Ladies and gentlemen, good day and welcome to PI Industries Ltd's Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an option for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchscreen phone. Please note that this conference is being recorded. Now, in the conference, Nishid Solanki from CDR India, thank you and over to you, sir. Nishid Solanki, may I request to unmute your line and proceed?
Thank you. Good afternoon, everyone, and thank you for joining us on PI Industries' Q4 FY 2026 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. Sanjay Agarwal, Group Chief Financial Officer, Dr. Atul Gupta, CEO, CSM AgChem, Mr. Jagresh Rana, Global CEO of PI Ag Sciences, and Dr. Ramesh Subramanian, Global CEO of PI Health Sciences. We shall begin the call with key perspectives from Mr. Singhal. Following that, Mr. Agarwal will share his views on the company's financial performance. 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 could be forward-looking in nature. A disclaimer to this effect has been included in the investor presentation that is available on the stock exchange websites.
I would now request Mr. Singhal to share his perspectives. Thank you and over to you, sir.
Yes, thank you. Thank you and good afternoon to everyone for joining the call today. I want to begin with a brief view on the global agrochemical landscape, follow that the domestic agri-environment, and then walk you through PI's operational and strategic progresses. The global crop protection market has been continuing a multi-year down cycle. Recovery remains uneven from complicated by the global events during the quarter, which has led to a clear shift towards just-in-time purchasing. The conflict in the Middle East, late February, has introduced a fresh layer of disruption that the industry was not anticipating. The pressures are difficult, they also reinforce the strategic value of geographical diversification. The domestic demand drop is generally encouraging on the fundamentals, even though the near-term industry demand has been muted due to the elevated channel inventories , low crop prices, and incidents of rains.
The Rabi season was good with increasing acreages. Structural drivers for our industry remain firm in place. The world still needs to feed growth populations and farmers, globally are demanding solutions for safer and more selective and more sustainable solutions. Innovators and integrated R&D-led manufacturing and forward thrust, seamless execution, and will be the long-term winners. Moving to our business performance for the quarter, we are continuing to demonstrate resilience underpinned by the breadth of our portfolio and depth of our customer relationship. More importantly, we believe the investments made over the four years that we continue to make have a meaningful strength of PI's long-term position to differentiate and move it into the next orbit.
Our consolidated revenue portfolio has delivered INR 67.137 million with healthy EBITDA margins of 25% and cash and balance sheets of INR 34,275 million, enabling the company to pursue further strategic investments for long-term sustainable growth. Our pharma business delivered a 40% growth for the full year. We'll continue to strengthen customer engagement and innovators. Biotech companies will be investing in capabilities across process development regulatory frameworks. We believe it represents significant importance for long-term growth platforms, leveraging our deep chemistry capabilities, integrated facility between India and the E.U., and the operating model of strong innovation expertise. Let's bring down to our attention to the biologicals, which has been a passion for over two decades, during which we have built one of the most comprehensive biological portfolios for the Indian market.
Over the past two decades, the business has emerged as one of the fastest-growing segments of our portfolio, compounding over 20%. Our acquisition of a differentiated technology platform has given us a global market access and advanced R&D capabilities for significantly accelerating our growth ambitions globally. We believe our technology has the potential to address the next generation crop health and protection for sustainable agriculture solutions. On sustainability, we have maintained our position as S&P Global yearbook again, and our most recent S&P Global CSA percentile has improved to 98%, placing us firmly in the top-rated chemical companies in the world. I want to now focus on defining platform PI over the coming decades.
Our in-house chemical entity program, a discovery platform, our first NCE, Axel Enfold, discovered in India and now is coming to the market soon, demonstrating our ability to invent at a global scale and take innovation from India to the world. We believe there's a major shift in the way PI will pave for global-scale manufacturing from a distributor to reposition itself as a global innovator, backbone strength, and partner across the value chain and turn ourselves into a life sciences company. We expect in 2027 to deliver growth with exports and global biologicals backed by customer momentum as well as domestic business expected to gain from the new brand launches. Today, PI stands to move into the next orbit, into an innovator mindset and a life sciences cycle building from CRD platforms, electronic chemicals, and operating growth across multiple lines.
Our growth would continue to support strong balance sheet technological capabilities and powered by science-driven platforms with deep-rooted relationships with customers and strong understanding of the global work culture. Therefore, I conclude. I would like to take this opportunity to acknowledge the decade-long contribution of our Joint Managing Director, Rajnish Sarna, who has been a critical part in shaping and supporting PI. He has stepped down from the executive responsibilities, including IR, to focus his health, which will continue to be associated while he will continue to be associated with PI as non-Executive Director of the Board. I would love to also take this opportunity to speak from the PI management and the board and all the family of PI for the great commitment, dedication, and the contribution that he's made in building PI over the last three decades.
Going forward, I would like to make it clear that our Group CFO, Sanjay Agarwal, will continue to actively engage with the investor community and ensure continuity and communications at strategic engagements. I'm always there to support in any of those challenges. With that, now I hand it over to Sanjay and take it through the financial performance details. Sanjay, over to you. Thank you once again, all of you, and to Rajnish for being an excellent part of supporting the company. Over to you, Sanjay.
