India Pesticides Limited (IPL) Earnings Call Transcript
February 6, 2023
Earnings Call Speaker Segments
Ladies and gentlemen, good day, and welcome to Q3 and 9M FY '23 Earnings Conference Call of India Pesticides Limited, hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Tejas Sonawane from Dolat Capital. Thank you, and over to you, sir.
Thank you, Aman. 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 Q3 FY '23 earnings 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 will open the forum for a Q&A session. Thank you, and over to you, sir.
Thank you, Tejasji. Good afternoon, ladies and gentlemen. I hope you and your family are staying safe and healthy. I take the pleasure of welcoming you all for the Q3 FY '23 Earnings Conference Call of India Pesticides Limited. I hope you all had a chance to look at the financial statements and earnings presentation uploaded on the exchanges and our website. Despite the inflationary pressure, our margin saw an improvement on Q-on-Q basis due to improved operational efficiency and cost pass-through. The company performed well with a 16.1% Y-o-Y revenue growth, driven by higher demand for existing products and the new molecules. High-cost raw material inventory and high fuel prices have been a challenge during this period also. Our R&D capabilities, including the ability to create substitute chemicals and decrease reliance on imports, are critical components of our strategy. All of our recently launched products were well received by market, and we expect their demand to grow going forward. Further to this, our planned INR 70 crores CapEx for expansion at Sandila plant in FY '23 is on schedule. We are happy to announce that the Ministry of Environment and Forests has granted us environmental clearance for our Hamirpur project under our wholly owned subsidiary, Shalvis Specialties. We anticipate starting operations during the fiscal year '23-'24. Our export component increased to 68% from 49% in Q2 FY '23. The increase has been driven by the company's focus on expanding the global reach and building strong relationships with international customers and expanding customer base. The company's strengthening of R&D has also created a crucial role in its export growth. India Pesticides Limited has been consistently developing new products that cater to the ever-evolving demands of the global market, and its innovative products have been well received by international customers. As informed to stock exchanges last month, we have recently commissioned a plant for a herbicide with good export potential. During the quarter, our long-term credit facilities were reconfirmed by CARE Ratings Limited at A+, which highlights our ability to manage capital efficiently. IPL continues to overcome challenges and are much stronger despite uncertainty in the business environment. We are eager to roll out new products in the coming quarters to improve product mix and reach consumers. We assure our shareholders that we are committed to working towards our vision of supporting chemical business and farmers across the globe by producing superior value chemicals through quality and efficiency. India is now a relatively stable economic haven, with strong domestic demand and growing competitiveness in exporting quality of goods and services. IPL is poised for success with skilled manufacturing and competitive edge. With this, I would like to pass on to Mr. S.P. Gupta to walk us through our Q3 FY '23 financial year highlights. Mr. Gupta?
Thank you, sir. Good afternoon, ladies and gentlemen, and thank you for joining the India Pesticides conference call to discuss Q3 financial year '23 results. I will quickly go through our financial performance. Taking you through the financial highlights, the total revenue stood at INR 222 crores as against INR 191 crores in Q3 financial year '22. That is Y-o-Y growth of 16%. The growth has been driven by the growth in the international market. EBITDA in Q3 financial year '23 stands at INR 51 crores, with EBITDA margin of around 22%. The PAT stood at INR 35 crore in this quarter as compared to INR 43 crores in Q3 financial year '22. PAT margin is 15.7% in Q3 financial year '23. The revenue from exports stood at INR 148 crores as compared to INR 109 crores in Q3 financial year '22, and domestic revenue stood at INR 69 crores as compared to INR 81 crores in Q3 last year. Revenue from Technicals and Formulation stood at INR 184 crores and INR 34 crores, respectively, during this quarter. India Pesticides Limited has a strong balance sheet with the ability to generate good free cash flow. The company is planning to fuel its CapEx plan with internal accruals. We remain confident of continuing our growth trajectory while extending full support to our customers, suppliers and other valued stakeholders. With this, we would be happy to take your questions. Thank you.
[Operator Instructions] The first question is from the line of Rahul Jain from Credence Wealth.
Am I audible?
Yes, yes, sir. Yes, sir.
