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 2024 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. Rajnish Sarna, Joint Managing Director, Mr. Manikantan Viswanathan, Chief Financial Officer, Mr. Prashant Hegde, CEO Domestic, Mr. Atul Gupta, CEO Exports, and Mr. Anil Jain, MD, PI Health Sciences. We will begin the call with key perspectives from Mr. Singhal. After that, we will have Mr. Manikantan sharing his views on the financial performance of the company. 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 may be forward-looking, and a disclaimer to this effect has been included in the investor presentation shared with you earlier and also available on stock exchange websites. I would now invite Mr. Singhal to share his perspectives with you. Thank you, and over to you, sir.
Okay. Hi, good afternoon, and thank you for giving us your time today as we discuss the performance of PI Industries during the quarter four and the annual year 2024. I will use my remarks to share the strategic and operational updates around the business. I'm not sure if my voice is clear, because I'm getting an echo. Is that okay on the other end?
Sir, you can go ahead, sir.
I will use my remarks to share the strategic and operational update around the business. Quarter four for the year has been another commendable performance from PI, yet again, delivering broadly as expected despite industry headwinds. Q4, revenue grew by 11% year-on-year. For the year, we had a growth of 18% of revenue. The improvement in profitability stands even better at EBITDA growth of quarter four and for the year of 32%, 37% respectively. The global industry has seen a performance pressure in the past 2-4 quarters, and the situation is yet to recover fully. The inventory restocking cycle is seemingly incomplete, and any material improvement in the demand and pricing trends is projected to commence only in the later part of the current financial year. These trends chiefly impact generic products.
PI has consistently stood apart from it, by delivering above those trends in the last several quarters. Going forward, as the on-ground situation changes, we will continue to do well, benefiting from the adverse trends of the industry. This has been possible due to the differentiated business model and product portfolio of PI. Our growth is mainly driven by commercialization of new products in the early stage of the life cycle. These products have significant growth potential and value, and as and when the innovator progresses with the global execution, this gives us a future upside. The cycle continues as you commercialize more new molecules from these pipelines. What continues to attract global innovators to PI is a demonstrated capability in process development and innovation, efficient scale-up of complex molecules, project execution capabilities, and our ESG standards, above all, with respect for IP.
On the export front, the growing trend of commercialization of new molecules will only intensify. During the year, more than 70% of the growth has come from new products. Our pipeline of new molecules also remain robust, and here, the share of non-active molecules of new inquiries stood at 50%. In the longer term, we anticipate an upside to a third of new molecule commercialization to come from non-active. As these technology molecules mature, we see strong contribution to our growth rates. On the domestic side, we have seen some good performance owing to the erratic monsoon and El Niño conditions, which led to long dry spells impacting insecticide and herbicide sales in certain geographies. Our emphasis has always been and will be on driving high-quality revenue. Our domestic portfolio contributes to the new license as super products that have significant growth potential.
Over the past 2 years, we have stepped up our presence in the biological area. I'm very happy to share that our brands are gaining traction with a 35% growth in Q4, 29% for the year. Our agriculture specialist brand, Jivagro, has also helped us in setting a position in these segments. On the recently launched products, has seen an enthusiastic response of our insecticide CARVINT and herbicide, EKETSU. The first time three-day combination arrives again. PIOXANILIPROLE for seed treatment and serving environment and biopesticide PIILIN for grapes and chilies. Also, great response on CAMPANA, insecticide of rice BPH and [Ringil], sucking pests. We continue engineering molecules into India. During 2024, we will introduce 70 new domestic brands, all of which have been received well.
We have a range of brands always expanding and presenting the most advanced solutions in the crop protection to the farmer. The steady pace of the business introduced successfully brands contribute to the above par performance side from us. The development pipeline includes more than 20 products, including products, development and registration, and underline the visibility of growth for the business in the forthcoming year. I now turn my attention to the pharma side of the business. We are right now in the process of building an integrated CDMO market, which is on its way.