Thank you, Mayank. Good afternoon, everyone. I'll summarize the company's financial performance for the quarter ending March 31st, 2026, and for the full year FY 2026. FY 2026, as Mayank mentioned, it has not been easy for AgChem sector. However, we have been backed by our strong business model and hence navigated this near-term industry cycle. We've also taken several initiatives proactively to work with our global AgChem customers, and we believe the sector is transitioning out of down cycle. For quarter four FY 2026, we reported a revenue of INR 15,652 million, delivering sequential growth as per our guidance last quarter. On a full-year basis, the revenue is INR 67,137 million, delivering a growth on a three-year CAGR. Decline in AgChem exports is primarily driven by lower volumes, reflecting the broader global industry contraction and customer delivery schedules.
We have commercialized five new molecules in AgChem exports and launched four new products in domestic agri brands. New brands now contribute around 18 odd % of AgChem exports, highlighting our focused de-risking strategy and innovation-led approach. Domestic agrochemical demand remains being impacted due to channel inventory, pricing pressure, delay in the regulatory transitions of biological portfolio, and lower crop acreages impacting key crops of PI. However, we expect this growth momentum to now pick up with a stronger Kharif season. Our domestic business is supported by our strong product portfolio, new product launches, and focus on several on-ground initiatives led by technology and farmer engagements. This year, we launched four new products, three in the herbicides, one in the insecticide.
On our pharma platform, we delivered 40% growth in revenue for the full year, driven by our growing strategic customers and our relentless effort to continue building capability to build a differentiated CRDMO model. Global biologicals also continue to progress with ongoing investments in market and product development, focus on innovation, and strengthening R&D capabilities in the U.S. and in India. Our gross margins for the full year as well as for the quarter stood at 58%, supported by a favorable product mix and strong operational efficiencies. At the EBITDA level, we delivered what we committed at the start of the year, a resilient margin of 25% for the full year. While the ETR for the quarter has resisted due to higher non-SEZ sales, on a full-year basis, the ETR for FY 2026 remains at around 22%.
We expect FY 2027 and thereafter ETR to be in the range of around 23%-24%. We have sustained our trade working capital in terms of days of sales at 139 days, despite the volatility in the overall market. Our strong debt-free balance sheet, supported with net cash of INR 34 billion, provides strong resilience and flexibility for strategic investments. In addition, we have successfully implemented SAP S/4HANA, which marks a key milestone in our digital transformation journey, strengthening our operational backbone, enhancing data visibility, and enabling future scalable growth with improved governance. As we see opportunities in FY 2027, we expect a positive growth in FY 2027, supported by new product launches, especially our first homegrown NCE in the domestic business and our pharma and biologicals continue to scale up. With this, I conclude my opening remarks. I'll now request the moderator to open the forum for Q&A. Thank you.
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets. While asking a question, ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to answer a question. The first question is from the line of Saurabh Jain from HSBC. Please go ahead.
Hi. Thank you so much for the opportunity. My question is on the CapEx that we have incurred over the last three years, which translates to almost like a INR 2,600 crore of CapEx. We are not seeing a conversion of this CapEx into the revenues for the last two years. For that reason, the asset turns, which used to be almost like 2.5x, dropped down to almost like 1.5x now. I wanted to understand where this CapEx is being directed to and some sense in terms of how much of it is being focused towards the legacy projects and the new projects. When do you expect this CapEx to be translating into the revenues?
I think that's quite a question as well. The point is that if you look at these asset investments are done for a multi-year ramp-up, both in capacity and scale of manufacturing, some of these investments have been in the software arena of technology, NCEs, and new business arenas, which have a longer gestation. Some of them are coming off color in the coming year and the next couple of years. That's really where I would answer that from a contextual point of view.
Generally, I thought the gestation period used to be pretty short, right? We used to set up a plant in eight to nine months, and then it used to start to flow into the revenues. Now, this gestation period seems to be kind of widening. INR 2,600 crore, how much of that would be spent onto the R&D and technology developments and how much on actual steel on the ground?
Yes, the ramp-up doesn't happen over one year as you would appreciate. If the eventual new molecule capacities are at X, which are to a maturity of five years, you build the plant. The ramp-up typically takes four to five years to do that. Plus the distribution in the newer arenas of innovation, which have been over the last so if you were to take an example, I don't have the exact numbers, but I think, Sanjay, you can get that back later. The arena we've been doing regulatory investments to take the new molecules into the markets. That comes with the price tag and those also investments. We're building the new pharma capabilities and assets to create offering for tomorrow. That's really the split today.
Obviously, at the present moment, you see that, but also the industry cycle of these demands have been lower, as you would say, occupation less. Fundamentally, the new products, at some point with maybe a delayed gestation, would shape up. Yeah?
Okay. Sure. I have another question, but I prefer to get back into the queue. Thank you so much.
Thank you. Next question is from the line of Tejas Pradhan from Citigroup. Please go ahead.
Yeah. Hi. Am I audible?
Yes. Go ahead.
Yeah. Hi, sir. For full year FY 2026, could you give a sense on what the growth would be for excluding your largest product in AgChem CSM business?
Sir, if I get your question right, for last year, besides the new molecules, the new product growth rate.