Okay. Sir, in the previous 2, 3 quarters, we have had issues with regards to logistic cost of raw materials going up. In the previous quarter also, you had mentioned about gross margins going down because of high cost inventory and increasing in fuel cost and also logistic costs. At the same time, you had also mentioned that you will -- this inventory, high-cost inventory will be completely utilized in this particular quarter. So first question with regards to margins. Yes, we have shown some improvement in gross margins from about 43% to around 45% in the current quarter, quarter-on-quarter. So how soon do we expect the gross margin to reach our 50% mark, which we were doing some quarters back, given that the high-cost inventory must have run out? That is my question number one.
Sir, inventories, we thought we completely -- we have not yet consumed the total high-cost inventory. But we feel that by this quarter, it will be completely -- we will be utilizing the high-cost inventory. And with this, for the next quarter, our margin should improve.
Okay. So it will take another couple of quarters to reach back around 50%, 51% gross margin.
Sir, 50%, 51%, it will be very difficult to say, but we will try our maximum whatever is possible.
Sure. And sir, with regards to CapEx, we had completed roughly about INR 35 crores in the first half and the balance, INR 35 crores, to be done in the second half. So till date, how much CapEx is completed out of the INR 70 crores for the current year?
We have done CapEx of INR 54 crores in 9 months.
Okay. And the balance will be completed before March.
Before March, sure, sir.
And this INR 70 crores plus the earlier INR 70 crores, this is that INR 140 crores of brownfield CapEx, which we have done at the existing plant, will contribute roughly about 2.5x asset turnover?
Yes, sir. Yes, sir.
And how much time, sir, it will take to ramp up this capacity to reach this full utilization to the extent of 2.5x?
I think it should be by end of this year. That is the FY '24.
Okay. So FY '24, we can have -- with the existing plants, we can surely reach about around INR 1,100 crores of top line, INR 1,000 crores to INR 1,100 crores?
Yes, yes. Easily, sir. No doubt about it.
And sir, what kind of contribution we will see from the new products which we have added in the current quarter and also in last -- previous 2 quarters? Till date, what is the contribution from the new products? And what is the expected contribution from new products in the next year?
Contribution from new product is around INR 25 crores during this quarter. And we are expecting around, say, INR 250 crores of incremental turnover during next year from new capacities.
Sure. And sir, you had mentioned in your earlier calls that all the new products which you are trying to launch or will launch, typically, they will have 50% plus gross margin?
That is our realistic, but considering this inflationary pressure, I think the gross profit range will be say around 46% to 47%.
Okay. Sure. One last question with regards to the new site. So how much CapEx do we expect? We had earlier indicated to spend about INR 20 crores in the current year in the new site. Typically, what is the amount expected to be done in this new site by year-end? And you mentioned that we expect the new site to start commercial production in the next year somewhere around quarter 2, quarter 3. So next year, what kind of contribution to sales can we see from the new site by the new greenfield CapEx?
Sir, actually, the new site is going as per our expectation. We were expecting the meeting for the environmental clearance to happen in November, which did happen, and we got the clearance in the first go. And we are now starting our activities at the new site. And the CapEx, what we have planned for the next year would be about INR 700 crores. And we expect the first 2 units to be in operation by, say, December, January onwards. And the contribution from that site would be nominal, probably because the plant would be still under stabilization. But from the next year, FY '25 onwards, it will contribute significantly.
The next question is from the line of Ayush Mittal from Mittal Analytics.
First of all, congratulations on a good performance [ considering ] the times that have [indiscernible] industry [indiscernible]. So sir, 2, 3 questions. So first, we are seeing a very big demand-supply mismatch in the agrochem industry, and many of the players are facing very weak demand or inventory correction, or they are facing pressure on margins. So on the demand side, are we facing issues? Or are we broadly in line with what we were planning to grow? And we also had some new product launches ahead for the coming quarter. So can we -- can you share more about this aspect?
