Ladies and gentlemen, good day and welcome to Advanced Enzyme Technologies Limited Q2 and H1 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Saraf, Manager, Investor Relations. Thank you, and over to you, Mr. Saraf.
Good evening, everyone, and welcome to Advanced Enzymes second quarter and first half 2022 earnings conference call. I hope you all are doing well. Joining us on the call today are Mr. Mukund Kabra, Whole-Time Director, and Mr. Beni Prasad Rauka, Group CFO.
For your reference, we have prepared a detailed presentation to supplement our comments during this conference call. This presentation is posted in the investor relations section of our Advanced Enzymes website and on the stock exchange as well. Before we proceed, I would request you all to please read the forward-looking statements disclaimer contained in the PPT.
During our call, we will make forward-looking statements regarding our expectation or prediction about the future. Because these statements are based on our current assumptions and factors that involve risk and uncertainty, our actual performance and results may differ materially from our forward-looking statement. Now Mr. Kabra will start the opening remarks by briefing you all the earnings update and business highlights for the quarter. Mr. Rauka will walk you through the financials in detail. Post that, we will open the floor for question and answer round.
Without any further ado, we shall commence this call. Over to you, Mr. Kabra.
Thank you, Ronak. Good evening, everyone. Once again, I welcome you all along with the whole AETL family to this conference call for the quarter and half year ended 30th September 2021. First and foremost, we hope that you and your family are in good health and in high spirits. Before we begin, I would take this opportunity to wish each one of you a very happy Diwali and a prosperous new year in advance. Let's hope we all have a successful and most importantly, a healthy year ahead. I will start this call by sharing with you the earnings updates and the business highlights for the second quarter 2022 and segment-wise performances. Our revenue grew by 6% on year-over-year basis to INR 1,271 million. Our EBITDA declined by 16% to INR 493 million during the quarter.
Our PAT declined by 22% to INR 303 million. EBITDA margin stood at 39% while PAT margin stood at 24% during this quarter. If we look half-yearly, the highlights are like this: Our revenue grew by 14% on year-on-year basis to INR 2,641 million during first half. Our EBITDA grew by 2% to INR 1,120 million. Our PAT declined by 5% and stood at INR 700 million. EBITDA margin stood at 42% while PAT margin stood at 27% during this period. This impact in the operating margin is because of high input costs. We are finding unprecedented increase in almost all the input materials, including fuels and logistics costs.
Given that the growth journey we are into will continue to invest and grow in some of our critical aspects like R&D and business development. Our new R&D facility work is on track and is in good progress. We believe this investment will help us to set very strong foundation for the future growth. Now I will take you through the segment-wise revenue. Human Nutrition contributed 72%, Animal Nutrition contributed 11%, Industrial Bio-Processing contributed 9%, and Specialized Manufacturing, which is revenue from SciTech, has contributed 8% in the total revenue during this quarter. Human Nutrition segment grew by 4% to INR 920 million in quarter two financial year 2022 as compared to INR 885 million in quarter two financial year 2021.
The Animal Nutrition segment grew by 3% to INR 136 million in quarter two financial year 2022 as against INR 132 million in quarter two financial year 2021. The Industrial Bio-Processing segment underperformed by 37% during this quarter. It accounted for INR 118 million in quarter two financial year 2022 as compared to INR 187 million in quarter two financial year 2021. In this segment, food business contributed 7% and stood at INR 86 million, down 33% year-over-year basis, while the non-food business contributed 2% and stood at INR 32 million, down 48% year-over-year basis during quarter two financial year 2022. The Specialized Manufacturing contributed INR 97 million to our revenue.
On the geographical revenue front, the domestic sales contributed about 47% of the revenue from operations during quarter two FY 2022, as compared to 42% during quarter two FY 2021. Domestic sales accounted for INR 595 million in quarter two FY 2022, as compared to INR 504 million in quarter two FY 2021, increase of almost 18%. International sales were 53% of revenue from operations as compared to 58% during quarter two FY 2021. International sales amounted to INR 676 million in quarter two FY 2022, as compared to INR 700 million in quarter two FY 2021, slight decline of 3%.