As you know, with all the new molecules we've been launching, they contribute now around 18%-20% of our total portfolio. They also have been growing at a faster clip in the overall portfolio. While their revenues are declined because of the overall challenges we know, but the new molecules, they have been shaping well and contributing incrementally to our margin profile.
Okay. Okay. Just apart from the new molecules, even the existing molecules which you would have launched prior to that, right? If we just strip out the impact of the largest product, Pyroxasulfone, excluding that, would there have been growth in FY 2026 in CSM exports, or that would have been a year-over-year decline?
Well, if we look at the other lines, the biologicals, new molecules, yes, there's growth, but expected growth rate situated with that given the external environmental situation and the agriculture scenario, they have not kept pace. I mean, eventually, they're going to come up to shape. That's what we see from our global partners' communication and understanding. Yeah?
Okay. Okay. Understood. Secondly, on the contract assets, now we have seen a reduction from INR 1,000 crores as of December 2025 to INR 700 crores as of March 2026. While that has reduced, on a YoY basis, it is still higher. I think in March 2025, it was around INR 400 crores, right? Would we expect further reduction over here to FY 2025 year-ending levels? How should we look at this number on a steady-state basis? What sort of level do you target over here?
Well, I would say that if it has a margin huge reduction about 30%-35% as we would have seen in this year from the last quarter, this is subject to asset utilization, to value of product in the pipeline, and long-term products. I would say this will remain overall around the same level given where the business model and structures are today.
Okay. Okay. Thanks. Just one more, if I could squeeze in, would you have a sense on would you be able to share what the capacity utilization would be at a company level for FY 2026?
Yeah. The FY 2026 is around a bit below 80.
A bit below 80. Okay. Thanks. Thanks, sir.
Thank you very much. Next question is from the line of Vivek Rajamani from Morgan Stanley. Please go ahead.
Hi, sir. Thank you so much for the opportunity. Just one question on the margins. I can see over the last couple of quarters and for much of fiscal 2026, you've been able to maintain your gross margins at a very healthy level of 58%-59% odd. For the last couple of quarters, at least on the EBITDA side, we've seen a bit of compression going back to the 22% mark, whereas we started the year with a 27%-28% margin profile. Just going into fiscal 2027, if you could just give us some sense of how should we think about margin profiles, both on the gross margin level and the EBITDA margin level?
Sir, by look going forward, we'll continue to focus on maintaining the gross margins, right? Obviously, the volatility quarter-to-quarter could be different, but the average gross margin that we looked at, that's a strategic focus to continue managing the disparities and market. Yeah?
Sir, sorry to interrupt, we were not able to hear you. Can you repeat the last one second, please?
I said we are not the quarter-to-quarter volatility as it continues, but if you look at the average gross margin for last year, we continue to focus to maintain the gross margin at that level, as indicated earlier.
Sure, sir. The EBITDA margin would be a similar commit?
You see, given the present environment, the volatility of the various multiple factors, whether it's input costs or whether it's other cost structures and other challenges, I would say our target is always to say that how we can continue to manage them and beat them better. It would be very difficult to give a specific answer today to say where would they be. Yeah, as the company continues to manage that, because while making sure that we don't compromise on our long-term trajectory and continue that focus to look at market share and growth. Yeah.
Sure, sir. That's clear. If I could just squeeze in one more clarification. In the opening remarks, when you mentioned you're looking at positive growth in fiscal 2027, would that be positive revenue growth or positive earnings growth?
Well, clearly, we're looking at revenue growth as one of the key drivers for this positive growth going forward. Yeah?
Sure, sir. That's clear. I'll rejoin the queue. Thank you so much.
Thank you. Next question is from the line of Rohit Nagraj from 360 ONE Capital. Please go ahead.
Thanks for the opportunity. In our PPT, we have indicated that we have received regulatory approval for a launch of a nematicide in the U.S. What is the kind of scale-up that we are expecting over the next maybe three to five years? Is it a biological or a synthetic one? Thank you.
Sorry, I didn't get your question. What was your question, sir? It was not very clear. Can you repeat, please?
Yeah. We have received regulatory approvals for the launch of a nematicide in the U.S. That's what we have indicated in our PPT. Is it a biological? What is the kind of market size that we are tapping in terms of this particular product? What is the kind of potential revenues that we can generate over the next maybe three to five years?
Sir, I think I will take this first, and maybe Jagresh can fill me in there. Yes, it is a launch of a new biological nematode. It's the first time a new biological nematode is coming in the market at that scale. I think the growth rates, at least you can look at what you're doing to evaluate. I mean, maybe you can give a better feeling.
Yeah. Yeah. No, absolutely. Hey, thank you for asking this. Based on the performance we have seen, this kind of a very unique biological nematicide product, most of the nematicide products which are there in the world today, they are mainly applied in the soil. Today, there is hardly any nematicide product which can be a foliar application. First of all, this is the first time that we have introduced a product in the market which is a foliar application-based. Second part in this is that this product, the nematicide market overall globally, especially in Brazil, U.S., in these markets, has been growing very rapidly. More and more farmers are realizing the problems of nematodes. We are expecting a significant growth from this product. U.S. is a third market. We have already launched it in Brazil and Mexico. U.S. is a third market.
