PI Industries Limited (523642) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the PI Industries Q3 FY '25 Earnings Conference Call. [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, sir.

Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries Q3 FY '25 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. Sanjay Agarwal, Group Chief Financial Officer; Dr. Atul Gupta, CEO Exports; Mr. Prashant Hegde, CEO Domestic; and Dr. Ramesh Subramanian, Global CEO, PI Health Sciences. We will begin the call with key perspective from Mr. Singhal. After that, we will have Mr. Agarwal sharing his views on the company's financial performance. 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 in nature. A disclaimer to this effect has been included in the investor presentation shared with you earlier and also available on stock exchange website. I would now like to request Mr. Singhal to share his perspectives with you. Thank you, and over to you, sir.

Yes. Thanks, Nishid. Thank you, and good afternoon to all of you. Welcome to our call to discuss PI's third quarter and the 9-month performance for the year '25. While I should provide an update on the operating scenario, but I should also bring in the perspective on the strategy that we have embarked upon in the mid- to long term. Our approach of aligning with innovators and working in high potential molecules and brands has helped us deliver stable performance amidst challenging market dynamics. In order to reach a continued strong runway of performance, we are already actively engaged in multiple areas, and that will underline our progress for the coming years. The global crop protection industry is passing through a transition downturn. However, mid to long-term strength in the industry remains the same despite earlier challenges like supply chain bottlenecks and fluctuating of input cost, the sector is adapting to the evolving landscape. Over the past few weeks, task force and challenging geopolitical scenarios have been making the headlines indicating a shift in the global trade dynamics. Since the underlying demand is there, the tailwinds could impact Indian exports favorably. We continue to focus on innovation, sustainability and an efficient supply chain to play our part in creating a stable, productive future for agriculture. Domestically, the generic segment has faced an ongoing pricing pressure and elevated inventory levels. Looking ahead to the next season, market sentiment will be strongly influenced by investment trends for the sector and overall health of the rural economy. Directionally, for a pure agrochemical CSM distribution opportunity size of $15 billion to $20 billion of innovative products, we will be chasing 10x market opportunity over the next 2 decades. Addressing the multibillion-dollar market of Pharma, CRDMO, electronic chemicals and biologicals and new NCEs through differentiated business model, focusing on niche segments with innovation and building talent and distinct asset capabilities with a systematic regulatory support, we are on the journey to evolve from becoming an ag science company to life science company. During the year, thus far, our performance has stood out and we continue to deliver the clients. Trends during the period reflects strength of our business model and a disciplined execution underscoring profitable expansion even in the [indiscernible] industry sentiments. Revenue growth from the ag chem exports was 9% on a high base given volume gain and contribution from new products grew by 35% year-on-year. Biologicals on the other hand, have added growth showing a 25-plus percent increase. Let me now cover the trend during the reported quarter. We saw consistent improvement in the ag chem exports backed by scalable new molecules and launch in the past couple of years. The new products have delivered growth of more than 40% year-on-year. The new product growth is mitigating global headwinds over the past couple of years. This stood at 6 to 7 molecules every year. The inquiries continue to come in, with over 50% of those from ag chem innovative products. This step with consistent investments made towards novel chemistry platform, process technologies and various technology support deliveries. Moving on to our domestic business. From a good base of '24 compared to the markets, PI has grown 5% year-on-year. This follows decisions taken to drive superior product mix that demands margins and maintain quality of revenue. Our biological range has shown a strong growth of 25% over the prior year. Domestically, we have already introduced 6 brands. Thus for this year, beyond these, we have a pipeline of 20-plus products at different stages of evaluation and registration. Momentum launch new innovation. Products will continue each aim of delivering visible gain to the pharma with a better sustainable offering. Our range in horticulture and biologicals are going well. We will remain determined to develop new varieties of brand backed by a stable capital base and entrenched relationship with the innovators. While our existing business model [indiscernible] that will continue to generate strong momentum at foreseeable future, in the coming 3 to 5 years, we will see a noticeable work map coming from our new initiatives. Fresh cash generation and strong balance sheet are driving growth opportunities. I will elaborate on some of the key perspectives. As you are aware, we have invested and are continuing to invest to build and differentiate CRDMO offering in the pharma space with high quality of talent being onboarded, assets being built to deliver the future processes to the benchmark with the best-in-class in the world and customer portfolios to be admired. In '25, financial reflects the transition of the new business model and the development spend, which continues to happen over the next couple of years. We add to our global industry veterans to lead the pharma business, but they have begun to deliver the results, supported by integrated process and maybe refurbished assets in our location of Jaipur, Hyderabad, Italy, Lodi and putting our expansion in doing business development in the U.S. Biologicals have been a passion for over two decades. Our passion has always told to build the new recent acquisition. We have acquired a leading technology platform in biologicals with patented proteins and peptide technology, a unique technology platform of proteins that are showing good results in the field. In addition to the existing market for the U.S., Mexico, Brazil and the U.K., we will now be introducing these in these products into India as well, while we continue to expand our foothold in the existing markets. We are also working on proprietary offering to work under rigorously. We have taken a typical step for the development of the first AI [indiscernible] in the midst of Phase III trials from India in the regulated database product generation in different geographies by evaluations with partnerships. Harnessing our competencies on innovation and advanced technology and capability scale products by delivering standout products sustainably different from what's available in the market. With these new avenues, with scale-up and existing strategies continues as per our plan. Moving on, I wish to underline efforts on the sustainability side, an anchor for us. As we seek to scale our business across multiple pathways, we are aligning our processes and strategies to contain an adverse impact on the environment. For PI, caring as one of our values for the Mother Earth is a way of life far before ESG became a buzzword and companies began chanting about their sustainable programs. PI has become a trendsetter so far in the sustainability programs, in the chemical industry, in many of its first to its credits. Fast forward from now, we are proud to be ranked as the top 3 percentile of ESG companies and listed in the exclusive S&P Sustainability Yearbook in 2024. We expect to retain our listing on this prestigious S&P Global Sustainability Yearbook consequently for the second year in '25, which speaks volumes of our journey and our commitment to sustainability. New inquiries continue and setting up the stage for equally impressing our performance. At this stage, we request our Group CFO, Sanjay, to continue to discuss forward, and thank you very much, and over to you, Sanjay to take it forward.

