IPLNSEQ1 FY24June 30, 2023

India Pesticides Limited

6,370words
148turns
10analyst exchanges
1executives
Management on call
D. K. Jain
CHIEF EXECUTIVE OFFICER – INDIA PESTICIDES LIMITED
Key numbers — 40 extracted
Rs. 2,047 million
tories. The price of technical products have also declined significantly. Our revenues stood at Rs. 2,047 million in Q1 FY24 compared to Rs. 2,217 million in Q1 FY23. We remain cautiously optimistic and are dete
Rs. 2,217 million
have also declined significantly. Our revenues stood at Rs. 2,047 million in Q1 FY24 compared to Rs. 2,217 million in Q1 FY23. We remain cautiously optimistic and are determined to tap into the opportunities pr
Rs. 204 crore
financial performance. Taking you through the financial highlights, the total revenue stood at Rs. 204 crores, against Rs. 222 crores in Q1 FY23. EBITDA in Q1 FY24 stands at Rs. 26 crores. PAT stood at Rs.1
Rs. 222 crore
Taking you through the financial highlights, the total revenue stood at Rs. 204 crores, against Rs. 222 crores in Q1 FY23. EBITDA in Q1 FY24 stands at Rs. 26 crores. PAT stood at Rs.16 crores in Q1 FY24, as
Rs. 26 crore
l revenue stood at Rs. 204 crores, against Rs. 222 crores in Q1 FY23. EBITDA in Q1 FY24 stands at Rs. 26 crores. PAT stood at Rs.16 crores in Q1 FY24, as compared to Rs. 41 crores in Q1 FY23. During the quart
Rs.16 crore
rores, against Rs. 222 crores in Q1 FY23. EBITDA in Q1 FY24 stands at Rs. 26 crores. PAT stood at Rs.16 crores in Q1 FY24, as compared to Rs. 41 crores in Q1 FY23. During the quarter, Company saw pressure du
Rs. 41 crore
. EBITDA in Q1 FY24 stands at Rs. 26 crores. PAT stood at Rs.16 crores in Q1 FY24, as compared to Rs. 41 crores in Q1 FY23. During the quarter, Company saw pressure due to a reduction in the selling price of
rs,
a reduction in the selling price of some of their products owing to destocking by overseas suppliers, leading to an impact of Rs. 17 crores. This, in fact, comprises Rs. 7.3 crores owing to sales made
Rs. 17 crore
rice of some of their products owing to destocking by overseas suppliers, leading to an impact of Rs. 17 crores. This, in fact, comprises Rs. 7.3 crores owing to sales made during the Q1 FY24 and Rs. 9.8 cror
Rs. 7.3 crore
destocking by overseas suppliers, leading to an impact of Rs. 17 crores. This, in fact, comprises Rs. 7.3 crores owing to sales made during the Q1 FY24 and Rs. 9.8 crores due to the revaluation of inventories
Rs. 9.8 crore
Rs. 17 crores. This, in fact, comprises Rs. 7.3 crores owing to sales made during the Q1 FY24 and Rs. 9.8 crores due to the revaluation of inventories in hand at NRV. The revenue from export stood at Rs. 84
Rs. 84 crore
8 crores due to the revaluation of inventories in hand at NRV. The revenue from export stood at Rs. 84 crores, as compared to Rs. 101 crores in Q1FY23. And domestic revenue stood at Rs. 117 crores, which is
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Guidance — 20 items
D. K. Jain
opening
“We are focused on introducing new products and expansion of the Hamirpur plant project.”
D. K. Jain
opening
“Our team has been relentlessly working on developing chemicals from basic stages and process to mitigate the impact of such situation going forward.”
D. K. Jain
opening
“Simultaneously, we aim to foster growth opportunities for our employees, generate profitable returns for our investors and contribute to the communities we operate in.”
Rahul Jain
qa
“Okey, and do we expect further inventory losses based on the current situation India Pesticides Limited August02, 2023”
Rohan Gupta
qa
“So do you see, or do we expect that our per kg margin on which generally the export business is based on, that remains intact or even the per kg margins have been affected in the current scenario in the export market.”
