PI Industries Limited ($523642)

Ladies and gentlemen, good day, and welcome to PI Industries Limited Earnings Conference Call. 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 Q4 FY '26 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. Sanjay Agarwal, Group Chief Financial Officer; Dr. Atul Gupta, CEO, CSM Pchem; Mr. Jagresh Rana, Global CEO of PI Ag Sciences; and Dr. Ramesh Subramanian, Global CEO of PI Health Sciences. We shall begin the call with key perspectives from Mr. Singhal. Following that, Mr. Agarwal will share 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 could be forward-looking in nature. A disclaimer to this effect has been included in the investor presentation that is available on the stock exchange website. I would now request Mr. Singhal to share his perspectives. Thank you, and over to you, sir.

Yes. Thank you. So thank you, and good afternoon to everyone for joining the call today. I want to begin with a brief view on the global agrochemical landscape. follow that the domestic environment and then walk you through PI's operational and strategic progress. The global crop protection market has been continuing a multiyear down cycle. Recovery remains uneven from comp by the global events during the quarter, which has led to a clear shift towards just -- the conflict in the Middle East late February have introduced a fresh layer of disruption that the industry was not anticipating. While the pressures are difficult, they also reinforces the strategic value of geographic diversification. The domestic backdrop is generally encouraging on the fundamentals that the near-term industry demand is muted due to the elevated channel inventories, low crop prices and incidence of rains. -- season was good with increase in ac. Structural drivers for our industry remain firm in place. The world still needs to feed population and farmers and globally are demanding solutions for a safer and more selective and more sustainable solutions. Innovators and integrated R&D-led manufacturing and scale of execution and will be the long-term -- moving to our business performance for the quarter. The continued to demonstrate resilience underpinned by the breadth of our portfolio and depth of our customer relationships. More importantly, we believe the investments made over the 4 years and we continue to make have a meaningful strength of PI's long-term position to differentiate and move into the next operation. Our consolidated revenue for the full year has delivered $67.137ion healthy EBITDA margins of 25% and cash balance sheet of 34,275 million, enabling the company to pursue further strategic investments for long-term sustainable growth. growth for the full year with customer engage and innov.iotech companies will be investing in capabilities across process development regulatory for -- we believe import of long-term growth platforms, leveraging our deep chemistry capabilities, integrated facility between India and EU and operating strong innovation expertise. Let me now draw your attention to the biologicals, which has been our passion for over 2 decades, during which we have built one of the most comprehensive biological portfolios for the Indian market. Over the past decades, the business one of the fasting segments of our portfolio over global R&D capablbslob. We believe our technology has the potential to address the next-generation crop health and protection for sustainable agriculture solutions. On sustainability, we have our position as S&P Global Yearbook and our most recent S&Scro98centile placing us firmly in the top chemical companies in the world. I want to now focus defining in-house chemical entity discovery platform. Our first Move India now is coming to the market soon, demonstrating our ability to invent at a global scale and take innovation from India to the world. We believe there is a major shift in the way BI for the global scale manufacturing from a distributor to reposition itself as a global backbone and partner across the value chain and turn ourselves into a life science company. We expect to deliver growth with exports and global biological sections back customer momentum as well as domestic business is expected to gain from the new brand launches. Today, to move into the next innovindset cycle building CIDOforms electronic chemical and growth across multiple lines. Our growth will continue to support strong balance sheet, technological capabilities and powered by sci-driven platforms with deep relationships with customers and strong understanding of global work culture. Before I conclude, I would like to take this opportunity to acknowledge the decade-long contribution of our Joint Managing Director critical part in shaping and supporting PI including to focus his will continue to be -- while he will continue to be associated with as the Board. I would like to also take this opportunity to thank the management and the Board and all the family for the great commitment, dedication and the contribution that we made in building over the last 3 decades. But going forward, I would like to make it clear that our group CFO, Mr. Sanjay Agarwal will continue to actively engage with the investor community and ensure continuity and communication strategic engage. I always there to support in any of those challenges. With that, now I hand it over to Sanjay and take you through the financial performance details. Sanjay, over to you, and thank you once again, all of you and Subajes for being an excellent part supporting the company. Over to you, Sanjay.

