Q3 24/25

Feb 14, 2025

Summary

Q3 FY25 revenue rose 32% YoY and PAT more than doubled, while 9M revenue remained lower amid agrochemical weakness and customer exits. FY26 growth is targeted at 30%-35% on a standalone basis, supported by pharma, polymer and contract commercialization.

Ladies and gentlemen, good day and welcome to the Anupam Rasayan India Limited Q3 FY 2025 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. Kanav Khanna from EY Investor Relations. Thank you and over to you, sir. Thank you and good evening, everyone. Welcome to Anupam Rasayan India Limited Q3 and nine-month earnings call. Please note that a copy of the disclosure is available on the investor section of the website as well as on the stock exchange. Anything said on this call which reflects the outlook towards the future or which could be construed as forward-looking statement must be reviewed in conjunction with the risk that the company faces. Please note that the audio of the earnings call is the copyright material of Anupam Rasayan and cannot be copied or rebroadcasted, attributed in the press or media without specific or written consent of the company. Today from the management side, we have with us Mr. Anand Desai, Managing Director, Mr. Gopal Agarwal, Chief Executive Officer, Mr. Amit Khurana, the Chief Financial Officer, and Mr. Vishal Thakkar, the Deputy Chief Financial Officer. With this, I would like to hand over the call to Mr. Anand Desai for his opening comments. Thank you and over to you, sir. Thank you, Kanav. Good evening, everyone, and a warm welcome to the Q3 FY 2025 earnings call of Anupam Rasayan. Let me begin by providing updates on our business verticals for the quarter. Our pharma and polymer segments we saw as our new growth drivers have continued to expand their contribution to our revenue. The pharma segment grew significantly, achieving 23% of sales, while the polymer segment accounted for 10% of sales in the nine months of FY 2025. For the full year, we anticipate both segments to contribute meaningfully to overall revenue. With this growth being expected to persist through FY 2026 also. As highlighted in our previous calls, the expansion of these verticals will help create a more balanced portfolio, ensuring greater stability against sector-specific fluctuations. Now let me highlight our financial performance for the quarter and half year under review. Our consolidated operating revenue for the quarter stood at INR 390 crores, which was 22% higher than the Q3 FY 2024, and around 33% higher than Q2 FY 2025. This growth is, as discussed earlier, on the back of continued growth in pharma and polymer segments and robust performance by Tanfac. In the last nine months, agrochemical sector has faced a weak demand situation, especially from Europe, which is expected to improve in coming quarters. on the margins front, consolidated EBITDA margins for Q3 FY 2025 stood at 31% on account of favorable product mix and strong margins pursued by Tanfac also. Given the uptick in the demand momentum and projected offtake from our customers, we anticipate resuming our growth trajectory in the next financial year, targeting a 30%-25% revenue increase in FY 2026. At Anupam Rasayan, we remain committed to building a sustainable business. Over the years, we have invested in various initiatives, including a recent INR 59 crore investment in a 9.2-megawatt hybrid power plant combining solar and wind energy, which was successfully commissioned in October 2024. With the agrochemical demand picking up coupled with higher contribution from pharma and polymer and our growing strength in fluorination chemistry, we at Anupam Rasayan are confident to get back to our growth path. With this, I would like to hand over the call to Mr. Gopal Agarwal, the CEO of our company, to discuss the business updates. Over to you, Gopal bhai. Thank you, Anand bhai. Hello, good evening, all of you. I will begin briefly by discussing the business highlights, which will be followed by financial highlights by our CFO, Amit bhai. As Anand bhai mentioned, the challenges we faced in the agro segment seem to be fading away. While the pharma and polymer segment continued to experience strong growth, driven by launch of over 17 molecules in FY 2024 and 6+ molecule that are being launched in FY 2025. It is also noteworthy that we have around 65+ molecule of pharma and polymer in R&D and pilot stages currently. These 65 molecules can be split between pharma and polymer, say, approx 30 and 35 respectively. All these molecules are going to be the driver of our growth in coming times. Apart from polymer and pharma portfolio, let me take this moment to talk about our other growth drivers. Our fluorination chemistry portfolio, which got strengthened with acquisition of Kenfacq by ensuring uninterrupted supply of KF and HF around three years back, is continuing to see a good traction from our customers. As discussed in our previous call, we anticipate that Japan, where we have a very strong business development team, will contribute approximately one-third of Anupam sale for the next two to three years, with most of the business secured through long-term contracts. Further, I am happy to share that we have recently signed one contract and another LOI with a U.S. MNC for supply of high-performance specialty chemicals used in critical polymer applications such as defense, electronics, and aerospace. With this and our new product pipeline, we expect U.S. as a geography to have substantial contribution in growth of the company, translating to over 15% of sales over the next two to three years. The third driver of our growth, alongside polymer and pharma expansion and fluorination, is our continued capability to secure LOIs and successfully convert them into long-term contracts. At present, our order book stands at approximately INR 10,700 crores spread