IPLNSEJune 04, 2022

India Pesticides Limited

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221turns

15analyst exchanges

0executives

Key numbers — 40 extracted

34.3%

is a matter of great honour for all of us at IPL. Further, during the quarter our revenue grew by 34.3%, supported by increased demand of new product launches. In spite of the global supply chain disru

54.50%

the global supply chain disruption, we were able to maintain our gross margin for the quarter at 54.50%. During the quarter, we have recognized non-recurring expenses of approximately INR 6.5 crore, of

INR 6.5 crore

quarter at 54.50%. During the quarter, we have recognized non-recurring expenses of approximately INR 6.5 crore, of which INR 4.0 crore is the towards bad debt and INR 2.35 crore to debt interest cost. Our adj

INR 4.0 crore

g the quarter, we have recognized non-recurring expenses of approximately INR 6.5 crore, of which INR 4.0 crore is the towards bad debt and INR 2.35 crore to debt interest cost. Our adjusted EBITDA margin for

INR 2.35 crore

rring expenses of approximately INR 6.5 crore, of which INR 4.0 crore is the towards bad debt and INR 2.35 crore to debt interest cost. Our adjusted EBITDA margin for the quarter stood at 26.08% and PAT margin

26.08%

ebt and INR 2.35 crore to debt interest cost. Our adjusted EBITDA margin for the quarter stood at 26.08% and PAT margin at 19.60%. During the quarter, we soft launched one new herbicide technical, wh

19.60%

debt interest cost. Our adjusted EBITDA margin for the quarter stood at 26.08% and PAT margin at 19.60%. During the quarter, we soft launched one new herbicide technical, which has the revenue poten

INR 50 crore

ing the quarter, we soft launched one new herbicide technical, which has the revenue potential of INR 50 crore. Presently, we have two upcoming products in pipeline, out of which last product will be launched

11.3%

the continued commitment of our team towards growth. For the year ’21-‘22, our revenue was up by 11.3% and our EBITDA was up 19.8% on year-on-year basis. As you know due to multiple challenges across

19.8%

our team towards growth. For the year ’21-‘22, our revenue was up by 11.3% and our EBITDA was up 19.8% on year-on-year basis. As you know due to multiple challenges across the world, the economies an

INR 729 crore

ent raw material procurement. Taking you through the financial highlight, total revenue stood at INR 729 crore, against INR 655 crore achieved in last year. That is a YoY growth of 11.3%. EBITDA for the finan

INR 655 crore

ement. Taking you through the financial highlight, total revenue stood at INR 729 crore, against INR 655 crore achieved in last year. That is a YoY growth of 11.3%. EBITDA for the financial year ‘22 stands at

Guidance — 20 items

Tejas Sonawane

opening

“As the outset, I'm pleased to state that our Hamirpur plant ground breaking ceremony will be held by the auspicious hands of Honorable PM, Narendra Modiji on 3rd June, 2022.”

Tejas Sonawane

opening

“Presently, we have two upcoming products in pipeline, out of which last product will be launched by Q3 of FY’23.”

Tejas Sonawane

opening

“During the quarter, we further increased our Sandila plant capacity by 500 metric tons for our existing Fungicide technical and plan to increase it by 1,500 metric ton by the end of next quarter.”

Tejas Sonawane

opening

“Our progress of the ongoing expansion project is as per timeline and 2 | Result Update: Q4 and FY2022 India Pesticides Limited Q4 and FY2022 Results Update as per our expectations.”

S. P. Gupta

opening

“Further, we expect to invest INR 70 crore in CapEx during current year, financial year ‘23.”

Vinayak Mohta

“One is, the revenue of growth from here on, given that you will be expanding, you've already invested INR 70 crore last year and you will be investing INR 70 crore this year.”

Vinayak Mohta

“And just wanted to understand what are the risks to, if the guidance is correct, then what are the risks to the same?”

Vinayak Mohta

“And secondly, would be, what are the kinds of EBITDA margins we are looking to maintain going forward?”

