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

Ladies and gentlemen, good day, and welcome to Q2 FY '24 Earnings Conference Call of Insecticides (India) Limited, hosted by Choice Equity Broking Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vatsal Vinchhi from Choice Equity Broking Private Limited. Thank you, and over to you.

Thank you, Yashashri. Good afternoon, everyone. On behalf of Choice Equity Broking, welcome to the Q2 FY '24 Post Results Conference Call of Insecticides (India) Limited. I also take this opportunity to welcome the senior management team. On today's call, we have with us Mr. Rajesh Aggarwal, Managing Director; and Mr. Sandeep Aggarwal, the CFO. Kindly refer to the safe harbor statement on the last slide of the earnings presentation. I will now invite Mr. Rajesh Aggarwal for the opening remarks to be followed by a Q&A session. Thank you, and over to you, sir.

Thanks a lot. A very warm welcome from me, Rajesh Aggarwal, MD of the company to all the participants to today's investors call. I can happily say that IIL has emerged as a leading technology-led agrochemical company, and we have announced a very good, very strong impressive financial numbers in this quarter. The revenue growth is led by our strategy. The strategy is very, very clear, which we have been discussing from quite some time that we are working on the focused products and we are targeting the focused products. So what are these focused products? These are Focused Maharatnas and Maharatnas, which include about 30-odd products which we are focusing. And we are looking to the new products into this segment actually. And at the same time, we are doing this tail-cutting of the old generics where we see a lot of competition, because the recent price fluctuations, which were seen post-COVID. So I felt that these are the products which, with the slightest movement of the market, they become unprofitable for the company. So we targeted that we will stop the technical manufacturing of these products. We might continue with the brands, but we will not manufacture the technicals of these products. And we will shift to the new generation products. And that strategy is working out well because we are able to take all these technologies to the market in a beautiful manner. And all our moves have been very well appreciated by the market and the products are very well accepted by the market and got a good response. So first of all, I would like to talk about our Japanese collaboration, particularly with Nissan, with whom we have launched several products like Pulsor, Hakama. They were the beginner. From Pulsor, we made Izuki, our new mixture, again, a patented mixture here I would say, and from Hakama we made Hachiman, again, a patented mixture, which included one of our technical and one technical from Nissan, but we got -- we could back the IP out of this. And two another patented products are Shinwa and Kunoichi. So all these products are moving pretty well. Izuki though, I would say it's a partial success in this year because the season was very, very short. But I have very strong hopes, and we believe that all these products are going to be the big hit. And particularly here, I would like to talk about Shinwa, which is going to touch INR 100 crores of gross sales. In this month, actually, it is going to gross INR 100 crores of gross sales. So very good response coming out of this product and Shinwa is going to become our #1 product. That was the strategy also, though we have just touched the halfway, but still it is going to become a very big product. Along with this, I would also like to thank our R&D team, because their moves of backward integration, new formulation development, new product development all are doing very well. We are able to back many 9(3) registrations and bring these products to the market. And most of the things are very so successful. The beautiful part is by doing this, when we are making the new formulations, particularly the mixtures, so in these mixtures, we are backing the IPs. So these IPs are helping us in providing the solution to the farmer and providing the monopoly to the retailers and distributors, so which has given the edge in the market, and I can say clearly that these are all value-added products. Along with this, we are also doing a lot of backward integration. And in recent years, we have brought various molecules like Green Label has been very, very successful product from our stable by doing the backward integration. Dominant is very successful. This year, we have launched Torry. And Torry -- last year, it was not. But Torry itself is doing very well actually. And this year, we are able to multiply its sales. Same way the Mission was launched into earlier this year. So Mission granule and SC formulation. We have launched 2 formulations and had a very good response. If I add these two, then I also believe that we will be crossing INR 100 crores of gross sales, again, by the brand alone. And apart from this, whatever institutional sales we are deriving, that is extra. So I mean to say that our strategy of establishing these new products is helping us a lot, and there is a lineup of products, because now we are going to start our new technical plants actually immediately after the Diwali shutdown. As you know, that Chopanki expansion is already completed and Dahej expansion is almost completed now. And immediately after Diwali shutdown, we are waiting for the approval. So the new plant will also be started and there will be many new AIs, which we are going to manufacture from this plant, which can lead to launch of many new products. And we are not stopping now. Whenever we get the registration and the product is big, even we get the slightest of season, we try to launch the product in time so that the product enters into the market, we can collect the initial feedback. And based on that, we can make the improvement into the season when there is a peak season. And before that, people have started refilling of these products. So we had launched a product called Green expert in the past. So it could only touch the South market, but got a very good response. Similarly, a product like Supremo SP was launched into the market just 2 months back in the last quarter, very good response. Opaque and Nakshatra were launched and received a very good response out of this. Even now for wheat crop, we have launched Million. So Opaque is also going to wheat crop. Nakshatra is going to -- basically meant for sugarcane. So some swing happens for sugarcane now. So it is going into the market. So I mean to say that we have established ourselves as a player, who can launch these products, who is bringing choicest products toward the farmer and bringing the new technology product at the affordable prices. And this strategy is playing very well, and I believe that our focus to work for Maharatna, we are able to attain a reasonably good success in these difficult times, which was a year of El Nino and most of the competition, they are not able to meet our number. We've shown a growth of 20% into this quarter, and I would thank here the new products only basically, which are supporting or the products, which were launched into the recent past. So these are majorly Maharatna and Focused Maharatna products, were all value-added products with which we are able to grow our sales. So we are continuously going to focus around our innovation because I always believe that it is the solution which attracts the customer, not the product. So we need to continue this innovation regularly so that we can increase the pipeline of such value-added products, which are value for money for the customer and they give the effective solution to the customer. Here, I would also like to talk about the team because once you establish the products, you need the team to market these products. So we have been regularly enhancing our team. Today, if I talk about the sales team, then our total team strength in the sales have crossed 700. So these are the techno-commercial people who are into sales and marketing. And there are more than 900 CAs, who are actively working for us in the market. So it's a very big strength into the market of more than 1,600 people in the field. And at the same time, if I talk about the distributor, the distributor -- regular working distributor number has also crossed 8,000 actually. So I can talk that we have a very good penetration into the market and at the same time, to establish the last-mile connectivity, it's not only ERP where we are focusing, but also focusing on the CRM, which we have started with Salesforce. And this Salesforce was also launched into the market during the Navratri. We have taken it to our staff. The staff at the moment is connected with the distributors and retailers, but the idea is that we wish to establish our last mile connectivity with the retailers, with the CAs and also with the farmers who will not be part of my ERP program. So they