Thank you, Mr. Singhal. Good afternoon, friends on the call today. I'll summarize the company's financial highlights for the third quarter ended 31 December 2024. Please note that all the comparisons are on a year-over-year basis and refer to the consolidated performance. So to share the performance highlights, I'm sure most of you would have already looked at those results. During quarter 3 FY '25, we have reported a revenue of INR 19,008 million, a growth of 0.2% over the same period of last year. In specific, agrochemicals, which accounts for 97%, 98% of our total revenue, is up by 4% and EBITDA has clocked a flat growth. Ag chem business. Ag chem exports is up 2%. And within that, a new product growth is 40% year-on-year. Our total domestic revenue has increased by 5% to INR 2,806 million. Pharma has strong -- has seen a strong sequential revenue growth of 55% to INR 637 million in quarter 3 of FY '25. Our ETR has increased from 14.7% to 22.5%, which impacted our net profit for this quarter. Let me also cover the YTM performance for FY '25. Revenue is at INR 61,907 million, a growth of 4% over the same period of last year. Export revenue is up by 6% to INR 51,306 million. Once again, there's been a growth of new products, which remained a key feature of our 9-month results FY '25. AgChem exports is up by 9%, and the new product growth is 35% year-on-year. Domestic branded revenue grew by 3%, and within that, the volume is up by 8%. If you look at EBITDA, without our pharma business, while the pharma business is on a build-out mode, that our EBITDA has increased by 17% to INR 18,760 million. Profit overall has increased by 1% to INR 13,297 million. We expect the ETR for FY '25 to be in the range of 22% to 23%. Cash flows from operating activities increased by 8% to INR 12,482 million. This was due to good EBITDA growth and efficient working capital management. The trade working capital in terms of days of sales has improved from 80 days to 68 days. Similarly, better inventory management has led to reduction in inventory days from 59 days to 46. On balance sheet, our balance sheet has further strengthened during the year. Our net worth increased to INR 98,660 million. And we have a healthy net cash balance of INR 42,091 million. That concludes my opening commentary. I'll now request the moderator to open the forum for Q&A. Thank you.

