Welcome to Aether Industries Q2 FY24 Earnings Conference Call hosted by HDFC Securities. 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 touchscreen phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Ghuge from HDFC Securities Limited. Thank you, and over to you, sir.
Thank you, Yusuf. Good afternoon all. On behalf of HDFC Securities, I welcome everyone to this Aether Industries conference call to discuss the results of the quarter ended September 2023. From Aether Industries, we have with us today Dr. Aman Desai, Promoter and Whole-Time Director; Mr. Rohan Desai, Promoter and Whole-Time Director; Mr. Faiz Nagariya, Chief Financial Officer; and Ms. Shubhangi Desai, Executive IR. Without further ado, I will now hand over the floor to Ms. Shubhangi Desai to begin with the earnings call for Q2 FY24. Over to you, Shubhangi.
Good evening, everyone, and thank you, Nilesh, for the brief introduction. Today, on October 31, 2023, our Board has approved the financial results for the Q2, and half year ended on September 30, 2023. We have released the same to the exchanges as well as updated the same on our website. Please note that this conference call is being recorded, and a transcript of the same will be made available on the website of Aether Industries Limited and exchanges. Please also note that the audio of the conference call is the copyright material of Aether Industries Limited and cannot be copied, rebroadcasted, or attributed in press or media without specific and written consent of the Company. Let me draw your attention to the fact on this call. Our discussion will include certain forward-looking statements which are predictions, projections, or other estimates about future events.
These estimates reflect management's current expectations on future performance of the Company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Aether Industries Limited or its officials do not undertake any obligation to publicly update any forward-looking statements whether as a result of future events or otherwise. Mr. Rohan Desai will begin by sharing Aether's business outlook. Then Mr. Faiz Nagariya will cover the financial highlights for the period under review a nd Dr. Aman Desai will share the ongoing expansions and strategy of the Company going ahead. Now, I shall hand over the call to Mr. Rohan Desai for his opening remarks. Over to you, Mr. Rohan.
Thank you, Shubhangi. Good evening and warm welcome to everyone. I hope everybody is doing well, and I am pleased to connect with you all to discuss the performance of our company for the Q2 of current Financial Year 2024. The inventory in agrochemical sector has reduced, and we are seeing orders coming back for our products from the customers in this sector. We see the trend improving in the agrochemical sector, which we had anticipated before a few quarters. The specialty chemical business has enabled us to withstand the challenges faced by the sector, and we have witnessed recovery in the overall business with improved margins created by reduction in the raw material prices. The average selling price has been at the similar levels in quarter two as it was in quarter one, which is approximately INR 1,600 per kilo.
We expect a revival of business with China dumping reducing on a month-on-month basis. With respect to the China dumping story, we have seen a depreciation in Chinese currencies, which is helping Chinese manufacturers. Also, incentives and subsidies provided by the Chinese government are also helping Chinese manufacturers for the export, and these incentive subsidies as a percentage have increased several times in the calendar year of 2023. Coming to the Aether's business segment, we are seeing contribution of 66% of the total top line from large-scale manufacturing, 18% from contract/ exclusive manufacturing, and 15% from contract research and manufacturing services business model during the half-year of financial year 2024. Our exports accounted for 34%, and our domestic sales accounted for 66%.
With that, I will conclude speaking, and I would request our CFO, Faiz Nagariya, to touch upon the financial highlights for the period under review.
Thank you, Rohan, and good evening, everybody. I'm glad to present the Financial Results of Aether Industries Limited for Q2 and H1 of Financial Year 2024. The total revenue of the Company is to be at INR 3,431 million in half year financial year 2024 as against INR 3,127 million in half year financial year 2023, resulting in an EBITDA of INR 1,085 million in half year 2024 as against INR 919 million in half year financial year 2023, which is a growth of 18% in the comparing period. The EBITDA margin stood to be at 32% in HFY 2024 as against 29% in HFY 2023. The PAT amounted to INR 680 million in half financial year 2024 as against INR 578 million in half financial year 2023, which is also a result of growth of 18% of the PAT in the comparing period.