will be covered by CRM. The idea is that we should establish a 2-way communication with the company, with the people who are not directly connected like retailers and farmers. So that we can increase our reach and our bandwidth and we can have the understanding of the requirement of the farmer and the retailer directly from the market, so that -- which can help us in enhancing the brand value and enhancing the sales of these products. At the same time, we are also enhancing our manufacturing facilities. As I told you that Rajasthan expansion has already rolled out in full, and we are going to add some more technical share. In Gujarat plant also, we -- I believe that we will be fully active by month of December, and we should roll out more products from this plant also. There will be new AI. There will also be certain backward integration for certain technicals, which will be the Insecticides technicals in particular, so that will also help us in being more cost-effective into these markets. So there will be about a half a dozen addition of new AIs by these 2 plants. So at the same time, we are also strengthening our formulation facilities by rationalizing the products. And we have a very clear set mission that we have to like cross the industry growth target, like the industry is showing a single-digit growth, but I definitely wish to outgrow this -- actually for this complete decade, for which I'm establishing my manufacturing facilities also and continuously investing in this and like this Sotanala investment, which is going to come now. So we have already acquired land. Shortly, we'll be finalizing the plans, and then we will start the construction here. And I believe that this plant should also be active in early 2025 with its full strength. And this will be doing both, technical manufacturing and formulation activities, again, strengthening the company for next 5 to 5 years for growing at a good CAGR. At the same time here, I would also like to talk about the JV. The JV also is making new applications for the patents, and we are receiving some patents also. And we -- I view the first product coming out in the next 2 years because we have generated a lot of data. The Japanese have generated a lot of data. We have done the pilot scale trials, very successful trials of the product. And most part of data is already generated. Now we are waiting for the bio efficacy trials, official trials for the Indian market. And once the trial results are out and we will be ready for making this application, we will apply for the registration of these products, which means that the new discovery of India will come from IIL through the JV. So that also is playing out well. Along with this, we are also focusing in the biological segment because I believe that biologicals are the upcoming segments. And a lot of work has not happened into this direction, but it has got a lot of potential. So we'll be targeting this also. Now I'd like to talk about the results. Particularly, we have shown a growth of about 20% in this quarter. And if I see the half year, then complete half year shows about 17% growth, which is INR 1,336 crores of sales. It is not only the sales growth, but the good part is, along with the sales growth, we are able to do the sales growth in the focused product segment. If we look at Maharatna, the Maharatna's from 56%, we are able to grow it to 64% in the half year. I believe this is a big achievement. And while growing our sales, we have maintained our finances very well. We are able to work out -- cut down our working capital days. We are able to cut down our borrowings strongly, like the borrowing has come down by almost INR 100 crores. Working capital days from 169 has come down to 112. And we are also able to cut down the inventory for more than INR 250 crores. From INR 850-odd crores, it has come below INR 600 crores, so more than INR 260 crores of advantage in the inventory also. So I believe that our strategy of 90, 90, 90 days, which means that we don't want to buy the inventory for more than 90 days, and we wish to exhaust everything within 90 days and keep our finance is also under control within 90 days. It is playing out well. So we have been focusing around this strategy and also the strategy of working around these new value-added products. So both these strategies are playing out very well. And also here, I would like to talk about our brand ambassador, Ajay Devgn. The campaign has been very, very successful into the market, particularly the new launches with the photographs of Ajay Devgn have been very well appreciated, particularly the product, Mission. So it has helped us in establishing the reach and the credibility and the image of the company. And here, I can say again, it has helped us in establishing the last mile connectivity. Again, I would like to reiterate that we are very, very clear that we'll be focusing around the Focused Maharatna, which is 11 products. But out of the 11 products, the main focus was around 7, 8 products, Shinwa and Mission, Torry, Hachiman, Green Label, Izuki, Dominant. So at least first 5 have been very, very successful. And I can say Izuki and Dominant are partially successful. But our lineup is very, very strong. As I told before, Green Expert, Nakshatra, Opaque, Pulsor are already launched. Million is launched. Even two more biological products, Mycoraja, which is our biggest selling product. We are going to launch Mycoraja. Nirog, a new bio fungicide is also on its way to the market. So I can say that we have got a very strong pipeline of products and a good opportunity into the country. At the same time, there is another good news, which is about the stability of the raw material prices, because there was a very high fluctuation into the market that lead to a lot of confusions, but we see the prices settling down now, and I believe that almost the bottom is touched, though there may be light fluctuations because nobody can predict the exact bottom. But I believe that the market will rationalize now, and it will start -- either it will stabilize at the current level or start moving up in a short while from here. But overall, I see a very good opportunity. And with our focus around our distribution network, innovation and growth, farmer engagement, retailer engagement, providers, adviser engagement and training. I'm so very, very confident that we'll keep on receiving a very good response. And today, if I talk about the gross sales of the company, which is to INR 1,000 crores-plus the day is not far when we'll be touching INR 2,000 crores plus of Maharatna product sales. So we wish to work in a very focused manner, and I'm very confident to receive a very good response. Talking here, I'd like to talk about two more points, which I've not touched. So this is Dahej fire incident. There was a small fire in the Dahej, which we had announced in the previous meetings. So that repair work is completed. We had estimated a loss of about INR 4 crores. We have completed within INR 3.5 crores, and this will be filed with the insurance company soon. So the plant will be up and functional immediately after Diwali, because at this moment, this is under the routine maintenance also. So once the routine maintenance is complete on 17th of November, the target is to restart the plant. Here, I would also like to talk about the new building, which I just told that the new project is also ready at Dahej side. So new project, we are waiting for the final approval. I believe that we should be able to start it in early part of December. So this will be also up and functional, which means that with a very strong range of products and very strong backup of the technical manufacturing and formulations, we are going to touch the new season, and we should be able to get the full advantage of the new products in the year '24-'25 itself. Along with this, I would also like to talk about the export. This year has been very, very difficult for export because the El Nino had a very bad impact. Apart from El Nino, there were various challenges because the demand visibility was poor. The finance conditions of different markets was very, very tight, but there is a huge potential because India plus 1 policy -- sorry, China Plus One policy, Europe Plus One policy is playing out well, and there is a huge potential. We see a huge recovery in the demand. And I believe that our target of INR 150 crores, what we have the revised target, was kept for this year. We should be able to reach very near to that target, because most of the exports happen in the second half of the year. So the time has come where we should gear up. We'll be able to gear up our exports also. But in future, I believe that we should be able to register a good growth in the export number also along with the domestic numbers. So with this, I would like to thank everybody for listening to me, and I would request the CFO to give the exact numbers and the details about our performance of Q2. Thank you.