Thank you, Mayank, and good afternoon, everyone. I'll summarize the company's financial performance for the quarter ended March 31, 2026, and for the full year FY '26. FY '26, as Mayank mentioned, it has not been easy for Achem sector. However, we have been backed by our strong business model and hence navigated this near-term industry cycle. We have also taken several initiatives proactively to work with our global Hem customers, and we believe the sector is transitioning out of down cycle. For quarter 4 FY '26, we reported a revenue of INR 15,652 million, delivering sequential growth as per our guidance last quarter. On a full year basis, the revenue is INR 67,137 million, delivering a growth on a 3-year CAGR. Decline in exports is primarily driven by lower volumes, reflecting the broader global industry contraction and customer delivery schedules. We have commercialized 5 new molecules in Hem exports and launched 4 new products in domestic agri brands. New brands now contribute around 18-odd percent of Hem exports, highlighting our focused derisking strategy and innovation-led approach. Domestic agrochemical demand remains being impacted due to channel inventory, pricing pressure, delay in the regulatory transition to biological portfolio and lower crop acreages impacting key crossOPIs. However, we expect this growth momentum to now pick up with a stronger k season. Our domestic business is supported by a strong product portfolio, new product launches and focus on several on-ground initiatives led by technology and farmer engagements. This year, we launched 4 new products, 3 in the herbicides, 1 in the insect. -- arm, we delivered 40% growth in revenue for the full year, driven by strategic customers and our relentless effort to continue building capability to build a differentiated CDMO model. Global Biologicals also continued to progress with ongoing investments in market and product development, focused on innovation and strengthening R&D capabilities in U.S. and in India. Our gross margins for the full year as well as for the quarter stood at 58%, supported by a favorable product mix and strong operational efficiencies. Further at the EBITDA level, we delivered what we committed at the start of the year, a resilient margin of 25% for the full year. non-SEZ sales a full year basis, the ETR for FY '26 remains at around 22%. We expect FY '27 and thereafter ETR to be in the range of around 23% to 24%. We have sustained our trade working capital in terms of days of sales at 139 days despite the volatility in the overall market. Our strong debt-free balance sheet supported with net cash of INR 34 billion provides strong resilience and flexibility for strategic investments. In addition, we have successfully implemented SAP S/4HANA, which marks a key milestone in our digital transformation journey, strengthening our operational backbone, enhancing data visibility and enabling future scalable growth with improved governance. As we see opportunities in FY '27, we expect a positive growth in FY '27, supported by new product launches, especially our first homegrown NC in the domestic business and our pharma and biologicals continue to scale up. With this, I conclude my opening remarks. I'll now request the moderator to open the forum for Q&A.

[Operator Instructions] The first question is from the line of Saurabh Jain from HSBC.

My question is on the CapEx that we have incurred over the last 3 years, which translates to almost like a INR 2,600 crores of CapEx, but we are not seeing a conversion of this CapEx into the revenues for the last 2 years. And for that reason, the asset turns, which used to be almost like 2.5x, they have dropped down to almost like 1.5 now. So I wanted to understand where this CapEx is being directed to and some sense in terms of how much of it is being focused towards the legacy projects and the new projects? And when do you expect this CapEx to be translating into the revenues?

So I think that's the question is valid. The point is that if you look at these asset investments are done for a multiyear ramp-up both in capacity and scale of manufacturing. Some of these investments have been in the software arena with technology. NCs and new business areas, which have a longer gestation and some of them are coming off color in the coming year and the next couple of years. So that's really where I would answer that from a contextual point of view, yes.

But generally, I thought the gestation period used to be pretty short, right? We used to set up a plant in 8 to 9 months and then it used to start to flow into the revenues. Now this gestation period seems to be kind of winding -- and INR 2,600 crores, how much of that would be spent on to the R&D and technology development and how much on actual steel on the ground?

Yes. Well, the ramp-up doesn't happen over 1 year, as you would appreciate. The eventual new marketing capacities are at x, which are maturity 5 years you build the plant. The ramp-up typically takes 4 to 5 years to do that, yes. And plus the distribution in the newer arenas of innovation, which have been over the last -- so if you were to take example, I don't have the exact number, but I think you can look at that area, we've been doing the regulatory investments to take the new molecules into the markets that comes with a price tag and those are also investments. We are building the new pharma capabilities and assets to create offering for tomorrow. So that's really the split today. So obviously, the present moment, you see that also the industry cycle, all the demand have been lower, as you would say, occupation less. fundamentally, the new products are in at some point with maybe a delay gestation would shape up.

Next question is from the line of Tejas Pradhan from Citigroup.

So for full year FY '26, could you give a sense on what the growth would be for excluding your largest product in agro CSM business?

If I get your question right, for last year besides the new molecules, the new product growth rate.

