PI Industries Limited (523642) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '24 Earnings Conference Call of PI Industries Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you.

Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries' Q2 FY '24 Earnings Conference Call. Today, we are joined by senior members of the management team, including Mr. Mayank Singhal, Executive Vice Chairman and Managing Director; Mr. Rajnish Sarna, Joint Managing Director; Mr. Manikantan Viswanathan, Chief Financial Officer; Mr. Prashant Hegde, CEO Domestic; Mr. Atul Gupta, CEO Exports; and Mr. Anil Jain, MD, PI Health Sciences. We will begin the call with key perspectives from Mr. Singhal. After that, we will have Mr. Manikantan sharing his views on the financial performance of the company. Thereafter, the forum will be open for question-and-answer session. Before we begin, I would like to underline that certain statements made on today's conference call may be forward-looking and a disclaimer to this effect has been included in the investor presentation shared with you earlier and also available on stock exchange websites. I would now like to request Mr. Singhal to share his perspectives. Thank you, and over to you, sir.

Yes. Thanks, Nishid. Good afternoon. And good afternoon to everybody, and thank you for taking the call today. Once again, I'm pleased to be addressing all of you on the strategic progress that we made in making the ever evolving business landscape of PI. I'm once again pleased to report a good performance as we had a tough performance quarter even in the challenging operating environment. Just to give you a flavor, during Q2, we saw a 20% increase in revenue. This was accompanied by 28% improvement in EBIT and a PAT delivered a 44% growth. While the performance has been encouraging, I would like to give you an idea of the operating scenario. Heightened climatic variations are impacting both the pattern of sowing, application and usage of crop protection. During the Kharif, we experienced erratic monsoons, consequently forcing farmers to hold back on application of certain crop protection products. The continuous falling prices of raw materials coming in from China, moreover, putting pressure on selling prices of generic portfolios. A similar scenario has been reflected in the global, where prices remained under purchase. Channel inventory stayed at an elevated level and the distributors in the U.S. and Brazil are prioritizing destocking and filling up the requirements for lower-priced stocks. However, the consumption of crop protection products in the key markets of North America is robust, thereby indicating good healthy industry in the medium term. On PI, our operating model is vastly differentiated with the focus in IP-based products and niche capabilities distinguishes us and place us of being in a different path compared to the other industry players. Our model, a big focus on innovative molecules with technical strength and capabilities. We have seen a growth of more than 22% in the quarter over last year, while we still -- while the industry faces headwinds. Growth remains well diversified in exports, and I wish to underline this is coming not only from Agchem but also from molecules in the other areas, electronics and specialty chemicals and imaging. Our pipeline of molecules is similarly diversified across multiple end use in the industry. As we exclusively work on innovative molecules, such variation in operating models do not influence our momentum, whereas we continue to get the upside from a wider opportunity for growth. Given our understanding of multiple chemicals and chemistry capabilities with strong technological platforms, our ability to build high-performance solutions to the market, we are confident of sustaining the growth moments. With a healthy pipeline of molecules, we see a potential of high growth focus on the future and a better product mix. We commercialized 3 molecules during the quarter, and we expect to commercial 1 or 2 molecules before the end of the fiscal year. Now moving on to our domestic business. Our focus of driving quality of our revenue rather than pursue growth and size of the revenue alone in these challenging times has resulted in positive benefits. As always, emphasize, we have been a good product mix, bringing efficient working capital management and all those are present in our presentations. This light of our performance has seen moderation due to erratic rain in monsoon while we have done better in terms of the overall financial health of the business. The monsoon has seen even un-distribution as far as the reservoir levels in South India, marked below last year's average. The sowing patterns of Rabi could also influence as well. The high level of operating discipline that we have shown in terms of managing inventory, launching high-performance products and having a diverse product mix is contributing to the moment of mitigating the operating scenario in which we are present today. We expect to see recovery of niche crop segments and our comprehensive portfolio shall be adequately placed to meet these requirements. Coming to the outlook, which I've shared, on the continuing of our original guideline of 18% to 20% revenue growth with improved margin returns. Initiative is already underway to augment capacities, to support further growth plant. Concurrently, we are also scaling up effort of integrating newer technologies. We recently signed an agreement with Koppert to work on a sustainable agriculture agendas to market, distribute and innovation products and solutions in the agricultural biological space. Our journey in the pharma is off to an encouraging start. We continue to work towards developing a differentiated CRO, CDMO and an API-KSM model, where we have multiple scenarios and highly experienced resources, which are coming on board and are on board as of today. Our Hyderabad Research Center is being ready and is getting staffed in the coming times. There's a team of domain experts both within and outside India, which are aiding to connect and build a differentiated model in the pharma again for the pharma companies. In parallel, we are upgrading infrastructure, building Kilo lab facilities, modernizing the quality management system, digitization and other initiatives and opportunities in Italy. We have made successful debut at CPHI recently, and the intensive meetings and discussions in order to realize near future potential of opportunities and also a better understanding of how we go and grow this business in the future. Our focus on scaling our business in CRO and CDMO, adding more APIs, KSMs and RSMs to the mix and such bringing an end-to-end offering to the large pharma companies that integrate solution provider. Given the robust of the operation with a strong cash flow, the senior management focused on evaluating various inorganic opportunities to meet the long-term objectives of putting PI into a differentiated business model and a player in the industries it operates. Multiple initiatives are being held in the ESG area. We've already improved S&P Global, and I'm proud to say we are ranking at the 95 percentile, further our Ecovadis evaluation is under progress for 2023. Once again, I would now complete my remarks, and I would hand it over to Manikantan to continue. Once again, thank you for being and supporting us and once again my congratulation to the management team for this great effort. Over to you, Mani.