Thank you, MD, sir, and welcome all the participants. Though the major highlights of the results has already been discussed, but one, after the good performance of the company, for the shareholders or you can say the partners of the company, the company has declared an interim dividend of INR 3 per share or you can say 30% of the face value of the share of INR 10 each. So the record date will be 10th November. So this is the interim dividend declared by the company. So now the main highlights have already been discussed. So I will tell you the key performance where the company has shown the growth. So category-wise sales breakup, insecticides, herbicides, fungicides and biological, quarter 2 FY '23 versus quarter 2 FY '24, the insecticides contribution has come down from 51% to 49%; the herbicides contribution has increased from 29% to 34%; and the fungicides from 16% to 13%; and biological and PGR are at the same level of around 4%. If you see the sales segment-wise, B2B, B2C and exports, the B2C sales contribution is around 71% of the total sales, 26% is contribution from the B2B part and 3% is the contribution from the exports. If you see the major strategy on which the company is working, the Maharatna product sales in B2C segment versus other products. So in FY '23, the Maharatna contribution was around 59% and others are around 41%. As in FY '24 quarter 2, the Maharatna contribution is around 65% and the others is 35%. And the growth has already been discussed, so there is a 20% growth. The revenue has increased during the quarter from INR 583 crores to INR 696 crores. There is a growth of around 20% in EBITDA also. The EBITDA has grown from INR 68 crores to around INR 82 crores. If you will see the quarterly comparisons, the sales has grown from INR 582 crores to INR 696 crores. The EBITDA has grown from INR 68 crores to INR 82 crores, and PAT has grown from INR 45 crores to INR 53 crores. If you'll see the working capital days, though already discussed by the MD sir, so in FY '23, the total working capital days of 169 days. And in H1 FY '24, it is around 112 days. So we'll hope that we'll maintain this or improve this in coming time also. The inventory days has come down from 227 to 105 days in FY '24. And you'll see the return ratio, though it has been annualized for half year, the ROCE ratio has improved from 6.9% to 16.4% and ROE ratio has improved from 10.2% to 21.6%. Thank you very much.