Yes. So as you know, with all the new molecules we have been launching, they contribute around 18% to 20% of our total portfolio. And they also have been growing at a faster pace in the overall portfolio. So there, the revenues have declined because of the overall challenges we know. But the new molecules, they have been shaping and increment to...

Okay. So just apart from the new molecules, even the existing molecules which you would have launched prior to that, right? So if we just strip out the impact of the largest product, paroxlulfone, excluding that, would there have been growth in FY '26 in CSM exports or that would have been a Y-o-Y decline?

Well, if you look at the other lines, the biological, new molecules, yes, there's growth, but expected growth rates which were to be there given the external environmental situation and the agric scenario, they have not kept pace. But I mean, eventually, they're going to come out to shape. That's what we see from our global...

Okay. Understood. And secondly, on the contract assets, we have seen a reduction from INR 1,000 crores as of December '25 to INR 700 crores as of March '26. Now while that has reduced on a Y-o-Y basis, it is still higher. I think in March '25, it was around INR 400 crores, right? So would we expect further reduction over here to like FY '25 year ending levels? And how should we look at this number on a steady-state basis, what sort of level you target over here?

Well, I would say that a huge reduction about 30%, 35% as you would have seen in this year from the last quarter. This subject to asset utilization to value of product in the pipeline and of products. So I would say this will remain around the same level where the business model...

Okay. And just one more, if I could squeeze in. Would you have a sense on -- would you be able to share what the capacity utilization would be at a company level for FY '26?

Yes. FY '26 is about around a bit below 80%.

Next question is from the line of Vivek Rajamani from Morgan Stanley.

Just one question on the margins. I can see over the last couple of quarters and for much of fiscal '26, you've been able to maintain your gross margins at a very healthy level of 58% to 59-odd percent. But for the last couple of quarters, at least on the EBITDA side, we've seen a bit of compression going back to the 22% mark, whereas we started the year with a 27%, 28% margin profile. Just going into fiscal '27, if you could just give us some sense of how should we think about margin profiles both on the gross margin level and the EBITDA margin level?

So if I look going forward, we'll continue to focus on maintaining the gross margins, right? But obviously, the volatility quarter-to- will be different, but the average gross margin that...

Sorry, we were not able to hear you. Can you repeat the last one, please?

I tell you we are not -- the quarter-to-quarter volatility as it continues. But if you look at the average gross margin for last year, we continue to focus to maintain the gross margin at that level as indicated earlier.

Sure, sir. And the EBITDA margin would be a similar comment?

Given the present environment, given the present the volatility of the various multiple factors, whether it's input costs or whether it's other cost structures and other challenges. I would say our target is always to say that how we can continue to manage them and beat them better. But it will be very difficult to give a specific answer today to say where would they be. But yes, as the company continues to manage and manage that because while making sure that we don't compromise on our long-term trajectory and continued focus to look at market share growth...

Sure, sir. That's clear. And if I could just squeeze in one more clarification. In the opening remarks, when you mentioned you're looking at positive growth in fiscal '27, would that be positive revenue growth or positive earnings growth?

Well, clearly, we're looking at revenue growth as one of the key drivers for this going forward.

Next question is from the line of Rohit Nagraj from 361 ONE Capital.

So now BTD, we have indicated that we have received regulatory approval for a launch of a Manati U.S. So what is the kind of scale up that we are expecting over the next maybe 3 to 5 years? And is it a biological or a synthetic one.

I didn't get your question. What was your question? It was not very clear. Can you repeat, please?

Yes. So we have received the regulatory approval for the launch of a nematoidin U.S. That's what we have indicated in our PPT. Is it a biological? And what is the kind of market size that we are starting or in terms of this particular product, what is the kind of potential revenues that we can generate over the next maybe 3 to 5 years?

So I think I will take this first, and then maybe Jagran me in there. Yes, it is a launch of biologics is the mature -- and it's the first time as you remember coming in the market at scale. I think the growth rates can look at what you do to that maybe you can give a better fill.

Yes. No, absolutely. Thank you for asking this. So this is -- based on the performance we have seen this kind of a very unique biological limited product. Most of the limited products which are there in the world today. they are mainly applied in the oil. Today, there is hardly any limited product, which can be a full year application. So first of all, this is the first time that we have introduced a product in the market, which is a fully application base. Second part, basically in this is that this product, the limited market overall globally, especially in Brazil, U.S. in these markets has been growing very rapidly. And more and more farmers are realizing the problems of metal. We are expecting from this product. We have -- U.S. is a third market. We have already launched it in Brazil and Mexico, U.S. is a third market, -- where we have launched in Brazil, we are basically seeing this year that we should be almost more than tripling our sales for this particular product. It's a product which compete very well with the synthetic chemistry products. And we are seeing some very positive results and good performance from the pharma type.