across on an average five to six years. Of this INR 10,700 crores, INR 3,100 crore worth of order book is already commercialized, and of the rest, majority will be commercialized in FY 2026. Keeping all these growth drivers initiatives in mind, we believe that we should start seeing strong performance going forward. As Anand bhai already shared with you, we expect to grow at a rate of 30%-35% in FY 2026. With this, to take you through financial highlights, I would like to hand over the call to our CFO. Over to you, Amit bhai. Thank you, Gopal bhai, and good evening, everyone. I will start by highlighting the financial performance for the quarter before handing over the call to Vishal bhai for in-depth discussion. Starting with our CapEx update, as of December 31, 2024, we have completed INR 650 crores of the planned INR 670 crores CapEx. As Anand bhai mentioned, all the plants are on track for commercialization by March 31, 2025. As noted in Anand bhai's opening remarks, our new 9.2 MW hybrid project was commercialized in October 2024. This initiative is expected to generate annual energy cost savings of approximately INR 15 crores. Combined with our previous INR 68 crore investment in our 17.9 megawatt project, the total savings will amount to INR 28 crores annually. With these efforts, 65% of the company's electricity needs will be met through green energy in the future. We remain committed to cost optimization and operational efficiency. This strategic focus, along with our ongoing expansion, positions us well for sustained growth. With that, I will hand it over to our Deputy CFO, Vishal bhai, for further insights into the financials. Thank you, Amit bhai. Good evening, everyone. Thanks for being with us today. I would like to share key performance highlights for the quarter and nine months ended December 31, 2024. Before we open the floor for Q&A session, I hope you have had the opportunity to review the detailed presentation and the results that we have submitted to the exchanges and posted on our website. Kindly note our numbers for the quarter and nine months are on a consolidated basis, and they include Tanfac numbers as well. Let me first discuss consolidated financial highlights for the quarter ended December 31, 2024. First, operating revenue for Q3 FY 2025 was at INR 390 crores as compared to INR 296 crores in Q3 FY 2024, up 32% YOY. EBITDA including other income was at INR 121 crores in Q3 FY 2025 as compared to INR 81 crores in Q3 FY 2024, up 48% YOY. This would translate to 31% EBITDA margin in this quarter, up 389 basis points. Profit after tax was at INR 54 crores in Q3 FY 2025 as compared to INR 26 crores in Q3 FY 2024, up 108% YOY. Our top 10 customers contributed to 63% of our total revenue in Q3 FY 2025. Talking about the nine months financials, operating revenue for nine months FY 2025 was at INR 938 crores as compared to INR 1,074 crores in nine months FY 2024, down 13% YOY. EBITDA, including other income, was at INR 262 crores in nine months FY 2025 as compared to INR 306 crores in nine months FY 2024, down 14% YOY. This translates to a 21.8% EBITDA margin in this period. Profit after tax was at INR 97 crores in nine months FY 2025 as compared to INR 127 crores in nine months FY 2024. With this, we open the floor for Q&A. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. 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. Again, if you wish to register for a question, please press star and one now. Participants, you may press star and one to ask a question. Our first question comes from the line of Meet Vora from Emkay Global. Please go ahead. Yeah, thanks for the opportunity. Firstly, while the pharma and polymers business is doing well, agrochem sales have been slow for quite some time now. Is this more customer specific or market specific rationalization in terms of overall sales? Meet, thank you for that question. Let me answer it in this manner. Definitely, there was a bit of a headwind that we saw in the agrochem market, especially in the early years. However, if you look at also, there was one of the large Indian MNCs in the agrarian sector, which was contributing around 15% of our revenue in the past historical numbers, which we have decided to withdraw our business from them. That also has been one of the significant reasons why our ECM contribution has been lower. That's one that I would want to highlight over and above. Because had that not been the thing, probably we would have been far better off and probably our drop in ECM would have been significantly lower and our revenue growth would have been larger in these years. Coming to how we see it from here on, we have started seeing the strength, as was mentioned in our opening remarks by Gopal Agarwal and Anand Desai as well. We see strengthening of the ECM demand, especially also from Europe. We anticipated that in Q4 you will see stronger numbers from the ECM as well in FY 2026 as well. I hope I have been able to answer your question. Yeah, sure, Vishal. Secondly, congrats on continuing the LOI signing and conversion of that into contracts. Again, like yesterday, we have signed a new LOI. Based on that, what is your overall outlook for the U.S. business? You rightly identified, Meet, that these two contracts are very meaningful contracts. One contract and one LOI are very meaningful revenue drivers for us in the U.S. Yes, we expect both these contracts to be commercialized in next year itself, which would mean that we would have a significant revenue addition coming from these two contracts. We expect that U.S. as an end market would be in the high teens for us by the end of next year. Next year to 12-18 months time, we should be looking at high teens contribution from the U.S. If you look at from a geographical diversity point of view, if you really look at it, what has really happened to us is that agrochem