Should we begin the question-and-answer session, sir?

Yes, ma'am. Please, you can start.

[Operator Instructions] We'll take our first question from the line of Bharat Gupta from Fair Value Capital.

First of all, many, many congratulations to Rajeshji and Sandeepji for a fabulous performance. It is really heartening to see company's performance like after a tough time, which we have seen after Q4. So a couple of questions, sir, from my side. So as you have said that we have been outpacing peers over the quarterly performance. So any color like particularly, which you want to say whether it is probably distribution-led or particularly like the products which we are working upon. So there is a mismatch which is there in the market where peers does not have a similar set of products. And how are we incentivizing our channels? So can you throw some light over it?

Yes. Thanks, Bharat. Your question is very, very relevant. Yes, the entire focus is around the 9(3) products, because whatever products we are bringing in now, so most of these are 9(3) products itself, so which gives you some type of monopoly into the market. Though when you are making a new AI, anybody can do a 9(4) and bring it. We know that. But we try to take the first-mover advantage in case of AI. And then in case of formulations, we are trying to make the mixtures out of these formulations where we can bag the IP. So that gives the strength to -- in the market because, ultimately, you are able to beat the competition by bringing in this technology. Along with our R&D, our collaboration is also helping the Japanese collaboration, particularly Nissan and OAT in bringing us the new products. So with Nissan, we have a very strong pipeline of products, which are going to come in future. We are expecting -- we have more than half a dozen products already into the market with Nissan, which are doing very well. And we are expecting to launch one product in the new year again, which will be a monopolistic paddy herbicide. So these are all patented technologies, which are coming from Nissan also now. So that gives the edge. As regarding incentivizing the network, we have to keep a reasonable incentive for the network. And now for the key distributors, we have formed the two clubs, the Maharatna club and the Ratna club for our distributors. And definitely in these clubs, they will have a personal meeting with me and they will have the incentives, some incentives better than the other distributors. And regarding -- I believe in today's day and today's time, connectivity is the major support and we are trying to connect the distributors through SFDC because they will not only have their account information and working information, but through our SFDC program, they'll be also able to watch the -- their retailer's demand and they can fulfill their retailer demand on our SFDC platform itself. By receiving the order they can make the dispatches. So that type of convenience also we are trying to bring in, and we are also trying to connect the farmer. So when the farmer gets connected, he connects to the retailer, to the distributor and the distributor will be able to see what is happening below him. So this type of connectivity and training programs also we are conducting. The idea is that we should help the distributor to grow and there should be mutual growth into the market. So that is the basic agenda.

Right, sir. Sir, secondly, if we look at the outlook of the rabi season, so do you expect the momentum to remain over the H2 as well because frankly, the reservoir levels across the southern plateau region, so that has remained on a shortfall. And so particularly, if we talk about the second half of the year, so how do you see our company growing over -- in the coming quarters as well?