Only 1 capita will put, we're still in the early stage of developing a product, pharma acceptance to biologicals. But what we -- I think what Jagresh is saying that we're very positive by what we see -- and I think it will take a couple of years to establish a product, but the results are very encouraging and gives us a huge capability to say, yes, we need to invest to build the markets and the investments have been an aggressive approach to build this part.

Sir, second question in terms of GSM business. So last year, we have indicated 2 the contributions from new products was about 15% to 18%. And this year, we have said FY '25, the contribution is about 18% to 20% -- if I do the math, it seems that on a year-on-year basis, the new product, absolute revenue seems to be flattish or slightly negative. So -- how do we look at it from the FY '27 perspective? .

You're right. You see a tested the global agriculture market scenario itself is challenging. And you can see that from the performance of the large companies trying to put new products, customer expectation acceptance due to commodity prices. Clearly, as the situation is very volatile, but we do see this becoming a bit better, right? And I think fundamentally, we hold agriculture cycle has to pick back and innovation will get adopted at much faster rate. So we see that to be looking a little bit more positive. And as you would have seen our commentary over last year, there were challenges in the market and what was expected to turn around and our companies are looking second quarter, half second half, but still not come around. But hopefully, things shape up in the right direction, we will see a better number coming from.

I'm seeing in on our novel NCE molecules Filtrol, we plan to launch in the Indian market -- what about the global launch are we expecting any kind of out licensing for the sales? And what could be the timeline for the same

Yes. So right now, for the global markets, we're working in a couple of geographies where we will be looking to find regulatory -- each geography different requirements, regulated requirements, local and global -- so we'll be looking to put in application for filing probably at the end of this year or next year. And then we get to the regulatory framework, and we'll be looking at strategic partnerships and would announce them at the right level when we come to the right point of decisions in them. Yes. The first point is, at a global level, regulatory framework. .

Next question is from the line of Rahul Jain from Credence Wealth Management.

Sir, my questions are centered on the electronic chemical market. So Typically, we have mentioned in the previous call about commercializing about 4 to 5 molecules. So if you could share some details in terms of the molecules, what kind of revenue contribution what kind of indication each of these molecules are supposed to solve? And what kind of customer sets we have been talking about both between Japanese and the non-Japanese. That is my first question. .

In an understanding as you have seen that in the past, we are commentary the handling innovation. We are working on some new innovative ideas with companies, and as you would say, they are right now at the ramp up sales, electronic chemicals. They are another significant portion of the company's top line. But what is the indicator that we are very strongly working in that area. And once we scale up, we'll have the right answer to give it to specific their niche applications, and they are unique in their offerings. And that's the area which we are able to operate.

Sir, if you could share some kind of typically what can be the size of this segment of our electronic chemicals, say, next 2, 3 years? Can this be a INR 1,000 crore business in the next 3 years? SP1 Well, I do about 3 years, but yes, certainly with time. We will definitely look at that. That is our target. We would love to do that. As we stated earlier last year, we have looked at saying, yes, we're looking to target about EUR 100 million in the next 4 to 5 years in this segment. SP602206744 Last bit, sir, when do we expect the Pharma to turn EBITDA positive?

The pharma revenues are, as you can see today, as you've seen the global situation, the CRD or play is a very what we call winning right now, very confident that we look at certain interesting opportunities in some parts of the value chain, which of 3 to 5 time. Obviously, the investment mindsets are shifting. As we see these things move. And as we have stated earlier, achieving INR 500 crore, INR 600 crore is when you would see these things moving to a positive phase. This could be a couple of years, if not a little bit more than that to get to that space, yes. But right now, the company is more focused in building capabilities, offerings and building customer confidence to look at their value liability. That's really where we are.

Next question is from the line of Ankur from Axis Capital.

First question on the overall pricing environment. given the volatility in raw metal prices of late and the pressure from Chinese led the global pressure there on the chemcycleas a home. Is there any significant pricing correction or pressure that we are seeing across our portfolio -- and second bit 1 clarification there. The 5-odd percent realization decline in our exports that we are seeing, is it more a product mix issue? Or is there a deflation or some pricing correction there?