Thank you, Mr. Singhal. Good afternoon, everybody, on the call today. I'll summarize company's financial highlights for the second quarter ended 30th September 2023. Please note that all the comparisons are on year-on-year basis and refer to the consolidated performance of the company. As Mr. Singhal has shared, our performance demonstrates a differentiated approach to doing business and a sharp focus on keeping operating parameters in line with our objectives. To share the performance highlights, during Q2 FY '24, we reported revenue of INR 21,169 million, a growth of 20% over the same period last year. This was driven by growth in export revenues by 28% to INR 16,329 million and a decline of 2% in domestic revenues to INR 4,840 million. Profit after tax increased by 44% to INR 4,805 million, attributable to EBITDA growth and low ETR despite higher depreciation. Let me also cover YTM performance for FY '24. YTM 30th September, revenues were INR 40,273 million, a growth of 22% over the same period last year. This was driven by solid growth in export revenues by 32% to INR 31,959 million, which offset 7% decline in domestic revenues to INR 8,314 million. Profit after tax improved by 45% to INR 8,634 million. EBITDA. ETR for YTM was 9.83% due to growth in export revenues and onetime effect on merger of pharma entities in India. Cash flow from operating activities increased 118% to INR 6,697 million and INR 7,253 million excluding pharma. This was due to higher EBITDA and efficient working capital management. The trade working capital in terms of days of sales reduced to 84 days vis-à-vis 111 days as on 30th September 2022. Inventory levels also reduced in terms of days of number of sales to approximately 63 days to INR 13,998 million. Our balance sheet further strengthened during the year. Net worth increased to INR 79,820 million as on 30th September 2023. YTM capital stood at INR 7,630 million and is in line with our plan. This concludes my opening commentary. I will now request the moderator to open the forum for question and answer. Thank you.

[Operator Instructions] We have our first question from the line of Abhijit Akella from Kotak Securities.