The growth which we have shown across the B2C segment, it's across the country. And I'm happy to tell you that South has achieved the target 105% so far. So the time has been tough for South in particular from the very beginning, but they are about their target. Y-o-Y, if I say that we are growing by almost 15% to 20% actually state to state. Yes, you're correct the reservoir situation particularly is bad. But you have to see -- you have to look for the opportunities and see the bad part. So it is bad, particularly in the 2 areas of Nellore and Rayalaseema. In other places, it looked reasonable. There will be some loss of paddy crop. It depends because the rains are expected to touch South area, particularly the states of Andhra, Telangana and also Karnataka during this month. Tamil Nadu so far has been raining regularly actually. So no issues of rains in Tamil Nadu. But these 3 states, particularly Andhra and Karnataka are the biggest sufferers. Telangana is a reasonable sufferer so far. So I think that we should be able to achieve the target. We have been so far doing fine, actually, in this area. So I'm not much disturbed. But yes, there might be a loss of paddy crop by 2.5 lakh to 3 lakh acres actually, which is not very huge, actually, if you see the state as a whole.

But sir, post H1 performance, any kind of a revision to our estimates, like earlier you were talking about reaching a 12% kind of a growth with a 9% to 10% kind of a margin. So is there any kind of a revision which you want to make post the results?

I don't want to make any revisions actually, and I don't want to give any target. But I believe that we have been working around the target, and we are definitely going to cross the market performance. So whatever competition is going to do, we'll be much above the competition. That is the only commitment I can give. My performance is visible actually, and you can see it quarter-on-quarter also.

Sir, my next question pertains to like you were mentioning in your opening remarks that the RM prices have started to stabilize. So already, we are sitting on INR 600 crores of higher cost of inventory. So do we expect that the positive traction in the margins can particularly happens once the RM prices remains on a stable track going forward?

Yes, we can expect that actually because most of the high-priced inventory is already taken care actually in the second quarter. So it will be very small old inventories lying with us. So those loss which has come on account of the high-priced inventory will not be there anymore, I believe.

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

Sir, first question is on our new product or freshness index. It's very enlightening to see that the product launched in last 2 years, especially in your presentation, the green and orange have done very well in FY '24 so far in the first half. So just wanted to understand that this product despite this very heavy contribution in terms of revenue, at least in the first half, the margins have not been as we would have expected otherwise with such a large contribution coming from the new launch product. So any particular reason or it is impacted because of we have to take some write-off on our high cost inventory in first half, and we may see a significant margin expansion in the second half?

Yes, Rohan, you have answered correctly actually. There is a problem because in Q2, we had to start with the old baggage actually, because you have seen that I started taking the hit from quarter 4 of last year. Q1 also was showing the stagnation in the profitability, and that was all on account of the old inventories. With -- by selling these products in a better fashion, we are able to cover the losses what would have been otherwise visible on the balance sheet. So now I'm happy that our quarter 2 results are quite positive. We are able to surpass the profitability of the last year. But I can, at the same time, say that we have come out the pressure of old inventories, what was there on the company. So now we are on a level playing field where we can make while we can show the performance and some of the products like Torry, Mission, Shinwa, they still have the market in the rabi season. And we have -- apart from this, we have launched 2 more products actually, which are going very well on the wheat herbicide, one is Million, one is Opaque. So these already have hit the market. And for -- as I told you, Nakshatra is also a herbicide for sugarcane. So all these products are for the rabi season and they are going to see the market in the rabi season again. So a good fortune for these products also. So I'm very, very confident that these new launches and some other products of the -- which were launched in the past, they are also going to support us in this season. So we should be able to register the growth in the second half of the year also.

Okay. Sir, can you quantify any number, the kind of write-down, we had to take in the first half or in Q2 because of the high cost inventory liquidation?

Very difficult to because that way the calculations are not made. But definitely, there is a hit. If you would want, then I can make a request to the CFO to work out because we have not worked that out.

Okay. Sir, second is, once again, on the new product launches only. So with a roughly 20% plus revenue contribution is right now coming from the just product launch in just last 2 years itself, so any margin difference you would like to guide that what kind of margin difference we have in this newly launched product in last couple of years? And also for next year or even the rest part of the year, what kind of product launches we have in plan?

Actually -- generally, when we are launching the new products, they are in the Maharatna range. And Maharatna range products already have margins relating to the other products. So we have a 2-point strategy that we are cutting out the old generic where the interest is not much, interest of the market or the profitability is lower and they are losing the market share. So we are cutting down those products. And where there is stiff competition, those products also, like I announced 6 technicals I'll be curtailing. So this is a very strong statement in our opinion because the 6 were very, very big products, #1 products, which are used to manufacture actually in the past. And stopping the technical manufacturing of 6 products in one go is a very difficult announcement for anybody, I believe, in my industry, in particular. So since we have got the pipeline of new products, which we will start manufacturing and replace these 6 products with the 6 new products, so I'm not worried much actually, and I can announce it openly that we are doing this as a strategy. So definitely, these new-age products will have better margin than the older generics.