is there, but if you look at personal care continues to be 10%. If you see pharma has become 25% for us and polymer is more than 15% for us as we grow. If you look at from a geography point of view, Europe which was the largest market, today now we will have effectively four large markets, which is Europe, Japan, U.S., and India. They all four will have a meaningful contribution to our revenue in addition to Singapore, which will be our strong presence as we move. If you look at it over the last three to four years, where we have been very consciously working on our diversification strategy, you see that we have been able to diversify across products, across customers, across geography, across end market application, and also across the plants where we have multiple plants that from there we can cater to. This strategy is just playing out and as we move in next 12-24 months, this would have seen a far better balanced portfolio. Sure, Vishal. In terms of reaching your peak revenue potential from the LOI pipeline that has been signed, I think we were earlier envisaging that that will be achieved broadly by FY 2027. I think that timeline still remains or is there any change on that? I think there we would expect that contracts also coming in. We feel that the large part of the peak revenue should have come in by FY 2028. Because it will take us, the commercialization would have happened in 2026, 2027, but the peak would come in by 2028. Also please appreciate that earlier we were talking about the numbers which were delivered in 2022 LOIs, which were we were expecting for 2024-2026 to commercialize. Now we have other LOIs which are coming in 2024 also and 2025 as well. Which will also take couple of years to commercialize and then ramp up. That will be the case. I will put it there. But to share, INR 3,100 crores worth of LOIs and contracts have been commercialized. Next year, further significant part of the balanced portfolio should have also been commercialized. Understood. Thanks for that. Just last question, are we also looking at any inorganic opportunities in this space, either on pharma, agrochem or polymers or within the existing verticals that we are having? Look Meet, honestly say, we keep looking at any value-adding opportunities that we can have. Like what we did for Tanfac, we keep continuing to look at assets and companies which are across geography. I think if it is agrochem or if it is pharmaceutical or it is polymer, as long as it is a value-adding and strategically advantageous to us, we will be keen to look at it. We continue to look at it, as and when we have something very meaningful to share, we would definitely share with the market and with you and the team. Got it. Thanks. That is all from my side. Best of luck for the coming quarters. Thank you. Thank you, Meet. Thank you for that. Thank you. Next question comes from the line of Harsh Shah from Axis Capital. Please go ahead. Yeah, hi, sir. Ankur Bariya this side. Thanks for the opportunity, and congratulations for good set of numbers. First question on the changing business mix that you highlighted. So good to see personal care, pharma, polymers, et cetera, also improving there. Will it be fair to say that balance here, which is roughly around 8 million, 50%-55% of the revenues in 9 months? Yes, I think that's where it should be. Yeah, it can be around 50%-55%. Great. The margin profile for these segments, pharma or polymer, will it be largely the similar way, the way we have been pricing our agrochem, or these will be margin accretive? Typically, you know that how our business models are there. We try and look at the pass-through from the margin side and cost side. But because these are also the forward integration and using our current value chain, our ability to get some extra margin is likely on this case. So both on polymer and pharma, we should have an upward bias on margin. These are very niche applications, especially in polymer, which will ensure that our ability to ask for and gain that margin should be there. However, I would be conservative and say that we should look at on a balanced portfolio side and okay with the margin of the agency. But there should be an upward bias. I will only do it. Sure, Vishal. Where I was coming from was, on a 9-month basis, our gross margin has expanded, and this expansion is largely led by this change in business mix. Given that incrementally also the growth horizon for polymer, pharma, et cetera, is pretty healthy given the molecules that we are working on. Largely, these gross margin numbers should be maintained. Will that be a fair assumption? Sure. Fairly similar. Historically also, I've been really suggesting that rather than looking at me from a gross margin, I would prefer to look at myself from an EBITDA perspective because I have a contract or I have a business model that I'll ask for the pass-through. When gross margin is one of the factors, because if there is a complex product, then the gross margin will be very high, but my overheads will be also higher, and hence my EBITDA margin will be there. Seeing me from an EBITDA margin perspective would be more reflective of my stability of my business. But you are right. Today, it seems to be the case. Okay. Vishal, one thing, since you mentioned EBITDA margins, our other overheads as well as manpower cost on a 9-month basis has declined both in double-digit numbers. If you can put some more light here, is there a cost reallocation or how should one look at it? I think this is also to do with two things. One is because of my lower volumes also has some bit of a contribution to that. Second also is the product mix. Because largely, if you look at it, my EBITDA margin has expanded. When you look at my console also, please see that Tanfac has really given a very high margin and which is also getting to the console numbers moving