Where we have launched in Brazil, we are basically seeing this year that we should be almost more than tripling our sales for this particular product. It's a product which competes very well with the synthetic chemistry products. We are seeing some very positive results and good performance from the farmer side.
Only one caveat I will put. We are still in the early stage of developing a product, farmer acceptance of biologicals. I think what Jagresh Rana is saying is very positive about what we see. I think it takes a couple of years to establish a product. The results are very encouraging and give us a huge capability to say, yes, we need to invest to build the markets. The investments have been aggressive approach to build this product. Yeah.
Sure. That's helpful. Second question in terms of CSM business. Last year, we had indicated FY 2025, the contribution from new products was about 15%-18%. This year, we have said FY 2026, the contribution is about 18%-20%. If I do the math, it seems that on a year-on-year basis, the new product absolute revenue seems to be flattish or slightly negative. How do we look at it from the FY 2027 perspective?
You're right. You see, as you can very well understand, the global agriculture market scenario itself is challenging. You can see that from the performance of the large company trying to put new products, customer expectation, acceptance due to commodity prices. Clearly, as the situation is very volatile, but we do see this becoming a bit better, right? I think fundamentally, the whole agriculture cycle has to pick back, and innovation could get adopted at a much faster rate. We see that to be looking a little bit more positive. As you would have seen our commentary over last year, there were challenges in the market. What was expected to turn around and how companies were looking, second quarter, half second half, but still not come around. Hopefully, things shape up in the right direction. We will see a better number coming from here.
That's really where I would put that stop. Yeah.
Sure, sir. Sir, just last one I'm squeezing in. On our novel NCE molecule, PIOPSON ibuprofen, we plan to launch in the Indian market. What about the global launch? Are we expecting any kind of auto-licensing for the same? What could be the timeline for the same? Thank you.
Yes. Right now, for the global markets, we're working in a couple of global geographies where we will be looking to file regulatory. Each geography has different regulatory requirements, local and global. We'll be looking to put in application for filing probably at the end of this year or next year. Then we'll be going to the regulatory framework, and we'll be looking at synergic partnerships and would announce them at the right level when we come to the right point of decisions with them. Yeah? The first point today is that at the global level, there is a regulatory framework.
Perfect. Thank you so much and all the best, sir.
Thank you. Next question is from the line of Rahul Jain from Credence Wealth Management. Please go ahead.
Hello. Hello. Am I audible? Hello?
Yes, sir. Go ahead. You're audible.
Hello. Sure. Thanks for the opportunity. Sir, my questions are centered around the electronic chemical basket. Typically, we have mentioned in the previous call about commercializing about four to five molecules. If you could share some details in terms of the molecules, what kind of revenue contribution, what kind of end application each of these molecules are supposed to serve, and what kind of customer sets we have been talking about, both between Japanese and the non-Japanese? That is my first question.
Dimension and understanding, as you would have seen that in the past from the commentaries of handling innovation. We are working on some new innovative ideas with companies. As you would say, they are right now at the ramp-up stage, the electronic chemicals. They are not a significant portion of the company's supply. What is an indicator that we are very strongly working in that area? Once we scale up, we'll have the right answers. To get into specific, they're niche applications, and they are unique in their offerings. That's the area which we always operate in. Yeah?
Sure. Sir, if you could share some kind of typically, what can be the size of this segment of our electronic chemicals, say, next two, three years? Can this be a INR 1,000 crore business in next three years?
Well, I don't know about three years, but yes, certainly, with time, we will definitely look at that. That is our target. We would love to do that. As you stated earlier last year, we have looked at saying, yes, we're looking to target about INR 100 million in the next four to five years in this segment.
Sure. Last bit. Sir, when do we expect the pharma to turn EBITDA positive?
The pharma revenues are, as you can say today, as you've seen the global situation, the CRDMO play is a very, what you call, swing-in and swing-out play. We are right now very confident that we're looking at such an interesting opportunity, some part of the value chains, which should fructify with time. Obviously, the investment mindsets are shifting. As we see these things move, and as we have stated earlier, achieving INR 5,600 for a top line is when you would see these things move into a positive phase. That could be a couple years, if not a little bit more than that, to get to that space. Yeah, but right now, the company is more focused in building capabilities, offerings, and building customer confidence to look at their value database. That's really where we are.
Thank you so much.
Thank you. Next question is from the line of Ankur from Axis Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. First question on the overall pricing environment, given the volatility in raw material prices of late and the pressure from Chinese-led, the global pressure there on the AgChem cycle as a whole, is there any significant pricing correction or pressure that we are seeing across our portfolio? Second bit, one clarification there. The five-odd percent realization decline in our exports that we are seeing, is it more a product mix issue, or it's an RM deflation or some pricing correction there?
Sir, I would like to answer that. A pricing correction, that is, currency deviation, that we have passed through models. Yes, we are seeing volatility in the raw material prices, and they have had some impact. There is a balancing act where the company is playing in this volatile market while supporting customers, looking at end-customer challenges to ensure that we have a sustainable growth and continuing to put high utilization of our delivery plans while focusing on managing across markets. As you would very much understand, I can't give you a straight answer because nobody seems to have a straight answer. This is a very volatile market. All is swinging like a yo-yo. Raw materials swing like a yo-yo tomorrow, yes, tomorrow, no. The outcome today is, yes, there's an impact. We are focusing on those impacts.