The revenue de-grew by 2% in Americas, while it grew by 4% in Europe and strong 18% in Asia, ex India. The rest of the world remained muted during this quarter. Now, let me hand over this call to Mr. Rauka, our CFO, who will walk you through the quarterly financial review. Over to you, Rauka sir. Thank you.
Thank you very much, Mukund. Good evening, everyone. I hope you all are in good health. Now I will take you through the company's financials for the second quarter of FY 2022 and then the first half of FY 2022. On year-on-year basis, Q2 of FY 2021 and Q2 of FY 2022, our revenue is increased by INR 67 million, which is about 6% from INR 104 million- INR 107 million. This includes sales of sales by SciTech, which is roughly about INR 97 million in this Q2. Last year's Q2, there is no number because SciTech we have acquired somewhere in January 2021. Our EBITDA is decreased by about INR 92 million from INR 585 million. Our EBITDA is at INR 493 million during this quarter, which is at 39% of our revenue.
Profit before tax is decreased by about INR 107 million from INR 520 million to INR 413 million. PAT is at INR 303 million as compared to INR 386 million in Q2 of FY 2021, so there's a decrease of 22%. Q-on-Q basis, sequential basis, the revenue is down by about INR 100 million, which is about 1,271 million as compared to 1,370 million. EBITDA is at 493 million as compared to 627 million. Profit before tax is decreased by about INR 134 million from INR 547 million- INR 413 million. It's at about 32% during this, first, second quarter as compared to 40% of first quarter.
PAT is at about INR 303 million, 24% of our revenue, as compared to INR 397 million, 29% of the revenue during previous quarter. Our year-on-year basis, first half as compared to the previous year first half, year-on-year revenue is increased by 14% by INR 332 million. This 14% growth includes roughly 10% growth because of the contribution of SciTech. We are at INR 2,641 million as compared to INR 2,309 million. EBITDA is about increased by about INR 18 million from INR 1,102 million- INR 1,120 million at 42% as compared to 48% last year. Profit before tax is decreased by INR 67 million from INR 1,017 million- INR 950 million.
We are at about 36% of our revenue in terms of the profit before tax. PAT is about 27%, which is about INR 700 million during the first half of FY 2022, as compared to INR 734 million during last year's first half. Our evoxx's numbers are at 53 million of revenue and EBITDA of 10 million. PAT is slightly negative because of tax impact, and tax impact because we do some withholding tax in India. This is kind of expensive for them. The previous year Q2 numbers were 60 million of revenue, 18 million of EBITDA and PAT of about 5 million. JC Biotech Q2 revenue stands at 150 million and EBITDA of 45 million.
PAT is INR 25 million as compared to a revenue of INR 130 million, EBITDA of INR 37 million and the PAT of INR 21 million. Our largest selling product, which is I mean, anti-inflammatory enzymes, stood at about INR 268 million as compared to INR 272 million in previous quarter. There is a slight de-growth of 1%. It constitute about 21% of our revenue as compared to 18% in previous quarter and as compared to 23% in Q2 of FY 2021. Our top 10 customers have contributed roughly 31% of our revenue during this quarter, as compared to 34% in the previous quarter. Q2 of FY 2021, it was about 39%.
B2C segment mainly from U.S. has contributed about $1.62 million as compared to $1.11 million during the previous quarter. India, I mean, generally we also share the breakup of, you know, the Human Nutrition which comprises of, you know, pharma, probiotics, biocatalysis. India business was INR 403 million, roughly 32% for this quarter. International business stood at about INR 516 million, which is about 41% of our total revenue. Total works out 72% of our total business for this particular quarter, Q2. U.S. sale is about INR 461 million, roughly 36%. 50% comes from the U.S. Other than U.S., other countries have contributed about 4% for Human Nutrition.