on a different level, especially with the strong- Sorry to interrupt. My question was more on the standalone side. I am excluding Okay, fine. When you look at the standalone business, I think the broad number that you are saying is largely on account of a bit of an ease of expense which has dropped a bit, which is also the reason that you see this, and also a little bit of primarily, a bit of a volume part of it, which also means that there is a lesser job work that has gone out, and that is also one of the reasons. Two broad reasons, if you were to see that. Okay. And just lastly, on the working capital side, since the large domestic MNC is gradually exiting. Sorry, we are gradually exiting the large MNC. How should we look at the working capital part, both on EcM side as well as the new business, which is almost 50% of revenues now? How is the working capital? How are the working capital terms over there? You are right. See, had the citrus segment been there in terms of, let us say, 2 months back when the markets were more buoyant, then my working capital would have very strongly improved with this segment of the customer also, and also with the efforts that we have put in. Because of the slowness that we saw for the last 4 quarters to 5 quarters, one, my debtors had expanded, which are now coming into a more stable, at least into the improving trend. And my inventory also, as my revenue now picks up, that should also start getting liquidated. I believe that the targets that we have kept for ourselves, I think the numbers we should be focusing on that and 18 odd months plus or 6 months, we should be there. Okay, great. Thank you and all the best. Thank you. Thank you, Ankur. Thank you. Next question comes from S. Ramesh from Nirmal Bang Equities. Please go ahead. Thank you very much, and congratulations on your results. So in terms of your operating cash flows for nine months and this year, what is the CapEx you have done for these nine months, and how are you seeing the operating cash flow, and what is the increase in debt as on date? Okay. Let me come to the first, the CapEx part, and then I will come back to the other parts. Just give me a minute, please. My CapEx for this year has been INR 200 crores. Right? Okay. If you look at my increase in my total today, my total debt level will be around about 10 plus 300. So INR 1,100 odd number will be my debt levels today. Okay. In terms of working capital days as of nine months, where are we in terms of the inventory and debtors and the net working capital cycle? I would say that my working capital has been similar to what I have seen in the six months period. I would suggest you to take it at that level, and that is where I would put it. When you responded to the previous speaker that you expect to achieve reduction in working capital in 18 months, what would be the net working capital number of days that you can achieve in the 18-month period? That's what we have been saying, that 180-200 days is the target that we are focusing on, and that is the target we want to continue to focus on. See, today, when you look at the days, what is happening largely is because of my first part, which was a muted part on a very lower numbers that I had. The debtors have expanded significantly when you divided by the sales. But when you look at, let's say, if I were to even look at our revenue, let's say of INR 1,300 crores or INR 1,400 crores, whatever number you want to take at that point in time or a run rate of that number, you will see that my days start stabilizing better. And the ability to liquidate my working capital will be higher from two reasons. When your sales start picking up, your ability to liquidate inventory comes in. And two is also when there is a buoyancy in the demand, your ability to request your customer to pay on time is also higher, and which both will ensure that in next 18 to 24 months we should be able to achieve that. That's the target, Ramesh, I would focus on going forward as well. If everything works well in terms of your own business plan, where do you see your debt, this gross debt figure, say, in the next two years? I don't want to give any guidance on those numbers, but I'll give you a very simple anecdotal evidence, and then probably you are better at math than me to really project it. But if you look at 2022 versus 2023, when my sales picked up, my working capital days reduced by around 40 to 50 days from 290 to 240 days, to 250 days. And that year, if you look at it, my operating cash flow from operations was around INR 255 crores when I compare to the PAT of INR 170 crores. I believe that the moment we start achieving the growth and the reduction in the working capital days, there will be a very strong conversion of EBITDA to operating cash flows. For the first one to two years, we will have a stronger benefit from EBITDA to cash. That's what you will see as we go forward. And what happens is I don't have any right now CapEx that has been planned. This cash will only convert into reduction in the net. If you look at the warrants issued to promoters, when do you expect the balance funding to be paid? How much would that be, say, when everything is paid? It's INR 270 crores, which is expected in the first quarter of FY 2026. Okay. And that also will ensure that I have reduction in debt, because that primary usage of that is debt to a large extent. Yeah. Let me squeeze in just two more thoughts. One is your capacity has gone up from 27 to 30,000. That is what the latest presentation was. So where has this 3,000-tonne expansion happened? In unit 5 and 6 in Sachin? Where exactly has it happened? So one in Sachin, one in Jhagadia, and another one will come in Jhagadia as we go. Okay. It is all about 1,000 each? Because this will be 1,000, INR 1,200 plus, the balance will be in Jhagadia. Between domestic and exports, can you give