The PAT margin stood at 20% in half financial year 2024 as against 18% in half financial year 2023. Now, the comparison between the Q2 of current financial year and Q2 of last financial year, the revenue of the Company stood at INR 1,793 million in the Q2 of financial year 2024 as against INR 1,466 million in Q2 of financial year 2023, resulting in EBITDA of INR 612 million in Q2 of financial year 2024 as against INR 433 million in Q2 of financial year 2023, which is a huge growth of 41% in the comparing periods. The EBITDA margin stood at 34% in Q2 of financial year 2024 as against 30% in Q2 of financial year 2023.
The PAT has also increased, and it is INR 378 million in Q2 of financial year 2024 as against INR 272 million in the Q2 of financial year 2023, resulting in an overall growth again, a good one 39% in the comparing period. The PAT margins stood at 21% in Q2 of financial year 2024 against 19% of Q2 of financial year 2023. The debtor cycle of the Company still stays but we have been able to bring it down the debtors marginally from 145 days as on 31 March 2023 to 139 days as on September 30, 2023, and we are continuously working on this and expect to improve the ratios much better by the end of financial year 2024.
Our inventory days have increased more due to demand from agricultural customers, agrochemical customers, which came back, and for the delivery of these materials to be done in Q3 and Q4 of financial year 2024, and hence, the raw material is procured and also the production process has been high. The overall raw material inventory has been five months only. The increase in inventory days is attribute to Site-IV, which will be up and running in the last quarter of financial year 2024, for which the validation quantities are being manufactured to be dispatched in Q3 and Q4 of financial year 2024. Now, I would request Dr. Aman Desai to share updates on Aether's ongoing expansion plans and strategies going forward.
Thank you, Faiz, for the financial highlights. Good evening, everybody, and I hope this finds everybody doing well. I'll speak today about our strategies, specifically our CAPEX and expansion plans going forward. Our strategies and CAPEX plans for our Greenfield manufacturing Sites 3++ , Site-IV, and Site-V have been advancing well as previously announced and laid out. We continue to advance our CAPEX plans on all fronts in an aggressive manner. CAPEX on Site-III+ and 3++ is underway as planned, with the machineries and equipment being secured and all the regulatory approvals being applied for already. Upon commercialization of the Site-III+ and 3++, production of three to five products in the fields of agrochemicals and pharmaceuticals has been planned. These Site-III+ and 3++, are planned to be commissioned and operational by Q3 of fiscal year 2025.
We expect the plan to be finalized by Q1 of FY26. CAPEX on our upcoming Site-IV is also progressing as planned with ongoing civil work and procurement of equipment. We'll be commissioning to begin shortly, and Site-IV is expected to be operational by the end of this current financial year. This Site-IV will be initially dedicated entirely to contract and exclusive manufacturing, and the initial construction and plan direction is going to align with our strategic agreement recently announced with the leading oil field services company based in the U.S. Continuing construction in the near future on Site-IV will be towards the recently announced commercialization agreement with Saudi Aramco Technologies Company on the novel Converge Polyols platform. At manufacturing Site-V, we have applied for all the necessary regulatory approvals along with beginning the fencing and the initial civil work.
Planning towards Site-V is accelerating now. This is the Panoli site with the vision of a massive industrial estate with more than 16 production blocks, each production block to be ground +4 structures with more than 500 reactors combined in these 15 production blocks. This Site-V will incorporate global grid practices towards sustainability, carbon neutrality, and renewable energy-based resources. This Site-V will also be designed and built well above digital engineering, technology, and safety design standards and will represent the ultimate phase of Aether's production capabilities and will be a milestone step in Aether's transition to a major global specialty chemical manufacturer. We continue to make significant investments towards R&D. Our R&D expenses for the first half of fiscal year 2024 stood at INR 273 million, i.e., 8% of our total revenues for the first half of fiscal year 2024.
