IPLNSESeptember 30, 2023

India Pesticides Limited

3,973words

63turns

7analyst exchanges

0executives

Key numbers — 40 extracted

Rs. 206 crore

e headwinds, our company remains steadfast in the commitment and delivered sustainable revenue of Rs. 206 crores, driven by robust domestic demand and relentless focus on operational efficiency. Our expansio

77%

Fungicides, Technicals and active pharmaceutical ingredients. The Technical segment contribute to 77% of IPL's total revenue is expected to grow in future. There are 19 Technicals losing their patent

4.2 billion

et players. The total of 19 Technicals that go off patent will bring about an increased value of $4.2 billion to all the market players. IPL is well positioned to capitalize on this opportunity be cause of i

rs,

th. We deeply appreciate the trust and unwavering support we have received from our valued customers, dedicated employees, trusted partners and committed shareholders as we embark on of our journey to

Rs. 253 crore

through our financial performance. Total revenue for Q2 FY24 was Rs. 206 crores as compared to Rs. 253 crores in Q2 FY23 due to decline in export sales. In Q2 FY24, we registered an EBITDA of Rs. 31 crores,

Rs. 31 crore

Rs. 253 crores in Q2 FY23 due to decline in export sales. In Q2 FY24, we registered an EBITDA of Rs. 31 crores, a sequential growth of 19% with EBITDA margin of 15%. The net profit for the quarter stood at

19%

ine in export sales. In Q2 FY24, we registered an EBITDA of Rs. 31 crores, a sequential growth of 19% with EBITDA margin of 15%. The net profit for the quarter stood at Rs. 20 crores, with PAT margin

15%

FY24, we registered an EBITDA of Rs. 31 crores, a sequential growth of 19% with EBITDA margin of 15%. The net profit for the quarter stood at Rs. 20 crores, with PAT margin of 9.5%. Some of the raw

Rs. 20 crore

, a sequential growth of 19% with EBITDA margin of 15%. The net profit for the quarter stood at Rs. 20 crores, with PAT margin of 9.5%. Some of the raw materials and finished goods price have reduced substa

9.5%

h EBITDA margin of 15%. The net profit for the quarter stood at Rs. 20 crores, with PAT margin of 9.5%. Some of the raw materials and finished goods price have reduced substantially. This has led to a

Rs. 22 crore

luation as per accounting standard and impacted the gross profit and profitability to the tune of Rs. 22 crores during H1 FY24. In Q2 FY24, our revenue from exports stood at Rs. 62 crore

Rs. 62 crore

. 22 crores during H1 FY24. In Q2 FY24, our revenue from exports stood at Rs. 62 crores as compared to Rs. 122 crores in Q2 FY23 and domestic revenue stood at Rs. 140 crores as compare

Guidance — 16 items

Anand Agarwal

opening

“Our expansion project through our subsidiary remains on track and is anticipated to be commissioned by the end of this fiscal year.”

Anand Agarwal

opening

“As part of this expansion, we will be augmenting our production capacity by 2,000 metric tonnes expected to be complete by Q4 FY24.”

Anand Agarwal

opening

“On the expanding capacity of 2,000 metric tonnes will be operational by FY24.”

Harsh Beria

“My second question is about our earlier comment on creating a new subsidiary, which will be if I understood correctly, it will be marketing company.”

Dheeraj Jain

“This new subsidiary, what we are planning because we are also working on that, but that will be concentrating more on registering the products in each of the countries abroad along with the Formulations.”

Dheeraj Jain

“So we are inspired by Sharda Cropchem, but it will be on the similar lines.”

Harsh Beria

“So if I understand correctly, the manufacturing of Technical will be still done by us, and we'll be selling both to B2B and B2C customers the end formulations?”

Dheeraj Jain

“And then we will be working on other molecules also and the engineering is going on for other molecules.”

Karan Shah

“And sir, lastly, the 2,000 metric tonnes that we plan to add which will come by FY24 end, would it be for similar category of products in which we are right now?”