[Operator Instructions] The first question comes from the line of Rohit Nagraj from B&K Securities.

Sir, first question is on the pharma products that we were developing under PI umbrella before the acquisition of the new business -- pharma business. What is the progress of that? Have we seen probably scaling up those products which are under our R&D into the new facilities? And a concurrent question on the pharma business is, where are we currently in terms of the margin profile, both on gross and EBITDA level? How are we foreseeing it in the future, given that at least the top line seems to be increasing over the last 2, 3 quarters?

Sorry sir, we have lost the line of the management. Please stay connected.

Okay. So thank you for your question. So -- the first part of question about the products, earlier products, yes, during the COVID time, we have been working on, we also developed certain intermediates and supplied certain products. And those who are specific to COVID period. Besides also some of the development projects we were working, which are now part of the overall development pipeline that we have in pharma. So that is continuing. Regarding your second part of your questions on margins. As you have seen, I mean, the margins have been maintained. If we see quarter 3 last year versus this quarter, it is broadly around 48%, 50% kind of margin level. But as we are now building and developing more of CRDMO projects, particularly CRO and early CDMO kind of projects where the margins will obviously, over a period of time, improve. And you will see that reflecting in our financials in the next 1, 1.5 years.

Sure That is helpful. Sir, second question is on the three areas that you mentioned, and Singhal sir also mentioned, into pharma CRDMO, electronic chemicals, biologicals. So currently, where are we in terms of maybe revenue or probably a number of products into each of these areas? And maybe 3 years down the line, how are we looking to shape up these verticals in terms of the overall contribution to our revenues and number of products under each category?

Yes. So -- I mean, both these areas, as our Vice Chairman explained in his speech, both these areas are new business ventures, pharma as well as the biologicals, particularly the new technology platforms that we are talking, which we acquired. We very strongly believe that we are on the right scale of path. We are also transitioning as you will appreciate from the erstwhile business model to the new CRDMO kind of a business model. So there are also certain portfolio changes in products and new product inquiries, new type of projects are being added, new customers are being added in pharma. We believe that once this revenue and the business model is stabilized in, say, next 1 year or so, we will be growing by 20% to 25% year-on-year in coming period. And this is what the visibility that we have in pharma for the next 2 to 3 years. Same way in acquired business of biologicals. So currently, we already have a reasonable-sized biological business in our domestic markets, okay? On top of it, the business that we have acquired is currently at a low base, but we are expecting to build on in the markets that the business is operating, the registrations that we have got. And this growth is certainly going to be reasonably high. We are already expecting more than 25%, 30% kind of growth next year and thereon, we will strongly be building that business. So all in all, both these businesses, although the sales are low, but we are anticipating and expecting aggressive growth in coming 2 to 3 years' time and building on there.

So if I may answer and add a little bit to this, PI is obviously looking to create a differentiated business model in this space. These do take investments, time and strategies to be shaped and then to embed the customers. So typically, these businesses have a long-term J-curve approach, and that is that you would possibly see that the PI way, and we've been able to do that, whether in the ag business in the early 2000s over the discount for manufacturing post 2008, 2010, where we've been building and stabilizing in putting things that they shape into the next level. And that's the stage that these two initiatives are today. And I'm pretty confident with more experience of the past, these curves could be even sharper, if not better.

The next question comes from the line of Vivek Rajamani from Morgan Stanley.

One clarification and one question from my end. Firstly, with respect to these new products, which have grown 40% on a year-on-year basis, would it be fair to say that they make up about 20% of the exports portfolio like you mentioned in the past? Or has that number changed materially this quarter?

Yes, it's broadly in the similar range.

Sure. So still about 20-odd percent of your exports portfolio?

Yes.

Got it. The second question, sir, was on margins. If you look at the EBITDA margins that you've reported, on a consol basis, we've seen that improve pretty strongly. We've gone from about 22% to 24% to about 26% last year. And for the 9 months, you're obviously close to about 28%. So congratulations on that. Just wanted to better understand this margin uplift, which clearly looks to be a structural. Is this a function of your new products operating at a significantly better margin profile? Or is there something that you've gotten on your cost side that's driving this very sustainable increase? I know you've mentioned in the past that the margin profile is a function of the product mix, which can change every quarter, but just some color on the gains that we've made and the outlook going forward will be super helpful.

