues, the phosphorus issues. So there are many issues now. So India sees a lot of international demand, a lot of domestic demand. And I believe that the second half of this year should see a good progress like we see a good international demand as well as domestic demand during this period. Now I'd like to discuss about the company's performance in Q2 and H1. We are pleased to state that there has been a strong second quarter led by integrated growth and pricing revenues. IIL delivered 9.53% PAT, and EBITDA margins grew to 14.4% in the current quarter. The total revenue is INR 443 crores, and the gross revenues and the export has contributed just INR 17.75 crores in this quarter. So we had [ changed ] export orders, and we were prepared also to deliver these export orders. So if we look at the half year, the first half, we would just complete about INR 55 crores?

Yes.

Yes, INR 55 crores in the first half. But I'm very, very confident to cross INR 100 crores very soon because the demand is huge and now the container position is improving. I can say stable, though the container prices are still high, but now at least we are getting the containers. And while we are quite hopeful of getting very good sales in this quarter, actually, particularly in the international market. So the total revenue in the first half has been INR 913.5 crores, and the PAT margin in the first half is INR 8.39 crores with EBITDA margin at INR 12.85 crores. The export, which is INR 56 crores, we have already crossed last year's sales in the month of October itself. And as I told you that we wish to cross INR 100 crores during this quarter itself. And I'm very, very confident that the type of orders we have and the planning we have, we should be able to do it very soon. The top-performing Maharatna products have been [indiscernible] in this quarter 2 because this is the main period where in the [indiscernible] we saw our progress. And the contribution from these Maharatna products in the Q2 had been about INR 370 crores, a little less than that. If I see the sales of insecticide, herbicide, fungicides and biologicals, so the total sale in -- if I look at the brand sales, the total brand sales is about INR 316 crores, out of which INR 189 crores have come from insecticide, about INR 67.5 crores have come from herbicide and about INR 49.5 crores have come from fungicide, and about INR 10 crores -- a little less than INR 10 crores has come from the biologicals. So segment-wise, if I look at my sales, branded sales have contributed a little less than 60% insecticide, herbicide in Q2 contributed 21.34%, fungicide contributed about 15.7%, and biological has contributed 3%-plus. If I look at the regions, then East is about 19% because East had a major offering particularly in the state of Bihar and northeastern states, there is a rail sector, so the demand was very, very low. Similarly, the West also was a bit [indiscernible]. It is also standing at about 22% now. North again, 22%. South has done pretty well despite of the odds, but since they were receiving the containers [ long term ] and they are the happiest when the rains are coming. The South has contributed a whooping 37% in this quarter. Talking about the product launches. So of -- these are the product launches of '21, which have contributed roughly 400 -- INR 40 crores, total INR 40 crores. So the major products here have been [indiscernible], which has contributed roughly INR 5 crores. Dominant has contributed about INR 20 crores in this quarter, and Parati has contributed about INR 11.8 crores. So these are the major contributors. There are another 3, 4 products, but they are minor product section, not the major products. These 4 will be big launches of 2021. Now I'd like to update on that report. The one thing I forgot to mention when I was discussing the product, we have extended our line of Lethal after the ban of Nuvan and Thimet. You are aware that Nuvan and Thimet are one of our biggest brands actually and contributing more than INR 100 crores-plus at the end of the year. So Lethal Gold and Lethal Granules are the 2 products which were launched in the generic segment after the ban of these 2 products. And they have shown very good results actually. And I'll explain those later. But the response which is coming is quite good, and we have been expanding our Lethal range of products and the expectation from this is, again, very, very high. Talking about [indiscernible]. So in FY '22, the total expenses in the expansion have about INR 68 crores. The expansions are aimed to increase the technical [indiscernible] facility, the formulation facility and also the -- like we have expanded in 2 states, Gujarat and Rajasthan. In Rajasthan, we have set up the -- increased the capacity of the technical plant by almost 40%, and we expect to complete this project by December. And January, it should come into production. In Gujarat, we expect to complete our project by March. It is delayed by another 2 months actually, but we are quite confident that we should be able to complete our expansion within this fiscal year, actually. And actually that we have already started producing where we have established the formulation facility. So some -- these expansions are going to help us in launching new products. They're also going to help us in doing the backward integration for some of our technical AI, where we'll reduce our dependence on the international markets and produce the raw materials locally, which will help us both in increasing the top line as we get more market share and increasing the bottom line because we'll make the raw materials in-house, so we get that advantage. So in FY '22, about INR 58 crores is the balance which has to go. And out of this, about INR 24 crores is utilized. I'm sorry, this INR 68 crores was utilized up till the beginning of this fiscal, actually. And in this fiscal, about INR 24 crores is utilized. And so I'd also like to talk about the buyback. So we have completed a buyback of INR 60 crores for which we had launched in the middle of this year actually. So it has been completed successfully. And the same was closed at about INR 50 crores. I don't have the exact number. I believe that you have all the details already, and we just wanted to give a reference that today we have completed this, and there are no debts in the company. Yes, the inventory was high and the season was [ good ]. So due to this, some working capital cycle got increased, due to which we had to utilize the bankers. But as you are aware, quarter 3 is a collection quarter where our sales are less, collections are more. I'm very, very confident. October has been like that. And November and December are, again, going to be like that, and we should again become debt-free very soon with 0 utilization from our bankers by the month of January or February. I would also like to talk about the business outlook. The 2 products were launched in this year, namely Hachiman and Oxim. Oxim is a relatively smaller product and Hachiman being a bigger product. These products are both from the house of Nissan, Nissan Japan, and they have come but they both have the [indiscernible] products developed with collaboration with this, again, Nissan Japan. They are good for soybean and pulses and some other crops. So they did very well. We've got a very small window to market these products, hardly 1 to 2 months actually, but the response which we got were very good actually. And in totality, these orders have contributed roughly a little below than INR 20 crores in