Sir, demand-wise, we are not facing any major problems. The products, what we are regularly producing, we are able to sell, and the quantities are reasonably okay. I think if we see the total volume, what we have done this quarter is slightly more than what we did in the previous quarter. Our previous quarter, we did a Technical turnover of about INR 3,900 crores -- sorry, tonnes. And this quarter, we are doing more than 4,000 tonnes. So demand-wise, it is okay. But the pressure -- cost pressure is only because the energy cost has increased a lot. As informed last -- in the last conference call as well as in TV interview, our fuel cost has gone up significantly. Especially, the rice husk -- if we are to buy around INR 300 a quintal, now the price has increased almost to INR 1,100, and now it is ranging around INR 850 to INR 900. So the cost of energy has gone up. And because of the lots of uncertainties in the initial period, we have imported a lot of inventories to avoid any risk of production stop. So the inventories, we are still carrying and which we hope that, by this quarter, we will be able to consume the high-cost inventories.
Okay. Great. So -- and sir, there was some new herbicides that you are planning to launch in Q4, and we have done a lot of stocking for that. I think the inventory buildup was due to that...
The herbicide major usage comes in the first quarter of every year because normally, in April, May, June, the demand would be higher on these [ books ]. There are -- so we are slowing the product now, and the major sales will happen in the next quarter.
In Q1 or Q4?
Q4 -- Q1. In the last half, Q4 and Q1. Major sales would be in Q1. But we have to build the stock because that is a very short-time sale. So that is why we have to build this stock.
Okay. Yes, sir. Sir, the new expansion that we are doing at Hamirpur, we have just got the EC, and you are saying that within a year, we'll be able to build 2 units. That's a very short time. But so have we only been doing some construction activity? Or how will it happen? Because usually, it takes 2 years for a plant to get up and running and then it takes time for approval. So how will we be managing so fast?
Sir, actually, what happens is after getting the environment clearance, simultaneously, we are also working on other clearances because we require a lot of clearances from the government. So I will just explain to you, after environmental clearance, we also got the ground water abstraction clearance also. We got the permission from them. And the [ FIROC ], we have already received. Then we have made arrangement with our -- this landfill system company, [ MP ]. We are already in the agreement with them. And then we already applied for the consent to establish to the pollution control board. So these activities are parallelly going on. And we are planning initial stages a few intermediates. So for intermediates, we don't have many regulatory requirements in terms of registration at the CIB, what is that, the Central Insecticide Board, et cetera. So we have already shortlisted a few intermediates that we will be starting first. So we feel that we should be able to produce funding by the third quarter opening in the fourth quarter of this year. And this is also a must for us because of the tax benefit role that the government has given that the plant has to be commissioned in FY '24. Only then we can avail the concessional income tax of 15% [ that ] push us to act a little faster.
Okay. That's great to hear, sir. And sir, another 4,000 tonnes we were planning to add at Sandila. Any update on that?
Yes, that is going on, sir. That is going on. As of today, as we informed last month, we have already added one more herbicide, which is a very good export potential. Overall, the capacity of that plant would be about 300 tonnes. And then a few into more intermediates are under construction, which we will be commissioning maybe in March, maximum by April.
The next question is from the line of [ Nagesh Shen ] from NB Investments.
Sir, during the quarter, there is an increase in the export compared to the domestic sale. So first question is, what are the reasons for this?
There has been very good demand for our herbicide as well as recently launched herbicides.
Okay. Is it specifically for herbicide only, this increase in sales has happened?
Yes. But existing herbicide had -- we have got good export order. And a few quarters back, we have launched one more herbicide that's exclusively for export. That has got very good export demand.
Okay. Sir, just a continuation of this. See, we have our top 3 products where we have more than 20% market share, where our competitors are all these MNCs. And these MNCs must be having their manufacturing plant at either China or maybe some place in Europe. And if it is in Europe, with the current increase in power cost. So any information you have got, whether they have received their production and they're diverting their requirement to India or something like that?
No. Sir, our major competitors, they are not based in Europe. The major competitor is based in Israel. And they have their products going on. But our -- because we have long-term arrangements with our customers, we are able to continue to supply the required quantities to them. And from China, we have not so much of competition at all because the manufacturers of these compounds in China are relatively very small.
So I'll ask you in another way. So because -- is there any increase in demand for our these 3 products from Europe markets?
Europe market increase is not -- in 1 quarter, yes, because that product we have launched only last year. So we are getting good demand for that one herbicide from Europe itself. Europe and the adjoining countries from Europe, from the main European Union, when the adjoining countries, we are getting good demand for that. And for the herbi side, we are getting good demand in other countries also.