B2C, as already mentioned, overall, I mean, you know, it's about INR 120 million during this quarter, roughly 9% of our total revenue. This is all from my side. Now, we would like to open this floor for question and answer session. Thank you very much.
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 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. The first question is from the line of Rohit Sinha from Sunidhi Securities. Please go ahead.
Thank you for taking my question, sir. Just on the overall outlook side from the second half, how we are looking at the second half of FY 2022 and what sort of top line growth and EBITDA number, I mean, EBITDA margin basically we would be targeting on.
Rohit, good evening. Now, there is lot of disturbance on the supply side. There are like certain disturbances on the logistics sides, and there are like certain price increments into most of the raw material, which is unprecedented. I feel like this should continue. At the same time, there are like certain issues like the inventory pile up at many places. I feel like this should continue till March, somewhere February, March, the things should normalize. Going forward, we have also like piled up like some inventory at this point of time to cater to this, all sort of this questions which are going to come up. We'll move with the need-based operations, which is required to maintain the sales.
At this point of time, it's very difficult, but I would like to say that we'll maintain the margins, which was in the range between 40%-48% as we move on for the whole year. On the revenue side, it's difficult, but I feel at least like, I won't be able to give you the exact percentage increase, but we will be positive. At least like this was the worst quarter that we have seen. We hope that going forward, the next quarter will improve.
Okay, sir. Okay. Thank you. Secondly, what sort of overall CapEx we would be expecting for FY 2022?
For CapEx, for the whole year the CapEx should be the normal CapEx, which is going to be somewhere around INR 10 crore-INR 12 crore on a yearly basis.
Okay. Just any update o n our upcoming R&D plant which we are talking about?
Yes, sir. We already got the N.A permission. Now, the designs are getting finalized and we are in the process of getting the sanction from multiple corporations.
Okay.
Probably 1.5 months-2 months, we are away to start the construction work.
Okay. By what time we'll be expecting to complete this?
Once we start, it will take one and a half years at least.
Fair enough. Oh
It will go in the phases, Rohit.
Okay.
The first phase should be finished within one and a half years.
Okay. Okay. That is from my side. I'll come back in queue. Thank you.
Thank you, Rohit.
Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Shikha Mehta from Equitree Capital. Please go ahead.
Good evening, sir. Happy Diwali. You mentioned that the input cost has been high this quarter, so if you could give more color on that as to what increases we've seen in which line items broadly.
Happy Diwali, Shikha. It's like across most of the raw materials. The important thing is like the coal, the fuel, which is like, gone from INR 65.5- INR 66 to somewhere around INR 11-INR 11.5, and currently it's about INR 15.
Mm-hmm.
If you go through like all the phosphate salts or any other salts, everything is on the higher side. If you go through the soya flour is now like going down, but the main impact is because of the logistics as well. Across the sector you will find that there is increase in the cost.
Do we see this normalizing over the next quarter or do you think it'll take till the end of the year?
It's very difficult to predict, Shikha, but my best guess is like it should be normalized by the end of this year. That is where like we are going with the inventory pile-up at this point of time, and we are going need-based operations and we will...
Right.
...utilize more from our inventories.
Right. Sir, any guidance on the new products that will be in the pipeline? Anything interesting on that front?
On the biocatalyst side, we have done a good progress in this quarters. We have come out with three more molecules and their applications, but it has to go to the customer level. Currently, like right now we are standing with like six, seven molecules on the biocatalyst front, which is a good progress. Probably it will take another two quarter or three quarters to really generate the revenues.
Sorry, you said two-three quarters, right, to generate revenue?
Yeah. Yeah.
Okay. Sir, what was your R&D cost this quarter and for the half year?
Yeah. INR 63 million during this quarter and last quarter it was INR 43 million. For YTD we have spent about INR 96 million. I'm talking about only the revenue side.
Okay.
CapEx will be another, you know, some INR 20 million or so.