So just a couple of clarifications I wanted to seek. One was on the pharma entity performances. So first of all, if you could just help us understand from an accounting perspective, why do these Ind AS reductions or adjustments show up when we are booking the net revenues in our financials. Also, the earnings have been on the negative side. And how should we see that trending forward over the rest of this year and into next year? And finally, just on Therachem within the pharma business, the revenues for the quarter seem to be in the range of INR 6 crores to INR 7 crores. I believe the run rate was much higher at the time of acquisition, about INR 200 crores for the full year or thereabout. So what exactly is happening there and how we should see it moving forward?

Thanks, Abhijit. So first of all, your first question, this is more about aligning the accounting practices. So one of the company was following a different accounting standard. And since now we have combined all these entities in PI Health Sciences, we were to align the accounting policies and also the standards and therefore, we have this Ind AS adjustment has been made in their accounting -- or rather financials, okay. So this is one point. The second point on Therachem, it is more about the scheduling of the business. They were already carrying some inventory, okay, for their requirement, plus they -- in the first quarter, there were certain schedules. So in this business, the CDMO business, it is more about campaign and the supply according to the customer and all, so much so very steady state kind of quarterly run rate as such. But yes, I mean there are different schedules for different products in following quarters. And there's nothing like a significant downsizing of the business from the customer side, it is all a matter of scheduling of the business and inventory.

So just to clarify, should we continue to assume roughly INR 500-odd crore revenue base for the pharma business for this year? And these Ind AS adjustments are more of a onetime alignment and they will go away at some point in the subsequent quarters?

Yes, this is Anil Jain here. So I think whatever INR 500 crore, this is for the whole year. Now during financial year, one is almost 11 months and other is almost close to 9 months. So accordingly, this figure will help us. We are on track right now. And Ind AS adjustment is one time, yes. That's right.

Ind AS adjustment is one time.

Okay. Got it. And just one last thing from my side, if you permit. On the CSM side, the agrochemical CSM business, how does the growth outlook look like for the second half of this year? And there is a mention in the results about shipment that got lost in transit about INR 40-odd crores. So number one, what happened there exactly? Is it shown as cost in the raw material line? And excluding that, then the EBITDA margin seem to be even higher at about 28% for the overall company. So it seems a very sharp improvement versus what we were doing. So if you could please just elaborate a bit on what's driven the margin improvement and how we should see that going forward?

Yes, sure. There are too many questions in your one question. So let me try and remember and answer one by one. First of all, we still maintain our growth guideline, including that of CSM of clocking close to 18%, 20%, okay? So that remains. And accordingly, second half, we will also be seeing growth in this business. Talking about this container thing, yes, this is a very unprecedented scene we have -- situation we have seen this time, and we have never experienced within the last 75 years of our company and also in the industry that -- I mean, a few of our containers, the material was -- theft took place without changing or without altering the sealed container out of -- sealed container that has took place, which is a very, very unprecedented scene. And we later on also found out that it has also happened with a few other companies, it is not only with PI, but a few other companies as well, including few other chemical companies. But good part is that -- and I must certainly appreciate the kind of effort the state administration, police administration put, and very expeditious investigation was done. A lot of efforts were put in, and they've already nabbed some of the culprits. The investigation is still going on. Some of them are still at large. The material they have already recovered, which is under investigation and subsequent processes are going on. So at this stage, since the matter is still under investigation, the material is still under investigation, we will not speculate that what we'll recover and when will this get recovered. But to be on a conservative side, we have accounted for the material cost of this material in our financials for this quarter.

So I mean just the last point was just the margins have expanded significantly if you adjust for this cost. So what's driving that? And how should we see that going forward?

Well, that is more about the product mix. The product mix has been favorable for us during this period. And even in our domestic area, we're more focused on quality of revenue, the favorable product mix rather than saving deal volumes and values, and that has certainly helped improve the overall EBITDA margin during this quarter.

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

Congrats on a very strong set of numbers. First question is on the pharma initiative. So what is the progress in terms of some of the R&D molecules in PI's kitty getting commercialized through the manufacturing facilities outside. So how do we expect the rollout over the next maybe 2, 3 years' time frame?