Vinayak Mohta

“So, what is the trajectory that you think will be sustainable?”

D. K. Jain

“Gupta, we would be spending INR 70 crore this financial year at our existing Sandila site and the major expansion will come from next year onwards at our new site at Hamirpur.”

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Risks & concerns — 11 flagged

And risk, of course, there could be some, we don't envisage any such risks, but only some delay or some regulatory problems or any other thing, those could be some risks involved.

— Vinayak Mohta

So, have you faced any price decline in any of the products?

— Krishan Parwani

So, you have not faced any price decline in any of the products?

— Krishan Parwani

It was slightly lower as compared to financial year ’21 because of decline in only one of the products, for which we have received good orders this year.

— S.P Gupta

There is minor decline in volume terms as compared to financial year ’21, because of only one product, for which we have received good orders during current year.

— S.P Gupta

If something happens in supply chain or some crude is going higher or inflationary pressure is there, then we may see.

— S.P Gupta

And do you see any impact of it coming down in the coming quarters?

— Yogansh Jeswani

Sir, the decline that we are seeing this due to new product launches or like what is the reason for the reduction in the margin?

— Ananth S

Actually, the quantity declined because of decline of only one product, herbicide.

— S.P Gupta

You mentioned, I guess, there was no volume growth this year because of decline in one of the products that you had.

— Aashish Upganlawar

The volume decline is only for one of our major herbicide only and for all our other products we have growth this year.

— S.P Gupta

Q&A — 15 exchanges

Yes. Hi, good evening. I majorly had questions across two dimensions. One is, the revenue of growth from here on, given that you will be expanding, you've already invested INR 70 crore last year and you will be investing INR 70 crore this year. And you're generally guided for an asset turn of 2 to 2.5 for the newer facilities that come on stream. So, is it fair to assume that you are looking at anywhere between INR 1,150 crore to INR 1,250 crore of revenue by FY’24? And just wanted to understand what are the risks to, if the guidance is correct, then what are the risks to the same? This will b

Vinayak Mohta

Okay. And secondly, would be, what are the kinds of EBITDA margins we are looking to maintain going forward? And this time, you came in at 24%? So, what is the trajectory that you think will be sustainable? And thirdly, on the capacity. The newer land that you have bought, what kind of timeline or what kind of plans do you have with regards to CapEx and what kind of products or technology are you planning on bringing it on? It's too early to say but, you would have some plans. So, just some ideas regarding that as well. Thank you. 4 | Result Update: Q4 and FY2022 India Pesticides Limited Q4 an

Hello. Good evening, sir. Congratulations for a great set of numbers. Sir, I had a basic question about, when we say that in the most products, we are backward integrated, so just for example, say if we consider a Pretilachlor or a Captan, so, does it mean that we directly start from aniline or maybe nitrate in terms of Captan and then entire chemistry is taken care by us or we buy intermediates and then just you do the processing of the chemical groups?

D. K. Jain

Sir, we start with chlorine and carbon di-sulphide to start to for the our Captan plant. They are the very basic chemical and number two, for Pretilachlor, we start from aniline. Okay. So, basically, we are integrated. We are backward integrated that way. And we are happy to say that our plant for this intermediate, using aniline, the intermediate what is required for Pretilachlor, we have just commissioned. Successfully,we have commissioned only last week. So that is a very good part and that will really save a lot of foreign exchange to our country and dependence on China. Great. Sir, anothe

Good afternoon, sir. Congratulations on a good set of numbers. Sir, I have three questions. The first question is, we were to launch around eight new products and out of which it looks like we have 5 | Result Update: Q4 and FY2022 India Pesticides Limited Q4 and FY2022 Results Update already launched six products. So, the remaining two, would it be any fungicide or technical type of product? Or is it the intermediate product?