Initial upgrades to the research facility, infrastructure upgrades, manufacturing facility, human capital build-out process is progressing well. We are also augmenting our talent base by hiring global industry experts and building best practices in the forefront of business development, R&D, and pipeline inquiries have started shaping up to help achieve aspirational, the long-term growth of this segment. We are continuing to drive for the integrated research setup in the [AgChem], and once again, one of a kind. Single site centered in Udaipur growth aspiration. The research center can render every technological process requirement from biological evaluation to chemical synthesis, for a process scale-up from bio fermentation to various flow chemistry technologies. Our R&D setup designed to global specifications and world-class standards, engages more than 700 scientists, over 165 PhDs, of which have delivered more than 170-odd patents so far.
These teams are working to develop technology platforms that delivers across, opportunity across the existing and new industry verticals. On the sustainability front, which is close to the heart of PI, we make great strides. At PI, it seems to be a culture of attributes to our business. At PI, we improved the S&P Global Sustainability Assessment, ranking to the 95th percentile, as we also are well retained a gold medal in EcoVadis in sustainable achievement with 98th percentile ranking. PI has also been featured in the S&P Global Sustainability yearbook of 2024, thereby earning the distinction in ranking among the top ESG-rated companies globally. We have multiple programs around the ESG outcomes integrated with our business processes. As we shared earlier, continues to evaluate inorganic opportunities aligned with the long-term strategic direction and growth aspirations, backed by strong science and technological capabilities.
We, in our outlook on the current fiscal year, remain positive. On the domestic front, we will focus on portfolio diversification, drive high quality revenue from the newly introduced products, as well as technology-based approaches to share performance in the CSM business. The pharma performance has gradually improved, and we, while we will make sure that year end, we come into an implementation or integrated year offering to go to the global customer. With this, I bring my remarks to an end, and will invite Manikantan to take this forward to discuss. Thank you once again for being a part of our growth and always positively there to support us. With this, over to you, Mani, take the financials for the company.
Thank you, Mr. Singhal. Good afternoon, everyone on the call today. I will summarize the company's financial highlights for the fourth quarter ended 31st March 2024. Please note that all comparisons are year-on-year and refer to the consolidated performance of the company. As Mr. Singhal has shared, our performance demonstrates a differentiated approach to doing business and a sharp focus on keeping operating parameters in line with our inaudible. To share the performance highlights, during Q4 FY 2024, we reported a revenue of INR 17,410 million, a growth of 11% over the same period last year. This was driven by 15% growth in exports revenue to INR 14,701 million, and around 5% decline in domestic revenues to INR 2,709 million.
Gross margin and EBITDA improved mainly due to favorable product mix and operating leverage. Profit after tax increased by 32% to INR 3,695 million. Let me also cover the performance of the full year FY 2024. Revenue was INR 76,658 million, a growth of 18% over the same period last year. This was driven by solid growth in export revenues by 25% to INR 62,970 million, which offset 6% decline in domestic revenues to INR 13,688 million. Profit after tax improved by 27% to INR 16,815 million. Effective tax rate for FY 2024 is 11.3%, with a one-off gain around 3% in our pharma subsidiary, PI Health Sciences.
The EPR for FY 2025 is expected to be around 24% due to tax exemption of our second SEZ unit at Jambusar, moving from 100% to 50%. Cash flow from operating activities increased to INR 20,359 million. This was due to higher EBITDA and efficient working capital management. The trade working capital, in terms of number of days of sales, reduced to 59 days, which was 79 days as on March 31, 2023. The inventory levels also reduced in terms of days of sales to approximately 62 days to INR 13,012 million. Our balance sheet further strengthened during the year. Net worth increased to INR 87,310 million, CapEx to the 10,823 million, including pharma acquired assets of INR 4,972 million.
Surplus cash, net of debt is INR 38,825 million as of March 31, 2024.
...Our balance sheet and cash flows have stood robust in line with clear financial strength and discipline and execution, thereby enabling a superlative performance. That concludes my opening commentary. I will now request the moderator to open the forum for Q&A. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Before we take the first question, I would like to announce that all participants may please restrict themselves to two questions per person, so that the management may be able to address all questions in the queue. We have the first question from the line of Abhijit Akella from Kotak Securities. Please go ahead.
Yeah. Good afternoon, and thank you so much for taking my questions. Just a couple from my side. One is on just to clarify the tax rate guidance. So we are now talking about 24% tax rate from fiscal 2025 onwards, right? So that will be a continuing tax rate beyond that. Is that correct?