The strength of our R&D team grew from 262 in Q1 fiscal year 2024 to 270 in Q2 fiscal year 2024. Our major expansion project of the new pilot plant at the land which was procured on long lease is in full momentum with ongoing procurement of equipment along with the corresponding commissioning activities. This pilot plant expansion builds upon what is already, in all probability, the largest pilot plant in the world. We have further initiated an additional expansion of our R&D infrastructure, the brand-new R&D center, to be built over the next one to two years to complement our existing R&D center. Needless to say, such aggressive expansion of R&D and pilot plant footprints, which are the workhorses of our CRAMS business model, is firmly on the backing of numerous inquiries and additional tie-ups with the top echelons of global innovators across the industry sector.
Various contracts are in the pipeline for this, and these are being executed as we speak. We are in process of further enhancing our technical team by employing CXO leadership, the announcements which we will be doing in the next quarters to come. These additions will add significant value to our Company's competency and capabilities, and we will be able to accelerate our vision of being a leading global specialty chemical manufacturer. The fundamental base of Aether remains strong and uniquely positioned, and we continue to augment this base with our aggressive expansion in infrastructure across R&D, pilot plant, and production by attracting and retaining the best logistics and engineering minds globally through our three different business models of large-scale manufacturing, exclusive or contract manufacturing, and CRAMS, and with our focus on competencies and capabilities applicable across the industry spectrum.
With that, thank you all for your time and attention today, and back to you, Shubhangi.
Thank you, Dr. Aman. We shall now request the moderator to open the forum for question-and-answer.
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 touch-tone 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'll wait for a moment for the question queue to assemble. First question is from the line of Vipraw Srivastava from InCred Capital. Please go ahead.
Hi. I had a couple of questions. I just wanted to understand that as the newer product portfolio wherein you have launched molecules like Dolutegravir and all that, have they started contributing to the top line, or it will happen later in this financial year?
Yes, we have started contributing to their top line.
Okay. Okay. Cool. So just wanted to understand then why is the average selling going up? I mean, they have a higher realization, right, compared to their portfolio?
Yes, because all the overall product portfolio has seen a decrease of approximately 25% in terms of the selling price. So you're not seeing that average going up, rather it is stable and reducing.
Right. Right.
It is approximately reduced from two quarters. It has reduced by INR 100 approximately.
Right. Right. Just one more question. So your agreement with Otsuka for 4-MEP. For that, so are we seeing any upside? Last year, according to the annual report, the volumes which you did were 560 metric tons. So we should see a significant improvement from this side this year because you're also manufacturing Otsuka?
Yes. So the volumes will increase on gradual basis. There are two molecules which have mentioned one was mentioned in the RHP, and the other was not mentioned in the RHP. So both have started contributing. In the Q2, we have set some quantities already. And as they are managing from the existing manufacturing capabilities of in-house manufacturing capabilities, it is taking slightly more time for the approvals, but it is moving on this way, and we expect this to fully migrate by the end of 2025.
Right. Right. And last question. So for Bifenthrin and Methoxyfenozide, these faced some pricing pressures in last quarter. So has the situation improved, or how is it faring up these two molecules?
The Bifenthrin is still facing pricing pressure, especially because of the Chinese aggressive dumping. In case of the Methoxyfenozide, the pricing has stabilized quite a bit and is on the upward trend currently.
Thank you. Thanks a lot.
Thank you. Ladies and gentlemen, in order to ensure that management is able to address the questions from all the participants in the conference, please limit your questions to two more participants. Next question is from the line of Satadru Chakraborty from Chakraborty Family Office. Please go ahead.
Hi. Good afternoon. Congratulations on the strong numbers. It's very hearty to see the margin profiles are one of the best, and also finally some positive cash flow from operations. I just had two questions. So on the blended realization, we spoke earlier to be 1,600 per kg. I believe last quarter, crude prices were down, and then Chinese anti-dumping was there. I believe you mentioned the anti-dumping still continues, but crude prices are now really high up. So I was very curious as to can you shed some more light on what exactly happened to your raw material and your finished product prices assuming the Chinese dumping continues for the rest of the year? A nd if crude moves up or down by 10%- 20%, are we saying that this is completely inelastic and we cannot really increase our realization, or how do you look at it?