this year. And next year, I'm very, very confident it will cross INR 50 crores from this product. And we'll have certain more partners to these products, and they will contribute more sales in this also that I'm quite hopeful. So our strategy is very, very clear, that we keep on introducing the new technologies, new products, bringing these technologies into each of the farmers. So there are 2 ways of bringing this technology. The first way, to collaborate with the Japanese partner and bring the Japanese product. Yes, our Japanese basket is very, very big this year. Again, we are expecting to launch 2 big products from Nissan very soon. The registrations are in the final stages, and they were expected after Diwali. But due to some technical glitches, it's taking a little more time, but we are still hopeful that by the end of this quarter or early January, we should be having both the registrations in our hand. And there will be 2 products which will be coming from Nissan. And there are some registrations which have already clicked for us, which will be -- which are the products developed by our in-house R&D. And they will be manufactured in India for the first time. There will be new generics actually. But again, here, we expect one very big product actually followed by some more products. So there are about 6 to 7 launches which are in queue, which are lined up for next 3 seasons. But as we get the registration and as the plant will be ready, we'll keep on introducing these products. So out of 6, 7 products, I expect that 4 or 5 launches will happen into this year. There will be market testing we'll complete in this year. And next year, we'll be converting it to sales. So that is the advantage that people will be aware about the results of the product, will be aware about the stacking of the product, the response of the product and that the multiplication of sales in the new year, very easy, actually. So we are getting very good response also from the institutional customers of some of the new technologies actually where we'll be signing the deals with some of these Indian distribution companies also. So we see growth from the new products both in the branches as well as the institutions itself. So we are having the patents for all these products, which are the new generation technologies and also for the mixture products which we are making, which are coming as a ready solution to the farmer. And we are also working in the biologicals segment with more and more solutions. So today, if you look at the outlook of Insecticides (India), the less you are working on R&D developing these technologies, we are working in manufacturing by expanding our plant, and we will be finishing the expansion during this quarter -- not quarter, during this fiscal, actually, in full because Rajasthan target is to finish in this quarter; Gujarat, a little delayed, will be completed in this fiscal. And similarly, the [indiscernible] thing will be completed. So we are on expansion part, and we will be launching so many products and [indiscernible] of the products so that the risk of availability, which is there on the generic, the idea is that we slowly keep on shifting our stress from generics to the new-generation molecules and develop these new-generation molecules. So first point is to develop these products to get the registration and then to manufacture. And the second point is to increase the network, to connect with the farmer more and more so that we have a customer to accept these products. So we are working in both directions, and we'll get the response from both sides. And we have one more patent for a mixture product recently, but that product will be coming in the first quarter of next year, so I'll not discuss much about that. But just wanted to intimate that we are continuously applying for patent. We are continuously working for new technology. And the idea is that we'll have the tail cutting for the older generic technologies where we are bringing the new generation solution. So this is the target as a company. Again, I would also like to discuss about the policy changes, particularly about the fraud prevention. So a lot of efforts are being made by the company, where the finance department is working with the sales and marketing teams and also with the network in controlling these operations. At the same time, a lot of focus is being given by the auditor so that all the measures are in place. And we adopt the technology. We are working on new ERP programs like we have recently tried. We are creating the dashboard with Microsoft which provides a lot of information. We are trying to take this -- the information from this dashboard to the last mile, to the distributor, to the lower level sales staff also. So we are working in this direction. So the idea is that there should be more and more transparency and more and more information should be available with the people who are connected with the company so that these can reduce the chances of any type of [indiscernible]. Scope is very, very high because, today, we realized that depending only on one country, will not work out, and they are looking at the alternate sources. And Insecticides (India) has created this goodwill in a big way. Now we will be working this year in about more than 25 countries, and we are going to make more and more partners. Across the world, we are bagging registrations in different countries. So later, if you will have the question, so [ Shrikant ] will be able to give guidance on -- or more details on that. But I can say that internally, we are keeping our target to double our export business in this system. And I'm very, very confident that we'll achieve the target very soon. So our guidance on the -- on this year, I would say that we are going in line. We have achieved more than 98% of this, our budget. The Q2 was relatively tough, but now Q3, the situation is improving. So I don't see any impact on the margins coming because we are increasing in all type of sales, the brand business, the institution business as well as the export business. I see the -- like growth in all the directions. And at the same time, we are incurring the CapEx required, and every CapEx is coming from the internal accruals only. There is no pressure of funds on the company. So we are very well placed that way also. So I can say that we will be -- like you can be quite hopeful about the company, about the performance of the company. The PAT margins and the EBITDA margins have shown some improvement in Q2. And I expect that in the second half of this year, they should be able to show further improvement. There are odds in running of certain products. So we are working, like Thimet and Nuvan, still. Our top line is not impacted. Our bottom line is not impacted. We have taken care of it in full by introducing the newer technology. We are continuously working towards launching these new products. Now the main focus is the 2 we focus, like we bring in the new technologies from Japan, and we bring in the new technologies from our own R&D center, taking the advantage of the government, the team of Made in India with backward integration. And we are trying to make more and more raw materials by ourselves so that we can establish ourselves as a major player for certain key products, actually. And government is also planning for the PLI scheme, which should give a positive advantage to the company -- company's effort of backward integration. So with this, I thank you very much and open the house for discussion and questions.