So as I was to untether pricing direction, there is currency deration that we have passed through models. Yes, we have seen volatility in the raw material prices. and they had coming back. But there's a balancing act at the company is playing in this world market. while supporting customers, making end customer challenges to ensure that we have a sustainable growth and continue to put high utilization of our delivery plans while focusing on managing our gross margins. So as you would very much understand, I can't give you a straight answer because nobody sees trade answer this very old-time market. or the timing like the raw material seems like a tomorrow, yes, tomorrow now. But the outcome today is, yes, there's an impact. We are focusing on those impacts. We're looking to hard to create the value extraction of the company, and the company has a very strong focus to have optimize and maximize, taking consideration from customer to suppliers.

Sure. So okay, let me put it this way. Our focus here will remain on volume growth for our existing as well as newer products or we will prefer to have a balanced approach in terms of margin as well.

Well, our focus today would be to continue to hold the market share in volume because the market growth return back in the market. That's typically our business focus, right, given the volatility that we see. And it does not mean that the margin will not come, but that could also the more 1 of that in nature right now, as you would understand.

Sure. That's helpful. And just one clarification, if I may ask. The electronic chemicals or the newer areas where we are expanding into, these will be large -- the CapEx for them as be largely MPP based or there will be some dedicated capacity coming in, which is already there in our books. .

So again, these are niche carats. There'll be multi-powered assets and some maybe specialized assets. right? Because we're not in the commodity end of the electronic chemical, we are more focused on the niche and compact area of operation with it.

Next question is from the line of Siddharth from Equirus Securities.

On the Pharma business, could you just share your thoughts in terms of growth and profitability over the next 2, 3 years? How should we see this business scaling up? .

As I think I mentioned in the earlier question was exactly that we are looking where not to build those capabilities in the next 2, 3 years, as I said, the EBITDA fell we would be look at crore, INR 600 crores top line, we should be able to move into that phase. And as you would very well understand being the play it takes a long term to build the foundation, but then you start seeing an accelerated curve, which moves fast because the entire world with new box. You talk again when the cycle picks up, it takes a J-curve, that's say the approach that we're seeing. So I see that in the next 2, 3 years to start showing some early shapes.

Secondly, on the Global Biologics business, given that now we have started getting product registrations and also building a distribution model across geographies. How should 1 think about the OpEx of this business? And when we achieve a scale where we break even in this business? .

Again, I would say the way to answer this, what we are seeing, as ages mentioned earlier, we see the project post trajectory. As you would see the market itself are depressed to the India grit sector. We are clearly seeing a great acceptance of our technology and product performance. And I would say, we are very much positive to see that in the next couple of years, we should be in the position that you're looking to achieve for ourselves. As you rightly questioned, to get into [indiscernible]. Again, if you see more opportunities of more innovations, we'll be investing, and we will not do that to the other value add. So we are definitely very excited to what we see. But a couple of years from now, that doesn't look too far from us to be playing that game.

And lastly, for FY '27, in terms of any -- we would have any higher OpEx in terms of any large registrations or any other onetime costs that would be coming in our P&L given that we are looking at commercializing a few products.

Yes. So this is an ongoing thing which we have been -- since we've been investing into R&D and we are looking at these new LCs. So that's been continued in the last few years, and the same trend will continue of INR 6 crores, INR 100 crores of additional spend, which go...

I think his question was next year.

Yes. Next year, FY '27 as well, we'll have similar expenses for the R&D and also for the launch since we're looking at the biopic launch this year, we'll have some additional costs in the next few quarters on that.

And for the global products also, we would have additional cost coming in.

Yes, clearly, I think the action we can be very potato your answer. Next year is going to be heavy investments in lending out months. So those costs will be there.

Next question is from Surya from Philip Capital.

Sir, my first question is on the investment priorities going ahead? And what is the kind of CapEx -- in terms of the investment priorities, I just wanted to understand any specific investment that we are talking about the new business opportunities.

This would be a CapEx we ate in the past also. So we should have INR 700 crores to INR 800 crores of CapEx this year as well. again to fill in building new capabilities, both at the manufacturing level some of the new launches, which we are going to be having R&D spend, which we are going to have and across both Pharma and our agrochemical business. .

Okay. And also to have a better understanding about the kind of incremental contraction that we should be seeing from the newer business area -- is it possible to discuss what is the kind of a construct or your order book position currently in terms of the areas, whether it is Agripharma and with over newer area that we are talking about. .

Well, we don't have a specific -- we have a new areas, but I think somewhere around $1 billion, $1.2 billion, which is already the order is, which continues to hold on. But we don't have a specific breakup of those right now. particularly the other businesses are about B2C that the biologicals and now there's no other situation there. And I tostinterms of top line with DI and they are the numbers of order books now.