Karan Shah

“Or again, new products will be introduced from there?”

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Risks & concerns — 3 flagged

As you all know, the agrochemical industry is passing through a difficult time in terms of prices and volumes because of various reasons like oversupply, weather conditions and geopolitical situations.

— Dheeraj Jain

253 crores in Q2 FY23 due to decline in export sales.

— S.P. Gupta

Because like I understand your concern or how the customers say this, but like what do you think of the longer term?

— Harsh Beria

Q&A — 7 exchanges

My question is to our Chairman, Mr. Anand-ji. What are the growth plans with respect to coming 2-3 years? And as you mentioned that we are expecting our capacity to go double, so is there any timeline?

Anand Agarwal

One thing I can tell you that we can't give you as a particular at this moment, any concrete time frame, but our team, and we are quite hopeful that in coming 2-3 years, we are going to do wonders. I can say only one thing.

My first question is about our key molecule, Prosulfocarb. Sir, what's the inventory situation in our end markets like? And are we seeing incremental competition coming in this product?

SP Gupta

Well, we cannot give you a specific inventory for a particular product. But what is happening in the Herbicide you have name, there is a high level of inventory in user countries and destocking by MNCs are going on, so volumes are declined. Okay. My second question is about our earlier comment on creating a new subsidiary, which will be if I understood correctly, it will be marketing company. Is that a correct understanding? Will this be a business model like Sharda Cropchem that we are planning to establish? This new subsidiary, what we are planning because we are also working on that, but th

I just wanted to understand where are we on the Hamirpur plant, like the product that we were planning to finalize the chemistry, we were planning to finalize? Have we processed anything for that?

Dheeraj Jain

Sir, at Hamirpur plant, we have already planned 1 molecule and the plant construction is in progress there. And as informed earlier also that we would be commissioning this plant in the last quarter of this financial year. And we would be building them as the block-wise structure would be there. So first block would be ready by this financial year. And then we will be working on other molecules also and the engineering is going on for other molecules. And first molecule, the chemistry, the plant is under erection now. Okay. And sir, lastly, the 2,000 metric tonnes that we plan to add which wil

My next question is about our product pipeline. So traditionally, we have been manufacturing very low-priced product, so something between $2 to $5 per kg. Incrementally, will we be doing these kinds of products? Or do you want to increase our realizations for products as we go into newer products, as we launch newer Technicals?

Dheeraj Jain

Well, the pricing is no bar for us, because we have products ranging from $2-$3 to $100. So we have that complete range of products. In higher-priced molecules, the percentage margin slightly gets affected. That's what is our experience. But we have a lot of molecules of the range at $20, $30, $40, $50 like that we have. And new products also, we are adding almost 1 new very small molecule, which we have recently added, which we are selling at almost $120. Sir, as you said, like in a higher-cost products or higher realization products, we make lower percentage margins. Why is this the case? Do

I just wanted to know, in Q1, you had inventory losses of about Rs. 17 crores. And I think I missed your opening remarks. Have you had an additional Rs. 5 crores of losses in the inventory for this quarter?

S.P. Gupta

Yes. This quarter, we have inventory loss of around Rs. 6 crores. Okay. And how much has that brought our EBITDA margins down by? Rs. 22 crores inventory loss, we have taken on the sales of 400 crores, it is around 500 basis points EBITDA margin has declined. So do you foresee further inventory losses in the next quarters or H2? We have now the very small old inventory lying with us. So we do not see any inventory loss, except for 1% or 2%. So the EBITDA margin should come back to about 16% to 18% for the next 2 quarters, right? Yes.

My next question is about our domestic Formulation business. Can you talk about the unit economics of this business? Like what are the kind of margins which we are making in domestic formulation?