Okay. Okay. Sir, now since our IPO, how many products we have launched till date, sir?
Sir, at the time of IPO, we had promised 8 molecules to be in the pipeline. And out of these 8, we have already launched 7 products. With this new herbicide, what we have commissioned this month, including that, it will be -- this will be the seventh molecule what we have launched. This includes 6 key ingredients and 1 intermediate, and [ the new plant ] is already under construction, which we are planning to launch soon.
Okay. Now you said out of the 7 launch, 6 are technicals and only 1 is intermediate, right?
Intermediate. Yes, sir. Yes, sir.
Okay. Okay. So now before this...
It is largely being imported. So it will be an import substitute in line with our government's initiative of [indiscernible]. So from that point of view, now we are able to manufacture in India.
Okay. Sir, before this IPO, I think we had only 6 products, no? 5 fungicides and 1 herbicide, that is correct?
We have 7 to 8 products. We were having 2 for herbicide and 6 fungicides.
6 fungicides. So total 8 products, no?
8 products.
Okay. Now [ why I was ] asking that question is, of the 8 products that you had before the IPO, are we completely backward-integrated in those products?
In those products, sir, majoritily, we are backward-integrated, except some critical general-purpose intermediates, no, which are available in the market that we were sourcing from the market. But otherwise, we are backward-integrated. So 1 or 2 intermediates, we have to import because they are readily available in the market. Those we were buying from the local market as well as importing. And otherwise, majoritily, it was backward-integrated and the Indian-source, sir.
Got you. Now the new 6 technicals that you have launched. So there, we are not backward-integrated, right?
So there also, we are backward-integrated, sir. As I told you just recently, we started an intermediate, which was being imported -- majoritily was being imported. So that we started manufacturing. So we are getting backward integration in that. And the other 2 molecules also we are getting backward integration. Our strategy is that we only say that we would like to be backward-integrated company. We do very few products. We did the n-minus-one strategy.
[Operator Instructions] The next question is from the line of [ Ankit Gupta ] from Bamboo Capital.
Congratulations for...
[ Mr. Gupta ], can you a little bit loud, please?
Yes. Congratulations for a decent set of numbers in tough times. Sir, if you can talk about how has been the realization trend over the past 3, 4 years for some of the key products like captan, folpet and [indiscernible], let's say. What were their prices of pre-COVID? And how are they currently -- how much did the move up in the past 1 year now has been the price trend over the past 6, 9 months?
Earlier, the price was very, very stable. During -- as compared to last quarter of this financial year '22, the price has increased by around 8% now for the molecules. Earlier prices were very stable before COVID.
Okay. Okay. So there wasn't any significant increase in prices post-COVID, let's say, in FY '21, '22?
Yes, yes, yes.
And now in fact, in this 6, 9 months, they have increased by 8%?
Yes. Yes. But correspondingly, raw material cost has also been increased by this similar amount or slightly more, slightly more.
Sure, sure. And sir, 1 figure that you mentioned that from the new launch, newly launched 7 molecules were expected, we are expecting to generate INR 250 crores of revenue in FY '24. Is that right?
Yes, yes.
And how much are these molecules contributing to our sales in 9 months?
9 months, they have contributed around 12%.
Sure, sir. And how many molecules are we planning to launch in FY '24?
FY '24, sir, we will be launching at least 4 products.
Okay. And this will -- this product will also be targeting export markets largely?
These 4 products would be at least 2 in the -- in our subsidiary and 2 products in our existing plants.
Sure, sure, sure. And sir, the new greenfield CapEx that we have -- that for which we have got the EC approval, will that be largely focusing on the existing set of molecules? Or will be introducing new molecules which will be contributing to the revenue from the new plant?
We would be aiming at new molecule, sir. Existing molecules, we have had a reasonable capacity here. And we would be there aiming for the new molecules and the new chemistries with bromine and fluorine and other processed chemistries.
Sure, sure. And sir, Sandila plant post this INR 70 crores CapEx, will there be any space left for further CapEx or, like, we can just reach around INR 1,100 crores kind of revenue from the Sandila plant and now the growth will largely come from the new greenfield CapEx that we are doing?