Right. Sir, if you could give your subsidiary numbers again, I missed them when you were giving them earlier.
Which one you want, Shikha?
All the subsidiary numbers, the revenue and the EBITDA numbers for JC Biotech and so on.
Okay. If you don't mind, I can share with you all these numbers.
Sure, sure.
You can send me on the mail. I'll share with you.
Okay.
All the numbers, you know, of the subsidiaries, whatever you...
Sure, sir. Thank you.
Yeah.
Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Rohit Nagraj from Emkay Global. Please go ahead.
Yeah. Thanks, sir. Thanks for the opportunity. The first question is, we had introduced the you know probiotics for COVID fatigue in Indian market. How has been the response till now, and what do you expect in terms of how the marketing and further penetration of this that we are planning? Thank you.
Good evening, Rohit. This COVID fatigue product we just introduced in Indian market because we wanted to test the flow of B2C in India. However, right now the sales are very low, but we got a good response in the U.S. market, where our sales are better with this product. If you really look at it, the B2C segment of our U.S. has gone up to $1.61 million-$1.64 million for this quarter.
Right. Any particular marketing strategy for the Indian market that we are planning for? Because I think our characteristics would be certainly different than the U.S. market. Any plans on that front?
In Indian market, we are testing the floor at this point of time. We have launched the product on Amazon, and we have already launched our website, and we are going through some PR activities, like internet promotions right now. We will see how the response is, because this is the first product which we are doing as a test marketing. Once we understand the market, then probably we'll come up with few more products which are in the pipeline, which are already there in the U.S. markets.
Right. Got it, sir. The second question is on the Industrial Bio-Engineering. Particularly catering to non-food area, what would be our strategy in this regard? Because given that there has been a lot of emphasis nowadays to go in for a bioproduct instead of the conventional chemical products, I think this could be a good opportunity from our perspective. How are we, you know, probably going ahead with this particular area in terms of our strategy? I'm not talking about short-term, but maybe from a three-five-year perspective.
Rohit, which area you are talking? Which industry you're talking?
Industrial Bio-Engineering, which is non-food area related to, say, textiles or detergents or any other, I don't know, industries.
Rohit, at present, like in, textile and detergent, non-food area is not our core focus area. We are really not, like, focusing into those areas, but we are focusing into the food areas where like the clean label or where the E numbers are, there. How do we come out and how do we give the solutions which is E number free, chemical free? We are coming out with the products in the food areas but not in the non-food areas.
Right. Got it. Sir, just one clarification. You mentioned that we are currently preparing for inventory. These are, I suppose, the product inventories you are talking about. For raw material we are going ahead with more or less like a just-in-time concept, right?
We are going with like, both areas. We already like work for the concentrate, which can take care of 2 months-3 months, easily. We are working with like, we have like, kept lot of raw materials as well, cold storage as well, which can take care of any emergency orders. We can move quickly and can produce it. We are not sure on the logistics because in between we face the problem like, we are almost like out of the cold and we had to shift to the palm oil for some part of the day. We don't want to get into that kind of a mode where the cost is very high. We are keeping all the inventories at this point of time.
Right. Got it. On cost, input cost pressure transferring to the products. How much lag generally it takes and when do we expect that the entire input cost pressure will be transferred? Is it just a transitory phenomena that, by the time we try to take price increases, the raw material or input cost pressure again corrects and so we'll have to forego, whatever margins we have, in the intervening period.
Yeah. That's what has happened in this quarter, no?
Right.
Cost has gone up, but you know, but you're not able to really pass on because of the kind of margin we have. Generally, you know that margin is always, you know, taking care of such kind of a fluctuation in input cost. It's not possible to pass on it so fast unless until, you know, the change is permanent. This appears to be kind of a situation in this quarter we have tested. Now we have to again, you know, as we are progressing, we will again review whether that you know whether we need to really look at in increasing of our prices or it's a kind of, you know, temporary transition. You can say transitory time where, you know, you don't pass on that cost to your partners basically, and you absorb it.