Okay. Sir, next is we are also in a B2B technical manufacturing business selling in a domestic market. Recently, we have seen that China has been dumping many products and the prices have been under pressure, which would have impacted our B2B business as well. Can you give some highlights that how was the utilization level of our plant in B2B? How is the scenario now? And do we expect any near-term improvement given the China situation still under the pressure -- alarming or remain bad from -- for product coming from China?

This competition is always going to exist. This was always there, and this is always going to remain because still there is a correction in our national policy that we encourage the domestic manufacturing and discourage the imports because we are encouraging domestic manufacturing, but we are not discouraging the imports, because in many other countries, when a domestic company is manufacturing something, people are not allowed to do the import registrations. Whereas in our country, where the government sometimes is giving the preference to the import registrations even if something is being made here. So they are giving data relaxation many a times to make the product, which is made in India. So this competition is going to remain, and we have to live within this competition and find out our way forward within this competition. So here, the branding strategy is always going to play. The first-mover advantage is always going to play. Whenever we are bringing these generic products, actually, in that case, the only solution in B2B segment is, number one solution is first we give only [ tech ] products. Second is we start giving the formulation. Third is we start making the technicals. But the new strategy which is coming in patenting the new formulations. So if I can make the patents and we can strongly establish those products into the market, then we can give our mixtures in B2B, that is our new strategy, which is working out. And this year, we are going to share many mixture products into the market into B2B segment, so that we are able to maintain our -- into this segment also.

We have a next question from the line of Keshav Garg from Counter Cyclical PMS.

Sir, firstly, on behalf of all the shareholders, I want to congratulate you and your team for all-time high quarterly revenue and operating profit. And sir, also, our net worth has INR 1,000 crores for the first time. Sir, so many congratulations to you, especially considering the industry environment. Sir, so -- sir, and also our inventory has gone down like you mentioned. Sir, but our receivables have doubled from March till now to INR 611 crores. Sir, are these receivables again expected to come down at around INR 300 crores levels going forward?

It's our routine actually. Whenever you will see our September numbers, the debtors will be at the peak because July, August, September, July and August, particularly are the main selling months. And November, December, January -- October, November, December are the collection months. So in this quarter, my collection will beat my sales. So the -- I cannot though discuss the numbers, but the collections can be about 20% to 30%, not even 30%. I think up to 50% higher than the sales numbers.

Okay, sir. Sir also -- sir, now that -- sir, our stock price is still at where it was in 2017, whereas our net worth has doubled. So any thoughts on a share buyback considering our growth prospects? And sir, secondly, you had given a guidance of INR 2,000 crores revenue for FY '24, whereas sir, even on trailing 12 months, we have reached almost INR 2,000 crores. So for this, the second half, sir, are we expecting any growth year-on-year in our top line? And sir, if so, then what kind of top line you think is achievable in the current financial year? And sir, what kind of margins you think we can reach?

I'll not share the exact numbers. But here, I would say that we are going to grow in quarter 3 and quarter 4. In my previous replies also, I mentioned about the new introductions and our very focused approach. So with this focused approach, I'm very, very confident that both these quarters will be the quarters of growth and it won't be the growth in the top line, but bottom line also, and we'll beat the Street or will be the industry, I can say. So I can just say that we'll be beating the industry. So now I don't want to give any aggressive targets. I want to be reasonable. I want to show the performance. And the share prices and all actually like it's very difficult. Market has to trust us. So once the market will start trusting, once the -- my performance will show, definitely, why not, I'll get the value.

No, I'm trying to say, sir, that we can do a share buyback and so that our earnings per share will increase faster than our profits going forward. So all shareholders will benefit. And sir, you already did a buyback 2 years back at INR 575 and today the share price is more.

You can given the suggestions. If CFO can go workout actually something, if there will be something then we can put it to work in front of the Board.

Sir, just one more thing. Sir, like you mentioned that 6 technicals, which have become commoditized, we have stopped them. So in this business, we keep on coming out with new products, whereas the old products keep on getting basically low margin. And -- so any thoughts on licensing our own -- our old products to others so that we can earn at least some royalty for the hard work that we have done in the past to build the reputation and those brands?

I've talked about discontinuing the technicals. I have not said that I will be discontinuing all the brands. I think 90% of the brands will continue because they were all big brands. But I'm stopping the technical manufacturing because there is tough competition from China, and there is high price fluctuation, which is not helping. So many of my competitor friends are manufacturing these AIs. We'll continue to buy from them or from the importers. So I'm stopping the technical manufacture because I see that there is no much value addition. So the people who like to do that type of business, they can continue with that business, and we'll continue buying from them. So whenever the leasing opportunity comes, we'll definitely lease our brands also to people. But I believe that product goes, the brand never goes. So we believe in the strategy of multiplying the brand. Multiplying, I mean to say, by using -- increasing the usage of the brand -- of the leading brands. So we try to make more brands from the same brand because of the image of the product. If I talk about my leading brand of Lethal, so I have more than half a dozen variants of Lethal today. Victor, about 3, 4 variants for Victor. So I'll do that strategy. So the brand will always remain actually. Brand will never die. The products may come and go.