So, it's too early to tell, Mr. Chakraborty, on this I mean, to comment on this. What we are seeing is that because of the Chinese currency devaluing and being at US dollars, $1 is equal to RMB 7.32 right now, which is pretty stable and not appreciating in any manner, we are still facing this problem. And it will still continue that the pricing will still have a pressure in Q3 because it's the end of their financial year. December is the financial year ending for Chinese. So, both that, I believe the pricing will tend to change, and there would be some appreciation of the prices, which will happen. Certain raw materials which have improved because of the crude going North.
However, the prices of our competition and of our finished products have really stabilized now and bottomed out. So, I don't think it will reduce further in any way, but let's see in this quarter and wait and see this quarter around.
Okay. That's helpful. My second question is really around the inventories. So I probably must say this, yeah. The receivables and payables picture look very good, much better than previous quarters. I think the inventory is stabilizing, but I heard on the commentary from Fiaz that the agrochemical customers are asking for more. So, anything that you can add? What exactly is causing this, and when do we expect to start clearing in the next two quarters, or how are we looking at this in general?
Yeah. So in my commentary, as I said, let's see. In the first quarters, agrochemicals was down, and the orders were there, but they delayed the delivery. So the manufacturing took place in quarter two, and the finished goods inventory and the raw material process is high in this quarter. And in this Q3 and Q4, we'll be supplying this to these agrochemical customers. So we expect that the inventories will go down, of course. And then because it will be a continuous process of the supplies that are coming from them and we'll be supplying them on a continuous basis, we'll not be required to hold more inventories, and eventually, they will come down.
Another reason is the Site-IV which is coming up is for which the validated quantities are being supplied from Aether Industries and potent raw materials being procured and quantities are being manufactured. Because in the Q3 and Q4, we have to send the validation quantities to the US based Oil & Gas Company .
I see. Well, very helpful. I'll probably reach you back in a second. Thanks and all the very best.
Thank you so much.
Thank you. Before we move to the next question, a reminder to the participants. Anyone who wishes to ask a question may press star and one. Next question is from the line of Rohan Gupta from Nuvama. Please go ahead.
Yeah. Hi, sir. Good evening, and thanks for the opportunity. So the first question is on your initial comments. You mentioned that you have started with witnessing growth coming back from the chemical customers and that's what contributed in the second half. However, contradictory statement that you mentioned, the Chinese dumping continues, and the pricing pressure will continue at least this year-end. So, if the inventories in the systems and the Chinese dumping continues and inventories are still at a high level, how are we expecting growth coming back from the customers in agrochemicals?
Yeah. Rohan, let me clarify. We are very small, o ur contribution of agro is lesser than pharma as of today. And we are operating on exclusive manufacturing, contract manufacturing in the agrochemical space, whereas we are operating on large-scale manufacturing in pharmaceutical space. So we have received this contract, so we are limiting the statement of the demand of agrochemical coming back for Aether, basically, not for the whole world or the rest of the people around. So we have received that orders, and so we are just communicating that. And the contracts are formed, and it has to be delivered in the next two quarters. So that is the reason why we have said this statement.
Okay. Fair enough. So our new product launches is primarily focused on agrochemicals. Over the next three to four quarters, we will be able to see multiple products coming in. Do you see that any delays happening from your customers? Any spillover in any of these products being catered to the customers? Any delays?
No. We don't anticipate any delays in either the new launches or in the existing contracts that we have. And so yeah.
Okay. Yeah. Got it.
We also anticipate through making a couple of announcements shortly in this upcoming quarter related to Site-IV specifically and the launch of a couple of partnerships and a couple of programs that we're talking about.
Okay. That's great. Also just for that.
No delays in that. We are online.
Okay. Just one more question is on your average realization. You mentioned it's roughly maintained at INR 1,600. However, on the old product, it has come down by roughly 20%-25%. It is just only the new high value-added product has contributed and maintained the realization at INR 1,600. Our business model is more related to the China supplies and the product which are first-time made in India but definitely are facing pricing pressure from China. So in our old product basket and the realizations have come under pressure by 20%-25%. Is it in line with the cost coming down in the similar, or there is a margin pressure on our existing or old product basket? Have we not seen these new product launches when you have, do you expect that there will be a margin pressure otherwise?