Going forward, as things normalize, you start getting, you know, your same kind of a margin.
Right. Got it, sir. Thanks for all the answers and Diwali wishes to the entire team, sir.
Thank you, and same to you. Thank you so much, Rohit.
Thank you.
Thank you very much. Participants, you may press star and one to ask a question. The next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead.
Hi sir. Good afternoon, and thank you for taking my question. Sir, firstly, I'd just like to understand that, the tepid growth that we've seen in our revenue, is this because demand has contracted or we were unable to supply because of logistics issues or because of unavailability of input material? Maybe if you can shed some color on that.
There's no one reason to pinpoint, frankly speaking. That's what, you know, Mukund has explained. The entire, you know, this is very exceptional time, frankly speaking. Very, very difficult, you know. The input cost is going up. Logistics is another issue. The cost of logistics is also gone up. Another thing is, you know, because of the severity of the pandemic about six, seven months back. Maybe in the first quarter, you know, lot of inventory has been built up by most of the, you know, the customers.
I mean, you know, the difficult time where, like, everyone is going very cautious approach that, you know, wherever the cost is increased, whether, you know, one should really work on that particular material or not, or work on something, you know, which is really giving kind of a margin just to stabilize at least overall profitability scenario and to manage the business. During this time, I mean, it is very difficult to give you one reason, but yes, this is, you know, I mean, you know, overall impact of all several reasons like higher input costs, you know, issues of COVID still in Europe, Russia, Americas.
I think U.K. is struggling with another issue where truckers are not available to really transport their material because of, you know, some kind of issue with the Brexit and the shipments are not available and the transit time is, you know, in spite of the goods reached to the destination, but they are not able to clear, so it is taking 3 months-4 months to get a shipment and cleared from the port. I mean, you know, the industry is really kind of a situation somewhat where everyone is struggling in that sense. We are not in a position to give you one single reason for that.
Okay. Sir, if you could share, have you lost any customer or any orders, because of pandemic or it's simply a question of, like you were mentioning...
Yeah.
...COVID-related issues?
Correct. Everyone is going with a very cautious approach. Procurement may not be there. They might have kind of a situation where they have deferred the procurement. Okay, we have so much of inventory. Like, we have built up our inventory. If I look at my inventory level as of 30th September, it is about INR 1,153 million. Roughly 115 crore as compared to 94 crore at 31st March 2021. This is the scenario overall in.
Okay. We've not lost any customer.
Yeah.
Not really to pinpoint. It's a part and parcel of the business. One customer comes and goes, but not really.
You know, one may not buy in one particular quarter or two quarters, but then, you know, the procurement happens after five months or six months. It is not a loss of customer in that sense.
Got you. Sir, this is my last question. What are the kind of margins that we're making in our SciTech business, the new division that we're now reporting revenues for? Would it be lower than what the overall business system is?
SciTech, as compared to our enzyme business, basically, you know, we intend to. The SciTech business is. I'm sorry, I think there's some echo. It's definitely a different business, and this is, you know, with intention that we have a different and novel delivery mechanism of our finished goods. So that's where, like, you know, SciTech has been acquired. SciTech gross margins and PAT margins are definitely lower than us. If I really give you the numbers in terms of, you know, overall EBITDA margins, SciTech is roughly at 25% EBITDA margin and a PAT margin of about 11%. You are aware about our EBITDA margin of about, you know-
Yes.
40%-46% and PAT margin of, you know, 25%-32%. If in spite of the fact that, you know, whatever sales we have from SciTech during this first and second quarter as well as year to date, six months, overall, you know, the profitability in absolute number they have contributed, but in terms of the percentage, definitely it has a negative impact in that sense.
Okay. That could also be one of the reasons why our margins are below the-
Yes.
32% margin, band that you used to talk about.
To some extent, yes. Because, overall, for nine months, if you really look at the numbers for nine months and then you have to see the difference of the PAT we have and the PAT of SciTech, and that's how you can work it out.