Yeah, that will be the continuing tax rate for the FY 2025, FY 2026. As long as we see it, deductions are available, we'll be in that range.
Right. And, Mani, so this will be for five years now, right? And after five years, probably the entire tax holiday at Jambusar goes away. Is that, is that how it should be?
Yeah. Currently, it looks like that. Yeah.
Okay, got it. And the other one I just had, sir, was on the,
Sorry to interrupt, but, your line is not very clear. I request you to please use the handset.
Okay. Is this better?
Yes, a little better. Please go ahead.
Yeah. Okay. Just the other question I had was on the new product launches. So you mentioned that about, you know, 1/3 of the new products are going to come from non-agro segments. If you could please just shed some color on what end use industry these might be, whether it's, you know, electronic chemicals, semiconductors, et cetera. And then, just one add on to this. What percentage of sales come from biologics in the domestic business? And if you could also possibly share the breakdown of the pharma sales between Archimica and Therac hem, if possible. Thank you so much.
Thank you, Abhijit, for your 10 questions, 10 good questions. Very smart, but let me try and answer some of them as I remember. So your first question was regarding biologicals. Biologicals, we don't have breakup right away, but what we have kind of also communicated is that there is substantial growth in this quarter to tune of 35 %. And also, if you look at our financial year numbers, there is a significant growth of 27% kind of growth over last year in biological space. The other question was about... Sorry, can you repeat your question, please?
Yeah, yeah. The non-agrochem sectors, sir, which ones will be the prominent ones we are looking at?
So new molecules that you were talking, that one-third of the growth, sorry, one-third of the, new products are coming from non-AgChem space. Yes. So this is about the kind of, new inquiries, R&D pipeline, progressing, et cetera. So if we look at that pipeline, quite a significant number of products are from non-AgChem area. Some of the segments are like you mentioned, these are electronic chemicals, semiconductors. Maybe, Atul, you can pitch in and briefly explain which are the other areas that we have.
Yeah. There are other areas related to performance chemicals, advanced polymers, which are used for the various applications, apart from electronics and semiconductors.
Okay. Got it, sir. Yeah, the last question I just had was whether it's possible to get the breakdown of pharma between our chemical and the, and the rest.
Well, that may not be the right way here, but we can provide you, Abhijit, from the sidelines.
Great. Thank you so much, sir. I wish you all the best.
Thank you.
Thank you. The next question is from the line of Rohit Nagraj from Centrum Broking. Please go ahead.
Yeah. Thanks for the opportunity, and, congrats on good set of numbers. So first question is on pharma business. So, the entire development spend, has it been completed in FY 2024? And given that we have done CapEx of INR 132 odd crores, whether-- what we, what is the kind of growth that we are looking in FY 2025, and what kind of margins are we looking, and what could be the levers for the growth? Thank you.
Well, this development process is still continuing, maybe for the next 1.5 years, this cycle will continue. But yes, we will certainly be growing more than 25% in the next financial year, which is the current fiscal. In terms of margins, as I said, till the time we complete this cycle, development cycle, it is difficult to kind of clearly indicate the kind of margins. But yes, once we complete this development cycle, maybe in next 1.5 years or so, then we will be getting to the normalized margins, or margin set.
Sure. And, second question is on, you know, overall consolidated business. So we have seen that there is a strong, almost a 450 basis point expansion in gross margins during FY 2024, and that has led to further, EBITDA margin expansion. So how are we looking at it, when we move to FY 2025? What kind of EBITDA margins that are sustainable, you know, in FY 2025 and onwards, given that, there could be some benefit, from gross margins, which may taper down in FY 2025? Thank you.
We are maintaining, you know, around the similar kind of margins, gross margins, around 49%-50%, in the FY 2025. The EBITDA margins will also kind of normalize at this level, as we are also kind of making a lot of developments and in some of these areas.
Sure. Thanks for answering all the questions and all the best. Thank you. Thank you.