So Anil here. I don't know which molecule you are talking because this is a platform where we are providing the services to the company not the product. So I'm not aware of really what molecule your are talking and which area are we going to market.

Yes. Just we had mentioned earlier that we have been working on the pharma segment R&D, so those molecules I'm just...

These are more of intermediates and key starting materials and intermediates. So yes, those are also progressing in our R&D CRO bench that we are pursuing. And this is part of our evaluation.

Sure, sure. And second question is that given that during current year, there has been a significant decline in generally all the RM prices, how are we seeing our prices for the next year contracts, 2024 contracts for our products?

Are you talking about the -- our export...

Exports, export product. CSM segment.

Yes. So there given our business model, in any case, these are pricing, et cetera, is for each campaign we review. Before we start any campaign, the pricing is reviewed. The price structures are defined with pricing basis, the prevailing raw material, et cetera, is always reviewed before we sanction. So yes, before starting '24 campaign, I mean obviously, these corrections take place, whether it is reducing or increasing.

We have our next question from the line of Vivek Rajamani from Morgan Stanley.

Congratulations on a good set of numbers. Just 2 questions. Firstly, on the broader inventory situation. You obviously touched upon that. You're still seeing the destocking kind of playing out. Just in terms of your assessment, compared to maybe a quarter or 2 back, do you get a sense that you're starting to see some improvement either in the intensity? Or are you starting to see some green shoots from any part of the world. That was my first question.

Yes. So we are certainly seeing an improvement because the consumption still remains strong in different geographies, whether it is South America, North America, even in Asia, Europe, we are seeing that consumption is strong. The acreages are almost same or marginally increased, consumptions are strong. So obviously, the inventory destocking and as this is gradually improving, in last quarter, this quarter, situation has relatively good. But yes, it may take maybe a few quarters, again, depending on products, these generic products or other commodities that we particularly see that in next few quarters, things should normalize is what the expectation is.

Sure, sir. And just as an extension to that, is there any particular geography that the problem is extremely severe in your general understanding?

Well, we have -- I mean, in our understanding, yes, of course, Brazil has been a major challenge because there was a lot of stocking in previous years there, most the generic products, yes, given that there were challenges if you appreciate from the last year [indiscernible] availability and further added to that was the price escalation, which has now shown a turn down, both from availability and price points with double impact and that's something we expect in the next couple of quarter shifts thereon.

And just last a couple of clarifications from me before I rejoin the queue. The 18% to 20% guidance on the Agchem side, I would imagine that's predominantly volume driven, correct?

Yes, majorly because price corrections are already there on the input. So this is mainly on volume.

Sure. And you've mentioned in your slide, there's an expansion -- capacity expansion on the CSM side is on track, any ballpark what is this capacity expansion number that you're looking for this year, any ballpark?

So we had guided for close to INR 800-odd crores of investment this year. So far, we are progressing in line with that.

We have our next question from the line of Praful Kumar from Dymon Asia. I'm sorry, his line is disconnected. We'll move on to the next question from the line of Noel Vaz from Union Asset Management.

I just have one question on the one molecule, which was mentioned. This is the new product which the company is coming up with -- which is the new diamide. So I just wanted to know what exactly is the total market size that we are potentially looking at as well as how does the company plan to take up this product? That's all from my side.

Sure. So I mean this is a very proud moment that PI has been the first Indian company to receive International Organization Standardization recognition, named pioxaniliprole. But the -- I think that what I would say this -- we have right now got the registered name, the product is under evaluation in various geographies across the world. We had discussions with various partners, at the same time, evaluating the product performance at various levels, at the field levels, in various crops, in various regions to figure out the potential. As many have already appreciated as diamide molecule, this is a couple of billion dollar market share which is there. So we will be looking at how we're going to play into this market share and penetrate. That's really how I would put it for now.