We would say simply, you got the right -- last statement right, which is exactly the product mix. And there are multiple moving parts in differently, different quarters, things move around, things come in. So I think the guidance that we give, we keep that, yes.

[Operator Instructions] The next question comes from the line of Siddhant Gadekar from Equirus.

Sir, first on the diamide that we are targeting to launch. Can you give us some color that in terms of field trials, where are we today? When do we plan to launch this product? And given that we are looking to launch it in India, can our India business materially double from here in the next 2, 3 years?

Well, my friend, as you know, innovation comes at a -- has a very -- has a different challenging space, but giving you specific answers, we are pretty confident and happy with what we see as a product. One, with our experience of what we know in the field and we see the potential of that Indian globally, critically driven by the sustainability lens and our capability to ramp up new products and ideas into the market. Today, where we stand, we are in the third phase of trials and data generation. We believe, in a year or so, we should be looking to get to look at the regulatory framework and maybe a couple of years down the road, we should be in the market. And I think once we see what the product does and perform, that gives the confidence to take it to the next phase as typically for any new launch, for any new AI that we've done historically. And I'm sure PI with this strong capability of [indiscernible] few decades of taking new innovations to the market and scaling them to create an impact is an experience, which we are very confident, will be more embedded, if not more aggressively embedded into our own product, at least in the geographies that we operate. And for the geographies, we should look at partnership approaches.

Sir, secondly, in terms of the impact of -- on the margins because of the Plant Health Care acquisition, can you just quantify that number?

Sorry?

Only for the Plant Health Care, it's a small business at this point of time. So the numbers won't materially change.

As we mentioned, to be very clear, this is a technology platform, which is very promising to us. We see some very interesting data and facts globally. And based on that, we are in the process of, again, knowing the business as you know and the regulatory framework, it does take time, and to get them into the market and development. So we will be investing aggressively in that timeframe globally, over the next couple of years, if not more, to really take this product and scale this platform, the products which are there and give the platforms to create new technologies and new products.

The next question comes from the line of S. Ramesh from Nirmal Bang.

So when you talk about this 20% to 25% growth in pharmaceuticals, CDMO in the next 2 to 3 years, what is the kind of revenue you need to breakeven at EBITDA? And what is the time line to achieve say, critical mass, maybe in the range of INR 500 crores to INR 750 crores, when do you see that materialize?

I definitely say if you see the numbers, I would give it a couple of years, not more. As you know, the pharma development space or the unique spaces that we're going to operate, have a longer gestation period. So this could become very quick shortfalls and could multiply and some of them -- because you are looking at differentiated model here and some would this. But I would say give it a quick 2-year run before we get to those spaces.

Okay. And biologicals, is it possible to share what is the current share of biologicals in your domestic portfolio? And what is the kind of overall market potential you see in India and exports?

Well, biologicals, I think if I was to look at the Indian market, we are pretty well poised. We are in the top 3 players. We have an aggressive at least 15% of our revenue portfolio coming from biologicals. And with this growth path, we definitely want to make some impact to become one of the largest biological players in the country. And some of these technologies could have across over to other geographies, while the technology that we bought could have across into the geography. So our strategy to become a dominant player in this space is on its path, and we have a very good execution capability as demonstrated by the fact over the last 2 to 3 years, the growth rate in the challenging domestic market where we continue to show that with more than over 20-plus percent of growth. So giving us the confidence that we have got in a machinery which knows how to work, and we are now going to look at putting more portfolios of products and delivering that.

If I may, it would also be important gentlemen, to add here that biologicals as a segment, globally is growing much faster than chemicals, okay? From current maybe $10 billion, $11 billion, which is expected to maybe $20 billion in the next 3, 4 years, okay? And therefore, we believe that we are positioned very well, both in India as well as now with the acquisition of the technology platform, and not only technology platform, but there are also 3, 4 products which are registered in the most developed market globally, we believe that we will be very much part of this growth journey that we are expecting in biological space globally.