No. We are not seeing margin being in pressure at the moment because the raw materials have also moved in the same direction. Also, the 25% is on the blended product that is the new launches and the old product portfolio. We have prepared a very detailed summary for the whole product analysis, and we can discuss on the offline basis. We can showcase to you that on the blended basis, approximately 22%-25% reduction has happened in terms of the selling prices.
Okay. Rohan, if you can give some number, what was the volume growth on this quarter on Qo Q basis? Any indication on that?
Just a minute. I'll give it to you.
Yeah. Rohan, the volume has almost approximately been at the same. It is the same as it was. It is the same because as we said that if you see the revenues have been on the same ground in the same lines, and the quantities are also same, and because every price is same. There's very less increase, not so much increase also. So there's no reduction as such.
Okay.
You want to answer Q o Q? Q o Q.
Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. Yeah. I was also talking to you on Q o Q. Just a small clarification, and I'll go back to Q. There is a significant increase in employee costs. So any one-offs are there, or it is a normal growth rate which we are expecting?
No. There is a normal growth rate because when we are preparing the Q1 results, sometimes the annual increases and everything is pending. So we do a kind of a provision, and then there is actual increment which happens. Then we have also done another ESOPs were granted in the month of May at the end of month of May. The impact has not come in the Q1 as much, so that will come in the Q2 more. That is one of the things. And then other provisions which are increased because of the increment. So this is a normal trend. There is no abnormality in that.
Okay. Okay. Thank you so much, and I'll come back to you for follow-up questions.
Sure. Sure. Thank you, Rohan.
Thank you. Next question is from the line of Rohit Ohri from Progressive Shares. Please go ahead.
Hi, sir. A couple of questions. The first one would be, could we speak to gross margins that gradually moved from 48%-49% to around 50%-53% of the range right now? Do you anticipate that going forward, you'll reach around 55%-56% in the next 2-3 years?
Yeah. Of course. That is our target, and this is our benchmark for us. And that's why when you heard Rohan and Aman speaking, the raw material prices also have gone down along with the finished goods also. And we anticipate that this will help us increase our margins going forward because the finished goods prices are now on the bulk market, and when the CHhina dumping story and we would see a revival in the finished product prices also. So we should increase from here.
Okay. In terms of Aether and fluorination, if you'd like to share something, I know that you are taking some baby steps , but if you'd like to share if you're working towards some specialized chemistry over here in this domain for fluorination?
You meant fluorination, right?
Yeah.
Yeah. So our intention is to enter solely into metal fluoride with KF and the likes, and not to enter into HF or F2. And so we are very specific about which fluorinations we would like to do as per our competency because it's a whole different world in fluorination. And so we are very clear about what we'll do and what we'll not do.
Actually, I think that it will go in Site-III++, or will it go in Site-V?
Oh, it will go into Site-III++ as well as into Site-V.
Okay. Dr. Aman, currently we are at 8 x 8 by when do you think will be 10 x 10?
Good question. It's a work in progress. In fact, we have at least three more capabilities which we are working on right now in addition to the fluorinations. It's a constant endeavor on our end to expand this and also subtract this. These are the things which are not contributing as much. We do it as a continuously running endeavor, and it's a work in progress, yeah.
Okay. My last question looks much smaller and interests you. Post the signing of the LOI, we were working on some two to three products. And do you think we'll be able to launch them this year, or will they be a spillover to next year?
If I'm assuming, you mean this by the oil field services agreement that we made a couple of months ago. And that is anticipated to be, as I mentioned in my commentary, that about 25% of Site-IV is being erected and commissioned currently exclusively for that particular customer, scheduled to be launched by the last quarter of this fiscal year, so by January, February, March. And we anticipate business revenues starting off cautiously optimistic about being significant, but starting off for sure in the last quarter of this fiscal year.
But the issues related to the MENA region or the tension or the conflict, that has not affected the order which we were working on for an approximate estimation of INR 300 crore of 1,600 metric tons which we had kind of projected earlier?