S.P. Gupta

Domestic formulation, our margins are slightly lower as compared to our Technicals margin. So they will be in the range of 15% to 18% EBITDA margin. And sir, is it the same in export formulations as well in line with domestic formulations, the margins? We are exporting very negligible. So export market margins are higher, but volume, it's quite low. And so for our existing products, where we have good capacities, are we planning to have more registrations in potential geographies? Or are these largely penetrated across geographies? No, we are increasing our range of the registrations in the ne

Thank you. 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

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Speaking time

Harsh Beria

Dheeraj Jain

S.P. Gupta

Moderator

Siddharth Lakhanpal

Anand Agarwal

Karan Shah

Vatsal Vinchhi

Atul Dhandharia

SP Gupta

Opening remarks

Vatsal Vinchhi

Thank you, Sagar. Good afternoon, everyone. On behalf of Choice Equities Broking, welcome to the Q2 and H1 FY24 Post Results Conference Call of India Pesticides Limited. I also take this opportunity to welcome the senior management team. On today's call, we have with us Mr. Anand Swarup Agarwal, Chairman; Mr. D.K. Jain, CEO; and Mr. S.P. Gupta, CFO. Kindly refer to the safe harbor statement on the second last slide of the earnings presentation. I will now invite the management for their opening remarks to be followed by Q&A. Thank you, and over to you, sir.

Anand Agarwal

Thank you, Mr. Vatsal. Good afternoon, ladies and gentlemen. I hope you and your family are staying safe and healthy. Wishing you a very Happy Dhanteras and Happy Diwali. I take the pleasure of welcoming you all for the Q2 and H1 FY24 earnings conference call of India Pesticides. I hope you all had the chance to look at the financial statements and earnings presentation uploaded on the exchanges and our website. In Q2 FY24, agro industries continued to face the headwinds in terms of high-cost inventories, destocking in international markets and ongoing price declines resulting from an oversupply of raw materials from China, which impacted our exports. Despite these headwinds, our company remains steadfast in the commitment and delivered sustainable revenue of Rs. 206 crores, driven by robust domestic demand and relentless focus on operational efficiency. Our expansion project through our subsidiary remains on track and is anticipated to be commissioned by the end of this fiscal year. A

Dheeraj Jain

Thank you, sir. Good afternoon, ladies and gentlemen. We welcome you all for the Q2 and H1 FY24 Earnings Conference Call of India Pesticides. As you all know, the agrochemical industry is passing through a difficult time in terms of prices and volumes because of various reasons like oversupply, weather conditions and geopolitical situations. In Q2 FY24, despite several headwinds from industry, your company has delivered a reasonable revenue of Rs. 206 crores on the back of strong efforts by the team. Our ability to navigate current industry challenges is a testament to our dedicated marketing and R&D team. Their relentless pursuit and innovation has allowed us to maintain our competitive edge in the market. This has not only helped us in adapting the changing market conditions, but also in anticipating and meeting the evolving needs of our customers. Now moving on to some strategic development during the quarter. I am pleased to share a significant development in our leadership team. A

S.P. Gupta

Thank you, sir. Good afternoon, ladies and gentlemen, and thank you for joining the India Pesticides conference call to discuss Q2 and H1 FY24 results. I will quickly walk through our financial performance. Total revenue for Q2 FY24 was Rs. 206 crores as compared to Rs. 253 crores in Q2 FY23 due to decline in export sales. In Q2 FY24, we registered an EBITDA of Rs. 31 crores, a sequential growth of 19% with EBITDA margin of 15%. The net profit for the quarter stood at Rs. 20 crores, with PAT margin of 9.5%. Some of the raw materials and finished goods price have reduced substantially. This has led to a stock revaluation as per accounting standard and impacted the gross profit and profitability to the tune of Rs. 22 crores during H1 FY24. In Q2 FY24, our revenue from exports stood at Rs. 62 crores as compared to Rs. 122 crores in Q2 FY23 and domestic revenue stood at Rs. 140 crores as compared to Rs. 128 crores in Q2 FY23. Revenue from Technicals and formulation stood at Rs. 115 crores

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