D. K. Jain

Sir, we had promised eight molecules when we went public. Out of which five we're already launched till the financial year ending March ‘22. And then this quarter, we have just launched one, just commissioned like I mentioned earlier, we have just commissioned a plant for the intermediate for a Pretilachlor and two more products, one will be intermediate and one will be a herbicide, which will be launched in the coming days. One herbicide would be launched next quarter and the another intermediate for one of the very important insecticide, that will be launched by another four months from now.

Yes. Hi. Thanks for the opportunity. Couple of questions. First on this quarter performance. So, if I see, I think last year in the 4Q FY’21, there was a COVID impact, right? Otherwise, you would have 8 | Result Update: Q4 and FY2022 India Pesticides Limited Q4 and FY2022 Results Update clocked a revenue of at least INR 180 crore, INR 190 crore. So, what happened this quarter? I mean, this quarter you have clocked, I think INR 177 crore? So, have you faced any price decline in any of the products?

S.P Gupta

No, no. Quarter four is our softest quarter, in last year also and even it is the same situation in the current year, because of seasonality of export market. So, you have not faced any price decline in any of the products? Is it what you're saying? No, no, no. Price decline is not there. Okay. Okay. Fair enough. So, it's more to do with the seasonality? Okay. Yes. Sure. The second question is on the CapEx, sir. Because I think it was mentioned that you would be receiving the EC by let's say October, December. So, you would have to do some of the CapEx in let's say 4Q of FY’23, right? So, mayb

Hi, sir. Thank you for the opportunity and congratulations on a good set of numbers. Sir, couple of questions have been answered. I am saying, most of the questions have been answered, there are just few more from my end. Sir, looking at your year-end balance sheet, if we go into the inventory numbers, the inventory, both on absolute numbers and on the basis of days is comparatively higher. We are closing on INR 140 crore of inventory. So, could you share some more light, why is this sudden jump in closing inventory?

S.P Gupta

Actually, the company has taken a call to keep higher inventory of imported raw materials, so that the production remains uninterrupted. As you are aware there are challenges in terms of logistics for imported material and shipment are getting delayed due to delay in availability of containers and some traffic jams in China. As far as our finished goods inventory is concerned, there has been delay in getting containers for that also. So, this has resulted in high level of inventory for finished, as well as for raw materials. Understood. So, sir, roughly, what would be the breakup of this INR 1

Hello, thanks for the opportunity. Firstly, on the initial part, sir explained about one-time expenses. Can you just repeat that? The part of the one-time expenses for this and the other expenses reported?

S.P GuptaD

Actually, one-time expenses include, bad debt of INR 4 crore. Earlier, we were not following the receivable policy, since we were unlisted. Now, we have adopted receivable policy. Earlier, what was happening, if we had filed legal cases in Formulations business, we were not writing it off. But now, as per the policy, even if we have filed the cases, if the receivables have extended to a particular period, we have to write it off. So, we have adopted receivable policy this year and taken one-time hit of INR 4 crore. And the second one is of interest of more than INR 2 crore on taxes paid of ear

So, how fast do we see the ramp up of the new capacity? Will it happen immediately or will it take around two to three years timeframe to ramp up to the full utilization rate?

D. K. Jain

Sir, we now have capacity expansion at our Sandila unit, which we feel we should be able to complete this year. And at our new site at Hamirpur, under our wholly owned subsidiary, that will start only from next year. And there of course, we will be spending about INR 100 crore to INR 125 crore every year for coming three, four years at least. So, at the Hamirpur plant also, will we ramp up in terms of revenue happen gradually, or only post the entire commissioning of the plant, the ramp up in terms of revenue will happen? Sir, there also we will be building in blocks. So, every year, we would

Hello, team. My just clarification, two clarifications. First on the margins. Again, you mentioned 26%, 29%, we need to be stabilizing new products. So, what should be the margin in let say, FY’24? Will we again go back to the 30%, 31% kind of range in FY’24? Or let’s say ’25 we will be fully ready with our units and other things?