us the split? What is domestic and how much is exports as of 9 months or 3Q? It is broadly 50/50 for now. If you are looking at your margin profile, as you said, you are expecting some improvement based on your product mix, and there is an expectation of 35% growth. What is the base FY 2025 revenue you are penciling in for that growth? In terms of the overall portfolio margin, assuming that you are able to convert the LOIs and the existing business, you will be able to maintain the current year average trend in terms of margins? See, S. Ramesh, I don't want to give a very specific guidance for the margin. Let me give you a directional one, which probably will help you in terms of estimating where we are looking at. One, I would continue to guide at 26%-28% EBITDA margin. Though I know there is an upward bias, but I would want to do that for two reasons. One, there will be a ramp-up of new plants, which has its own implication in terms of overheads, at least in the initial when the ramp-up starts happening. One. Two, when you have a newer product, it takes you a curve. There is always a curve that you hit the expected efficiency over one or two cycles of production. So that is the second point where I would like to keep it at 26%-28%. In terms of revenue, as I had also mentioned, that on a console basis, we should be flattish in terms of standalone, we should be having a mid-teens kind of a de-growth, is where I will put it at. Mid-teens de-growth for the full year FY 2025, right? On a standalone basis, yes. Yeah. Okay. Thank you very much. I will join the queue and wish you all the best. Thank you. Thank you. Thank you, S. Ramesh. Thank you. Next question comes from the line of Rohit Nagaraj from B&K Securities. Please go ahead. Yeah. Thanks for the opportunity. Couple of clarifications and couple of questions. First, in terms of clarification, you mentioned that the total quantum of LOIs that is commercialized is INR 3,100 crores. Is it reflected in numbers or these are the contracts which have been commercialized? How should we look at this particular number? You are right. I cannot say that INR 3,100 divided by INR 500-600 is a reflection in the revenue of 6 and 5 is the reflection of the revenue. Answer is no, you are right, that's not the case. Because it took time to ramp up. I can only say that this year we should be looking at around 20%-25% of my revenue coming from these LOIs and contracts. This year means FY 2025? FY 2025. I'm talking about FY 2025. FY 2026 should be a significantly higher number. Right. Got it. Second clarification again. The growth of 30%-35% YOY. Are we basing it on the standalone numbers or consolidated numbers for FY 2025? standalone. Okay. Got it. A couple of questions now. In terms of the gross margin expansion that we have seen. Historically also, you've been telling that normally we have a back-to-back arrangement in terms of the raw materials as well as the contracts that are in place, and hence our gross margins or even EBITDA margins are largely secure. But a quantum jumped suddenly in a particular quarter. Are there any other factors which have moved the gross margin significantly, given that you are again, you've just alluded that on a sustainable basis, we still look at, say, 26%-28%? Is there any one-off which has moved these gross margins during this quarter? Rohit, really now it's no more to do with the product. One product has contributed how much to my. This quarter has been where there are a couple of products which have higher gross margin. That is the reason you would see it on a quarterly, because depending upon the schedules, few products grow in a particular quarter versus the other products grow in a different quarter. On an annual basis, if you look at it, you will see me more stable. Also what I would encourage, and that's what I'm trying to share, that look at me more from an EBITDA than a gross margin level. Because again, when you have a pass through, I also not only have a pass through of my raw material, I also have pass through of my overheads, my utilities, my every other cost. That's where I try and look at the EBITDA number, which is a more reflective of that relationship. As I was saying that if there is a product which is a more complex product, then the complex product will have a lower gross margin because there are multiple steps, and when multiple steps are to be executed, the overheads and the utilities would go higher. If I keep my EBITDA margin to be constant, that means that I would have to expect a higher gross margin to compensate for the higher overheads that would be there. I would put it only largely to that phenomenon than any other phenomenon. Right. Just to summarize, probably if there is any change in a particular quarter, it will get even out during the course of, say, two quarters. Exactly. Exactly. That is the reason, if you see, I have been very conscious of making those numbers, making that guidance on the numbers. Also in terms of, if you look at my nine months, they are more in line with rather than the reflection of the quarter. Okay. You also mentioned about one of the domestic MNCs going out of the When you have terminated the contract for Actem. This is 15% of Actem revenues or total revenues? Total. Okay. This has happened in FY 2025? Huh? Sorry, I did not hear you. This has been taken effect from FY 2025. Is that the right way to look at it? The process started from 2024, and 2025 you can see the full impact. Fair enough. Just last question on the CapEx front. You said INR 200 crores of CapEx. However, the INR 670 crores are probably still sitting at the CWIP level, and hopefully will get commercialized during this quarter. Correct. How do we look at- So INR 670 plus INR 200 will be the total capitalization? No. INR 670 will be the total capitalization. What he asked was the cash outflow for the CapEx