Okay. So if I may squeeze in one last question. In your slide, you have mentioned that you expect a recovery in the second half of this calendar year in the custom synthesis exports. So in terms of the basic agrochem cycle, do you think that it is synchronized with the potential recovery in the distribution of agrochemicals or will it happen with a lag? And once you see this recovery in the second half, do you see the volume growth revive in the traditional CSM exports in agrochemicals?

Yes, sure. I mean when you look at -- if you look at the market recover, for sure, the benefits of that would pan out for everybody, and we should be also well poised to do that. And it's expected we're looking at the global situation that you must have understood that, yes, India, the season has not gone well. So this year, we have looked at also the challenges globally, one of the biggest markets in Brazil, where there have been drought challenges. So -- but it's expected next half year, things will pick up, and I think the industry overall will start cheering up.

[Operator Instructions] The next question comes from the line of Krishan Parwani from JM Financial.

So firstly, on agri-CSM business, how does your order book look like in CY '25? As in, would that be able to give you a double-digit growth in, let's say, CY '25 or FY '26?

Yes. So the growth of the business doesn't come only from order book, by the way, because there are annual businesses and there are long-term businesses. So yes, our long-term businesses give some visibility, but also the annual businesses are also part of the growth for any year for this business. As Mayank explained to the earlier participants, the business or the global industry is in transitory mode. There are a lot of trade wars, tariffs, other challenges that the industry is facing as of now. So maybe in the next 1 or 2 quarters, we will have more clarity in terms of overall growth for '26 or '27. But as of now, we are reasonably maintaining, sustaining the volumes that we are operating today.

Secondly, has there been any progress on our own AI [indiscernible]? I mean, where are we in that -- I mean, is that registration started or which stage are we at?

So as we explained in our communication presentation as well as opening commentary, there are certain leads progressing very well in the development phase. One of the leads is even more advanced, and we are also developing the registration packages for -- particularly for India and a few other countries, and that is progressing very well. Maybe, Mayank, you may want to add something else?

No. So as I mentioned earlier, that's the stage, as you rightly mentioned, we are at that stage, and we're pretty confident how this looks. So this will be really, what I want to create a mark in what PI has been able to do globally in the innovation space.

Got it. And just two small clarifications from my side. On pharma, you've incurred close to INR 100 crores CapEx in 9 months FY '25. So when do you expect that to start contributing to the top line or margins if that was for the backward integration or for some other CapEx?

No. So let me answer this to you. We are not in the business of backward or forward integration here, to be very straight. We are in the business of creating offerings and capabilities in the various facets of the value chain from discovery to markets, from back with strong science and technological capabilities. For each of these, we are making investments both in hardware and software. Software typically being human capital and skills, hardware being assets. And the other critical part of this integrated piece is a regulatory framework, which has a gestation period to do a value-created offering to the customer and those investments are in that line. And that will take a couple of years to shape up to meet the requirements from a regulatory standpoint to deliver value to the customer.

Got it. And the last bit was on the plant health care. I don't know whether you mentioned earlier, but how much was the contribution to the top line this quarter and to the margins, if you can?

I mean, as we mentioned, this is more of a development platform for us. And for now, the revenues are not any significant at the top level.

The next question comes from the line of Abhijit Akella from Kotak Securities.

My first question is with regard to the depreciation and amortization expense, which seems to have increased quite significantly quarter-on-quarter. If you could please just help us understand the reasons for that? And whether this is a good run rate to trend off of going forward?

So yes, the incremental depreciation charge is primarily because of the amortization of the intangible, which has been added during this particular quarter on account of the PHC for the biologicals business, which we have acquired. So it will be fair for you to take this run rate going forward.

The second question is just with regard to, I guess, number one, if it's possible to share the order book number as it stands at this point in time. And just to clarify whether the revenue growth guidance, which has been mentioned as single digits in the presentation. Last quarter, it was high single digits. So should we interpret that, that has been reduced a little bit? Or how should we interpret that?

So we maintain the growth guidance what we had indicated last quarter, okay? Because we are also currently in the rabi season and also the overall -- even exports scenario that we have explained earlier, whether it will be mid-teen or high teens, that we will figure out. But yes, we maintain the growth guidance, and this is what we are targeting as of now. Your other part of question about the order book. So yes, I mean, it's around the same level around INR 1.4 billion, okay? That's the response to your two questions.