Then next question would be on the unit constraints. Sir, you have mentioned about maintaining the gross margin situation for the full year FY '27. But if you can say something what is the kind of availability situation? And what are the kind of impact of that possibly in the near term that we can see because of the availability of our oil -- but that's a big challenge at this juncture? .

You put exactly. So I think it's 1 of the most simple question was the most difficult answer maybe or difficult answer the simple question. As you know very well, as you all know, we are all challenges that availability, and that's not something in our hand. But so far, we've been able to manage and we'll continue to manage, but we never know when the situation changes the way the world is today, right? And I'm sure that's applicable to most of us in the sector and the industry. Yes.

Next question is from Sumanticipate Kumar from Motilal Oswal. .

Yes, sir, my question regarding pharma segment. And you have mentioned in the PPT a significant increase in CDMO inquiries. So how is the conversion is going to happen considering all the inquiries you have number one. Number two, we have seen in the PPT our services businesses increased significantly. So what is leading this business? And also, you are adding new customers in the last 12 months. So considering all these factors, next 2 to 3 years, how much growth you are expecting in the segment?

I think we just answered that earlier. Yes, as you know, we are trying to CDMO, the success at moving to 2 years new customers in open really as mentioned, we're looking at INR 500 crores, INR 600 crores...

Sir, sorry to interrupt, your audio is not clear.

As we mentioned earlier, right? And for example, of business, which would become the J-curve approach to look at how we can look at more expected growth going forward.

And from the outlook perspective, you have written -- we remain positive for the growth -- so any number, can you talk on double-digit, low double-digit mid-teens kind of growth we are expecting in FY '27. .

I would say, yes, growth for sure, double or late single will all be subject to the other world reacts yes? And that's...

Normal case scenario? .

I can't look at the normal case scenario right now because the quarter has once it's too close to the quarter to answer that. But yes, I can say we can definitely look at growth, Marin at a later stage of nearly late stage in the digital early-stage double digit at the worst case scenario.

Okay. Worst case scenario? .

Yes, at the worst case, we will have -- definitely have some growth above because it really goes that there's no oil and there's no fuel and there's no food, then we can't do much, right? So today we are to answer that is challenging, but we have plans to grow in a better presses compared to the competition.

Next question is from the line of Abhijit Akella from Kotak Mahindra. .

The INR 1,100 crore CapEx that we incurred for FY '26, sir, will it be possible to lay down the specific key projects in which this investment has gone.

Yes. So at least across the chemical, pharma and the R&D spend, which we have done. So we were about to commercialize [indiscernible] facility in Louann, so that has taken a substantial sum plus the NPP -- one of the NPP, which we have commercialized during this year. So the spends have been there in the agricapital side. And then the last day of the investments which we have been doing.

But just to clarify the presentation, see pharma CapEx was about INR 91 crores for the year. Yes. So then should we understand that the remaining INR 1,000 crores or so is all agrochemicals or how is it...

Agrochemical and the R&D space.

And the fine chemical area that we're talking about

That include all the electronic chemicals, agrochemicals and the R&D, fine chemicals.

R&D is -- yes, sorry, just to clarify, finleap plan that is for part of the NPP itself.

Yes. It's 1 of the MTP, which we'll get in commercial, as we mentioned earlier, if you would note.

Second 1 for plant health care, would it be possible to just quantify the revenues for FY '26?

So they have been the range around $2 million, $3 million.

Understood. And sorry, I might have missed this earlier, so please excuse me if I did, but on contract assets of INR 700 crores, what's the kind of trajectory you're expecting in the year ahead? I mean will it decrease further? Or How much?

Well, I think that's the range we've always been in, in the last quarter, given the business model and scenario balance sheet capacity, inventory customer needs and also look at the volatility of supply chains, we would...

Next question is from lanes from Long Equity Partners. .

First, 1 request. I mean, 1 of your largest product in the CSM segment, and there are patent rate. It's nothing new, most of the CDMOs or CSM companies have to deal with it. what would -- what would be nice is if you can give -- I address that question in your press release in some way that I think would be really appreciated because there are so many layers to that molecule. So that is my request. The first question, Sai, on that molecule. Do you see sort of like a gradual decline over the next 2, 3 years and then bottoming out? Or do you expect like a cliff that we will see only in that molecule. I'm not asking about rest of the business.

Well, I don't know how to answer that. Number one, need to appreciate additional, this is the partnership. Reviewing strategies will be a challenging scenario in today's context. We are a highly competitive world. And as you would -- I would like to look and model this through the approach that you've seen for any other product that goes in genericization in the sector.