[Operator Instructions] The first question is from the line of Varshit Shah from Veto Capital.

First of all, Rajesh, congratulations on pulling off of [indiscernible] in the challenging quarter both on exports and domestic [ products ] [indiscernible] that is slightly underperforming [indiscernible]. So first of all, congratulations to you and your team. My first question is, sir, on the gross margin [indiscernible], you alluded in your opening remarks that there has been a ramp-up in some of the product [indiscernible] as well as mark. So is that the major reason for improvement in gross margin both on a Y-o-Y and Q-o-Q basis? That's my first question.

Thank you very much for the positive remarks. Yes, like the product mix is the major issue. They help us in rebuilding the margin. So there have been certain products like, as you know, our superstars have gone, means Thimet and Nuvan used to be INR 100 crore product. Now they are the biggest stress. How do I make the product bigger? So our 3 brands which are in the INR 75 crores range, and there are another 5, 6 brands which we are trying to build up in the INR 50 crores range. And I'm quite happy to tell you that, yes, we are very near to these targets or we have already hit those targets. And we try to like make the bigger brands bigger actually. So we have a clear vision that will focus on certain products which we can make bigger, and there should be products from the new generation actually. And they should have a sustainable growth in future also. And at the same time, we are bringing the newer technologies also, as I told you. So there will be certain big launches in -- like I can foresee about at least 3 to 4 launches, which will be quite big actually.