We are looking to how to create the value extraction in the company. The company has a very strong focus to say how we can optimize and maximize, taking consideration from customer to supplies. Yeah?
Sure. Okay, let me put it this way. Our focus here will remain on volume growth for our existing as well as newer products, or we will prefer to have a balanced approach in terms of margin as well?
Well, our focus today would be to continue to hold the market share and the volume because the margins could always return back when the market swings. That's typically our business focus, right, given the volatility that we see. That does not mean that the margins will not come, but they are more volatile in nature right now, as you would understand. Yeah?
Sure. That's helpful. Just one clarification, if I may ask. The electronic chemicals or the newer areas where we are expanding into, the capex for them, these will be largely MPP-based, or there will be some dedicated capacity coming in, which is already there in our books?
Again, these are niche chemicals. There will be multipurpose assets and some maybe specialized assets, right, because we're not in the commodity end of the electronic chemicals. We're more focused on niche and complex areas of operation within these.
Sure, Mayank Singhal. That's helpful. Thank you and all the best.
Thank you. Next question is from the line of Siddharth Gadekar from Equirus Securities. Please go ahead.
Hi, sir. Sir, on the pharma business, could you just share your thoughts in terms of growth and profitability over the next two, three years? How should we see this business scaling up?
As I think I mentioned to the earlier question, it was exactly that we are looking right now to build those capabilities in the next two, three years. As I said, they bid us where we would be able to look at INR 5,600 crore top lines. We should be able to move into that phase. As you would very well understand, being the CDMO play, it takes a long time to build the foundation, but then you start seeing an accelerated curve, which moves fast because the entry barriers and the regulatory frameworks followed with early-stage products, you start targeting. When the cycle picks up, it takes a J curve. That's really the approach that we are seeing. I see that in the next two, three years to start showing some early shifts. Yeah?
Just a second. On the global biologics business, given that now we have started getting product registrations and also building a distribution model across geographies, how should one think about the OpEx in this business, and when do we achieve a scale where we break even in this business?
I would say the way to answer this, what we are seeing, as I think Jagresh Rana mentioned earlier, we're seeing the project-positive trajectory. As you would see, the markets itself are depressed today in the agri-sector. We are clearly seeing a great acceptance of our technology and product performance. I would say we are very much positive to see that in the next couple of years, we should be in the position that we are looking to achieve for ourselves, as you rightly questioned, to get into a break-even position. If you see more opportunities of more innovations, we will be investing, and we will not do that without a value add. We are definitely very excited to what we see. A couple of years from now, it doesn't look too far from us to be playing that game.
Lastly, for FY 2027, in terms of any we would have any higher OPEX in terms of any large registrations or any other one-time costs that would be coming in our P&L given that we are looking at commercializing a few products?
Yeah. Sir, this is an ongoing thing which we have been since we've been investing into R&D, and we are looking at these new NCEs. This has been continuing for the last few years, and the same trend will continue of INR 50 crore-INR 100 crore of additional spends which go.
The following question was next year.
Next year. FY 2027 as well, we'll have similar expenses for the R&D. Also for the launch, since we're looking at the PIOPSON ibuprofen launch this year, we'll have some additional cost in the next few quarters on that. For the global products also, we would have additional costs coming in?
Yes. Clearly, setting the question to be very precise to your answer. Next year is going to be heavy investments in building out markets. Those costs will be there.
Okay. Got it. Thank you.
Thank you. Next question is from the line of Surya. From PhillipCapital, please go ahead.
Yeah. Thanks for the opportunity. Sir, my first question is on the investment priorities going ahead and what is the kind of a CapEx. In terms of the investment priorities, I just wanted to understand any specific investment that we are talking about, the new business opportunities.
Sir, these are CapEx. We've tried it in the past also. We should have INR 70-800 crores of CapEx this year as well, again, to build in new capabilities, both at the manufacturing level, some of the new launches which we are going to be having, R&D spends which we are going to have, and across both pharma and our agrochemical business.
Okay. Also to have better understanding about the kind of incremental contribution that we should be seeing from the newer business area, is it possible to discuss what is the kind of a construct of order book position currently in terms of the areas, whether it is AgChem, pharma, and whichever newer area that we are talking about?
We don't have a specific list of new areas, but I think somewhere around INR 1 billion-1.2 billion, which is already the order book position which continues to hold on. Yeah. We won't have a specific breakup of those right now. Most typically, the other businesses are more B2C, like the biologicals. There's no order book situation there. Pharma is too insignificant in terms of the top lines of PI and the other numbers for order books. Yeah.
Sure, sir. Next question would be on the supply chain constraints. Let's see. You have mentioned about maintaining the gross margin situation for the full year, FY 2027. If you can say something, what is the kind of availability situation, and what is the kind of impact possibly in the near term that we can see because of the availability of raw materials, whether that's a big challenge at this juncture?