of the year, and I said INR 200 is the CapEx for the year. Fair enough. So that includes INR 650. So totally you will see that INR 670 crores of gross block would be added by the year-end. Right. Got this. Thanks a lot. I am done. Thank you, Rohit. Thank you. Next question comes from Ashwini Agarwal from Demeter Advisors LLP. Please go ahead. Good evening, sir. Good set of numbers. Congratulations. A couple of clarifications to questions earlier asked. One is on the debt level. Did I hear the figure right, that INR 1,100 crores is your gross debt number as of December 31, 2024? Yes. Does that mean that it has come down by INR 170 crores? Because as of September 30, this number was INR 1,270 crores, from what I can see. Okay. Just what you are saying, can I get it again, please? Yeah. So basis what I can see, as of September 30, your gross debt number was INR 1,270 crores. And what you mentioned was that now your gross debt number as of December 31 is INR 1,100. That would indicate INR 170 crore repayment. Is that right, or am I missing something? When you have finished recording, you may hang up. Stand corrected. The total number is around INR 1,200 crores. You are right. I stand corrected on that. INR 1,200 crores. So there is still a marginal decline from INR 1,270 to INR 1,200. Would that be- That is more to do with the CapEx repayment, the term loan repayments largely. Okay. And sir, if you could just clarify that, again, I think Ankur Bariya had asked at the start of the conference call that the decline in operating expenses on a standalone basis that we see on page 8, which is quite substantial, you mentioned that it is mostly due to outsourcing costs or contracts that you give out. Or is it that you capitalize some of the costs related to the CapEx? There is no capitalization. Is that a fair assumption to make? Yeah, there is no capitalization. I will tell you a very simple thing. Let's look at my revenue for the six months standalone last year, nine months standalone last year. Yeah. If you look at it, there is in terms of my sales, right? Yeah. Now if you look at that also if you look at my employee benefit, let's say, the reduction is lower than that, right? Other expenses also, it is not as low as that. So largely, not all of these costs is a fixed cost, right? There is variable cost to it, especially the outsourcing or job work cost. So that way you will see that you will be in the similar number. That's what I was trying to say. So honestly, if I were to put it simply, the variable part of the cost has been reduced because of the volumes that has been produced and so on. On the employee side, largely it is the ESOP cost, which has really been the reason for that. Perfect. Thank you. And sir, would you be able to read out the numbers for inventory and essentially inventory number as of December 31, this number was INR 1,272 crores as of 31st. I would excuse myself from this because, A, we don't list out those numbers for the third quarter. Because then again, I would have to report out all the other numbers because then only my balance sheet will be fairly looked at. Rather, I would say it's in the similar range is where you can take it from now, please. Okay. Thank you so much. I hope you appreciate. Apologies if I have not been more helpful than this. But you can take my words on that we are fairly stable on those numbers right now. Okay. On an absolute term, right? That's fine. Thank you, sir. All the best. Thanks. Thank you. Thank you. Next question comes from the line of Rajakumar Vedanathan from RK Investments. Please go ahead. Yeah, good afternoon. Thanks for the opportunity. Am I audible? Your line is bit cracking, if you can be bit more. Can you hear me now? That's far better. Thank you. Sir, so my question is on the inventory. Sorry to labor on that. So if I see your September inventory was INR 1,270 crores, and if I see your December number, the changes in inventory is almost INR 120 crores negative is there. So which means you have added further INR 120 crores inventory. So it's about INR 1,400 crores of inventory roughly you should have as of December. And I also look at your material cost to sales is about 40% on a console basis. So which means you are roughly carrying almost inventory to serve almost INR 3,400 crores worth of revenue, which is almost like two years of revenue. I just wanted to, if you could just give some color why we are adding this material. Is it because there are a lot of lead time is involved in locating this material, or is it a long production cycle? If you could just enlighten us, it will be really helpful. Sure. I would not speak on the specific numbers that you have derived, and I will leave it to your judgment on that. But let me answer the question that says that why are we having such a high inventory, be it INR 80,000 crore or INR 1,100 or whatever numbers we derive at. Let me put it very simply. If you look at large part of my back inventory come from finished goods and WIP and not of RM. RM will be 15% to 20%, 20% plus or minus 5% of my total inventory holding. Now, why do we need to hold this inventory? On a structural basis, I'll answer first, and then I'll answer why it is higher than the structural basis as well. On a structural basis, if you really look at it, I am one of the primary or single supplier to my customer. And when I am that, I need to hold a particular level of finished WIP. What is WIP to me is basically a product which is here ready to be dispatched, but I would want to keep it not yet finished because then where the aging comes into play, I will keep it one step before, or I will hold the distillation process back so that the age of the product is not starting. So that's the reason you see WIP and finished goods. And hence, if you have to see me, you have to see me as a percentage of sales. Inventory is a percentage of