We have our next question from the line of Neel Mehta from Axis Securities.

Congratulations on the great set of results. I just -- we are increasing our newish products under Maharatna brand and B2C contribution of sales from year-on-year has increased. So how would you say for the next -- down the line, let's say around FY '24 what would the breakup be?

You asked about B2B in particular, Q3 generally is a dull quarter for B2B sales, but B2B sales start picking up again from quarter 4, because January onwards, we can sell a lot of products to the other companies. So Q3 will be a little duller, but Q4 will be very strong for B2B sales. So B2B sales have priced almost 25%, 26% for this year. This quarter, it has -- or in the end of first half of the year, 26%. I believe that percentage will be visible to me into this fiscal actually. And in the next years also, I believe we should be able to maintain this percentage.

And also under B2C, the Maharatna brand at 65% of sales under B2C, and we are increasing production under that brand. So what would the breakup be for Maharatna and other brands?

It is almost similar, actually. In the B2C segment also, the Maharatnas are contributing roughly 65% and B2B also, they are contributing 65%. So it is our focus sales. We are targeting the same focus product into B2B segment and B2C segment also. As I told that I've discontinued 6 product technical manufacturing. This means I've stopped selling 6 products into these segments already. So I'm introducing the new products and coming out of the generics.

We have our next question from the line of Shikhar Mundra from Vivog Commercial Limited.

Congrats on a good set of numbers. Just wanted to understand how much have we invested total in the Dahej plant and in the Chopanki plant?

Sandeepji will be able to give the exact numbers, but roughly we have made an investment of about INR 300 crores in last 3, 4 years, which has gone into the 2 plants. So exact numbers can be given later or maybe now, I'm not sure. And we have a proposal of investing INR 150-odd crores in Sotanala project, which is going to start in the next calendar year.

Right. And what would you say the capacity utilization of the existing assets, I mean, apart from the Dahej, Chopanki plant and the...

Like if we look at the existing assets, then we use these assets to a level of about 70-odd percent. Again, we generally calculated formulations on the basis of 8 to 10 hours of working and technicals on 10 months of working. So since the product mix is changing, the new generation technique of the quantity, which is coming out of that technical plant is much, much lesser, but the value is much, much higher. So we have made an assessment because before the annual maintenance, because in the annual maintenance, we also need to set up the target for the new technical manufacturing, new product lines and everything is set. So I had one round of discussions so far. So in that round, we understood that we have used the capacity to about 75% plus levels actually in this last fiscal.

All right. So the future growth will have to be -- will come from these new plants?

Definitely, it will be -- new plants will be very much instrumental actually and the product mix change is also going to be instrumental. And since we are making the new formulations. Again, we are focusing on sustainability. To make the thing sustainable, we are focused on the new formulations, which are water-based formulations, WDG formulations, many WP formulations, like we are cutting down the solvents to water. And also along with this, we are trying to make new products. So yes, we have to strengthen our formulation base also, and that we have been doing regularly.

And what would you say will be like the fixed asset return from these new plants, Dahej and Chopanki?

Again, the number is not calculated yet. It's not, but generally 5x plus is the type of return.

And roughly -- okay, for the next -- and roughly, what are we targeting to make, is it more of technical or formulation for these new plants?

When I say 5x, 5x is for the technical. Just to add, formulation is much higher actually.

We'll move to the next question from the line of Pallavi Deshpande from Sameeksha Capital.

I just wanted to understand the asset return for the technical is 5x and that's for the new one, I guess. And what was it earlier for the old ones which you're now phasing out?

Generally, the industry average is about 3x, but we have always been successful in crossing those averages, because we keep on shopping the molecules, the molecules which are in high demand, which are large value-added products, we try to bring those products. So I believe in the past also, we are able to maintain such numbers. The exact things can be submitted by the CFO in the -- maybe later, but we are somewhere always between, I believe, 3 to 5x actually, and we are near to 5x rather, I would say.

Right. And so the old ones that we had the old technicals, they were also doing 5x returns?

Some plant may be doing 5x, some plant maybe a little lower than that. But old plants were going fine actually. There was no problem in continuing those products. The quantity I was doing were very, very big. But the problem was of the margin because of the market fluctuations, we are not able to deliver the results as per the expectation of the state. So strategically, we targeted that we would stop those molecules, and we'll target to do the new things.