You have got me exactly. I think it's one of the most simple questions with the most difficult answer maybe, or difficult answer with a simple question. Yes, you know very well, as you all we know, we are all challenged with that availability, and that's not something in our hands. So far, we've been able to manage, and we'll continue to manage. We never know when the situation changes the way the world is today, right? I'm sure that's applicable to most of us in the sector and the industry. Yeah?
Sure, sir. Yeah. Thank you, sir. Thank you for the.
Thank you. Next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yeah, sir. My question regarding pharma segment. You have mentioned in the PPT a significant increase in CDMO inquiries. How is the conversion going to happen considering all the inquiries you have, number one? Number two, I have seen in the PPT your services business has increased significantly. What is leading this business? Also, you are adding new customers in the last 12 months. Considering all these factors, next two to three years, how much growth you are expecting in the segment?
I think we just answered that earlier, yes. As you know, we are trying to add the CDMO. The success rate moving to two, years, new customers, new avenues have been opened. Well, we had mentioned we're looking at INR 500 crore-INR 600 crore.
Sir, sorry to interrupt you. Your audio is not clear.
As we mentioned earlier, right, there are all these initiatives which have been taken. We are looking to target to get this to the next two to three years, yeah, of INR 500-600 crore business, which could then become the J curve approach to look at how we can look at more expected growth going forward.
Okay. From the outlook perspective, you have written we remain positive for the growth in FY 2027. Any number can we talk on, double digit, lower double digit, mid-teens kind of growth we are expecting in FY 2027?
I would say yes, growth for sure. Double or late single, we will all be subjected to how the world reacts. Yes?
Normal case scenario? Normal case scenario?
I can't look at the normal case scenario right now because the quarter has gone. It's too close to the quarter to answer that. Yes, I can say we can definitely look at growth, my friend, at a later stage or nearly late stage single digit or early stage double digit at the worst-case scenario. That's things taken.
Worst-case scenario?
Yeah. The worst case, we will definitely have some growth, I hope, because if really goes that there's no oil, and there's no fuel, and there's no food, then we can't do much, right? Today's world, to answer that, is challenging, but we have plans for growth at an aggressive pace compared to the competition.
Thank you. Thank you so much.
Thank you. Next question is from the line of Abhijit Akella from Kotak Mahindra. Please go ahead.
Good afternoon. Yeah, thank you so much for taking my questions. The INR 1,100 crore CapEx that we incurred for FY 2026, sir, would it be possible to just break down the specific key projects in which this investment has gone?
Yeah. I think across both the agrochemical, pharma, and the R&D spends which we have done. We were about to commercialize a kilo lab facility in Lodi plant. That has taken substantial sum, plus one of the MPPs, the flow, which we have commercialized during this year. The spends have been there on the agrochemical side. The last is on the R&D investments which we have been doing.
Okay. Just to clarify the presentation, chief, pharma capex was about INR 91 crores for the year.
Correct. 100 or so. Yeah.
Yeah. Should we understand that the remaining, say, INR 1,000 crores or so is all agrochemicals, or how is it?
Agrochemical and then the R&D spends.
The fine chemical area that we're talking about.
That will include all the electronic chemicals, agrochemical, the R&D, fine chemicals.
Right. Okay. R&D is yeah, sorry. Just to clarify, fine chemicals, any specific plant that's been put up, or it's part of the MPP itself?
It's one of the MPPs which was getting commercialized, as you mentioned earlier, if you would note the exact word.
Okay. All right. Thank you. Second one, for Plant Health Care, would it be possible to just quantify the revenues for FY 2026?
They have been in the range around $12 million-$13 million.
Understood. Yeah, sorry, I might have missed this earlier, so please excuse me if I did. On contract assets of INR 700 crores, what's the kind of trajectory we are expecting in the year ahead? I mean, will it decrease further, or by how much?
Well, I think that's the range we've always been in in the last few quarters given the business model and scenario and balance of capacity and mentioned customer needs. Also looking at the volatility of supply chains, we would look at keeping it at that level.
Okay. All right. Thank you so much, sir. All the best.
Thank you. Next question is from the line of Rupesh from Long Equity Partners. Please go ahead.
Hello, sir. Thank you. Thank you for the opportunity. First, sir, I have one request. I mean, one of your largest products in the CSM segment, I mean, there are patent risk. It's nothing new. Most of the CDMOs or CSM companies have to deal with it. What would be really nice is if you can address that question in your press release in some way. That, I think, would be really appreciated because there are so many layers to that molecule. That is my request. The first question, sir, is on that molecule, do you see sort of a gradual decline over next two, three years and then bottoming out, or do you expect a cliff that we will see only on that molecule? I'm not asking about the rest of the business. Yeah.
Well, I don't know how to answer that. Number one, we appreciate that this is not our molecule. It's a partnership. Revealing strategies would be a challenging scenario in today's context. We are in a highly competitive world, and I would like to look and model this through the approaches that you've seen for any other product that goes with generalization in the sector.
Okay. Okay. The second question, sir, is for electronic chemical business, what is our current gross block, and what kind of gross block do you expect in next two, three years?