None. None. These are initial anticipated volumes only, so the initial set of products. We hope that this partnership will be much deeper than that. But no impact from those events that are currently happening. Thank you.
Okay. Thank you, Dr. Aman. Thanks a lot.
Thank you. Ladies and gentlemen, to answer questions, you may press star and one. Next question is from the line of Rohit Nagraj from Centrum Broking . Please go ahead.
Yeah. Thanks for the opportunity. Am I audible?
Yes, you are. Please go ahead.
Yeah. Thank you. So my first question is on the demand side. So earlier, Rohan explained that on the pharma front and agrochemicals front, we have firm orders from customers. So generally just a generic question, generally, how much of our quantities are contracted on a yearly basis for each of our segments where we have a relatively higher visibility? And are these calendar year contracts for one year or maybe more than one year or so? Thank you.
So on the contract exclusive manufacturing, we have multi-year contracts which create a minimum quantity of it. There is no take off pay in that contract. However, there is an indication that this much minimum quantities will be prepared from Aether. And that is how we run by it. Every year, we renegotiate the pricing based on the current trends of the raw materials, and we take the orders. And so, we have that visibility on contract exclusive manufacturing. But on the large-scale manufacturing, previous year, we had good visibility and order books, which we are currently not taking big orders from the customers because of the pricing changing quite drastically, which then leads to renegotiation with the customers. So currently, until the pricing of the raw materials stabilizes and the finished product stabilizes, we are not taking long orders onto it.
That is our idea where we are not taking huge hits on any kind of raw material inventory or in-process inventory. That's the strategy which we are using right now. Rohit, does that answer your question?
Yes. Yes. Second question is only so basically, we have been hearing that on the industry side, there has been a pain in terms of the inventory destocking and all. However, you explained that we are having some orders at hand. But do you foresee that the inventory destocking or inventory issue may crop up if the customers are not able to release their inventory at their hands, which has been a problem from past several quarters? So any such indications that you are getting on the agrochemical side particularly? Thank you.
No. So we have limited products on the agrochemical side, and we are not seeing this kind of issue in our products. We are not speaking in general terms. General terms would be true because a lot of people are still giving commentary on that the destocking issues are still ongoing. We do not deny that. We are just talking about our basket of products.
Sure. Sure. That answers my questions. And thank you.
Thank you.
Thank you. Next question is from the line of Chirag Shah from the White Pine Investment Management. Please go ahead.
Hi. Can you hear me?
Yes, we can hear you. Please proceed.
Yeah. Thank you for taking my question. This was regarding the shareholding pattern. Sir, do we have any timeline by which we need to comply with the minimum shareholding of 75%?
Yeah. So we have time till May 2025. So we have still two more years to go, 1.5 years more to go. So we have still some time to go for that.
Okay. So by May 2025, we need to be at 75%, correct?
Correct. Correct.
Thank you.
Thank you.
Thank you. Ladies and gentlemen, to answer questions, you may press star and one on your touchscreen telephone. We have our next follow-up question from the line of Vipraw Srivastava from InCred Capital. Please go ahead.
Hi. Just had one follow-up. So regarding the intermediate from Dolutegravir , so this drug by Gilead called BIKTARVY which is capturing market share in the U.S., so are you guys seeing any drop off sales because of that has repeatedly losing market share, or how is the market shaping up on the ground?
Yeah. We have seen a drop of 40% on the demand side, but that was well expected on this product.
A drop of how much?
40%.
How much is limited?
Price is approximately 20%-25% lesser.
Okay. Yeah. So let's say demand was 100 previously, now it's 60, right?
Yeah.
Okay. Thank you.
Thank you.
Thank you. Next question is from the line of Inderjeet Singh Bhatia from HDFC Securities. Please proceed.
Yeah. Hi. Good afternoon. Congratulations, Aman, Rohan, Faiz. A couple of questions from my side. First is if I look at the CRAMS contribution, that has kind of come down. Is it because products have kind of migrated out of CRAMS into more large-scale manufacturing, or do you see there is some bit of softness in that business model?