So that's really helpful. Actually, my second point is that your other expenses and SG&A expenses actually are [indiscernible] Y-o-Y. We have seen that [indiscernible] normalization of expenses because of resumption of specific travel. And your [indiscernible] is actually flat Y-o-Y. So particular reason you want to point out? Or was there any one-off in the base? Or there is some shifting off from Q2 to Q3? Is there something like that?

No, there is nothing like shifting of expenses actually. Yes, this rate and some other things have increased, but the product mix has also changed actually. Product mix plays an important role but I'm selling the cheaper products or the expensive products or the Maharatna, how much share I'm getting from the Maharatna. So we should focus on Maharatna. It's pretty well in Q2, actually, and the response is very, very positive. And Q3 also, we are, I believe, pushing it in the right manner. I mean taking it to the market in the right manner. So I'm quite hopeful actually. And then, of course, the prices have increased a little in this time, so we are trying to rework our prices also, revise the prices and try to like be in line with the market. So the response so far is positive.

So that's helpful. But sir, just to clarify and be slightly deeper on this, so I was referring to the INR 36.5 crores there of underlying saving. Is this same as Y-o-Y, I mean, previously at Q2?

You said INR 36.5 crores in where?

In the other expenses.

Other expense, I don't have the detail handy, but these other expenses are as per the guidelines actually. This is nothing -- some expenses would have come here in the other expenses as per the Ind AS actually. So today, unfortunately, the CFO is not there, so it's [indiscernible], but it's good because [indiscernible] he is getting married. If you want this response, we can submit the response. This is an indirect adjustment, nothing more than that.

Okay, okay. No, it's not a big deal actually [indiscernible]. Just want to understand it. If you allow, I have one more question. So on the CapEx point, can you split the amount of [ cash-in ] between the Chopanki [indiscernible] and the Dahej [indiscernible], if you can explain the CapEx amount within the 2 projects?

Actually, I don't have it handy, but I can say that Chopanki will be about 25%, and Dahej should be about 60%, 65%, 10% should go to SEZ.

Okay. And Dahej [indiscernible], right?

Dahej is not mixed. Dahej, we have 2 different facilities. 10% has gone to SEZ, which is for formulation. But Dahej is technical, it's all technical and reverse engineering. I mean on technical and specialty chemical, no expansion of formulation.

And sir, just a slightly -- I mean the same question. I mean we have some good relationship with [indiscernible] and some of the other [indiscernible]. Any plan for doing content management for some of the molecules, not immediately but [indiscernible] entities, which are able to start because when you buy it, it also allows you to ultimately plan and make more equity. So we have been...

Yes, your assumption is correct. Actually, we have done our expansion keeping those possibilities in mind. So we will be setting up a pilot plant, like 2 pilot plants, separate and small pilot plants and 1 in Rajasthan, 1 in Gujarat, which will be a demonstration plant. And there will be 2 scale-up of plants which will be set up in Dahej, which are also in process along with the other project actually. So we are already working in line with that so that we are able to woo our partners and some other Japanese companies and other international companies for many products. And a lot of products which we'll be making backward integration, so I also target the multinational companies, including the inventors of some of these products which I'll be bringing actually now because it will be competing in terms of quality and will be competing in terms of price, then there is no reason they should not buy from us. So we are already working in that direction. Your [indiscernible] is correct.

[Operator Instructions] Next question is from Saurabh Kapadia from Asian Market Securities.

Yes. Sir, just picking at your guidance for the full year, 10% to 15% growth. So in second half, what makes you confident on which product you believe to drive more [indiscernible]?