Thank you. The next question is from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah, hi, sir. Thanks for the opportunity, and congrats for good set of numbers. First question on the working capital side. A commendable job there in terms of, you know, reduction in inventory, driving the working capital lower. How do you read this number going ahead, given, you know, where I'm coming from, the domestic business have been slow in this year as well, and going ahead, hopefully, FY 2025 onwards, things should improve. So will we see some increase in working capital led by inventory going ahead, or these numbers should sustain?
Well, we will sustain these, you know, current levels. While there are some improvement opportunities, but we also believe that in some other areas there are going to be continuous challenges. So more or less, we believe that we'll be able to sustain, the current levels that we are operating.
Great, sir. Secondly, on the overall revenue growth guidance that you have, you know, mentioned 15%, is this at the company level? How do you see the CSM part, CSM part, you know, going here?
Yeah. So this is at the company level. Of course, the domestic, as we all know, a lot will depend on how the overall—Yeah. Let me again repeat. So yes, this 15% guidance is at the company level. As we all know, on the domestic side, a lot depends on how the overall season will pan out. But, going by the positive commentary as of now, the details about, you know, monsoon and onset of monsoon, et cetera, we believe that we'll be able to kind of achieve this kind of growth on all businesses, you know, domestic side, export side, as well as on pharma side.
Sure, sir. Lastly, if I may, just on the cash that we are sitting on, plus the incremental operating cash flow generation, but will, for the pharma business scale-up, are we still looking at the inorganic part, or probably organic CapEx can see a significant uptake?
Well, right now, particularly in pharma, we are focusing on, you know, settling this current cycle, development cycle, investment cycle. Okay? But yes, we are also looking at several other opportunities, inorganic opportunities, actively evaluating them. But in pharma particularly, as your question is, we are more focusing on completing the current development cycle.
Okay. Great, sir. Thank you and all the best.
Thank you. The next question is from the line of Vivek Rajamani from Morgan Stanley. Please go ahead.
Hi, sir. Thank you so much for the presentation. Two questions. You mentioned in the presentation that about 70% of the export growth has come from the new products. Would it be possible to share some color in terms of what is the absolute share of these new products in your, CSM portfolio today, and where do you see this scaling up, say, in the next couple of years?
Well, these percentages are absolute numbers only in front of us, but suffice to say that. Basically, we are diversifying this whole portfolio of CSM, which is also kind of reflecting in the growth numbers that we are seeing, that significant percentage of growth is coming from new molecules that we have commercialized in last 3 years. And secondly, even the pipeline and the commercialization, more than 25%-30% of the molecules are from AgChem space. It's basically diversifying the overall portfolio.
Sure, sir. The second question was, you've obviously mentioned that a third of the new molecules will be non-AgChem, and they'll also ramp up. Just wondering if, you know, these products will still be operated out of your existing suite of facilities, and at what point in time do you think you'll have to invest in new or dedicated capacities to, you know, cater to these new non-AgChem opportunities?
So currently, these are being managed from our, you know, existing site as well as existing multiple plants, white spaces. But as the volumes will grow, we can certainly look at building dedicated multiple plants. By the way, one of the plant that, which is in process, is a kind of a dedicated plant for some of these products.
Sure, sir. I'll rejoin the queue. Thank you so much, and all the very best.
Thank you. The next question is from the line of Rohan Gupta from Nuvama Institutional Equities. Please go ahead.
Hi, good afternoon, and thanks for the opportunity. So first question is on the similar line that on the new products you had mentioned in the presentation, roughly six new products, and large part of the growth in exports have come from, 70% have come from the new products. I mean, not immediately in the near term, I mean, not as a 25%, but I'm looking at over next three years. How do you see that the revenue contributions coming in our export market will be from the new products in overall export revenue? Can you give some broader color on that?
Well, it would be quite significant contribution, and, if we see next 3 years considering the kind of, you know, level that we have already achieved, I think more than 35%, 30%, 35% of the contribution would be from these products, which would have been commercialized in last maybe 5 years, 5 years or so. So yes, going forward, there is a lot of, lot of focus being put on commercializing new products, intensifying this whole development phase of many of these products, which are in the R&D phase today, and they were in R&D phase in last couple of years. But yes, I mean, many of these projects are being commercialized and scaling up.