Sir, with this expansion, the Sandila plant will be almost full. Maybe very small space for 1 or 2 small products but not very much for any big capacity addition there. And the further expansion will come largely from our new site.
[Operator Instructions] The next question is from the line of Chintan Mehta from Prudent Broking.
Sir, my question is how much the top 3 product contribute...
Mr. Mehta, can you be a bit loud? Your audio is very low.
Sure, sir. Sir, how much does the top 3 products contributed in 9 month FY '23 ended, sir?
They contributed around 45% of our turnover.
Okay, sir. And is it possible to give a breakup of [indiscernible] or thiocarbamate breakup? I mean how much percentage in total revenue?
Let's say, fungicides, the top 2 -- out of top 3, 2 are fungicides. Fungicide turnover will be around 25%, and herbicide top -- turnover will be 20%.
Okay. And these are all 9 months ended, correct, sir?
9 months ended.
Sure, sir. And sir, what is the volume and value growth for this quarter compared to last year's same quarter?
Volume has been increased by 8%, and price has increased by 8%. Total increase is 16%.
Okay. And sir, utilization at the end of 9 months, sir? Sir, both Technical and Formulation?
For Technical, it has been around 72%. But Formulation has been quite low, maybe around 40% since there is a lot of China inventory in local market. So -- and there is, well, off-season also. So utilization, Formulation was low.
Okay. And sir, since the IPO, we have launched healthy 7 molecules. Sir, any rough number that how much the market size in terms of molecule we have increased?
Market size, 1 or 2 are very large molecules. They have very good market size in India. But to quantify, say, they may be having market size of around INR 1,000 crores.
All 7 molecules? All 7 new molecules?
All, sir.
Okay. And sir, the new product we are targeting, any idea about demand or the realization prices? Are they stable all around?
For this last product, we have launched all the 7 new molecules we are talking.
The next question is from the line of Senthilkumar from Joindre Capital Services.
Am I audible?
Yes.
Sir, my first 2 questions on revenue mix, sir. Actually, in your opening remark, you said like the export revenue share increased to 68 percentage from 49 percentage on a sequential basis. So if I do a math on this, I could find that there is a 45 percentage drop in domestic sales and 20 percentage increase in exports revenue. Even now you have committed like there was a strong demand for both existing and newly launched products. I couldn't understand. So now what is the reason for this 43-percentage drop in domestic revenue, sir?
Sir, actually, domestic revenue, what happened, sir, this is a slightly lean season. What happens -- so the major consumption is in Q2. So Q1 and Q2 sales are a little higher, and Q3 slightly, it is flat, number one. So that is why the local sales are slightly less. We are building the inventories for the local sales, which we will be selling during the last period of this quarter as well as next quarter.
And my second question, sir, you just commented like revenue from newly launched products is INR 25 crores. Okay. So what I have done is now, if I reduce the INR 25 crores from the revenue of INR 217 crores reported in this Q3 FY '23, I can find that there is only 1 percentage growth in the overall revenue. I just want to know whether -- do we see any slowdown in -- for the existing product demand?
Even our Q3 financial year '22 sales, the -- our new products have contributed INR 10 crores to INR 12 crores sales also since we have launched some products in Q2 financial year '22 only. So there is contribution from new products in the last Q3 of financial year '22 also.
Okay. Okay. So what is the contribution of newly launched product in Q2 -- Q3 FY '22, sir?
It is by around INR 12 crores to INR 13 crores last year. Now it has increased to INR 25 crores.
The next question is from the line of [ Pawan Chira ] from ENAM Holdings.
Earlier, sir, you mentioned volume growth of 8% and price growth of 8%. Was this for the first 9 months of FY '23?
No, it was for this quarter as compared to Q3 of financial year '22.
This was for the quarter. Okay. And in absolute term, what was the volume number? You said somewhere 3,900 tonnes.
Yes, 3,900 tonnes. Its sale production is slightly higher.
How much is the production, sir, if you have the number?
It will be around, I think, 4,100 tonnes.
4,100. Okay. And do you have 9 months number, sir, for production and sales volume and how much was the growth?
Sir, I will -- right now, we do not have this 9 months production number because -- we can send you by mail.