S.P Gupta

Yes, for financial year ’24, margins will improve slightly. It will be maybe 100 basis points, 200 basis points higher to this 26%, 29%. The raw materials should remain constant. These are the bumps. Sir, the problem is that nowadays, the raw materials are changing up and down. So, that uncertainty would always be there. Okay. Okay. Sir, a related question on the raw material side. So, when we are guiding let’s say INR1,100 crore of revenue, we are talking only about the volume growth. Coming from INR 700 crore and going to INR 1,100 crore, coming only from the volume growth. We are not assumi

Yes. Good afternoon. One question. These two intermediates that you have been making in-house versus buying it outside, what would be the cost savings for you? And how are you able to achieve competitiveness over there, if you are going to sell part of it outside?

D. K. Jain

Sir, these two intermediates, what we have planned to produce, first of all, they are not available in India at all. We need to import them from China. And it is not available. Nobody is selling it here in India at all, and I don’t think anybody is making these chemicals in India. Maybe one company, but we are not very sure about it. So, that way, we would not be depending too much on China. Our dependency on China will get slightly reduced, and we would be using part of it for our captive consumption and then, part that we would be offering to our customers in India. And what would be the cos

Yes sir. Haresh here. Can you just tell me the figure for last three years? I mean bad debt figure for last three years?

D. K. Jain

Bad debt figures. Is this INR 4 crore is bigger than the previous three years or it is an average? No, no, it is bigger. Actually, earlier, two years back, we have written off maybe, provision will be of INR 2 crore, last year it will be INR 2 crore. But during current year, including provision, we have taken figure of INR 7 crore. So, INR 3 crore is provision. INR 4 crore is bad debt we have written off due to policy. So, basically, every year, it is around, the average is around INR2 crore, bad debt? No, INR 1 crore to INR 1.5 crore. Okay. And this last year, that is 31-03-’22, you have seen

Good evening, sir. Overall, good set of numbers for fiscal FY’22. Just a couple of questions. The new products which you launched in FY’22, they must have contributed how much to the overall topline in FY’22?

S.P Gupta

It will be around 8% to 9% of our current turnover. And total four products were launched, right? Three till first nine months and one in this quarter, right? Yes. Yes. Five. And in terms of CapEx, I understand, that INR 70 crore is pending to reach Sandila capacity to 28,000 metric ton and Hamirpur you will start at INR 100 crore, INR 125 crore per annum run rate. So, next year CapEx we should assume around INR 180 crore, INR 190 crore total for FY’23? No, for FY’23, Sandila plant will be INR 70 crore and for our new site, environment clearance we have not received. So, we are projecting a Ca

Yes. Just one question. You mentioned, I guess, there was no volume growth this year because of decline in one of the products that you had. So, is it the only reason or there is some other reason also, capacity constraints and stuff that was there this year?

S.P Gupta

The volume decline is only for one of our major herbicide only and for all our other products we have growth this year. Okay. Okay. So, overall basis, you didn’t have any volume growth? It is entirely price driven this year or mixed? Yes. Yes. It was price driven. Okay. And the 25% growth that you are mentioning for the next year, it is mostly to do with the volumes or the higher prices will still prevail in the next year? I mean the guidance is mostly towards volume growth, is it next year? Yes, yes. Mostly volume growth.

Yes sir. So, my first question is on new products that you have launched in FY’22. I think four, five products that you have launched, what are the market opportunities for those four, five products? Sir, the new products that we launched in FY’22, the four, five products that we have launched, what is the market opportunity for those four, five products?

D. K. Jain

Market opportunity for those products, sir, individual product-wise, we have to again check. There would be almost INR 150 crore to INR 200 crore. Collectively? Yes. 18 | Result Update: Q4 and FY2022 India Pesticides Limited Q4 and FY2022 Results Update So, sir, what I am trying to understand, these new products, that we will launch in FY’23 and the products that we have launched in FY’22, collectively, they have a market opportunity of INR 350 crore, let’s say INR 400 crore at tops. So, how do we plan to grow from this base? So, are there new products in the pipeline or what are we trying to

So, thank you very much for taking out this time and we got very good feedback from all of you. And if you have any more questions, please feel free to come to us. Absolutely no problem. We would be delighted to clarify all your doubts. Thank you very much once again. Have a nice evening.