Just to clarify, you meant mid-single digits or high single digits, right? Just now you mentioned mid-teens or high teens. So I just wanted to clarify.

5.1 inches or 5.12 inches, that's the single digit game...

You are right, Abhijit.

Okay. Okay. Just one last thing from my side. On the pharma business, last time, we had mentioned that we see full year revenues in the range of INR 250 crores to INR 275 crores. Do we -- I think we have done something like INR 130 crores in the first 9 months. So how does that target sort of look at this point in time?

Yes, we are targeting the same numbers that we indicated last time, yes.

Around the same range.

Got it. And sorry, just one really last thing from my side, if I may. Just on the pharma business, any sense you could provide with in terms of new customer additions, number of new customers or some metrics around that would be great.

Ramesh, you can comment.

Yes. So we continue to gain traction. We -- from a new customer addition perspective, in Q3, we had between 5 to 10 new customers. I'll just leave it there. But the quality of the customers have been excellent. But we're also focusing on the quality of the projects, right? There are certain projects that would give a good long-term sustainable revenue. That's where the focus has been. So we hope that those projects continue to go through that clinical pipeline and lead to good results for the investors.

Abhijit, does that answer your question? Since there is no response, we move on to our next question, which is from the line of Bhaskar Chakraborty from Jefferies.

Could you give us some color on the CDMO orders secured with the new program that you have mentioned in the presentation? How long duration that is? And would that drive growth in FY '26?

CDMO what?

Under the [indiscernible].

I can. So this is for a new development project. It's actually a life science application. It's an interesting and exciting program for us. It's a commercial product. The product is now being tested. So if it works out, it certainly has -- it is -- since it's already commercial application, it has long-term -- a good long-term potential. What we are waiting for is to see the successfulness of the application, which we would know in the next 6 months or so.

And the one line just if I may put, rather than go into the details of the projects because of the nature of the business and confidentiality and the stage gates of various approvals, the risk factors, you know better. So that's why we would say, yes. But what is exciting to us, we are three interesting projects, and they're looking in a near mature gate approach.

So is this like a pilot right now that can convert into a long-term order in the next 6 months?

Yes. This is an end application that we have supplied the material in for. And the market is being tested with that application. It's a life sciences application.

[Operator Instructions] The next question comes from the line of Rohit Nagraj from B&K Securities.

One question on the next year's guidance. I mean, obviously, we'll not be giving it right now. But we have said in the CSM part that demand will start improving in second half of CY '25. So is it safe to assume that FY '26 also would be in transition? And given that the legacy business is still having some kind of volatility. Is that the right way to look at it?

Well, I would surely suggest that we should wait for another quarter. And probably post the fourth quarter, we will be in a better position to kind of give a very clear visibility of next year. Because as we explained in the earlier part that there are a lot of moving balls right now. Global situation, tariff situation, also the industry inventory scenario, et cetera. But we believe that in next 3, 4 months' time, we would have a better visibility and understanding.

Sure. Second question, again, on the pharma CDMO front. So in terms of customer profile, are these the large innovators we are working with or the mid and small-sized innovators? And usually, from an approval perspective, does it take relatively longer and lesser time as compared to maybe working with the large innovators?

So the way I would put that answer, there is a strategy which we have, which is probably not only customer-centric cities one piece, but also technology platform and application. So it's a combination of that. So I would not talk about large or small and our offerings for what value-added services to which customer we could play an influential role. And that's really where I would leave that because customer strategy is dependent on how best we are fitted to. And some we fit in the big and some we fit in the small and some we fit in the startup area, yes.

The next question comes from the line of Tejas Pradhan from Citi.

On the non-agchem side of the portfolio in, say, electronic chemicals, which you have mentioned. Is there any -- like while you have mentioned about the inquiries, is there any material contribution to revenues from that side so far? Any color you can provide on your plans?

We have actually already commercialized 3, 4 projects over the last 2 years. So this is not some inquiry level or R&D level kind of development we are talking here in electronic chemicals. We are already working with some of these global players in Japan and in Europe in this space, already commercialized 3, 4 projects this year. Current year also, we have commercialized a few projects. And there is also a very healthy pipeline in the R&D where we are doing evaluation and scaling up those projects. Maybe Atul, you may want to add something?