Okay. Just one last question, sir. Any inorganic opportunities that we're evaluating currently?
Yes, definitely. That is a part and parcel of, I think, one of our strategy to grow and to sustain this particular business.
Okay, sir. Thank you.
Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Manish Poddar from Nippon India. Please go ahead.
Yeah. Hi sir. Just two questions. First one is if you could probably share, you know, what would have been the growth rate in the probiotics and the biocatalyst segment in the first half of this year.
Growth in probiotics and?
Biocatalyst.
Biocatalyst. Yeah. Let it please, Manish.
Yes, sir.
Probiotic, international and domestic. Total probiotic sales is about, one moment, I'll just give you the numbers, INR 185 million during the first half of this year.
This is what, sir?
It's INR 348 million.
I'm so sorry. You witnessed a decline up there. Is that what you're trying to-
Yes. That's what I'm saying. Yeah. Right.
Why would that be? Because I thought probiotics grew significantly in FY 2021 and, you know, we were, you know
Right. It grew significantly.
It's, we think, like it's more to do with the inventory stock buildup in this particular areas.
Okay. How about biocatalyst?
Sir, biocatalyst is more or less same. Rauka ji can give the number because one or two products which were going, those were going. The good part is currently like, we are signing with now five, six products. Those products are going into the customers for the trials. We feel that the revenue from the new product should come after two, three quarters down the line.
Biocatalyst is doubled. Last year for six months it was INR 51 million and this half it is about INR 112 million.
Effectively, if I have to understand it, in the first half of this year, you know, the lower growth which you've seen in the Human Nutrition is largely led by the inventory issue in probiotics.
Right.
That is how I want to look at it, right? Okay. Just another data point if you could share is that, you know, what would be a contribution, let's say, from the top customer and top 10 customers for first half 2022, sorry.
Yeah. Rauka ji.
Yeah, I'll give. I'll go.
It's 31%, I guess. You can give that number.
Yeah.
31% is for the top 10 customers.
Yes.
The top customer?
Yeah. 31% is top 10 customers, and top customer is about 6.7%. It's roughly 6%.
Here also, the top customer you still witnessed a decline in the first half. Could you probably explain the reason for that?
It's the same, like, same Manish I talked about inventory issues.
Do you see, let's say, the situation probably stabilizing now incrementally or, you know-
No, I don't feel like the situation should stabilize till March end. It should stabilize from the third quarter of next year.
Okay. Just one last one from my side. On the animal side, I think we were looking for, you know, partnerships up there. Probably could you help us with an update up there?
Not on the animal side. We were looking into the partnerships on the food side in Indian market as well as like in the South Asian market. We have appointed Azelis as a distributor for five countries in South Asian countries for the food and nutraceutical business. In Indian food market, we are joining with the Anshul for a distribution. In the animal feed, we were going on our own at this point of time. We started our Singapore office. Not exactly the office, it's work from home office, but we started the recruitment in Singapore. We started some recruitment in India as well to develop the market in Eastern Europe. We are working on the Latin American development at this point of time.
Just to understand this better, so you will do the registration by yourself and also scale the business organically and not through partners. Is that what you're trying to aim for?
We are working on both the strategies. We are looking for organic growth as well as the inorganic growth. If the opportunity comes from the inorganic front, we will definitely look into it.
Okay. Thank you so much. Happy Diwali.
Happy Diwali to you, Manish. Thank you.
Thank you. The next question is from the line of Bhavesh Jain from ITI . Go ahead.
Thank you, sir, for giving this opportunity. I said, how important will be U.S. market for us? Because last three-four years, the growth rate is not there in that particular market even as we have seen 4% growth, and we have guided in five years to double the revenue. How important that market will be for us to achieve that target or aspiration of doubling the revenue in five years.
Bhavesh, lot of disturbance from your phone.
Yeah, but-
Hello.
How is U.S.?
Hello.