Management

SP Gupta Chief Financial Officer Investors@indiapesticideslimited.com +91 522 265 3602 Bijay Sharma / Ashok Negi Churchgate Partners ipl@churchgatepartners.com +91 22 6169 5988 India Pesticides Limited Water Works Road, Aishbagh, Lucknow-226 004, Uttar Pradesh, India www.indiapesticideslimited.com

Safe Harbour

Certain statements in this presentation concerning our future growth prospects are forward looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The company's results may be affected by factors including, but not limited to, the risks and uncertainties in research and development; competitive developments; regulatory actions; the extent and duration of the effects of the COVID-19 pandemic; litigation and investigations; business development transactions; economic conditions; and

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Speaking time

D. K. Jain

S.P Gupta

Rajesh Jain

Moderator

Krishan Parwani

Yogansh Jeswani

Bhavin Chheda

Ayush Agarwal

Ananth S

Jimesh Sanghvi

Opening remarks

Tejas Sonawane

Thanks, Margaret, and good afternoon, everyone. On behalf of Dolat Capital, I would like to welcome all the participants to the Q4 FY’22 earnings call of India Pesticides Limited. We would like to thank the management for this opportunity, for giving us this opportunity to host this call. From the management team, we have with us, the Chairman of India Pesticides Limited, Mr. Anand Swarup Agarwal; the CEO-Mr. D. K. Jain and the CFO-Mr. S. P. Gupta. Before we start the call, allow me to read out the disclaimer for the safe harbor statement on behalf of the management. During the call, we can make forward-looking statements considering the environment we are in today, which obviously carries a risk in terms of uncertainty due to which the actual results could be a little different, and we do not undertake to update the statements periodically. Without any further ado, I would like to hand over the floor to Mr. Anand Swarup Agarwal, the Chairman of India Pesticides Limited for his opening

D. K. Jain

Thank you, sir. Good afternoon, ladies and gentlemen. I thank you for taking out time to join this earning call of FY’22. Our strong financial year ‘22 validates the resilience of our product offerings and business model and the continued commitment of our team towards growth. For the year ’21-‘22, our revenue was up by 11.3% and our EBITDA was up 19.8% on year-on-year basis. As you know due to multiple challenges across the world, the economies and raw material supply chains have been affected. But as we are sourcing most of our raw material locally, and are backward integrated in most of our products, which has supported our business during such challenging times. Our focused execution of our strategy, supported by improving micro-economic indicator, and market sentiment, positions us, as well as becoming a strategic partner to our customers looking to have a sustainable dependable partner. This is helping us to gain market share and command better pricing. During this quarter, we ha

S. P. Gupta

Thank you, sir. Good afternoon, ladies and gentlemen, and thank you for joining India Pesticides Limited conference call to discuss financial year ’22 results. India Pesticides’ margin and profitability continues to remain strong with our efficient asset utilization and efficient raw material procurement. Taking you through the financial highlight, total revenue stood at INR 729 crore, against INR 655 crore achieved in last year. That is a YoY growth of 11.3%. EBITDA for the financial year ‘22 stands at INR 227 crore, as compared to INR 189.5 crore in financial year ’21, with a growth of 19.8% YoY, and INR 47 crore in Q4 of financial year ’22. EBITDA margin was at 31.1% in financial year ’22, as compared to 28.9% in financial year ‘21. The PAT stands at INR 158 crore in financial year ‘22 as compared to 3 | Result Update: Q4 and FY2022 India Pesticides Limited Q4 and FY2022 Results Update INR 134.5 crore in financial year ’21, a growth of 17.5% YoY and about INR 31 crore in Q4 of finan

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