Yes. So pharma -- I'm sorry, the electronic chemical business is pacing very well. This year, so far, we have commercialized two molecules. And in the next quarter, there are another two molecules in pipeline, which we intend to commercialize. And out of the total inquiries we have received, more than 50% inquiries are from electronic chemicals. So there is a good traction for the future as well, what we see going forward in the electronic chemical segment.

And the advantage here is that apart from having access to the global players with whom we are already doing this business for the last few years, there is also a huge opportunity that is coming in India in the next couple of years as the semiconductor projects are going live in India as well. So yes, I mean, I can say that we are very well positioned here in this segment of specialty chemicals.

Sure, sure. And just to sort of add more, like what could be the percentage contribution ballpark currently? And maybe 3, 4 years down the line, how much could this increase to?

Well, it would be a difficult question to answer right now because as Atul mentioned, there are already 3, 4 projects commercialized and several of them are at scale-up stage. So maybe in next 1 year time, we will have a very clear picture that how much percentage or what kind of value it can add to growing CSM business.

The next question comes from the line of [indiscernible] from Avendus Spark.

First question is on the ag chem space. So based on your interactions, generally, for the industry, [indiscernible] the inventory and pricing trends. So is it still in a bit of a decline mode or the decline has now stopped and then things have kind of stabilized? How are you seeing it for the industry, sir, pricing and inventory?

Well, it's a mixed scenario, I would say. We are talking to almost all major innovators in this industry. So it's a mixed scenario and also very specific to products. So for certain markets, there is improvement. Inventory levels have come to normalization. Also the general demand scenario is there. So yes, I mean, those geographies are more recovered than a few others. Specific to certain products, yes, certain products they still are facing the inventory destocking kind of a situation. But mostly, this belongs to the generic category of products. Yes. So I mean, it is very difficult to kind of summarize the overall situation in this -- at this stage. But yes, it's a mixed scenario. And that's why most of them expect that maybe in the next 2 quarters' time, we should be -- overall industry should be in a better position than what it is today. But yes, compared to last 1 year or last 1.5, 2 years, yes, it is certainly better position.

Got it, sir. Sir, second question is on the CapEx for the ag chem business. So how are we seeing it for the next 1 year? What is our CapEx plan? And also any MPPs that we'll be bringing up?

MPP? Sorry, if you could just speak a little louder, we couldn't hear you.

Sorry my question -- I hope I'm audible now. My question was on CapEx for the ag chem. Any new plants -- any new plant that we plan to bring online in the next couple of years?

Yes. So if I may answer that the CapEx, which we had given the forecast, in the coming year, we are going to build 2 new multiproduct plants to make the future requirements and the visibility of the business what we have. So that's the one major CapEx investment which is going to come.

Sir, any CapEx number that we can give as a guidance for the next year?

We already indicated...

INR 800 crores to INR 1,000 crores.

Sorry, sir, I was not able to follow.

I said, it will be between INR 800 crores to INR 1,000 crores.

The next question comes from the line of Bharat Shah from ASK Investment Managers.

A couple of acquisitions that we made, what is our assessment? Have they lived up to our expectation? Fallen behind? Or what is the assessment?

So as I would answer, Bharat bhai, I think they are completely in line to what we thought we want to do with them. But the business model, as you know, PI well takes time to really -- these are very small entry points into these businesses, and we've not been silly about our capital allocation either from multiple points. But we've got into certain areas by one, biting some regulatory timelines to enhance our growth plans and investing in these to really differentiate these models. And I would say, yes, the investment side of the technologies and the capabilities that we want are marginal. Now we're building and adding to those capabilities, and I do believe we will see some good outcomes in the next 2 to 3 years where we will also start up showing some marks of moving up. So I would say from our internal perspective, we're excited about them, and we see a good future for them in the future.

But Mayank, are we saying it will take 2 to 3 more years before we see meaningful results?