No, the levels have come down a little. It's more or less the same. And we anticipate this is a solid business model. We are very upbeat and robust in this business model, and we anticipate quite a bit of additional projects when it comes to this thereafter as well. And so, not at all concerned about this business model, rather very upbeat and very positive about this one.
Okay. Thank you. Second question is on this oil services kind of contract that we have. We expect full-fledged implementation next year, right?
We expect full-fledged implementation in the next fiscal year, yes. In the last quarter of this fiscal year, we'll be commissioning the plant and moving the plant. And we are actually in the receipt and are carrying out the trial orders across the products right now as we speak. And so the idea is to have reasonable transactions and revenues in the last quarter of this fiscal year, but definitely full-fledged in the next fiscal year, yes.
S,o Aman, since this is an entry into a new segment, new industry for us, is there an expectation that this will lead to kind of more products from the same client which can come through in, say, FY25 later part? Or are you likely to see more customers from the same industry kind of approach us, which is also likely to kind of come through in the next one to two years?
Certainly, most certainly, yes for the part of the question. So we expect to see additional this is expected to be only the first four products or three products that we mentioned in the letter of interest with this particular customer. And the intention and ongoing discussions already with this particular customer about additional products to be added to this market. And so as soon as in the fiscal year 2025, we should be able to see additional products to be added. In terms of the second additional customer in this space, that remains to be seen. But this is one of the topmost oil field services companies based in the U.S., and we are very happy to be in a strategic exclusive kind of arrangement on the manufacturing with this customer.
Great. Thank you. Congratulations once again for the future.
Thanks a lot. Thank you.
Thank you. Next question is from the line of Dhruv Muchhal from HDFC AMC. Please go ahead.
Yeah. Thank you so much. Just to clarify, you mentioned that the realizations are down 25%. This is on YoY basis, right? The whole business?
Yes. YoY basis.
Okay. So you're still good 17% because all driven by volumes?
Yes. It is all driven by volumes.
Okay. And about 50% of your business is pharma, and you mentioned that probably it's only agro which is more impacted in terms of what we understand, at least, is impacted because of this inventory issue and all those things. But the realizations are down quite a bit, about 25%. So it seems the business is also seeing some reduction in terms of probably I'm not sure why. I'm just trying to understand this. Is it because of the crude price recorrection, or also there is some higher intensity from Chinese even in the pharma segment?
Yes. Obviously, the shifting is happening across the industry spectrum, so pharma is also facing the same problem.
Okay. So it's not only inventory issues that we see in the agri, it is because if new capacities are probably, I'm not sure. It has been getting more aggressive because of incentives and other things with Chinese.
Yes.
That's all. All the best. Thanks.
Thank you. We have our next follow-up question from the line of Rohit Ohri from Progressive Shares. Please go ahead.
Hi. In terms of the geographic breakup, which we see currently having around 66% from the domestic business, do you expect it to be maintained going forward, or do you think that the domestic pie would be arrested here?
No. Going forward, we would see more of exports coming in, and the pie will be, again, the same as 50/50, which was the same past.
Okay. Okay. And in terms of developments for the businesses apart from Spain, Italy, Germany, are you looking at some Southeast Asian countries that come from the annual report where you say that you're looking at Singapore, Malta, Norway, and South Korea, which have got really strong growth trajectories. Have you been able to kind of get some orders from these regions?
Oh, yes. Basically, we are focusing on certain fields which involve Korea, Taiwan being powerhouses in those specific fields, as well as the oil field services area that we are discussing. There is some presence in Singapore as well that we are currently evaluating. So there are two different sides of the industry spectrum, two different industry applications that we are currently evaluating, which are located in these regions and very promising discussions going on. There are discussions going on, not significant business revenue transacted yet, but hopeful for it to initiate in the near future.
Okay. Thank you for answering my questions.
Yeah. Thanks a lot.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Participants, to ask a question, you may press star and one. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Thank you, everyone, for participating in the call. We hope that we have addressed almost all of your questions. If you still have any further questions, please feel free to reach out to us. Have a great day ahead. Thank you.
Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you all for joining us, and you may now disconnect your line.