Yes, sir. And you said, sir, new products in first 9 months contributed 12% of sales.
Yes.
This would be roughly INR 80-odd crores?
Yes, yes, yes.
Okay. Okay. Okay. And Hamirpur plant, sir, what was the CapEx number you have spent till date?
We have spent around INR 10 crores in Hamirpur project, and we are further expecting to spend INR 7 crores to INR 10 crores in next 2 months.
Okay. And next year, how much will you spend? So next year, by Q4, you will start this plant?
Yes, at least 1 to 2 products.
Yes, yes, yes. We will start in Q4 financial year '24.
The next question is from the line of Rahul Jain from Credence Wealth.
Sir, you mentioned the new products and also the new products to be added, which is the number of products next year would be 4, and this will come at the new site.
No, not all 4 will not come to the new site. 2 will come at least at the new site, and 2 would be in the existing site. Existing [ capacity ] will continue. That [ capacity ] will result in 2 more quarters.
Sure. And for the 3 sites...
We will be giving 9 products from our existing site.
Okay. Okay. And sir, with regards to customer additions, how has been the customer additions? What are we -- how are we trying to add the customers? Any new customers added already? Or you are quite confident that those will come in, specifically the large MNCs across the globe?
Yes. We are already working in that direction, sir. And we are adding new customers. We are having discussions with a few U.S. companies and a few Australian companies. So that discussion is already going on. And for the new products, we have some arrangements with the new customers, even with Japanese.
And how about the registration of these products in the various territories?
We are already working on those lines. Wherever they require registration, we are giving them all the data required to register. And where we need to register, we are submitting. We are getting the data generated because we require 5 batch-reports. We require physical chemical properties. We require toxicological studies. So the studies are already going on, and we will be submitting these for the registration in various countries.
Sure. And sir, with regards to this INR 1,100 crores of top line from the existing site next year, 2 parts to it. One, given that most of it will come from the existing -- the old products as well as the new products which we have launched in the last 6 months to 9 months post IPO. And typically, what you understand from your interactions is most of these products have been doing well and are expected to do well, and the CapEx is also almost completed with regards to the existing plant. So as we speak today, given that the raw material costs are coming down, given that the logistic costs are now much more favorable for you, the fuel cost should come down gradually, do we see any risk to push the top line, which we are projecting? What can that risk be, number one? And number two, what kind of EBITDA margins do you visualize for this kind of top line, which is around INR 1,000 to INR 1,100 crores?
The EBITDA margin, we are projecting it next year is between 23% to 25%. And since our product had very stable pricing environment, presence of China is very less. So we do not see much downward risk due to price reduction. But even our customer, our buyers, they are not able to increase price very much. So a stable kind of environment we are projecting as far as pricing is concerned.
[Operator Instructions] We have the next question from the line of [indiscernible] from [indiscernible].
Sir, my question was regarding the Hamirpur capacity. So if I understand correctly, we are predicting -- projecting INR 100 crores in CapEx over the next 4 years. And from the environment report, what I see is Technical is around [ 3,600 ] tonnes per annum, and Formulation is around 29,200 tonnes per annum. Now are we looking to commission this entire facility in this 4-year period?
Sir, this is the clearance what we have got from the Ministry of Environment. We -- what we have applied for slightly higher capacity so that we don't have to go to them again and again. That is number one. And we would be -- as told earlier, we would be building that in blocks. And we are -- we can go up to this capacity. That is the reasonable estimate, but we will see over the years how we add the capacities. We are projecting about INR 100 crores per annum for the coming 4 years. And with this CapEx, whatever capacity we can build up, we will try to build as much as possible. But to be on the safer side, we have taken a safe capacity permission from Ministry of Environment.
Understood, sir. With this INR 100 crores over the next 4 years each year, what is the kind of capacity that we are looking to implement?
It is difficult to tell because what happens there some products now, they are slightly higher in value. So the capacity would be slightly limited, and some products are slightly low-value products. So there, the capacity could be a little higher. So exactly telling the capacity, what we will be building is slightly difficult at this stage. Maybe down 1 year, 1.5 years, we will be more definite on this.
The next question is from the line of Pratik Singhania from SageOne Investments.