Right. And sir, the new technicals are in -- with the JV with Nissan. So I just wanted to understand, would the -- how the arrangement works in terms of sharing of...

No, I would clarify. I'm not making any technicals in the JV. All the -- I'm marketing some of the Nissan's products, half a dozen products are there, which I'm marketing already. And there will be a new addition. But in these cases, Nissan supplies of the product, we either make a formulation or packet. So this is done by us. Yes, the technicals, which we are going to make, all these technicals will be back to work of backward integration by our technical R&D team. So this is the all in-house R&D team, which will be responsible for making these technicals. And we, in the past, whatever we have introduced, we have made many technicals for the first time in the country very successfully. And I believe we are going to -- we should be able to repeat the same success for this new technical also.

Right. So I understood that. Now in terms of the understanding with the JV partner, Nissan, in terms of the pricing of these technicals, which we'll make in-house, will you market this?

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We have a next question from the line of Rohan Advant from Prad Capital.

Sir, am I audible?

Yes, yes.

Sir, my question was on your gross margin. If I see our current gross margins are around 25%, raw material cost is 75%. And our higher-margin products are growing faster. For the next, say, 2 years or so, where do you see these gross margins headed? Because related to the industry, we've had lower gross margins for some time now. So I'm sure you are thinking of taking your gross margins higher. So where should those be headed, say, FY '25, '26?

We are on a part of continuous development. I don't want to give any margin figures, but here, I would like to sell you. If we improved the Maharatna sales a lot this year, we are going to further improve into the next 2 years. So you can see the margin growth should be visible actually in both these years, and we'll keep on growing our margins.

And sir, secondly, this year, you've launched products and you've grown really well related to the industry, but maybe all products have not enjoyed a full season. So for FY '25 and FY '26, do you foresee this momentum of significantly higher revenue growth than industry to continue? And if you could give us some numbers, will it be like 20% growth? Or what are you looking at?

Again, I don't want to quote, though I've told in the past that we are working with a mission of a CAGR. In the past year also, we have grown by 20%. This year also, we are growing almost at the same pace with little difference. So we'll keep on growing, and we keep on performing. And our numbers will be visible continuously by virtue of the products, the product mix improvement, you should be able to see the progress continuously. So many of our products, which have not shown so far because they did not get the season, but the response is quite very interesting from the market. People have very well appreciated all our new launches actually, which has gone to the market. So we expect that many products have already shown and other products will also be showing. So the response is wonderful.

We'll take our next question from the line of Bharat Gupta from Fair Value Capital. [Operator Instructions]

Sure. Sir, I just wanted to check like since we are there in the B2B space, so are we in active discussion with any Japanese player with respect to contract manufacturing for any technical? And how do you read the CDM opportunity given out the China plus 1 trend, which is there in the market?

The opportunities are always there, and we are always in discussions actually. So I don't see anything visible immediately. So once we are near to something, we'll make an announcement. But yes, always, we are in talks, and there are many things in process, and we expect a positive response.

We'll take the next question from the line of Pallavi Deshpande from Sameeksha Capital.

In terms of the margins for these technicals, they would be higher than the formulation -- sorry, they would be lower than the formulation?

Again, Madam, it depends on the product. If it is a Maharatna product, it will have always a good margin even if it is a technical or a formulation or a B2B. So our industry is very, very different in the generic product. Nobody is going to pay the margin. But for the specialty products, everybody agrees to pay.

And those 6 patented products -- I mean the -- for the new technicals that you are doing, they are all patented, they're not the generic, right, the technical you're making now?

Again, not necessary because when we make the technicals, so these technicals are not the patented technicals. Why? Because we make them for the first time in the country, but very rarely we bring the totally new product to the country for the first time. So we are able to bring such technologies through Nissan only. With Nissan, I have brought some technicals, which were presented or which are still patented like if I talk about Shinwa, I talk about Kunoichi, the new product, which I'll be launching with Nissan next, it is going to be patented. Patent, we are able to claim more in terms of formulations than the technicals. But yes, when we are making new generation technicals, we are the first company after the inventor, who bring this technical to the country or sometimes we are the second company. So being less competition area and more margins, we are able to focus around these brands and establish these brands very well into the market, which gives us the edge into the market.

I would now like to hand the conference over to the management for closing comments. Over to you, sir.

So thank you very much to all the participants. You have asked very, very relevant questions. And I would thank you again for sparing your valuable time and your suggestion, which always come to me, and I would assure you that with our outlook on the new technologies, innovations, we should be able to continue with our strategy very well into the market and will continuously outperform the market.

On behalf of Choice Equity Broking Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.