sales rather than percentage of COGS, which you are seeing me at right now. So that's one that I would say. Having said that, even after assume of that numbers, whatever, I would say that my steady state sustainable business model should have been around 180 to 200 days of those numbers. And if you look at me at that number, you will see that my ROCEs, my terms, everything will play out. However, today I am higher than that. Even if you look at the September numbers, I'm significantly about, and further. When I exited 2023, I was on a turnover of over INR 1,300 crore and a run rate of over INR 1,400 crore to INR 1,500 crore of revenue on a run rate basis, and I was expecting a revenue growth in the next year as well. Now, when you are planning with that kind of a revenue growth, your production plans are accordingly. And when instead of that, we had a degrowth for 18 months. If you really look at it, for the 18 months from then on, we have a degrowth that we saw. I had a double whammy where I had a production and hence the inventory accumulation, but my sales did not happen. My numerator has dropped. Today, you will see me at a TTM of INR 900 crore versus what, had there been a growth, I would have been a TTM of INR 1,500 crore to INR 1,600 crore at that point in time. Because on 30th, even if I put a 20% to 25% growth, I would be at a 15 to 16. All my numbers would look more reasonable. Also what happens is that when you produce but you are not able to sell, that accumulates into your inventory, and so inventory expanded on an absolute number also, which is what you would have seen me from 2023 to 2024 September numbers, which was reported. If you look at it, we have expanded. Expanded by around about INR 200 crore to INR 250 crore odd of inventory. That, both put together, has really expanded the situation. Had there not been that, I would have achieved that number and if you look at the trajectory from 2022 to 2023, that trajectory was there. So 290 had gone to 250, and one more year of growth where I would have been able to liquidate my working capital and also increase my revenue, I would have been at a 220 to 200 base. That was what was projected. I appreciate this is a matter of concern for each of us. The only thing that I can say is the reflective will be when I get my sales back, sales growth back, because sales is there, but it's not sufficient enough. When the sales growth is back, we would be able to see the numbers which are more amenable and more sustainable to the business model that we have. I hope I have helped you on that. Yeah. This is helpful, sir. Any comment on the material cost percentage to sales? It's about 40%. You are roughly having two years of inventory. That's what I'm saying. It is not the way. I would not see it that way, my friend, for a very simple reason, that 80% of my working capital is a finished good to work in progress. Then it is not COGS, it is sales. You want to see me through sales rather than through COGS. Because when I sell, it's a 9-month sales number that is there or 12 months that is there. The moment I start selling, it comes to that number. That's the reason. Look at my numbers because I've declared my working capital, work in progress numbers, or my finished goods and my RM numbers, and you will see those reflections. That's where I'm coming and saying that, look at me from the sales rather than from the COGS. Okay, this is helpful. Sir, just to extend the question, just one more question. I'm sorry, I'm just collecting my thoughts. Sorry. No problem. Please continue. I'm sorry. I'll just get back, sir. I just- No problem. You please join in as and when you want. I'll be happy to answer you. I'll fall back in. No problem. Thank you. Thank you. Next question comes from the line of Tushar Raghate from Kamayakya Wealth Management. Please go ahead. Yeah, good afternoon, sir. Thank you for the opportunity, and congratulations for the great set of numbers. Again, sir, the question is on the working capital. From the last five years, I could see your working cap, like your inventory as a percentage of sales. From 40%, it has been to 72%. Firstly, I would just like to know what would be the average of that. Is it 60%? Or like just a random number I'm saying. Accordingly, your take on that. Okay. Sustainably, eventually, my number should be 50%, plus or minus 5%. 58% you're saying, right? 50. Five, zero. Okay. That means you're- Sustainably 50%, plus or minus 5%, depending upon the business cycle, depending upon the number of molecules that I launch, depending upon the contracts that I get into. But you should sustainably see me at that level. Got it. That means more or less INR 2,800 crore of sales, considering the inventory you have carried, right? I would not put the exact number, but it will be two things. Please appreciate, I will put it quickly because this number, when I sell, it sells completely, right? It is a one-time sale. It is not two-time sale. Because, let's say, I have INR 1,000 crore of inventory, right? Got it. If I sell 200 crores, 200 crores is reduced. Right? Got it. Because that is ready to be sold, and I'll go to 800. Got it. Right. What I am saying is, please appreciate as simple as that eventually, because I said that there are two parts to my working capital, one is a sustained working capital, which will be required for my business to sustain. Okay? And two is there is an additional working capital which is there because of the situation that I mentioned in the earlier portion. These two are, you should see me, let us say next year. That is why I am saying that by 18-24 months, I should end up with the numbers that we have talked about, which is where I should be achieving 180-200 days of my working capital. Sales as my working capital, and it will be combination of two things. One is liquidation of some part of the working