We will be making another INR few hundred crore investments in that area. That's a new avenue of growth. New assets and plants will be built up as we continue to see that we want to scale this business up. We have got four to five products in the pipe which are working well. We are looking to develop more strategic areas into this. Investments of the gross block would be going up in this area. Over the next five years, we start seeing turns of the volumes and revenues that we plan to achieve.
Sir, is that number like INR 200 crore, INR 500 crore, INR 1,000 crore, what kind of asset turn, any range would be helpful?
Anything substantial of that area, INR 500 crore is a number which I would really look at. INR 100 crore-INR 200 crore is not a significant investment as you would appreciate in the plant today.
Asset turn would be high or low, some idea around that?
That would be the answer today because we're right now investing to build the business. The asset turn that you would see in the CSM business, the early stages have lower asset turns. Business, when it touches mature, reaches a scale, you would start seeing those colors. Yeah.
Okay. Okay. Then the final question, sir, is on the NCE molecule. In the NCE molecule, I mean, for the life of a patent, right, let's say 15 years sort of, I mean, what kind of potential I know it's a very dynamic world. There's so much hard work you have to do, find partners, and all that. What kind of potential can it be for the company of our size? I mean, today, we are at, let's say, INR 8,000 crore revenue scale. Would it be significant for our scale, or it would be 10% kind of scale? I mean, some range there would be very helpful in terms of potential over the life of the patent.
It would be significant or not significant. I think we are pretty done with being an innovation out. I think that year of launch and the first season of launch will give us the impact at the larger scale to look at the significance. I think the most important significance that needs to be noted is taking an innovation, commercializing. I don't think a single company from India has done that. It's probably the first company in any chemical sector to do that. That's the benchmark for putting our capability take from discovery to markets. Rest assured, it has to be a significant number for us to invest and build, followed with that learning. We will have an understanding from the season that we go, and we'll be in a better position to answer.
We are also looking at this as a capability buildout for more new things from the pipeline to come. That's the way I would look at that, the shift to the PI capability mindset from a distribution company to a manufacturing for innovation, now take innovation to the markets. That's really what is the ability which is coming through. Once this is demonstrated well with this product, it gives us hope to build a lot more for the next multi-decades, multi-years, if I was to say, to bring innovation to the market. This is the significance of this product. The number significance for the revenue, yes, it should be a good contribution to applying for the domestic business to start with. Based on some of our learnings for the season or two, we'll be in a better estimate to look at the potential sizing of the product.
Yeah?
Yes. Okay. I hope at some point of time, you give some preview into the upcoming NCE molecules, sir. I do hope that. All the rest.
Thank you. Ladies and gentlemen, we will take the last question from the line of Rham Saravanan from iThoughtPMS. Please go ahead.
Hi. Am I audible?
Yeah, we can hear you.
Yes, sir. Go ahead.
Thank you for the opportunity. My question has to do a bit with the client that we are serving for our biggest molecule. Since they have come up with guidance of their formulation in which they use our molecule, they have come up with guidance of beating their conservative guidance of full year last year. I'm just trying to understand if our shipments to this client of ours are going to get better in the upcoming quarters. Basically, what I'm trying to understand is if we will have growth on our AgChem export sector, which is dominated by one single molecule, do we see traction in that molecule going forward? Will we see volumes picking up in that molecule specifically for the next couple of quarters?
Well, I would look at the way you looked at that customer and follow that guidance. From our perspective, when contract manufacturing to what we are building in is already what we have contracted, as we would appreciate the supply chains are long. Clearly, it will be too early for us to answer and to let guidance to say how we see that. Clearly, yes, if they do benefit, we would see the reciprocating benefit with time. Yeah?
Right. Just to follow up on that, since I know we've addressed about the contract assets already on the call, but we've seen a reduction of contract assets going from Q3 of FY 2026 to Q4 of FY 2026. Does this mean that our clients are actually so we are basically billing our clients, and they are actually drawing up on the reserves of our contract assets. Would we see this trend moving forward, let's say, by Q1 2027, Q2 2027, and Q3 2027?
I would say there's a base level of inventory, which is always kept. There will be high level kept given the volatility, as you could appreciate in the world. We are looking to keep and build and optimize capacities so there's no point here runouts, right? That's how we're looking at it, right? I think given the scale and the complexity of the value chain of production, contract assets below INR 5, INR 6, INR 700 crore would be a challenging number to manage that risk.
Any number that we can probably close on the contract assets for 2027?
As I mentioned, we'll be remaining within this range for what we estimate for today. It could shift from a quarter to quarter basis.
Right. Another question just on the electronic chemical side. What is the approximate revenue figure that you can give us for the electronic chemicals for FY 2026, and any guidance for 2027 and 2028 as well? Because some of your clients have been talking about the end market dribbling by FY 2030. I think there's a lot of traction in these molecules that PI is entering into. I'm just trying to understand the whole market for these electronic chemicals and the numbers from your side for guidance for 2027 and 2028.
Let me be honest to tell you, we are right now in the early stage. The numbers are not significant for the PI top line. We are in the development stage of some of these products. We are building capacities and understanding and capabilities for the customer. In two to three years, we will be in a better position to understand the scale and size, as you would understand, these are very serious levels of confidentialities with our customers and confidentiality contracts given the highly competitive environment of this space. We are excited and gung-ho about it given the facts the areas that we are operating are in the niche space. As these are light, as we have mentioned, four to five products which we are evaluating and developing.