D.K. Jain
qa
“Maybe a marginal effect will be there, but not at all in the export market.”
Rohan Gupta
qa
“Just want to understand, India Pesticides Limited August02, 2023 sir, when you are improving the product mix that definitely will be coming with the improvement in margins, as well, mainly on a per kg basis.”
Rohan Gupta
qa
“So, do we see that our margin profile with the new product mix, improvement in product basket, will reach to old NAV in terms of percentage margins of 25% plus?”
Rohan Gupta
qa
“600, it will be only you can say 15% or 16% margin versus earlier 20% to 22% margins?”
D.K. Jain
qa
“So, we expect to maintain the EBITDA margins of around 20%, and we will try our best to improve this further on by proper selection of the molecules.”
Risks & concerns — 15 flagged
We remain cautiously optimistic and are determined to tap into the opportunities presented by these volatile and uncertain markets.
— D. K. Jain
Our team has been relentlessly working on developing chemicals from basic stages and process to mitigate the impact of such situation going forward.
— D. K. Jain
During the quarter, Company saw pressure due to a reduction in the selling price of some of their products owing to destocking by overseas suppliers, leading to an impact of Rs.
— S. P. Gupta
The Demand environment in the international market remained weak due to adverse weather conditions and inventory destocking.
— S. P. Gupta
The decline in sales has been mainly through volumes only.
— S. P. Gupta
Sir, we have also talked about that you have improved the product basket, and that's why despite volume decline of roughly maybe 8% to 10% in the current quarter, our revenue decline had been limited to 7%, 8% on this, so quite a remarkable job done there in terms of improving the product mix and congrats to that.
— Rohan Gupta
It's a very difficult question to answer.
— D.K. Jain
I think you would have asked even in some other company's conference call also it is very difficult.
— D.K. Jain
That one, sir, it will be very difficult to tell.
— D.K. Jain
We have market, these are very volatile nowadays.
— S. P Gupta
As regard margin decline in recent year, earlier, we were having very few niche products, but the market size of those products that had got saturated or very low.
— S. P. Gupta
Okey, and pricing pressure and the inventory write-off, what you are seeing is more on the product, which you sell in domestic market or even your export this Rs.
— Bhavin Chheda
84 crores sales what you have done, you faced margin pressure on that also?
— Bhavin Chheda
The margin pressure on exports are not very much sir.
— D. K. Jain
You're saying herbicide is the place, where you faced majority decline?
— Bhavin Chheda
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Q&A — 10 exchanges
Q
Sir, the first question relates to, yes, we have been going through tough times for the last 3-4 quarters due to the external environment and aggressive pricing and dumping of products from China. So currently, as we speak now, 2 things about this. One is how is the demand shaping up both on the domestic and the export front and in terms of prices of various materials, both raw materials and product side, how are the prices behaving now post the end of the last quarter? Had they stabilized? Have some of the product prices started going up if you could share some more details on the environment
D. K. Jain
Rahul Ji, good morning. The external market still remains slightly subdued. The demand from overseas customers because of still the oversupply from China, as well as weather conditions, but in the domestic market, the demand looks to be good, but the prices are remaining subdued. and we hope that by this quarter there could be some improvement could be there. So, have the prices stabilized or they are actually falling towards the end of the first quarter? The prices are still slightly falling sir, because when we talk about what is happening, then the customers, whenever they quote a price, th
Q
Yes. Hi, sir. Good afternoon and thanks for the opportunity. Sir, a couple of questions, First is on our inventory markdown roughly Rs. 17 crores, the amount, which you mentioned. So, what we understand that generally we have a pass on clause to the end customer, and even the raw material is also procured accordingly and backward calculating the prices, which we have negotiated with the customer. So, I mean, generally, we have a pass-on mechanism with the falling or the rising raw material price scenario. So, any particular reason that this reduction in the selling price and even the inventory
S. P. Gupta
Rohan Ji, the full NRV impact is on the import substitute product, which we have started making last year. The contract you are telling, they are with our overseas customers, that is for export but this entire NRV loss is on products which we have started last year, Aatma Nirbhar Bharat import substitute from China, and they have other targets for the local market. In that territory, we do not have any agreement with local suppliers. Okay. So basically, which you are saying for the domestic sales, where the product has been manufactured, the global prices of the Chinese players have reduced th
Q
Yes. Thanks for the opportunity. Sir, first question is in terms of any new product launches in Agro segment during FY24. Last year, you have launched multiple products, which you also indicated primarily from the import substitute perspective. Any new launches, which have been planned for this year?