Yeah, this is fine. I mean, we have understood your question. Just, Mukund is answering your question. Please.
Yeah. Yeah, U.S. is going to be important market, no question about it. It's our important market, and our presence is very strong in U.S. market. We expect 8%-10% growth, which is coming from U.S., over a five-year spread.
Okay. Which segment largely will drive this growth? Because I'm seeing last three, four years and even this H1, it is not getting translated into higher growth.
Most of the growth will come from the B2C segment, which we are really focusing and targeting. Like, if we're really seeing the B2C areas, last year also we've grown from $3 million- $5 million. Currently also, like, if you look into this quarter, it's already $1.61 million. This year probably we should touch about $6.5 million into this area. This is going to be our growth target as we move on into the U.S., besides the normal growth in the B2B nutraceutical business.
Okay. India growth rate has been good in this H1 also. This SciTech also, the growth rate has been good, and we are seeing that traction?
No.
No, if we just take out the SciTech...
Right.
...probably, like, this is like a more turbulent quarter. Yeah. The growth is, almost, at the same level at this point of time because of, like, some of the inventories issues, from some of the larger customers as well at this point of time. The things should, like, normalize by the first quarter of the next year.
Okay, sir. Thanks a lot, and all the best.
Thank you.
Thank you .
The next question is from the line of Rohit Nagraj from Emkay Global. Please go ahead.
Yeah, thanks for the follow-up. So during this quarter, we must have faced, you know, issues on exports because orders must have been on a CIF basis. Would that be the right way of looking at it? Are we now looking to correct it by giving it on FOB basis, or how are we trying to tackle this issue? Thank you.
Rohit, our major export from India is number one to our own U.S. subsidiary company. Okay? Whether you make it CIF, FOB, finally it will have, you know, impact on the consolidated numbers, right?
Right.
Other than, you know, U.S., other customers, wherever possible, we are negotiating as far as, you know, the cost of the, like, you know, shipments are concerned. Still, you know, the cost is gone up substantially, so it is very difficult. We also need to share. You know, it is an approach where we want to have some kind of a continued relationship with our customers, not exactly looking at, you know, that the entire cost we can pass on to our customers.
Right. Got it. Sir, last quarter we had provided guidance, and I think you mentioned in the earlier remarks as well, on gross margin side, 70%-75%, EBITDA margin front, about 40%-48%. Is this applicable for FY 2022 as well, or we are looking that FY 2022 could be a transitory year because of the issues that we've been discussing till now?
Yes. I think this is transitory. That's the reason, you know, now we are also going with a cautious approach, wait and watch, and I think that's how the scenario is.
Sure, sir. Thank you so much, and best of luck, sir. Thank you.
Thanks.
Thank you. The next question is from the line of Bhavesh Jain from ITI Org. Please go ahead.
Sir, one follow-up on our top product. We were seeing incremental competition and some pricing pressure. How has been the competition in that product?
Yes, the pricing pressure is there, that we are currently passing on the cost rise at this point of time into the top-selling product. If we really look into the volume-wise, we have sold more than what we did last year.
Okay. Traction has been good, right, as of now in terms of volume?
Yeah, yeah. Volume-wise, it's better. Margin-wise, it is on a little lower side at this point of time because we couldn't, like, really pass on the prices.
Has the prices stabilized, or we still see more pressure on the prices?
It's more or less stabilized, but probably there can be some pressure. In this kind of a scenario, I don't feel like the prices should go down further. It's more or less, I guess, like it's stabilized at this point of time.
Okay, sir. Thank you. Thanks a lot.
Thank you.
Thank you. A reminder to all the participants, you may press star and one to ask a question. As there are no further questions, I will now hand the conference over to Mr. Mukund Kabra for closing comments.
Thank you everyone for all of your participation and listening to us. I wish you all of you a very happy Diwali and prosperous new year. Thank you once again. Thank you.
Thank you very much. On behalf of Advanced Enzyme Technologies Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.
Thank you. Thank you.