Okay. Sir, if you can give some sense on this pharma piece, where the margin profile is still, I mean, the gross margin though is pretty decent at 55%, but at EBITDA level, because the overheads and all. So if you can give some sense of how the revenue ramp up will be there on the pharma part of the business, and if we can expect that, because you have initially guided that your EBITDA margin in the pharma business also will align with the PI margin over the next three years. I think that almost one and a half year already completed. So are we looking at that margin profile of pharma piece will be aligning with the PIs, and in what timeframe?
Yeah. So it's... I mean, we have just completed one year of these acquisitions. As I was telling to the earlier participants, that the development cycle as we see today will continue. The investment development cycle will continue for next, at least next one and a half year or so, and we will surely see the normalized EBITDA margins for that.
So we are still looking that in next two years, EBITDA margins in pharma business is aligned to 22%-24% kind of numbers with the PI number. Is that fair assumption?
Yeah, it will surely be 20%+ kind of level for 3 years.
And, sir-
And then-
Sir, after one year of acquisition of pharma, so once again, going back to the history when we were looking at that, the pharma piece should contribute roughly INR 1,500 crore kind of revenue over the next three years. Are we still looking those numbers intact from the pharma part?
No, I don't know, INR 1,500 crore, but you see, point here is that in next three years' time, to three years' time, we would surely complete this investment and development cycle, number one. Number two, the growth in revenue, as I was telling to the earlier participant, will certainly continue during this period also in the development and investment phase. And our outlook for next three to five years, kind of, you know, more than doubling these revenues of what we have acquired is certainly there. That will continue.
... Okay. Also, the last week from my side, come back in queue, in terms of the growth guidance, in terms of revenue, you are saying roughly 15%. How are the new molecules, like the 15 molecules and all which we are launching in export and also in biologicals in domestic? So, amid that, we are still looking 15% growth, which is because of our biggest molecule, are we expecting some kind of deceleration there in growth or the revenue from both products will start declining? Are we expecting any of that both or by giving the revenue guidance of 15%?
Can you again, please repeat? We were not able to clearly, you know, hear your question. The line is not very clear.
Sorry, sir. I was saying that we are still giving a 15% revenue growth guidance. However, the six new products launched in export markets, where we see there's a significant ramp up along with the biological. So in our view, the growth guidance should be higher unless we are expecting our top contributing product, [Virax], is seeing some degrowth. Are we expecting any such possibility or while you are giving the guidance of 15%?
No, it's not, you know, the degrowth or the growth for prospects of a particular product. You see, it's a product mix, product portfolio. There are products which are quite stable. There are products which are, over a period, are degrowing, and there are products which are being launched, which are early in their life cycle, and they are growing. So this is the kind of portfolio, and if you also look at our business model, the business model is also that every year you keep continuously commercializing these new products, which takes care of some of the products, old products, which are kind of, you know, where the growth is remaining.
So the central point is that on a balance basis, if we look at overall, we are confident that we will see this kind of growth momentum, 15%, around 15% kind of growth momentum. And mind you, the overall industry sentiment is not very positive. So keeping that in mind, I think this is quite reasonable.
Fair enough, sir. Last bit from my side, if I'm allowed. On the CapEx front, you mentioned that roughly INR 1,100 crore kind of CapEx which we have done for the current year, including INR 500 crore rupees acquisition, so INR 600 crore kind of investment in existing business. However, I think we are guiding for roughly INR 800 crore investment for the current year. So, if you can share the CapEx number for next year and is there any spillover CapEx use there, which will go to next year in the current year?
So we are looking at close to INR 800 crore-INR 900 crore kind of CapEx in the current fiscal.
Okay. So there is no spillover impact, like, because I think that last year we were still short of close to INR 200 crore in terms of CapEx. So INR 800 crore is a maintained number for this year also, in terms of CapEx. We are not giving a CapEx guidance INR 2,000 crore.
I mean, there is obviously a little higher plan, but when you end up with your actual spend and capitalization, et cetera, et cetera, then there is always a lead and lag. So keeping that in mind is what we are indicating INR 800 crores-INR 900 crores kind of number.
Fair enough, sir. Thank you very much for all the answers. Thank you.
Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yeah. Hi, sir. So, we've seen around 37% kind of degrowth for FY 2024 in pharma business. So can you talk about what is the key factor and how things is going to shape up in FY 2025, considering this factor?
Anil, maybe you can briefly explain. Okay, I think his line is not clear. So this is mainly because of, you know, debonement of some of the products that innovative products that we have been supplying. That is the key reason for this.
Okay. So is there any realization decline for the existing portfolio also?
Your line, your line is not very clear.
Is there any realization decline I'm talking about?
No, no, no realization decline. There's no price realization decline.
Okay.
Because of supply procurement.
Okay. Thank you.
Thank you. The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
Thank you, and good afternoon. So in the pharma business, the development expenditure which you're talking about right now is routed through P&L. So, can you give us some indication of what is the kind of development expenditure you would incur, say, over FY 2025, 2026? And will it continue through the P&L, or will you capitalize it after some time?
No, it will continue through PNL, and that is the reason we have explained this in our communication. Well, we don't have just in front of us the development plan for next couple of years. But yes, as I said earlier, this cycle will continue for next at least one and a half years.
In terms of, yeah, ramp-up in revenue, from this, you know, post India, INR 300 crore, can we expect, say, INR 500 crore by 2026? And this pro forma EBITDA margin after, before development spend of 12%, can that go to about 14%-15% in the next two years?
Yeah, that's what we are expecting.
Okay. And in terms of the order book execution that you have right now, that is presumably the CSM export excluding pharma, right? $1.75 billion.
Yes.
Okay. And so in terms of monetizing that, what will be the run rate over the next two, three years on that order book? Given that you are talking about 15% growth, so will that be evenly spread out? I mean, plus or minus the new molecules, how do you see that run rate going then?
No, to be honest, I'm not very clear about your question. If you can rephrase it.
Basically, you have the order book of $1.75 billion, assuming that it doesn't include any pharma orders, and that's pretty much in CSM. When you look at unwinding this order book in terms of your future revenue in CSM, would that be evenly spread out in terms of execution, say, over the next three, four years? Or will it be, you know, a front-end loaded or back-end loaded?
Yeah, I mean, typically, this order book will have, you know, it is spread over next 3 years- 5 years, some products for couple of years, some products for 4 years, some products for 5 years. So yeah, on an average, we can say, 4 years-5 years. And in addition to these, in addition to the order book, where we have long-term, agreements or contracts, there are, you know, a significant number of products where we have annual, purchase orders, et cetera. So the annual revenue or the, you know, the growth number that we see basically comes from, not only from order book, but also from our annual contract for purchase orders. I hope this answered your question.
So just one last thought. If you look at the Chinese price index, there is a report which says the Pyroxasulfone prices have declined to about $75, which is a, you know, a steep decline. So how does it impact your, current, CSM arrangement for supply of the molecule?
Well, I do not have this information that Chinese supplier at that price, because currently, I don't think any supply has been from China for this molecule.
Thank you very much, Lavanya.
Thank you. We have the next question from the line of Yash Master from Unifi Capital. Please go ahead.
Hi, sir. Good afternoon. So my first question is, this year we are targeting around 15% revenue growth. Previously, you were targeting 18%-20% growth. So I just wanted to understand that this reduction in guidance, is it just for, like, short term? Because this year our main product will face some pricing pressure, and in short term, it may impact our revenue. But as we are scaling up new products in CSM and diversifying into pharma, and also we have a heavy cash on balance sheet, so... And we have been looking for firm acquisition for some time, and that can bring in significant growth. So can we expect in long term that we can go back to achieving our 20%, 20%+ revenue growth?
Well, there were several questions in your one question. So let me try and answer it one by one. As far as your question around why 15% versus last year 18%-20%. So few aspects. One is that, of course, the base has gone up. Now we have a new business as well, okay? Secondly, as we were discussing earlier, the overall business industry sentiment, demand scenario, although we are not into so many generic products, but still the overall sentiment is not great. And considering all these aspects, is what we are very cautiously guiding for the growth. Okay.
The third aspect is that, there is, as we have seen in past also, that there is a lot in the domestic area depends on how the monsoon onset is taking place, how the, you know, rainfall distribution is. So keeping in mind those kind of, you know, contingencies and situations, is what we are very cautiously guiding for this growth. Your second question was, if you can repeat, please? Can you please repeat your second question?