D.K. Jain
Rohit Ji, yes, we are planning to launch about four products this year, which will be consisting of three technical products and one intermediate and apart from these, we would be launching few new formulations also more than 10 combinations formulations in our B2C sales and also, as you know, that our Hamirpur facility is work is going on there. So, we will be launching our first product in Q4FY24. India Pesticides Limited August02, 2023 Right, and these three technical, these are again import substitutes? We think that out of these two are import substitutes; and one is only for export. The
Q
I just wanted to get an idea on our working capital days?
S. P. Gupta
Working capital days has reduced from March 23 levels by 20 days. Our inventory level has declined and debtor days remains same. So, it has declined by 20 days from March. Okay. That's helpful. And have you faced any problems regarding sales returns? No, no. There has not been any abnormal sales return, nothing of that sort. Okay and I just wanted to understand, which geographies do we mainly export to? We export sir, mostly to Europe, U.S., Australia, and Japan. Okay. So, any geography that we majorly export to, a major chunk of our exports goes to that? Major chunk goes to Europe, sir, Europ
Q
Sir could you tell me what will be the asset turnover for our capex planned at Hamirpur, as well as for IPL?
D.K. Jain
Asset turnover, sir, we expect about 2.25x to 2.5x at Sandila, as well as Hamirpur site. India Pesticides Limited August02, 2023 Okay and sir, just to add on to the question of our earlier participant, so what could be the margins going forward? Can we expect them to stabilize around like once they go back to normal 22%, 23%? Sir, we wish very much, and we feel that around 20%, we should be able to achieve comfortably. Okay and sir, the revenue guidance was 10% for FY24, would you be able to give any guidance for FY25? For FY25, sir, we had planned for about 20% to 25% revenue growth every yea
Q
Thanks for the opportunity. A couple of questions have been already answered, so I won’t repeat that, because you guys mentioning about the RS. 17 crores inventory adjustment, wherein Rs. 9 crores were the write-off and the other Rs. 7 crores I missed, what was that amount, sir?
S. P. Gupta
Just divide the amount, on products we have taken NRV hit at the end of this quarter. During this quarter, we have sold products worth around Rs. 20 crores, and they were sold less than our cost price by Rs. 7.3 crores. Say the costs were Rs. 27 crores, but we have sold for Rs. 20 crores since price had declined in some product by 30% to 40%. So that is basically our inventory write-off. Yes. Sir, next is, last quarter, you had mentioned about the product registration that we have got in US, and I think our herbicides, and we had gotten a good client entry in it. So any further update on that?
Q
Hello.Good evening, sir. So a lot of my questions have been answered. So just want to know, with our new capex that's coming online, we are expecting around an asset turnover around2 to 2.5x. So, Rs. 110 crores. So, we could expect maybe nearly Rs. 250 crores of additional revenue in the next year or maybe it will take time to scale up, how would that journey be of our revenue of our new capex?
D.K. Jain
Sir, this capex, what we will be doing now, we will be completing by March 24, and some of it will be in infra and we expect that this should contribute to us in the next financial year, partially and the full impact would be there in the next-to-next year. Okay, sir. So, sir, you've given a guidance for FY24, FY25, but in a long-term basis, what do we see our journey like? Our path back to profitability, higher profitability that we had and revenue growth of 20%, 25% would come back in FY26? Or maybe this too market dependent right now. How would you quantify or qualify the journey that we ar
Q
Hello. Thank you for the opportunity, sir. I just wanted to know, what do you say when this destocking situation will get better by how many months, as per your estimate?