They have gone into the various phases, which we will be looking at a manufacturing scale at a later date. Yeah?
Right. For it to have, let's say, a significant contribution, let's say how pharma is having in our business right now, just to give those kind of numbers.
In five, six years, we've estimated somewhere about $8 million-$100 million of revenues in this space.
Right. Right. Yeah. Thank you for that. Any commentary on gross margin guidance for 2027?
I think as earlier questioned by a couple of others, we said we're continuing to manage and maintain the average gross margin of last year.
All right, sir. All right. Yeah, that'll be all. Thank you so much.
Thank you. Next question is from the line of Sajal Kapoor from Antifragile Thinking. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Two questions. PI has spent more than a decade discussing adjacencies like pharma, electronic chemicals, life sciences. Yet agrochemicals still remain the dominant economic engine of the company, and we have been discussing why so. As on today, from management perspective, was the original assumption that PI's process chemistry and customer trust advantages would automatically transfer more easily across domains than they actually did? What has been the single biggest unexpected challenge in building meaningful non-agro scale? That's my first question. Thank you.
I'm not very sure about whether you're talking about a decade, but we made these investments over the last two, three years. Clearly, agrochemicals are bread and butter. In our adjacencies, we wanted to discover not only manufacturing. Our adjacencies have been only evaluated in the manufacturing space. I think if you look back at the history of PI, even in the contract manufacturing, it took about 10-12 years before a significant impact on numbers could be seen in the past early 2000s. That's what it really is when you're getting into the innovative phase. You can completely understand CRDMO. A product doesn't get into a manufacturing play in pharma at least for five to six years of impactful numbers, right? That's really how we are looking at it. Same in the electronics. We've invested them over the last three to four years.
We are seeing products. They're a scale-up. We are seeing investments that we are making. There will be time. I don't know whether I would say that this is a concern for us, but this is something which we see working well. In the strategies of the chosen player, we also have a differentiated play, not just the large-scale commodity play in the other AgChem. Yes, there are challenges.
Still much.
From the sectors, especially in the pharma sector, there have been challenges with external environment investments, biotech startups, reduction-space. The aggressiveness at which it was supposed to be approached has become one challenge. Investments. Now I see that sector picking back up, so we could see those scales come up. Yeah?
Sure. Sure. That's helpful. I was actually alluding to the 2012 annual report. Anyway, I mean, what has PI learned so far about the difference between scaling AgChem CDMO versus scaling pharma CRDMO, and what capabilities still need to be built before PI can genuinely compete with established pharma synthesis leaders on innovation depth, not just chemistry execution? Thank you.
Yes. As you see, we invested that. We have looked at the biological offering capabilities which have been invested. We started working in that. We are looking to further invest in the KSM materials impacts. We have a GMP facility we need to be further built for CDMO, kilo labs are going to be fired up in this year, which is going to create pipelines for the future. I believe in the next year or two, number one, you can't build all the capabilities on the offerings. We are looking at capabilities which we need to have, which we can depreciate. Two, areas where we want to partner so we can become a full integrated partner for a pharma biotech startup to a company with strong manufacturing in a regulated and an unregulated environment.
I believe in the next couple of years, we'll be in a pretty good, unique, competitive position with best-of-class assets to play this game well.
Wonderful. Wish you all the very best, Mayank and team. Thank you.
Thank you. Next question is from the line of Archit Joshi from Nuvama. Please go ahead.
Hello.
Yes, Archit. Go ahead.
Yeah. Thanks. Sir, I just had one question. Would it be fair to assume that the current AgChem market is tilting more towards generics than that of patented products? If you could also allude as to why would this be happening, would there be some stress on the farm economics level, or is it the farm demand that is going through a rough patch? Any thoughts on that would be quite helpful.
Yes. I think that's a good analogy. If you were to pick it up, if you look at to be very honest, the commodity prices are not moving, the prices on the other side are high. The input cost of the farmer is going. Agrochemicals are becoming a necessity. He's looking at cheap solutions right now. There are positions and openings for the opportunities in certain sectors where he doesn't have any value-contributing solutions where innovation is coming. While the pace rate of adoption may have slowed down, it doesn't mean new molecules and new innovation will not be adopted. It is just that cyclical nature. As the aggression would come up in the commodity cycle and the agriculture sector, this would accelerate. That is our view.
It doesn't mean that if you still see innovation is moving, but don't forget where the commodities or the generics have gone to the bottom of the pit when the market hit back, whereas innovation will still continue at steady pace. On an average CAGR, you would appreciate that innovation is still continuing to do better. On short-term or windows of cycles, if you cut in pace, yes, you could see the cycles and trends that you're talking about, which is what you call external dynamics, which play the game. Yeah.
Right. Thanks. Thanks. That helps, and all the best.
Thank you very much. With this, we conclude today's conference call. I can now hand the conference over to the management for closing comments.
Thank you, everybody, for joining the call. Thank you, as always, for your support. Look forward to catching up with you over the next quarter. Thanks once again. Warm regards.
Thank you very much. On behalf of PI Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.