Excuse me, sir, the current participant seems to have dropped from the queue.
Okay. Then we can take up another question.
Yes, we will proceed to the next questioner. We have the next question from the line of Krishan Parwani from JM Financial. Please go ahead.
Yes. Hi, sir. Thank you for taking my question. Firstly, on this Pyroxasulfone problem, so, you know, when can we expect first launch? Will it be 3 years, 4 years down the line? And also, any number on peak sales from this product, if you can give.
Well, yes, it typically should start 3 years-4 years plus ahead. Given peak numbers would be too early to comment. The product is under evaluation development. Yeah.
Okay. And secondly on this rest of the QIP money, do you have any more inorganic acquisition plans?
Yes, we are very actively evaluating few options.
Understood. And lastly, if I may, just some small clarification. On this INR 800 crore-INR 900 crore CapEx that you're going to do in the current fiscal, so like could you, like, give a breakup in terms of what could be the non-CapEx?
Well, that would be very difficult. Atul, maybe you can come in if you have any such breakup. We don't have it, right?
Not really, sir.
Yeah, we don't have this breakup, so this is... You know, as you may know, that these are the multi-product plants. These are generally not for a very specific molecule. So when we build these plants, they are for several products.
Understood, sir. I mean, I was just more of asking because other than, I mean, in the end, since you have the technical, so those would be different than the MPP. But in any case, no worries, and wish you all the best for the coming year, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Yash Master from Unifi Capital. Please go ahead.
Yeah. Sorry, sir, I disconnected from the line. No, I'll refer to the transcript for your answer. I just had one more question. So I wanted to understand, on the Pyroxasulfone side, the technical that we are supplying to the innovator is going off patent this year in U.S. So, and, but the formulation is still patented for some years, so the final product may- could see less price erosion, but our technical is going generic, so other suppliers could make it. So how much price erosion are we expecting on the technical side?
Well, we don't really expect, you know, any impact of this product going, you know, off patent in U.S. in current fiscal, because it will take few years for registration for another players to come in. The second point is, which you also kind of mentioned, that the formulation, the products which are being marketed, combinations, they have pretty longer, you know, exclusivity of patent. So therefore, we don't expect in the developed market any significant impact.
Oh, okay. Okay. And can you just provide something on domestic outlook, like how is it looking right now, and when can we expect growth to pick up in that segment?
Prashant, you may come in.
Yeah. Hi. Yes, last one year, we all know has been a challenging year for domestic because of, extreme weather condition. However, given the IMD forecast and climate forecast on, rains, so we are, definitely optimistic, for the, first quarter.
Okay, so we can see, maybe see growth from first quarter itself.
Yeah. The first quarter is more of a placement quarter. Otherwise, if you look at the consumption starts by second half of June, and basically, second quarter is the major consumption. Having said that, the industry has a higher inventory in the marketplace, so we also need to have a close watch in case if there is a little bit of a delay in rain, that may have impact. Otherwise, as of now, going by the forecast, we are positive.
Okay. So on a quarter-over-quarter basis, it may differ, but on an annual basis, there will be a growth in domestic revenue. Am I right?
Yes, definitely.
Okay. Thank you. That's all. Thank you for answering all my questions. I'll get back in the queue.
Thank you. The next question is from the line of Lavanya Tottala from UBS. Please go ahead.
Hi. Hi, good. Thank you for the opportunity. One question... position in CSM, I think, percent growth in the new product. Is it 5% or 25%?
Line for you is not very clear. May we request you to please use the handset mode?
Is it any better now?
No, it is-
Sorry. It's not clear. I'll rejoin the queue. Is it clear now? Just come back.
This is better. Yes.
Yeah. So I'm just asking on the new product revenue share. So last year, our revenue share was somewhere around seventeen-... our revenue share from new products should have 23%-25% in FY 2024. Is that the right understanding?
Yes, you are right.
Okay. So this we are expecting to grow to about 33 years.
Yeah, I-
Just, I wonder, the products which you mentioned. I just missed a bit there. Is it on the page which-
Come again, your question?