D.K. Jain
Sir, it's very difficult to tell. It's a very difficult question to answer. I think you would have asked even in some other company's conference call also it is very difficult. But what we feel probably, this destocking should be over by another three months to four months because the companies what they have the overstocking, they would have got rid of their stocks by the time. Yes. Okay and then so by then can we get to 20% margin level? Yes, that's what we feel. That's why we have estimated is that this quarter, it will be slightly subdued, but from next quarter onwards, certainly, we expec
Q
Sir, good afternoon. Sir, few questions. First, I think as you mentioned, this Rs. 17 crores impact, you have said that across a few products. I just wanted to understand that, since you have a product portfolio of more than 12, 15 products, so where and majority is fungicide and herbicide. So does that both the segments were impacted by pricing power, or a few large products were impacted, how to understand what's exactly happening to our overall portfolio. If you can give some guidance, because last three quarters, four quarters, the overall margin guidance has been coming down, and we have
S. P. Gupta
Actually, the price reduction or the inventory loss, what we have taken, it is in new import substitute product launched last year. They are mainly herbicides only. So, we have taken a hit. As regard margin decline in recent year, earlier, we were having very few niche products, but the market size of those products that had got saturated or very low. They were on very low growth path. In order to achieve expansion, we have launched eight new molecules, but unfortunately, these molecules were mostly import substitute product from China.When there has been a sudden price fall for these products
Q
Thank you very much for your participation. For any further queries or clarifications, please do get in touch with our Investor Relations team. Thank you. Have a nice day.
Management
Speaking time
D.K. Jain
35
S. P. Gupta
23
Moderator
12
Rahul Jain
12
Rohan Gupta
12
D. K. Jain
11
Bhavin Chheda
9
Yogansh Jeswani
7
Ketan Athavale
7
Darshil Jhaveri
5
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Opening remarks
Tejas Sonawane
Thank you, Reo. Good afternoon, everyone. On behalf of Dolat Capital, I would like to thank the management of India Pesticides Limited for giving us the opportunity to host their Q1 FY24 earnings conference call. From the management team, we have with us today, Mr. D.K. Jain, Chief Executive Officer; and Mr. S.P. Gupta, Chief Financial Officer. Without further ado, I would like to hand over the call to the management for their opening remarks, post which we'll open the floor for a Q&A session. Thank you, and over to you, sir.
D. K. Jain
Thank you, Mr. Tejas. Good afternoon, ladies, and gentlemen. I hope you and her family are staying safe and healthy. Unfortunately, our Chairman, Mr. Agarwal, could not join this call because of some urgent unavoidable circumstances. He has sent his greetings and apologies. I take the pleasure of welcoming you all for the Q1 FY24 earnings conference call of India Pesticides Limited. I hope you all had the chance to look at the financial statements and earnings presentation uploaded on the exchanges and our website. The agrochemical sector has been navigating through a challenging external environment, which has impacted our operations also. Raw material prices are fluctuating due to overseas supplies leading to pricing headwinds and increased cost of inventories. The price of technical products have also declined significantly. Our revenues stood at Rs. 2,047 million in Q1 FY24 compared to Rs. 2,217 million in Q1 FY23. We remain cautiously optimistic and are determined to tap into the
S. P. Gupta
Thank you, sir. Good afternoon, ladies, and gentlemen, and thank you for joining the India Pesticides conference call to discuss Q1 FY24 results. I will quickly walk through our financial performance. Taking you through the financial highlights, the total revenue stood at Rs. 204 crores, against Rs. 222 crores in Q1 FY23. EBITDA in Q1 FY24 stands at Rs. 26 crores. PAT stood at Rs.16 crores in Q1 FY24, as compared to Rs. 41 crores in Q1 FY23. During the quarter, Company saw pressure due to a reduction in the selling price of some of their products owing to destocking by overseas suppliers, leading to an impact of Rs. 17 crores. This, in fact, comprises Rs. 7.3 crores owing to sales made during the Q1 FY24 and Rs. 9.8 crores due to the revaluation of inventories in hand at NRV. The revenue from export stood at Rs. 84 crores, as compared to Rs. 101 crores in Q1FY23. And domestic revenue stood at Rs. 117 crores, which is similar as achieved in Q1 FY23. The Demand environment in the interna
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