I have not given the exact number, but I'm very hopeful, very, very confident, and this will be the general growth actually because I see the demand coming from all the areas. The international market is very, very aggressive. The [indiscernible] business team is aggressive and also the brand. So I see demand everywhere because the inventories were very, very low. They will be in the market probably end of this current season. Because the market was tight, people were not lifting material. But now people have [indiscernible] because you see the prices of everything going up. So whenever there is a high in the prices, so people, when they hear the rumors or they come to know that, yes, the prices are going to up, they try to stock. So everybody has the tendency to stock and everybody is feeling that if they move in buying at this time, then we'll be selling outside. So people are investing. So that is keeping you hopeful but the sales in this second half should be [indiscernible] actually. Then I think this is also good actually because the rates, which have [indiscernible] lost in the current season, the rates are good. And then if I look at the prices, the prices of cotton are all-time high. The prices of [indiscernible] are very good. The prices of some other crops are good actually. And generally, farmer [indiscernible] where we -- it has suffered because they particularly got hit by the bad monsoons actually. So their losses are full, they are in the loss. But in general, farmer is happy with the price of the crop.

Okay. And sir, the second question on the international business. You actually have booths this year. So this geography and specific monetaries, are any new execution that is coming up, which [indiscernible]?

[indiscernible] will be giving to Satwe. But just to inform that, previously, we were focusing entirely on formulations. So -- and we were focusing on Middle East. We were also focusing on African countries and some Asian countries. Now we are increasing our scope, and we have that many registration, and we are increasing our countries. Like just for a reference, last year, the total countries where we did business was about 15%. And this year, these countries are [indiscernible] between 23 and 24. We will be working with 25 customers actually, against about, say, 14, 15 customers last year. So a big change is coming. So I'll give the line to Satwe to throw some more light. Satwe?

Yes. Yes, the international business is primarily driven because of formulation. First of all, there is a very good growth in the cropping area across the world. And that has also actually the good -- generated a good demand across all the major areas. And prominently because of our -- right from the beginning, the focus is on the African market, Asia Pacific area and Middle East market. These 3 areas has actually we established a very good rapport with our customer, and that has paid a very good dividend in this season also. So we have actually developed business in these 3 areas only. And we have a very good order book also in our hand. And hopefully, the container shortage situation is also now steadily improving. So we are expecting this -- the orders in hand where we translate into the actually the commercial success definitely in the next 3 to 4 months of time.

[Operator Instructions] The next question is from the line of Varshit Shah from Veto Capital.

Just one question on the export side. So historically, the [indiscernible] now, I think they are [indiscernible] back some on the export side. One is, of course, some changes. Second is the markets cycle, which is just trying to [indiscernible]. What steps are we doing in the terms of [indiscernible] customer reach so that our exposure [indiscernible] and actually we can build up on this success, which we are witnessing in the current year. If you can just shed some light on the portfolio level and at the customer level what we have done or what we are planning to do in the coming quarter and into next one?

Okay. What the amount is like for me, agrochemical business, we have to plan much in advance, invest there and then there will be registrations. So we had started our export portfolio from Mumbai office 5 years back actually. And we have been continuously investing on registration and providing the data. Today, I have almost more than -- size of more than, I think, about 10 or 11 technicals and more than 3 dozen formulation. So the complete data package are available with us, which we are giving to many countries and many customers who are signing with us. And since the range is quite big, so people are very happy. So we are following it in 2 ways. Number one, we are strengthening our core portfolio by bringing in new products. Second, we are strengthening our capability by backward integrating in our key molecules. The 2 biggest products, which are manufactured as technical as today are [indiscernible]. From there, the backward integration involve the molecules. The idea is that we should be more reliable partner in these 2 products to the international as well as the domestic customers. So we have that focus in mind. So I mean to say that with our product range and services and then plan, this investment has also helped us because now there is a dedicated facility, which is providing the formulation requirements of the customer. And apart from this in Dahej also, I have done a lot of expansion keeping the exports in mind. So Dahej plant will also be contributing in exports and a [indiscernible] facility will be contributing in exports. So overall, with our -- like these customers going up, the registrations coming in, the product range, so everything is going to help us in building the international market.