So, earlier, in the earlier question, you mentioned about deferment of some innovative products in terms of our supply. Is it in the pharma space, or did I miss that part?
Yeah, that was for pharma for pharma.
Okay. Do we expect these orders to come back this year or next year?
Yeah, discussions are this, and these are in any case, biotech, small biotech companies, so that, that whether this will come in the coming financial year or maybe a little later.
Okay. Got it. Got it. Thank you so much, sir. All the best.
Thank you. We have the next question from the line of Naushad Chaudhary from Aditya Birla Sun Life Asset Management. Please go ahead.
Thanks for the opportunity and congrats on a decent set of numbers, sir. Follow up on a participant question. We appreciate your guidance of 15% growth despite global headwinds. But post FY 2025, do you see we have product sets ready that can, you know, help us to go back to our 18%-20% kind of growth for two to three years post FY 2025?
Yes, of course. I mean, as the overall industry cycle, you know, comes back to the normal kind of situation, there are all opportunities to kind of for us to go back to our 18%-20% kind of levels.
Without compromising on the margin?
Yes, of course.
Um, lastly-
That option, by the way, that option always remains, huh? That option is for current year as well, but as you may know, you know, our philosophy on the business, we have always managed business in a sustainable manner. So yes, and in a differentiated manner. So keeping those principles in mind is what we always guide, and we always do the business.
We appreciate it, sir. Lastly, on the U.S. market, not from your product point of view, but in general, if product goes off patent, how much time does it take for a generic player to register in that market and, you know, to have a real impact on the patented product once it goes off patent?
Well, it varies from product to product, so difficult to generalize, but yeah, it takes anywhere between, you know, 1.5 years-2 years. But if it's... You know, as we were discussing earlier, if the exclusivity is there on the formulation, then it's a completely different scenario.
All right, sir. Thank you so much. All the best.
Thank you. The next question is from the line of Meet Vora from Emkay Global. Please go ahead.
Yeah, hi. Thanks for the opportunity. So, my question was regarding the CapEx that we have done over the last two years. So, roughly INR 900 crore, INR 800 crore-INR 900 crore, last year, and we are planning to do this year. So, can you just give a broad sense of, what is the CapEx that we have done? We have installed one dedicated plant, is what you mentioned, and others will be all MPPs. As in how many plants we have put up?
Atul, maybe you can come in and briefly explain.
Yeah. So this, you know, the CapEx, what we are talking about is for a dedicated plant, one dedicated plant and also, a multi-product plant, and for the new molecules, you know, on which we have been working. This continues, you know, for this year as well, fiscal year 2025 forecast what we are giving.
In total, we'll be putting up two dedicated and two MPPs?
Yes. Yes.
Sure, sir. Second question was on margin front. So while we are mentioning that our gross margin has improved because of overall favorable product mix, is it because that contribution from a higher margin product is more, or is it because that newer products that we have commissioned are having higher margin?
Well, I'm not sure what you meant, but let me clarify that this gross margin improvement is on account of several factors. Product mix is one aspect, but also business mix. So if you appreciate that there is now pharma business part of this overall business, where the gross margins are higher. If you also consider that, you know, the export revenues are more compared to the domestic ones. There also the gross margins are higher because of the nature of the business. So these are some of the reasons. And then, of course, within the segment, whether pharma or whether CSM exports, the product mix has also been favorable.
Understood, sir. Just one last bit, if I may. Sorry for harping on this again, but if I look at the U.S. geography, I just wanted to understand that, even if Pyroxasulfone, for example, is patented, can someone import Pyroxasulfone from some other country or some other supplier and sell it in U.S.? Or whether there is an application patent or there is only a process or a technical patent?
But, you know, anyone importing Pyroxasulfone will not be selling Pyroxasulfone technical in U.S., no? He will have to be selling some final product, finished product, and if that product is patented, then, you know, that is the issue one needs to consider.
Understood, sir. Okay, thanks. That's all for my side.
Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sirs.
Yes. Once again, thank you for being a part of this conference today, and I wish the PI team all the very best and continue to look forward to your support. Thank you. Thank you so much, gentlemen.
Thank you. Thank you.
Thank you. On behalf of PI Industries Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your line.