The second question, sir, is for electronic chemical business, what is our current gross block? And what kind of gross block do you expect in the next 2, 3 years? .

We will be making another few hundred crore investments in that area, and that's a new avenue of growth. So new assets and plants will be built up. as we continue to see that we want to scale business up. We have got 4 to 5 products in the pipe, which are working well. We are looking to do more strategic areas into this. So investments of the gross block would be going up in this area and then over the next 5 years in terms of the volume and revenue that we plan to achieve..

But is that number like INR 200 crores, INR 50, INR 1,000 crores what kind of asset on any range would be helpful. .

Anything not a significant investment as we would have either today.

And is that -- or some idea on that.

It is generic to answer today because right now we're invested to build the business, the asset turn that you would see in the CSM business, the early stages have lower asset turns but business when it estimate reaches a scale in states come...

Then the final question, sir, is on the NCE molecule in the NCE molecule, I mean, for the life of path, let's say, 15-year sort of I mean what kind of potential -- I know it's a very dynamic part based on artwork, you have to do find partners and all that. But what kind of potential can it be for the company of our size. I mean today, we are at, let's say, INR 8,000 crores revenue scale. Would it be significant for our scale? Or it would be 10% kind of I mean some range there would be very helpful in terms of potential what's the life of the patent...

Significant amount. I think we are pretty -- we are bent I think the year of launch and the first season of not give us the larger cap to look at the significant. I think the most important significance that needs to be noted is taking an innovation, commercializing. I don't think the new company from India has done that, and it's probably the first company and chems affected to that. So that's the benchmark for putting our capability to take from discovery to markets. And restart to just give a significant number for us to invest and build, followed with that learning, we will have an understanding for the season that we go and we're in a better position to answer. And we are also looking at this as a capability build out for more new things on the pipeline to come. So that's the way I would look at that. The shift to the PI capability mindset for distribution company to a manufacturing for innovation uptake innovation in the markets. So that's really what is the ability, which is coming due. While this is demonstrated well despite, it gives us hope to build a lot more for the next multi-decades, multiyears, if I was to say, building innovation to the market. This is significance of this product. The number of significant with the revenue, yes, it should be a good contribution to the top line for the domestic business to start with. Based on some of our learnings for the season or two, we will be the better estimate to look at the potency of the product.

Yes. Yes. Okay. I hope at some point of time, you gave some preview into the upcoming NCE molecules, sir, I do know that and all the best. Thank you .

Ladies and gentlemen, we'll take the last question from the line of [indiscernible] from iTotPMS.

So my question has to do a bit with the client that we are serving for our biggest molecule. So since they have come up with the guidance of their formulation in which they use our molecule. They have come up with a guidance of beating their conservative guidance of full year last year. And so I'm just trying to understand if our shipments to this client of us is going to get better in the upcoming quarters. So basically, what I'm trying to understand is if we will have growth on our Adam export sector, which is dominated by 1 single molecule, do we see traction in that molecule going forward? Will we see volumes picking up in that molecule specifically for the next couple of quarters?

Well, I would look at the way you look at that customers follow that guidance from our perspective, when contract manufacturing, so what we are building in is already what we have contracted, as we appreciate supply chains are long. Clearly, it will be too early for us to answer and to that guidance to say how we see that. But clearly, yes, they do benefit will see that gating benefit of time.

Just to follow up on that. Since I know we've addressed about the contract assets already on the call. But we've seen a reduction of contract assets going from Q3 of FY '26 to Q4 of FY '26. SP611358872 So does this mean that our clients actually -- so we are basically building our clients and they're actually trying up on selling reserves of our contract assets. So would we see this trend moving forward, let's say, by Q1 '27, Q2 and Q3 '27?

I would say this is a business there's a bad level of inventory, which is always kept. They will be hired that we can give the volatility, as you could appreciate in the world, we are looking to keep in build and optimize capacity. So there's no point we have announced right? So that's how we're looking at it, right? And I think given the scale and the complexity of the value chain and production, contract as is below INR 500 crores or INR 700 crores would be a challenging number to manage that risk.

So any number that we can probably close on the contract assets for '27?

We will -- as I mentioned, we will be remaining within this range for what we are estimated for today. It could shift from a quarter-to-quarter basis.

Right. And another question just on the Electronic Chemicals side. So what is the approximate revenue figure that you can give us for the Electronic Chemicals for FY '26. And any guidance for '27 and '28 as well. Because some of your clients have been talking about the end market tripling by FY '30. So I think there's a lot of traction in these molecules that is entering into. And I'm just trying to understand the whole market for these medronic Chemical and the numbers from your side for guidance.