So that's helpful. Sir, I wanted to know if you mentioned the full volume on [indiscernible] coming from China. So are we working to sort of produce that also in now or you already [indiscernible]?

It is in process. It is in process. So we should be able to do that.

[indiscernible]

There would be 2 intermediates actually. [indiscernible]

The next question is from the line of Abhijeet Bora from Sharekhan.

Yes, sir, I was just looking at your guidance in the presentation. You guided for INR 100 crores improvement in the EBITDA margin for the full year. But when I see your margins, we are already at like 14% kind of in this quarter. [indiscernible] conservative or are we expecting some impact of the high cost inventory in the coming quarter?

No, it is a conservative indication. I don't want to revise because that guidance was the old guidance, which we have not revised, I believe. So we'll not give a revision that has performed. So I'm confident that the Q3 results will not be lower than Q2. They will be better.

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

Congrats for a good set of numbers in the challenging environment. Sir, my question is that like I would like to know a bookkeeping thing. Like what is the volume and value growth for H1? And have you taken any kind of price hike in H2? Like will you take given the price hikes, like raw material price hike in China?

Like generally, yes, the volumes product-wise are important. In totality, we don't consider the total volume. But yes, the data is available because we have prepared the dashboard to give the data. We'll share that with you. I don't have it handy. Because there are some products which will cost INR 100. There are other products which cost thousands of rupees, so I cannot compare apples and oranges at the same time, but we'll share the data. Regarding the price hike, yes, the price of [indiscernible] has gone up actually. The packaging material, raw material, transportation cost, everything is a hit today, the solvent, the chemicals, everything. So we are forced to take the hikes since last on October and November, those 2 months we have taken the price hike. So some projects, it is more. Some projects, [indiscernible]. So it is in line with the market situation. So in generics, it is really difficult to take the hike. But in certain products here, so product to product varies. So we have taken 2 price hikes already in the month of October and November.

Just to quantify your point that the price hike, so can you just tell us like how much percentage on an average you have hike in the prices?

If I say average, average is like 2%, 3%. But there will be certain product which will have 7%, 8% hike. There will be some products which will have no hike. So on an average, when you say average, so average may come to here. But yes, there is a price hike actually in price. So we can say 2%, 3% -- average 2%, 2.5% price [indiscernible] in totality because we are talking about average there.

Got it. And sir, also I would like to know, are we planning to take another hike in Q3 or Q4 given the input prices?

It depends on the [indiscernible] international. The situation is so volatile. It is very difficult to announce. If similar things prevail, then herbicides are not available in that case. So I see a hike of at least 5% in the entire range of herbicides in December. So it can go up to 10% also. It depends. So it will depend on the international scenario, which will help me in deciding how much I can take because whatever I decide, it has to be in line with the market situation actually. We can lead, but we cannot be out of market.

Okay. Okay. Got it. And also like in my other question, I would like to know how should we look at the mix of branded exports and [indiscernible] business post completion of our expansion in FY '22?

We have not budgeted exactly, but yes, all the business will be growing. Like exports, we would again target increase of -- a decent increase in the next year. So this year, we'll cross 100. Next year, again, we'll plan a decent increase. Similarly, in the institutional business also we'll look at an increase of 25%. And see, the expenses will be coming, so the brand business also might see an increase of about 15% or something. So next year, I can say that generally [indiscernible] of 10% growth. But due to the expansion, I will give a guideline of 15% plus type of growth in the next fiscal. So I have not decided but just an idea, a broad idea that we should look for 15% growth hike in next year.

So sir, like in export that you were targeting INR 100 crores of revenue in FY '22, right? Okay. And so far, we have paid around INR 57 crores kind of revenue.

Yes, in the month of October. Yes, November has been quite good actually, so our expectation from October is quite well.

Got it. Got it. And one more thing. Like as you said that is [indiscernible] business will grow more than 20% in next year, then our -- that will change our product mix towards -- more towards [indiscernible] business.