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

Sir, my first question is on this pharma business. You mentioned that the one of Ind AS impact is over onetime, so this you are talking about that the current numbers which you are already factoring in terms of the reporting is over? Or it is going to be for the balance of the year itself in the similar ratio?

No. So whatever was we had inherited the inventory and all, those things is a onetime thing, which has been accounted for.

So you're saying that H1 INR 35 crore Ind AS adjustment that was all over, right?

Yes.

Okay. So from H2, we should be seeing some positive contribution in terms of the contribution from the pharma business?

Yes. Yes.

Okay. And sir, second question is the ramp-up of the pharma business once again and the margin profile, it's quite different than what we -- when we have got the numbers from this time of acquisition. So is it still in terms of because of the higher cost, which we are incurring at these plants, that is so? Or at the time of acquisition that the profitability margin was higher around these plants? You also mentioned that this year, you'll be looking roughly 14% to 15% margin, while H1 pro forma margins are still at 7%. So we see that the margin of 15% will be only achieved next year because your long-term guidance in margin in pharma business is still in the 20% to 22%. So when we are expecting that?

Yes. So yes, you're right. Frankly, this is too early to look at the volumes and the margin percentage. Yes, I understand your point, but you think even during our talks and last few quarters when we had acquired, we were cautioning the analysts that let's not look at previous year numbers of past numbers. Two things are happening. One is that there is a lot of development spend is being made because the idea is to scale this business up. We are not running these businesses as individual entities. I mean whether it is the starting material company or the API company, we are not here to run them independently as the business they were doing earlier, okay? And this is precisely the reason that a lot of development spend has been done, a lot of integration has been done to gross leverage. And during this initial period, there is certainly going to be pressure on these margins, but we are confident that post integration, which will take very next few quarters' time or a year's time, after that is the plan that we'll be able to scale this business up and also get to the expected margin level, which still remains -- our expectation still remains beyond 20% in this business, 20%, 22%.

Okay. Sir, second question is on our domestic business, though we have seen most of the formulation companies in India have done collectively well in first half and Q2 was fantastic for most of the domestic formulation guys. However, that is not the case for us. So even in H1, I mean, if we combine that with the Q1 as well, we don't see -- we see the dip only in revenue compared to last year. While in general, the season and the demand scenario has been pretty decent as far as the domestic market is concerned. Any particular reason for that?

So as we explained earlier and in fact, if you see, we have seen a very mixed kind of situation. So I mean there are situations where the local players have not been able to kind of achieve growth, significant impact is there in terms of revenue and more so in terms of the margin profile. And this genericization and generic situation, pricing situation has certainly reflected across the industry in the performance. We -- as a company, we focused on our specialized products rather than saving more and focusing more on revenue growth, our progress, given the situation that we have seen in first and second quarter, was more on quality of revenue and the discipline around the working capital and margins, et cetera. And that has been one reason that we kind of contained on this revenue growth to say precise number and whatever few percentile moderation that we have seen could have been avoided if we would have also chased those typical products even in our portfolio, but that was not done, and that was really deliberate strategically some of the products which have been kind of a generic exposure for volatility.

So actually, we refrained away from selling generic products and focus more on specialty that helped us actually in improving our margins but not reflecting revenues?

Margins and working capital efficiencies. So that's a clear reflection of quality of business having a substantial shift for more value accretion for...

This is a time being exercise, sir? Or you think that we may continue to do so going forward as well?

This is a temporary exercise, obviously, because the volatility doesn't add value, it's stressed. We kind of -- we will eventually play this game as when things stabilize.

But of course, if this situation for generic remains the way it is, obviously, our focus will be more on a specialized and specific categories.

We have our next question from the line of Siddharth Gadekar from Equirus.

So my first question is on the diamide. We had highlighted earlier that we are in talks with global partners for the product. So any progress on that side? And how should we look at 3 years higher down the line in terms of the launch? Or could you give us any timeline for that?