So honest to say here, right now at the early stage, the numbers are not significant for the per top line with the development stage of some of these products, we're building capacities and understanding and capabilities for the customer. In 2 to 3 years, we will be in a better position to understand the scale and size. As you would understand, it's a very serious level of confidentiality with our customers and confidentiality contracts, given the highly competitive environment of the space. But we are excited in the go about it given the fact the areas that we're operating are in the niche space. And as these are like we have mentioned full 5 products, which we're evaluating developing. They've got into the various phases, which we'll be looking at a manufacturing scale at a later date, yes.

Right. So for it to have, let's say, a significant contribution, like, let's say, how pharma is having in our business side. In those kind of numbers...

5, 6 years is estimated about somewhere about $100 million of revenues in the space.

And any commentary on gross margin guidance for '27?

So I think earlier question by a couple of others, we said we continue to manage and maintain the gross average gross margin of last year.

Next question is from the line of Sajal Kapoor from [indiscernible]

Two questions. PI has spent more than a decade discussing adjacencies like pharma, electronic chemicals, life sciences, -- yet agrochemicals still remain the dominant economic engine of the company, and we have been discussing why so. So as on today, from management's perspective, was the original assumption that PI's process chemistry and customer trust advantages would automatically transfer more easily across domains than they actually did? And what has been the single biggest unexpected challenge in building meaningful non-agro scale? That's my first question.

So I'm not very sure about whether you're talking about, but we made these investments over the last 2, 3 years. Clearly, agrochemicals is bread and butter. Sojacovery, not only manufacturing. Adjacencies have been only evaluated in the manufacturing space. And I think if you look back at the history of PI, even in the manufacturing and contract manufacturing, it took about 10 to 12 years before a significant impact on numbers could be seen in the past early 2000s. So that's what it really is when you get into the innovative phase. Completely under CDMO, a product doesn't get into a manufacturing play in pharma at least for 5 to 6 years of impactful numbers, right? So that's really how we are looking at it. Same in the electronics, we've invested them over the last 3 to 4 years. We are seeing products, the scale up. We are the investments that we're making. So they will be done. So I don't know whether I would say that this is a concern for us, but this is something which we see working well. But in the categories of the chosen player, we have a differentiated play, not just the commodity play especially in the pharma there has been challenges in external biotech startups reduction space. So the supposed to approach has become one challenge investment. But now I see that sector picking back up, so we could see those scales up.

Sure, sure. That's helpful. I was actually alluding to the 2012 annual report. But anyway, I mean, what has PI learned so far about the difference between scaling agchem CDMO versus scaling pharma CDMO and what capabilities still need to be built before PI can genuinely compete with established pharma synthesis leaders on innovation, not just chemistry execution.

Yes, if you see the investment there -- 5 point for the future. So I believe in the next year or 2, number one, we build the cap the offerings. So we are looking at capabilities which we need to have, which canate.wo,as partner so we can become a full integrated partner for pharma biotech startup to a company with strong manufacturing in a regulated and unregulated environment. So I believe in the next couple of years, we'll be in a pretty good unique position with...

Next question is from the line of Archit Joshi from Nuvama.

Sir, I just had one question. Would it be fair to assume that the current market is tilting more towards generics than that of patented products? And if you could also allude as to why would this be happening? Would there be some stress on the farm economics level? Or is it the farm demand that is going so fast? So any thoughts on that would be quite helpful.

Yes, I think that's a good analogy if you were to pick it up, to be very honest, the commodity prices are not moving the prices on the other side are high. The input cost of the farm is going. And chemicals are becoming a necessity. So you look at cheap solution right now. there are open for the opportunities in certain sectors where it doesn't have any value contributing solutions where innovation is coming. While the rate of adoption may have slowed down, it doesn't mean you want new innovopted. -- cyclical nature. And as the aggression would come up in the commodity cycle and the agriculture sector, this will accelerate. That is our view. And -- but it doesn't mean -- we still see innovation is moving, but don't forget where the commodities or the generics have gone to the bottom of the pit when the market hit back, where innovation will still continue ste.verage, you would appreciate that innovation is still continue to do better. And on short term or cycles, cut, you could see the cycles that you're talking about...

Thank you very much. With this, we conclude today's conference call. I now hand the conference over to the management for closing comments.

Thank you, everybody, for joining the call, and thank you as always for your support, and we look forward to catching up with you over the next quarter. Thanks once again.

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