Won't be [indiscernible] actually. There will be -- like we'll be trying to sell the new generation molecules, what we are bringing the new launches. So I'd like to take the entire share from the new launches. So that will be my vision. But yes, where we are backward integrated or increased more AIs or we have strengthened our technical or manufacturing capabilities, those [indiscernible]. Because technically, I'll be increasing my capability of making [indiscernible] by 50% in Rajasthan and about 30%, 40% in Gujarat with backward integration. So I can sell the chemicals also. I can sell the technicals also. There will be capabilities of all type. And looking at the demand, we'll do that. Yes.

But in institutional business, our gross margin is much lower compared to the branded business, right?

Again, there are -- it depends what type of products we are selling here. In the brand, there are major margins. But if I want to do everything by myself, every farmer cannot open a hotel. So there is a different customer in the hotel, different customer [indiscernible] be different types of customer to have to go back to all the requirements. I cannot take up the entire share of India in one go.

Okay. Okay. Got your point. And one last thing, like if I look at our gross margin, that is right now in FY '21 would be around 25%. And in H1 FY '22, they are on similar kind of area. And earlier, we used to make 31%, 32% kind of gross margin. So when we can expect to reach that level and improve...

Continuously improving. We are continually improving. In this fiscal, you will see the improvement in the next fiscal. Because of the product mix, you will see the improvement again. That is something I can say. We'll see continuous improvement in our performance because the plants are not coming, it was a COVID time, difficult time. Last year, we could not take the new generation product to the market. This year, we did not bag the registration. The -- all the projects got delayed. So the new introductions were not possible. So all these factors were very, very important. But still, [indiscernible] did a lot of effort actually in all the directions, and they could achieve the sales. And of course, the profitability is also maintained. So that is something good actually. So we are not at all aggressive during this period. But next year, we will be.

Perfect. So can we explain by maybe FY '23, we can reach the 30% kind of level of gross margin?

No, I'll not give any outlook, but I'll just say that we keep on improving.

[Operator Instructions] The next question is from the line of Saurabh Kapadia from Asian Market Securities.

Yes. I have just one question on the domestic business. So we are expanding our capacity and also [indiscernible]. But on the distribution side in terms of the work, the penetration, so are we [indiscernible] in a number of [indiscernible].

We are working on the last-mile customers actually. We are working on our farmers. We are working on our retailers. We are working on our dealers. We are working on our distributor. We are trying to identify that where we are getting what percentage at which contracts where we are not able to reach those numbers, where we are achieving what is the desired quantity, the desired volume, value, are our customers growing, not growing, how are they performing. We have created one concept while customer [indiscernible]. So all the customers, [indiscernible] coming, which shows the Y-o-Y growth, Y-o-Y contribution, Y-o-Y product mix usage. So everything we are very closely monitoring actually. So that we can identify that where we need the development, where the effort or the focus has to be more, how we can connect with our IT mix customer, how we can connect with our retailer, so there'll be complete focus on this because the new products are coming. So new products will not go just by putting on the distributor counter. And to create the market, to create the buyer for that actually, if the customer wants to buy it and it comes to the counter, then only those products will become the brand. So it's a lot of efforts which will be required by us. Actually, we are also increasing our team, the marketing team, the expert technical team, the sales team. We are doing the expansion in all the directions in network as well as the team.

Okay. And any specific state or region where you see more scope in terms of more product?

No, scope is everywhere, actually. South has incidentally become the largest market for us. That should be the second largest. But this year, the West was very, very bad because it was a continuous dry spell, and then there was continuous heavy rainfall in the West. So I can say Southwest dock and East, this will be the percentage in the hierarchy. South will be the biggest, followed by West, then North, then East. It has the potential to beat some other, so let's see because [indiscernible] has been very bad for East because of like floods in Bihar. Bihar is one of our key markets actually. Also [indiscernible], they created a lot of product. So we see a good potential, which will be coming out of the East also. So this is the situation.

[Operator Instructions] Yes, sir, there are no further questions from the queue.

Thanks. Thanks, everybody, all the participants, for keeping time out of the busy schedule and attending this earning call. I thank you very much for your interest in IIL and look at your continued preference. And of course, thank the Asian Securities also for this call. Thank you very much.

Thank you. Ladies and gentlemen, on behalf of Asian Market Securities, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.