Sir, I want to know the realization for folpet and [ caltep ] for FY '21 and '22? And what is the price as of now for 9 months as well as the Q3?
This is slightly confidential, sir. It will be difficult for me to tell the exact number on this. And [ caltep ], we are not producing. We are producing -- we are not producing [ caltep ]. We are producing folpet but not [ caltep ].
Okay. But sir, has there been a substantial drop in the realization because -- is that affecting our overall gross margin?
No, there is no reduction in the realization of even folpet. That's what I can tell.
Okay. So the realization stays as it was compared to [indiscernible]?
That stays. Yes, sir.
And sir, with respect to your like large players like UPL, Corteva, the commentaries have been very positive. So why are we not being able to pass on the cost if the demand from those guys are much strong?
Sir, actually, the ultimate usage price in the market now, that doesn't get absorbed probably. That is why we are not able to pass on the complete cost increase. Though we have an arrangement with the companies and the raw material costs we are able to pass on. But the overall manufacturing cost and the energy cost now that becomes difficult for us to pass on. That is why there is some effect on us.
Okay. And sir, with respect to our current location, like since coal availability is a challenging situation for us, then why not shift or like set up new plant at a much better location, which are much more friendly and access to coals are much easier?
Sir, for your information, I would like to say that we are not using coal at all even in our existing plants. We are using a much greener energy source that is rice husk and which is slightly cheaper than coal. And the rice husk is available plenty in this area because UP is producing a lot of rice. So rice husk is available in the plenty. Though the price has -- even the rice husk has increased over the period now, but the availability is there. And indeed, it is a green initiative by the company not to use any fossil fuel. So we don't use any coal at all.
Okay. So 100% of our requirement is met through rice husk in terms of power generation?
Not power generation. It is for the other energy requirement. For example, steam generation, hard water generation, [ hot air ] generation, all those things. Power, of course, we buy from the electricity board.
The next question is from the line of Yogansh Jeswani from Mittal Analytics.
Congratulations on a decent set of results. Most of the questions have been answered, sir. Just a couple of follow-ups are left. So inventory, you mentioned that the high-cost inventory will go down in coming [ quarter ] in Q4 and, specifically, in Q1. So -- but could you just share the December inventory closing value? What was it, sir?
You won't see it in absolute number. It is around the same as in Q2 current September. It's by around INR 225 crores.
Okay. And this we expect to bring down to what level, sir, by year-end? I mean the reason I'm asking is because our inventory days, overall, has gone up, not just the absolute amount. So overall, what is the trajectory that you want to bring down into by year-end?
By year-end, it will be reduced by at least INR 25 crores.
Okay. So major changes should come in next financial year then, the normalization basically?
A major normalization to earlier inventory level will not be there since now we are producing some products which had very seasonal demand. Earlier, our products were -- they were being sold, say, in 10 to 11 months entire year. But to our new product, they are specifically for Kharif season. They are being molecule. So we have to build up a lot of inventory in anticipation of next season. So inventory level will not go down to earlier levels, but it will rationalize from here.
Okay. So now going forward, with the new products, sir, are Q4 and Q1 will be the quarters with heavier sales?
Yes, yes, yes. This quarter is heavier.
Okay. Got it. And the new products that we mentioned, the contribution from which we are expecting 300 tonnes. So what is the kind of price point for this product, if you could share?
The prices vary from, say, INR 600 per kg to -- we'll have for [indiscernible].
New product. Are you asking for the new herbicide, what we have introduced or our overall product range?
Sir, 1 product, you mentioned that we have launched for 300 tonnes in Q3.
Yes, yes. That is the slightly high-value products, ranging from about almost about INR 3,500 a kg.
Ladies and gentlemen, due to time constraints, that would be our last question for today. I now hand the conference over to Mr. D.K. Jain, CEO, for closing comments. Thank you, and over to you, sir.
We thank you very much for taking out your time to attend this call, and wish you all the best and have a good evening.
Thank you very much. Ladies and gentlemen, on behalf of Dolat Capital, that concludes this conference. Thank you all for joining us, and you may now [ disconnect your lines ]. Thank you.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete India Pesticides Limited transcript - plus 252,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to India Pesticides Limited earnings transcripts and 252,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.