No, but I just mentioned that earlier question that yes, we are in the request -- we are right now -- it's got a name and I think that's the key point, and we are in the process of evaluation and the market share opportunity, as I mentioned, of diamide is about a couple of million dollars. And this generally takes a longer time. It across multiple season, the trials take place in different geographies, comparative evaluation that's done in different geographies. So it takes time.

Okay. Sir, but in terms of our patents, then will our patents being counted from 2019 or the day the product is launched?

Patent is always the date of filing is counted, not on the date of the launch of the product. Patent is considered from the date of grant, yes.

We have our next question from the line of Naushad Chaudhary from Aditya Birla.

Congrats on a good set of numbers in a challenging time. Just one I have. So within your existing basket of commercial molecules and at advanced stage of pipeline, how many do you think can become INR 400 crores, INR 500 crores revenue per molecule in next 3, 4 years, excluding the large one which you have?

Can you please repeat? We were not very clear about your question.

Within the existing basket of commercial molecule and the molecule which are at the advanced stage of pipeline, how many do you think can become INR 400 crores, INR 500 crore of revenue per molecule in the next 3, 4 years?

There are many of them because this is one of the key criteria for us to evaluate products when we commercialize them for manufacturing and export in particular. So yes, there are many of them, but it all again, depends because when we get into these molecules, I mean, these molecules are at a very early stage of their commercialization. And their potential is more clearer and known when they are already registered and commercialized in few geographies. So yes, I mean, the initial indications are very good for several of these molecules, but we will be very sure of the scale-ups and volumes for -- of the growth potential as we progress further.

We have our next question from the line of Nitin Agarwal from DAM Capital.

In terms of when you have dedicated plants for CSM versus multipurpose plants, typically, what is the difference in asset turns you're able to get higher asset terms on the dedicated plants?

Higher...

Higher asset turns.

Look, are you asking a question that can you -- are you able to get higher asset turns from dedicated plant?

Yes. And to the extend, a sense on how much higher do we are able to get typically?

It's unfortunately not a straightforward answer because it is -- basically, we have to look at an overall scenario, it could be dollar per kilo, it could be lower asset turn, but a better return on capital and better margin. So it's not -- it's a business just purely not on an asset turn basis, which is general for commodity chemicals, but the specialty in these big chain molecules, it could be lower. It could have complex chemistry with higher value that may give you a lower turn, but give you better marginal returns. It's not a ratio which you can identify. But typically, if you look at the chemical industry in this space, it can go between 1.5 to maximum 2.8, 2.9.

Okay. And sir, secondly, on our CSM business, with the volatility which has been there in the raw material pricing over the last few quarters, I mean do we go through quarters during the cycle where there is a lag and lead impact in terms of the raw material pricing and the final product pricing? I mean, there are gains and whether we make -- in a sense, if there is a declining raw material pricing situation, we end up making gains in a particular quarter, likewise and vice versa? I mean, does that really come about in particular quarters?

As I explained earlier, we have this pass-through model, and that has been the PI way of working for years as I explained. So if that kind of doesn't work and its adjustments, which Rajnish as mentioned earlier, whether it's niche on a contract-to-contract, quarter-to-quarter basis based on contract types.

So yes, I mean there will always be lead and lag, but the commercial understanding, the business model is such that these things are shared whichever way the direction or trend is on the pricing.

Sir, last one. Sir, on the overheads this quarter, Y-o-Y, there will be very little increase. So is there any particular factor which has driven that despite the growth in revenues?

I think overheads, frankly, I'm not linearly proportional to revenue, but yes, there has been a good approach to this because we obviously are looking at the volatility of the market and trying to see how we can continue to optimize and run this, yes.

We have our next question from the line of S. Ramesh from Nirmal Bang Equities.

Sir, first, on the CapEx you've done in pharma and the disclosure you have made in the segment assets, can you explain the mismatch because you have acquired assets for INR 4,972 million, and you've shown an asset of INR 1,257 crores in the segment assets. So how do we tie in these 2 numbers, if you can help us understand?