Yes, sure. I mean there will be -- you can see that things change for sure, as you see. But some of these -- I mean, today, if you look at the operating technology platform, if you want to bring these products and bring to scale, there's a regulatory framework, there's a development framework, it takes time. And it's like any new molecule, right? As an example, there is a platform and then they are investing R&D to create a pipeline. You take the PIHS, CRDMO, entering the customers, building the capabilities, the early-stage development building and getting the approval cycle numbers, it takes time. And these are the long gestation periods with smart and also as you move into them and you create your own uniqueness and capabilities, it takes -- you build your moat. And let me remind for those -- I mean, you know, Bharat bhai, well that it took about 10, 12 years of hard work before CSM started showing colors, but that's not what we're expecting here. This is much faster than what -- and therefore, we went in the entry to an acquisition point by those timelines.

Just wanted to add, Bharat bhai, that when we are saying 2, 3 years, it is more from the point of view of them making any meaningful contribution to overall PI, which is a $1 billion-plus kind of a business today, okay? Because of the scale of these investment -- acquisition investments, is the reason that we are saying that it will take maybe a few more years to be able to contribute meaningfully. It is also important, Bharat bhai, to articulate here that if you see PI's progression over, I'll not say a few quarters or few years, but over, say, last 20 years, we have been able to scale up and build business and grow more than 20% to 25% CAGR growth over two decades by building new businesses and verticals and all this, okay? And all this was achieved by chasing only agrochemicals, okay, mostly, okay? And now for next two decades, to sustain that momentum, we have created these growth engines with relatively smaller investments. And therefore, they are also currently operating both these initiatives like pharma as well as biologicals at a relatively smaller scale. But the kind of growth opportunities that are there, both in pharma, maybe another $100 billion kind of addressable market that we'll be chasing and same way in biologicals, which will be more than $20 billion to $25 billion kind of addressable market that we'll be chasing. We strongly believe that by adding these 2 or 3 verticals, we will be in a much better position to sustain the kind of growth story that we have delivered over the last two decades.

And if I may add here that given that we have entered this over the next 2 years, we built, we have strong balance sheet to leverage to scale up and accelerate by value addition in these spaces, but the foundations are very well.

On that, there is absolutely no doubt. We have patiently nurtured capabilities and strength in the business to develop and grow the business in a significant way for the long period of time. Bit by bit by bit each product we have nurtured and brought it to the shape and size where the business stands today. I was only speaking from the perspective whether the acquisitions met with our strategy as well as capital allocation objectives or you have any -- I mean, supposing these opportunities were to come all over again today, what would you do differently than what you did when you acquired?

What would I do different than what when we acquired?

Supposing the same thing were to be acquired today, if the offer was on the table today instead of when we did, when we acquired them, what would we do differently about the same offer if it were to be on the table?

So Bharat bhai, taking the PHC, the offer is today only, it's not too long. So I think I would still go for it and bite that bullet without a question. The offer that we have on the pharma, I think we have still said, yes, it's a good bite. And we still bite that bullet because what we are building, we are very excited about it and what we've been able to build on the software aspects, whether it's in talent, global offering capabilities, customer mindsets and also certainly intrinsic parts of the assets that we've been shaping up to deliver the value is something completely different. And we take that both one, not only to build and deliver, I can show you the best car, but eventually to make the car win, we need to train the driver. And that's also what we got the car and the driver. Now we need the crowd, which takes a bit of while after even a few races, then only the crowd follows you. That's really where we are today in the step.

Sure. I appreciate. And one last bit. I could join only a little later. So I might have possibly missed this. But did you offer any view about the upcoming year, '25, '26 in terms of likely growth that the overall business and the March will witness?

Rajnish, do you want to take that?

Yes. So Bharat bhai, we responded to these questions that we will wait for another 3, 4 months to be able to give a very clear guideline on that.

Okay. So that will come after the March quarter results?

Yes. Yes, yes.

That's because there is currently haziness or there are things that you need to get your hands around before you want to put out that?

Well, this is not so much so pertaining to only us or particularly for us, but this is about the haziness that we are seeing today almost everywhere post this recent regime change in the level of the state that a lot of trade wars are currently being anticipated and therefore, a lot of moving balls, I would say. And that is what most of these large customers are expecting to settle down in the next few months' time. And therefore, everyone will be in a better position to kind of predict rather than speculating it at this.

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

Yes. Thank you, everybody, for your kind support, and we very much look forward to your continued support, and all the best to our team to continue to put this great effort. Thank you.

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