capital, and two is increase in the sales that I would expect. Combination of these two will come to a more sustainable number rather than only one. Got it, sir. Just, again, one question. Sir, on the trade receivable part. Like five-year CAGR of the sales is 24%, but the trade receivable is growing at 37%. Just what is your take on that? If you look at 2 years back, and if you look at my CAGR of sales and CAGR of receivables, only in the last 12, 4-6 quarters, that number of receivables have expanded. Yes. That's largely because when the markets are slow, you would tend to give an additional credit, which I have given, and that is the reflection. I can give you one simple example. One of the largest agrotech company in the world, they requested us that, "We were due to pay you in November. But as my year is ending, and this is a slow- I'm reading between the lines that this year has been a slow year and my year is ending. Why don't I request to pay you in January, not in November? And for that, if there is any cost, I'm willing to pay the cost." That is a customer who has been with us for the last 10 years or more. We are doing multiple products with them. We are doing multiple new projects with them. I don't see first like that. Mind you, they are I appreciate that it has expanded, but you also have to see from the reflection of the market realities, when the markets have really been pretty weak for my customers and I have to stand by them, which is what I have done on the receivables side. Got it, sir. Sir, your non-agro- Sorry to interrupt. Tushar sir, may we request you return to the question queue for follow-up question, please? It is okay. Let him ask this question and then he can. It is okay. Okay, sir. Thanks for that. Sir, just wanted to know your non-agro business. Like due to that, do you see any working capital relaxation going forward? See, every business will have its own dynamics. So in some businesses, you will see that the inventory is high. In pharma, if you look, because large part of my pharma business is Indian pharma business. Understood. Receivable days will be higher because India tends to be longer on the payment cycle side, and also they tend to delay from the promised ones. So when you see my receivable days expanding, you will also have the reflection of that. But on a total basis, on the other side, pharma will have a lesser inventory requirement because, again, I will have that kind of. So overall, you will see it will be even Steven, but yes, there will be nuances to each of their segment. Got it, sir. That was really helpful. Thank you. Thank you. Thank you. Next question comes from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead. Thank you for the follow-up question. There are two parts. One is, if you look at the kind of indication you gave on the mid-teens kind of decline for full year, it suggests that you have to grow your fourth quarter revenue by about 15%, because last year you did about INR 300 crores. What is the visibility you have to surpass last year's fourth quarter revenue as we speak? Secondly, if you look at the mapping of your growth drivers on, I think, slide 17, you have given the three growth drivers, polymer, pharma, LOIs, and then fluorination. Can you support any overlaps and say what percentage of your growth will come in each of these areas? Because there will be some common products across the three categories. If you can split these three drivers into independent categories of growth to avoid the overlapping and duplication, that will be very helpful. Oh, sure. Let me answer that first question, what you are saying about what you have released in terms of my indication. It's fairly the right reflection, and I believe why we believe that we will be able to deliver is a very simple thing, that if you look at it, as I said, I have a very high visibility coming from my customer demand. Two is coming back, and I am seeing that the customers have requested for those volumes, and hence that number will be the number that is there. If you see last year, whatever we did was also lower than what we did in 2023. Is it that this is the numbers which we have not delivered? Answer is that we have delivered these numbers. We believe that the numbers that we have been seeing in terms of whatever demand that we have seen from the customer and whatever the orders are there, we feel far more comfortable. Also please appreciate now is the new year for my customers, large part of my customers. They have a more buoyancy in terms of their ability to give me a more firm demand, which we are seeing now. All in all, pharma polymer continues to give me the growth and it coming back will give me this growth. Yeah. On the second question on the growth drivers, you can strip off the- Next time onwards, I will try and see how we can share that with you. Because, see, it is very difficult to do a settled service on the three parameters. But we will try and see how we can present it better for you. Yeah, that would be very useful. And thank you very much and wish you all the best. Thanks. Thank you. Thank you. Ladies and gentlemen, we will take that as our last question for today. I now hand the conference over to Mr. Vishal Thakkar for closing comments. Thank you everyone for your active participation this time. Definitely, it was very helpful and exciting. We hope that we have been able to answer most of your queries. I also apologize if I have not been able to give more specific answers because of the constraints that we are as a listed company to not meet a very specific guidance. If I miss any of the questions or there are some questions in this call, please feel free to reach out to our IR partner, EY, and we will be happy to take it offline. Thank you very much. Thank you. On behalf of Anupam Rasayan India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.