On the pharma side, there is acquired assets and what has been shown is retained assets. I think I can send across the details to you offline.

Maybe you can connect with our CFO separately.

Yes. So second thing is, if you were to dwell a bit more on the pharma economics, what is the level of gross margin we should see on a stable basis, as you scale up, say, over the next, say, 4 to 6 quarters? And in terms of the proportion of overheads to revenue, again, if you can give us some sense in terms of the percentage, it will help us work towards when you can possibly breakeven and get to that 20%, 20%, assuming a certain scale for the revenue, if you can just help us understand, that will be great.

Yes, yes. Sure. So currently, the gross margin is at 70%-plus level. And we believe that this can certainly be sustained on the scale-up level as well, more than 70%, 75% level. And overhead percentage and all that EBITDA and all those levels as I explained earlier, that we'll have to keep in mind that this is going to be a development phase for next several quarters as we are integrating these different resources and companies from CRO till APIs and in the interest of long-term objectives of building a differentiated model. So yes, I mean, once we get to a maturity level, we will see that we will be generating more than 20%, 22% kind of EBITDA margin on a constant level.

Okay. So in terms of the development expenditure in terms of cash outflow, what is the kind of expectation you have, say, in the second half and for FY '25 for the pharma assets?

Well, we don't have these specific numbers right now on the call because all this is in -- still in development phase and making, but yes, we can have a separate call on this.

Sure. So finally, on the tax rate, now there's a certain amount of difference in the tax rate for pharma and the existing business. So can you give us some sense in terms of where the tax rate will settle for the pharma entities once it is in a stable -- steady state stable profit-generating phase? So what is the kind of tax rate which would assume there?

That tax rate for pharma would be around 25% normally. That's what a tax rate would be. But what you're seeing this current quarter is one-off effect on account of merger. That's why we see it, that is one-off in this quarter.

So pharma, we can work with 25%, right?

Yes, yes.

We have our next question from the line of Krishan Parwani from JM Financial.

Just one clarification from my side. When you said 18% to 20% revenue growth, did you mean for overall company, including pharma or just the agri CSM?

Well, this is only for the agri CSM we are saying without considering the impact of this onetime.

We have our next question from the line of S. Ramesh from Nirmal Bang Equities.

Yes. So just as a follow-up question. Now in terms of the domestic business, I know it's a little bit of a challenging environment out there. So if you look at the second half, given the challenges in terms of moisture levels, last time, you had said that you hope to do well. So what is the kind of expectation you have for growth in the domestic business in the second half? And how do you see the new molecules and a normal agronomic condition guide you in terms of the potential volume growth for, say, FY '25 in your domestic business?

Prashant, you are there on the call? Prashant?

Yes. Thank you. Yes, last time we did mention, we are hoping that the rainfall situation will improve after -- but if you look at August was completely dry, that has impacted overall numbers in the domestic. As you look forward, basically the second half, there are a few areas, one is South and the wheat. Wheat is obviously very, very positive, looking at overall commodity prices, looking at the acres. However, we are seeing some challenges in the South, where it's rice and chilly because of water levels are very, very low, mainly because of dry conditions prevailing in parts of Andhra Pradesh, Telangana and Karnataka. That will have some impact, but we are expecting a growth on the quarterly basis, both in Q3 and Q4.

And any sense in terms of what we can expect for FY '25 based on your current portfolio and the new molecules you have launched?

It's a tough question to answer at this point of time looking at the overall volatility, which we are seeing globally as well as in India. Probably after December, we should be able to give you some kind of indication.

Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir.

Once again, thank you, everybody, for coming on to this call. We, at PI management, are very well encouraged and supported by the investor community and continue to look forward to the support in these challenging times. And I wish you and all your families a very Happy Diwali, a great year full of happiness, joy, great health and success. All the very best from the PI team. Thank you.

Thank you. On behalf of PI Industries Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.